Indian Property News on 'February, 2007'

ABN Amro on Launching Realty Arm

Indian investors will soon find their access on global market prices. ABN Amro Mutual Funds has filed with the capital market regulator, Securities & Exchange Board of India (Sebi), for a scheme that will fund in construction companies and property developers worldwide.

The ABN-Amro Global Property (India) Equity Fund is just waiting for the final nod from the regulators. The realty fund will invest in foreign equity and equity related securities through ABN Amro’s Luxembourg based ABN Amro Global Equity Fund.

With the launch of its realty arm, ABN Amro bank cements a new link supporting it to set a substantial presence in India. Indian market offers great scope for growth and is good from profit perspective.  The bank will add “best practice” fund management skills and a truly client focused approach to it, says, Huibert Boumeester, Global Chief Executive Officer of ABN AMRO Asset Management.

The market regulators have liberalized their rules the last year, according to which, they allow mutual funds to launch schemes that will invest in overseas equity or equity oriented schemes. The shift has been taken to improve the market scenario for Indian retail investors. This encouraged principal PNB mutual redraft its existing schemes that would partly invest in overseas equity. However, no fund took initiative to launch a scheme for overseas with Sebi’s own plan allowing India-registered mutual funds to launch real estate funds.

As per the norms laid by Reserve Bank of India (RBI), Indians are allowed to invest $50,000 per annum overseas. Experts said, the ABN-Amro scheme was aimed at this segment.

Malls Excluded from Realty for FDI purposes

As per the new guidelines, the government has excluded shopping arcades and multiplexes from the purview of foreign direct investments (FDI) for real estate. They will be included under the automatic route with foreign direct investment up to 100% in hospitality sector including development work and set up of cinemas.

FDI rules for construction projects pertaining to property market include accommodation units, commercial spaces, resorts, educational institutions, recreational facilities, and regional level infrastructure, etc.

The current FDI policy does not address whether owning, developing, and constructing a multipurpose malls and multiplex theatres would fall under real estate or not.

ESSEL group is parking a handsome amount of money to develop 45 family entertainment centers in tier II and tier III cities across the country. The project requires the fund over $453 million and the group will raise $145 million through FII placements.

Advantages of Loans on Rent Receivables over Personal Loans

Nowadays, giving a call to lure customers to buy a loan has become really popular among banks. It is quite possible that these calls may irritate you, especially when you don’t need a loan or are not interested with the options provided by that bank.

Apart from these individuals, there are people who are in a dire need to have personal loans. Reasons like marriage or an unforeseen hospitalization may encourage them to apply for loans. However, those with property rented out enjoy a much better scope. They can check out the loan options with different banks for loans against the future receivable rent of such a property.

Most state owned banks are lending such loans at little or above benchmark prime lending rates. Moreover, the banks come up with attractive deals during the festive season. Although, these are loans to the landlord against future receivable rents to the landlords, there are other parameters too need to be taken care of.

So, what should be the criteria one should follow to avail the best loan option. Our article discovers the same:

Such loans are available only in case of properties that have been rented out to public sector undertakings (PSUs), banks or recognized private companies. In the mentioned cases, the loan amount should not go beyond the future receivable rent of the property minus margin money, which may range from 20% to 25% of the future rent of the unexpired rent period. Next, the facet that holds importance is assignment of future receivable rents along with a guarantee from third party.

Another imperative thing is that the bank must ensure getting a mortgage of at least 1.5 times the value of the loan taken on any immovable property. There are the cases when banks can also ask for a mortgage on any liquid asset including national savings certificate, kisan vikas patra or other similar schemes. It includes:

• Non availability of immovable property
• Low value of the rented out property
• Undesirability of the landlord to sell out the property.

However, these kinds of loans require the landlord to furnish a mortgage, which certainly works out best than availing a personal loan. Now, let’s take another case in which the landlords have already promised their piece of property. This is one of the underlying reasons encouraging most landlords to purchase properties through housing loans, whose repayment go up for 10-20 years. To have a fresh loan against the future receivable for the same rented out property, the landlords require seeking out for some other security to offer bank. However, it is much better for a person to avoid buying another loan under such a case. In case, the situation is unavoidable, he person could go with the loan against future rent receivable.

Kolkata’s First Sports-Mall Complex

Ashok Bhattacharya, municipal affairs and urban development minister laid the foundation stone for the first sports complex, which will come up as a public private partnership (PPP) between the Merlin group and Kolkata Metropolitan Development Authority (KMDA) at Kasba in the southern fringe of the Kolkata.

This new sports complex will be called as the Rajdanga Sports cum Commercial Complex, and will feature a huge field to host games like football, hockey and cricket. However, there are no plans to lay a track for athletes in the field yet.

The complex would certainly emerge as the ideal place for budding sportsmen. Also, it would also be used for organizing small sports events and indoor games.

KMDA is also drawing plans to come up with a water park in proximity to Ruby Hospital off the Eastern Metropolitan Bypass and offer former ace swimmer Bula Chowdhury a free hand to run a swimming academy.

Incorporating the investment over Rs. 200 crore, the Rajdanga Complex will serve as a money spinner for the Kolkata government.

KMDA would earn revenues by selling space in commercial and office blocks, while the Kolkata Municipal Corporation would get around Rs 12 crore as sanction fees, say promoters.

Ambani Brothers Won Karnataka IT Project

Of 24 bidders, only Ambani Brothers have been shortlisted for the exclusive project of the development of 10,000 acre Knowledge City involving a whopping investment of Rs. 50,000 crore. The City would be catering to the demanding requirements of the IT industry’s growth in Karnataka. The other property developers bidded for the project were from across the globe, including players from Dubai, Europe and Asia.

The project will come up in Bidadi, situated 25 km from the city limits of Bangalore.  The residential requirement of IT employers is shooting up day by day. For that reason, the plans were drawn up to develop such a township meeting the accommodation needs that is likely to grow by 30% in the next 10 years.

The project would be an integrated township, featuring commercial spaces, residential colonies, hospitals, shopping arcades, schools and an array of other required facilities, said M N Vidhyashankar, secretary – IT, biotechnology and science & technology, Karnataka government.

Ambani Brothers will get the land to develop by April this year and the work in the initial phase is expected to execute during the second half of the year. It would take around 18 months for the first phase of the proposed township to get completed.

The Knowledge city will have an excellent connectivity with the upcoming Bangalore International Airport by an eight-lane highway, which when completed will connect the airport and the Knowledge City in a 30-minute drive.

Airport Upgrade Jacks up Realty Rates in Dwarka, Gurgaon

With the UPA chairperson Sonia Gandhi having laid the foundation stone for the revamped Delhi airport last Saturday, the ball has been set rolling for the first modern, international-styled airport in the country. But, what has also been set rolling are the real estate rates all around. According to experts, a 10-15% rise in rates has already been registered in areas near the airport like Dwarks as well as Udyog Vihar, DLF Phase II & III in Gurgaon.

Says local realtor Vikram Chopra, “In a country where connectivity is a major issue and the construction of an expressway or a flyover result in a hike in the prices of the surrounding real estate, an airport that is going to be the first internationally-styled one in the country is big news. In fact, apart from Gurgaon and Dwarka, the increase in property rates has already started happening at farmhouse colonies like Westend Greens, Pushpanjali, Vasant Vihar and Shanti Niketan in South Delhi.”

The modernisation of the airport has also added to the image of the areas around it, especially Dwarka. “The airport revamp has added to the sentiment of the area and has become a selling point for real estate developers and dealers alike. People’s point of view too has changed and most of them, especially foreigners now want to live in close proximity to the airport,” says property dealer Vinod Sindhu.

But, it is not just the Delhi airport that has seen an increase in realty rates all around. This phenomenon is more prominent in cities like Dubai and Singapore, which are also popular transit points for travellers, apart from being great tourist destinations. Both cities saw a quantum jump in the real estate around its state-of-the-art airports — to the tune of 20-25% — owing to the economic boom that the city’s experienced after the modernisation of their port and airport.

Says Deepak Bhavsar of Trammel Crow Meghraj Property Consultants, “Airports always have a spin-off effect on the surrounding real estate, especially commercial, owing to the link that industries like logistics and tourism have with it.

Story Submitted by Ranjeet
Source from financialexpress.com

I-T Dept. Questioning Realty Brokers, Interior Designers

I-T department is on its look out for defaulters and carried out searches regarding the same at various locations including Maharashtra, Kochi, and Chennai. The tax sleuths have been conducted regarding realty brokers, property developers, interior decorators, and advertising agencies including others as well, say sources.

The searches are still going on and further details are awaited, says SSN Murthy, director general of investigations in Mumbai. However, he denied giving any details about the search conducted in these locations.

Murthy maintained that the searches were a part of the routine job of the investigation wing towards the end of the financial year. A senior income tax official told FE that the department carries out search and seizure operations only when there was an evidence of confidential documents or assets which have not been disclosed in an ordinary course.

The searches were conducted as a part of the daily investigation work of the wing, which is necessary to do at the end of every financial year. According to the sources, such searches are conducted only in the light of confidential information or assets which have to be concealed in an ordinary course.

During such search operations, Income tax officials are permitted to carry out a search in the residential as well as business premises of the individual, inspect his assets including vehicles, bank lockers and if need be seize the books of accounts, stocks and valuables.
IT Department has been succeeded in disclosing illegal income to the tune of Rs. 1,100 crore across the country. Likewise, a research hunt at a real estate broker in Mumbai disclosed the amount of Rs 125 crore.

Launch of India’s First Property Exchange Scheduled for June

A property exchange allows investors to sell and purchase property whether online or offline. Now, property exchanges, prevailing in international real estate sector, have landed in India.

Jayadaad.com is coming up with a first-of-its-kind property exchange by this June, which will be called as National Property Stock Exchange (NPSE).

Industry watchers are of view that investments in real estate are always preferred over investments in stock or gold. It is liquidity that has been the core area where the sector takes a thrash as compared to other investment prospects. Property exchanges hope capitalizing on the investment opportunity by taking care of this factor.

While trading in property through local dealers and websites is widely prevalent, a property exchange does more than just that. It not only offers trading in a much more organized manner, it also offers an index of property rates across the country.

The shift is towards encouraging small investors to join the loop, enable them to yield the profits of the real estate boom. Further, liquidity will bring more improvements in the sector thereby overcoming the hurdles preventing investment inflow.

The name, National Property Stock Exchange (NPSE), has already been registered as a company. SK Jain, CMD, Jaaydaad.com is working on the plans to create a Rs 500-crore corpus with a bank to bring liquidity. In case, a buyer wishes to sell the acquired property within 7 days of buying, he will avail the market price, which means no losses at all.

The NPSE will be set up in accordance with the guidelines laid by the government for a stock exchange.

Bangalore sees fall in Commercial Property Rentals

Real estate happens to be one of the key aspects playing a crucial role in development of India’s garden city, Bangalore. With property here seeing appreciation quite rapidly, there is a contradictory situation for commercial property, which has seen a drop of over 30% in the last one year. Whitefiled, a suburb of Bangalore has seen property prices shooting up consistently.  However, a correction has taken place in the IT neighborhood. There are some connectivity related problems accountable for the scenario. In addition, oversupply is also believed to be another major reason.

This year, a balance between demand and supply has not been achieved. Commercial absorption in Whitefield stood at a little over 2 million sqft last year. The supply situation is pegged at over 6 million sqft while demand continues to be at 2 million sqft. This marks the difference of exactly 4 million sq ft. Oversupply is considered to be an often occurring situation in Indian metropolis.

Likewise, the infrastructure seems to have lost pace with the real estate growth. With upcoming IT centers mushrooming away from the two main IT clusters, Electronic city and Whitefield, campus developments led the rentals to slip in Whitefield in order to grab the attention of major IT firms.

Sarajpur Road and Old Madras Road hold position among emerging IT centers. Here, accessibility is believed to be much better as compared to Whitefield.  Consequently, the going rate in the case of commercial rentals in Whitefiled, which stood at around Rs 30 per sq ft a year ago for property falling under the category of ‘A’ grade dropped to Rs 20 per sqft in the present day.

Earlier, the rentals used to hover at Rs. 50 per sq ft. whereas they are still at Rs. 44 sq ft today. The interest in Whitefield is lower nowadays. Connectivity is a major issue for those who have to commute to and from Whitefield and surrounding areas.

Citigroup Property Investors Closes on $1.3B Asia Pacific Fund

Citigroup Property Investors closed its CPI Capital partners Asia Pacific LP. Fund for $1.29 billion. The fund has invested in real estate sector throughout the Asia Pacific Region, with the main focus on Greater China and India.

The craze for parking in real estate is becoming high, which is clearly underlined by the decision of Citigroup, a major American financial services company based in New York City and its Hong Kong based investment team to put in $200 million to the fund. They have also invested in Shanghai and Macau, China; Hong Kong; and Delhi, Pune, Bangalore, and Chennai. There are 19 prospective investors sharing the balance of the investment, including Smith Barney.

Citigroup is also planning to raise $3.5 billion for another fund to make investments in firms in upcoming markets, including India, China, Estonia, and Chile, as reports Bloomberg and media outlets.

Citigroup Property holds assets over $9.8 billion under management in both public and private markets in North America, Europe, and Asia. The group primarily focuses on the office, industry, multifamily, hospitality and retail sectors.