Indian Property News on 'August, 2007'

Gazit-Globe Plans $110m investment in HIREF

Gazit Globe, a real estate company listed on the Tel Aviv Stock Exchange, is planning to invest $110 million in Hiref International LLC, an Indian real estate investment fund registered in Mauritius.

HIREF International is the real estate fund set up by HDFC. The latter will make a co-investment of $50 million alongside. The life period of the fund will be nine years, with two one-year options to extend.

Gazit-Globe will invest in Hiref through a subsidiary that will be one of the four anchor investors in the fund. The move will help the company to secure a significant place on the fund’s investment and other committees along with the co-investment options at the company’s discretion in construction projects that the fund will put money into.

Hiref International will invest in Indian real estate in both direct and indirect ways. The projects will also include the development of Special Economic Zone (SEZ), technology parks, industrial park, hotels, and other recreation projects. With the investment in Hiref, Globe Gazit is looking forward to expand its horizons in Asia.

Ongoing Office Space Trends in India

Demand for commercial properties in India has got a major push by a large growth in IT and ITes companies. In case, you come across a productive land which does not have any hoarding announcing the imminent arrival of any retail or residential project, then you may self assume it to be reserved for a commercial project.

Over the years, the IT sector in India has reached to a new high and so have multinationals which now look out for bigger spaces to enlarge their operations into a single large building. Such a growing trend among companies of national and international repute in India is leading to the growth of built to suit commercial space in India.

According to the property data showcased by DTZ, in 2006, 10.6 million sq ft commercial space came up in the NCR. Of the total, 4.6 million sq ft was pre-committed.

Initially, Indian conglomerates used to have their own buildings. Contrary to this, MNCs nowadays prefer to take the space on lease. The buildings of Nestle and Ericsson were the early built to suit offices in the NCR region completed by DLF in Gurgaon.

Today, developers are developing more and more office space, even without having any pre-commitments because they are confident of the market to get them business with time.

Many builders customize buildings for their clients. For example: they will construct an external façade or large open floor plate with a few columns etc. And, the clients who lease office spaces have the liberty to customize the space as per their own requirements.

However, pre-commitments are increasing day by day, a factor motivating the developers to come up with more and more space. Most DLF buildings in Gurgaon which are on the completion stage have all been pre-committed.

Renting a House in Ludhiana Goes Simple

Real estate agents in Punjab are fast cashing in on nowadays. A major part of the credit goes to the construction boom which has nurtured the growth of real estate business in the state. Although, property prices in most part of the state are going through roof but rentals are growing at a stable rate. One of the cities witnessing such a trend is Ludhiana.

House rentals in the areas accommodating middle class income group as well as the posh like Sarabha Nagar have recorded a sharp increase in the last 1 year. Rent for an independent house built over 250 sq yards in Sarabha Nagar is hovering anywhere between Rs 7,000 – Rs 15,000 per month.

However, the rents were believed to be the same last year as well, which clearly underlines that there is no considerable hike. On an average, the rentals have not seen an increase of more than Rs 2,000.

Residential colonies in Ludhiana such as Vikas Nagar, Gurudev Nagar, Haibowal, and Dugri offer accommodation at a monthly rental in between Rs 4,200 – Rs 7,800. The factors deciding the amount of rent primarily depends on the type of construction.

Residents feel that there has been no substantial increase in the house rentals for the past two years because of easy availability of home loans. Add to that, people nowadays don’t mind paying high EMIs for their home sweet home. Of course! They find the option far better than paying high rentals every month.

Only the working class relocating in Ludhiana is tending for rented premises. And, they hardly feel any problem to pay rent as they get their HRA from the company, says Kushal Kapoor, Ludhiana.

Retention Policy for Buildings in HP Likely To Bring Down Rentals

Property price in Himachal Pradesh fears a sharp fall in rentals in the wake of the recent decision of the state government to approve the Retention Policy for buildings.

The move will push the development of structures that were stopped midway. Since, the prices will go down; there will be more accommodation for visitors, feel real estate consultants. However, industry watchers say the property prices to soar again once there are more housing units available on rent regularizing rules.

According to the latest Retention Policy for buildings, building owners will have to pay a fee of Rs 500 per square metre in limits of Municipal Corporation Area and Rs 200 per square metre for legalising the documents.

Buildings built without any prior approval will also be regularized on payment of the above mentioned fee. Such a case will bring penalty of an additional sum of Rs 5,000 to Rs 9,000 for every storey in a building in limits of Municipal Corporation. Contrary to this, constructing buildings in other areas without any prior approval will call out a fee of Rs 2,000 to Rs 6,000.

As per the approved Retention Policy, if any residential building will have convenience stores in any of five storeyes shall be considered for regularisation subject to provision for parking in the premises.

DLF to Develop New City Centre in Gurgaon

Indian property giant DLF Ltd will soon come up with a modern city centre near the 18-hole Golf Course Road in Gurgaon. The company will take up the construction in collaboration with global construction major Hines.

The complex will be designed by the famous Robert A M Stern. To feature 30 storeys, the centre will be developed over a large area of 20 acres with the total 2.5 million square feet of constructed area.

The entire complex will be dedicated to the commercial space. Also, it will have end retail shops, restaurants, and a 5-star hotel, informs an industry source. Skyscrapers in the complex will include large green areas. Only 10% of the space will be covered by the construction and the rest of the area will left green.

There is an acute shortage of commercial space in Gurgaon, one of the factors which have pushed the lease rental rates to Rs 120 per square feet per month. Gurgaon is likely to see an oversupply of office space soon.

The proposed city centre is believed to serve as a major land mark in the area and is scheduled to be operational in 2010. By the concerned timeline, the centre will be well connected to Delhi through metro and a widened national highway, which would be a matter of major convenience for all.  Since the land is already acquired by DLF, development work is likely to start soon.

DLF’s Upcoming Investments at a Glance

India’s biggest real estate firm, DLF Ltd. is drawing plans to invest around Rs 1,000 crore for establishment of a Special Economic Zone (SEZ) for information technology (IT) firms.

Commenting on its first IT zone to come up at Nagpur, DLF says it to be operational by 2010. The zone will come over an area of 140 acres. The IT Park is a part of the 3,250 acres multi modal international hub airport SEZ project at Nagpur.

To be located adjacent to the international hub airport in Nagpur, the zone would have an international and national information technology firms. The project is believed to generate a large pool of job prospects, says a DLF spokesperson.

Recently, DLF announces to secure the proposed integrated Township project at Durgapur in West Bengal. It is public-private partnership project that contains the potential to attract investment up to Rs 4,000 crore.

Apart from the Durgapur project, the company is also working on a 500 acre Township, a textile SEZ, two IT parks and hotels in Kolkata.

Indiareit’s Retail Fund Garners Rs 400 cr

Indiareit, the real-estate fund promoted by Piramal Enterprises, announced to raise Rs 400 crore through its first retail focused fund – Indiareit Fund Scheme III. Rs 25 lakh was considered as the minimum investment limit.

Earlier, the fund had decided for Rs 350 crore as the targeted investment. However, it has now already raised Rs 400 crore. Indiareit is also considering about a greenshoe option for another Rs 300 crore and will close the deal by August-end.

The fund is holding high talks with some renowned corporate investors and is likely to close the fund with Rs 700 crore. Some known banks including ICICI, ABN AMRO, HDFC, and HSBC were playing the critical role in marketing the fund in the domestic market.

Domestic realty funds have come up with a new concept of a lower entry-level investment to grab the attention of more retail participation in their funds. A number of domestic real estate funds are stepping up their efforts to bring more retail in the picture.

As compared to the real estate in yesteryears, the sector enjoys greater transparency. With the Indian property market yielding high returns, the investors have begun to show large interest in property investments.

Retail investors are parking larger funds in a second home whereas real estate enthusiasts from high middle class are investing more in retail and commercial properties.

Bank of India to Revaluate Its Fixed Assets

The Bank of India (BoI) is looking forward to raise its Tier II capital, a secondary bank capital including undisclosed reserves and subordinated term debt. The plans have encouraged the bank to revalue its fixed assets.

Revaluing the assets will help the bank to ensure its fair market value and fixed assets such as properties. The board of directors of Bank of India (BoI) will have a meet on Thursday and revalue identified fixed assets. They will also give a thorough consideration on the increase in their value during the current quarter.

According to the set of guidelines by the Reserve Bank of India (RBI), 45% of revaluation reserves can be counted as Tier II capital. Once the revaluation process will be over and the crystallization of revalued fixed assets is done, Tier II capital of the Bank will naturally increase, says the Bank.

The concept of revaluing the assets has been followed by a few banks in the recent past. Industry watchers see the possibility of the BOI selling off some of its properties after the reassessment. However, the bank has not given any hint regarding which properties to sell.

According to the earlier guidelines by the RBI, revaluation reserve could not be taken as the core capital as they were be more temporary in nature.

The RBI wants banks to take necessary steps as well as have a discerning eye while creating a policy for revaluation of their properties. Revaluation reserves reflect true increase in the market value of the properties. Banks must follow an effective policy for reassessment of fixed assets owned by them.

Kalpataru Properties bags CNBC Awaaz-CRISIL Real Estate Award

Kalpataru Properties Pvt Ltd. bagged the award for both the Best Residential Property and Best Organization Structure at the CNBC Awaaz – Crisil Real Estate Awards 2007, which held at Taj Landsend on August 16, 2007.

Hundreds of property developers sent in their nominations from across India for different categories. Entries were further sorted out under different categories such as retail, commercial and residential sectors from across the country.

There were 175 nominees shortlisted for the Best Residential Property and 15 nominees for the Best Organization Structure.

Kalpataru Horizon at Worli has been awarded for the Best Residential Property. Boasting to be first of its kind, Kalpataru Horizons is an exclusive residential project featuring the 1st residential floor at the 14th level (12 feet) of each tower. The building comprises of 2 premium towers, each featuring 30 storeys. Both the towers are built on 11,878.02 sq m rectangular plot each.

The complex offers an array of recreational facilities including a club house, party lounge, squash court, games room, heath club, and a well equipped gym.

Expressing great ecstasy, Mr. Mofatraj Munot – Chairman of Kalpataru Group, gives the entire credit to their team who has worked dedicatedly to create a unique niche every step of the way to make Kalpataru Horizons a huge success.

He further sheds light on other facets of the complex which offers a mixture of both the latest innovations and aesthetics to the buyers of premium apartments. Each room in the complex renders scenic surrounding and has a sea view, which has been made possible by building beyond a certain height.

Kalpataru Properties Pvt Ltd. is one of the few real estate companies that have truly corporatised itself by having all the relevant departments.

Noida Raises Circle Rates

The recent rise of around 40-45% in circle rates for land in Noida can bring down the number of land transactions in the city, thereby crippling the already suffering property sellers there.

Recently, Noida has announced an increase in its own sector rates, which is believed to be the only reason for the hike in circle rates by the district administration, says a revenue department official.

The state does not want to loose on stamp duty payable on land transactions as there are people who try to escape paying a reasonable stamp duty, which is 8% of the total land cost.

Outlined below are the sectors that have witnessed an increase in their circle rates:

The Greater Noida Industrial Development Authority (GNIDA), on Tuesday, announced a new housing scheme.

According to the scheme, the buyer has to apply for a piece of property (say 90 square metre flat) on the form of Rs 1,100 followed by depositing Rs 2 lakh for entering the draw. If the applicant turns out to be a lucky candidate, he/she will have to pay the entire cost of Rs 18.46 lakh in lump sum in three months.

Such a pricing has been done for 264 flats of 90 metres each, 521 of 120 square metres, 733 of 200 square metres and 147 of 250 square metres each.

This housing scheme in Omicron Sector opened today and will close on September 20. The draws will be taken out on November 20.

The Authority will only give a chance to the applicants who want to pay in installments if there will be shortage of those who will pay at one go.