Indian Property News on 'February, 2008'

Real Estate Sector Looks for Management Graduates

Real Estate Biggies like DLF Ltd and K Raheja Universal Pvt. Ltd are in hunt for IIM-K graduates, when job placements begin in the first week of March, for the 2008 batch. The school is also expecting some real estate consulting firms and realty funds to make offers to graduates.

Real estate sector which has been historically catogarised as an unorganized sector of the economy, relying on family ties and personal connections for its talent pool is changing trends. But if past experience and recruitment on college campuses — information technology in the 1990s, financial services and consulting in recent years — is any indication, the aggressive wooing of fresh management graduates reflects the changing and growing nature of the industry. Retail companies, for instance, were seen on campuses last year, a few months after giants such as Reliance Industries Ltd and Bharti Enterprises Ltd announced plans to enter the sector.

Real estate in India has already seen a rise in mid-level salaries and high attrition rates. A number of real estate firms tapped the capital market last year—developers, including DLF, Omaxe Ltd and Puravankara Projects Ltd, raised around $3.7 billion (Rs14,689 crore) in 2007. Another company, Emaar MGF Land Ltd, shelved an initial public offering earlier this month due to the turbulent stock market.

Indiabulls Real Estate Raises INR 15.8 Billion by Selling Power Unit

India’s fourth-biggest property developer by market value, Indiabulls has raised 15.8 billion rupees selling shares in its power unit to billionaire Lakshmi Mittal and Farallon Capital Management LLC.

In an e-mail statement India bulls Real Estate said that it has sold 37.5 percent of its fully owned subsidiary, Sophia Power Company Ltd. The mail also revealed that Farallon will buy 23.4 percent while the remaining shares will be bought by Mittal.

Both Farallon and Mittal will buy the stakes at 66.67 rupees a share, the company said. Indiabulls Real Estate will hold 62.5 percent of Sophia Power.

The combined stake bought by Mittal and Farallon will drop to 28.6 percent after a proposed merger of Sophia Power with Indiabulls Power Services Ltd., another fully owned unit of Indiabulls Real Estate, said Ajit Mittal, head of investor relations and president of corporate affairs at Indiabulls Real Estate, by telephone from Mumbai.

IPL Clean Bowled By DLF

India’s biggest Real Estate Developers, DLF, has bagged the Indian Premier League (IPL) title sponsorship rights for Rs 200 crore for five years, with a first-year commitment of Rs 40 crore.

The five year deal can be reviewed at the end of three years depending on the success and performance of Indian Premier League (IPL). The minimum cap will, however, remain at Rs 40 crore per annum.

Speaking on the deal, Lalit Modi, Chairman and commissioner, said “I am truly happy to have India’s leading real estate developer DLF as our title sponsors as they happen to share a common vision with BCCI to make the Indian Premier League one of finest circuiting leagues in the world “.

Expressing his happiness on the deal, Rajeev Talwar, group executive director, DLF said that DLF always emphasises on nurturing and recognising talent and this is one more achievement towards nurturing professional talent for the game of cricket in this country. This is a game which has mass appeal all over India. Both cricket and DLF will grow hand-in-hand.

India Expected to Create Real Estate Investment Trust

Following fellow Asian countries, India is expected to create a market for real estate investment trusts (REITs) this year. The step will make it easier for investors to buy into the country’s sparkling new office blocks and shopping malls.

The move would also be encouraging for foreign property funds keen to join India’s construction boom but are not allowed to own finished buildings. Through REITs, they could buy the assets they develop, offering them an easier way to exit the projects and take profits on their investments.

In December, market regulator Securities and Exchange Board of India (SEBI) issued draft guidelines for REITs, which pay most of the rent from their buildings to investors as dividends. But people in the industry say unless tax breaks are also offering by the government in its upcoming budget, a local REIT market would be a non starter.

The SEBI proposal contained no mention of the kind of tax breaks that kick-started other property trust markets, but it could be fleshed out in the federal budget due on Feb. 29. Property trusts, long-established in the United States and Australia, have caught on in Asia in the last five years, with investors enjoying stable yields that are higher than government bonds, and share price rises when rents and property values rise.

REITs would be riskier in India’s immature market, where a three-year building boom sparked by easing of foreign investment rules barely masks crumbling colonial-era infrastructure.

Real Estate Facilitating Indian Economy Growth

Speaking at the “National Convention ‘NATCON 2008, Kamal Nath, Union minister for commerce and Industry said that developments in the Indian real estate sector symbolizes the changing face of nation and is a reflection of the growth in the Indian economy brought about by high rates of GDP and also by India’s integration with the global economy. The minister further added that in recent years real estate sector has been the main driving force of the Indian economy’.

Describing the present upswing in the economy Kamal Nath emphasized the requirement of creating international standard infrastructure and residential real estate to sustain the growth rate projected in the 11th Five Year Plan.

The Minister further stated that we have already opened construction development sector for FDI and the policy permits wholly owned subsidiary in this sector in India by a foreign company. “Of course, there are conditions regarding minimum area for real estate development and minimum capitalization to be brought in by the foreign investor. A number of global players have entered the Indian market and many more have shown interest. Growth and investment have also created opportunities for investment in real estate sector, he said.

“While the role of the Government is expected to be primarily as a facilitator to the development process, the private sector participation is aimed at bringing technical and managerial expertise in delivering good quality mass housing projects. It is a good sign that many State governments are joining hands with private entrepreneurs in resolving the acute scarcity of residential real estate in urban areas. The private sector and Government has to work in tandem towards a common goal. It is equally important to address the institutional and regulatory aspects as well as strengthen and expand the capacity of financing institutions for further growth of the sector,” Nath said.

kardan plans $1.2 billion investment in India, China

The Dutch-Israeli investor in real-estate and finance companies, Kardan NV plans to invest as much as 800 million euros ($1.2 billion) to develop housing and commercial centers in China and India.

In India, the investment company is looking at opportunities in New Delhi, Mumbai and Pune, where GTC said in November it would build its first project in India. It may expand into other countries in Asia, Ickovics said.

According to Mr. Ickovics, Chairman of the management board Mumbai is the largest Indian financial center, Delhi is the capital and Pune offers strong potential for growth because of its location.

In China, Kardan is targeting residential and retail projects in “second-tier” cities of 3 million to 15 million people. There are 350 to 400 million Chinese who are expected to move from rural areas to cities in the next decade to find work, Ickovics said.

India Doesn’t Suits your Budget? Invest in UK, US or Dubai

If investment in Indian Real Estate seems to be out of your budget, go for UK, US or Dubai. Sounds unbelievable but its true! Real Estate prices in south and central Mumbai is higher as compared to prices UK, US or Dubai. And the best part is, you get all of it without excessive pollution and slums all around you.

Thanks to a foreign exchange relaxation, Indians can now legitimately remit up to $200,000 (Rs79.26 lakh) every year for investment purposes, including property. With two persons (you and your spouse), the amount can be raised to $400,000 a year, enough to buy you decent property in many global cities.

In a budget of around Rs80 lakh will expel you to the outer border of Mumbai’s western suburbs. On the other hand, a two-bedroom-hall-kitchen (BHK) flat at Dubai’s Marina would cost Rs35-60 lakh. More opulent residential configurations would cost Rs1 crore and above. This is a steal compared to rates in Mumbai. In Dubai, Indians cannot actually buy property, but they can lease one for 90 years. On this basis, it is possible to obtain four-bedroom luxury apartments or even decent-sized villas for up to Rs1.5 crore.

Similar investment won’t be able to fetch property in New York or London, but you can get great property for Rs4-5 crore — upwards of around £500,000 — which is what decent property in south and central Mumbai now costs.

Russian Multinational Sistema to Enter into Indian Real Estate and Infrastructure

The largest chip makers of Russia, Sistema JSFC plans to enter into the Indian Real estate, hotels, hi-tech electronics, infrastructure and highway development.

Speakingg on the same President Goncharuk said ‘we are looking at major investments in various sectors, including real estate, hotels, infrastructure and building highways.’

These investments will be in addition to Sistema’s 51 percent stake in Indian telecom company Shyam Telelink, with whom it plans to launch a nationwide mobile services network, the report said. As per estimates the mobile foray alone may cost 4-5 billion usd by 2012.

The Ever Growing Indian Real Estate Sector

The Indian Real Estate Industry is on a roll be it in the country or outside. The sector has witnessed immense growth in the past couple of years. The phenomenal increase in the Real Estate demand and access to funds were the key drivers for propelling the Indian real estate market into an overdrive.

The industry received the much requisite first shot of funding in 2005 wherein the foreign direct investment (FDI) route was opened up for Indian real estate. Since then there has been no looking back, the real estate sector has transformed to reach $57 billion in 2007, and has a potential to reach $90 billion by 2012 according to the Eleventh Five Year Plan.

The ever increasing momentum has paved the way for exciting opportunities for both domestic as well as international investors. The real estate industry has multiple stakeholder’s right from developers to investors (including private equity funds), financiers, buyers (including Real Estate Investment Trusts) and service providers such as property consultants, contractors and project management companies. A typical consolidation may be triggered by any of these stakeholders.

Going forward, we expect the Indian real estate market to witness greater M&A activity driven by consolidation and the growing maturity of the market. This activity would ideally be supported by requisite regulatory framework and inherent attractiveness of the real estate sector (which in turn is based on sound market fundamentals and relatively stable economic & political regime).

Mukesh Ambani-led Reliance Group Plans a Splash in Real Estate

The Country’s largest corporate house, the Mukesh Ambani-led Reliance group is all set to make a mark in the Real Estate Industry. The Company has already started its procedure of recruiting large number of highly experienced professional to work on its captive and independent projects.

The company is in hunt of professional with at least 15 years of “hands on experience” with major civil constructions, hotel chains, interior designers, architects, real estate developers as well as contractors and engineering consultancy companies working in this field for its real estate projects.

In its advertisement Reliance group has explained that the potential candidates should have worked on and successfully completed projects for major residential complexes, 5-star hotels, malls or IT office complexes in India and abroad. The ad also mentioned that Reliance Group has substantially large portfolio of real estate projects to fulfill captive requirements as well as an independent business activity.

“Projects include high quality office space, residential properties, convention centre, auditorium etc. Renowned international architects, leading business service engineers, design and other consultants and interior designers are associated with these projects,” the group noted.

The group’s existing real estate projects include Reliance Corporate Park in Navi Mumbai, a modern Convention Centre and a world-class hospital in Mumbai. The appointments, all to be based out of Mumbai, would be made in a Reliance Group company operating in the EPC (engineering, procurement and construction) sector, the advertisement said.