Latest Real Estate News on 'Mumbai'


HDFC Property Fund raises $250 mn via offshore fund

Add comment   |  July 21, 2014

Bangalore/Mumbai: HDFC Property Fund, the private equity arm of Housing Development Finance Corp. Ltd, has raised $250 million (around `1,500 crore today) through an offshore fund. It hopes to raise another $150 million by the end of the year, said a person directly familiar with the development who did not want to be named.

On Friday, HDFC Property Fund informed the BSE that it had raised the capital through its second international fund, saying “the recently closed fund will focus on investing primarily in residential property developments in major cities across India”.

The cumulative assets under management now exceed $1 billion, the statement added.

The new fund, which started raising capital in 2012, had targeted a corpus of $500 million. But it has raised only $250 million so far, and decided to do a first close and start the process of investing before attempting to raise another $150 million, said the person cited earlier.

Typically, funds that aim to raise a large corpus raise a certain amount of capital and announce a first close, after which they start investing in deals.

HDFC Property Fund had last raised $800 million through Hiref International Llc, an offshore fund, in 2007.

Its new offshore fund will start investing the capital it has raised and will invest a maximum of `240 crore in each transaction. It will invest in Bangalore, Kolkata, Delhi-National Capital Region (NCR), Pune and Mumbai.

The fund will invest in residential projects and is expecting an internal rate of returns (IRR) of 23-24%.

“We will do structured investment with a portion of equity in these investments,” the person said.

Of the $250 million, the fund has already committed `800 crore across a few deals in Mumbai, Pune and Bangalore.

One of these is the Vrindavan Tech Village project in Bangalore, which is being developed by realty firm Embassy Property Developments Pvt. Ltd and where Blackstone Group Lp is an investor.

HDFC Property Fund will invest around `240 crore in the 30-acre residential component of the project, said a second person familiar with the transaction.

HDFC has raised the offshore fund in difficult capital-raising conditions when global investors are wary of putting their money in the Indian real estate market.

Funds raising offshore capital are, in fact, finding it far more challenging compared with domestic capital, which is still easy to come by.

Financial services firm ASK Group, which plans to raise a $200 million real estate offshore fund, has raised $50 million from global investors on its own and has hired Cushman and Wakefield as a placement agent to help raise the remaining $150 million.

“This (HDFC) fund raise is a sign that foreign investors are back looking at India and they are ready to give capital to Indian funds. The expectations from the government is very high and investors are starting to re-invest in India,” said Ambar Maheshwari, managing director-corporate finance, at property advisory Jones Lang LaSalle India.



For 100 mn sq ft, REITs can get $10 bn

Add comment   |  July 7, 2014

Real estate developers are looking to attract $10 billion of investments as they bundle over 100 million sq ft of commercial property in to REITs (Real Estate Investment Trusts) over the next couple of years. Blackstone, K Raheja, Embassy, Panchsil, DLF and RMZ could be first off the block together listing as much as 75 million sq ft, for an estimated $5 billion, in the next twelve months, once the REITs get clearance in India. The properties are located across eight Indian cities.

Anuj Puri, chairman and country head, Jones Lang LaSalle India (JLL), says REITs offer foreign investors a wider range of properties to buy into. “Foreign investors can buy only into IT Parks or special economic zones, not stand-alone buildings or malls. However, REITs will bundle a variety of properties which will make them attractive investment options,” Puri told FE.

The only hitch could be the unclear tax structure; right now it would appear REITs would be taxed at three levels. It’s not clear, for instance, whether dividends received from REITs would attract the same treatment as dividends paid by companies, which are not taxed in the hands of the receiver. The industry is also apprehensive that a dividend distribution tax would be levied. Since 90% of the income earned must be distributed as dividends, the industry says it is important that the tax impact is negligible else returns to the investor could be meagre. Moreover, the norms aren’t clear on how capital gains would be treated and whether it would be similar to those from equities and mutual funds.

Gaurav Karnik, partner at EY, points out that if an investor holds equities or equity-oriented mutual funds, for more than 12 months, long-term capital gains tax could be nil.

“In the case of REIs, it is not clear how the instrument will be treated and taxed,” Karnik says.

REITs are investment entities where the corpus is invested primarily in completed, income-yielding real estate assets; the income generated is distributed among investors as dividends. The structure is similar to that of mutual funds that can be listed and traded on exchanges.

In October 2013, SEBI issued draft guidelines for REITs reviving a proposal that had been put on hold in 2008; the initial offer size has been pegged at Rs 250 crore and listing of units mandatory. The minimum public float must be 25% to ensure adequate public participation and float. The guidelines say that the size of the assets under REIT should not to be less than Rs 1,000 crore to ensure that initially only large assets and established players enter the market. REITs can raise funds from any investors, resident or foreign; the proposed minimum subscription size is Rs 2 lakh and the unit size Rs one lakh.

A June 2014 research report of JLL quoting Department of Industrial Policy and Promotion (DIPP) data says that FDI into the construction sector-townships, housing and built-up infrastructure-declined to about $1.3 billion over the April 2013 to February 2014 period from $3.1 billion in the April 2012 to March 2013 period. Developers with investible assets say they are keen on REITs as and when the format comes into the market. “In principle we are supporting the idea of REITs in the country, but there is some clarity required on the tax structure, so we need to see how it pans out,” says Amit Grover, national director (offices), DLF Ltd.

Source: Financial Express



Dilip Kumar moves court against brothers over property dispute

Add comment   |  July 7, 2014

The legal dispute between iconic actor Dilip Kumar and his two brothers over property in Mumbai’s posh Pali Hill area may turn into a long drawn battle as an affidavit has been filed on his behalf before the Bombay High Court.

The affidavit filed by the actor’s wife Saira Banu states that the brothers-Ahsan and Aslam – have no rights over the bungalow which was demolished for redevelopment. Ahsan and Aslam, who resided with their brother at the iconic 48, Pali Hill bungalow till it was razed in 2007, have approached the High Court seeking implementation of an agreement made in the same year.

As per the 2007 agreement, Dilip Kumar was to provide accommodation of 1,200 sq ft flat to Ahsan, who is now 82, and 800 sq ft flat to Aslam, who is now 72. The need for agreement arose as the brothers had refused to vacate the bungalow when Dilip Kumar wanted to redevelop it.

History

The rights for the bungalow and the plot were procured by Dilip Kumar in 1953 from one Hasan Chamruddin, who had obtained the plot from Khatau Trust on a 999- year lease. Dilip Kumar was among the first from the Bollywood film industry to give Pali Hill celebrity status. Ahsan and Aslam, as per media reports, have been residing with their brother at the bungalow for six decades.

The deal to redevelop the bungalow was made in 2006. The veteran actor had then approached his brothers to vacate the bungalow to allow a builder start work. The brothers were said to be against it. Ahsan and Aslam then spoke to their sister-in-law Saira Banu who on humanitarian grounds had taken the initiative to accommodate her two brothers-in- law, leading to the agreement in 2007.

Trouble

It is not that Dilip Kumar has reneged on his promise as the project has been delayed due to the legal dispute with the plot owners, Khatau Trust. The agreement could be fulfilled only when the redevelopment project gets completed. Ahsan and Aslam, however, want their brother to fulfil his promise irrespective of the project. In the affidavit, Dilip Kumar has stated that he arranged for their accommodation at Malad and also paid Rs.46 lakh to the developer. But his brothers refused to shift to Malad. In their legal suit, Ahsan and Aslam claimed that the monthly payments has stopped after December 2012 and currently they are facing problems of accommodation as they have nowhere to go. Until now there is nothing on record to show that the brothers are also co-owners of the bungalow. Ahsan and Aslam are not even tenants which would endow them with tenancy rights. They have been described in the affidavit as “gratuitous licensees”-someone allowed to stay without any consideration.

Dilip Kumar also challenged his brothers to produce any document which would show they resided with him on the terms of leave and license. He stated that there was no legal binding to continue with the monthly payments. When contacted on phone, his wife Saira Banu, who was busy due to preparation on the eve of Ramzan, confirmed the move.

Source: India Today



Bhabha property to be used as family home

Add comment   |  July 7, 2014

The iconic Meranghir bungalow at Malabar Hill, acquired by a section of the Godrej family for Rs 372 crore last month, will be used as a family home and won’t be demolished.
It is learnt that the family of Smita Crishna, sister of Jamshyed and cousin of Adi Godrej, plans to refurbish, restore and live in the bungalow. “There is no question of razing it and constructing a high-rise building,” said a source close to the family. The media-shy Smita, married to theatre personality Vijay Crishna, has let it known to friends that she intends to move in with her husband and two daughters. She refused to comment on the ongoing controversy, but those close to her said the family is “pained” at the insinuations and allegations about the future of this property.

The house, once occupied by Homi Bhabha, father of India’s atomic energy programme, is embroiled in a legal battle—atomic energy employees, the state government and the Centre have intervened to convert it into a national monument.

“Smita Crishna was searching for a bungalow property for personal use since a long time,” said people in the know. In fact, she is the only member of the Godrej family to reside in an apartment—Crishnas occupy a penthouse at Grand Paradi building at Kemps Corner. The other Godrejs—Jamshyed and Adi —live in bungalows in south Mumbai. Jamshyed Godrej and cousin Nadir and families live at 40 D, Ridge Road, a ground plus three storey bungalow. Adi Godrej has two sea-facing bungalows at Walkeshwar and Juhu.

It was Jamshyed who took part in the auction last month on behalf of his sister. “Their only intention is to live together after improving the bungalow’s physical condition,” said sources. “The late Jamshed Bhabha’s will need to be respected. So must the desire of the new buyers,” they said. Jamshed, who was brother of Homi Bhabha, died in 2007, and willed the Meranghir estate to the National Centre for Performing Arts (NCPA).

“The Godrejs have been patrons and regular visitors to the NCPA. The Godrej Dance Theatre at the NCPA was donated by the family in the mid-1980s,” said Khushroo Suntook, chairman of NCPA. “This is Godrej money going to NCPA. The opposition to the sale of the bungalow is based on specious grounds,” said a person known to the Godrejs. Suntook added it would be a blow to Mumbai’s cultural scene if the sale were to fall through. “We have kept all our expansion plans on hold.”

Recently, chief minister Prithviraj Chavan said he would ask the Centre to declare the bungalow heritage property. Employees of Bhabha Atomic Research Centre have petitioned the Centre and moved court against the sale, stating the home should be converted into an atomic energy museum. Last month, the prime minister’s office, too, intervened to stop the property from going into private hands. The Department of Atomic Energy approached Bombay high court, saying it planned to acquire the property and convert it into a museum. It feared the bungalow may be pulled down.

Source: Nauzer K Bharucha,TNN



Commercial realty gets a boost as companies gear up to cash in on “Acche Din”

Add comment   |  June 30, 2014

Companies across industries such as IT, consultancy and e-commerce have begun leasing and buying office space in expectations of an economic boom under a stable central government — a development that will rejuvenate the job market.

Top property consultancies in the country such as Cushman & Wakefield, CBRE, JLL, Knight Frank and DTZ say they have mandates from various corporates to lease about 40 million sq ft of space in the top seven cities this year. With firms planning to use more than half this space for expansion, conservative estimates show that they will create around 350,000 jobs in the process.

“There is a sense of urgency among clients today,” said Viral Desai, director – office at Knight Frank. “While not much has changed in their business so far, with a new government in place, they are preparing for growth. No one wants to miss the bus,” he added. Consulting firm KPMG recently leased over 700,000 sq ft of space in Bangalore and there is buzz in the market that its peers EY, Deloitte and PwC are also looking to ramp up. Many of the big Japanese and Korean firms are looking for space, though demand from the IT industry — doing well on the back of a US recovery — is still the biggest.

Accenture, for example, is looking for about one million sq ft of space in Bangalore, according to property consultants. Another big segment vying for space is e-commerce which has seen multiple rounds of consolidation and entry of big global players such as Amazon and eBay over the last one year, with players adding offices and warehouses on hopes of a boom in consumer spending.

Bangalore-based RMZ said it has already leased 3.25 million sq ft in a business park in the city to corporates such as SAP, Morgan Stanley, ANZ and Honeywell in the last few months. While large scale leasing might not be back just yet, the first signs are here.

“Corporates, both Indian and foreign, foresee 2016 as a big year and they are starting to plan for that growth today,” said Bhumesh Gaur, co-chair at India chapter of CoreNet Global, an association of corporate real estate professionals whose members include over 100 India and foreign corporates. A landslide victory for BJP-led National Democratic Alliance in the general elections triggered the new-found excitement in the corporate sector. “In our conversations with companies till a few months ago they were more interested in maintaining status quo as they were uncertain.

There were no large futuristic calls on expansions. That’s changing now,” said Anckur Srivasttava, chairman of GenReal Property Advisers. Srinivasan Gopalan, chief operating officer at Mumbai-based developer Wadhwa Group, said the company’s leasing pipeline has doubled since the election results to nearly 400,000 sq ft now. “Enquiries have gone up substantially,” he said.

The development will boost the job market, which has slowed down due to subdued economic growth that hit production and consumption. According to an ET Intelligence Group analysis of close to 250 companies belonging to the S&P BSE 500 index, employment growth slowed to 3.5% in FY13 from 5.7% in the year before and 6.4% in FY11. There could be an improvement this fiscal with corporates planning to use about 25 million sq ft of office space they plan to take on lease in top cities such as Gurgaon, Bangalore, Pune, Hyderabad and Chennai for expanding their businesses. “There is a lot of positivity in the environment now as challenges of project approvals and capital inadequacies are being done away with.

There is significant expectation of de-congestion of growth from now on. Overall growth expectation for the job market in the next one year is very bullish,” said Rituparna Chakraborty, senior vice president at HR consultancy firm Team-Lease Services. “The challenge for India now is not job creation but finding the right talent and skillset,” he added. Meanwhile, rising demand for office space may lead to supply shortage and high rentals. Over the last few years, as demand for office space declined, as a kneejerk reaction most builders started to defer new office projects and shelved many projects.

According to JLL, across the top seven cities, expected total supply of grade A office space is only about 31 million sq ft in 2014 compared to 44 million sq ft in 2011. “In most cities, enhanced interest from companies has not kept pace with commercial property developers with lack of new launches. The rentals are expected to move up by 5% to 10% this year,” said Ashutosh Limaye, head of research at JLL India. Srivasttava of GenReal Property said he expected office rentals to keep rising constantly over the next five years.

Source: Economic Times, By Sobia Khan, Kailash Babar & Ravi Teja Sharma



Mumbai port proposes real estate plan

Add comment   |  June 30, 2014

Mumbai: State-run Mumbai Port Trust has proposed an ambitious real estate development plan for its 1,800 acres of land as a way to revive the fortunes of the 142-year-old ailing port.
Speaking at the 142nd foundation day of Mumbai Port, shipping minister Nitin Gadkari said that a committee has been set up under Rani Jadhav, a former chairperson of the Mumbai Port Trust, to suggest ways to monetize its nearly 1,800 acres.

“We have asked the panel to submit its report in next three months. Following that, we will be appointing international property consultants,” Gadkari said, adding that the land will not be handed over to private builders. The estimated value of port trust’s estate is `75,000 crore, the minister said.

Upon receiving the Jadhav committee report, the government will float an international bidding and award the development project on a BOT (build, operate, transfer) basis, he said.
Mumbai port—once considered the premier harbour of the country—has nearly one-third of the total employees across all 13 major ports of India, but handles only 10% of total traffic of these ports.

In contrast, the Jawaharlal Nehru Port Trust, or JNPT—a port that was commissioned on 26 May 1989 to decongest Mumbai port near Nhava Sheva island— now handles nearly 55% of the total container traffic.

Mumbai port is also the largest real estate owner in Mumbai, but various approvals and controversies have prevented any monetizing the land. The port earns only about `200 crore a year from the land.
Under the proposed real estate development plan, Gadkari said, the port has plans to build cruise terminals, new waterway projects, a 500-room floating hotel to be anchored off the Raj Bhavan coast, three-four floating restaurants, a ferris wheel on the lines of the London Eye, and marinas and jetties to promote water transport in Mumbai.

“A lot of land on the eastern waterfront is used for low-value economic activities like warehousing among others. But if it is commercially exploited, it can attract lot of high end real estate development such as malls, office complexes, residential apartments,” said Anuj Puri, chairman and country head property consultancy Jones Lang LaSalle India.
Puri, however, added that the government must offer a long-term lease on the plots of land to attract serious bidders.

Not everyone is supporting the plan.

“The real question is whether government wants to use land for offering open spaces and green cover to the city or exploit commercially for benefit of few, and we will come to know about that after the committee announced by the minister submits its report,” said Debi Goenka, an environmental activist and trustee of Conservation Action Trust.

Source: Live Mint



FIR against Mumbai real estate tycoon

Add comment   |  June 30, 2014

The Bombay High Court Wednesday ordered the Mumbai police Crime Branch to file an FIR against four persons, including Hiranandani Developers co-founder and managing director Niranjan Hiranandani and two police officers, in a complaint filed by a 28-year-old woman from Powai.

The woman has accused Hiranadani of getting residents of the Jai Bhim Nagar in Powai forcibly evicted by slum lords and destroying evidence of a shrine damaged by the men who tried to evict the slum dwellers.

She has also pressed charges of criminal intimidation and criminal conspiracy against the real estate baron.

The woman has also made allegations of rape against two police officers attached to the Powai police station.

“The incident took place on June 14. The police officers raped the petitioner in the morning but when she went to the police station, the police officers did not register her complaint. They also refused to carry out medical examination,” alleged the petitioner’s lawyer Gunratan Sadavarte.

“The court has directed the crime branch to register the FIR against Sanjay Sansare, Prakash Wadkar, senior police inspector Y S Jadhav and Niranjan Hiranandani,” Sadavarte said.

Hiranandani was not available for comment.

Source: Indian Express



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