Thursday, January 18, 2007

Greater Bangalore is now a reality

Times Of India
What is the good news for the denizens who have been embraced into Greater Bangalore? That there is no increase in any taxes in the near future.
At least that’s the first indication government officials are sending out. Major issues that the citizenry are worried about — betterment charges, levying new cesses — have still not been spelt out. “Give us a few more weeks, everything will be spelt out,” say officials. The administrative challenges still remain — how many offices, staff strength, uniform taxation system and merger. The status quo — existing offices will continue at the CMCs, TMC and village panchayats. Until notified further, these citizens have to continue paying taxes, cesses and get their khata from the existing offices.
Here’s what is being promised as well — that from every residence, there will be an office within 3-4 km, where basic administration work for the citizens can be handled. To start with, the existing 3 zones will escalate to 8 zones and each zone will have 4 offices.
Officials say that it’s only from the next financial year that all the citizens coming under the jurisdiction of 741 sq km of Greater Bangalore, will be treated under a new banner, with a uniform adminsitration for the entire jurisdiction.

Boundary for Greater Bangalore

In the north, the boundary starts from the junction of Govindapura and Vaderapura. The boundary is co-terminus with the northern boundary of Vaderapura running in eastern direction. The boundary again touches the junction of Kattigenahalli, Kogilu and Bellahalli. The boundary further covers the northern and eastern limits of Belahalli running towards south, along the eastern limits of villages.
The boundary runs southwards encompassing Medahalli (of K R Puram CMC). The boundary traverses westwards along the southern boundary of villages Basapura, Begur, Yelenahalli, Kambathenahalli encompassing the village Basavanapura, Gottigere. From the junction of Nagadevanahalli (of Kengeri CMC) and Sonnenahalli, the boundary moves towards the north along the boundary and encompasses villages — Sonnenahalli, Ullalu, Herohalli, Siddelehalli.
From the junction of Lakshmipura, Singapura (of Byatarayanapura CMC) Chikkabettahalli, the boundary runs towards the north, covers villages Chikkabettahalli, Doddabettahalli, Atturu (of Yelahanka CMC), Ananthapura and Harohalli villages.

Registration of properties

The final notification on Greater Bangalore has come at a time when the registration of properties is in a limbo. While the CMC/TMC (which is now dissolved) and 111 villages of various grama panchayats, which have now come under the aegis of Bruhat Bangalore Mahanagara Palike (BBMP), will have to wait as the state has not issued any clear guidelines on the status of properties that are now part of Bangalore agglomerate. According to official sources, it will take a while for the BMP to update property records in erstwhile CMC/TMC areas and issue khata under the BBMP banner. Until then, property registrations in these areas will continue to be in a mess.
Currently, only properties in BMP jurisdiction with the Palike issued khata, those allotted by BDA and layouts approved by BDA, properties allotted by Karnataka Housing Board, KIADB and KSSIDC are being registered.
“Once the urban local bodies come under the BBMP, khatas issued by the CMC/TMC/gram panchayat will have to be updated by the BBMP officials within one year. Only then the properties can be registered,” officials of the stamps and registration department explained to The Times of India.
Properties in CMC/TMC areas, which have khatas will be valid till the next financial year. However, revenue properties will be banned from registration as they are agricultural non-converted lands.
Meanwhile, the property value in the city outskirts has seen a 10 to 15 per cent increase ever since the preliminary notification of Greater Bangalore. Property developers too are holding back their assets till the government comes up with a clear policy on the issue. “We have identified land in CMC areas and finalised the deal. But we do not want to register as there will be administrative wrangles later. We have paid the owner and will do the transaction when Greater Bangalore takes shape,” said a few developers.

CM plans out elections

With Greater Bangalore being notified, the state is looking at the next step: setting up an elected body to govern it. CM H D Kumaraswamy on Wednesday said: “As soon as reservation and delimitation of constituencies are done, we will take up the elections.”

Kumaraswamy firm on Bidadi township

The Hindu

Says farmers will get a fair compensation

# 9,000 acres of land to be acquired
# 32 bidders offer to develop the township

BANGALORE: The State Government will hold discussion with farmers and provide a good compensation package for those who stand to lose land for the proposed satellite township in Bidadi, 35 km from Bangalore, Chief Minister H.D. Kumaraswamy has said.

The Government had decided to acquire over 9,000-acre land in several villages to establish the township at Bidadi in Ramanagaram Assembly Constituency, which is represented by Chief Minister himself.

Tier-2 Karnataka cities get funds

Times Of India
Bangalore: If the IT boom has to reach tier-II cities, isn’t it best to follow the Bangalore example? This is what chief minister H D Kumaraswamy is aiming to do.
Identifying the International Technology Park Bangalore (ITPB), set up through a tie-up with Singapore in 1994 as the root of Bangalore’s success, Kumaraswamy has sought to set up similar parks in tier-II cities. “I have spoken to a Singapore government representative for tie-ups and public-private partnerships for technology parks and infrastructure in tier-II cities like Belgaum, Mysore and Mangalore. I have also asked for the setting up of a Singapore consulate in Bangalore,’’ the CM said on Wednesday.

Discussions with the Singapore representative is part of the CM’s one-onone meetings with foreign dignitaries under the CII Partnership Summit. Other than Singapore, Kumaraswamy met representatives of Kuwait and South Korea to discuss bilateral trade and investment.
The CM said he has requested Kuwaiti assistance and investment in oil exploration and processing along the state’s coastal areas. “The Kuwaiti representative was very forthcoming and even told me there were more South Indians in Kuwait than Kuwaitis!’’ he added.

The South Koreans are looking at mutual trade and investment in the fertiliser and steel sector. Kumaraswamy said there’s a proposal for a steel mill to be set up off Seoul in South Korea.
Bidadi township soon
The first of the CM’s dream satellite townships appears set to take off: 32 major players have put in bids to develop the Bidadi township. The bids are for construction of residences, development of industries, shopping malls, etc. The aim is to decongest Bangalore.

“We are processing the bids. Some companies have also expressed interest in another township at Nandagudi in Hoskote,’’ the CM said.
There is, however, opposition from farmers who fear the compensation paid to them will not be adequate. Kumaraswamy said he will try to resolve these doubts: “We are setting up the township 30 km out of Bangalore keeping the land rates in mind. But farmers in Bidadi are those who voted for me, I will protect their interests more than that of capitalist investors.’

High realty rates edge out average Mumbaikar

Times Of India

Mumbai: The overheated property market has virtually edged out the average Mumbaikar from his own city. And when a leading housing industry expert like Deepak Parekh of HDFC admits there is no scope for the common man to buy a flat in Mumbai, it reinforces the sentiment that skyscrapers, redeveloped societies and newly-constructed complexes, even in the suburbs, are beyond the reach of most salaried people. “It is unfortunate that the common man has to go out of the city in search of accommodation. There is little hope for him to purchase a house in Mumbai,’’ says Parekh whose father pioneered the concept of housing finance.

The question then is, who are these people buying homes across Mumbai today? What is their background, their profile?
According to the HDFC head honcho, they are mainly businessmen, professionals or successful Indian managers who may have made money on stints abroad and are now coming back on fat salaries. “Then there are NRIs and retired corporate heads buying apartments in south Mumbai,’’ says Parekh. The average salaried man, according to him, can only think of places like Borivli and beyond.

Vice-president (private banking department) ABN Amro bank, Deepak Rattan, fits the profile of an average flat-purchaser these days. He has finally settled for a three-bedroom pad in a Worli highrise for Rs 2.1 crore. The backside of his flat faces a slum, but Rattan says he hardly has a choice. “Gone are the days when a Rs 2-crore budget was considered huge in the heart of the city. Today, brokers tell you to try your luck in the suburbs,’’ he laughs.

Rattan’s comment echoes the experts who criticise the state government for its failure to provide decent low-cost, public housing and for promoting what US-based urban planner Edward Soja recently described as ‘Gated Communities’ where the well-heeled live behind iron gates.

Ketan Vadalia, a property developer in the eastern suburbs, says 70% of the buyers in locations like Ghatkopar and Mulund are traders from the metals and textiles market. The other 30% are salaried people, mainly from IT companies, drawing a minimum salary of Rs 1.5 lakh.
“The minimum budget for an apartment in Ghatkopar starts at Rs 50 lakh for a twobedroom pad. It can go up to Rs 1.25 crore for a larger flat,’’ says Vadalia.

“These buyers are people who have been in a family business for a long time and over the years they have had enough resources to buy a flat worth Rs 50 lakh in areas like Ghatkopar,’’ adds Vadalia. Interestingly, the communities with the strongest purchasing power are Gujaratis and Marwaris, who prefer areas like Santa Cruz, Vile Parle, Malad, Kandivli and Borivli in the western suburbs and Ghatkopar and Mulund on the eastern side.

Builder Nayan Bheda of the Neptune Group, which is setting up residential projects in Bhandup, points out that 90% of his almost 600 flat buyers are from the service sector, mainly from MNCs and corporate houses. The rest are Gujarati traders.

“Our customers fall under the higher middle income group. Flats in our project are pegged between Rs 50 lakh to Rs 80 lakh each, depending on the size. In the second phase, each will cost over Rs one crore,’’ says Bheda. Barely two years ago, Bhandup was one of the most affordable destinations to stay in. Prices in 2005 were below Rs 2,500 a sq ft; today, they have almost doubled.

It’s the same story in the western suburbs. Managing director and CEO of Mahindra Gesco, Pranav Datta, says his clients include doctors, architects, businessmen and senior professionals, who buy flats upwards of Rs 1.25 crore in places like Goregaon. “The salaried-class who can afford such flats earn Rs 30-Rs 40 lakh a year,’’ adds Datta.

As for central Mumbai, where glitzy residential towers are replacing defunct textile mills, the aspirational Mumbaikar’s dreams of purchasing a flat at the rate of Rs 4,000 per sq ft disappeared more than two years ago. Prices here have shot up by 300% since then.

Jaidev Mody of Piramals, which is setting up the Ashok Garden project at Parel comprising four towers, says 70% of the buyers are professionals from financial services companies, banks and large corporations, general managers, presidents and MDs.

Even rates in a congested and downmarket area like Khetwadi (where many redevelopment projects are coming up) are in the range of Rs 9,000 to 12,000 per sq ft. In nearby Girgaum, a two-bedroom flat would cost Rs one crore and double the amount for a three-bedroom flat.
Haresh Mehta, one of south Mumbai’s largest property redevelopers of dilapidated chawls and buildings, says that 80% of his clients are diamond merchants and traders from the metal market. “They have a lot of purchasing power,’’ he adds. Market sources reveal that customers buying flats in redeveloped cessed properties in south Mumbai have to pay as much as 40% of the amount in hard cash.

Wednesday, January 17, 2007

Morgan fund invests $152m in Oberoi realty firm

Source - Hindustan Times
In one of the largest FDI deals in Indian realty, Morgan Stanley’s Special Situation Real Estate Fund has invested $152 million in Mumbai-based developer Oberoi Constructions.

While officially there was no statement on the equity size picked up by the Morgan Stanley Fund save that it was a ‘minority stake’, it is reliably learnt that it is a 10.75% stake.

Anand Madduri, the Hong Kong-based executive director of Morgan Stanley’s Asia-Pacific Property portfolio, claimed the Oberoi deal was the single largest foreign direct investment (FDI) in India’s real estate sector so far. Oberoi Constructions is a fast-growing firm in the financial capital, and has no connection with the hotel group of the same name.

"The closest is Farallon Capital’s investments in Indiabulls at around $143 million. However, these were in several tranches spread over 24 to 30 months," Madduri added.

US-based hedge fund Farallon Capital has taken a 60% stake in Indiabulls Property which has in turn picked up two NTC textile mills in Mumbai in separate public auctions.

The Morgan Stanley realty investment of $152mn for a 10.75% stake implies that Oberoi Constructions has derived a valuation of a little over $1.4 billion.

Since Oberoi Constructions has a turnover of a little over Rs 600 crore per year, the high valuation by international investors is largely a derivative of the high asset value given to the land banks built up by the company.

Four major property projects are being developed by the company - 8 million square feet in Goregaon in a mall and a residential project on what used to be Novartis land, two million sq feet each at Jogeshwari’s Fantasy Land and Mulund’s Glaxo SmithKline (GSK) land and an additional 8 lakh sq ft at Andheri’s Excel Industries land.

"All these projects are FDI-compliant, and we have taken care to buy property titles that are FDI compliant," Vikas Oberoi, the company’s chief promoter, told HT.

He clarified that the joint venture with ICICI Venture at Worli on what used to be Glaxo’s land, is not FDI compliant, and was part of a separate SPV (special purpose vehicle).

Madduri said there were no plans to ramp up Morgan Stanley’s investments in Oberoi Constructions in the future. "The company will continue to acquire land, and these can be leveraged for future funding," he added.

Tuesday, January 16, 2007

Bachchan family plot thickens

Mid-day reports that 674 sq meter plot in Juhu was gifted for around 3.3crs with around 6L paid towards stamp duty. The rate works out to be around 5000 rupees per sq/ft in Juhu which is the rate in Kandivili. I guess for Mr Bachchan and others in Mumbai "Black" is green. The biggest surprise to every at the Registrars office was the absence of Amar Singh. Rumour has it that he is going to gift a plot measuring 6000 meters to Mr Bachchan. Ofcourse the plot will be in UP.

This has been a good week for superstar Amitabh Bachchan.

On Sunday, his son Abhishek got engaged to actress Aishwarya Rai and now his younger brother Ajitabh has gifted him a 674 square metre plot in Juhu worth around Rs 3,30,21,000.

Yesterday, the brothers signed the gift deed of plot number 15 of Vitthal Nagar Co-operative Housing Society at the office of the joint sub-registrar at Bandra Kurla Complex.

The brothers arrived at the office around 5.30 pm and started the procedure of assessment and paying the stamp duty. Within no time, they left the premises — smiling and shaking hands with the registrar office employees.
“We found all the documents okay as required and a stamp duty of Rs 6,60,450 was paid by Amitji according to the market valuation,” confirmed Udayraj Chavan, the joint sub-registrar of Andheri 2 (class II). The stamp duty was paid under Chavan’s guidance.

MiD DAY has acquired the details of the gift deed that was executed on Sunday.

According to the gift deed, on November 29, 1975, the previous holder of the said property, Naranbhai Motibhai Patel, had assigned and transferred all his rights, title of the property to Ajitabh for an amount of Rs 1,36,760.

The deed copy further mentions that the donee is older natural brother of the donor. It also says the donor is desirous of gifting all his rights, title and interest in respect of the said property.

According to a source, “Ajitabh decided to confirm the gift deed on Makar Sankranti when his nephew got engaged to Aishwarya.”

Sources added that a production facility house and an office for Abhishek and Aishwarya are likely to be constructed there after the marriage. It could also serve as the new corporate address of ABC Production Limited, which the Bachchans are planning to revive.

Rumour has it that Abhishek has acquired a property at Carter Road, Bandra, where he and Aishwarya may live after marriage. They have been regularly visiting the four-storeyed bungalow Naivedya (plot no 85).

This bungalow, owned by builder Shobit Rajan and designed by architect Pornitnath, has eight rooms, a terrace lawn, 1,000 sq ft washroom and a small swimming pool at the roof top. According to an estate consultant, “This property is worth Rs 1,14,400 per sq ft. The bungalow would cost them at least Rs 9 crore.”

Citi Property to invest $500mn in Indian realty

Business Standard
According to David Schaefer, managing director and head-Asia pacific, CPI, the company is looking at investing in the hospitality and residential sectors in addition to creating office space in tech-parks. "The funds being brought to India are being utilised for creating a quality land bank in major cities and also to invest in specific projects undertaken by builders," he added.

Since the country is facing a shortage of quality hotel rooms in major cities, the company is planning to bring in funds to build quality assets which thereby bring in global hotel brands.

"Of the committed $500 million to India this year, nearly 40% is being reserved towards the hospitality sector to build hotels and service apartments in tier II information technology cities," he said.

The company since May 2005 has invested $250 million in building real estate assets in residential and hospitality sectors in Chennai, Bangalore, Pune, Delhi and Hyderabad.

Nitesh Estates partners Citigroup for luxury hotel

Bangalore-based Nitesh Estates is partnering New York-based Citigroup Property Investors to develop a luxury hotel for $100 million. For the hotel management, the company is in talks with three of the top global hotel chains.

Making an announcment today, Nitesh Shetty, managing director, Nitesh Estates said: "Citigroup Property Investors has partnered us to build the hotel, a 250-room luxury hotel set to come up on Residency Road in Bangalore."

"The project is an integrated one having high-end retail stores on the ground floor and a health spa on top of the building. We will finalise the management chain in 3-4 weeks," he added.

The hotel is being designed by an architects firm based in California and is to be operational in 30 months.

David Schaefer, managing director Asia Pacific, Citigroup Property Investors said, "We believe the real estate sector in Bangalore has a tremendous growth potential. We have identified Nitish Estates as one of the fastest growing property developers in India."

Mahindra plans 2,500-cr heavy vehicle plant near Pune


MUMBAI: Mahindra & Mahindra has committed to an investment of Rs 2,500 crore near Pune to set up a greenfield facility. The new facility, M&M’s fourth in the state, will manufacture commercial trucks through its joint venture with US-based International Truck and Engine corp (ITEC).

The plant will manufacture 50,000 medium and heavy commercial vehicles for the Mahindra-International JV and the remaining capacity will be utilised to manufacture new generation of M&M vehicles, mainly those used for commercial purposes. Spread over 700 acres, the facility will begin production in two years and will have an initial capacity of 2,50,000 vehicles which can be increased in future.

The company refused to comment on what other M&M vehicles will be manufactured in the new facility but Anand Mahindra, vice-chairman and managing director of M&M said, “With the economy growing at 9% we have no worries about what to do with unutilised capacities.“

Pawan Goenka, president-automotive sector, M&M added, “Between this project and our new facility with Renault, we are making sure we have enough capacity for the next 10-15 years for all our future product lines.” M&M signed a 51: 49 joint venture agreement with ITEC in 2006 and has been scouting around for a suitable location for its facility.

The new plant will come under a new company in which M&M will hold a majority stake. Of the Rs 2,500 crore investment which will be made over the next 5-6 years, Mahindra-International will put in Rs 400 crore and the rest will be financed by M&M through internal accruals and debt.

The joint venture will produce medium and heavy commercial buses and trucks which will be designed and developed by the two companies based on ITEC’s existing product line. The vehicles will be distributed through M&M’s distribution network and will also be exported through its own as well as ITEC’s and M&M’s overseas networks.

While the JV also includes M&M’s existing range of light commercial vehicles, which are currently being manufactured in Zaheerabad and marketed under the Mahindra International brand name. As per the terms of their arrangement joint venture company will manufacture commercial vehicles with over 3.5 tonne capacity which leaves M&M free to manufacture smaller vehicles including those in the very lucrative 1-tonne segment.

With M&M’s latest investment announcements the Maharashtra state has crossed the Rs 10,000-crore mark in auto investments with companies like Tata Motors-Fiat, General Motors, Mico, Volkswagen and Daimler Chrysler choosing the state for future expansions.

Middle class moves out of metros

Press Trust of India

Metros New Delhi, January 16: Italian marble floors, bar, modular kitchen, a state-of-the-art bathroom and a swimming pool in the backyard: luxury has just got redefined, and that too for the middle class as far as housing is concerned.

With real estate prices in the NCR region soaring, developers are looking at greener pastures in tier II and tier III cities: in fact, the boom has just begun in Kundli, Sonepat, Panipat in Haryana and Rudrapur in Uttaranchal, where luxury apartments, affordable even by the middle class, are fast coming up.

All roads today lead to tier II and tier III cities that are around two to three hours drive from Delhi where these luxury apartments are coming up," says Kashif N Usmani of Taneja Developers and Infrastructure Ltd (TDI).

"The last decade saw the transition of sleepy towns like Gurgaon, Noida and Faridabad into enviable addresses. But today, these tier I towns, as they are called, are all saturated and far beyond the means of the middle class," he says.

"The focus is now on other closer-to-Delhi cities of Haryana as the development policies there are very conducive for real estate development. For around Rs 20 lakh, a middle class person can get a luxury apartment," says Sunil Anand of Anand Properties & Infrastructure Ltd.

The catch is that these apartments come with a luxury tag.

A 2-3-bedroom apartment comes with attached state of the art baths, modular kitchens and wooden flooring in the master bedroom. "If this is not enough to lure the buyer, there is also a fountain at the entrance," says Anand.

ASSOCHAM against land grabbing, says new chief

New Delhi, Jan 16: Newly-elected president of industry body Assocham and Videocon Chief Venugopal Dhoot on Tuesday said he was against "land grabbing" in the name of SEZs and the chamber would take farmers on board while pursuing industrialisation.

"Assocham is against land grabbing. We are for farmers and when we undertake industrialisation we would like to convince them that it is for their benefit," Dhoot told a news agency in his first interview before assuming office.

With controversies surrounding land acquisition for SEZs and other industrial projects in many parts of the country, Dhoot reiterated there was "no sense in making SEZs by compromising the interest of farmers".

His comments come in the backdrop of protests against Indonesia's Salim Group's Special Economic Zone at Nandigram in West Bengal, Tata Motors' car project at Singur and against SEZs in Haryana, Uttar Pradesh and Maharashtra among others.

On the issue of rehabilitation policy proposed by the Prime Minister, he said the chamber would support it.

Asked if Assocham was ready to speak to politicians who were agitating against acquisition of farm land for industrial purpose, Dhoot said: "As a chamber we do not believe in talking to individuals. If any issue has to be taken up then we will speak to governments, including chief ministers."

Dhoot, whose group has been active in global takeovers, said government should provide support and incentives to parent Indian companies that are investing overseas.

Reliance Retail splurges Rs 1,000 crore on real estate acquisition


NEW DELHI: Putting its mega retail plans on full throttle, Mukesh Ambani-promoted Reliance Retail has spent close to Rs 1,000 crore in two days acquiring commercial properties in the national capital.

According to sources, Reliance Retail on Tuesday acquired a property at Vikaspuri in West Delhi valued at around Rs 280 crore.

Yesterday, it had acquired seven properties valued at around Rs 700 crore. Of these, six were at Dwarka near the Indira Gandhi International Airport and one at Rohini in West Delhi.

"The overall space size of the acquisition is over five lakh square feet," the sources said, adding the company would be taking part in another bid tomorrow for two properties at Vasant Kunj in South Delhi.

These two properties at Vasant Kunj are together expected to be valued around Rs 25 crore, the sources added.

When contacted, company officials declined to comment.

The properties acquired by Reliance Retail were a part of auctions by the Delhi Development Authority, through which it had collected about Rs 900 crore against a reserve price of about Rs 400 crore.

Yesterday, the DDA had auctioned 16 commercial plots totalling around 40,000 square metres. Mr Mukesh Ambani had last year unveiled mega plans for expansion in the retail space entailing an investment of Rs 25,000 crore in the next few years. - PTI

Monday, January 15, 2007

Landmark to kick off Kolkata entry with 3 big store

KOLKATA: Within days of snapping its ties with the Emami group, book-and-gift retail chain Landmark is busy chalking out plans for its Kolkata foray, whereby it proposes to open at least three large size retail outlets and a slew of smaller format stores across the city.

Talking to ET, Landmark's chief operating officer Himanshu Chakrawarti said: "We are looking to launch three stores, each spread over some 25,000 - 30,000 square feet. Total investment for these three stores is estimated to be about Rs 15 crore."

The Chennai-based retail chain is eyeing prime properties in and around Camac Street - Theatre Road area, Salt Lake as well as in south Kolkata. "To begin with, we plan to hit high-street areas with large format stores.

Subsequently, we will focus on opening stores in malls," Mr Chakrawarti added. He, however, refused to identify the properties citing confidentiality reasons. Realty sources said the company has identified prime properties on Camac Street, Lansdowne Road as well as on Hazra Road, but a final decision is yet to be taken. The properties will be taken on lease.

Till recently, Landmark used to operate in Kolkata through a joint venture with FMCG major Emami. With Trent acquiring a controlling 76% stake in Landmark as well as its subsidiaries from its founder Hemu Ramaiah last year, ties with the Emami group was severed last month.

Mumbai/Pune : RIL deals directly with farmers for SEZ land in state

PUNE/MUMBAI: In a major shift in strategy on special economic zones (SEZs) in Maharashtra, the Mukesh Ambani-led Reliance group has decided to buy land outright from farmers, instead of involving any government agency to acquire it.

Reasons for the move are many. The delay in the passage of the Maharashtra State SEZ and Designated Areas Act, concerns raised by Congress president Sonia Gandhi on land acquisition and — most importantly — widespread agitation at Singur and Nandigram over forced acquisition of agricultural land by the West Bengal government have resulted in the state government going slow on the plans.

“We have now decided to purchase land directly from farmers,” confirmed the RIL spokesperson for Maharashtra SEZs. He, however, refused to discuss the price being offered but said, “It’s much more than the prevailing market rates. Farmers are now happy and queuing up to offer their land,” he claimed.

Sources in the state government indicated that the company changed its tack sometime in December. “So far, they have bought close to 700 hectares,” a senior official told ET.

According to a revenue department official, nearly 80 purchase deeds have been registered in the last few days in Raigad district. The company has paid a stamp duty of around Rs 60 lakh on these registrations. This is an additional cost for the company, which is understood to have paid farmers three times the government-listed rates on direct purchase of land.

As per the earlier plan, the Maharashtra government was to acquire land spread in 45 villages for Reliance SEZs at government rates, which comes to a couple of lakhs per hectare, against the market rate ranging Rs 40-Rs 75 lakh per hectare, depending on the location. The government’s role as a land acquirer for Reliance had come in for sharp criticism.

However, it’s not yet clear whether the company wants to follow the direct buying route or would involve the government at a later stage.

The group is planning two mega SEZs in Mumbai —Navi Mumbai SEZ and Maha Mumbai SEZ. It has already taken over 450 hectares on first lease from Cidco for its Navi Mumbai project. The lease deed was registered prior to March 31, 2006, and a stamp duty waiver was given to the company.

However, last year, the company had decided to drop the acquisition route — where a state agency acquires land and then transfers it on first lease to the developer. It has, instead, started buying land directly from farmers.

Reliance was, in fact, looking at starting the formalities of leasing over 10,000 hectares once the Maharashtra State SEZ and Designated Areas Act was passed. The legislation would enable developers to get a stamp duty waiver if they directly acquire or lease land. A stamp duty waiver was available between October 2005 and March 2006.

The state government, however, did not extend the stamp duty waiver beyond March 2006. It was reckoned that the waiver would be automatic, once the SEZ legislation is passed by the Assembly and notified by the state government. This also slowed down the SEZ development.

Now, passage of the state SEZ legislation could be delayed till the Centre formulates a rehabilitation package for displaced farmers. Last year, Congress president Sonia Gandhi made it clear that agriculture land ought not be used for these zones and the dominant view inside the party is that the policy should not be construed as anti-farmer.

Around 72 SEZ proposals have so far been approved in Maharashtra, but their fate is unknown due to lack of clarity on land acquisition norms.

Some of the big-ticket SEZ projects lined up for Maharashtra include Bajaj Auto in Aurangabad, Bharat Forge (Pune), Videocon (Pune and Aurangabad), Shapoorji Pallonji (Nagpur), Indiabulls (Raigad), Wipro (Pune), Syntel International (Pune), K Raheja Universal (Navi Mumbai), Hiranandani Builders (Powai) and City Parks (Pune). At present, developers which register their deeds will have to pay stamp duty. With Reliance setting a precedent, the cost of land acquisition would go up for others.

Chennai calling

Economic Times
A spurt in commercial activity — largely led by the automobile industry and IT & ITeS sector — is pushing the demand for real estate projects in the southern capital
Raja Awasthi & V Nagarajan

CATCH the action. Defying political upheavals and though not marketed globally like its neighbours, Chennai has emerged as the favourite destination of corporates and MNCs. In fact, it has emerged as the most attractive city for offshoring services, according to a survey by A T Kearney, global management consultancy firm. The city was benchmarked on three major categories like financial costs, availability of skilled manpower and business environment.
The city is home to major automobile companies. Also, a world-class IT corridor is taking shape on the Old Mahabalipuram Road, a hardware corridor is on its way in the western part, while the northern part is gearing up for port expansion to house warehousing units. Auto major BMW is the latest entrant and is setting up an assembly unit in Mahindra Industrial Park. Industrial estates like Ambattur and Guindy are slowly giving way to IT units.
On the western side, a number of electronic hardware companies are setting up operations. The SIPCOT’s industrial park with an area of 2,469 acres has received an overwhelming response from varied sectors. Investment valued at Rs 4,700 crore is likely to flow into the area, according to reports. Realising the impending potential, land prices are already up 25-35%. Land prices on the arterial road are commanding a price of Rs 40-60 lakh per acre.
Interestingly, flexible FSI norms for IT sector development and lucrative deals have lured residential property developers to switch over to commercial property development. This has resulted in a sudden setback in terms of supply of residential units. Soaring land prices in the central business districts have pushed apartment prices to Rs 4,500-10,000 per sq ft in the prime locations.
In the absence of any largescale housing complex, Chennai is heading towards housing shortage which is one reason for the influx of property developers from Bangalore, Hyderabad, Delhi and Mumbai. On a conservative estimate, 4,000 apartments would be immediately needed as 40,000 people are going to be employed in Siruseri alone, say realtors. The only consolation is that 15 township projects are under various stages of planning, though concrete action plan is yet to see the light of the day.
Chennai’s local developers are launching medium scale projects which are being instantly absorbed by the market due to a strong demand. Akshaya Homes took a bold move to launch a residential project 25 km away from Tidel, which was a sell-out and three projects launched on the IT corridor in Sholinganallur and Perungudi have been entirely sold out. Bangalore’s Puravankara and Mantri are due to launch their projects, whereas others like Brigade, Sobha, Prestige, Salarpuria, Renaissance and Delhi builders like DLF, Unitech and Aerens are eyeing land parcels for projects. In fact, Unitech has acquired more than 2,000 acres in three different locations in Chennai.
Says Devinder Gupta, MD, DGS Realtors Ltd: “There’s a lot of job opportunities in Chennai — with the booming auto industry there. We are looking at new opportunities and will announce our plans soon.”
The demand for office space has been estimated in the region of 5-6 million sq ft this year. If the past absorption is any indication, then 90% of the commercial space has been absorbed by the IT and ITeS sector. Capital values for office range from Rs 2,900 to Rs 4,900 per sq ft. Rental levels are up by 15% in the past one year due to hike in interest rates.
About 10-15 mall-cum-multiplex projects are due to be developed as part of integrated township development in and around the city. These will add about 6 million sq ft of organised retail space in the city,says Santhosh Kumar CEO, property consultants Trammell Crow Meghraj.

Massive Flow of funds could lead to speculation

Economic Times
IT SEEMS the RBI has informed the finance ministry of the whopping growth in the real estate sector, which has seen a 400% rise in foreign direct investment (FDI). In fact, the central bank had expressed concern over the sudden rise in FDI inflow into this sector and the impact it could have on the prices in domestic market.
The inflow into the sector went up to $703.3 million in January-October, 2006 from $135.35 million in January-October, 2005. RBI, which has been consistently cautious over FDI flow into realty sector, has warned that such massive flows could lead to speculation and over-heating of the real estate sector. The total FDI inflow into the country in January-October, 2006 stood at $7.9 billion, up 143% from $3.2 billion in the same period in 2005. RBI had earlier held that pre-IPO and follow-on public offers of real estate companies should be treated as FDI and governed by the FDI guidelines. It had argued that the Foreign Exchange Management Act (Fema) needed to be amended if FDI in real estate had to be given the status of portfolio investment.
With more than 35 big-ticket foreign funds having checked in, more than $ bn additional FDI is knocking the doors of the real estate sector. According to industry estimates, nearly 90-100 real estate funds have already parked themselves in the country scouting for investment opportunities.
Merrill Lynch forecasts that the realty sector will grow from $12 billion in 2005 to $90 billion by 2015. As of now, some of the prominent global funds that are aggressively investing in the sector include Carlyle, Blackstone, Morgan Stanley, Trikona and Warbus Pincus. Experts say they are sitting on a total corpus of $12 - 15 billion.

We’re bullish on small cities’

Economic Times

We’re bullish on small cities’
AJOY VEER KAPOOR is the managing director of Saffron Asset Advisors. This company was established in May ’06 to manage investments for Eredene Capital, a $100-million fund listed on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE). On December 6, ’06, Saffron listed Yatra Capital on Euronext, Amsterdam with a market capitalisation of e100 million (around $133 million). Currently, Saffron manages two internationally listed companies aggregating primary investment of $230 million, focused on the Indian real estate sector. Ajoy is an entrepreneur and banker, with a career spanning over 25 years and having global exposure to real estate. His previous assignments have been with HSBC and Standard Chartered Bank. AMIT BHANDARI spoke to him about his views on the domestic real estate sector. Here are excerpts from the interview:

What part of the funds under your management have been deployed already?
Saffron Asset Advisors currently manages two funds, with a total value of $100 million and $145 million. These are listed on the LSE and Euronext. Yatra, which is listed on Euronext, has the rights to take up the capital to $550 million from the current investors. Yatra has been listed only four weeks ago.
Eredene is a $100-million fund listed on the LSE. It is about six months old and 29% of the total funds have already been invested in three projects — one in Nagpur and two in Indore. The Nagpur project is a mall, while in Indore, we have a township and a mixed development. We expect to invest 60-65% of the total funds over the next two months. We are currently looking at projects in Pune, Kolkata, Trivandrum, Kochi and Dehradun.

Your current investments are all in small cities. Many of the options being evaluated by you are non-metro cities. Is this a coincidence?
Our first two funds — Eredene and Yatra — focus on tier-2 and tier-3 cities. The next fund we launch will look at tier-1 cities. We are very bullish on the mid to long-term prospects of these cities — a timeframe of 5-10 years. We are looking at launching another fund — Yatra 2, targeted at tier-1 cities — on Euronext, once Yatra is substantially invested. We could reach that stage in the next six months.
Two factors work in favour of small cities. First, post 9/11, many companies are diversifying their geographical base. Second, a big problem faced by IT majors is attrition, which can be 20-40% in big cities. A tier-2 or tier-3 city with good physical and educational infrastructure can tackle both these issues.

Do you see a bubble in the Indian real estate sector, given the way prices have moved up over the past few years?
How you read the market depends upon your objectives. Speaking for myself and for Saffron, I feel the mid to long-term story is intact. However, corrections in some sectors and some markets cannot be ruled out. One also needs to consider factors like credit squeeze by the Reserve Bank of India, pressure on the rupee, inflation and the possible impact of new measures which may be introduced in the budget. We are not worried because we are in it for the long term. There is a shortage of housing, and corporate profits are growing at 15-30%, which will lead to more recruitment and more demand. So, we are not worried.

Which are the best markets in India today?

We feel real estate is not the driver, rather it is driven by industry. Therefore, growth of various markets will depend upon the growth engines. In my opinion, tier-2 and tier-3 cities in Maharashtra present a good opportunity. Compared to Mumbai and Pune, Nagpur, Nasik and Aurangabad have a cost advantage.
They are also witnessing activity in sectors like IT and biotech. Among other states, we find Gujarat and West Bengal attractive. Madhya Pradesh is another state that has been ignored so far, but it should grow over the next few years.

Hyderabad : Land rates go south


HYDERABAD: The cost of construction might have doubled in the past six months owing to increasing demand for various inputs, but the real estate market on the other hand is on a real downward spiral.

Whether it is due to the Karimnagar by-election result or the talk of Second State Reorganisation Commission (SSRC), the land transactions around the city have almost come to a standstill.

The prices have either dipped by 10-20 per cent on the outskirts or remained unchanged for the past one month. While some locations see a few enquiries, business is slack in popular destinations such as Shamshabad or along the proposed ORR.

"There is no real estate activity in areas such as Maheshwaram and Shamshabad. People are not willing to sell less than what they had bought, which is around Rs 10,000 per square yard as compared to Rs 30,000 per square yard in Madhapur, but there are no takers even if the prices are slashed.

Land and plots in urban areas are still better off. They are at least getting enquiries but in rural areas, the situation is bad," said Ajay Kumar Jetta, a real estate dealer.