Sunday, September 30, 2007

Making Delhi her property

Doris Delessard seems perfectly at ease as she orders a coffee at Barista in Defence Colony Market, though the manager behind the counter does a double take at this 24-year-old blonde’s perfect Hindi. But then, this French girl is no ordinary foreigner visiting India. For the last year and a half, she has been a real estate broker in Delhi, sourcing apartments, houses and office spaces for her clients, mostly foreigners.

“When I came to India on my first job as a merchandiser, I realised how difficult it is for foreigners to find their way around,” says Delessard. “I went back to France and I advised two friends who wanted to visit India. Then I thought why not make a business of it?” she smiles.

In the last year, Delessard has helped over 100 Brazilians, Germans, French and Spaniards working with companies like Chanel, Total and The New York Times, to set up home in Delhi, right from finding them a house to organising air conditioners and gensets, for a commission. “In the West getting a phone, a gas and Internet connection is not such a problem. Here it can be a nightmare, and that’s where I come in,” grins Delessard.

On her first trip to India three years ago, Delessard split an apartment in Malviya Nagar with some Indian student friends. She built a little network of people and contacts, whose services she uses even now, in her business.

Dressed in a business suit, self assured and confident, Delessard is like an encyclopedia on Delhi roads and shortcuts, and talks knowledgeably about real estate prices and escalating rentals in South Delhi. Considering real estate brokering in Delhi remains largely dominated by men, Delessard sure stands out in this community.

“When I meet other brokers, they laugh and don’t take me seriously,” explains Delessard and adds, “They try to fool me till they realise I know my business.”

Delessard has changed 14 Indian real estate partners since she started out 18 months ago, before zeroing in on her current collaborator. “Our understanding is good. He finds the houses, I get the clients and we share the commission,” she explains.

Delessard lives in Freedom Fighter Colony in Neb Sarai and initially, she moved around Delhi meeting clients in an autorickshaw, after striking a deal with the driver to reserve his vehicle exclusively for her, at Rs 6,000 a month. Last month, she bought an Innova, and retained the same driver. Now Delessard is expanding from real estate into services. She’s just launched her company, Doris services & consultancy Pvt Ltd where she provides foreigners in Delhi the works: drivers and maids, interpreters, a non-stop supply of plumbers, electricians and carpenters, and car rental options.

“Nobody in India is offering these services and I guess Indians don’t realise how intimidating this country can be for foreigners,” says Delessard, who’s recently hired a lawyer and an accountant to take care of her company.

Clearly, she has taken to Delhi well. “I love this city and it’s a wonderful country,” she smiles. Through her real estate work, Delessard has also come across Indians looking to buy property across Europe, and is currently tying up with real estate brokers in France.

Her French assistant, Margo, a 20-year-old student studying in Paris, who’s here to learn the ropes on real estate, lunges for her boss’s phone, that’s been ringing constantly. “We’ve got four more meetings today,” explains Delessard, leaving hurriedly.

Real estate companies like Chesterton Meghraj and Richard Ellis had better look sharp.

Making Delhi her property

Thursday, September 27, 2007

Times of Oman

MUSCAT — The Indian Property Exhibition 2007 opens today at Al Falaj Hotel.

Billed as ‘India — a destination for investment’, the exhibition will feature India’s leading builders, promoters, real estate companies, banks and financiers.

India has turned out to be a real estate hotspot and NRI investors wanting to invest in real estate will have access to a first hand information on the upcoming and on-going real estate projects.

Owing to the real estate boom, buying a value-for-money home in India isn’t just easy. The third Indian Property Exhibition is being organised to address the rising need for quality homes with its guidelines, guidance and a galore of choices.

After years of toil in the Gulf, a lovely home is everyone’s dream. Indian property exhibition offers key solutions for Indian expatriates to find their choice of homes across India — be it apartments, independent villas, bungalows or farmhouses. For those looking for commercial properties, beach resorts and plots, there will be a lot to go for.

More than 150 projects will offer freedom to purchase dream homes in New Delhi, Mumbai, Kolkata, Burdwan (West Bengal), Hyderabad, Chennai, Bangalore, Mysore, Hosur, Vizag, Coimbatore, Trichy, Madurai, Ooty, Thirunelveli, Courtallam, Pattukottai, Ludhiana, Ajman, Panipet, Ghaziabad, Mohali, Sonipet, Meerut, Bhathinda, Karnal, Jaipur, Lucknow, Gurgaoan, Jodhpur, Kundli, Chandigarh, Dindugal, Nagarcoil, Kanyakumari, Tirupur, Salem, Sathur and many other locations.

More than 150 projects across these cities will be on display during the two-day exhibition. Brought by Indus Fairs & Events Pvt Ltd, the exhibition is sponsored by Vatika, with Premier properties, Vakil, Our Town being co-sponsors. Closing on September 28, the exhibition will be open from 10.30am to 9pm.

Right time for NRIs

The $12 billion real estate market in India is on a high growth curve, on the back of a booming economy, increased participation of global players in the Indian market, new technological innovations coming to India, new norms and policies with respect to maintenance of buildings, general upgradation of infrastructure, entry of some world-class players in the hospitality and entertainment sector, favourable demographics and liberalised FDI regime.

The real estate sector is the second largest employer in India. This sector is projected to grow to $50 billion by 2010 at an average rate of 20 per cent per annum. Investment opportunity is expected over $50 billion in the next five years.

“In India’s fast-growing economy, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. The real estate sector will continue to derive its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector,” a report by Pricewaterhouse Coopers has said.

“Favourable interest rates, modern attitudes to home ownership (the average age of a new homeowner is now 32 years compared with 45 years a decade ago), economic prosperity along with a change of attitude amongst the young working population from that of ‘save and buy’ to ‘buy and repay’ and liberalised FDI regime have all contributed to this boom,” it said.

While the last decade saw the transition of sleepy towns like Gurgaon, Mysore, Jaipur, Burdwan (West Bengal), Mangalore, Hosur, Vizag, Ludhiana, Ajman, Panipet, Ghaziabad, Mohali, Sonipet, Meerut, Bhathinda, Karnal, Lucknow, Jodhpur, Kundli, Faridabad, Trichy, Madurai, Ooty, Thirunelveli, Dindugal, Nagarkoil, Kanyakumari, Tirupur and Salem into enviable addresses, today these tier I towns, as they are called, are saturated and far beyond the means of the middle class. Naturally, the opportunity in the residential development in Tier-II and Tier-III cities — like Hyderabad, Coimbatore, Gurgaon, Noida and Chandigarh is equally enormous.

The real estate industry has a lot of potential as various foreign real estate and finance companies have entered the Indian market.

Moreover 100 per cent FDI is allowed in real estate development and the Indian government has played a major role in supporting the growth of the real estate sector by allowing NRI investment.

Mall space is expected to increase dramatically in the coming year, according to a recent report by Myrrill Lynch. Property development is no longer merely constructing a building and leasing it out. The tenants of today are well versed with professionaly

managed buildings. This has made the developers in India appreciate the need to maintain and manage their property in a systematic manner.

Overall, the year ahead promises to be a good one for all those involved in the industry — the builders, as well as the consumers. The future of India is set to usher in the gold rush of realty.

NRI investors looking for investment in real estate India would have access to first hand information on upcoming and current real estate projects, as a range of property options, from residential apartments, plots and bungalows, to commercial properties would be on display.

Vakil Housing Develop-ment Corporation

Vakil Housing Development Corporation (VHDC) is a leading premium layout developer. Spearheaded by M. A. Vakil who has over two decades of experience in the real estate market, VHDC specialises in layout development with a pleasing ambience, an offering that is unique and has little competition.

VHDC has been instrumental in quietly transforming the landscape of Bangalore, guaranteeing quality and timely delivery of ‘thoughtfully designed spaces’. The company exemplifies meticulous planning and attention to detail, which makes every Vakil project a pleasure to live in.

VHDC prides itself on being a forward-looking organisation. Many of VHDC’s marketing, e-commerce and customer service initiatives have set benchmarks for the real estate community in the country.

The company is customer centric with the highest degree of professionalism and transparency. VHDC, a pioneer in landscaping, has offered unique features like butterfly park and fruit orchards at their projects.

VHDC’s customers range from businessmen, government officials, entrepreneurs to professionals from some of the most prestigious organisations in India.

VHDC is committed to the objective of ‘Creating International Quality Living Spaces’.

Vakil Housing in years of its existence has developed premium properties in Bangalore. All of Vakil Housing’s projects have been in areas which have seen massive appreciation after the launch of their project.

Times of Oman

Emaar planning India IPO to raise $1.5bn

MUMBAI: Real estate firm Emaar MGF Land plans to sell a 10 per cent
stake through an initial public offering in India, which banking
sources say may raise about $1.5 billion to make it one of India's
biggest listings.

The company is 40pc owned by Dubai's Emaar Properties and Indian real estate developer MGF Development holds close to 60pc.

Emaar MGF said that it had filed a prospectus with the Indian
regulator and would offer up to 117.4 million shares in the sale,
including a pre-IPO placement at a price to be determined through a
book-building issue.

India's market regulator takes at least a month to approve the
issue, and the company was then expected to offer shares in the
following three months, bankers said.

Sources close to the development said the company may raise about $1.5 billion depending on the market conditions.

"The pricing of the issue will depend on the market condition. If
the market rises to 18,000 or 19,000, it is a different story
altogether," a banking source said.

In July, real estate firm DLF listed after raising $2.25 billion in
India's biggest IPO. Shares in DLF, India's biggest real estate
developer, rose nearly nine percent on their debut, and have gained
nearly 30pc since then.

Home prices in India have dropped as much as 20pc this year because
of rising interest rates and a correction after prices had more than
doubled in a few years.

Gulf Daily News

In realty, DLF is 4th in world- News -Real Estate-Markets-The Economic Times

In realty, DLF is 4th in world- News -Real Estate-Markets-The Economic Times

'Realty still favourite of investors, $10bn in pipeline'- News -Real Estate-Markets-The Economic Times

'Realty still favourite of investors, $10bn in pipeline'- News -Real Estate-Markets-The Economic Times

Tuesday, September 25, 2007 Announces a Strategic Partnership with, India’s no. 1 real estate portal with an alive and ever growing database of more then 1500 builders, 20,000 brokers, 40,000 individuals, and over 200000 properties, announced a strategic traffic partnership with Properazzi European Group SL. is a property search engine and the largest property portal of its kind in Europe. As a search engine that aggregates property listings from real estate professionals and other property sites, Properazzi hosts 4 million properties, of 49 countries, in 32 languages., widens its frontiers and leaps across boundaries to extend its reach to 49 countries through this partnership. It’s a landmark for us as we will now be able to provide our users access to a house not only on our Indian shores but also anywhere in the world that they may be interested in. So for all those who have wondered what would a flat cost in London or what a property in the Mediterranean would cost – it’s all a click away!! We will keep coming back with more developments and new ideas to keep our delighted customers coming back for more”, said Ms. Deepali Singh, Business Head –

Yannick Laclau, Properazzi CEO, comments: “India is an important growth market in the world today and European buyers of real estate are increasingly turning towards it. This agreement will enable Properazzi to make Indian real estate more easily accessible to consumers.”

With this Traffic Partnership will provide its users access to Properazzi’s index of international real estate listings, on the other hand Properazzi’s visitors will have access to’s real estate listings. Besides strengthening the reach of users to countries across the globe, the partnership will also enhance 99acres and Properazzi’s through branding and visibility on both the sites. Users can search through Properazzi listings through a link of “international properties” on the homepage of, leading to a landing page with a “Properazzi search box”. The searches will redirect visitors to for details on properties.

The partnership is a definitive step towards integration of online content to broaden reach and increasingly fade boundaries. For further information, please log on to and

About is the no.1, real estate portal in India. It was launched by Info Edge, in September 2005, as a gateway to the country’s property bazaar, and an information ‘exchange’ for buying, leasing and selling of all types of residential and commercial properties anywhere in the country. The website enables easy access to a huge property bank for netizens and allows for direct connect with realtors in over 200 cities in urban and remote parts of India. With properties of almost 1500 builders, 20,000 brokers and 40,000 individuals, the portal lists over 200000 properties. The site has a registered database of 150000 users.

For more information or to buy, sell or rent property in India, please log to

About Properazzi:

Properazzi is a property search engine that helps consumers find properties to buy and rent. With over 4 million property listings in 49 countries, it is the world's largest website of its kind.

Properazzi uses its proprietary search engine technology to aggregate content from tens of thousands of real estate agents and publishers across Europe and North Africa, and make it easily available to consumers on a single website, free of charge, and in nearly all European languages and currencies.

Properazzi was launched in March 2007 and is backed by Mangrove Capital Partners. Properazzi is based in Barcelona, Spain. For more information, please visit
Contact Details:
# Sonali Shyam, Sampark Public Relations Pvt. Ltd., +91 9891820253 Email:
# Jerin Verghese, Sampark Public Relations Pvt. Ltd., +91 9818117244 Email:
# Tom Dibaja, Properazzi European Group SL, +34 696 025 284 Email:

Wednesday, September 19, 2007

NARI ties-up with IRPF to organise realty brokers

NEW DELHI: National Association Realtors of India (NARI) on Tuesday joined hands with International Real Property Foundation (IRPF) to organise and set global standards of practice and excellence among the realty brokers.

"The basic intention of NARI and its association is to improve the image and credibility of the real estate brokers in the country," NARI Chairman P S N Rao told reporters here.

NARI and US-based IRPF signed an agreement for assistance of technical expertise and other guidance to the domestic body.

With over one lakh unorganised real estate brokers in the country, NARI aims to be the apex body of the agents in India.

"We want to bring all the realty agents under one single umbrella in next five years and position the organisation as a credible voice of Indian real estate brokers," Rao added.

National Housing Bank Chairman and Managing Director S Sridhar spoke on the occasion, " This is a welcome development. So far, the Indian real estate market is not as robust and systematic as others, like capital market."

He also suggested NARI to look into the valuation aspect of the real estate properties.

Tuesday, September 18, 2007

XE Capital and Ashish Saraf Announce Joint Venture to Originate and Develop Real Estate Assets in India

XE Capital and Ashish Saraf Announce Joint Venture to Originate and Develop Real Estate Assets in India

DLF: high rates affecting real estate demand | Business | Reuters

DLF: high rates affecting real estate demand | Business | Reuters

RBI?s monetary policy inimical to real estate - livemint

RBI?s monetary policy inimical to real estate - livemint

Shriram, US pvt equity funds to develop India town | Business | Reuters

Shriram, US pvt equity funds to develop India town | Business | Reuters

Blackstone to enter realty market with Nagarjuna - News - Real Estate - Markets - The Economic Times

Blackstone to enter realty market with Nagarjuna - News - Real Estate - Markets - The Economic Times

Smaller cities to fuel real estate growth - Realty Trends - Real Estate - Markets - The Economic Times

Smaller cities to fuel real estate growth - Realty Trends - Real Estate - Markets - The Economic Times

Real estate grows at 30%, lures investors and developers @ NewKerala.Com News Channel

Real estate grows at 30%, lures investors and developers @ NewKerala.Com News Channel

Invest in realty with Rs 10 lakh

Invest in realty with Rs 10 lakh

RREEF lures ICICI veteran to head India business - General News - - The network for financial decision makers

RREEF lures ICICI veteran to head India business - General News - - The network for financial decision makers

Israeli real estate firm to invest in Chennai - livemint

Israeli real estate firm to invest in Chennai - livemint

Sunday, September 16, 2007

A new wave

Mid-East investors are no strangers to Malaysia and its wealth of
opportunities but it looks like they will soon have to share the
spotlight as the next wave of investments come from India. Truth is,
the country has ample room and allure for all.

INDIA has long been a sweet spot for Malaysian companies looking for
investment opportunities abroad. Let's face it – India's sheer size
makes it hard to ignore. 

Business opportunities in that country served as beacons of hope,
particularly for our local construction companies, which not too long
ago were forced out of their comfort zones to look for new businesses
abroad in order to survive.  

More recently, two of our local telecommunication companies, enthralled
by the allure of India's vast potential given its underserved
population, ventured into that market by acquiring stakes in two mobile
service providers as a means to counter slowing growth rates at home.  

Indeed, statistics point to the fact that the major
areas of Malaysia’s investments in India have been in the construction
sector, software production, electrical and electronics as well as
rubber products. 

The country’s vast economic potential, its growth-friendly policies and
reform measures, large population and rising affluence levels have no
doubt fuelled the growing exuberance among Malaysian companies to set
up shop there. 

That Malaysia is India's biggest trading partner in South-East Asia is
testimony of the good bilateral ties that exist between the two
countries. Statistics indicate that the two-way trade is growing. It is
estimated that the figure will jump to US$10bil in 2007, a far cry from
the US$6.58bil value recorded just a year ago. 

But somehow, in terms of foreign direct investments between Malaysia
and India, the funds seem to have flowed mostly one way – our companies
investing in India.  

Truth is, Malaysia has never aggressively courted
Indian investors. Even now, all the attention appears to be on Middle
Eastern investors and the heaps of petrodollars they can pour into this
country. But there's a difference between these two groups of

“The Mid-East investors are bringing in the mullah but in terms of expertise and knowledge, they need us more.  

“As for investors from India, they are coming in with the cash and the expertise,” says an observer. 

Given the vast amounts of liquidity that have been building up in India
in recent years, it is heartening that Malaysia is steadily gaining
prominence among Indian investors now looking for alternative
investment destinations. And that Malaysian investors have long built
their ground in India offers certain comfort levels that may add to the

The past week alone has seen our local business
publications highlight deals involving some high-calibre investors like
Reliance Industries Ltd, Satyam Computer Services Ltd and more recently
Manipal Education and Medical Group International of India. 

“For Indian companies, Malaysia is still one of the cheaper markets to
penetrate compared with Singapore and Hong Kong. We are going to see a
lot more deals being struck in the coming months, particularly in
sectors like property development and software,” says Baljeet Kaur
Grewal, chief economist and head of global research at Kuwait Finance
House (KFH). 

India is hungry  

That India is in a shopping binge is crystal clear. In fact, the wave
of acquisitions has earned it second place on the global M&A list
this year in the Asia-Pacific region, with a total outbound deal value
of US$13.5bil.  

Indian giants with deep pockets such as the Tata
Group, Reliance Industries, Essel Propack, Videocon India, Nicholas
Piramal India, Shasun Chemicals and Drugs and United Breweries have
steadily made their bold moves into global markets, namely US and

Much of the hunger has been attributed to a vast supply of funds,
globally competitive business practices and a favourable regulatory
environment, besides growth prospects.  

Sick global entities are also on the radar screen as there are gains to be reaped post turnaround.  

Of course, it's hard to forget the bold manoeuvres of Indian tycoon
Lakshmi Mittal and his controversial US$22bil hostile bid for Europe's
largest steel maker Arcelor; a move which earned him the tag “the
barbarian at Europe's gates”, having drawn hostile resistance from
France, to Spain to Luxembourg.  

The steel baron is now the world's third richest man
and chief executive officer of the world's largest steel company
Arcelor Mittal. The geographic scope of Arcelor Mittal, with its
320,000 employees in 60 countries, is impressive to say the least. 

There are lots more where Mittal comes from. Infosys Technologies Ltd,
an IT company that started out in 1981 with seven people and all of
US$250, is an influential name in the worldwide technology industry.  

The company now has a market capitalisation of US$20bil, operates nine
development centres in India and has over 30 offices worldwide.  

Talk about Indian conglomerates and the Tata Group immediately comes to
mind. One of India's largest conglomerates, the group reported revenues
of about US$22bil in 2005/06. This is the equivalent of about 2.8% of
India's gross domestic product. The group's market capitalisation stood
at US$56.3bil as at Aug 30, 2007. 

Location counts  

The deals in Malaysia we have seen so far aren't exactly small potatoes.  

In Satyam's case, the group is clearly building on the success of its
Global Solutions Centre (GSC) in Cyberjaya to now turn Malaysia into
its largest software hub outside India.  

The IT services group first ventured into Malaysia in 2003 when it launched its GSC. 

The facility serves as a major technological development and software
support centre for Satyam's global operations. It involved an initial
investment cost of less than US$2mil. 

The hi-tech centre is equipped with state-of-the-art infrastructure. It
also has round-the-clock access to Satyam's global knowledge
repository, which can be leveraged to deliver solutions to customers
across the globe.  

Equally important is that the centre's inception has paved the way for
local graduates to gain training in India and to be absorbed as
full-time employees. 

Since 2005, Satyam's Malaysian operation has been recruiting batches of
fresh graduates and sending them to the group's Learning Centre in
Hyderabad, India, to undergo training stints.  

The GSC, which now has about 300 workers, will also spearhead the development  

of some mission critical systems and directly support the software
needs of the Asia-Pacific operations of some of Satyam's Fortune 500

Even then, this is just the first phase of a grander plan that is afoot for Satyam's operations here.  

The plan is for Malaysia to house Satyam's Global Delivery Campus,
which will eventually have a staff strength of 5,000 in a few years to
come, its founder and chairman B. Ramalinga Raju was quoted as saying. 

Reliance Industries, on the other hand, is here as part of a bigger
plan to increase its global market share of polyester fibre. Its
acquisition of Hualon Corp (M) Sdn Bhd's assets for an undisclosed
price early last week will pave the way for the chemicals group to
command more than 7% of the global market share in polyester fibre and
yarn and strengthen its position in the textile value chain. 

The Manipal group has unveiled plans to set up its first hospital in
Penang and a stem cell research and development centre in Bukit Jalil
Technology Park next month. 

The healthcare management group will invest an initial US$5mil to launch the first phase of the stem cell R&D centre. 

Malaysia also hosts a number of other major Indian companies like Ranbaxy, TCL Industries, Godrej and SM Chemicals.  

Most of these investments are concentrated in chemicals and chemical
products, petroleum products, food, beverages and tobacco and
non-metallic mineral products. 

Mind-boggling opportunities 

If observers agree on one thing, it is that there is a lot more room for Malaysia to sell its story to Indian investors. 

Says KFH's Baljeet, “Some sectors in India are growing in amazing ways.
So, for Indian companies to look outside of India for growth
opportunities would mean that they face certain constraints in their
home market, whether to do with increasing costs, saturation or the
absence of quality and efficient infrastructure. 

Chart 1
“For instance, real estate prices in Bangalore have
gone through the roof. Factors like these are compelling companies like
Satyam to look to Malaysia to set up their development centres and
support their expansion plans,” she explains.  

Indeed, the growth figures coming out of India are mind-boggling.  

India has emerged as the second fastest growing economy in the world,
after China, with a GDP growth rate of 9.4% between April 2006 and
March 2007.  

This has helped propel the country to claim the status of a global economic powerhouse in the region. 

KFH estimates that India’s real estate sector will reach US$90bil in value by 2015 from just under US$15bil in 2007.  

By 2010, India’s telecommunications market is expected to reach
US$38bil in value and contribute to more than 5% of the country’s GDP.
At present, telecoms is one of the key sectors contributing to India’s
exuberant growth.  

The healthcare sector, already one of the largest service sectors in
the country, is poised to grow further to US$61bil or 5.5% of GDP in
2009 and US$79bil or 8.3% of GDP in 2012. 

But all that growth has come with a price, which some Indian companies are finding a tad hard to swallow.  

As KFH points out, India's persistently high economic growth over the
last three years has resulted in a dramatic rise in inflation and
widening financial imbalances.  

Chart 2
Asset prices are high, equities even higher (price to
earnings exceeding 20 times) and the prices of real estate have
sky-rocketed by more than two-fold in many big cities. 

This would help explain why Indian outsourcing companies like Infosys
Technologies and Wipro have been setting up operations in other
countries, particularly China and Eastern Europe, in recent years.  

The cost of hiring engineers and staff attrition rates in India are
also rising given the growing number of Indian companies that offer
services operations there. In Malaysia, the outsourcing industry is
still in its infancy. 

This means that companies like Satyam will have access to a large pool of local talent. 

There is also the infrastructure aspect to consider.  

Satyam's Asia Pacific and Middle East director and senior vice
president Virender Aggarwal has been quoted as saying that Malaysia
offers a lot of first world facilities at costs that are closer to
third world ones.  

“This makes capital costs far lower because we don’t have to invest in
captive power generation for example,” he said, referring to India’s
persistent power problems. 

Other factors like rising wages in low-cost countries like India and China have also made Malaysia look more attractive.  

“It is true that the hiring costs in Malaysia are still about 50%-60%
higher than in India and China, but for that price you get ready access
to a large pool of good talent, world-class infrastructure and strong
government support.  

This makes the overall cost of doing business in Malaysia quite competitive,” says one observer. 

FOREIGN DIRECT INVESTMENT (see Chart 1 & Chart 2)  

In 2006, FDI inflows to India stood at US$11.12 bil, an increase of
255% from that in 2005. They were dominated by the services sector at
40.5%, followed by electrical equipment 20.9%, telecommunications 10%,
transportation 4.1% and power, fuels and oil & gas 2.6%. As at
1Q07, FDI inflows to India amounted to US$3.22 bil, an increase of 174%
y-o-y over 1Q06’s US$1.85 bil.  

For full year 2007, we project India’s FDI inflows to trend higher to
US$12.89 bil, of which 10%-12% is expected to go into the healthcare


* India's share of global biotech market stands at approx 1.1% 

* In 2006, the sector generated a revenue of some US$1.5bil. There are some 280 companies involved in the sector. 

INDIA owns the top spot in the world's IT and ITES (IT enables services) stage 

* 1.3 mil and 3 mil people are directly and indirectly employed in overall IT industry in India 

* Business Process Outsourcing (BPO) is estimated to contribute 5.4% to India's GDP in 2007 (2006:4.8%) 

* Export of software services and IT-BPO in 2007 estimated at US$31bil 

* Indian companies' world wide share of global outsourcing market rose from 0.5% to 7% within the last 4 years 

* Bangalore, the hot bed for India's IT industry, has over 500 major
international IT companies (40% of the whole of India's IT industry is
located here)  

* In future, India is expected to have a 70% share of the estimated US$17bil global KPO (Knowledge Process Outsourcing) market  

Source : various sources on the net including official Indian Government websites


Malaysia gains 

Seeking more Indian investment inflow makes good sense from a Malaysian perspective.  

The Malaysian Government has given priority to the information and
communications technology (ICT) sector with the Multimedia Super
Corridor or MSC. 

“It makes sense for Malaysia to collaborate with Indian companies,
which are light years ahead of us in some sectors like ICT, healthcare
and life sciences,” says an observer.  

Unlike Middle East investors who are happy to just pump in the cash,
Indian investors tend to place a lot more emphasis on the technology
transfer and human capital aspects of their investments.  

Satyam's Malaysian operation is a case in point. The GSC initiative has
helped Satyam staff its centre in Cyberjaya while transforming fresh
graduates into industry-ready software engineers.  

This has bolstered the country's ICT base along the way. 

Currently, the GSC employs about 300 professionals, of which two-thirds
are Malaysian. They will have access to Satyam's matured processes. 

Like India, Malaysia has zeroed in on the services sector as a prime
area for growth and development. The Iskandar Development Region's
focus on the services sector is proof of this.  

The expanding Indian economy offers opportunities for local and Indian
companies to explore collaborative initiatives in an array of services. 

“India and Malaysia have strong complementarities in services, which
can be further explored through collaboration in all sectors and modes.

“Some of the areas of significant interests include tourism, financial
services, transport, construction services, business process
outsourcing, after-sales services, education and training services,
health and diagnostics services and consultancy services,” the observer

Strategic partnerships like the one struck with the Manipal group, for
example, will accelerate Malaysia's pursuit to become a regional
biotechnology hub.

The Star Online: Business News

Property buyers getting younger

There's a new crop of buyers serenading the real
estate market. This younger lot is stepping in as end-users who are consciously
eyeing investments in property as an essential part of their gameplan. And
developers too are innovating to meet the increasing demand from the 'new'
consumers in their mid 20s and early 30s.

We home in on the latest trend embracing the realty
sector. Twenty-seven-year-old Chartered Accountant Rajat Malhotra has been
meeting real estate agents for the last four months. He wants to buy a property
in Delhi NCR and has been looking at various deals to zero in on the best one.
"Some of my friends have already invested in property and that got me interested
too. I started doing some surveying around especially for areas closer to my

It can be a great
convenience to my daily schedule and I don't have to stay on rented
accommodation then," says Rajat. Housing finance companies on their part feel
that when it comes to a younger borrower, the lender can take a higher risk
exposure as a younger borrower has a long time frame to repay the loan. Says
Kapil Wadhawan, vice chairman and MD, Dewan Housing Finance Limited (DHFL), "The
profile of the borrower is definitely getting younger.

Any institution assesses the credit worthiness of the
borrower while lending i.e., his capability to repay the amount borrowed . To a
certain extent, a younger borrower does have an advantage due to his age as he
still has the possibility to grow in his profession and, also, will have a
continuous flow of income to be able to repay for a longer period."

Global real estate consultancy
Jones Lang LaSalle Meghraj (JLLM) agrees that the average age of buyers has
dropped significantly over the last decade. "It has dropped from 45-32 years and
this new, young breed of property buyers has its collective eyes trained on
stability and upward mobility in the future. On a primary level, young property
buyers tend to choose locations close to their workplaces, so as to reduce
commuting time. On a secondary level, they will buy property at non-work related
locations that will see appreciation in the long run," reveals Anuj Puri,
chairman and country head, JLLM.

Developers recognise this shift in trend and offer
projects that are in sync with the demands of this age group.

"Current architecture designs,
stylized interiors and environmental facilities are certainly impacted by the
choice of youth. Hence developers offer accordingly to suit their modern tastes.
Moreover, the demand is more for houses in the range of Rs 30-60 lakh. This has
benefited realtors with ready market to offer houses in this range," says B P
Dhaka, official spokesperson, Parsvnath Developers.

It's not just about primary home purchases alone. A lot
of people later on opt to buy a second home from an investment point of view
too. And the profile of this lot usually falls in the age bracket of 30-40
years. Says Atul Mehrotra, director, marketing, Uppal Group, "Yes, this too is
the younger generation in question who are looking at real estate from an
investment aspect. Buying a house the second time has become a possibility
especially for those who had bought their first property just before the boom in
the real estate. This leaves them with enough disposable income that they can
direct for another property."

In Mumbai, an upsurge in buyers can be seen in the
30-35 years age group. All thanks to reasonably good returns and a buoyant
economy. Milind Korde, MD, Godrej Properties feels that customers today do not
just seek a home or workspace.

"They look for a lifestyle and a property that offers
the best in terms of location, design and facilities appeals to them. Hence,
offering contemporary designs and amenities is a must." Kolkata-based Hiland
Group feels that clear personal preferences emerge with this new group. Large
format developments is popular with this generation.

"They want all lifestyle facilities within a price
bracket of Rs 30 lakh to Rs 50 lakh as opposed to the more traditional city
centre locations. Rising income levels is stirring more and more younger people
to buy a house of their own," feels Hiland Group MD Sumit Dabriwala.

Another city-based developer,
Merlin Group has products that offer more value additions so that it appeals to
them. "The newGen prefers developing areas like south Kolkata and Rajarhat
instead of totally saturated areas. A change in the buyer's age group has made
us innovate with services like space efficient apartments , broadband
connections, sports arena, gymnasium, music lounges, etc. in our future
projects," says Merlin Group MD Sushil Mohta.

Thirty-five-year-old Abhijit Das who had bought a flat
for himself eight years ago in Kolkata feels that attractive home loan rates,
increased income level and an increase in the number of 'dual-income' families
has led to a growing interest in the realty sector. Das is now actively looking
at a second home investment in the city.

Down south, in Bangalore too the change is evident with
people in their late 20s and early 30s picking up property in the Rs 25-45 lakh
bracket. And when it comes to a second home buy, it is established individuals
in their late 40s who are keen on owning the same. Says Ashok Ganguly, VP-
marketing, Nitesh Estates, "Financing such buys are far more easier today. Banks
and financial institutions lend money to the extent of 90% of the total cost,
making it very easy to own a home."

Agrees Avinash Prabhu of Skyline Construction &
Housing, "A bulk of our buyers are picking up property in the Rs 25-60 lakh
bracket. As far as a second home is concerned, it is done from an investment
standpoint. Most of them continue to buy second homes to rent out the same."

A series of efforts to make the
real estate sector more transparent and organised has also helped in attracting
this new class of end-users . Hence for many of them investing their saved up
booty in real estate seems just the perfect logical step forward to planning a
better future.

Wednesday, September 12, 2007 does a new look for Indian Real Estate. does a new look for Indian Real Estate.

Strong fundamentals propel real estate sector

Rising interest rate, oversupply only temporary dampeners

Room for growth

NHB pegs housing shortage at 45 million units in Eleventh Plan.

Retail space demand seen growing to 200 million sq. ft by 2010.

Office space requirements will increase to 95-110 million sq ft.

S. Shanker

Mumbai, Sept 11 Rising interest rate, oversupply in development
phases and project execution are temporary dampeners for the domestic
real estate sector that is propelled by strong fundamentals.

Long-term demand drivers such as a sustained GDP growth, rising
affordability, population growth, favourable demographics, rapid
urbanisation and increasing mortgage penetration, besides an improving
regulatory framework are in place, according to equity broking house
Prabhudas Lilladher.

The National Housing Bank pegs the housing shortage at 45 million
units during the Eleventh Five Year Plan. The urban housing shortage is
estimated at 22 million units, which implies an annual demand of
4.5million units.

Retail demand

The size of the retail industry is estimated at $250 billion. The
sector is expected to grow at 10 per cent per annum and organised
retail is said to form 10 per cent of the total retail market by 2010.
This implied a $35 billion share in the segment, which would generate a
retail space demand of 200 million sq ft (square feet) by then.

Organised retail currently accounts for three per cent of the
industry. However, given the massive expansion plans of domestic
retailers, traditional formats are breaking down. Further, opening up
of the sector was likely to provide a renewed impetus to organised
retail, the broking house said

Office space

The office space market is largely benefited by IT/ITES demand that
constitutes 60-70 per cent of the total demand. Assuming an average
office space requirement of 100 sq ft/worker implies an additional
demand from the sector at 67 million sq ft.

According to
Nasscom, the IT/ITES sector currently employs 1.63 million people and
would need an incremental 0.67 million professionals by 2010. Going by
the demand requirements, this would entail 95-110 million sq ft by 2010.

Ms Neyha Srivastava, research analyst, and Mr Subramaniam Yadav,
associate, said given the limited avenues of fund raising, with a
number of developers going in for initial public offers and foreign
currency convertible bonds, the realty companies’ ability to float REIT
(real estate investment trust) structures could prove a significant
value enhancer.

An REIT would make it easier for developers to divest rental assets and unlock funds for redeployment elsewhere.

The Hindu Business Line : Strong fundamentals propel real estate sector

Tuesday, September 11, 2007

Indiareit Seeks Up to $750 Million for Property Fund (Update1)

Sept. 11 (Bloomberg) -- Indiareit Fund Advisors, the
venture capital firm controlled by the Piramal Group, plans to
raise as much as $750 million overseas for what could become
India's second-largest real estate fund.

The Mumbai-based company may begin tapping investors in the
U.S., Europe, Middle East and Japan by year-end, Managing
Director Ramesh Jogani said in an interview yesterday. The fund
will invest in companies building apartments, malls and offices
in India.

India, the fastest-growing major economy after China, may
receive as much as $10 billion in overseas funds betting on real
estate in the coming 2 1/2 years, Indiareit estimates. Housing
Development Finance Corp., Infrastructure Leasing & Finance Ltd.,
and Kotak Mahindra Bank are among institutions raising money to
invest in unlisted developers and projects.

``Demand for space in India seems unending,'' said Raja
Seetharaman, associate director at Jones Lang LaSalle Property
Consultants in Mumbai. ``Investors are looking for a big
opportunity in India as the economy is poised to grow a minimum
7.5 percent over the next few years.''

Real estate funds focused on India have attracted about $3
billion so far, according to Indiareit, on optimism economic
growth that averaged 8.6 percent over the past four years will
power demand for offices, shopping malls and residences.

India's real estate industry may swell to $90 billion by
2015 from $12 billion in 2005, Moody's Investors Service said in

Residential Boom

``All the signs are there that the momentum will be
maintained,'' Jogani said.

Indiareit, which raised $200 million from individuals and
companies overseas last year and 4.3 billion rupees ($106
million) domestically, plans investments in projects in Mumbai,
Bangalore, Hyderabad, Chennai and Pune. ABN Amro Holding NV and
ICICI Bank Ltd. helped it raise the money.

London-based 3i Group Plc, Europe's biggest publicly traded
private equity firm, invested $40 million in the $200 million,
five-year fund Indiareit closed in September last year. That
fund may triple during its lifetime, Jogani said.

Indiareit has earmarked about two-thirds of the amount
raised for its real estate funds to residential projects,
seeking to profit from rising demand for homes as salaries rise,
Jogani said. India faces a shortage of 25 million houses,
according to HDFC.

New Funds

Housing Development Finance, India's second-biggest home
mortgage lender, last month raised $800 million from overseas
investors for a nine-year real estate fund, the nation's biggest,
exceeding the $630 million drawn by SUN Apollo Real Estate Fund
in January.

Kotak Real Estate Fund is raising $350 million from
overseas investors in addition to the $500 million it raised
locally to invest in houses, offices, hotels and warehouses,
Vikas Chimakoorti, a partner at the fund, said last week.

IL&FS Investment Managers Ltd. and U.S-based Milestone
Capital Advisors Pvt. yesterday said they plan to raise 10
billion rupees to invest in hotels, hospitals, warehouses,
offices and houses.

The Piramal Group controls companies including Nicholas
Piramal Ltd., the nation's seventh-biggest drugmaker by market
value. It set up Indiareit in early 2006, Jogani said.

To contact the reporters on this story:
Sumit Sharma in Mumbai at .

IL&FS, Milestone open door for realty investment

MUMBAI: IL&FS Investment Managers
and Milestone Capital Advisors have launched a real estate fund where investors
can enter with as low as Rs 10 lakh. IL&FS-Milestone Fund-I is an
yield-driven real estate investment fund based on a structure similar to the
real estate investment trusts (REIT). Worldwide it is the most popular
investment route for corporates and individuals to invest in real

The close-ended scheme will have a term of four years, with
an option to extend the term by a year and if required by one more year. The
fund is targeting a corpus of Rs 1,000 crore, which includes a greenshoe option
of Rs 500 crore. The fund will remain open for subscription till October 30,

IL&FS-Milestone Fund-I will be the first real estate
investment fund in India to offer a low minimum investment commitment of Rs 10
lakh for individuals (in multiples of Rs 5 lakh thereafter) and Rs 1 crore for
corporates, with the convenience of draw-down spread over 12 months.

“The fund is especially attractive for individual investors
who want to diversify their portfolios without the complication of investing in
real estate directly,” Shahzaad Dalal, vice-chairman and managing director
IL&FS In-vestment Managers said at a press conference on

IL&FS-Milestone Fund-I will offer a quarterly yield
distribution to investors and property appreciation benefits in the long term.
The fund is targeting an annual yield of 11% (pre-tax) and an internal rate of
return of 18-20% (pre-tax) with property appreciation.

“With an investment focus on completed properties that are leased for a long-term
period to high-quality tenants, the fund does not carry any development
risk,” said IL&FS-Milestone Fund managing partner Ved Prakash Arya. He
also added that the fund will target greater geographical and sectoral
diversification through investing in offices, IT & ITES buildings,
hospitals, hotels, warehouses and shopping malls across

Individual investors can utilise this as a recurrent income
source as well as accrue property appreciation benefits in the long term. The
fund employs a conservative investment philosophy and a low-to-moderate leverage

Monday, September 10, 2007

Owning a house to be a distant dream

Despite a slight drop in interest rates on home
loans, real estate prices are still very high in big cities. Experts
say it will stay that way for several months. That means most people
still can't afford a home of their own.

Vivek and Smeeta
together bring in Rs 50,000 every month. After 15 months of negotiating
expensive bank loans and leaping property rates, they've decided owning
a house in Delhi is Mission Impossible.

"We have been hunting
for our own house for quite some time now. But with a budget of Rs 30
lakh we can afford a house only in the outskirts of Noida or Gurgaon,
so we decided to go in for a rented accommodation," said Smeeta Verma,

All across India, middle class families are getting
doors slammed in their face. Home loans have climbed by five per cent
in the last four years while property prices have doubled in parts of
cities like Delhi, Bombay and Bangalore.

Fall in sales

survey conducted by ASSOCHAM or Association of Chambers and Industries
show that sale of residential property in the last three months is 70
per cent lower than the same period a year ago.

Over the last
four years, the resale market has dropped by 60 per cent in metros, so
nobody is buying property as an investment any more. The survey also
found that 33 per cent of those who've taken home loans have been
forced to extend their loan period by five years because of rising
interest rates.

Prices not to fall

But real estate
experts argue that dropping interest rates is not the way to go because
property prices are totally out of reach for the average Indian. Every
experts NDTV spoke to confirms that prices will not be falling in the
next few months in any major metro.

"But if someone is expecting
the property prices to fall to 2002 levels, that is quite unlikely. In
certain pockets like NCR, Bombay, Bangalore the sheer demand itself
will help property price to sustain or go for a minor correction. But
for smaller cities we may see a major correction," said Malay Ray,
Business Head, DCM Services Limited.

Banks like State Bank of
India and Punjab National bank have dropped their interest rate by 0.5
per cent for the festival season, but they deny that this will continue
beyond Diwali. And the problem is that middle class India still has
nowhere to live.

Concrete concerns continue

In spite of reports that property prices are likely to see a correction, experts feel otherwise.
For the potential homebuyer looking for properties in prime areas, there is bad news. Builders and property experts are in unison that real estate prices are unlikely to go south.
This is despite various attempts by the Reserve Bank of India (RBI) in the past couple of years to cool real estate prices by raising interest rates and hiking risk weightage on the same.
These measures, though, have had some positive effect by reining in the growth rates in real estate prices.
Even, industry experts like HDFC chairman Deepak Parekh and ICICI Bank CEO and MD KV Kamath have been of the opinion that housing prices should correct by 10 to 20 per cent. However, builders say housing prices are likely to hold firm, especially in prime areas of the metros.
The reason: rising input costs and high land prices. Says Sunil Mantri, chairman, Mantri Builders, �I expect land prices to remain firm because of the lack of land availability in a city like Mumbai. Also, the increased cost of construction will add to the overall cost.�
While both builders and banks agree that the high cost of housing is deterring sales, the scenario is not as bad as is being perceived.
As Anuj Puri, chairman, Jones Lang Lasalle Meghraj puts it, �In the past, there were 30 apartments available for sale to 100 buyers. Now there are 60 buyers for the same number of apartments. Real estate rates can be expected to slide down if the number of buyers drops down to say, 20.�
As the homebuying season approaches, builders expect housing prices could rise further by the end of the financial year. Says Pranay Vakil, chairman, Knight Frank, �I expect a 5 to10 per cent increase in housing price by the year end. But it would be restricted mainly to the prime areas of Mumbai.�
In other parts of the country, Puri says property prices have decreased only in the National Capital Region (Gurgaon and Noida mainly), while they are on an increase in Kolkata, Chennai and Bangalore.
The main problem in most of these places is the availability of supply, especially in a city like Mumbai. Factors like the pending repealing of the Urban Land Ceiling and Regulation Act and rationalisation of stamp duty structure need to be addressed on a war footing to create an atmosphere which is conducive for price reduction.
Says Ali Lokhandwala, director, Lokhandwala Infrastructure, says, �Prices in prime areas of South Mumbai have not peaked as yet. So, I expect a hike in the prices in these properties. But, in areas beyond Bandra, the property prices will remain stable.�
The latter especially holds true for areas like the Vasai-Virar belt, Kalyan, Panvel and Dombivali, where there is an over-supply of land.
In a scenario where affordability is a concern, how do builders attract buyers? Apart from hoping for a drop in interest rates, they are trying to add value to their offerings.
These include offers to pay stamp duty and amenities like modular kitchen and free parking space. �We are offering freebies like amenities, parking space and stamp duty waiver,� admits Lokhandwala.
More importantly, builders are not encouraging speculation. Typically, when a new property comes up, the builder would sell some flats to speculators, even if there are no genuine buyers. This is because it helps them get instant liquidity.
However, in recent times many builders are not encouraging such buying. This is because if a speculator buys and exits within months after booking a small profit, it could adversely impact the prices in the building.
For somebody buying a second home through a loan, it may not be a great time to be in the market. �While this is a good time to buy as property prices are likely to remain stable, speculative investment is not recommended due to high interest rates,� adds Mantri.
In other words, the perpetual fence-sitter who is expecting to get great buys in prime areas should not feel too encouraged. For genuine buyers, timing is never important.

Concrete concerns continue

Blogged with Flock

Sunday, September 9, 2007

Want big salaries? Try the realty sector

Want big salaries? Try the realty sector

Blogged with Flock

Strategy for Real Estate Investments

The city of Bangalore has seen the highest price rises in its real estate over the past three to four years. Many have multiplied their wealth into many folds by just investing in real estate investments. It has been a gala time for builders, contractors and real estate agents. Best part of it is that even some of the salaried class people have booked their profits by investing at the right time, thanks to the real estate boom!!

While on one side people are busy buying and selling their properties, there are people on the other side who have missed the bus and are watching the show as they cannot afford the current prices. Is there anything you could do if you belong to the latter group?

One strategy that could be of great help is, leveraging debt. Nowadays banks are ready to loan up to 80% of the property cost. Well, if you are eligible for it, then you can definitely leverage banks money for your investments.

Lets look at it step by step. Say, for example, you have Rs 1 lakh savings and the property which you are interested costs Rs 5 lakhs. Considering the growing demand, people believe that it has potential to go up to Rs10lakhs within 5 years. Would you grab this property or would you just be happy buying a smaller property costing Rs 1 lakh, having similar potential of price doubling in 5 years?

The options here are just two, with loan or without loan. If you buy a smaller property of Rs 1 lakh with full cash, your profit after 5 years would be Rs 1 lakh. It is a 100% Return On Investment (ROI), that is, for every Rs100 you invest, you would be earning additional Rs100 as profit.

On the other hand, let us consider the case of buying a bigger property, the one costing Rs5lakhs by using your Rs1lakh savings and going for loan for the rest Rs4lakhs (80%). For calculation purposes, let us consider loan with an interest rate of 10% and the term as 10 years.

For the first 5 years, your interest outflow and pre-closure charges together comes to Rs1.78 lakhs. Adding this to the original cost of Rs5lakhs, the total cost of the property would then become Rs6.78lakhs.  If the price doubles as expected in 5 years, your Net Profit would be, 10 Lakhs- Rs 6.78 Lakhs= Rs 3.22 Lakhs. What is the ROI in this case? It is 322%. Isnt this amazing strategy?

While paying full cash payment is definitely good thing from the external liability point of view, paying partly cash and partly through loan may be a better option if one is interested in increasing ROI. In case of real estate investments, if the total expected price rise is more than the interest you pay to the bank, you can definitely increase your returns by taking a loan from bank. In other words, you can earn good returns not just from your money, but also from banks money. This concept is better known as leveraging debt in the corporate world which is used for increasing Return on Equity.

In the above example, considering the other way around, one can invest in a smaller Rs1lakh property by just paying Rs 20,000 as cash and the rest as loan. I have created table and a chart below to demonstrate how ROI in this case grows from 100% to 322% by increasing the loan amount step by step. The first row is with no loan and full cash while the last row has the maximum loan (80%) and just Rs 20,000 cash.

Though the loan is taken for 10years, but closed in just 5 years, it would incur additional 2% pre-closure charges. Considering all such charges and the bank interest for 5 years, total cost goes to Rs1,35,440 for 80,000 loan amount taken at 10% interest for 10 years term. Hence, selling the same property for Rs2lakhs at the end of 5th year would earn you a net profit of Rs 64,560 from your original investment of just Rs 20,000 !!! 

If you think the property boom going to last for many more years, you can repeat this strategy for next property, say, costing Rs4lakh, with 80% loan of Rs3.2lakhs and selling it at a later point in time, earning high returns. If it doubles in 5 years, again 322% returns would give you net profit of closer to Rs 2.5lakhs. In overall terms, a small sum of Rs 20,000 could grow up to Rs2.5lakhs in 10 years. If you thought only rich could multiply their money, this could prove you wrong.

Fixed deposit in a bank for 10 years at 10% interest for the same Rs20,000 amount would have grown to a sum of Rs 52,000 only (although you cannot directly compare the two because of their risk being different).

Are there any glitches here in this strategy? Not really, but two things one should keep in mind while taking loan for buying a property. Firstly, the EMI (Equated Monthly Installment), as you increase the loan amount, your EMI also grows and if one does not have capacity for this outflow of money every month, it is not recommended to go for a loan. In fact this is true for any loan not just while buying property.

The other point is about the expectations of price increase in real estate prices over time. Not many are good in their predictions of the future.  The boom period may not last long in reality. In the above table, we have considered that the price of real estate would double in 5 years. In reality it may or my not. Instead of Rs2lakhs, if the price goes up by just 30% in 5 years and if you sell at the end of 5th year, you would be making a loss of Rs 5,440 if you go with 80% loan, whereas with full cash payment, you are still at profit though small.

India has great potential to outpace other countries in the coming years. Looking at the GDP growth numbers for the last 2-3 years and going by the prediction of our economists, I think we can be very optimistic about our future growth. Real estate companies are betting high on these future numbers. If everything goes well on the international front, jobs coming to India would definitely grow at much faster rate and per capita income would also grow!!! This indirectly can create a huge demand for real estate and can push the real estate prices further up. May be its still a good time to buy and apply this strategy!!!

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Thursday, September 6, 2007

Why fund managers avoid realty stocks? -


tangible, it's solid, it's beautiful. It's artistic, from my standpoint,
and I just love real estate.

Donald Trump

critical investment factor is determining the intrinsic value of a business
and paying a fair or bargain price.

Warren Buffet

Unitech purchased 340 acres of land in Noida in May 2006 for Rs 1,583 crore,
it raised a lot of eyebrows. After all, it was the country's largest land

Few months down the
road, the Greater Noida Development Authority auctioned 290 acres of land
for Rs 1,640 crore. Surely, it was just a matter of time when a new player
would win the "largest land deal" trophy.

This year, DLF purchased
110 acres of land in West Delhi from the DCM Sriram Group (apparently
outbidding Unitech). The price? Rs 1,750 crore.

Unitech step aside.

DLF take a bow.

Did you notice the
figures? The number of acres has consistently fallen but the price to
purchase the decreased number has only risen. The scent of money is strong
in the real estate business. In fact, so alluring is its aroma that it
has even lured foreigners to our shores. In 2005, FIM Ltd, a company incorporated
in Mauritius and managed by the San Francisco-based Farallon Capital Management
LLC, bought 60 per cent equity in Indiabulls Real Estate Company Private
Ltd (IRECPL) for Rs 5.1 crore. Morgan Stanley invested $68 million in
Bangalore-based Mantri Developers. Merrill Lynch invested $50 million
in Panchsheel Developers.

If they are not teaming
up with real estate players, they are opting for real estate funds that
invest in developers. In 2004, the Securities and Exchange Board of India
(SEBI) permitted venture funds to invest in local real estate. To cite
a few examples, GE Commercial Finance Real Estate invested in an $800
million fund that is building IT parks. Calpers and the Oregon Public
Retirement Fund have invested $100 million each in the IL&FS India
Realty fund. Dawnay Day International has entered into a joint venture
- Dawnay Day AV Financial Services- to offer wealth management and property
investment services. But the UK-based investment company plans to invest
$1.5 billion in Indian real estate over the next two years.

For the benefit of
the foreigners who did not make it here, the companies have gone abroad.
Ishaan Real Estate, Hirco, Dev Property Development, Unitech Corp Parks,
Eredene Capital (Saffron), Trinity Capital, and West Pioneer Properties
Ltd have all listed on London's Alternative Investment Market (AIM).

Despite the potential
of this sunrise sector, not all fund managers have dabbled in real estate
stocks and no dedicated real estate fund has been launched till date.
Their reluctance is understandable.


In 2006, real estate consultancy firm Knight Frank was given the task
of valuing Indiabulls Financial Services' real estate business. The firm
placed it at Rs 21,569 crore and stated that the stake of Indiabulls in
the company was Rs 15,125 crore. This took place before the demerger of
the real estate business into a separate entity called Indiabulls Real
Estate Ltd (IBREL). Scoffers and critics wanted to know how the valuation
was done.

Their wish was granted
a few months ago when Gulam Zia, Head of Advisory Services,

Knight Frank was interviewed on CNBC-TV18. According to him, the valuation
for Indiabulls (where the real estate angle was concerned) was "pretty
much on the conservative side". The interviewer made note of the
fact that the holdings in the projects were valued at Rs 15,000 crore
while the current market cap (at the time of the interview) was in the
whereabouts of Rs 6,000 crore. The issue at stake was whether "in
hindsight it was a lofty appreciation that had a lot to do with prices
of some stocks when the exercise was conducted".

We quote Zia's answer
verbatim: "We are not exactly equipped to get into the exact status
of holdings of these properties, as the holding patterns are not clear.
The valuations that we are talking about are sheer real estate valuations
of the entire assets under that; how much of the properties are already
under the holdings, or those that are under cross holdings, etc, are things
that are not directly considered. As far as valuations go, we just assume
that all these properties are under the company's possession."

Valuation seems to
be the bane of the industry. Being a new industry, there is no tested
methodology for valuation of real estate stocks. Analysts in the more
developed markets of the West perform semi-annual and annual valuations
of company's property holdings. But valuation of real estate assets in
India is a different ball game altogether.

When looking at the
company, an analyst will have to understand the business approach. Is
the company focused on commercial, residential or retail space? Which
segment is more lucrative? Is its expertise just related to a particular
geographical belt or does it operate on a national scale? Does it have
a substantial land bank?

Most companies end
up being valued on the land bank they possess, not on the revenues they
generate. Yet, valuing the land bank is fraught with ambiguity. Location
is of prime importance. Is the land located in a metro or Tier II city?
Is it on the periphery or centrally located? What is the size of the land
bank? How much of it is legacy and how much is paid for? If paid for,
then has it all been purchased at a recent price?

Putting a price to
land bank would be tough. An analyst may value the land bank based on
fair market value (FMV). According to FMV, it would be the price demanded
by the seller and paid by the buyer when there is no compulsion on either

Now let's say a developer
has picked up a huge land bank towards township development. Naturally,
real estate prices in the vicinity would leap. Consequently, the land
bank will be priced highly. Say a year or two down the road, the developer
aborts the project and decides to sell the undeveloped land. Chances are
slim that he would get the quoted market prices. So even if the land bank
is rightly valued, it is to be seen whether or not the company will realise
the actual gains.

Regulatory approvals
for projects also remain an area of concern. Legal issues and stay orders
could delay projects substantially. The execution capabilities of the
management are crucial. Can the developer deliver within the constraints
of time, cost and quality? Does it have a good standing with banks and
financial institutions?

That's not all. Determining
the Title is not easy either. And this leads us to the issue of whether
the claimed land bank is identical to the actual holdings. If that was
not frightening enough, then you should know that a number of real estate
projects tend to have hidden liens. The latter is a legal claim on the
property that acts as a security for the payment of a debt.


Though the issue of transparency continues to dodge the sector and valuation
is a tough call, there is money to be made in real estate. But looking
at the factors that go into determining profitability projections of realty
stocks, a general positive view on the sector is insufficient. Smart stock
picking is what will make the difference. Companies of all hues and market
cap operate in this space. The move by the SEBI to come out with tighter
norms, standard disclosure procedures and ownership and agreement statuses
of the land bank will benefit investors. The number of companies getting
listed is on the rise and the BSE Realty Index, comprising of 11 stocks,
will certainly help as a benchmark. But one can well understand the reluctance
of most fund managers for the time being.

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Realty developers now zero in on the masses-Realty Trends-Real Estate-Markets-The Economic Times

Realty developers now zero in on the masses-Realty Trends-Real Estate-Markets-The Economic Times

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NRI remittance: How it is invested

NRI remittance: How it is invested

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RREEF lures ICICI veteran to head India business - General News - - The network for financial decision makers

RREEF lures ICICI veteran to head India business - General News - - The network for financial decision makers

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Tuesday, September 4, 2007

GST Road set to be Chennai’s SEZ corridor

Highway Now Offers A Fair Mix Of IT & Manufacturing; Has Become A Hub For Property Developers

D Govardan CHENNAI

THE arterial highway connecting Tamil Nadu’s capital Chennai to the
southern regions of the state, the Grand Southern Trunk Road — or GST
Road as it is popularly known — was a silent witness to zipping buses
and trucks, carrying loads of people and goods for years.
Standard Motors, located on the southern outskirts of the city, had
long stopped rolling out automobiles, the Madras Export Processing Zone
(MEPZ), tucked a few km into the city on the stretch, was less
glamorous to attract attention. In the mid-tolate 90s, when Ford and
along with a few
auto component units set up base on the stretch, GST Road figured on
the global automobile map, along with Sriperumbudur, which attracted
the larger investment from Korean major Hyundai Motor.
    Today, there is a whole lot of new
meaning for GST Road.
four SEZs already approved and room for at least a couple more, it may
soon turn out to be Chennai’s ‘SEZ Corridor’. Thanks to Infosys, which
is setting up its largest development centre in Mahindra SEZ, GST
Road now offers a fair mix of IT and manufacturing and has become a hub for property developers.
Road offers unparalleled accessibility and the best transportation
infrastructure in Chennai, in terms of connectivity as it is connected
by road, rail
and air,” says
Mr Ramesh Nair, local director, Jones Lang Lasalle Meghraj, which has
bagged the marketing rights for the Shriram Gateway SEZ.
Road is also in close proximity to thickly populated middle-income
catchment zones like Tambaram, Chromepet and Pallavaram, besides
Perungalathur, making it attractive to IT and BPO companies,” he added.

    Besides MEPZ, which houses several export units and is also
offering space for IT Parks to come up, and Mahindra Global City SEZ,
construction work has begun on Shri
Gateway and L&T Arun Excello SEZs on the stretch. In addition,
India Land, which is building a large IT Park at Ambattur, is planning
a mixed-use SEZ on GST Road.
    “Unlike OMR and Sriperumbudur stretches, GST Road is the only place
has established infrastructure already in place. With a slew of SEZ
projects underway, the stretch is fast developing into a kind of SEZ
Corridor because of the availability of large tracts of land,” said Mr
Rajesh Babu of leading property consultants, RECS Group.
the emerging potential, leading property developers L&T Arun
Excello launched ‘Estancia’, a large residential township, adjacent to
their SEZ project. Akshaya Homes, which was an early bird on the OMR,
has already moved into GST Road and launched a 520-unit residential
township, Metropolis. Hallmark Constructions too has just about
launched its 2,000 unit residential project on the GST Road.
established infrastructure, rail connectivity, which runs almost
parallel to the road, is the biggest advantage for GST Road. Several
established educational institutions are well entrenched on the
stretch,” industry sources said. “Unlike OMR, which is set to house
just a couple of hotels, there are over half a dozen hotels already
there or being planned,” they added.


Four SEZs have been approved on the stretch. With Infosys setting up
its largest development centre in Mahindra SEZ, GST Road offers a fair
mix of IT and manufacturing companies

• Being in close
proximity to thickly populated middle-income catchment zones like
Tambaram, Chromepet & Pallavaram, it attracts IT and BPO companies

Sensing the emerging potential, leading property developers like
L&T Arun Excello have launched large residential township, adjacent
to the SEZ projects

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