Property’s most favoured FDI destination: Residential sector

94 per cent foreign direct investments have been made in tier-I cities like Delhi, Mumbai and Bangalore
New Delhi, June 7: About $30 billion of foreign direct investment (FDI) is earmarked for real estate markets across Asia in 2007. Of this pie, India might end up getting as much as $6 billion, according to multinational real estate consultancy Jones Lang Lasalle (JLL).
In a report titled Rising FDI in real estate, JLL also lists the major FDI deals that took place during January-March 2007. Commenting on the changing trends in FDI during the first quarter of 2007, JLL strategic consulting & research division senior manager Abhishek Kiran Gupta said: “Most of the capital is being deployed in the residential sector and in mixed-used projects. Since the Reserve Bank of India (RBI) does not allow developers to utilise capital raised from banks for purchasing land parcels, capital raised through private placements, foreign investments and funds is being used for such transactions.”
Residential has been foreign investment’s most favoured asset class as exit from such investments is assured and the internal rates of return (IRR) meet investor expectations. Today greenfield projects in India offer a return of 20-25 per cent, the report adds.
Investors are also attracted to the strong commercial property yields across metros, and to the availability of quality supplies. Rentals for grade A commercial properties in tier-I cities like Mumbai and Delhi have gone up by more than 100 per cent over the last 15-18 months. While in 2006, more investments were made in special purpose vehicles (SPVs), entity-level transactions increased during the first quarter of 2007. “This can be attributed to investors’ rising confidence in the Indian real estate market,” opined Gupta.
About 94 per cent of FDI investments have been made in tier-I cities like Delhi, Mumbai and Bangalore. This is despite the high entry barriers associated with investment in these cities. The barriers include low availability of land parcels, mature markets, and a highly competitive environment due to the presence of several financially sound grade-A developers. According to the report, investment in tier-I cities in the next two to three years is expected to rise due to growing demand in these locations.
Going forward as tier-I real estate markets mature, the report notes, tier-II and III cities such as Chennai, Pune, Kolkata and Hyderabad are likely to emerge as new investment destinations.
With the RBI increasing the risk weightage on bank lending to real estate, issuing guidelines on maximum (bank) exposure to the sector and prohibiting the use of bank capital for buying land parcels, developers are looking at alternative funding options. According to Gupta, “The private equity route has and is expected to be favoured. Also, mezzanine structures have now become popular with investors. The other routes for raising capital are domestic listing on the BSE/ NSE and AIM, LSE listing.”
http://www.indianexpress.com/story/32983.html

Gulf investment in Indian property crosses Dh135b

Dubai: The value of real estate projects announced by Gulf investors in India has reached Dh135.79 billion ($37 billion), according to available information.
Companies such Nakheel and Emaar MGF have committed $32 billion between them to pan-Indian property developments. And a host of private developers are poised to make their move in a sector that market analysts say will grow by 700 per cent within the next 10 years.
"During the last couple of years several large institutional investors have been making high value investments in India and we expect to see a steady rise in such investments," said Raed Al Saleh, assistant general manager - asset management division at Kuwait Investment Company (KIC).

Al Saleh said transactions in the market are expected to grow from $14 billion to $102 billion in the next 10 years, fuelled by favourable demographics, growing purchasing power of the 200 million strong middle-class, increased levels of professionalism in the sector, and reforms on FDI.
The country attracted investments worth $3 billion in the real estate and construction sector, out of a total foreign direct investment (FDI) of $19 billion, in the fiscal year that ended in March, said Ajay Dua, secretary with the Indian government's department of industrial policy and promotion.
FDI target
Overseas inflows this year will help the country to achieve a 2007-08 target for total FDI of $30 billion, he said.
Emaar MGF, a joint-venture between Emaar Properties and India's MGF Developments, this week announced it has embarked on a $12 billion pan-India programme that will include special economic zones, hospitals, residential units, hotels and malls.
Earlier this year, India's largest real estate developer DLF announced an agreement with Nakheel worth $20 billion to build two townships in India.
Meanwhile Damac Properties, an arm of Damac Holding, is planning its foray into India with more than a billion dollars of investment into luxury residential complexes and resorts.
A top official at Dubai-based developer ETA Star Properties said last month the company will develop a Dh3.38 billion ($923 million) infotech park in Chennai. The announcement took the group's total investment value in India to Dh16.44 billion so far.
Another project is the $395 million Energy City India, being developed by Gulf Finance House. Now at the equity raising stage, the project is the second energy city in a series of energy focused business clusters planned across the Middle East and Asia, following Energy City Qatar. It will occupy a 600 acre site in New Mumbai, a satellite city to Mumbai.
KIC, which also partnered Gulf Finance House on Energy City Qatar, says the private placement initiative, is open to both institutional investors and individuals.
http://www.gulfnews.com/business/Real_Estate_Property/10130861.html

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http://www.transworldnews.com/NewsStory.aspx?storyid=17268&ret=Default.aspx

Netting the dream house

REAL ESTATE: High-end properties come up for cybersale.

Real estate portals in India are on a roll, despite the relative slump in the market. Traffic and listings have been rising exponentially, and while mid-sized, moderately priced properties are the staple on sites like 99acres.com, indiaproperty.com and magicbricks.com, increasingly, high-end properties located in plush areas of Delhi and Mumbai are also being listed.

Do an advanced search on any of these portals for apartments, independent houses, farmhouses, put in Rs 1 crore and above as the price criterion, and note the responses you get.

There’s a three-bedroom house in Vasant Vihar with Rs 48 crore as listed price, an apartment on Peddar Road, Mumbai going for Rs 30 crore, a farmhouse on 2.75 acres at Radhe Mohan Drive in Chhatarpur, Delhi priced Rs 18 crore, and many more.

Mostly, these are broker listings. One of them, S K Joshi of Sterling Estates, Lajpat Nagar, has been listing properties costing above Rs 1 crore on the web for the past two years.

“Thirty-40 per cent of my business now comes from the Net. I’ve got calls from NRIs, who’ve looked up a property on the Net.” Joshi is now trying to broker a deal for a 50,000 sq ft warehouse for a top company, again a contact resulting from his portal listing.

And it is not just the brokers, developers too are using these portals seriously — Jaypee Greens, Supertech, Grand Mansions. Ansals API has used property portals to market Aqauapolis (Ghaziabad), Orchard County (Chandigarh), Sushant Golf City (Lucknow), for apartments ranging from Rs 20 lakh to Rs 7 crore.

Kunal Banerji, vice president marketing, Ansals API, says “The Net is one of the most important marketing tools for us. We’ve set up a separate division to use the web in a dynamic manner and reach out to an international market.” The response — 14-15 solid enquiries — has been quite heartening, he says.

Obviously, this phenomenon is the result of the portals’ “worldwide reach in the virtual world”, as Rajan Sastri, head, research and advisory, indiaproperties.com points out. Another important factor, according to Sastri, is “the fact that with time has come ease in transacting over the Internet”.

Deepali Singh, business head, 99acres.com, too sees the listing of crore-plus properties as a natural progression from transactions in low-value properties. “Besides, advertisers have found the responses are more targeted and there’s less of junk.”

Yash Asher, product manager, indiaproperty.com, is less gung-ho. “Expensive properties are now appearing on portals because unlike, say, a year ago, this is no longer a seller’s market, and developers and brokers need to make use of every marketing channel available to them.”
http://www.business-standard.com/common/storypage.php?leftnm=lmnu6&subLeft=10&autono=286958&tab=r

Foreign partners don`t really add value in retail

No business house wants to be left out of the retail party; the potential to make money even at wafer-thin margins is huge given the low penetration of organised retailing at just 3 per cent. The Aditya Birla group wants its share of the pie and has started off by buying Trinethra, a southern chain of stores covering about half a million square feet. Sumant Sinha, CEO, Aditya Birla Retail, tells Shobhana Subramanian that Trinethra’s doing well, but he’s worried about high real estate prices. Excerpts:
What have you learnt from the Trinethra experience? Does it make sense to acquire or build from scratch?
I think there are merits to both. In our case, since we were starting without such a humongous background in retail, it was sensible for us to make an acquisition to get started.
Having said that, an acquisition also comes with its own cost which is that you have to integrate and over time you have to potentially change the stores that you acquire to what you want them to be. That has its own costs and more than even costs, it’s the time and effort of doing that. So I think it’s good to make one or two acquisitions to get the initial expertise but after that you have to be careful about making acquisitions.
Why do you believe it’s not necessary to team up with a foreign player?
Because retail is mostly a local business. If you look at the elements of success you have sourcing, supply chain, the stores, running the stores, the merchandising (which means an understanding of the customer), people and real estate. You need to hire people mostly locally; wherever you need to augment, you can hire from outside.
Real estate sourcing is entirely a local business, you need relationships with Indian developers and have to understand the dynamics here. So you can’t get much help from a foreigner. A lot of sourcing has to be done within India and you have to develop your own Indian supply chain and vendor base. Foreign companies can’t really help too much here.
Where they can add value to some extent is in the operation of stores but even there it’s not a benefit that you can’t avail by hiring people from other parts of the world. Ultimately the consumer you are selling to is an Indian consumer and we as an Indian group have a much better intuitive feel and understanding of this consumer than anyone sitting in America or Europe.
What about economies of scale?
If you look at economies of scale as a potential benefit, those economies of scale typically tend to work within the country. Global economies of scale are not that critical for success in the retail business and various studies have shown that. So you need to be large within the country rather than globally to get the benefits of scale.
What will be More’s USP? Why will I walk into a More store and not into a Fresh or a Walmart?
Well you might walk into another store as well depending on whether it’s close to your house or not because convenience is an important factor. So our intention is to be fairly close to our consumers and to the extent that we are closer to them than others, they will walk into our stores.
But the intention is to be very competitive in price. There can be different strategies; for instance, an everyday low-price strategy without promotions or one can have low prices on some days. What we’re going to be offering is very competitive prices on all key items with lots of promotions and excitement around the store.
The second is to give people the right merchandise: people don’t necessarily want a huge variety, what they want are the right products. But the idea is also to have multiple price points to cater to people across socio-economic classes. This would call for a good understanding of what people really want. We will also have innovative products that we will design in-house.
What kind of mix are you looking at between in-store brands and established brands?
This will evolve over time but our intention will be to get as much of the store labels as possible even in categories like apparel.
Do you feel that a model which builds in a higher proportion of store labels will fetch better margins? What kind of margins have you built in?
Typically a higher share of store brands do bring in better margins, but then margins are not the only thing. We need to get sales too. I’m afraid I can’t disclose what kind of margins we’re looking at because it is very sensitive information.
What kind of lease rentals are you paying for your properties?
That too is competitive information which I cannot share. But rates for real estate have gone up quite a bit and they’re getting to levels where it’s really not possible to make too much money. We’re getting affordable real estate in some parts of some towns, in other parts we’re not. Pune’s reasonably expensive; Chennai, Bangalore and Hyderabad are also getting to a point where they’re fairly expensive.
We feel it’s worth going into some of these towns at these prices. That’s our assumption right now but time will tell whether we’re right. To me that’s the big variable for all retail companies.
At the rates that people are having to pay right now, will people make money? That’s why you need people who have the staying power to go through the real estate cycle. Our feel is that real estate prices are high and at these levels it’s going to be hard to make money.
Will you be buying any real estate or will you opt only for leases?
We don’t have a fixed model. I think we’ll be a little flexible about life. We haven’t bought any properties so far.
Would you say the consumption story is intact? Is the environment friendly enough for a retail business?
I think at this point there hasn’t been that much of an impact on spending but if the government continues to raise interest rates, at some point there will be an impact.
I would say there are some things working in favour of the industry like consumer demand, while there are others that are not, such as infrastructure bottlenecks and good-quality people.
http://www.business-standard.com/lifeleisure/storypage.php?leftnm=lmnu4&subLeft=3&autono=286956&tab=r

StanChart buys office space for Rs 325 cr

MUMBAI: In one of the largest office-space real estate transactions in India, Standard Chartered — India’s leading foreign bank — has acquired commercial space building Titantium in Mumbai-suburb Goregaon for about Rs 325 crore. Standard Chartered, which bought the space from developer K Raheja, will get six floors and around 1,50,000 sqft through this acquisition. The space will be used to house the back-office operations of its consumer banking division and other support staff. Confirming the development, a Standard Chartered spokesperson said, “We are investing in growth. All our business are growing and this investment is to meet our increased staff requirement over the next 3-4 years.” However, he was reluctant to divulge the financial details of the deal. Sources close to the deal said Standard Chartered is scouting for more properties in Delhi, Bangalore and even Mumbai, to meet its future plans. The UK-based bank has doubled its post-tax profits in India from Rs 601 crore in March 2005 to Rs 1,364 crore in March 2007, increasing profits by 50.5% and 50.7%, respectively over the past two years. Its staff strength has jumped by 4,000 people over the past five quarters to over 17,000. The bank is expected to increase its India headcount to over 25,000 in the next three years, which will include around 15,000 non-BPO employees. Recently, Standard Chartered recruited heavily for its consumer banking business, corporate banking and also in the global markets. It is also hiring for its soon-to-be-launched private banking operations, which is expected to be a big focus area for the bank. The deal with K Raheja comes at a time when the commercial real estate market is expected to enter a bearish phase due to oversupply. Property consultancy firms believe oversupply in office space in most grade A cities in the past 6-12 months may result in a fall in rentals and capital values. However, they feel Mumbai market will be an exception because of the huge demand-supply mismatch. According to a recent report by real estate consultancy firm DTZ, markets like the National Capital Region of Delhi, Bangalore, Chennai, Pune, Kolkata and Hyderabad, except Mumbai, will face oversupply in the range of 20-200% of the estimated demand in 2007. Mumbai, however, will continue to have supply shortage for some more time.
http://economictimes.indiatimes.com/StanChart_buys_office_space_for_Rs_325_cr/articleshow/2105001.cms

Molinaro Koger closes $2 billion in hotel real-estate sales year to date

Washington, DC - May 31, 2007 - Molinaro Koger (MK), announced today that the firm has marketed, structured and closed 39 hotel real estate transactions year to date 2007 totaling more than $2 billion. Hospitality assets handled by MK thus far in 2007 circle the globe, ranging from the Copenhagen Marriott Hotel to a nine property full-service portfolio in the United States.
"As one of the most active transactional years for hotel assets, 2007 marks a time when the hospitality sector has clearly come into its own right in the world of real estate and international institutional investments," remarked Rob Koger, President of Molinaro Koger, in announcing his firm's year to date sales figures.
"On an internal level we are, of course, pleased that our ability to demonstrate the unique attributes of the asset's we market elicited strong investor interest and result in sales which meet our clients' disposition goals," continued Mr. Koger in reference to the firm's outstanding sales year.
Hotel transactions structured thus far in 2007 by Molinaro Koger as a result of their marketing efforts include:
- A portfolio of nine U.S. hotels for $450 million. Sold by Cranston, Rhode Island-based hotelier Procaccianti Group to Bahrain-based Investcorp. Procaccianti will continue to manage the properties, comprised of Marriott, InterContinental, Hilton and Starwood brands. The portfolio totals 2,828 rooms and more than 252,500 square feet of meeting space.
- The Washington Marriott Hotel and retail complex. Sold to Rockpoint Group and Highgate Hospitality for an undisclosed amount on behalf of Angelo, Gordon & Co., Amerimar Enterprises, and Greenebaum & Rose Associates. Washington, D.C., is one of the most expensive markets in which to build due to limited quality land sites, a wealth index of 143% (US average is 100%), and strict government regulations.
- The Copenhagen Marriott Hotel. The 395-room asset was sold to an affiliate of certain real estate funds managed by the Blackstone Group ("Blackstone"), acting on behalf of Danish joint venture company Hotelinvest Kalvebod A/S, which is owned 49 percent by Nykredit and 51 percent by Marriott International. Built as a new five-star property, the Copenhagen Marriott Hotel was opened in early September 2001 and will continue to be managed under a long-term contract with Marriott International.
- The Marriott Fairview Park. The 395-room hotel was sold by Host Hotels & Resorts to JER Partners for $108.5 million. The Fairview Park Marriott is one of the premier hotels in Northern Virginia just inside the Capital Beltway.
- A portfolio of six Sheraton Suites Hotels located in the United States. Sold by Starwood Hotels & Resorts Worldwide and IHV International for an undisclosed price to The Procaccianti Group. The portfolio consists of 1,492 two-room suite hotels located in Wilmington, Delaware; Kansas City, Missouri; Elk Grove, Illinois; Columbus, Ohio; Dallas, Texas; and Alexandria, Virginia.
- A portfolio of seven extended-stay Hyatt Summerfield Suites. Sold to Hersha Hospitality Trust on behalf of LodgeWorks, L.P. The sale price for the upscale extended-stay portfolio of 1,005 suites was approximately $169 million.
In other news, MK expanded the firm's Capital Markets division and opened offices in India in early 2007. During the last 12 months MK has structured more than $3.8 billion in hotel real estate worldwide. For further information about these transactions and current hotel property offerings, please contact MK at 703.760.9600 or via www.mkhotels.com.
http://www.hotelmotel.com/hotelmotel/article/articleDetail.jsp?id=432230

Changes needed for Realty Trust

India will need to change parts of its legal and taxation framework for real estate investment trusts (REITs) to find a foothold in the country’s booming real estate market, according to a joint research paper by credit rating agencies, Moody’s Investors Service, and Icra Ltd.
REIT is a trust that uses the pooled capital of several investors—big and small—to purchase and manage property that generates income.
These instruments are traded on major exchanges, just like stocks, and enable sharing in both residential and other commercial or industrial properties. However, they pay yields in the form of dividends, no matter how the shares perform. Several issues need to be addressed before REITs come into India, the report said. (REITs, which are currently not allowed in India, have been a hot topic in the country since last year.)
For instance, India has one of the highest levels of property tax and stamp duty among the major countries in Asia. This has lead to high levels of non-registration of property transactions and transfers through the power-of-attorney route, it said. This muddies real ownership.
Additionally, high stamp duties, registration charges and capital gains tax lead to high incidence of cash transactions. These cash-based transactions are usually routed through many shell companies, the report added.
India also has a poor land title monitoring system because of which there are many ownership problems. These factors have led to corporate governance issues withinthe real estate companies over transparency and disclosure.
“There needs to be an improvement in the Indian real estate sector before REITs enter India,” said Raj Kaushik, chief financial officer of Vipul Ltd, a real estate company. “REITs are futuristic options that are present abroad. They will come into India. But before that happens, the real estate sector needs to be more organized.”
According to the report, common areas where there is a lack of clarity include the number and size of projects being executed by any property group, the use of customer advances and the nature of total indebtedness within the group. The emergence ofreal estate developers without a proven track record in the sector has worsened theseissues. “The real estate transaction process is cumbersome and the property industry’s transparency and disclosure levels could be improved,” said Vikas Aggarwal, co-author of the report and a senior vice-president of Icra.
Both Moody’s and Icra expect that the existing, extremely fragmented structure of the Indian real estate market will continue for much longer.
http://www.livemint.com/2007/06/07011054/Changes-needed-for-realty-trus.html

Emaar MGF embarks on projects across India

Dubai: Emaar MGF, a joint-venture between Dubai-based realtor Emaar Properties and India's MGF Developments, has embarked on a major pan-India real estate building programme that will include nine special economic zones (SEZs) and 50 hospitals.
According to information supplied by Emaar MGF, it will also add 25,000 hotel rooms throughout India in ten years, numerous schools and universities, residential townships and shopping malls.
The plans are part of a huge investment package, which one Indian newspaper puts at $12 billion in the next five years alone. The figure is considered to be the largest single investment in the country's real estate sector.
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"It is our vision to change the way modern India lives and towards this goal we have brought into the country the largest ever FDI [foreign direct investment] in the Indian real estate sector," said Shravan Gupta, executive vice chairman and managing director, Emaar MGF.
The company started its programme by laying the foundation stone for the mega township project at Mohali Hills, a satellite town of Chandigarh.
The project will have a capital of Rs160 billion and will include residential plots, town houses, villas and shopping malls, in addition to facilities such as hospitals and IT parks.
Other residential projects include The Views in Mohali and The Palm Springs in Gurgaon, which will offer 300 high-end apartments and 100 luxury villas. The majority of the 50 hospitals planned across the country in the next 7-10 years will form a part these integrated townships.
Approval for SEZs
Meanwhile, Emaar MGF has gained approval for nine SEZs, which will cross various product categories and be located in states including Haryana, Hyderabad, Tamil Nadu, Andhra Pradesh and Karnataka.
In the hospitality sector, the company plans to build 10 luxury hotels and 45-50 business hotels within the same time period. It's joint venture with Accor will result in 100 budget hotels in 10 years. In total it will add 25,000 hotel rooms across India in 10 years.
The schools being planned will offer main education courses, while the universities will offer general stream and specialised courses. The first school will be built in Neemrana and will have a seating capacity of 1,800.
In terms of shopping centres, Susil Dungarwal, head of retail (west and south) at Emaar MGF, said the time is right for global companies to enter Indian retail sector.
But he warned that the ability to secure space in "legitimate and retail-friendly properties" that are more than 500,000 square feet in size is a challenge.
He also highlighted a lack of retail talent in India, but said the 15 million people in unorganised retail have the basic skills to make the jump into organised retail.
Emaar MGF was established in 2005.
http://www.gulfnews.com/business/Real_Estate_Property/10130291.html

Many investors feel like running away from homes

Buying real estate seemed a no-brainer five years ago. Cheap loans were easy to get. Home prices were soaring. Stocks were dead money.
How things have changed.
For-sale signs are sitting ignored in some cities. Interest rates on exotic loans are doubling. Insurance premiums and property taxes are skyrocketing. Wannabe real estate tycoons stuck with properties they can't sell have been turned into landlords, forced to fix toilets and take tenant calls in the middle of the night. Many are "under water" — owing more on the mortgage than they could get by selling.
Meanwhile, stock investors have been celebrating again as broad market indexes march to new highs. And that is prompting some real estate investors to make the switch back to stocks. Real estate "isn't as lucrative as it used to be," says Jack Patterson, a financial adviser in Coral Gables, Fla., who has been helping clients sell real estate and buy stocks.
It's a complete flip-flop from 2002, when investors tired of the bear market ravaging Wall Street cashed in their stocks and bought homes and investment property. People doing that were the subject of a USA TODAY cover story in December 2002.
Dave Yeske, a San Francisco financial adviser, was featured in that 2002 story because he was being barraged with people selling stocks to buy homes. "The pendulum has swung in the opposite direction," he says now. "The clients that sold stocks to buy spec houses in Arizona are telling me they're under water, can't rent them and they wish they left all the money in the stock market."
Lex Latkovski saw this shift early and made his move last year. He had been a big real estate investor. Shortly after moving to Phoenix in 1996 for a consulting job, Latkovski, 38, bought a house in the area for $87,000, putting down just $5,000. As home prices leapt, Latkovski quadrupled his bet, buying three more homes on the same street as investments. The prices on the homes skyrocketed.
Rather than ride the real estate wave until it crashed on the jetty, Latkovski bailed out. He sold three of the homes last year, pocketed a 60-fold gain and moved the money into the stock market. Seeing real estate as played out, he's bought exchange-traded funds and mutual funds.
"It was time to take my profits and walk away," he says.
It's easy to sour on real estate while watching stock investors making money without dealing with rental property and the associated costs, says Norma Solarz. Solarz, who as a social worker has next to no retirement benefits, bought a property in Oakland for $225,000 in 1997 with plans to rent it out, collect income along the way, sell it down the road and use the proceeds as a retirement fund.
Things haven't worked out the way she'd hoped. While the property has appreciated, by her estimate, to roughly $600,000, being a landlord is a bigger hassle than she'd ever imagined. She's plowed about $56,000 into the property for various repairs and had to deal with tenants and their problems no matter the time of day.
"I'm not sure it's worth the headache," she says, adding she's prepared to sell the property and move into stocks as soon as housing prices firm up.
She might have to wait awhile if current trends persist. The median existing single-family home price fell 0.9% from a year ago to $220,500 in April, according to the National Association of Realtors. And based on the S&P/Case-Shiller Home Price Indices, home prices in 10 leading metropolitan areas are expected to fall another 1.6% by November and 3.3% by February '08.
Some real estate speculators aren't willing to sit it out.
"Clients are telling me they're so ready to get out," says James Simos, a financial adviser at Infinity Financial Services who has been advising people how to shift out of properties and into stocks. "They don't want the taxes, the toilets and the tenants."
Recent real estate investors who are getting burned now could have saved themselves some trouble if they had done some research.
Historically, stocks have always been superior investments to housing, according to a comprehensive study by Ken Winans, president of investment research firm Winans International. From 1920 to December 2006, the average new home appreciated from $4,030 to $276,400, a 6,759% gain, he says.
But in that same 86-year period, the Dow Jones industrial average returned 17,210%, not even including dividends. Stocks still beat real estate over the past 20 years. New home prices gained 268% from 1986 to 2006, a fraction of the Dow's 1,193% gain, Winans says.
But as anyone who bought stocks back in 2000 knows, neither real estate nor stocks are safe investments.
For instance, Winans says that during the Great Depression, real estate lost 73% of its value and the stock market declined more than 90%. Realtors don't forecast real estate prices to fall that much this time, but the estimates continue to worsen.
The cycles of investing return to stocks
The migration from real estate to stocks is part of the natural swings investors go from loving an investment class to hating it, says Robert Shiller, a Yale professor who studies market movements. Just as investors saw housing as a haven from the bear market for stocks in 2002, they see stocks as their best bet now as some housing markets go from bad to ugly, he says.
Winans and others think the sloshing of money from real estate into stocks is one of the factors fueling the stock market's recovery to record levels. "Inventories (of unsold homes) are up while coinciding with volumes and prices of stocks going up," he says. "Surprising there aren't more people connecting the dots."
It's the "real estate effect," says Robert Maltbie of Millennium Asset Management. Individual investors who bet on real estate "know that's nowhere to go, so they're going back to equities," he says.
Frank and Kathleen Schlier, both 49, debated between investing in real estate and stocks, and stocks won. In May, they sold one of their investment properties — a home they inherited in Lafayette, Calif., about 25 miles east of San Francisco.
It was worth $800,000 when they inherited it last year, and they figured that with some work they could make an even bigger windfall. They plowed $30,000 into the property to subdivide the land into two parcels that could be sold separately. And they were thinking about spending another $800,000 to upgrade the existing home and build another on the second part of the land.
But they watched real estate prices struggle in the area, while stock prices soared, and they changed their minds. They put the entire subdivided property on the market for $1.2 million and ended up selling for $1.025 million. They're pleased with the money they've made but feel the stock market is a better place now and over the long term. They've taken the proceeds and plowed them into the stock market in a diversified portfolio.
Now they're considering selling their second investment property in Atwater, Calif., which Frank bought seven years ago for $140,000 on hopes the area would boom. But while prices soared to $300,000 last year, they've since fallen to $250,000 and the prospects aren't promising. Speculators flooded the area, and now many are having trouble finding renters, Frank says. If the person renting the property leaves, he's ready to sell that, too, and move that money into stocks.
Real estate can be really annoying
As people like the Schliers have learned, while real estate can be lucrative, it often comes with headaches and hidden costs. Those may have been tolerable when home prices were soaring, but now that prices have stabilized or even started to drop, the annoyances are deal killers.
Some investors want to get out but fear they're so far in the hole already that they don't want to take the loss. Janice Burnham, an eBay employee who lives in San Francisco and was included in USA TODAY's 2002 cover story, got fed up with stocks and bought a Silicon Valley home in 2002 and an investment property in Folsom, Calif., near Sacramento two years ago. She paid $353,000 for the investment property.
"Everyone else was making money," she says. "I figured this was the way to make money. I've changed my opinion on that," she says.
Now she figures she would have trouble selling the Folsom home for $320,000, a loss she's trying to avoid by renting the property. But that's not going well, either, because she spends money for upkeep and struggles to find tenants.
"It's a lot of work for no gain," she says.
Meanwhile, the money she left invested in the stock market has risen considerably since she took the real estate plunge.
Flippers deal with their fates
The plight of real estate investors is even the topic of a Web mockumentary, called Flipper Nation, that pokes fun at two wannabe real estate speculators who ended up making a $1 profit.
Jesting aside, some real estate investors are sticking with housing, in the belief that the bottom has been formed. Scott Hibner sold his investment properties in Las Vegas and used the proceeds to buy rental properties in Austin, where he thinks the prospects are brighter. He's planning on holding the properties for five to 10 years and not going "for a quick flip."
Others, like Nigel Swaby, a 36-year-old mortgage broker in Salt Lake City, are reluctant stock investors. Fearing the prices on two investment properties he owned in Salt Lake City could decline, he sold them in 2005 and invested the money in stocks.
Swaby wants to get back into real estate and has been hunting for homes to buy, but feels prices are still too inflated. "There aren't a ton of deals out there," he says. So his money sits in a high-yield savings account, a diversified stock mutual fund and four stocks: Procter & Gamble, Nortel Networks, Revlon and United Airlines. "I want a higher rate of return than a savings account, and stocks are it, until the real estate opportunity presents itself."
There are also real estate investors who borrowed so much and are so under water they're not yet willing to give up, says Tucker Watkins, a financial adviser at Ameriprise. "They have learned the hard way how illiquid rental real estate is," he says.
Each bit of news about the softening housing market makes these real estate investors, hoping for a turnaround, even more nervous, says Rob Alpert, a Smith Barney financial adviser based in Long Island with several clients who bought investment property in Florida. "They're waiting and seeing. They're miserable," says Alpert, who has advised clients with shakier finances to take the loss and move to stocks. "Don't make this worse," he tells clients.
Investors such as Latkovski, who already sold their real estate, are glad to be free from the worry. He's now traveling the world for two to five years, including China and India, paid for by the interest and dividends he's collecting from his investments. He updates his website with accomplishments, such as hiking to the top of a mountain in Lamayuru, Ladakh. "I'm taking some time off," he says.
http://www.usatoday.com/money/economy/housing/2007-06-06-real-stocks-usat_N.htm

Realty cos hit by AIM-less listing

LONDON: Despite the boom in Indian real estate, Indian realty companies listed on London's Alternative Investment Market (AIM) have seen value erosions and are generally trading at a discount of 8-20% to their issue prices.
"While this is disappointing, it is not surprising," said Shiv Dayal, managing director of Langham Capital Ltd, a boutique financial advisory firm with a focus on corporate cross-border transactions between India and the UK.
"News is sporadic about these companies and there is a lack of information for the investor to trade on. So, there is a slide," said Dayal.
Hiranandani's Hirco, Raheja Group's Ishaan Real Estate, Unitech, Eredene Capital, West Pioneer, Alpha Tiger and Dev Properties of the Indiabulls Group are some of the Indian real estate companies listed on AIM.
While most of these companies have a huge potential, their stocks are trading down.
Most analysts have put the lack of a profile in the UK as the major cause for the slide. "They have to keep investors informed of developments with regular information and education if they want to attract new investors," Dayal told DNA Money.
"Indian real estate should not see AIM as just a one-off way to raise capital," he added, insisting that they should learn investor relations from Wipro.
Indian real estate companies also have a lead time of around two years before any profits will show up. "It takes two-three years for the development of projects and there is no real pick-up in equity prices until the properties are close to occupation," said Dayal. Investors need to ride out the lead time.
Analysts also believe that as many of the real estate companies listed are family businesses like Raheja Group, it is a good opportunity for investors to get a stake in them. However, this also has the downside in that there is no certainty about when the returns will come, given the fact that investments may be made at a time of the family's choosing.
Non-family-owned companies tend to deploy their capital quickly and efficiently and so offer returns on investments more enough.
http://www.dnaindia.com/report.asp?NewsID=1100588

Seattle Marriott attracts investors with EB-5 visas

SEATTLE — American Life Inc. has a strong track record of attracting foreign investors to the United States. Now, the company is turning its sights on India for the development of a new Marriott hotel in Seattle.
American Life is focusing its efforts on helping to redevelop the "old port" area of Seattle, which, due to rapid expansion in the downtown area, has become attractive again after being abandoned for several years. In 1996, the U.S. government gave approval to develop the area using EB-5 investor visas.
The EB-5 visa allows foreign investors to come to the United States for investing $1 million into a business and hiring 10 employees anywhere in the country; investing $500,000 and hiring 10 employees in an area where the unemployment rate exceeds the national average; or investing in a regional center.


Liebman
Founded in 1996 by Henry Liebman, a Seattle-based immigration lawyer, and Ray Klein, a Japanese-based businessman, American Life has raised over $200 million in the last several years through EB-5 visas to convert Seattle's "old port" region from warehouses and old commercial buildings to new business properties. The company, which has a portfolio of approximately 30 buildings, has predominantly focused on investors from Asian countries, such as Korea and Japan.
"In the EB-5 world, which is a small world, we are probably the single biggest player," said Liebman, American Life's president.
According to him, when trying to raise money for projects the magnitude of American Life’s is the EB-5 visa is a great option. "It is one of the arrows you pull out of the quiver," he added.
With its foray into hotels, American Life is making its first targeted effort at attracting investors from India to the United States, well aware of the Indian-American community's dominance in the hotel industry.
The Marriott project, which will convert a vacant office building into a 15-story hotel, is also in a National Park Historic District. Liebman believes the project itself is very attractive to those interested in the hotel business. "A hotel was just the perfect use for [the vacant office building]," he said. "This hotel will stimulate the immediate area."
"This is a real deal on its own," he added. "The visa is extra."
The Marriott project will be a debt-free project in that all of the estimated $85 million budget will be raised by investors with no loan financing. According to Liebman, American Life is looking for a 50-50 split between U.S. investors and EB-5 investors. The company has already raised over $10 million and is generating about $1 million to $2 million a week, with 20 EB-5 investors so far, some of which are from India, he added. "It might take a year, but that is all right."
American Life plans to own the hotel property, but Marriott will manage it.
To focus on the Indian community, American Life is relying on Prashant Ajmera as its marketing manager. Ajmera is an Indian lawyer with more than 14 years of experience in the legal field, with several years of experience in Canadian corporate migration law and international trade. He spent five years of practice at the High Court of Gujarat, Ahmedabad, India, in the office of the Additional Central Government Standing Council.
Ajmera, who also worked as a partner with the Canadian Immigration law firm Brownstein Brownstein & Associates from 1992 to 2000, said that his familiarity with Indian law, as well as local languages — he is fluent in Hindi and Gujarati — is helping to boost the connection with Indian investors. Ajmera also emphasized that American Life's hotel project is a great opportunity, not just for coming to the United States, but also for getting in on the front end of what promises to be a revitalizing development in Seattle.
Liebman believes that India's similarity to the Western and U.S. business world makes it even easier to work with investors on the EB-5 visa. He added that with the Marriott project you can really see the effectiveness of the EB-5 visa at work — bringing in investment which might otherwise not materialize. "Maybe some investors might not get involved — but for the EB-5 visa — but it is still an investment they should be happy with," he said.
Liebman has a long track record in real estate in Seattle. Since receiving his law degree from the Puget Sound School of Law in 1980, he has worked in real estate law for over 20 years as managing partner of Coe Nordwall Liebman LLC and currently at Liebman-Mimbu PLLC.
http://www.indusbusinessjournal.com/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications::Article&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=87B70196E8094BDDA6F036BFB8E58C6D

Emaar-MGF plans 12-billion-dollar investment in India

New Delhi - Dubai-based real estate firm Emaar Properties and its Indian partner the MGF group plans to invest more than 12 billion dollars in projects in India over the next five years, a news report said Saturday.
The projects include those in the housing sector, hospitality, commercial and retail, education and healthcare and IT parks and special economic zones.
'Emaar-MGF is working towards making a significant difference to Indian lifestyle through world-class development,' Emaar-MGF executive vice-chairman Shravan Gupta told the IANS news agency.
'It is our vision to change the way modern India lives. We have brought the largest-ever foreign investment in the real estate sector in India,' he added.
The Emaar-MGF venture has made its first foray into real estate with the foundation stone of Mohali Hills - a 160-billion-rupee (3.94-billion-dollar) project near the northern city of Chandigarh in Punjab state - being laid Thursday.
Mohali Hills will be followed by similar integrated township projects in two other cities in Punjab. Each project will be spread over 400 acres.
Emaar-MGF has also tied up with Accor, global leaders in economy and budget hotels, to set up 1,000 budget hotels in India under the brand name Formule 1 in the next 10 years.
http://news.monstersandcritics.com/business/news/article_1312481.php/Emaar-MGF_plans_12-billion-dollar_investment_in_India

The pursuit of luxury

With the emergence of a new class of very affluent young Indians with tremendous purchasing power, India is no more a mere testing ground for luxury brands but a lucrative market with explosive growth potential.

IN a swanky Mumbai mall, 26-year-old Vidisha Handa finds herself in a dilemma. The half an hour she has already spent in the fragrances division of the mall hasn’t helped her make up her mind between Chanel’s Chance Eau Fraiche and No. 5 Eau de Parfum. Although her parents can make little sense of her indecision, they know for sure it doesn’t stem from the price tag. Their daughter, an executive in a management consultancy firm, isn’t the type who would even bat an eyelid before parting with Rs. 4,100 or Rs. 5,500 that the 100 ml sprays of the luxury fragrances cost. Vidisha is only one among India’s burgeoning population of luxury brand aficionados. “I don’t understand what the fuss is all about,” she says on being grilled about what appears to be an extravagant lifestyle to her parents. Increasingly spoilt for choice, countless others of her ilk can be seen succumbing many times over to the lure of the other desires on display: Handbags from Louis Vuitton and Prada, sunglasses from Bulgari and Gucci, shoes from Sergio Rossi, Tod’s and Jimmy Choo, or designer outfits from Armani, Versace and Condici.No longer an indulgence
It’s time to get real: Brands are no longer incidental and luxury indulgences much less about ethical dubiety. On the contrary, they are about feeling precious and pampered, buoying up lifestyles, and flaunting a superiority of taste. Luxury brands may well seem distinct, but as the definition of luxury turns increasingly nebulous, many of the essential differences between luxury and mass market brands are blurring faster than one could notice. At once a concept, a subjective impression and a polemical term, luxury and its pursuit are here to stay. For, given the sheer attractiveness of today’s luxury brands and the fortunes that are being pumped into driving them in emerging markets like India, it appears increasingly unlikely that they will fall out of favour.
For international luxury brands, India is no longer a mere testing ground, but a lucrative market. Estimates suggest that India has more consumers for luxury goods than the adult population of several countries. Little wonder, as the World Wealth Report 2005-06, published by Merrill Lynch and Capgemini, puts the number of millionaires in India at a whopping 83,000 and states that India recorded the world’s second fastest growth at 19.3 per cent in the number of high net-worth individuals in 2005. High-end luxury brands cannot take their eyes off the fact that over 25 million people are getting added to the hallowed Indian middle class every year. It is estimated that nearly two million Indian households earn more than $1,00,000 annually and can spend about $9,000 on premium goods and services. That itself translates into a potential market of $16 billion, even as the number of such affluent Indian households is believed to be growing by 12-15 per cent.
Industry estimates suggest that as many as 200-300 international luxury brands are trying to make inroads into the Indian luxury market, already worth Rs 2,400 crore ($444 million according to the “India Luxury Trends 2006” report by KSA Technopak), growing at 30-32 per cent, and expected to touch Rs. 5,000 crore by 2010. One study pegs the Indian market potential of the 15-35 year bracket at a whopping $14 billion. According to the Synovate PAX media survey 2006, the ownership of luxury goods has grown from 15 per cent to 19 per cent since last year. Those owning luxury jewellery ($500 and more) now account for 17 per cent of affluent India. Spurred by this growth in the purchasing power of young India, these brands are actively looking to either launch themselves here or scale up their existing presence.Driven by “aspirations”
Heinz Jurgen Krogner, chairman and group CEO of Esprit Holdings, the $5-billion luxury apparel and accessories maker that set up shop in India in 2005, ascribes the growth of the luxury segment in India to its “highly aspirational” youth. Xavier Bertrand, managing director for Chanel in India, also thinks that what makes India unique is a young population that aspires more and more to luxury products. Arvind Singhal, chairman of Technopak, asserts that the country is witnessing the emergence of a new class of very affluent young Indians. According to Pam Danziger, president of Unity Marketing, affluent youngsters in India with a median age of 24.9 years will play an increasingly important role in the target market for global luxury marketers over the next decade or two. Yves Carcelle, President and CEO of Louis Vuitton Malletier, too is a firm believer in the potential of the Indian market.
Sample these indicators. Luxury fragrance brands such as Davidoff, Bulgari and Jennifer Lopez - Live Luxe are selling like hot cakes at the more than 150 outlets of Beauty Concepts. An upbeat Tony Chin, CEO of Beauty Concepts, believes that the market for luxury fragrances has come of age in India due to the retail boom being witnessed here. Two Escada flagship stores recently debuted in Mumbai and seven more are scheduled to open in India within the next two years. Frank Rheinboldt, CEO of the Escada Group is convinced that Escada will be positioned successfully in the Indian market by then. The retail chain Shoppers’ Stop has announced plans to introduce such foreign brands in the luxury category as Tommy Hilfiger, Calvin Klein, and Espirit.
Jewellery retailer Damas recently launched its twelfth store in India and intends to open another sixteen in the coming year. According to Anaggh Desai, CEO, Damas India, India is currently the world’s largest consumer of yellow gold and the third largest in global diamond jewellery. Vertu, Nokia’s luxury mobile phone brand costing upwards of Rs. 15 lakh, has been selling phenomenally well in India. LVMH, the French luxury goods conglomerate that owns famous brands like Dom Pérignon, Christian Dior, Givenchy, Donna Karan and Louis Vuitton, has met with encouraging response in India and plans to launch other brands like Fendi, Dior and Celine. Shoe brand Jimmy Choo is looking to open 10 stores in India by 2011. Be it a $1,000 Vuitton bag, a $1,20,000 diamond-encrusted Mont Blanc pen, or Rs. 10,000 T-shirts and Rs. 55,000 luggage from German luxury brand Aigner, branded luxury products are a growing rage.
Making a beeline for India are a host of international luxury brands such as Gucci, Herm, Christian Dior, Cartier, Piaget, Tiffany, Moschino and others. To Reto Cina, president and CEO, Davidoff Group, which is launching cigars in India through Godfrey Phillips, India spells one of the fastest growing tobacco markets. According to chairman Diego Rossetti, Fratelli Rossetti is investing more in the Indian market because Indians understand luxury better. Even porcelain figurine designer Lladro is adding three more stores to its existing six stores in India. Genesis Colours, popular for its high-end fashion label Satya Paul, is reported to be in negotiations to bring the luxury apparel and perfume brand Kenzo to India. Kenzo is one of the two LMVH brands, the other being Thomas Pink, that will be entering India shortly. They are all here
Global designer brand Giorgio Armani is in talks with an Indian real estate major in its quest for a partner to tap into the Indian market. William Penn is bringing three of its Rs 9.5-lakh Sheaffer pens to India. Italian fashion group Ittierre Accessories is reported to be entering the domestic accessories market with the launch of Plus IT boutiques that will stock brands such as Ferré, Malo, Extè, Versace Sport, Just Cavalli, C’N’C Costume National, and the John Galliano Young brand. Another French firm, Estee Lauder is planning to introduce the Donna Karan range of fragrances, colour cosmetic line M-A-C and skin-care brand Clinique. Christophe Caillaud, CEO of Jean Paul Gaultier, known for its beauty products, apparel and accessories, said recently that his company is working to bring its ready-to-wear garments to India. Diageo India will soon be bringing in its Johnny Walker Blue label-King George V line, priced at $800 per bottle. Marilyn Carlson Nelson, chairman and CEO of the $28-billion Carlson group of integrated companies, has spoken about the group’s plans to open 70 hotel properties, including three belonging to its luxury brand Regent, in India by 2010.
The once unsophisticated retailing environment is making way for luxury malls like MBD Zephyr and Emporium. As many as 600 new malls are reported to be coming up across the country. The Gitanjali Group is planning a string of high-end wedding and luxury malls in eight cities across India.
The market for high-end luxury watches such as Rado, Omega, Breguet, Christian Dior, Tag Heuer, Corum and Franck Mueller is estimated at Rs. 650 crore and is growing at about 20 per cent annually. This explains why the Swatch Group had no apprehensions while introducing its Breguet watches in India with a price tag of $30,000. Watchmaker Tag Heuer expanded from 80 shops to 120 in 2006. According to Roland Streule, President, Rado Watch, India has the potential to be among the top two or three markets for Rado in the next five years.In the fast lane
The action has also spilt on to the roads. As if Mercedes and BMW, priced between Rs. 25-30 lakh were not enough, Maybach has come in to set the buyer back by Rs. 5 crore. While others like Volkswagen, Lamborghini, Rolls Royce Phantom, Bentley and Porsche have already joined the bandwagon, Aston Martin and Ferrari are in the process of following suit. The Indian luxury car market is growing at over 25 per cent. More than 5,000 luxury cars were sold in 2006, up from 3,000 in 2005 and just 1,000 in 2004. According to Suhas Kadlaskar, finance director, DaimlerChrysler India, there is more demand for luxury cars in the country today than ever before.
With India’s commerce and industry minister Kamal Nath recently signalling India’s willingness to reconsider import duties on luxury goods, this could well mark just the beginning.
http://www.hindu.com/mag/2007/06/03/stories/2007060350090400.htm

Chennai City land prices costlier than London

CHENNAI: With real estate prices turning unaffordable to the common man, a city-based firm has come out with the offer of much cheaper properties in London, Dubai and even New Zealand. Real estate promoters Ace International has put up for sale of 200 plots, some 20-25 kms off Central London and 12 kms from Heathrow airport. The 2,600-4000 sq ft plots cost Rs 15-20 lakh, half of what it costs in the Chennai suburbs. "This is perhaps for the first time that promoters are taking up the marketing of plots in some other country," V Santhanraman, Director of the firm, told PTI. The firm has taken up marketing of the plots offered by some prominent developers in London, including UK Land Investments and Marc Properties. The firm, which has been into the marketing of hotels in countries like China, Malaysia and Singapore and that of buildings for educational and other purposes and plantations, was approached by the London developers, said Santhanraman. "The outside world has come to know about the buying capacity of Indians and the globalised economy has facilitated the free purchase and sale of land anywhere across the globe," he said. The firm also claims to help the customer in completing all government and legal formalities regarding the purchase, resale and construction of houses in the plots. Santhanaraman said his firm would offer site visits to the customer after collecting 20 per cent of the total cost of the plot as advance. The firm would arrange the visiting visa, accommodation and air ticket of the customer. "He (customer) could then have a look at all the transaction and ownership details of the land. Once registered in his name, we will have a unique account in the government department UK Land Registry's website, which he can access from here also," he said, adding unlike in India, owners need not worry about encroachments as the land laws are strict there. The customer can sell it off as and when the prices appreciate or construct a house, for which he has to reside in the UK for four to five years. Santhanraman claimed that the appreciation of real estate prices in the UK was excellent. "We have been keeping track of the prices and it is projected to appreciate 300-400 per cent in two years." The company was also coming up with similar projects in Dubai and New Zealand
Ace would soon announce the sale of 1000 sq ft flats in Dubai at the rate of 25-30 lakh, he said adding, the firm has associated itself with some of the leading developers in Dubai like Emaar Highrise and Damac Properties for the purpose. Another project is an enclave of seven bungalows in New Zealand, construction of which were underway. "The appreciation of prices in New Zealand stand at 15-20 per cent", he added. According to Santhanraman, the company was receiving good response to the London project after an advertisement was put up in a leading newspaper. He hoped to sell out all the plots in London within a month. "The demand for real estate is so high here and the prices in London are so tempting when compared to sky-rocketing land prices in India, especially in Chennai," he said. Echoing his view, R V Sundar, a senior official of leading developer Ceebros said that the buying capacity of Indians, especially IT professionals, has pushed the real estate prices in the country to new highs. "During the past one-and-a half year, the prices escalated at a rate of more than 50 per cent. Even a 4000 sq ft plot in the Chennai suburbs will cost you around Rs 40 lakh," he said. The shortage of lands within the city areas has also contributed to the price rise, he added. With real-estate prices in Indian cities escalating and becoming out of reach for the middle class people, cities like London and Dubai seem to come in handy for them, quipped Santhanraman.
http://economictimes.indiatimes.com/City_land_prices_costlier_than_London/articleshow/2095200.cms

Hilton Hotels Corporation Announces Three Major Development Alliances

Deals Will Facilitate Opening Approximately 55 New Hotels in Key Markets Through 2012
LONDON & BEVERLY HILLS, Calif.--(BUSINESS WIRE)--Hilton Hotels Corporation (NYSE:HLT) today announced that the company will form three major development alliances with the intention to introduce more than 15 new hotels in the Caribbean and Central America, 25 hotels in Russia and at least 15 hotels in the U.K. throughout the next five years.
HHC has agreed to work with Caribbean Property Group for development within Central America & the Caribbean; London & Regional Properties Limited in Russia; and Shiva Hotels Limited in the U.K. and Ireland. The three development alliances follow the partnership deals recently announced in India and China, which are expected to result in 100 new hotels in those markets throughout the next five to seven years.
“These important alliances will reinforce our position as the premier global hotel company and underscore our strategy to sign large deals with major investors to develop a significant number of hotels in key growth markets around the world,” said Matthew J. Hart, president and chief operating officer, Hilton Hotels Corporation. “We are well on our way to achieving our stated goal of at least 1,000 hotels outside of North America over the next 10 years.”
Caribbean & Central America
Through a strategic alliance agreement with Caribbean Property Group (CPG), a New York-based, major property investment group, HHC will work actively with CPG to develop focused-service, franchised hotels within certain defined markets in Central America and the Caribbean. Initially, targeted markets include major cities and destinations in Puerto Rico, Costa Rica, Panama, the Dominican Republic and Trinidad. CPG will receive certain preferred development rights in return for meeting certain goals and timetables.
“This agreement ideally supports our international development strategy to bolster the Hilton Family of Hotels presence in growing markets where our brands are either underrepresented or absent,” said Tom Keltner, Chief Executive Officer – Americas & Global Brands, Hilton Hotels Corporation. “CPG is a well respected developer with invaluable insight in these markets, and we are confident that they will help us achieve these goals.”
The company initially will focus on the Hilton Garden Inn brand, with plans to develop additional projects under the Hampton by Hilton and Homewood Suites by Hilton flags, eventually.
HHC began its business relationship with CPG with the recent signing of management agreements for two existing full-service hotels in Costa Rica owned by a joint venture in which CPG holds an 85 percent ownership interest. Currently undergoing major renovations, the hotels will be re-branded and re-opened in the 2008 first quarter as the Hilton Papagayo and the Doubletree by Hilton Puntarenas, in Guanacaste and Puntarenas, Costa Rica, respectively.
“The region is ripe for focused service hotel development,” said Barry Breeman, vice chairman, Caribbean Properties Group. “The economies have strengthened in the region over the past five years. Today, there is a good base of first-class, full-service hotels and resorts, but a very limited number of mid-market, focused service hotels, especially in the premium branded sector. In addition to these markets and this segment being significantly underserved, we believe developing under the established Hilton Family of Hotels will give instant credibility to the projects. And as these projects succeed, we believe they will act as catalysts to help further strengthen local economies and development of other real estate classes.”
Russia
In Russia, which is a priority international development market for the company, HHC will enter into a ‘Preferred Development Alliance’ with London & Regional Properties Limited (L&R). This agreement is expected to result in the development of at least 25 new hotels in an initial period of five years, encompassing selected brands within the Hilton Family of Hotels, including Conrad, Hilton, Doubletree by Hilton, Hilton Garden Inn and Hampton by Hilton hotels, all of which HHC will manage.
“Russia is an outstanding market in which to pursue hotel development given the powerful combination of improving economics and favourable demographics,” said Ian Carter, chief executive of Hilton’s International Operations. “There is almost a total absence of internationally branded properties throughout the regional cities of Russia.
In London & Regional, we have a blue-chip owner; Hilton has enjoyed a long-standing trading relationship with this company that is comprised of highly experienced developers with a strong appetite for growth. With their support, we aim to become the market leading international hotel company in Russia.”
“The Hilton name is a powerfully strong brand and Russia offers tremendous potential as there are 11 major cities with a population of more than 1 million people,” said Ian Livingston of London & Regional. “With the multi-brand approach that Hilton Hotels Corporation now has, the company is able to offer solutions in all travel sectors.”
The development focus in Russia will be in Moscow and St. Petersburg as well as key regional cities. The first hotel expected to be included in the deal will be in the centre of Novosibirsk (Russia’s third largest city) where L&R currently is developing a mixed-use hotel and office project that features a 186-room Doubletree by Hilton. This hotel is expected to open in the second quarter of 2008.
In addition, and separate from this deal, HHC’s first Hilton hotel in Russia will be the 275-room Hilton Moscow Leningradskaya, which opens later this year.
U.K. & Ireland
In the U.K. and Ireland, also is a priority development market for HHC, the company will enter into a preferred development alliance with Shiva Hotels Limited, representing its first U.K. hotel franchise deal with a major property partner. The agreement is expected to result in the addition of at least 15 new hotels and will focus on the following Hilton Family of Hotels: Hilton, Doubletree by Hilton, Hilton Garden Inn and Hampton by Hilton.
Shiva, a privately owned company, is looking to expand its existing interests in the hotel sector and has four hotel sites under development that are expected to be included in this agreement. Two of the new sites will be Hampton by Hilton hotels, representing the brand’s first introduction in the U.K.
Rishi Sachdev, managing director of Shiva hotels, said "I am excited by the opportunity to develop and grow the business in partnership with Hilton, which has a strong, international presence and an excellent reputation. I believe that combining the Hilton family of brands with our development experience and operational expertise is a winning formula."
The four sites under development are a 350-room Hilton near Heathrow Terminal 5, a 200-room Hilton and a 120-room Hampton Inn by Hilton in Leeds, and a 120-room Hampton by Hilton in Derby.
“The U.K. & Ireland is a very important market for Hilton, given the strength of the economy and our already strong presence with 75 properties,” said Carter. “The introduction of additional brands within the Hilton Family of Hotels for the first time gives us the ability to attract new owners and operate across a number of market segments from luxury to mid-price, appealing to guests at different price points.
“These significant alliances are indicative of how we would like to grow internationally. We aim to make a big impact in each of our core development markets and achieve market leadership across major hotel segments through ventures with large ownership groups.”
About London & Regional(L&R)
L&R is one of the largest private property companies in Europe with investments, developments and business interests exceeding Eur 10 billion in over 12 countries including the UK, Scandinavia, Germany, Poland, South Africa, Russia and Panama. Within their property investment portfolio, L&R own over 50 hotels including London Hilton on Park Lane, The Trafalgar in London and the Hilton Frankfurt. In Russia, L&R has invested over Eur 500 million in the commercial property market since 2005 including prime office buildings, retail centres, hotels, logistics facilities and pipeline development schemes.
About Shiva
Shiva is owned by Rishi Sachdev, Managing Director and Ramesh Sachdev, Director. Rishi graduated from Cambridge University and joined Lehman Brothers as a derivatives trader. He left in 2001 to pursue a more entrepreneurial career, initially focusing on mixed use commercial property developments. Having developed a number of successful schemes in the UK, he recognized the growth potential in the branded mid-market hotel sector and started Shiva Hotels in 2003.
About Caribbean Property Group (CPG)
CPG is focused on making investments in primary real estate assets in the Caribbean and Central America. The company owns approximately $2 billion in real estate assets in Puerto Rico, including 5.8 million square feet of retail space, 2.2 million square feet of warehouse space and 300,000 square feet of office space. CPG also owns two major hotel-casinos, both in San Juan. CPG, along with joint venture partners, focuses on acquiring income-producing, fixed real estate assets in the Caribbean and Central America across four platforms—hotel, retail, office and industrial.
About Hilton Hotels Corporation (HHC)
HHC is the leading global hospitality company, with more than 2,800 hotels and 480,000 rooms in 76 countries and territories, including 100,000 team members worldwide.
The company owns, manages or franchises a hotel portfolio of some of the best known and highly regarded brands, including Hilton®, Conrad® Hotels & Resorts, Doubletree®, Embassy Suites Hotels®, Hampton Inn®, Hampton Inn & Suites®, Hilton Garden Inn®, Hilton Grand Vacations™, Homewood Suites by Hilton® and The Waldorf=Astoria Collection®.
The Hilton Family of Hotels adheres to founder Conrad Hilton’s philosophy that, “It has been, and continues to be, our responsibility to fill the earth with the light and warmth of hospitality.” The company put a name to its unique brand of service that has made it the best known and most highly regarded hotel company: be hospitable®. The philosophy is shared by all brands in the Hilton Family of Hotels, and is the inspiration for its overarching message of kindness and generosity.
For more information about our company, please visit www.hiltonworldwide.com, and to learn more about our be hospitable philosophy, please visit www.behospitable.com.
Contacts
Hilton Hotels Corporation Communications310-205-4545Kathy Shepard, kathy_shepard@hilton.comKendra Walker, kendra_walker@hilton.comhttp://www.hiltonworldwide.com

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20070604005891&newsLang=en

Property – upward spiral or downward plunge?

Source: High Rise
With property becoming unaffordable to many, is it time for a correction in the realty market? Or, with an estimated shortfall of 48 million housing units in India by 2012, will the intrinsic demand for property sustain the current boom?

Property prices have been racing skywards across the country over the past two years. Most cities and towns are witnessing construction frenzy. From metros to tier II and III cities, real estate prices have seen phenomenal hikes ranging from a 30 to 100 % appreciation. Experts believe that this spiralling up of property prices has not only been triggered by pure demand for housing but also the rising stock market which has made people look at property as an attractive asset class.

So is the present upswing in the market here to stay?

Nalin Kumar, Head - private equity and real estate, India, JM Morgan Stanley, “I think the demand in tier I, II, III cities will continue to grow - the question is have the prices gone up too much and out of control? The affordability for the consumers and the reality will be tested over a period of time. If the consumers can't pay for those properties then you will see a lot of bad debt and closed down properties - like we saw in East Asia in 1997.”

“This is a cycle where you are seeing the demand side coming up in the form of capital chasing real estate but you will see the supply coming up in the next 1 - 1.5 years time and at that time you will be able to determine whether there is an equilibrium in the market or not - the prices at that time will be real prices, the speculators will be out and the consumers will have the choice to walk into ready apartments. Today most of the people can't walk into ready flats - the price is frankly hypothetical,” feels Kumar.

Experts are unanimous in the opinion that the current scenario of the property market is no bubble, though a minor correction is expected in certain over-heated pockets.

“While there has been an appreciation in asset values - its not true across the board - there are certain parts of the country which are very speculative in nature and these areas we do expect a correction and there are parts not so speculative and over the last few years - the supply has not really caught up with the demand. So that's part of the reason why prices have gone up, but as it comes in there will be some stabilisation, but our view is that we are not headed for a crash,” state sources from kotak Real Estate fund.

Niranjan Hiranandani seconds the thought. “I don't think we are in any bubble. The demand for real estate is really shooting up the roof. Unless we get the supply in terms of housing into the market you are not going to see any fall in prices so we need a substantial delivery of goods in the housing, rental, commercial and it markets. In all these markets the demand is growing much faster than the supply. So we need to work hard to ensure that the supply comes in, so that we can see stabilization in prices,” he states.
But there is still some indication that speculators are cornering apartments at the time of bookings, and selling at a later stage nearer completion. And this could get in the way of attaining a more mature level in the property market.

Ali Lokhandwala, of Lokhandwala Builders says, “Yes, there are investors - HNIs who are still approaching developers like us with offers like ‘we want to buy the entire project and the entire sale component at one go right at the beginning’. So we look at who the investors are and then make a decision, though we always prefer actual users moving into our property and if we do one off such deals - its a rare case when we give the entire building to one investor and they sell it later on.

Ashish Raheja - MD, Raheja Universal has another opinion, “In many cities, particularly in the north you have integrated townships which is not really group housing - there are actually no condominiums coming up there - developer just buys 100 acres - puts out some roads, gardens and 500 sub plotting schemes and trades it to a wholesaler. He in turn sells it to some investor and it never reaches the end user. The house or bungalow that is to come up may be built in 5-7 years, maybe in Gurgaon and Noida in the NCR. The fundamentals are strong but outside cities in tier II and III, how many thousands of these plots will actually be sustained? Ultimately the bubble will burst - land cannot keep going up 4-5- fold - a reversion in the cycle will happen.

Industry watchers also observe that with many city based developers wanting to establish a pan India presence, they are willing to go to smaller cities and pay higher prices for land there as it is comparatively lower than the bigger cities they come from. This is also driving up land values beyond market prices. The demand take up of the end product is yet to be seen. However, experts are quick to add that this construction boom is being driven up by end users.

“As compared to last times' slow down, I don't see that kind of a crack, because the last time we saw a lot of NRIs who did not understand the market but this time there is more thought out money - the economy is far more matured - so even if there is a correction, I don't think the bottoms are going to fall out. I don't predict any doomsday,” foresees Arun Nanda of Mahindra Gesco.

And in spite of property prices reaching all time highs in most areas across the country, industry players feel the Indian real estate market has potential for further growth. While the RBI has tightened the screws on banks lending to developers, fund flows into India from foreign investors have only just begun and this is expected to keep prices firm.

“As a rational investor I would think they should come down, but given the amount of liquidity there is in the market place, I don't see that happening any time soon just because there is too much money that is flowing into the country as far as real estate is concerned,” says Sameer Nayar, MD – real estate finance, credit Suisse Ssecurities.

Subodh Runwal of Runwal Group also feels that there is a lot more opportunity and that is the reason why the investors are coming into the market at this stage.

“There is some concern on the property values but again we have seen cycles and we are not afraid of them - its not going be static - but will have ups and downs - so we will look at it on a project to project basis. Some of the markets are overheated but we will still consider them as we are here for the long term,” Stan Erwin - Senior MD, Trammell Crow Company.

Experts say the property market is going to look very different in about 18 months from now when substantial supply comes in.
http://www.moneycontrol.com/india/news/property/property-–-upward-spiral-or-downward-plunge/284269/0

Indian Real Estate: Investors Are Shopping, but Are They Buying Hype?

Drive through any of India's major cities and it will be impossible to go a mile without running into brightly colored cranes, construction rubble and men in yellow helmets scurrying up and down skyscrapers. Commercial high rises, residential townships, industrial parks and shopping malls are exploding into existence, encouraged by both long-term and speculative investors. Oversized private equity commitments by a growing number of foreign investors and home-grown financial institutions are helping to feed the frenzy.
But several astute industry watchers have begun poking big holes in that picture. For one, they say that many foreign investors have actually brought in only a small portion of their promised investments. Second, soaring land prices and price resistance from buyers are narrowing investors' margins significantly. Finally, they note that concerns continue to run high about the regulatory opaqueness for real estate ventures, bureaucratic red tape and the absence of title insurance, in addition to a host of other issues. India Knowledge@Wharton spoke with prominent private investors, property developers and brokerage firms to understand how these factors are tempering investors' appetites for Indian real estate.
With yields between 30% and 40% during the past two years, India's real estate industry has been the toast of global investment funds. But expectations for future returns have been sharply reduced to between 12% and 20% over the next few years. For many foreign investors, this means having to weigh Indian real estate opportunities against deals that offer comparable returns in other emerging markets like Eastern Europe or Latin America.
Fears of a real estate bubble and an overheated economy have led India's central bank to require a lender cutback on real estate loans. That move has pushed up interest rates, lowering consumers' appetites for home financing and simultaneously raising rents for apartments and offices. Most Indian real estate companies are privately held and their financial information is not readily available. The absence of comprehensive market data across product types like office, retail, industrial and residential properties further hurts the ability of investors to read the right signals, and the occasional rumor of a large deal going bust or a property developer resorting to a distress sale can damage investment sentiments far more than warranted.
More Hype than Actual Investments
Clearly, local investors understand the terrain far better than foreign investors. Much of the foreign capital committed to Indian real estate ventures has yet to be invested, says Aashish Kalra, co-founder and managing director of Trikona Capital, a private equity firm with offices in New York City, London and Mumbai. "Last year, less than $1 billion [was actually invested in] Indian real estate. That's less than the value of half a building in Times Square," he says. That compares with market estimates of between $15 billion and $20 billion in foreign capital headed for Indian real estate.
Kalra cited these figures during a panel discussion on real estate investing at a recent New York City event organized by The Indus Entrepreneurs (TiE), a network of entrepreneurs founded 15 years ago in Silicon Valley. "A negligible amount of foreign capital will get invested in Indian real estate in the next 24 months," he told the panel.
Sameer Nayar, managing director and head of real estate finance-Asia Pacific at Credit Suisse, offers a similar assessment. "There is a lot of hype about capital going into Indian real estate ... [but] not a lot of money is actually going in," he says. Extracting good returns from those investments calls for significant local market expertise in dealing with regulatory and other obstacles. "You make money because you can deal with the problems, and that's why your returns could be 50%," he adds. "If it were an easy market to work in, you would make only 15%."
Short-term Disenchantment
In April 2006, Trikona Capital group firm Trinity Capital raised 250 million pounds ($500 million) for Indian real estate investment in a public offering through London's Alternative Investment Market (AIM). Kalra says his company has deployed about $400 million in Indian real estate projects over the past year.
Including Trinity, about a dozen real estate funds targeting India have raised a combined $2 billion in the past year through listings on the AIM. Most of them are currently trading at levels significantly below their offer prices, revealing investor disenchantment. Trinity's share made its debut in April 2006 at one pound; it now trades at about 86 pence. Hirco, an Isle of Man-domiciled company promoted by the Mumbai-based Hiranandani Constructions group, raised about 382 million pounds ($755 million) from its IPO last December; since then, its shares have lost considerable sheen, down from 5 pounds to about 390 pence in the second week of May. Exceptions include Unitech Corporate Parks, which listed on the AIM last December at 93 pence and now trades at 96.25 pence.
"We see the opportunity [in Indian real estate], but we also see the risks and challenges involved," says Chanakya Chakravarti, managing director of real estate at Actis, a London-based private equity fund that manages assets of about $3.4 billion. Actis plans to set up a $300 million India real estate fund. It already has two other existing funds with an estimated equity of $475 million that have invested in Indian real estate, auto ancillaries and other industries. "Each fund has a unique risk-return profile, and we work with these. For us, India is a long-term story," he adds.
Chakravarti lists three main risks or challenges that real estate investors in India will be up against in the short term. The first, he says, is an oversupply of office space in the major and second-tier cities. A hazy regulatory framework fostering indecision and delayed investments is another concern. Finally, he notes, opaque deal-making processes that narrow the exit routes will deter serious investors.
"The property market today is rife with uncertainties. Prices as well as interest rates have been rising," says Anuj Puri, managing director of real estate services firm Trammell Crow Meghraj, the Indian joint venture of Dallas, Tex.-based real estate services firm Trammell Crow and the Meghraj Group, a financial services firm in London. "It is not advisable to expect any short-term gains; but of course, for long-term investors, India's strong fundamentals are still intact. A long-term investor can expect average returns of 15% to 20% per year."
Vikas Oberoi, managing director of Oberoi Constructions in Mumbai, says the risk-return profile for real estate investments is far brighter for those who have accumulated land inventory at prices much lower than prevailing levels. "The average net margin in today's market is 20% to 25%; we can easily do 15% better than the market," he says. Oberoi claims his company can achieve those higher returns because, among other reasons, "most of the land has been bought earlier."
Oberoi Constructions has an inventory of 15 million square feet of mostly prime land in Mumbai. At today's prices, Oberoi expects it to generate gross revenues of $2.2 billion. The company is focused mostly on for-sale residential apartments, although it dabbles in shopping malls, hotels and other commercial property lines. Oberoi expects his company to post $200 million in revenue this year, rising to $300 million in 2008.
This past January, Morgan Stanley's Special Situations Fund invested $152 million for a 10.75% stake in Oberoi Constructions, effectively valuing the company at about $1.4 billion. Oberoi says the untapped upside in his company's land bank was a major attraction for the institutional suitors it attracted. For instance, five years ago it bought a land lot with 8 million square feet in Mumbai's northwestern suburb of Goregaon for Rs. 100 crore ($24 million). Oberoi says the property would be worth 20 times more today.
"Where is the supply? There is only demand," says Oberoi. "In fact, I want the market to stabilize or [prices to] come down because then we would get land at cheaper prices. It is absolutely a seller's market."
Second-tier Migration
The most visible changes in the Indian real estate sector include the emergence of well defined product categories, the division of the market into tiered cities and a widening of financing options.
In the past, real estate was sold either as residential or as commercial property. With the maturing of the market and globalization of the investor base, the categories have been sharpened and new ones established. "Investors in the residential market are very different from the office and retail space investor," says Sanjeev Dasgupta, CFO and head of investments at Kshitij Investment Advisory Services, part of the Future Group, a large Mumbai-based owner of shopping malls across the country. In the residential sector, investors are in for high returns and are willing to take high risks, he says. This also allows for easy exit, although the risk of a mismatch between potential and real returns is high, he adds.
According to Poonam Mahtani, a national director of retail services firm Colliers International in India, "The investment risk is lower in the metros, but prices there are much higher than those in tier II cities." Several equity funds have consciously focused on tier II cities, because they believe that this offers the most potential. "Land prices are skyrocketing. Buying to sell is a very risky strategy. Land prices are way beyond levels that will generate a decent return. It doesn't make sense to invest any more unless you go to second- or third-tier markets."
Kalra, too, sees the markets outside of India's major cities as the most attractive, simply because they are not the low-hanging fruit sought by the early crop of investors with relatively lower risk appetites. "There are lots of opportunities outside the main metros. India has 30 cities with a population of a million people each," he says. Adds Dasgupta, "The returns are huge in tier II cities, where there is a large untapped potential." He believes that this sector will see a rental yield of 12% to 14% in the next few years.
In office space, experts see a migration towards second-tier cities. A recent report by Deutsche Bank on real estate trends notes, "As the demand for modern space has continually increased, new office locations have had to be developed in the south and east of the urban area (Mumbai and Delhi)." In Mumbai, secondary business districts have emerged in recent years, including the Bandra-Kurla complex in the central suburbs, 25 miles from the old commercial hubs in the southern end of the city.
Much-needed Transparency
For foreign investors, one troubling fact is a pan-India phenomenon: inadequate transparency in land valuations they use to price their investments. In an interview last month, M. Damodaran, chairman of the Securities and Exchange Board of India, discussed the lack of clarity in real estate companies' disclosures, especially with respect to their land banks. "We sought clarity ... on matters like, 'What does your land bank comprise, [and] what are the valuation aspects you have indicated?'" he told the India news wire service. "Where there is only an agreement to develop land, there must be complete disclosure. All such agreements are to be made available for inspection," he said, adding that he preferred land valuations to be made at current prices and not on the basis of future projections.
Trammell Crow Meghraj's Puri agrees. "There is a marked lack of transparency, corporate governance and accountability among India's real estate developers. There also continues to be a serious lack of quality infrastructure. In addition, India scores low in terms of congenial political environment in terms of the real estate sector. This means that there is a lack of clarity in pertinent policies."
But Puri also believes those issues will soon fade away as India's real estate markets mature. "Although real estate is a regional and highly location-specific industry, India will replicate the events that occurred in emerging markets like Mexico and Central Eastern Europe [including Russia, Bulgaria and Poland]," he says. "In these countries, too, foreign investments were the primary drivers for transparency, accountability and higher capital appreciation in the real estate sector."
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4196

Dharavi slums to be redeveloped into prime real estate properties

Newspaper advertisements were published in 20 countries on Wednesday offering “the opportunity of the millennium” for five major developers to take part in the long-delayed and controversial project to redevelop Dharavi, Asia’s largest slum. Some 57,000 families—about 300,000 people—will be moved into free but tiny one-bedroom homes in the area and land will be cleared for business and high-rise flats bounding some of Mumbai’s wealthiest parts.
The sprawl of Dharavi occupies 535 acres between the suburbs of Sion and Kurla on one side and the tony area of Bandra on the other. Real estate prices for commercial properties in the Bandra-Kurla area are ahout Rs25,000-30,000 per sq. ft.
A senior officer at Slum Redevelopment Authority (SRA) said, on condition of anonymity, that in preliminary talks several developers had indicated a high level of interest in the project. He named DLF Ltd, Kalpataru Construction Pvt Ltd, Group, Unitech Ltd, Hiranandani Developers Pvt Ltd and companies belonging to the Reliance Industries group and the Anil D Ambani Group. SRA is the nodal agency for the project.
The project will cost Rs9,300 crore instead of the earlier estimated Rs6000 crore. Mukesh Mehta, the US-trained architect who has been championing the cause of Dharavi for the past 10 years, said this was because the government has now decided to include additional amenities such as schools, colleges and hospitals in its redevelopment package. In the earlier plan, these facilities were to be developed by the municipality at a later stage.
The government of Maharashtra has been keen on taking up the Dharavi redevelopment plan as a model for other slum redevelopment projects in the city and state. Mehta estimates that the total cost of slum redevelopment projects across Mumbai city alone could be as high as Rs90,000 crore.
In February 2006, the government had planned to issue a global tender for the redevelopment of Dharavi, but the plan was derailed as Dharavi residents banded together to protest the planned redevelopment fearing displacement. SRA then shelved the project.
To facilitate the redevelopment, the government had raised the floor space index for Dharavi, allowing developers to build and sell more on the same space than they would have otherwise been able to. It has also said that only 60% of the people living in Dharavi need to approve it for it to go through, against the earlier requirement of 75%. The project has been fiercely condemned by the slum-dwellers, who have created a vibrant self-sufficient economy of potteries, tanneries and other industry among the narrow lanes.
http://www.livemint.com/2007/05/31000115/Dharavi-slums-to-be-redevelope.html

Indian government expects more foreign investment in real estate

Mumbai: India's hot property sector should draw in more overseas inflows this year and help to achieve a 2007-08 target for total foreign direct investment (FDI) of $30 billion, a senior government official said yesterday.
The country had attracted investments worth $3 billion in the real estate and construction sector, out of a total FDI of $19 billion, in the fiscal year that ended in March, said Ajay Dua, secretary with the department of industrial policy and promotion.
"Some money will come in this year [in realty] as companies float IPOs... it could be a little more than last year," he said on the sidelines of a conference of India and the Gulf Cooperation Council (GCC).
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Real estate prices in India have doubled in the last two years, helped by a fast-expanding economy that has boosted incomes and spurred demand for shopping malls, houses and offices.
Although demand has slowed after a sharp increase in domestic interest rates some firms such as DLF Ltd, which is launching India's biggest initial public offering of up to $2.4 billion, expects strong earnings growth and steady real estate prices.
DLF Vice Chairman Rajiv Singh said on Tuesday he expected prices to mostly hold at current levels, with some variation depending on location.
The company's offering opens for subscription June 11-14.
Speaking at the GCC conference, Commerce Minister Kamal Nath said: "I invite GCC-based companies and entrepreneurs to come forward and finance infrastructure projects in India."
The minister said some Gulf companies such as Emaar Properties and Nakheel were already in the process of building special economic zones in India along with their Indian partners.
Nath also urged Gulf banks to register with Indian regulators to enable their rich clients to invest in the Indian stock market, which has risen 4.5 per cent this year after rallying 47 per cent in 2006.
http://www.gulfnews.com/business/Investment/10129069.html