Interstate Hotels & Resorts Forms Joint Venture with JHM Hotels to Operate and Invest in Hotels in India

Interstate Hotels & Resorts , a leading hotel real estate investor and the nation's largest independent operator of full- and select-service hotels, today announced that it has formed a 50-50 joint venture partnership with JHM Hotels to operate and selectively invest in hotels in India. JHM Hotels is one of the nation's largest independent developers and owners of hotels. The joint venture, named JHM Interstate Hotels India, will serve as Interstate's platform for all hospitality-related activities in India, primarily focused on securing management agreements on existing and to-be-built hotels. The joint venture is establishing an office in New Delhi, India.

Interstate Hotels & Resorts Forms Joint Venture with JHM Hotels to Operate and Invest in Hotels in India

Grant priority sector status to housing industry

The importance of the Indian real estate sector can be gauged from the fact that it is the largest employment generator in the country after agriculture, and a single component within the industry — housing — contributes roughly 5% of India’s GDP.

Grant priority sector status to housing industry - livemint

Mumbai behind in Monopoly race

Mumbai’s real estate market is blazing-hot, as anyone can tell, with valuations that exceed even the best that Manhattan offers.But in the race to get itself listed as a valuable property market on the board game Monopoly, Mumbai is currently at a lowly 46th place, behind many leading world cities.With just 10 days to go for an online vote to end, Mumbai risks falling off the board, so to speak, unless its netizens wake up and start voting. To vote, you need to go to monopolyworldvote.com, and register; you can vote everyday for up to 10 cities a day.

DNA - World - Mumbai behind in Monopoly race - Daily News & Analysis

Sarovar spreads out as realty prices pinch

With prices of real estate going through the roof, Sarovar Hotels is looking at acquiring land away from city centres and larger towns for Hometel, its budget brand of hotels.Working towards this end, the company has acquired land on Old Mahabalipuram Road, which is 20-30 km away from the city centre in Chennai, and in Sriperumbudur in the south. It is also looking at Bhiwadi in Rajasthan, 50 kms from Gurgaon.The one-acre plot on Old Mahabalipuram Road was acquired for Rs 4 crore and the two acres at Sriperumbudur for Rs 6 crore. “There is enough demand here but no competition,” Ajay Bakaya, executive director, Sarovar Hotels, told DNA Money.“Real estate prices have been rising by about 20% a year. International players are willing to pay a price — in the form of sky-rocketing real estate rates — for entering the booming Indian hospitality market. But domestic players need to be cautious. If they buy land at a high price, these won’t have viability if the market shows a downturn,” said a hospitality industry analyst.

DNA - Money - Sarovar spreads out as realty prices pinch - Daily News & Analysis

FCI may rent out property to unlock realty value

The Food Corporation of India (FCI) is planning to cash in on the rising real estate value of the unutilised property lying with it in form of land and buildings.

FCI may rent out property to unlock realty value

Infrastructure and real estate exposition held

Infrastructure and real estate exposition organised by Gujarat Institute of Housing and Estate Developers (GIHED) was held in Ahmedabad recently. The exhibition involved six core sectors: real estate, SEZ, township, retail and speciality projects, infrastructure, hospitality and education.

Navhind Times on the Web: Business

Bangalore Real Estate Registers Maximum Price Rise in India

Bangalore real estate has registered the maximum increase in prices from 2001 to 2005, as per NHB Residex.
Residex was done in 5 cities of Bangalore, Bhopal, Delhi, Kolkata and Mumbai. The price movements were captured from year 2001 through to 2002, 2003, 2004 and 2005. Bangalore was 100 in 2001 and 275 in 2005 while Delhi moved from 100 to 201 from 2001-2005, Bhopal- 100-179 and Mumbai 100-178.
Speaking at the Credai's NATCON conference, NHB' Kaul said that there was a need to do an index for residential property prices. "Increase in housing finance has been 25 per cent each year. In other sectors of economy we have sophisticated systems of tracking markets whether it is stock markets, consumer goods. But real estate has not been formally tracked and price movements have not been captured. There was a need to develop a system by which real estate markets could be tracked."
The need for Housing Property Index (HPI) was due to urbanization, high economic growth, real estate assets that are a significant component of wealth, increase in bank lending to real estate sector, need for transparency in the market, overall development of the real estate market and policy inputs to government for real estate sector.
Residex will be an authentic indicator of price movements and it also points out areas which have a high growth potential. The project was initiated at the behest of GoI to measure residential property market and gathers information about price movements in residential properties and track reasons behind it- it's the official property index in the country.
Methodology used was the Price Relative Method. The technical advisory group consisted of CSO, NSO, RBI etc- after discussion all methods and practices, price relatives were calculated.
Australia, Canada, US bring out their own indices. Each Indian city was divided into three categories - less than 45 sq m, 45-90 sq m and more than 90 sq m. Sources of information were real estate agents, developers and Resident Welfare Associations. Issues were data collection, authenticity of data, need for cross verification, cost and methodological aspects. The transacted prices were taken and not the registered value of houses to get the realistic picture.

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Builders want tax breaks, higher spending

Indian construction and real estate firms want higher spending on infrastructure, lower interest rates and tax breaks on projects from the federal Budget, industry officials said.

Construction companies that saw tax rates rise after the withdrawal of income tax breaks on infrastructure contracts last year, want it back.

"The government should reduce interest rates for infrastructure projects. Concessions are available only for a few World Bank-funded projects, but this should be extended to all," said Sandeep Reddy, Managing Director of Hyderabad-based Gayatri Projects.

The industry also want a reduction in customs duties on construction equipment, and service tax exemption for construction contracts, said an official at IVRCL Infrastructures & Projects Ltd.

Blocked Ad

Real estate firms, which have seen a slowdown in sales due to soaring prices, have asked for a lower interest rates for home loans and for housing construction projects.

They have also sought a reduction in stamp duties on the housing sector and removal of service tax on rental income to bring down costs for investors.

"One point taxation should be levied so that the heavy burden of multiplicity of taxes is reduced and automatically, the cost of construction of flats will come down drastically,” the Confederation of Real Estate Developers Association of India, said in a note to the government.

Both sectors have sought more liberal rules for bringing in foreign funding.

"Given the large amounts involved in infrastructure projects and absence of cash flows during construction phase, Indian firms need to have access to finance of all kinds," the Confederation of Indian Industry (CII) said in a pre-budget presentation.

The industry body has asked for reducing restrictions on external commercial borrowings, convertible bonds, and foreign direct investment.

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I’d want infrastructure public-pvt partnership

What are the three things you wish for from the Budget?

Anuj Puri (Abhijit Bhatlekar / Mint)

I think corporate tax and personal income-tax should be lowered. It should be reduced to 25% for both. It is currently at 30%. Secondly, there should be a stricter intellectual property rights regime in India. People are hesitant to do business in India because of this. The Budget should focus more on health care and education.

If you could end one thing, what would that be?

Licence raj. We still are reminiscent of the British Raj. I think there should be more transparency in income-tax in the real estate industry. There is not much transparency in the real estate, banking, telecom and aviation sectors.

If you were finance minister, what would be the one thing outside your industry you would want in the Budget?

Infrastructure. It is the first thing that comes to my mind. In fact, it is somewhat related to my industry. The end-user price of homes is so high because of the high land prices. Land prices are 70% of the total cost of homes. If I can bring it down to 20%, home prices will come down. But for that we need infrastructure. The moment infrastructure is in place, large parcels of land will open up. The restriction in supply of land is because of lack of infrastructure. We don’t have roads, we don’t have bridges. There is no reason for the value of land in Mumbai to be twice of that in New York. The problem is we don’t have infrastructure to decongest the city. From a business point of view, it is a big dampener. It is (lack of infrastructure) impacting the profitability of the gross domestic product of the country.

I would want public-private partnership in infrastructure. There should be more speed in allocation of contracts. The government should bring in innovative models to improve infrastructure.

What is the one thing you don’t want changed?

One interesting thing that I don’t want to be changed in the budget is the government’s approach to foreign direct investment (FDI)—the way it is opening up FDI in sectors. I get so much comfort when I see that the subprime crisis is not going to affect India. Opening up FDI surely and safely is the right way to go. We took a small step in real estate, retail and insurance. We wanted to assimilate and see how it impacts the sectors. We have still not gone ahead with opening up of legal fraternity and to an extent the media sector. There would have been nervousness had the subprime crisis hit India. We would not have been able to handle it.

Which budget disappointed you the most? Why?

I think it is going to be this year’s Budget. It is likely to be an election Budget. We are not going to see any new initiatives. But if you look at the past budgets, I was disappointed when the government came to power four years back. There were a lot of expectations from the finance minister, P. Chidambaram. But...the government got elected in October-November, so they did not have enough time for the budget. It was also a confusing budget because of the banking cash transaction tax and other things.

One proposal you think is shot down in every budget, but shouldn’t be.

A hike in FDI in insurance from 26% to 74%. I think it should not be shot down because a huge amount of capital is required for the insurance sector. It is a large cash outflow business. Because of the current level of FDI in the sector, a lot of burden is on the Indian insurance partner...

What would you consider to be inclusive growth?

Inclusive growth should take along India II and India III. India II are the office boys, drivers, and India III is the guy on the street who does not have a job in office. We have to make sure that education, health and aspirational needs of these people are met.

(Anuj Puri is chairman and country head of real estate consultant Jones Lang LaSalle Meghraj.)

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Wages hiked to retain skilled manpower

Retaining trained and skilled manpower has become a difficult task for real estate developers, which is leading to increase in salaries of more than 100 per cent, industry sources said.

“First it is difficult to get good and skilled people and then retaining them is more difficult than that. We have raised salaries by more than 100 per cent and in some cases by 200 per cent,” a senior executive of a Dubai-based real estate company told Emirates Business on condition of anonymity.

A project manager with six to eight years of experience is now earning between Dh50,000 and Dh60,000 per month compared to Dh20,000 to Dh25,000 per month last year.

“We have announced projects and these need to be completed on schedule. We cannot afford to lose people. We will not see them performing better if they are not happy,” he said.

There are more than 520 developers in Dubai registered with the Real Estate Regulatory Agency, and the list if growing, said Chief Executive Marwan bin Ghalita.

If the industry grapevine is to be believed, senior officials of Indian and Chinese companies have been coming to the UAE to recruit people with experience in the real estate sector.

Senior staff with Gulf Co-operation Council experience can command excellent salaries and have become much more selective as to what type of company they would like to work for, Maggi Johnston, executive director, Team One Recruitment, said recently.

“Real estate is tied to the financial sector and so the increase is higher. There is a lot of activity going on in the real estate sector in the region, especially in Saudi Arabia. There is demand for qualified people so the salary levels will go up. There is a growing shortage of talent and this is a global phenomenon,” she added.

Construction costs in the Gulf have risen by around 30 per cent in the past 12 months and new companies are entering regional markets, making the sector even more competitive.

Rising costs remain the major issue for contractors this year, but, unlike previous years, it is the rising price and dwindling supply of manpower, not materials, that is causing concern, according to the Middle East Economic Digest. With one million labour cards issued in the UAE in 2007 alone, previously there has been no shortage of construction workers in the UAE.

However, Dubai contractors increased wages by 20 per cent following a strike in November 2007 at the emirate’s largest contractor, Arabtec Construction.

In addition, there is competition from the labourers’ home countries. The fall in value of the GCC currencies, due to their US dollar peg, has significantly reduced the attractiveness of the region to workers from the Indian Subcontinent.

The Indian Government is expected to spend $500 billion (Dh1.8 trillion) on infrastructure in the next five years. Similarly, in the Gulf, Abu Dhabi has launched $140bn worth of real estate projects since 2005 and Doha and Saudi Arabia are also at early stages of the development cycle.

“We all recognise that we are in a severely labour-constrained construction market. We run a severe risk of continuing to ignore the problem and expecting everything to sort itself out.  In reality, we need to introduce some fresh thinking into our recruitment and retention processes, as well as adopting some new approaches to overcome the continuing shortages,” said Rod Stewart, Regional Managing Director, Hyder Consulting Middle East.

Nakheel Chief Executive Officer Chris O’Donnell, however, believes there is over-reliance on labour and mechanisation could be a solution. “Although you pay more by hourly rate for skilled individuals but you get a lot more productivity and it allows you to use more mechanisation,” he told Emirates Business.

The Number

100% - Salary increase has been given byconstruction companies in Dubai to skilled workers in an effort to retain them

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India's Primary Real Estate plans $500 mln fund

Indian fund manager Primary Real Estate Advisors is planning to launch a fund worth as much as $500 million, probably in the second half of this year, but said it will tread carefully as the country's property boom stutters.

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High rise in real estate salaries

Employees in India received an average salary increase of 15.1 per cent in 2007, which is up from 14.4 per cent in 2006, according to the 12th annual Salary Increase Survey conducted by Hewitt Associates, a global human resource services firm. The report also predicts a rise of 15.2 per cent in 2008, making this the fifth consecutive year that salaries have shown a double-digit growth in India.

Real estate or infrastructure leads with highest salary increases leaving traditional leaders like Information Technology and Business Process Outsourcing behind.

While salary increases are largely dictated by talent demand and supply, Hewitt Associates forecasts a gradual decrease in salary increases and a stabilisation of increases to a range of 9 to 10 per cent by 2012. Factors influencing stabilisation include reducing the talent gap, changing the talent model, making training vital and re-engineering talent.

Though the fundamentals of the Indian economy are strong, the recent stock market fall and a strengthening rupee herald uncertainty. For India, the immediate implications of an economic slowdown in the U.S. is not worrying, but this is getting organisations to look at “productivity” as a single most important determinant of long-run prospects, the survey says.

The two fastest growing cost components in India are real estate or infrastructure and talent, and information technology and outsourcing companies, which have more than 75 per cent of production regulated by the U.S. economy. The highest increase in salaries is predicted in the middle management, junior manager and supervisor levels ranging close to more than 15 per cent while the top and senior management are likely to witness a hike of 13-14.5 per cent in 2008. For the general staff and manual workforce, the hike predicted is between 11 to 13.5 per cent.

The study also reveals that an increasing number of organisations are plagued by attrition and retention issues. Attrition rates have reached an all-time high in India with the insurance industry reporting the highest attrition rate at 35.2 per cent. This is followed by IT-enabled services at 28.9 per cent and hospitality industry at 27 per cent. External equity of compensation, role stagnation and limited career opportunities are the most cited reasons for attrition.

Hewitt Associates surveyed 600 foreign-owned, locally owned and joint venture companies this year, analysing information across 19 primary industries and 22 sub-industries.

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Parryware Roca to invest Rs 170 cr, eyeing acquisitions

Sanitaryware and bath accessories manufacturer Parryware Roca Pvt Ltd plans to invest Rs 170 crore in the next 2-3 years to expand its production and enhance its marketing and distribution channels. The Chennai-based company is also eyeing ino rganic growth and would spend an additional amount on acquisitions.

"We plan to invest Rs 50 core in expanding our existing manufacturing facilities in the next 2-3 years. We will also invest about Rs 40 core every year for the next three years on marketing," said the Managing Director of Parryware Roca Mr K E Ranganatha n.

"We are also looking to acquire companies engaged in our line of business, on which we will invest additional money," he said. However, Mr Ranganathan declined to comment on the size or time of acquisition. The company has four factories for manufacturin g sanitaryware products and another one for taps.

The brown-field expansions would take the current capacity of 40 lakh pieces per annum to 60 lakh pieces per annum by 2011. Upbeat on the real estate scenario and the bathroom renovation market in the country, Mr Ranganathan said the company plans to ope n more showrooms for its products.

"The market for sanitaryware and bath accessories is growing at the rate of 15 per cent every year. We plan to take the number of showrooms to 55 by next month from the current 41," he said. The number of Parryware Roca Customer Care Centres, which cater to the renovation market, would also be taken to 30 from the current 20 in next 1-2 years.

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Chennai leads with 67.3 pc of total green building space

Is the south greener than the north? So it seems, as far as construction is concerned. According to a report released by real estate consultancy Jones Lang LaSalle Meghraj on Tuesday, Chennai leads in India in terms of the number as well as the total volume of certified green building space.

Out of the 17 LEED -- Leadership in Energy and Environmental Design, a green building rating system developed by the US Green Building Council -- certified buildings in the country, Chennai alone is home to eight of them. This accounts for 67.3 per cent of the total green building space in India.

The 'India Green Buildings Anthology' report makes another startling revelation. Contrary to what most people think, in the context of the Asia Pacific region, India is ahead of China both in terms of projects certified as well as registered under LEED. While India has 17, China has only 4 certified projects.

However, experts say that the total area of green buildings registered in China exceeds that of India as large township projects as well as the Olympic Games infrastructure are going in for green certification, says the Jones Lang LaSalle Meghraj report.

Coming back to India, Kolkata is second only to Chennai with 15.7 per cent share of the total green building space, even though it has only one green building, the Technopolis.

However, with a total size of 6,50,000 square feet, the project assumes colossal proportions.

Kolkata is closely followed by the National Capital Region in the ranking with a 8.7 per cent share in the total area spread over three projects. Mumbai comes fourth with only one project and a share of 2.9 per cent. Other cities where certified green buildings have been built are Kochi, Hyderabad and Gulbarga.

"This shows that apart from the major metropolitan cities, projects registered for green building certification are spread far and wide across the country in around 12 smaller cities and towns," the report points out.

Also, apart from residential, healthcare and hospitality projects joining the bandwagon, there are some examples of large infrastructure and township development projects also going green.

Of mention are the Hyderabad International Airport Passenger Terminal as well as an integrated township in Asansol that have been registered as green buildings, says the report.

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Non-metros have higher rents, lower rent allowance

The house rent allowance is non-uniform across the country. Residents of metros – Delhi, Mumbai, Chennai and Kolkata – get a higher tax benefit than those in cities like Bangalore or Hyderabad.

However, the rents of Bangalore and Hyderabad are often steeper. Many want a change in this outdated tax law.

“When we were staying in Chennai, rentals were low. We were paying only about Rs 4000. As soon as we shifted to Bangalore, we had to pay Rs 8000, four to five years ago. Now, 10 per cent definitely also impacts,” says a techie, Vivek Tyagi, who now shells out Rs 27,500 every month for his flat in Bangalore’s upscale Indiranagar.

According to Section 10 (13A) of the Income Tax Act, the tax exemption on house rent allowance is 50 per cent of the basic salary for those who live in a metro but only 40 per cent for non-metro residents.

Vivek and his wife Shefali, who've lived in cities like Delhi and Chennai in the past, know that real-estate prices in Bangalore are currently at par if not higher than these metros and they have reason to feel short-changed by the government.

“On the one hand you're paying higher rent here and the deposit, plus you're losing out on the tax difference also with respect to other metros. So if nothing else at least Bangalore HRA tax rule has to be at par with other metros like,” Vivek says.

With real estate prices soaring across many Indian towns, even in NCR’s satellite cities like Noida and Gurgaon, the current yardstick of measuring tax rebates according to the status of metros and non-metros is no longer relevant.

“The government can come up with some sort of cost of living index for the major six or 10 cities and based on that, apply rules which are similar to these cities. In fact, if you see, most of the development has happened in places like Noida and Gurgaon in the last 5-10 years,” Vivek suggests.

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In4velocity to tap northern market for ERMS application

Software solutions provider In4velocity Systems on Tuesday announced its plans to tap the growing real estate market in Delhi and northern India for its Enterprise Resource Management System application.
The application, In4Suite, helps real estate and property development firms automate business process right from land acquisition, legal liaison to engineering, purchase and sales and room rental to property management including mall management, it said.

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Asian REITs market capitalization to be $500bn by 2016

Asian Real Estate Investment Trust (REITs) currently accounts for 10.6% of global REITs and is projected to touch market capitalization levels of $100 billion by 2010. This is expected to grow up to $500 billion in 8-10 years, according to industry chamber Assocham.

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Real estate developer breaks ground on Sobha Daffodil in Dubai

19-Feb-2008

Senior Executives of Sobha Group at Ground Breaking Ceremony, Jumeirah Park, Dubai

Sobha Group, one of the leading real estate developers in India with numerous realty projects in Dubai, has broken ground on its first residential development in Dubai. Building work started on Sobha Daffodil at Jumeirah Village on 28th January, 2008 following a ground breaking ceremony.

Ajay Rajendran, Vice Chairman, Sobha Group, said, “Sobha Daffodil marks our entry into the residential real estate market in the Middle East. We are pleased to celebrate its ground breaking”.

Sobha Daffodil is a 178-apartment real estate development located in Jumeirah Village, Dubai. The 4 and 10-storey complex offers a contemporary living environment with roof top garden, large temperature controlled swimming pool and fully equipped Club House.

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Avert recessionary trend in real estate sector: Era Group

The Reserve Bank of India’s Credit Policy has failed to live up to the real estate sector’s expectations. All eyes are now on what the Finance Minister announces in Budget 2008.

Sanjay Gupta, vice president, business development, Era Group

There is no denying the fact that the realty sector has made significant contribution to the Indian economy. Unfortunately certain myopic policies are forcing the sector to some degree of recession.

Key Recommendations

* Rationalize stamp duty: While stamp duty is a state subject, the government should initiate steps to rationalize it to enable all states to have a uniform stamp duty structure. This would provide a more level playing field to developers since it forms an important cost component

* Lower stamp duty and levy it on value addition: Presently there is tremendous under-valuation of property, primarily in the resale market, on account of high incidence of stamp duty. This has led to a situation where transparency is compromised. Lowering it will encourage more people to get their property registered at actual price rather than at lower rate. Besides, concept of levy of stamp duty on incremental value of property, much like MODVAT, should also be introduced

Currently, it is levied each time a property changes ownership, adding to the cost of the property. Levy of duty only on increase in value will greatly help in lowering cost of property thereby making it more affordable. On the flip side there is a possibility of unscrupulous elements taking advantage of this provision, but this can be structured in a manner to overcome this bottleneck

* Treat property as a long-term asset after a year’s holding instead of the present three-year period: Property, like shares, should be considered as a long-term asset after one-year holding of the same. This would greatly impact the tax incidence on gains from such transactions and go a long way in prompting greater disclosure of true transaction value, which in turn would bring greater transparency in the sector

* Abolish service tax from construction contracts: Housing is one of the basic necessities and ranks high on the government’s list. But to provide affordable housing especially to the middle and lower middle class population, steps must be initiated to reduce cost of construction which would in turn lower selling price. The service tax levied on construction contracts has only increased the cost of the finished product which has to ultimately be borne by the end-user

Sanjay Gupta, vice president, business development, Era Group

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Reliance & Vornado plan equal JV for $1-b realty play

Reliance Industries is in advanced talks with the New York-based Vornado Realty Trust, one of the world’s top five real estate asset managers, to float a $1-billion plus fund. The proposed fund will acquire and manage properties, mainly in the retail space, across India. People familiar with the development said RIL and the New York Stock Exchange-listed real estate investment trust (REIT) were discussing the possibility of an equal joint venture.

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