Monthly Archives: March 2010

The TCI Demerger

India’s leading integrated supply chain and logistics solutions provider Transport Corporation of India Ltd announced yesterday that its board members have approved the demerger of their real estate & warehousing undertaking into a new company named TCI Developers Limited (TDL) which will be effective from April 1.

The company emailed a press statement saying the demerged entity will have properties and investments with a book value of 50 cr rupees. The company currently has Real Estate properties in metropolitan cities including Delhi, Chennai, Pune, Nagpur, Bangalore, Ahmadabad and many more.

Hong Kong Container Terminal
The management said it believes that TCI’s Real Estate & Warehousing undertaking has the potential to develop the company’s existing realty sector into commercial ventures and also create a focused entity to develop large scale logistics infrastructure projects such as multi-modal logistics parks, truck terminals, free trade warehousing zones etc.

By the creation of a separate entity, the management aims to provide strategic direction and raise adequate funds for its development plans on the strength of its future profitability and growth. After the demerger is done, shareholders of TCI will get one equity share of 10 rupee face value in the transferee company, TCI Developers Ltd, against every 20 equity shares of 2 rupee face value.

The company’s Executive Director Vineet Agarwal was quoted in the press statement, “Investment in real estate & warehousing is more capital intensive and yields return over a longer period of time in comparison to the services model of the logistics business. Going forward, on a long term basis we would look at raising funds from strategic investors and financial institution”.

NIREM Offers Specialization in Realty

fresh off the stage
With the ever growing realty sector in India, the roles and responsibilities of real estate professionals have evolved considerably. This in turn forces a strong need for an efficient background in real estate along with strong professional skills in their functional areas of responsibilities. Since commercial property sector is very new for Indian property market there lies an urgent need the highly specialized real estate professional. Unfortunately, we don’t have any such real estate education program targeted at preparing specialists in commercial real estate.

IDS National Institute of Real Estate Management (IDS NIREM) has taken several initiatives to develop human resources for the Indian real estate market focusing on real estate education, training, consulting & research. Acknowledging the immediate need for specialization in realty management education it launched PG Diploma in Commercial Real Estate (PGD-CRE).this will be a one year distance learning course. This real estate course, patterned on MBA in real estate, is also offered at diploma and certificate level.

This Diploma course will be offered in two segments. First, for those who want to begin their career in real estate including the fresh graduates and MBAs and second for already existing realty professionals who either want to enhance their learning or want specialization in commercial property sector.

This course will concentrate on both knowledge and practical skills to analyze, acquire, finance, and operate real estate assets.

About the Institute:

IDS National Institute of Real Estate Management has been established by ‘The Industry Development Society for Real Estate’, which is a realty sector development and promotion body. NIREM will provide PG level degree, diploma and certificate courses in addition to MDPs, Consulting and Research in different areas of real estate. This institute is planned for Centre of Excellence in Real Estate Education, Training & Research.

In addition to learning programs, it also aims to develop benchmarks for real estate sector, retail & institutional investors and other stakeholders, provide with comprehensive market data to end-users facilitate simplification of asset acquisition and investment process, promote adoption of international standards including the financial and other disclosure norms, best practices and corporate social responsibilities etc

A Mall With A Metro

Our country’s one of the Leading Real Estate Development Company Mantri Developers of Bangalore recently announced the opening of one of India’s largest malls Mantri Square. The main attraction of the project is that the mall will have metro connectivity.

The mall will be located at Malleswaram, north Bangalore and spread over 1.7 million sq feet built with an investment of over Rs 500 cr. It boasts of 252 retail outlets (including 39 F&B outlets) offering 10,000 brands; the Chairman and Managing Director of Mantri Developers Mr. Sushil Mantri told the media. Mantri square will generate direct employment for over 4,600 people.

Light Rail New Paint Test
The highlight of the mall would be its connectivity to railway station which is being jointly developed by the metro rail authorities and Mantri developers on five acres of land belonging to Mantri and leased out to the government. The commuters will get off at a station on the second floor of the mall lead by a bridge providing shoppers an international and unique experience.

The station becomes operational in two years time frame and is expected to provide an additional footfall of 20, 000. It is expected that the footfall will go up to one lac a day once the station gets started. The station area would cover around 80,000 sq feet and a third party will be involved to maintain it.

The mall is inspired by worldwide mall architecture, it is supposed to have 40 feet wide corridors to allow shoppers to move comfortably even in peak hours. Its roof will be 450 feet long and 135 feet wide which will allow natural sunlight.

The mall would be responsible for introducing some leading international brands first time in the country, like Taco Bell, the leading Mexican inspired food chain, Leading Italian brand OVS etc. It would also see many national brands launching their outlets for the first time in the city.

Mr. Mantri said, “Mantri Square is going to be the largest mall in India. It will undoubtedly be the most sought after destination amongst discerning shoppers and for brands of repute as well. The sheer scale of offerings at the mall came only second to the detailing that has gone into ensuring a world class shopping, leisure and entertainment destination.”

We couldn’t agree more.

The Realty Sector Dissents

Days after the budget is announced the Realty Industry is showing discontent in concern with the service tax policy announced by the Union Finance Minister, Pranab Mukherjee.The Confederation of Real Estate Developers’ Association of India (CREDAI) with the Surat Builders Association wrote a letter dated March 5 to the finance minister to withdraw service tax imposed on sales and renting of residential and commercial spaces.

100409-SthSth029a World Bank

Union Finance Minister

In the letter to the Centre, the association has also said that a comprehensive action plan for urban housing is a must as there is a shortage of 27 million houses in the country at present.
President of Surat Builders’ Association and the Vice-President of Gujarat chapter of CREDAI, Tarun Rawal said that if we look at the population explosion in the city the figure has gone up to 46 lac very fast but there is a shortage of about 5 lac dwellings in the city itself. He added that the need for affordable housing in all the big cities is huge and to fulfill that we must have a central policy and plan to guide it.

The association urges the Union finance minister to look into the matter of service tax imposed on housing sector as the sector is crucial for growth to create affordable housing. Slum re-development and integrated township incentives are also required. “Only if this is provided will the sector be able to fulfill the need of a growing nation,” said Rawal.

It is argued by real estate developers in the letter that the imposition of service tax will ultimately make buying houses more difficult for the middle and lower classes. Likewise, service tax on rented property will adversely affect segments like IT sector as they are already showing declining trend when the US restrictions have affected them.

What the finance minister decides is what should be looked for now.

Second Phase Of ‘Ecospace’ Announced

Bengal Ambuja Upohar Condoville, Kolkata
A Business Park
March 12, 2010

The first phase of Ambuja Group’s ‘Ecospace’ Business Park on the northeastern margin of the city, Kolkatta, i.e. in Rajarhat, was inaugurated on Wednesday September 23, 2009 in presence of Mr. Pranab Mukherjee, the FM. Yesterday, on Thursday March 11, 2009, the launch of its second phase was announced by Harshavardhan Neotia, the Chairman of Ambuja Realty.
The complete Ecospace is a 20-acre project, but Ambuja is constructing only 10 acres of it. The rest is being readied by RMZ of Bangalore. The second phase will have two blocks with an area of 4.5 lakh square feet for sale. The Chairman told media that 85% of the area in the first phase is already sold out or leased to the likes of Voith, Bajaj Allianz, Bayer  Corp ,HDFC Bank, Indus Towers and Thyssenkrupp.

Also, Ambuja plans to invest an amount of Rs 200 cr. for a 5-lakh square feet Business Park in Salt Lake, and the second project will be set up over 1.5 lakh sq ft and will entail an investment of around Rs 60 cr. In all, a plan of three IT projects is the emerging plan of Ambuja. The total investment on Business Parks will be of an amount of Rs. 300 cr.

Project Launch by Supertech

Supertech, one of the leading real estate firm announced on Wednesday that it will invest Rs.4, 000 cr in developing 15 mega housing and commercial projects in the next three years. The project is concentrated along the northern India.

Mixed Use - Residential Project, San Jose, California
Photo by Architecture & Food
Mr. R.K.Arora, Supertech Chairman and Managing Director said they will develop 12 residential and 3 commercial projects on which this Rs.4, 000 cr will be spent .The projects include a luxury residential project in Noida with 750 units and a 1,500-unit township at a cost of Rs.500 cr. The new residential and commercial projects will be located in Noida,Meerut, Haridwar and Rudrapur (Uttarakhand).On being asked about their IPO plans, Mr. Arora replied it would come up by mid-2011. He told they have started to prepare for an IPO. But as the market is still to completely come out of economic downturn, they will wait till next year to raise fund via IPO.

The national capital region-based company also launched a 6,000-unit residential project in Noida, envisaging an investment of Rs 1,000 cr. The Eco Village will be constructed in different phases over the next 30 months and will be funded through a mix of internal accruals, debt and money coming from sales. Mr. Arora further added that they are also developing a 120-room luxury hotel in Haridwar, which will be managed and operated by the Radisson group and also constructing a budget hotel in the holy city that will be branded by them.

Assam Gets a Taj.

The chief minister of Assam, Tarun Gogoi today laid the foundation stone of the first five star hotel in the state – Vivatna by Taj, in the presence of top industry captains including Ratan Tata, the chairman of Tata Sons.

The lavish project in Guwahati will be completed and commissioned within two years and with a budget of Rs.90 cr. The premium hotel project will be located on 4.5 acres along the Guwahati-Shillong road (Khanapra). The company has been allotted the land on a long-term lease. The hotel design will be inspired by local architecture and will comprise of 150 rooms and suites. The hotel will have all the usual five-star facilities like a day-long dining restaurant, a specialty restaurant and a bar, but also recreational facilities like an expensive spa and fitness centre.

In 2006 Narayan Murthi, of Infosys, refused to invest in the state in the absence of any big hotel to host its guests. Gogoi said that since then he was “looking” for a five-star hotel in Assam. He said he then got in touch with Ratan Tata and impressed upon him to set up a five-star hotel in the city.

Shad suk mysiem

The State of Assam

On being asked why Guwahati, Mr. Tata said, “Why are we here? We are here because we have been drawn to the opportunities and the potentials of the state…This is a new Assam here and most of us are committed to be here…Guwahati is changed and it’s full of evidence of great development which I do not recall when I was here last“. He also said that the hotel would not only be the destination for business clientele, but it would also attract tourists.

Thus Taj marks a big start for hotel industry in the north eastern part of the country.

Women Participation in Real Estate

As the world joined hands to honor the 101th celebration of womanhood yesterday, the financially independent young women in India had plenty of reasons to cheer.

India - Faces - Rural women driving their own change 1

Women in Indian villages

For the past few years our country has taken measures to specifically increase the number of women buying property in India. Fortunately they have at large proved fruitful too. In the ancient times a woman faced difficulty in getting loans and if they were fortunate ones to get it, it was likely at a premium to what their male counterparts might receive. But now times have changed. The fairer sex is motivated to invest in property owing to a higher real estate tax rebate and cheaper loans for them in parts of India.

Here are some facts for women looking to buy property:

  • If you invest in an equity-linked savings scheme (ELSS), you could claim deductions of up to Rs 1 lac. Where as a housing loan enables you to avail tax benefits on principal repayment up to Rs 1 lac as well as up to Rs 1, 50,000 on interest paid on the loan.
  • If you want to purchase the house jointly with your parents (assuming you live there), you can claim deductions on your share of home loan.
  • If you are staying with your parents (in a house owned by them) and want to lease out the house you have purchased. In such a situation, in addition to deductions on re-payment of home loan principal up to Rs 1 lac, you can claim the entire interest paid as deduction against the rental income.
  • If the interest paid during the year is Rs 5 lac and the rent earned is Rs 2 lac, the interest amount can be claimed as deduction against Rs 1, 40,000. This will mean a loss of Rs 3, 60,000, which can be set off against your salary income, thus maximizing your tax gains.
  • If you plan to get married in the near future, your husband and you could maximize tax benefits on a home loan if you jointly own the house, besides lowering the repayment burden.
  • In the age of 20s-30s, there is a tendency to invest in a house on the basis of budget, i.e., if a 1BHK apartment is affordable, you are inclined to opt for the same, but you should keep in mind that you might need a 2BHK flat a few years from now.

Today women are on the same professional, personal and financial platform as men. You are independent, earn high salary, drive your own car, and have an impressive lifestyle full of luxuries. Owning a house would make you feel safe and secure for the future and serve as a wise investment option.

The Realty Sector Growth Continues

India, Day 1

LIC office in New Delhi

On March 7, T.S.Vijayan chairman of Life Insurance Corporation of India (LIC), India’s No. 1 insurer announced that LIC will invest nearly Rs 36,000cr in infrastructure in 2010-11 on the sidelines of a stone-laying function of a housing complex for its policyholders in Kolkata. He said LIC would undertake realty projects, both commercial and residential, across the country and the company expected an income of Rs 200-300cr from its real estate foray this year. LIC contributes to 4% of the country’s GDP as well as pays hefty dividends to the exchequer.

Most of the builders have increased prices and thus it is likely that real estate may see some slowdown in demand in the long term despite the fact that the housing finance companies like HDFC, SBI, and LIC Housing reported a strong 30% growth in loan disbursal in the December 2009 quarter over last year. Even the stock market performance of the sector has been good in the recent as The Sensex touched a high of 17,000.01 last week which is a benchmark.

The realty sector in India continues to grow particularly more after the fiscal  year 2010-11 budgets was presented. The investors rejoiced when the finance minister Pranab Mukherjee said while reading the budget “We hope to breach the 10% growth mark in the not-too-distant future”. Now Tax allowances are raised, putting more cash in people’s pockets and large housing companies are trying to make full use of it.

But Lack of long term strategic thinking will lead to unplanned development that will not only have an adverse impact on real estate investment and development but also on
macro economic and societal development. That is why it is important for Indian cities to provide a good quality of life to their people because economic success in the 21st century is going to be determined by the human capital a society is able to attract and nurture.