India Real Estate Monitor » Economic Zones

Land purchase for SEZ comes under commercial realty

rajani — Thu, 08 Jan 2009 12:33:25 +0000

The RBI’s draft guidelines on classification of commercial real estate exposure of banks may provide some relief on loans provided for acquisition of units in special economic zones. However, RBI has not found merit in the commerce ministry’s argument to keep loans for special economic zone development outside the domain of commercial real estate coverage. It has reiterated that bank exposure for purchase of land for special economic zone and its development, will be recognized as commercial real estate, while infrastructure development will not be treated as the same.
Bankers said that more clarity will be required on the issue. The central bank’s draft guidelines have drawn upon the Basel II framework on income producing real estate and high volatility commercial real estate and the US Federal Reserve’s definition of CRE lending as income producing commercial property loans and commercial or residential developmental loans.
While it has not detailed on high volatility commercial real estate for want of documented history of real estate cycles in India, RBI has drawn upon Basel II framework’s definition of income producing real estate.
Under the framework, income producing real estate refers to a method of giving funding to real estate such as, office buildings to let, retail space, multi-family residential buildings, industrial or warehouse space, and hotels, where the prospects for repayment and recovery depend primarily on the cash flows generated by the asset. The primary source of cash flows is lease or rental payments or the sale of the asset.

Controversy Over SEZ In Kerala

rajani — Mon, 25 Aug 2008 13:51:13 +0000

Thiruvananthapuram: The Kerala Pradesh Congress Committee (KPCC) alleges that the current controversy over Special Economic Zones (SEZs) in the State has its roots in the schism in the ruling Communist Party of India (Marxist), with one section showing undue haste in getting them cleared to help certain real estate companies.
The KPCC executive committee, which met here on Sunday, discussed the SEZ controversy among other issues and decided to come out with a statement reiterating the party’s policy perspective on the topic. KPCC president Ramesh Chennithala explained the party’s stand on the issue at a press conference after the meeting.
The committee felt that the controversy in the CPI (M) and the Left Democratic Front (LDF) it led was uncalled for. The LDF government had already cleared SEZs in several places in the State focusing on sectors such as Information Technology and neither the Communist Party of India nor Chief Minister V.S. Achuthanandan had found fault with the policy when it was mooted.
In a note circulated at the meeting, Mr. Chennithala, laying out the party’s policy, said a majority of the 21 applications before the government seeking SEZ status were from real estate groups and builders whose main objective was to construct apartments and allied facilities.
Listing out the names of the companies, Mr. Chennithala said in his note that the Industries Department had forwarded the applications of some of these companies to the Chief Minister’s office without proper spadework and by exempting them from the mandatory government clearance. And the proposals were sent for Central clearance without a discussion in the Cabinet. Most of the companies had exaggerated their investments in the SEZ and many involved farmlands, the note said.
Later at a press meet, Mr. Chennithala said the Chief Minister had now opposed the SEZs not because of ideological differences but because his party’s State committee had sought to corner him politically.The KPCC president said the Congress stance had been clarified by party president Sonia Gandhi at the Nainital All India Congress Committee session.

SEZ In Greater Noida, Haryana and Rajasthan By Ansal Properties

rajani — Wed, 20 Aug 2008 15:39:38 +0000

Real Estate major Ansal Properties and Infrastructure Ltd today said it plans to set up special economic zones in Greater Noida, Haryana and Rajasthan.

“We are set to set up SEZs at Greater Noida, Haryana and Rajasthan and are organising a roadshow in the holy city of Varanasi to let the people know about our plans at their native places,” Ansal API Vice-Chairman and Managing Director Pranav Ansal said in a statement here.

The company is developing a 2,000-acre township, besides an IT SEZ in Lucknow. The company has also launched a 2500-acre township near Greater Noida.

Besides, it has launched residential and commercial projects in Agra, Meerut, Lucknow, Greater Noida and Ghaziabad. It had last month announced plans to invest Rs 900 crore in a 250-acre engineering SEZ at Sonepat, Haryana.

BOA For SEZ Approved 29 Proposals

rajani — Sat, 02 Aug 2008 13:15:16 +0000

The Board of Approval (BoA) for Special Economic Zones (SEZs) cleared a total of 29 proposals to set up SEZs, including three proposals for conversion of in-principle approvals into formal ones. The Board recommended grant of 23 formal and six in-principle approvals.
Prominent among the formal approvals are four IT/ITeS SEZs in Kerala by Kerala State Information Technology Infrastructure Limited, another two IT/ITeS/electronic hardware SEZs in Andhra Pradesh by Godrej Real Estate Private Limited and S2tech.com. Two more IT/ITeS SEZs were approved to be set up in Gujarat by Strength Real Estate and Gaurinandan Property Holders.
Two biotechnology SEZs in Andhra Pradesh by Lahari Infrastructure and a Biological E were also approved.
An SEZ for non-conventional energy, including solar energy equipment/cell SEZ in Gujarat by Euro Multivision was also granted formal approval.
An engineering SEZ in Tamil Nadu by Township Developers India was converted from in-principal to formal approval.
In-principle approvals were granted among others for a multi-product SEZ in Madhya Pradesh by Reliable Smart City.
The airport and aviation sector, including maintenance, repair and overhaul (MRO) SEZ in Tamil Nadu by Taneja Aerospace and Aviation Limited, was given in-principle nod as also a free trade warehousing zone SEZ in Tamil Nadu by Vikram Logistics and Maritime Services.

Boulder Hills Golf And Country Club By Emaar MGF In Hyderabad

rajani — Sat, 31 May 2008 11:26:57 +0000

Emaar MGF Land Ltd, one of the leading real estate developers in the country has launched ‘Boulder Hills Golf & Country Club’- an integrated world class leisure and residential community in Hyderabad. The Rs 5,610-crore project will have residential, commercial and retail space, IT parks and special economic zones, luxury and boutique hotels. It will be constructed by Multiplex Construction India Pvt Ltd, a 50:50 joint venture company floated by Emaar MGF and Multiplex Ltd.
Talking at a press conference during the launch of the project here, W. R. Rattazi, chief executive officer of the company, said, “It is a landmark project for the company in south India.” This project, which is spread across five hundred thirty one acres of land, is south India’s first integrated world class leisure and residential community with an eighteen hole golf course. The one hundred ninety two acre golf course has been designed by Peter Harradine – a third generation golf course architect. It is a championship golf course.
“Plans are on to host the European PGA Men’s and Ladies events at the world class golf course,” he said.
In the first phase of the project, the company would be developing seven hundred three residential units with a mix of single and multi family units. It is likely to be ready within the next three years.
The project has already been well received in the market, so much so that the premium apartments and luxury villas that are being planned within the project have already been sold out, he added.
The company is presently doing eight different projects in the South. “Over the next few years, we plan to develop 31 million sq ft across ten locations in south India with a planned investment of three billion dollar. Already the company has a land bank of 1,500 acres in the south in places like Hyderabad, Tirupathi, Chennai, Coimbatore, Kochi, Mysore and Mangalore”, he said adding all over India, the company has a land holding of 13,000 acres.
In the next 4-5 years, Emaar MGF will spread its wings to 40 cities from 26 cities right now.

ASSOCHAM for at least 3 SEZs in Goa

rajani — Sat, 08 Mar 2008 09:35:26 +0000

Margao, March 7 The Associated Chambers of Commerce and Industry of India requested the State government to reconsider its decision on Special Economic Zones and advocated creation of at least of three SEZs, in Goa.

Three SEZs in bio and nano-technology, food processing and solar energy will help Goa attract investments up to Rs 50,000 crore and generate jobs for at least 20,000 youth, in next three years, ASSOCHAM said.

Addressing a press conference, on Friday, ASSOCHAM president, Mr Venugopal Dhoot said that SEZs in bio and nano-technology, food processing and solar energy would not require much land. Secondly it would help the state to prosper economically by attracting huge investments besides providing employment to the youth.

Mr Dhoot said that the controversy on SEZs on IT seems to be justified, as large amount of land was sought to be acquired in the name of IT. But if SEZs in bio, nano and food processing was created it would benefit the state, he added.

The ASSOCHAM president, who is also the chairman of Videocon Industries Ltd, further disclosed that Videocon has purchased around 35 acre of land in the state, near Karmali railway station, at Old Goa.

He said his company was planning to set up a knowledge based industry and a manufacturing unit, in the state.

Red Fort Plans Investment Of 2700crs

rajani — Sat, 02 Feb 2008 05:58:57 +0000

Private equity firm Red Fort Capital preparing to spend about Rs 2,700 crores in real estate by 2009, including acquisition of 2,500 acres of land in over 20 cities all over the country.
“By 2009 we would have empowered about Rs 2,700 crores in expansion of projects in Indian real estate. Out of which, about 70% will be invested in acquiring 2,000-2,500 acrs of land in outer edge of metros and tier II cities,” Red Fort India Real Estate Fund’s managing director Parry Singh said. The company will grow properties worth Rs 12,000 crores, he said adding “ the individual developers will also invest their share of the remaining equity amount on a project-by-project basis.”
Red Fort Capital (RFC) has already purchased over 1,000 acres of land in different parts of the country, he said, while adding “We are aggressively looking at 21 cities, with a strong interest in Mumbai, Pune, Chennai, Hyderabad, Bangalore, Kolkata and Vishakhapatnam markets.” Having dedicated a important segment of the first fund of $425 million, Red Fort is now in the process of utilizing the freshly initiated Rs 1,000 crores domestic fund.
“About Rs 800 crore of the domestic funds will be put in land purchase,” he added. The company is in the process of acquiring about 200 acrs of “relatively cheap” land in the border of Mumbai, he said. The company would build up residential, commercial, hotels, hospitals and retail spaces in these lands. “The fresh arguments have made us further gun-shy of developing Special Economic Zones,” Singh said.
On bind with developers, Singh said, “We tend to focus on mid-size developers, given our capability to add financial power as well as technical ability in project development and execution.”
The company would develop about 10,000 residential units in Bangalore over the next eight years, where as it would generate about 2,000 residence units in three years in Hyderabad, Singh informed. Besides, RFC is also presently developing properties in Chennai. On its possible raising capital from the public markets, he said: “The domestic fund has potential to be listed in the next three years.”
He, however, refused to disclose any details. Asked whether the existing floor area ratio (FAR) in the country should be enhanced, Singh said, “If infrastructure is poor, then FAR shouldn’t be increased. Developers should be allowed to build infrastructure and then increase the FAR.”