PRIVATE EQUITY COMPANIES TAKE THE REINS, TURN REAL ESTATE DEVELOPERS
More real estate private equity (PE) investors are turning developers, investing money from their funds into their own projects to shield themselves from the vagaries of the sector.
A lack of transparency, the murky nature of land transactions in India and project delays that are holding up their exits are forcing PE investors to take the reins into their own hands.
Gurgaon-based IREO Management Pvt. Ltd is leading the pack, having tweaked its business model four-five years earlier to become an integrated real estate firm acting both as the financier and developer of its projects.
Investments – look at India
ADB: DELHI INDIA’S NO. 1 INVESTMENT DESTINATION
Esha Roy, New Delhi, December 26, 2010
The Indian Express
Delhi has emerged as the most attractive city in the country for both foreign and domestic investors, according to the latest Asian Development Bank report on a survey of Indian cities. Greater Mumbai and Chennai follow Delhi closely as good metropolitan areas for investment. In a survey of 27 cities, the competitiveness factors evaluated were: people, catalysts, infrastructure and financials.
The 2010 ADB report says that location precedes supplier selection in globalisation initiatives: “Earlier, countries competed for location but now competition is often at a granular level between various cities. Lately, we are more likely to observe competition between Bangalore and Manila than between a generic India and the Philippines.”
MAHARASHRA, NCR GOT OVER 50% OF FDI IN FIRST HALF OF 2010-11
Maharashtra and the National Capital Region accounted for over 50 per cent of foreign direct investment inflows into the country during the first half of 2010-11, says the latest Industry ministry data.
Maharashtra attracted the highest foreign direct investment (FDI), of about $2.67 billion (Rs 12,275 crore) during April-September, accounting for 34 per cent of the total FDI in the country during the period.
Delhi’s National Capital Region (NCR), including parts of Uttar Pradesh and Haryana, received $1.96 billion (Rs 8,961 crore) of FDI during the period. NCR accounted for 20 per cent of the total FDI in the country. During the period, India attracted $11 billion of FDI, the data said.
REAL ESTATE: INVESTMENT NORMS SIMPLIFIED FOR PIOS
V Nagarajan, December 27, 2010
The Economic Times
With the easing of investment norms, persons of Indian origin (PIO) are treated on par with non-resident Indians (NRIs) with respect to economic, financial and education facilities, and purchase of property, other than agricultural property.
The Foreign Exchange Management Act (FEMA) defines a PIO as ‘a person, being a citizen of any country who at any time held an Indian passport or a person who himself or either of his parents or any of his grandparents were citizens of India by virtue of the Constitution of India or the Citizenship Act 1955 or spouse of an Indian citizen or spouse of a person covered under above’. However, citizens of Bangladesh, Pakistan Sri Lanka, Afghanistan, China, Iran, Nepal and Bhutan are not considered as PIO even if they meet the conditions under FEMA for different purposes under different regulations.
REALTY PRICES IN NORTH SURGE 40% IN 2010
Realty sector in North India witnessed an upward swing in 2010 with prices in residential segment moving up by around 45-50%. Market analysts attributed the boom to rise in demand by end users. Big realtors also kicked off housing projects in cities like Derabassi, Mohali, Ludhiana and Amritsar in Punjab besides Chandigarh becoming a preferred destination.
RP Malhotra from Dee Ess Estates, Zirakpur (Punjab) said, “The realty sector in North has seen a boom this year with the end users coming to the fore. The speculators and the short term investors remained absent from the market. The residential prices have moved up by 45-50% and there has been a rise of 55-75% in plots and independent property. The prices were also pushed up in Chandigarh due to various policy changes including increased Floor Area Ratio (FAR) which is now 2 for a 10 marla plot where earlier it was 1.5. The ground coverage has also increased from 50% to 70%.”
Real Estate Finance
CENTRAL BANK OF INDIA TO EXPAND REVERSE MORTGAGE SCHEME TO OTHER CITIES
After the launch of its reverse mortgage scheme for senior citizens, the Central Bank of India (CBI) is now targeting cities like Dehra Dun and Pune, which are considered to be hub of retirees.
“Our initial response to the reverse mortgage scheme for senior citizens is very encouraging. We are now launching it in cities like Pune and Dehra Dun where we find a lot of scope,” said R K Dubey, Executive Director of the CBI here.
Through this scheme, the bank hopes to earn a business of Rs 100-200 crore in the next few years. Under the scheme, the senior citizens can avail pension against their property. The reverse mortgage is relatively a new concept in India though it is very popular in western countries.
DEMAND SOARS FOR BANK LOANS AGAINST PROPERTY
The Hindu Business Line
Encouraged by the growing demand for loans against property as collateral, banks are trying to revive this business.
But they are guarded, want to avoid the risk of over-valuation.
They lend not more than 50 per cent of the market value of the property and that too at 2-3 percentage points higher than the normal home loan rate of interest.
The demand is prompting banks to look at reviving this product, which was earlier beset by problems of fake documents and excessive valuation.
The demand for such loans is coming mainly from micro, small and medium entrepreneurs, and are typically in the range of Rs 5-10 lakh.
REFORMS TRIGGERED EXPONENTIAL GROWTH IN REALTY, STOCKS
M Allirajan, Bangalore, December 27, 2010
The Economic Times
Mark Twain once famously said, “Buy land, they’re not making it anymore.” While the stock market has emerged as the clear winner among major asset categories for investors in the post-liberalization era, appreciating more than 1,300 percent on an average since mid-1991, property values in cities such as Bangalore that benefited from the reforms and the information technology boom have increased at an even faster pace.
Property and stocks grew at the fastest pace in the postreforms era, with the realty gaining between 450 percent and 1,400 percent while gold, when compared to property, made modest gains of around 275 percent. Silver, however, jumped by an impressive 632.5 percent during the period. As the markets opened up, throwing up a lot more opportunities, more people lined up to have a share in the lucrative pie.
“Emerging property markets (in the early ’90s) such as Bangalore and Chennai have become fully developed,” says R Rajesh Babu, chief consultant, RECS group, a real estate consultancy.
ACCOR TO CREATE 3000 JOBS IN INDIA NEXT YEAR
The Economic Times
NEW DELHI: Global hospitality firm Accor said on Tuesday it will hire 3,000 people by next year in India to fill vacancies being created at its upcoming hotels in the country.
Accor currently operates eight hotels under brands, Novotel, Ibis and Mercure, and two convention centers that employ about 2,000 people.
“By the end of 2011, we will employ total 5,000 people at Accor operated properties across India,” Accor Hotels India, Regional Director of Human Resources Ashwin A Shirali told media.