Can the service sector revive the office property market?

Ireo Victory Valley, Gurgaon. View of the central valley from a mid-rise balcony.

Recently, the annual GDP number (6.5% GDP growth during FY April 2011-March 2012) released by the Reserve Bank of India resulted in a negative sentiment throughout the real estate industry. Consistent with this, in 1H12, the demand for commercial real estate moderated on the back of office occupiers that remained cautious about their expansion plans.

However, the economy’s service sector has still experienced strong growth and is advancing at a rate of 8.5% in FY12. This indicates that a major slowdown in office real estate demand is not likely to occur – the service sector generates the highest demand for office space in the country.

Over the years, the service sector has been the growth engine of the Indian economy. Its growth rate has outperformed the overall growth rate of the country’s GDP, which includes the service, agricultural and industrial sectors – the three major sectors of the economy.

Read more: Money Control

50,000 hotel rooms in top six cities in next 5 years

Cushman & Wakfield (C&W), India’s leading real estate consultancy firm on Thursday jointly launched the research report with Confederation of Indian Industries (CII) titled “Indian Hospitality Story 2012 & Beyond” at the 4th International CII Hospitality Fair- 2012 which was held today in New Delhi.

The report was released at the first day of the three-day exhibition by minister of tourism Subodh Kant Sahai.

In this report Cushman & Wakefield evaluates the hospitality sector dynamics of top six cities of India – Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai and provides an overview on the performance, growth and outlook of the Indian Hospitality industry.

Read more: The Times of India

Unauthorised constructions demolished in Noida

Noida Authority today demolished several unauthorised constructions spread across 25,000 square metre land worth Rs 500 crore in two villages along the Greater Noida Expressway.

Encroachment was removed in two villages – Shahdara and Nalgarha, Noida Administrative Officer Rajesh Prakash said.

“The authority team first demolished unauthorised construction on 10,000 square metre land in Shahdara village near the proposed FNG road,” he said.

The encroachers had constructed a boundary wall on the land which belongs to the authority, he said.

Prakash further said, “Authority bulldozers demolished unauthorised construction on a 15,000 square metre land in Nalgarha.”

Colonisers had planned plotting of unauthorised colony on this land, sources said. Few days back, the Greater Noida Authority had demolished an unauthorised colony in Haibatpur.

See article: The Economic Times

Water

Saving water for Gurgaon

Nearly two months after the Punjab and Haryana High Court banned the use of ground water for construction in Gurgaon, district administration officials speak of an overwhelming response to their appeal to spot illegal borewells in the city and especially those used for construction.

Following the court order, all construction activity has been stalled in Gurgaon until the developers arrange to procure recycled water from the two sewage treatment plants (STP) located at Dhanwapur and Behrampur.

The district administration has also announced a reward of Rs 500 for those who give information about such borewells being used at construction sites as well as for other purposes. This, they maintain has paid rich dividends as they are flooded with calls from people giving complaints.

Read more: The Indian Express

Infrastructure/Transportation

Chandigarh Metro moves ahead on track to completion

The dream of getting a Metro rail running in Chandigarh is getting closer to reality , as the final draft of the Detailed Project Report (DPR) for rail system in the Chandigarh Urban Complex’ , has been submitted to the union territory administration.

The final draft report, prepared by Delhi Metro rail Corporation (DMRC), estimates a cost of Rs 10,900crore. The first phase is expected to be made operational by 2018.

The DPR was submitted to the Chandigarh administration a few months back. Officials say the DPR report has been conveyed to the stakeholders, the state governments of Haryana and Punjab.

Once an in -principle approval is given by the concerned stakeholders, of the proposed Chandigarh Metro Rail Corporation (CMRC), the report would be forwarded to the secretary , Union ministry of urban development, requesting his in -principle approval for the project.

Read more: Business Standard

Improving passenger experience is key driver of airports’ IT investment

The world’s airports are turning to mobile apps, social media and intelligent technologies, including geolocation services to make passenger experience much better. Several airports also plan to invest in social media, according to a new survey.

Improving passenger experience is the number one driver of IT investment by a majority (59 per cent) of the world’s airports, according to the Sita Airport IT trends survey.

Passengers are set to see several changes, the survey has noted, given the rapid increase in mobile and social media apps delivering a more personalised customer experience.

Keeping passengers informed about their flight status and wait times is the top reason for airports providing mobile apps, with 88 per cent of those surveyed saying they plan to invest in them by the end of 2015. During this period, 78 per cent of airports also plan to invest in social media with two-thirds of these currently focused on evaluations or trials.

Read more: Business Line

Economy/Market

India unveils more reforms as stocks surge

Finance Minister P. Chidambaram announced a tax incentive scheme for new investors earning below one million rupees ($19,000) a year who invest up to 50,000 rupees in the stock market.

“Gold is a dead asset,” Chidambaram told reporters in New Delhi. “There are millions of people with surplus assets and I hope this will encourage them to come to the market.”

Retail investor participation in the stock market is still relatively low in India with many people’s savings invested in gold, real estate and low-risk avenues like high-yielding bank deposits.

India, where gold is also widely purchased for religious and ceremonial occasions, is the world’s largest buyer of bullion.

The new equity investment scheme is designed to boost domestic capital markets and promote a greater “equity culture” in India, Chidambaram said, adding “we must wait and see” how much investment in stocks was generated by the move.

Read more: Dawn Business

SBBJ slashes base rate; Axis Bank, BoB in line

The State Bank of Jaipur and Bikaner (SBJB), a subsidiary of the State Bank of India (SBI), reduced its base rate by 25 basis points to 10.25 per cent with effect from October 1. It also reduced its deposit rates by 25 basis points, close on the heels of SBI reducing its base rate by a similar quantum on Tuesday.

Others banks like Canara Bank, Bank of Baroda, Bank of India, Punjab National Bank and Axis Bank are expected to take a look at its base rate shortly.

Shiv Kumar, CMD, SBJB said, “We have passed on the benefit of the cash reserve ratio (CRR) cut to our customers. About Rs 40,000 crore of loans linked to our base rate will get cheaper including home and auto loans. Surplus liquidity and poor credit growth are the key reasons why banks decided to revice its base rate.”

Read more: MyDigitalFC

Will look to cut lending rates when borrowing costs decline: LIC Housing Finance

In an interview with ET Now, VK Sharma, CEO, LIC Housing Finance Ltd, talks about the dynamics of the Indian home mortgage market as well as LIC HF’s margins and growth targets. Edited excerpts:

ET Now: State Bank of India has cut its home loan rates, and we understand that other PSU banks will follow this soon. Should we expect a rate cut from LIC Housing Finance as well now?

VK Sharma: We are also expecting other banks to follow SBI and announce a rate cut. As soon as our borrowing costs decline, we will certainly consider a rate cut and hope to transparently pass on the benefit of the rate cut to the customers.

Read more: The Economic Times

Retail

Indian Farmer Group Says Foreign Retailers ‘Not a Big Blessing’

A farmer who supplies produce to Bharti Walmart, a joint venture between India’s Bharti Enterprises and Walmart, at his farm in Punjab in this Dec. 6, 2011 file photo. Credit: Prashanth Vishwanathan/Bloomberg News

On Friday, a day after it formally allowed foreign retailers into the country, the Indian government took out full-page ads in many newspapers proclaiming that the move would result in “better prices to farmers,” or in other words higher farm incomes.

That has long been the biggest selling point of allowing Walmart, Tesco and other foreign supermarkets into India. A farmer in Punjab, Avtar Singh Sidhu, told me as much when I visited Jalandhar last year to get the reactions of farmers, traders and consumers to the government’s previous, failed effort to open up the retailing sector.

Earlier this week I spoke to another farmer, Ajay Vir Jakhar, who has become a prominent voice for reform in India’s agricultural policies. He offered a more qualified endorsement of foreign supermarkets, saying they would help farmers but they wouldn’t be the kind of game changer that the government was making them out to be.

Read more: The New York Times

Huge growth potential in brand stores, m-commerce, says Snapdeal

Snapdeal expects the recently launched ‘brand stores’ concept, which allows retailers to create their own store on the e-commerce major’s website, to contribute 50 per cent to its sales in the next 12 months.

The company that has set a target of Rs 600 crore revenue in the current fiscal is also bullish on mobile commerce and expects nearly half of the purchases on its site to be executed through the mobile platform in the next two years, an official said.

“With brand stores, Snapdeal aims to be an enabler for the many local/offline retailers to reach out to the growing online shopping population.

“Brands will be able to decide the look and feel of their page, customise product selection, manage promotions and exclusive launches,” Snapdeal.com Founder and CEO Kunal Bahl told PTI.

Read more: Business Line

FDI in Indian Retail: The Big Benefits Will Come Tomorrow, Not Today

The Indian government recently announced a slew of reforms, including allowing foreign direct investment (FDI) in multi-brand retail up to a level of 51%. A policy requiring that single-brand retail multinationals source 30% of products and materials from small businesses and craftsmen was changed to mandating that the same amount come from Indian firms. In this op-ed, Johns Hopkins University professor Ravi Aron, who is a senior fellow at Wharton’s William and Phyllis Mack Center for Technological Innovation, argues that opening up FDI will not only lead to a greater variety of products for sale and increased consumer choice, but also penetrate deep into the hinterland of Indian economic activity and do much to improve the country’s “shunned sectors” — infrastructure and logistics.

Read more: Knowledge (Wharton UPENN)

Home Improvement needs

US firm Pella Corporation enters luxury interiors segment

US-based doors and windows manufacturing major Pella Corporation is entering the luxury interiors segment here in collaboration with an Indian partner Abir Trademart. Its products are in the range of Rs 15 lakh to Rs 2.5 crore. The company would import its products from the US and sell them in India through its partner.

“The growing demand for luxury homes along with rising aspirations of the urban Indian consumer for an enhanced lifestyle offer good potential for our products and brand. We were already getting online enquiries from India but were waiting to find the right Indian partners,” John M Sullivan, Head of international business, Pella Corporation, said.

Read more: Business Line

NRIs

Should NRIs make separate Wills for assets in different countries?

Indians today are more mobile than ever before, migrating to most parts of the world. Asset ownership across the borders is also becoming more common. And with that comes a set of new challenges. Should Non Resident Indians (NRIs) make a separate Will for overseas properties? What is the right way to make a Will? What happens if he dies intestate, that is, without making a Will? How should NRIs handle cross border legal issues?

We will try to find answers to all these questions and more. If you do have questions about inheritance laws for NRIs, do post your queries in the comments section below and we will try to address the important issues in future articles.

Read more: The Economic Times

Power of Ideas 2012

NASE, a new voice to boost India’s social ventures

National Association for Social Enterprises India (NASE) is looking to take the momentum forward as the country’s first advocacy and lobbying platform for social enterprises.

Dogged by claims of poor governance, financial mismanagement and the absence of corporate best practices, social enterprises in India have often been given a short shrift by private capital, a situation that had led to liquidity deficiencies and an absence of supportive ecosystem.

But with social entrepreneurship becoming more mainstream, as more entrepreneurs seek to combine social welfare with profits, the newly formed National Association for Social Enterprises India (NASE) is looking to take the momentum forward as the country’s first advocacy and lobbying platform for impact businesses “Social enterprises in India have been a fragmented lot so far. A lot of good has been done, but the same hasn’t been really re-stitched. NASE is a platform where we want to ensure that the collective impact is far more than the sum of its parts,” Raju Bhatnagar, president of NASE, said.

Read more: The Economic Times

Social Investments nascent but growing

Social enterprises could see investments of about $4 billion globally in 2012, with investors continuing to see the market ‘in its infancy and growing’, according to a report released by JP Morgan and the Global Impact Investment Network.

In India, investors have already pumped in $600 million in the country’s fragmented social enterprise sector, with more expected to follow. “By running activities such as awareness campaigns and capacity building workshops, we want to encourage the integration of environment, social and governance criteria into investment decision making,” says Stefanie Bauer, Advisor on Sustainable Economic Development for German development agency, Gesellschaft fur Internationale Zusammenarbeit (GIZ ).

Read more: The Economic Times

Five challenges for social entrepreneurs willing to create impact today

This is a good time to be a social entrepreneur. The idea of building a profitable business that has an impact among people at the bottom of the pyramid is an attractive one. It has also created a palpable excitement amongst investors and business incubators, media and the government. However, social entrepreneurs seeking to combine meaningful impact with profitability face several challenges that are unique to the sector.

The Microfinance Act in Andhra Pradesh and the Right to Education Act (RTE) are some examples of policy discouraging private enterprise from building business models catering to lowincome segments, thereby creating sustainable impact. The Government should encourage and be open to private participation in inclusion models serving the base of pyramid.

Read more: The Economic Times

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