India among world’s top 20 real estate investment markets

Ireo Gurgaon Hills

Ireo Gurgaon Hills

A latest study by Cushman & Wakefield has ranked India 20th in the list of world’s top real estate investment markets with investment volume of $3.4 billion in 2012.

Notwithstanding the gloomy scenario, the report had some positive news for the real estate sector stating investment volumes rallied in the fourth quarter signalling the beginning of real momentum and a return of confidence in the market which could see volumes this year increase 14 per cent to exceed $1 trillion mark for the first time since 2007.

China was at the top position with an investment of $304.1 billion, followed by the U.S. ($267.1 billion) and the U.K. ($56.3 billion). The consultant said the global property investment market grew by 6 per cent in 2012 to $929 billion and was expected to cross $1 trillion mark in 2013, the first time since 2007. “India was (20th) among the top 20 real estate investment markets globally with investment volume of Rs.19,000 crore ($3,466 million) recorded in 2012,’’ the company said in a statement issued with the latest assessment.

Majority of the investment in India was through institutional sales (67 per cent) while the remaining were through private equity (PE) investments (33 per cent). Investments in institutional sales saw a decline of 37 per cent over last year, but private equity investment in India rose by 7 per cent in 2012 to Rs.6,200 crore. Bangalore saw the highest number and value of private equity investments at Rs.3,250 crore in 2012, posting more than double the investment over the previous year, followed by Mumbai with Rs.1,300 crore and National Capital Region (NCR) Rs.700 crore investments.

The report states that the global property investment market recorded a modest 6 per cent rise in activity during 2012 with volumes reaching $929 billion.

Realty developers to move finance ministry against new property tax

Real estate developers are planning to move the finance ministry against a proposed tax on property sales which they feel will slow the growth of a sector struggling to cope with sluggish economic expansion.

The government has proposed a new tax on developers on the basis of assessed valuation of a property at the time of transfer by inserting Section 43CA in the Income Tax Act, instead of levying tax on the basis of sale price, fixed when the project was initiated . As housing prices escalated across India over a period, the government looks to raise additional resources though this route.

Developers said the proposed tax is presumptive and questioned its constitutional validity. They said it may put buyers in a spot and reduce property sale in a slowing economy , defeating the government’s plan to revive the real estate sector that is linked to a number of industries like steel and cement and create jobs to thousands of construction workers.

“The presumptive valuation and consequent taxation are a step in retrograde ,” Shriram Properties Managing Director M Murali said. The move has left both the sellers and buyers baffled. Following the budget announcement , some developers were seen persuading buyers to register their property before the new tax kicks in.

Some have told buyers that in case they fail to get the property registered before March 31, they might have to make good the additional tax burden on sellers.

Read more: The Economic Times

Luxury retail headed to hotels for the right brand fit

High-end retail chains are increasingly looking at existing and new hotels to house their brands in India, according to experts tracking the sector. While some brands have traditionally been located in five-star hotels, retail chains were seen opting for malls in the last few years. However, the absence of quality real estate is once again pushing retailers, especially the luxury and niche brands, into the cool comfort of hotels.

Sanjay Dutt, executive managing director (South Asia), Cushman and Wakefield, said at least 40,000 sq ft of new retail supply is coming up in hotels. Aspirational brands, and luxury chains in apparel and accessories are among those targeting the five-star guests, Dutt pointed out. Getting quality space in mall or on high street is a challenge for retail chains, he said, explaining the phenomenon of some brands preferring hotels.

Anshul Jain, chief executive (India), DTZ, an international consultancy, gave a list of names to show that retail is betting big on the hospitality sector: In Bangalore, Leela Galleria, part of Leela Palace Hotel, offers around 65,000 sq ft of retail space; Ritz Carlton, Residency Road, has approximately 30,000 sq ft of boutique retail space under construction; J W Marriott, Vittal Mallya Road, is in the process of developing boutique retail space currently. In Chennai, ITC Grand Chola Hotel houses around 25,000 sq ft of retail space, and Leela Palace is developing 11,000 sq ft of boutique retail space.

International brands such as Mont Blanc, Burberry, Canali, Prada and Gucci don’t want to dilute their brand value by locating in inferior malls and high-street areas, according to Ankur Bisen, vice-president (retail), Technopak Advisors.

Read more: Business Standard


US should incentivise India to open economy

Saying that strengthening Indo-US trade ties makes abundant economic sense, a US expert says the US can help India’s growth by incentivising New Delhi to open up its economy.

“Within a generation, India will likely become one of the United States’ most vital diplomatic partners,” said Daniel Twining, senior fellow for Asia at the German Marshall Fund of the United States in an opinion piece in the Wall Street Journal.

“As the US pivots toward Asia, India will prove more capable than any existing US ally in advancing interests from defeating terrorism to managing China’s rise,” he wrote noting “Already, Washington and New Delhi have developed a far-reaching strategic partnership centred on defence cooperation.”

“In contrast, Indo-US economic relations remain underdeveloped, stymied by a lack of ision and Indian skittishness toward liberalization,” Twining said suggesting, “A new trade and energy partnership could make up for lost time.”

“To cement its burgeoning alliance with New Delhi, and to help India reform and grow, the US should offer the triple incentive of a free-trade agreement, assured energy supplies and membership in the Asia-Pacific Economic Cooperation forum (APEC),” he said.

Read more: News Track India


More independence a prerequisite for policy committee: Subbarao

India’s central bank needs greater independence before it can adopt a monetary policy committee structure, Governor Duvvuri Subbarao said on Monday.

The Reserve Bank of India (RBI) is one of the few major central banks where monetary policy decisions rest in the hands of the governor, as opposed to a committee.

While RBI is not statutorily independent, in practice it has wide latitude in setting monetary policy. “India also needs to move towards a monetary policy committee structure,” Subbarao said in answer to a question following a speech at the Bank of Mauritius, which has such a committee in place.

“For that to happen there are some necessary conditions to be fulfilled and one of the necessary conditions must be more independence of central bank,” Subbarao said.

India’s Chief Economic Advisor, Raghuram Rajan, widely seen as the likely successor to Subbarao, whose terms expires in September, favours moving towards a more powerful monetary policy committee.

RBI has a technical advisory committee on monetary policy, set up in 2009 as a precursor to a formal policy committee. However, the committee has only an advisory role and Subbarao has in several instances made policy decisions that went against the majority view of the panel.


Google joins fray for a slice of Indian tablet market

About 10 months after it launched its Android-base tablet, Nexus 7 in the US, Google has finally brought the device for the Indian consumers.

Close on the heels of the visit of its chairman Eric Schmidt to India last week, the California-headquartered company has added a device section to its virtual marketplace, Google Play in India. To begin with, the company has started offering its Nexus 7 tablet at its Indian marketplace. However, consumers looking at buying Nexus can only pre-order the device now since the company will start shipping the device only by April 5.

During his recent visit to India, Schmidt had apologised the Indian consumers for the non-availability of Nexus products in the country. “I do apologise, we are working on it. We want to fully service the market,” Schmidt had said replying to a query on why the company is yet to offer the Nexus devices to Indian consumers.

Nexus 7 which competes with Apple Inc.’s iconic iPad was launched in the US in June last year. The 7-inch device is powered by Nvidia Tegra 3 quad-core processor and runs on Google’s latest Android Jelly Bean operating system. The other features include WiFi, NFC, bluetooth, microUSB port, accelerometer, GPS, magnetometer and gyroscope.

Read more: Business Standard


Time for India to have national aviation policy, says IATA chief

India should formulate a national aviation policy to facilitate growth in the sector, said Tony Tyler, Director-General of the International Air Transport Association (IATA) here on Tuesday.

“The call is not for special favours or preferential treatment,” Tyler said at the inaugural Aviation Day India meet. The IATA head was of the view that the agenda to improve infrastructure, reduce costs and evolve a more reasonable taxation structure was absolutely critical to India’s long-term success.

Pointing out that security was a top priority not only of Governments but also airlines, the IATA chief was of the opinion that the current “one-size-fits all” prospective approach to security for both cargo and passengers is not sustainable. “We need an approach that focuses on outcomes and not process. And we should make the best use of scarce resources by taking a risk-based approach — recognising that the vast majority of cargo and passengers pose absolutely no threat to aviation or national security,” Tyler said.

The IATA DG also proposed to urgently combine forces to modernise cargo processes. “In 2008, we collectively said goodbye to paper tickets. By 2015, we are trying to do the same with cargo with 100 per cent conversion to e-air way bills — an important step in the overall e-freight vision. It is incredible that in the Internet age, 50 million tonnes of air cargo shipment still rely largely on paper-based processes,” Tyler said.

He pointed out that though the customs department in India had agreed in principle to create a paperless environment, the “progress is too slow. To be blunt, we need a show of political will to kick-start the process.”

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