Investments in office, retail space may rise rest of 2013

Ireo Waterfront, Ludhiana

Ireo Waterfront, Ludhiana

Sentiments towards commercial real estate investment remains favourable as India’s economy shows itself to be less vulnerable to the overall slowdown compared to other Asian economies. In the coming quarters, despite a slight drop in occupier demand during the April-June period, office and retail sector will continue to drive investments, according to the RICSIndia Commercial Property Survey Q2 2013. The industrial segment is expected to lag compared to office and retail.

While investment enquiries remained stable from the previous (January-March) quarter, it is expected that the capital values and transactions will continue to edge up as the year progresses. Investments and prices are also both likely to remain in the positive territory in the coming quarters across retail, office and industrial segments.

Along with signs of sluggishness in the economy, the commercial sector is facing challenges such as the lack of funding for building more projects, inflated prices, excess inventory across large cities and delays in obtaining building approvals.

However, despite these hurdles and the slowdown in the economy, the mood of investors is a little more positive as there is a sense of stability due to the recent measures such as the opening of foreign direct investments in retail. The retail sector is forecast to grow because of the announcement.

Read more: Business Standard

Govt looks at easing FDI norms for real estate

In an attempt to encourage investor participation in the Indian housing sector, the Ministry of Housing and Urban Poverty Alleviation is considering easing norms for foreign direct investment (FDI) in real estate projects.

“For FDI (foreign direct investment in real estate), the ministry is considering recommending some relief in three areas: one, minimum built-up area requirement should be reduced, two, the definition of the minimum lock-in period should be changed and, third, the minimum capitalisation (investment) that is required should be reduced,” said Arun Kumar Misra, secretary, Ministry of Housing and Urban Poverty Alleviation.

“These changes, if adopted by the Cabinet, will allow more and more players to be active partner in the FDI market,” the official said at a conference on the real estate sector organised by the Confederation of Indian Industry (CII) and CBRE South Asia.

At present, up to 100 per cent FDI is allowed in the real estate sector through the automatic route, subject to fulfillment of certain criteria. For housing plots, the project must have at least 10 hectares. Group-housing projects (apartments) are eligible for FDI if the total built-up area is at least 50,000 square metres.

Read more: Business Today

Need to relax rules for more foreign investments: FM

P ChidambaramThere is a need to relax rules to attract more foreign investments, Finance Minister P Chidambaram said on Monday.

The government is considering all options including a sovereign bond sale and selling debt to non-resident Indians to attract dollar inflows, he said.

“All options are on the table,” he said, while answering a question on a sovereign bond sale.

Govt is seeking higher foreign investments to fund the current account deficit, which hit 4.8% of the GDP in the fiscal year that ended in March. A swollen deficit has helped make the rupee the worst performing emerging Asian currency, which has been down over 9% since the beginning of May.

He further said that govt will not use reserves to finance CAD in FY14 and expected FY14 CAD to be in the same range as FY13 CAD.

Speaking ahead of the RBI policy meet tomorrow, Chidambaram said that price stability cannot be the only mandate of a central bank. It also needs to look at  growth and employment generation, he said.

On RBI’s measures to tighten liquidity, FM said that he did not expect the measures to result in hike in bank lending rates. He added that banks have assured him that they will fully meet the credit needs of the industry.

The measure to curb imports had effect in June, but imports had risen in July, said the finance minister, without giving details for the gold imports in tonnage or value terms for July.

Read more: Business Standard

Energy

Demand outlook strong for wind energy in the long run: ICRA

In ICRA’s view, fundamental long term demand outlook for wind energy in India is expected to remain strong. Demand will be supported by large wind energy requirements to meet the renewable purchase obligation (RPO) requirements in the country.

Since, wind based energy benefits from its increasing cost competitiveness against the conventional sources of energy, both due to spiralling fuel prices & persisting domestic fuel shortages in the country resulting into dependence on costlier sources of imported fuel, demand for the wind power is expected to rise feels ICRA.

The demand is further supported by National Action Plan for Climate Control (NAPCC) set up by Government of India (GoI) in June 2008 recommending a target of renewable energy mix in the overall energy procurement by utilities at 10% (minimum) by 2015 and 15% (minimum) by 2020 and by the remunerative preferential tariff in some of the key wind states namely Maharashtra, Madhya Pradesh, Rajasthan and Andhra Pradesh. Also, going forward, investment demand from IPP segment would remain key growth driver and ICRA expects the share of IPP segment in the capacity addition to increase from currently at about 40-45% to about 60-70% over the next two to three years, says ICRA .

Read more: The Economic Times

Infrastructure

L&T explores business trust model for IDPL’s road portfolio to raise Rs 2500 crore

Engineering major Larsen & Toubro is exploring an option to raise between Rs 2000 crore – Rs 2500 crore by clubbing operational road projects of its infrastructure development arm L&T IDPL into a separate entity which could be listed overseas through a business trust model.

This proposal was separately mooted by a European as well as a Japanese bank to the company, said multiple sources briefed on the matter. This new idea is based on the increasing popularity of the model amongst global financial investors who are scouting for high quality operating yield assets in infrastructure, real estate and renewable energy.

Currently L&T IDPL has a portfolio of 18 roads, 10 of which are operational. All the projects are housed under individual special purpose vehicles (SPVs). The total project outlay for the road projects is Rs 21,600 crore. L&T is among the top two road developers in the country.

Interestingly, the trust proposal has come at a time when L&T IDPL is already in advanced negotiations with a clutch of sovereign wealth funds, pension funds and long only investors to raise up to $500 million by diluting 15-20% at an initial equity valuation in excess of $2 billion. Abu Dhabi-headquartered Mubadala Development Corporation and Khazannah, the investment vehicle of the government of Malaysia and a global pension fund are among the potential suitors. Morgan Stanley has already been advising L&T IDPL in those live negotiations.

Read more: The Economic Times

Rapid transport system in NCR takes a step ahead with formation of NCRTC

After the cabinet cleared the proposal on the formation of National Capital Region Transport Corporation (NCRTC) on July 11, a Memorandum and Articles of Association for setting up NCRTC has been signed between four states-Delhi, Haryana, Rajasthan and Uttar Pradesh, Ministry of Railways, National Capital Region Planning Board (NCRPB), Ministry of Urban Development and Government of India.

The company has been set up with the objective of planning and constructing high speed rail corridors between Delhi and nearby areas with the vision of enhancing connectivity and development in the NCR region.

The company will start with a share capital of Rs 100 crore with a 50:50 ownership between Central and State Government. MoUD and Ministry of Railways will have 22.5% equity each in the project, with 5% equity of NCRPB and four State Governments will have equity of 12.5% each.

Three priority corridors have been identified in the first phase for development. A 111-km stretch between Delhi-Soniapat-Panipat with an estimated cost of Rs 18,755 crore. A 180-km stretch between Delhi-Gurgaon-Alwar estimated to cost Rs 32,141 crore and a 90 km stretch between Delhi-Ghaziabad-Meerut estimated to cost Rs 21,274 crore. The total cost would be Rs 72,000 crore but is expected to rise because of the long gestation period of these projects

Read more: Business Standard

Agreement signed to form National Capital Region Transport Corporation

Connectivity between Delhi and the towns of Alwar, Meerut and Panipat is set to receive a boost as the NCR states and the Centre entered into an agreement today to form the National Capital Region Transport Corporation (NCRTC).

The NCRTC will be the agency that would build three Rapid Regional Transit System (RRTS) corridors connecting Delhi- Gurgaon-Alwar, Delhi-Ghaziabad-Meerut and Delhi-Panipat at an estimated cost of Rs 72,000 crore.

Urban Development (UD) Secretary Sudhir Krishna said the RRTS corridors which are expected to be built in five years, once the construction work starts, would “completely transform the National Capital Region”.

Speaking to reporters after signing of memorandum and articles of association of NCRTC, he said the Union cabinet had on July 7, approved the formation of the corporation.

He said that the new body would have a share capital of Rs 100 crore of which the UD and Railway ministries would contribute 22.5 per cent each, the NCR Planning Board 5 per cent, while Delhi, Haryana, Rajasthan and Uttar Pradesh governments would put in another 12.5 per cent each.

Read more: The Economic Times

Emerging Businesses

Expatriates return to invest in Gurgaon, finding millennium city open to new concepts, products and opportunities

Gurgaon is increasingly becoming a city becoming home to Indian entrepreneurs returning from abroad with ideas for ventures, Point in case is Pooja Lal, who spent more than a decade outside India, now, a successful Gurgaon-based entrepreneur. She chose to invest in the business of experiential gifting. There are many like her who have made the millennium city as their working destinations, leaving behind the job of international firms on foreign soils.

“I came back to Gurgaon, India with a business concept in experiential gifting, which is somewhat still a new concept in Indian market,” said Pooja Lal, founder and director of Delight Gifts, an online venture. It offers gifting experiences and products where consumers can purchase gifts to be delivered across India.

The expanding gift market in India seems to be luring investors in this particular business. According to American Express, the gift market in India is estimated to be more than $30 billion annually. “In the period of less than a year, the idea has become a major hit in the Indian market. The turnover of the venture is also doubling every quarter,” corroborated Lal.

However, the concept is not new and many established rivals are working to compete with the emerging players. Lal retorted, “Though we are not the pioneer in this concept in India, we have developed a platform and changed the experience of consumers in the experiential gifting. Now, we have buyers of our services from Australia, England and the Middle East.”

Read more: The Economic Times

Educational institutions bring lucrative opportunity for technology firms in Gurgaon

The penetration of technology in educational institutions is bringing a lucrative opportunity for companies providing educational-related solutions in Gurgaon. Amidst the rising demand, these companies, which are providing softwares and enterprise resource planning (ERP) to educational institutions, are expected to grow at 13-15 per cent over the next four years, predicts industry experts.

“Technology has ushered a revolution in the education system of the millennium city, with demand for ERP spiking,” said Shobhit Elhance, vice-president of Applane. Applane provides cloud-based integrated software suite for managing all your organizational functions. It claims to have an annual turn over of around Rs 1 crore.

He further explained that ERP is management software. Under this system, the educational institute integrates applications to manage the work. This software integrates all facets of an operation, including attendance, report card, timetable, fee design, etc.

“The demand of technologies pertaining to school-management systems have increased in tier II and III cities which are yearning for world-class products and advanced technologies,” said Surabhi Das Sharma, sr vice-president, MGRM. MGRM Net is the educational technology arm of MGRM that provides comprehensive products and services under the brand name ‘M-Star educational expert systems.’

Read more: The Economic Times

Employment

Delhi NCR generates maximum jobs

Delhi-NCR region has created maximum number of jobs in the country during the first quarter of the current financial year, generating over 34,000 new jobs, an Assocham study said today.

“Among top metro cities across the country, Delhi-NCR remained numero uno in new job generation with maximum share of over 27 per cent. Kolkata witnessed a 19 per cent surge in job creation followed by Bangalore with seven per cent,” said the study.

“A total of 1,25,500 new jobs were generated across India during the first quarter of the current financial year,” it added.

However, Chennai witnessed a 21 per cent decline in creation of jobs during the first quarter mainly due to closure of small scale industries.

“A total of over 8,000 new jobs were generated in the city during the first quarter of this financial year as against 10,200 jobs created during the corresponding period of previous year,” the study — Job Trends Across Cities and Sectors said.

According to Assocham National Secretary General D S Rawat, one of the main reasons behind the dismal job scenario is closure of 25 per cent of small and medium enterprises, mainly due to severe power shortage.

Read more: The Economic Times

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