India, China stand out in office space demand

Ireo Waterfront, Ludhiana

Ireo Waterfront, Ludhiana

Asia-Pacific economies continue to outpace other regions of the world, whose growth prospects have weakened over the first half of 2013. The impact of this can be seen on the real estate demand in the two largest economies of the region.

India and China stand out with the largest future supply of office space in Asia Pacific. According to Knight Frank’s Asia Pacific Markets Review, both regions are set to witness between two–four million sq metres of supply till 2015.

The report states New Delhi, Mumbai and Bangalore are among the top destinations in Asia Pacific with future office supply close to three million sq metres despite a slowdown in prime office occupier markets.

While India’s economy is struggling, it is growing at a faster rate than in 2012, and the office markets have shown solid net absorption. Rents have moved sideways and are expected to continue this trend, given the significant new supply that is expected to come online over the next 36 months, it added.

In China, the general slowdown of the economy has trickled down to the office market, where prime rents in Beijing, Guangzhou and Shanghai declined over the first half of 2013.

Read more: Business Standard

Realty developers unhappy over rate hike by RBI

Expressing disappointment over RBI’s decision to hike the key policy rate, real estate developers said this would lead to increase in finance cost and also affect housing demand during the festive season.

“There was no need to increase the repo rate at this juncture. It will hurt the growth sentiment further,” DLF Chief Financial Officer (CFO) Ashok Tyagi told PTI.

Asked about impact on real estate, Tyagi said the overall sentiment would remain cautious, but he believed that good products from credible developers on good locations would always have a demand.

RBI today raised the short-term policy rate by 0.25 per cent to keep “worrisome” inflation under check, a move that may increase EMIs for home and auto loans in the medium term.

Commenting on the policy, Parsvnath Developers Pradeep Jain said: “It is highly disappointing to see such a signal from RBI. Though increasing Repo by 25 bps (0.25 per cent) may curb inflation marginally or may hold Rupee for a while, it is going to impact market sentiments significantly”.

The RBI had a golden chance to bring positivity in an otherwise sluggish economy, but this increase in rates would affect growth prospects, he added.

Read more: The Economic Times

Infrastructure

PMO finalises timeline for Amritsar-Delhi-Kolkata corridor

Seeking to push infrastructure development, the Prime Minister’s office today finalised the timeline for implementation of the mega Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) for which states will be asked to join as partners.

ADKIC, envisaging a budgetary support of Rs 5,749 crore for the first phase, will be aligned to the Eastern Dedicated Freight Corridor (EDFC) and will span 20 cities in seven states — Punjab, Haryana, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand and West Bengal.

The project, the second of its kind on the lines of the Delhi-Mumbai Industrial Corridor, will be put before the Cabinet for approval by October 30, a PMO statement said.

The Principal Secretary to PM held a meeting to discuss the report of the Inter-Ministerial Group set up to finalise the development of the ADKIC,

“In the meeting, it was decided to go to the Cabinet to get the necessary approvals for the ADKIC,” it said.

It added that the time-lines which were decided include obtaining in-principle approval of Union Cabinet on approach to ADKIC including proposal for formation of ADKIC Development Corporation by October 30.

Read more: The Economic Times

India to Boost Infrastructure Investment Through Trust Fund

The Indian government is currently working to set up a long-term infrastructure trust fund that would be open to both foreign and Indian investors – which would be similar to the real estate investment trusts in countries such as Singapore, Hong Kong and the US – by the end of this year in a move to boost further investments into the country’s wavering infrastructure sector.

Over the past years, India’s infrastructure sector has struggled to secure financing for projects since banks have been unwilling to lend because of policy constraints and since private investors have also been hesitant to provide funding due to the recent volatility within the country. This is where such a trust fund would come in.

Essentially, this trust fund will have long-term investments in infrastructure projects and will also sell its shares to the public as units. Revenues or profits from these infrastructure projects will flow into these units as returns, and the funds generated will also be used to pay down debt on future infrastructure projects.

Off-shore institutional investors, off-shore high net worth Individuals and other institutional investors will be allowed to invest in the fund.

Arvind Mayaram, secretary, Department of Economic Affairs, notes: “A major reason why some PPP (public-private partnership) projects in the infrastructure sector have run into problems is that many private partners did not price the risk in projects over a 25-year time frame. We are looking to set up an infrastructure trust fund in two months to ensure the long-term management of projects.”

Read more: India Briefing

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