Contents 8 M3M seals a big land deal...
12 Himachal CM asks cement at...
18 Crusader against Delays in...
12
18
24 Do Customers Prefer...
32 Income Tax Laws...
36 Vastu & Astrology... 26 The Waiting Game is Over...
30 Decoding Golf Realty...
2
| ProPerty observer |
40 After Land, Cement, Steel...
44 44 FDI in Multi-Brand Retail... 74 Sikka Group Launches...
48 Ansal API The Gen Next Ansal API has....
80 Magicbrics.com
66 58 ONE UP ON WALL STREET
88 High time to invest...
62 Cool office spaces for... 92 Investing in Real Estate...
65 Gadget of the month 94 The Reality of Real Estate
95 Making Delhi more Livable 70 Unitech Karma Lakeland
88 62 70
| ProPerty observer |
3
ProPerty observer Editor Sachin Mittal
Consulting Editor Yogesh Sood
Executive Editor Hari Om Tyagi
Senior Correspondent Manoj Choudhary
News Editor Achyut Nath Jha Editorial Advisors Satish Grover Mahesh Verma
Contributors Vivek Shukla Rakesh Goel Subhash Lakhotia Kamal Nath Thakur Vinit Kumar Koneru
Sub Editor Sanjeeb Kumar Sahoo
Marketing Rama Kanogia
Graphic Designer Umang Goel
Sales Co-ordinators Rahul Mathur Praveen Singh Eralu Harsh Vardhan Anoop Kumar Singh
Circulation Anil Kumar Singh Jitender Dahiya Jitender Rana
Photographer Hariom Sharma HEAD OFFICE
621, Devika Tower, Nehru Place, New Delhi-110019 TEL: 011-30679513, 9999-999-274 CUSTOMER CARE
99999999-16 E-MAIL: propertyobserver@propertyobserver.in FOR EDITORIAL QUERIES
edit@propertyobserver.in FOR SUBSCRIPTION
subs@propertyobserver.in FOR ADVERTISEMENT
ad@propertyobserver.in
Corrections & Clarifications Property Observer welcomes comments, suggestions or complaints about errors. It is our policy to reply to all complaints. You may write directly to the editor at: edit@propertyobserver.in Property Observer, a monthly magazine, is published and printed by Sachin Mittal under the aegis of Dreamwork Media and Entertainment Pvt. Ltd. (DMEPL). The whole copyright is vested with the publisher. Reproduction of the matter in any manner without permission is prohibited. All disputes are subject to the exclusive jurisdiction of competent courts and forums in Delhi / New Delhi only. Š2011 DMEPL. All Rights Reserved. Printed at: Aravali Printers and Publisher Pvt. Ltd., W-30. Okhla Industrial Area Phase II, New Delhi-110020. http:www.propertyobserver.in
4
| ProPerty observer |
LETTER FROM THE EDITOR
Looking for a Realty Kick
C
oming as it after the five-day World Economic Forum(WEF) summit in Davos where around 2500 CEOs from the world had gathered amidst the eurozone crisis and the lurking slowdown of India's growth story, it is a challenging task to find a silver lining. The mood at WEF was subdued; no doubt, there was hope that India would bounce back as an important investment and trade destination. This also comes after the latest global CEO survey report which claimed that India dropped to the fourth place, behind China, the US and Brazil as the country that majority of CEOs felt was most important for their overall growth prospects. Confidence among Indian CEOs about their own prospects in the next year was at 55%, down from a staggering 88% last year. However, there was general confidence that the Indian troubles would fade away if there were tangible corrective measures. There was some guarded optimism about Asia to remain the propeller for global growth though at a slower rate, with China leading the way at more than 8 percent, followed by India and Indonesia. Back home, Fitch Ratings in its report ‘2012 Outlook: India Real Estate Sector´ came out with a negative outlook for the Indian real estate sector in 2012 due to weak overall demand and higher construction costs, which are likely to continue to squeeze margins. It further elaborated that the demand for office space was likely to be maintained at 2011 levels. However, happily for India, real estate sector is getting much needed lifeline from pharma sector, thanks to growing domestic consumption. While technology (including IT/ITES) is a great mover of real estate in
office space segment, along with banking and financial sector, both the global and domestic pharma companies are expanding aggressively, giving a boost to the office space. Here, one important aspect that needs to be taken into account is that office space is more globally linked than the residential market. Also, technology-driven growth may face more heat from global slowdown than pharma sector-led growth where domestic consumption is almost guaranteed. This doesn’t mean that pharma has outstripped IT but its growth in India has become, by and large, saturated while pharma is just beginning its upward (trajectory). This is a testimony that the sector’s appetite for real estate has only just begun and the change is quite noticeable in the commercial cities of Mumbai and Delhi where office space occupied by technology and IT players has dropped to 15 to 25 per cent from 35 to 50 per cent a few years ago. In recent times, pharma hubs have triggered the office consolidation in Maharashtra, Karnataka, Gujarat and Himachal Pradesh and majors like Johnson & Johnson, Pfizer, Merck and Cadila have aggressively expanded their Indian operations. As per Cushman and Wakefield data, while Bangalore witnessed maximum activity with nearly 48 per cent of the total pharma/R&D absorption in 2011, Hyderabad accounted for 31 per cent and Mumbai and Pune together constituted 14 per cent of the total. Of course, corporate world is looking at the government to take some remedial measures and sectoral reforms to offer them the leverage. Government, on its part, sought to brush aside the concerns on slow reforms by suggesting that the FDI decision on retail sector reforms was only on a pause and did not amount to a reversal. Really, we need policy push to sustain the growth story and real estate is directly linked to it.
Sachin Mittal Editor Email: sachinmittal@propertyobserver.in
6
| ProPerty observer |
NEWS ROUNDUP
M3M seals a big land deal with DLF in Gurgaon
Chatwal plans to open 52 hotels in next five years
W
U
ith the deal size of worth `440 crore, M3M has bought 28 acres of land in Gurgaon from the DLF group. The land is strategically located in sector 70 A on Golf Course (Extn.)-Southern Peripheral Road (SPR), overlooking the Aravalis and connecting the SPR to NH-8. Mr. Pankaj Bansal, Director, M3M said “One more feather to our crown and the clinching of this deal has shown our commitment towards aggressive expansion plans in the near future. The company has already launched projects worth USD 2.5 billion in one and a half years, one of the few companies to have launched more than 10 million sq. ft. in such a short span. M3M with its present land bank of over 600 acres is now working towards quantum investments in the real estate sector”. He further added that our group is a 100% debt-free company, promising a luxurious lifestyle in the heart of Gurgaon. The company has already tied up with the banks, which are offering them loans at 12-12.5 per cent interest rate. “We will be taking loan, only for construction and not for land aggregation. We will also be selling off some non-core assets like SEZ and IT parks for cash generation’’, said Mr Arvind Parakh, president, Finance & Strategy, M3M. l
S-based hospitality major Hampshire Hotels and Resorts promoted by Indian American entrepreneur Sant Chatwal plans to launch 52 hotels in India in the next five years, under the Dream and Night brands. About 40 Night Hotels, a luxurious lifestyle brand, and 12 Dream Hotels, a boutique hotel targeting the business traveller, would come up in places like Goa, Chennai, Delhi, Mumbai, Bangalore, Jaipur, Udaipur, Hyderabad and Kolkata. The hotels, brainchild of Chatwal's son Vikram, would be managed by one of the world's largest chain of hotels, the Wyndham Group. "We would like to give more options for the 70 million Indians that travel within the country. Our aim is to be the largest boutique hotel company in the world in the next 10 years," said Vikram Chatwal. Chatwal company would invest `2,000 crore in these ventures — many of which would be operated on a franchisee basis."We have already signed 18 deals for both Dream and Night hotels. Most of them would be on the franchising and management model," said Sant Chatwal, chairman and CEO of Hampshire Hotels and Resorts. l
Making affordable housing a reality, the Maharashtra way
A
head of the forthcoming civic body’s polls, the Maharashtra government announced two major decisions which would make affordable housing a reality and better amenities for slum-dwellers across the state. In a bid to enhance the stock of affordable housing, the Democratic Front Government has made it mandatory for all builders and developers to reserve 20 percent of any property above 2,000 sq. m. for housing the poor. "This is a revolutionary decision which would benefit the poor, especially in urban areas like Mumbai, Thane and Pune," said Prithviraj Chavan , CM of Maharashtra.
8
| ProPerty observer |
Chavan said that any developer preparing a layout of more than 2,000 sq. m. would be required to set aside 20 percent of the land for constructing houses of 30 to 50 sq. m. (around 300-500 sq. ft). Similarly, “while developing major housing projects, it will now be mandatory for developers to reserve 20 percent of the flats measuring 27.88 to 45 sq.m. for economically weaker or low income groups,” said Chavan. These properties would be purchased by MHADA, “The state's apex housing stock creator, at the construction cost and allotted to poor and needy people through its regular lottery systems for which the necessary development control rules would be amended,” said Chavan . l
Mahindra’s realty arm plans `250 crore project
M
Delhi to provide shelter to migrant workers
T
ahindra Lifespace Developers, the realty arm of the USD 14.4-billion Mahindra Group, is setting its foot in Hyderabad, its fifth market in the country, with a one-million sq.ft. residential project involving an investment of `250 crore. “We are currently doing the site preparatory work. The project, on a 10-acre site at Kukatpally, will be launched in the next couple of months and will be delivered in three years from then,” said Anita Arjundas, MD and CEO. Having completed close to 7million sq ft of projects in the National Capital Region, Chennai, Mumbai and Pune, Mahindra Lifespace presently has 10 million sq. ft. of space which it calls Mahindra Lifespaces under various stages of development– some on the drawing board and some ready to be delivered – which will be completed in the next four years. Of the 10 million sq.ft., the selling price for 3.5 million sq.ft. space would be `4,700 per sq.ft. “We have land parcels in five cities and investments in them have already been done while we require `2,000 crore for the construction,” said Anita Arjundas. l
he thousands of migrant workers engaged in various projects in the national capital would soon be provided temporary accommodation in dormitories being constructed in north Delhi. Delhi State Industrial and Infrastructural Development Corporation (DSIIDC) chairman-cum-managing director Chetan Sanghi said that the corporation will build five-bedded and tenbedded dormitories at Kanjhawala north Delhi, to provide shelter to almost 20,000 workers. “The dormitories, to be constructed at a cost of `362.05 crore and spread over an area of some 33 acres, will be given on rental basis to construction firms and contractors for industrial workers, workers engaged in the construction industry, other migrant workers who cannot afford shelter at open market rates and seasonal workers, “ said Sanghi. "Land for the purpose has already been allotted to DSIIDC for construction of housing for the Economically Weaker Sections (EWS). The land is likely to be handed over to DSIIDC shortly," said Sanghi. l
Ajmera Realty lines up `1, 000 crore expansion
Tropical lagoon at luxury abode in Thane
jmera Realty and Infrastructure, a Mumbai-based realtor, plans to invest close to `1,000 crore in the real estate and power sectors in the next five years even as it is looking at exiting some of its non-core assets including cement business and a land parcel in Bahrain. The company has lined up `300-500 crore investment for developing residential projects, a mix of high-end and low-cost housing, in western India. “We are focusing mainly on the Mumbai market. We may also look at Pune, Ahmedabad and Bangalore,” said O P Gandhi, CFO of Ajmera Realty and Infrastructure. Of the targeted investment, which would be a mix of internal accruals and private equity funding, about `200 crore would come from internal accruals in the next two financial years.“For the rest, the company would look at private equity funding, only if required,” said OP Gandhi. According to source Ajmera also plans to pump in `300-500 crore in the power business in the next five years. Most of these investments would be made in the renewable energy space mostly solar power and bio-fuels. The company is looking mainly at Maharashtra, Gujarat and Rajasthan for the solar projects which would have smaller plants at multiple locations. l
ropical Lagoon is located at Ghodbunder Road in Thane. Tropical Lagoon is a luxurious residential project of 5 towers spread across 9 acres. Its attractions include a unique 80,000 sq.ft. Podium Garden with water bodies, terrace flats and sky gardens and large spacious apartments Tower-I Bougainvillea consists of 104 apartments of 2BHKs and 3BHKs. 45, 2BHKs are 1290 sq.ft. and 1330 sq.ft. (860 and 885 Sq.ft Carpet), while 52, 3BHKs are 1630 Sq.ft (1085 sq.ft. Carpet). Company also offers 7, 2BHK + Terrace having area of 1680 sq.ft. (1116 sq.ft. Carpet). The terrace is 450 Sq ft of Carpet approximately. Bougainvillea has 7 Sky gardens for the exclusive use of residence of this tower“The possession for Tower-I is expected in June 2012. In Tower-II the possession is expected in December 2012,”said spokesperson of company. l
A
T
| ProPerty observer |
9
NEWS ROUNDUP
Bhavya Creators launches Bhavya Corporate Tower
B
havya Creators has launched their boutique project Bhavya Corporate Tower’, the world class office spaces in Gomti Nagar, Lucknow. For their project Bhavya Creators has tied up with Expertise India which is known for its best deals and excellent aftersales-services in real estate market. Bhavya Corporate Tower with its state-of-art technology, advanced features and strategic location is going to be a mile stone among the commercial centres in Gomti Nagar, Lucknow, in futures to come. Spread across approx 2 lac sq.ft. of land and located at a prime location, the project will consist of retail and a commercial space. It will be one of the most innovative and iconic commercial hub, with cutting edge designs and concepts in the vicinity. "We believe in providing our customers best of modern & advanced technology buildings to fulfil all their demands. Bhavya Corporate Tower with its world class features, location and connectivity is going to be milestone and will set new standards for all the new developments in the area."said Ambrish Tiwari, MD of Bhavya Creators. Bhavya Corporate Tower is strategically located in Vibhuti Khand of Gomti Nagar. The most premium commercial locality near landmark office of Income Tax Department, honourable high court and various other private sector buildings. The project is to be developed on the lines of district centre comprising premium commercial, Retail and IT Spaces. l
10
| ProPerty observer |
BPTP buys out Merrill Lynch's 49% stake in Gurgaon project
R
eal estate developer BPTP is buying back Merrill Lynch's 49% stake in its Crest office building in Gurgaon for `180 crore. The developer has its corporate office in the same building. Merrill Lynch had invested `100 crore in the project in 2007 at the peak of the real estate cycle in India. Now, Merrill Lynch's Asian real estate assets, including those in India, are managed by Blackstone. “BPTP recently raised `270 crore through lease rent discounting of the 625,000-sq.ft. office building in Gurgaon that has tenants such as Deloitte, Fidelity as well BPTP itself,”said a person close to the development . The company is using a part of this money to buy back the stake from Merrill. The asset is valued at `530 crore, including a debt of `170 crore. Net of debt, the value of the asset is `360 crore. The source said that BPTP had used the money raised to repay this debt. l
Brigade Enterprises eyes `150 cr PE fund
B
angalore-based real estate firm Brigade Enterprises is looking to raise around `150 crore through private equity (PE) route by offloading a part of its stake in one of the commercial projects in the city. According to source, the company is looking at offloading part of its stake in a commercial project in the Whitefield area of Bangalore and is in talks with PE players to raise around `150 crore. The project named Summit Brigade Metropolis, which is situated at Whitefield, has 800,000 sq.ft. of built-up area and spread over two towers, sources said. Another fund house official said that the asking price for the commercial space is around `4,000 per sq.ft. by the developer. Brigade Enterprises, which has presence in residential, commercial and retail segments, has earlier started monetising its commercial spaces in another project called Gateway in the Garden City. The company usually earns upward of 30 per cent by selling its commercial projects. A Brigade spokesperson said, "monetisation of a commercial property is a normal course of action for the company and there is nothing new in it. However, we will not be able to comment on any specific project". l
NEWS ROUNDUP
Himachal CM asks cement at controlled price
H
imachal Pradesh Chief Minister Prem Kumar Dhumal asked the central government to include cement in the controlled items list within the Essential Commodities Act to check its rising prices. In a letter to Prime Minister Manmohan Singh, Dhumal said that cement produced in the state was available at cheaper rates in neighboring Punjab and Haryana than in the hill state. "In 2002, cement was decontrolled under the Essential Commodities Act, 1955. It was presumably done to facilitate market competition in cement production and marketing on the analogy of government of India's general policy of economic liberalisation," said Dhumal . This policy, the chief minister said, had harmed consumers instead of benefiting them. "In a free market economy, it is assumed that the market forces would throw up the ideal retail selling price of cement at any given location on account of competition amongst several suppliers. Such ideal free market conditions did not exist at any locations in Himachal,” said the veteran leader. "The cement companies have been fixing retail selling prices at various locations in the state in an arbitrary and irrational manner and as a result, an ironical situation has arisen while three major cement producing companies were located in the state," wrote Dhumal. He urged the prime minister to bring pricing back within the purview of the Essential Commodities Act. l
12
| ProPerty observer |
Obama presents mortgage refinancing plan
U
S President Barack Obama recently presented a plan to revitalize the real estate market.The move would allow millions of homeowners to refinance their mortgages and take advantage of the current historically low interest rates. Due to the precipitous decline in housing prices in recent years, more than 10 million homeowners now owe the bank more money than their houses are worth, the president emphasized. The housing crisis "struck right at the heart of what it means to be middle class in America: our homes", Obama said at a community center in Falls Church, Virginia. Many families have had to resort to getting help from public programmes to avoid losing their homes, but up to now those initiatives have been unable to handle the enormous scope of the problem. The plan presented seeks to benefit more than a third of the 10 million homeowners whose mortgages are underwater, the White House says. "Responsible" owners who are current on the payment of their mortgages will be able to refinance them at lower interest rates, meaning that they can save an average of about USD 3,000 per year, the president said. In addition to refinancing the mortgages, Obama's new plan also includes more protection to avoid inappropriate evictions, the sale of foreclosed properties by government agencies so that private investors who pledge to rent them out can do so and greater indulgence for homeowners who lose their jobs. Obama urged Congress to approve the plan, the cost of which is estimated to be between USD 5 billion and USD 10 billion. l
NEWS ROUNDUP
Somany Ceramics enters into JV with Italian Co.
Twinkle Khanna’s Super Gimmick
S
omany Ceramics Ltd, the Indian ceramics tile has entered a manufacturing and distribution arrangement with the best ceramic tile manufacturers IRIS Ceramiche and FMG (Fiorano Modenese-MO) of GranitiFiandre Group (Castellarano-RE) from Italy. According to this venture, Fiandre will look at a distribution arrangement with Somany Ceramics to sell ACTIVE Clean Air & Antibacterial Ceramic products in India, riding on Somany Ceramics’1400 strong distribution network & brand equity. Internationally normed tests have confirmed that Active tiles are self cleaning as they are able to degrade the nitrogen oxides, thus allowing the improvement of air quality which we breathe in a relatively short time. On the reduction of Nitrogen Oxides, it is estimated that 1.000m surface area of Active, radiated by sunlight or any other electric source of light, has an effect equal to that of 20 timber trees. Active tiles are also capable of reacting with the most common air pollutant molecules and hence provide antibacterial properties to the material. “This association with IRIS Ceramiche & GranitiFiandre Group further strengthens our motto of innovation and leadership which Somany Ceramics stands for. After VC 50, we bring to you ACTIVE as a result of our commitment to bringing world class products to the Indian customer. We look forward to working with these Italian brands and strengthening this alliance,” said Abhishek Somany, JMD Somany Ceramics Limited. l
14
| ProPerty observer |
I
By Yogesh Sood s Supertech Brand Equity gone for a Six? Yes, Industry watchers feel that’s why the Realty company Supertech Ltd. has recently hired the services of lesser known Bollywood actress Twinkle Khanna as its interior designer for launching ORB hi-end luxury apartments priced a crore upwards. With Twinkle’s hoardings and full page advertisements in the leading dailies, what’s the point that Supertech trying to prove? Will the flat buyers think of investing in the Twinkle promoted ORB project…. or will it be Twinkle, Twinkle, little star …….. And of course keep everyone guessing. Supertech must have paid several crore to woo Twinkle Khanna to come and say in front of the media that Supertech is simply the Best? Perhaps, many feel that‘s not the case as the company has recently changed its logo to convince the buyers that it’s still a leader and rock solid realty company which it’s not . l
FICCI for a review of Draft Land Acquisition Bill
Dharavi re-development set to take off
T
T
he government should review provisions of the draft Land Acquisition, Rehabilitation and Resettlement Bill, 2011 to make it viable for the industry to acquire land for projects, the industry lobby, FICCI suggested. "FICCI feels that any act should recognize the fact that there are a large number of people who would like to move out of agriculture and sell their land. There are enough statistics to prove this but the current bill seems to have overlooked this fact," statement said. The bill introduced in parliament in September last year seeks to update India's 117-year-old land acquisition laws and overhaul the rehabilitation and resettlement policy. According to the industry lobby, in the last decade rural population increased by 12.2 percent whereas urban population increased at the rate of 32 percent. While in 2001 rural population constituted 72 percent of the total population in India, in 2011 it constituted 68.8 percent. “Also average size of the operational holding in agriculture declined by 46 percent in 200506 to 1.23 hectares from 2.28 hectares in 1970-71. The decline in the operated area can be attributed to conversion of land for industrialization or transfer to meet the requirement of non-agricultural purposes,” said FICCI . l
he Maharashtra government paved the way for a massive development of central Mumbai's Dharavi, Asia's largest slum. Announcing amendments to the state's Development Control Rules (DCR), making the project a time-bound possibility, Chief Minister Prithviraj Chavan said that a 10-year corpus fund would be created for developing Sector 5 in Dharavi, which is mainly owned by the government.He said that apex housing body, Maharashtra Housing and Area Development Authority (MHADA) will be the nodal agency to re-develop it systematically, within seven years. The congested shanties and dilapidated tenements in Dharavi — which houses nearly 1.20 million dwellers in more than 100,000 dwellings according to the National Slumdwellers' Federation of India secretary M.G. Shekhar — would be re-developed as clusters of 300 sq.ft. carpet area each. He said that the state government had given the go-ahead for the Dharavi re-development project — spread across 535 hectares — but it did not register any significant progress. "We have now given a boost for the project. It is poised to change the face of Dharavi," said Chavan. l
DDA to build one lakh flats for EWS in next 3 Years
T
here is good news for people dreaming to own a house. Delhi Development Authority (DDA) said that it would make available one lakh flats for economically weaker sections and lower income groups in the next three years. The Authority also announced building of 53 community halls across the capital. The city's only land owning agency said that it would build a 'Golden Jubilee Park' as part of its Yamuna River Front Development project at an area of 251 hectares that will have amphitheater, plaza, information centre, exhibition space, food courts and children play area.
On the housing front, DDA said that work on over 20,000 houses for Economically Weaker Sections (EWS) by using prefab technology has already been taken up and construction of 24,000 flats for Lower Income Groups (LIG) will start shortly. "In all, over one lakh EWS and LIG flats would be completed in the next three years. These units are at various stages of planning and construction," said G. S. Patnaik, ViceChairman of DDA. He noted that the DDA was giving priority to people from EWS and LIG for allotting flats to reduce the number of illegal colonies and to make Delhi slum-free. l
| ProPerty observer |
15
NEWS ROUNDUP
KDP starts possession of Grand Savanna–Phase I
K
DP Infrastructure Pvt. Ltd, a leading real estate company of NCR has started possession of the first phase of its project, Grand Savanna located at Raj Nagar Extension, Ghaziabad. Set amidst lush green environs, the project is a perfect example of contemporary architecture surrounded by residential buildings, commercial complexes and educational institutions. Spread over an area of 12.69 acres, the GDA-approved project offers high rise buildings accommodating 1158 flats with an option of 1, 2 and 3 BHK apartments. Encompassing 15 towers, the first four towers are ready for possession with ready-to-movein units. The possession of the second phase is likely to start in the mid months of this year. The project extends resort like facilities combined with basic infrastructural amenities within the radius of the project. Other key features include indulgence club, in house crèche, multipurpose community hall and a segregated commercial space with a food arcade. With 24x7 power back, round-the-clock security, sewage lines and fire fight systems in place, the project fulfills the basic needs of the inhabitants residing in the area translating the dream of contemporary living into reality. Delighted at handing over the keys to the residents, Mr. Anuj Goel, Executive Director, KDP Infrastructure Pvt. Ltd said, “Located amidst developed infrastructure like sewage lines, electricity, roads and educational institutions, the project provides quality and comfort at an affordable price. He further added, “As the possession of Grand Savanna starts, a new chapter begins for the residents to enjoy the facilities available and experience modern living with élan.” Strategically located on the most prominent area of Raj Nagar Extension, Grand Savanna lies 25 km from the Central Business District of Connaught Place and only 12 km from Delhi border. l
16
| ProPerty observer |
Ashiana Housing enters Gujarat Real Estate market
A
shiana Group will be utilizing its 10.65 acres land parcel in Halol in Gujarat to develop a residential group housing project. The land is currently in the process of receiving the 'Non-Agricultural' clearances for getting group housing project. Company plans to receive the requisite clearances in next six months and start the development thereafter. “It’s a matter of delight for us to announce our entry in Gujarat real estate market. Delhi–Mumbai Industrial Corridor is an upcoming industrial hub with speedy macroeconomic growth and Gujarat is one such area which has been with the best infrastructure of the country,” said Varun Gupta, Director, Ashiana Housing Ltd. He further added, ”Over the past few years, rapid industrialization, growth of manufacturing sector and creation of a better social infrastructure has made Gujarat the most attractive destination for real estate. Halol is well connected to key industrial centers such as Ahmadabad, Bharuch and Surat, along NH8.” l
ASSOCHAM calls for raising import duty on steel
I
ndustry body ASSOCHAM called for raising import duty on steel products from the prevailing five per cent to a minimum of ten per cent so that domestic manufacturers can withstand growing imports from China and CIS countries. The challenging global environment is bringing fierce competitive pressures on performance and price reduction. “The oversupply in international markets is forcing China and the Commonwealth of Independent States (CIS) to dump their steel products like hot rolled coils, cold rolled coils and other coated products into growing markets like India,” said secretary general D.S. Rawat. After China, the United States and Europe, the country ranks as the fourth largest steel producer with annual production capacity of 68 million tonnes. By 2020, the figure is likely to go up to 200 million tonnes. China and CIS countries posses huge coking coal and iron ore resources which give them cost competitiveness while India depends on imports for its requirements. l
NEWS ROUNDUP
Crusader against Delays in Justice conferred award
D
r. Arun Mohan, a Senior Advocate of long standing, shifted his focus to this research work titled ‘Justice, Courts and Delays’ – and 1998 onwards, devoted most of his time and energy to it. With practical experience of what goes on in courts and how parties suffer by delay, he took upon himself the task of researching, analysing, and compiling this work which, unlike other works on law, does not stop at expressing concern but goes further to put forward solutions (usually as several alternatives) that are also affor-dable, and which will be of help to anyone and everyone concerned with a court case. ‘Removal of Delays’ in justice delivery has become the mission of his life. It seems he gets greater happiness by serving the society in this manner than he would by pursuit of material things – a conscious effort, or a kind of sacrifice, for the betterment of the public. Volumes 1 and 2 of his work ‘Justice, Courts and Delays’ have been released in July 2009 and Volumes 3 to 5 are to be released shortly. He also proposes to bring out later an abridged version and then, hopefully, make translations thereof in Hindi and other regional languages so that the common man, who needs the support of law to protect his rights or has to go to court to seek justice, can better understand the various intricacies and not allow himself to be overawed by the judicial process or be unable to face his opponent who is
bent upon procrastinating the litigation. It is rarely that we find a lawyer having a lucrative practice, giving it up to work for public service in this manner, and also do so entirely at his own individual expense. His mission is to see that access to justice in our country which is greatly constricted because of high costs and delays, is available to one and all. And he has set about to evolve practical solutions and more so because he feels that unless there is justice to the masses, the growth of India as a nation will not achieve its full potential. It is really a case of a Senior Advocate opting to take up the pro bono brief for the millions in the country waiting in the queue for justice and not taking up well-paid briefs. The two volumes are indeed an unparalleled contribution to the cause of justice in the country. The remaining three volumes of this monumental work are now awaited.
Grand Ajnara Heritage in Noida by Ajnara
A
jnara Group has launched a new residential project Grand Ajnara Heritage in Sector 74, Noida. Group also offers 2, 3 and 4 bedroom apartments with all modern facility like swimming pool, club house, gymnasium and more. The Group has effectively completed various projects, both residential and commercial in nature, on land acquired from DDA and GDA. Grand Ajnara Heritage’s plot is allotted by Noida Authority. Located in the heart of Noida Sector-74 Near to sectors -50 & 51. The plot is two sides open with wide roads. The project has easy accessibility; it is only 5 minutes away from sector 32 Noida City Centre. Various Institution, medical centre, banks, ATM & shopping complex are in close vicinity. The whole project has extensive central green landscape. The project ensures the optimum utilization of space, within the units for spacious apartments and lavish entrance lobbies for each tower. Ajnara India
18
| ProPerty observer |
Limited (formerly Ajnara Farms & Services Ltd.) is a pioneer group in real estate industry with an experience of almost a decade and a half guiding its growth. l
Saudi investment in Indian infrastructure
Apartments sold at premium in Gurgaon
audi Arabia was urged to invest in India's infrastructure sector and further boost economic engagements between the two countries. "We look forward to Saudi investment for development of our infrastructure and in other sectors," said Finance Minister, Pranab Mukherjee. "India needs an investment of close to a trillion dollars in the next five to seven years to build and expand its existing infrastructure to be able to sustain a GDP growth rate of 8 to 9 percent,” said Mukherjee. FM emphasised on the need for giving priority to the proposed USD 750-million joint funds to be set up on cooperation. "The proposed India-Saudi Arabia investment fund of USD 750 million to be jointly set up by Public Investment Fund, Saudi Arabia and a counterpart Indian agency needs to be given high priority as it is mutually beneficial," he said. FM also urged Saudi Arabia to assist India in meeting its growing energy demands. "The rapidly expanding Indian economy has a growing requirement of crude oil to sustain its development momentum. We hope that Saudi Arabia will be able to assist India in meeting its energy security needs in the years to come,” said Mukherjee. l
n one of the recent transactions in Gurgaon, a 5,200 sq.ft apartment was transacted at a price of `5.63 crore. This transaction took place in Unitech World Spa, a luxury condominium complex located in South City I. This 5BHK apartment is located on the 3rd floor in one of the apartment towers. The unit comes with three car parking spaces. The group housing project is built on 21 acres of land and has amenities like 100% power backup, unlimited water supply, exclusive club house, 24/7 security system, swimming pool, spa facilities and jacuzzi, among others. A 1,285 sq.ft. resale apartment at a premium residential project at Santacruz, Mumbai (W) was transacted at `3.8 crore. This price is inclusive of two car parks. This unfurnished apartment is housed in a 12-storied building located in one of Santacruz West's premium residential pockets. The building has two wings with 2- and 3- bedroom apartments with only four spacious flats per floor. It is one of the few buildings in the city that offers a wide array of amenities and an ideal location. Santacruz (West) is strikingly more affluent than the eastern part of the suburb. It is bordered by Khar, Juhu and Vile Parle. It is primarily a residential area, with the market situated near the railway station. l
S
I
Sobha Developers’ `1,500 crore sales target in FY 2011-12
B
angalore-based real estate developer Sobha Developers is expecting to achieve new sales of `1,500 crore in financial year 2011-12. In a real estate operations update for the quarter ended December 31, 2011, the developer has told the Bombay Stock Exchange that the company has sold 818,935 sq.ft. across the country in the October-December 2011 quarter, with an average selling price of
`5,475 per sq.ft. The average selling price for half year ended September 30, 2011 was `4,924 per sq.ft. Of the 818,935 sq.ft. sold in the quarter, Bangalore had the largest share at 567,662 sq.ft., while the national capital region was next at 106,183 sq.ft. Sobha Developers expects to sell over three million sq.ft. of space in this financial year. l
| ProPerty observer |
19
NEWS ROUNDUP
Delhi Metro's airport line extends its radio cab service
T
o enhance commuter convenience to and from Delhi Metro's Airport Metro Express Line (AMEL), the concessionaire of the line, Reliance Infrastructure, will extend its prepaid shared radio cab service to one more Metro station, an official said. "The shared cab service is already available at the Shivaji Stadium station for a minimum fare of `10. This will be now started at the Delhi Aerocity Metro station," said a spokesperson of Reliance Infrastructure. Reliance Infrastructure has tied up with Iris Cab, which will provide radio taxi facility at Aero City Metro station on the premier line. "The shared radio taxi facility is safe as the cab movement is closely monitored by their control room. The cab service at the Aerocity Metro station will help the commuters easily reach the T1 terminal," said an official. Cabs will be available from 8 a.m. to 8 p.m. every day. According to the official, prepaid shared radio cabs will soon be available at the
New Delhi station also. Built at a cost of `5,700 crore, the 23-km AMEL has six stations: New Delhi Railway Station, Shivaji Stadium, Dhaula Kuan, Delhi Aero City, Indira Gandhi International Airport and Dwarka Sector 21. l
Indian economy to grow at 7 per cent in 2011-12
Meinhardt to provide consultancy in Kolkata
D
espite turbulence in developed economies, India's gross domestic product (GDP) will grow by 7 percent in the current fiscal and is geared to return to a higher growth path of 9-10 percent in the medium term on the back of strong fundamentals. "Despite an adverse international environment, the Indian economy is expected to grow by about 7 percent this financial year ending March 31," said Prime Minister while inaugurating the 10th annual diaspora meet called the Pravasi Bharatiya Divas (PBD). India's GDP growth fell to 7.5 percent in the first half of the year against the budgetary target of around 9 percent growth for the current fiscal. The economic growth declined to 7.7 percent in the first quarter of 2011-12 and it fell further to 6.9 percent in the second quarter. The prime minister said that although the economy was passing through "difficult times", its fundamentals were strong and the GDP growth would rebound to 9-10 percent in the medium term. "We hope to bring back the rhythm of our growth processes to sustain an annual growth rate of 9-10 percent in the medium-term,” said Singh. l
22
| ProPerty observer |
M
einhardt, a global engineering, infrastructure and project management consultancy firm, strengthens infrastructure development in India by providing expert consultancy services in key projects. Meinhardt overall plan is to invest over `100 crore this year to acquire a couple of firms and enhance its presence in India. Meinhardt now plans to have its presence in Kolkata, Mumbai and in a Southern city within a year. Meinhardt is providing engineering consulting services for some very key projects in Kolkata which includes tallest building in Kolkata, “Urbana-2” which is 201 mt high ultra-luxurious residential projects. They are also providing detailed engineering services to South City Residential Township, Kolkata, India’s largest township development, covering an area of 372,000 m and featuring four towers, each 34 storeys high. "The growth curve of Indian economy is at an all time high and contributing to the upswing is the Infrastructure sector in particular. Growth in this sector is driven primarily by globalization of Indian corporate, growing presence of foreign businesses in India and rapidly increasing consumer class. With major National and global players making large-scale investments, we have to play a major role to boost up the development of infrastructure and thus construct a developed Nation. l
TREND
Do Customers Prefer
READYTO-ENTER
FLATS? The ready-to-move-in apartments turn out to be exorbitant for the middle class segment of the society
A
Vivek Shukla re serious buyers of realty market look for ready to enter flats or do they do not mind investing in those projects where they have to wait for from months to years to get their dream homes ? According to a study by leading realty broking firm, the demand for apartments and flats is definitely very high and they get most of the inquiries come from those keen to move into ready-to-occupy flats. “We have noticed that a majority of the potential customers are locals, which underlines the changing mindset in NCR to reside in flats which was a no-go area in the past,” a senior official of the firm informs. “Generally, endusers, who are looking to buy their first house, look for ready to move in apartments, as that would save the rental payments for their current premises. However, from investors point of view, ready-to-move-in flats would fetch lower returns on their investments vis-à-vis
24
| ProPerty observer |
under construction flats, even though there are far lesser risks associated with the former option,” Samir Jasuja, founder and chief executive officer at PropEquity, a real estate data, intelligence and analytics firm said. “On the other hand, there are several risks associated with a new and under construction projects like delays, price escalations, variance from the planned layout and builder troubles etc. But these risks come with higher probability of returns on their investments, and in several cases investors or second home buyers look for under construction properties for higher returns,” Jasuja said. Devinder Gupta of DGS Realtors says that unlike in the past the new-age customer is very smart and he ensures that their investment does not create headache for him later. Hence, he thoroughly checks the background of realty firms before taking the final call. They even inspect past projects of builders. While he prefers ready to enter house, he settles even in those projects where work is going on.
However, Ravi Saund, COO, CHD Developers Ltd. claims that the demand for under-construction property is far higher than ready to move in apartments. Depending on the stage of construction and also the response that the project has already elicited from other buyers/investors, the rates can be from anywhere between 15-30% lower. The ready-to-move-in apartments turn out to be exorbitant for the middle class segment of the society — and this is the segment which continues to be Indian Real estate’s primary driver. The middle class population of emerging market cities is burgeoning. If figures talk, approximately 460 million people in emerging market cities will enter the middle class between 2012-2015. It’s a buoyant situation. We are quite upbeat about it. The buyer has more choices and is lighter on his pocket. He can opt for construction-linked plan which has a long gestation period of 2-3 years. Now developers offer Subvention Scheme where the buyer enjoys a PRE EMI holiday. This scheme is beneficial for customers who stay
on rent. He pays rent and no EMI and later EMI and no rent. “ I feel that buyer in the under-construction property can make some tweaking in interiors comfortably. Therefore, it can make a lot of sense to invest in a under-construction property by a credible and reputed developer,” Sanjay Khanna, Director of Kailash Nath Projects Pvt.Ltd. told us. However, Sunil Jindal, CEO of SVP group, has a different take on this matter."I can tell you from my own experience that more often than not, customers invest in those properties where they find some kind of activity. If they see that work is on, then they invest. I have observed this tendency among customers in our many projects. Let alone the projects of big-time realty firms, selling flat, floor or plot on barren land is not at all an easy task. Selling dream is not possible nowadays as media has exposed the handiwork of a large number of realty firms in cornering huge sums from people after promising the moon.” Anuj Goel, Executive Director, KDP Infrastructure Pvt. Ltd. also belongs to those
groups of experts who feel that customers prefer ready to move in flats. Says Goel, “If it is an investor, the flat yields an immediate income of rent from the new flat. If it is an end-user, he does not have to pay the rent to his existing land lord as he gets the new flat to stay in and only pays EMI for his loan. Furthermore, the investors and end users practically see the developed and completed project without any confusion on the final outcome of the project.” Housing sector watchers say that construction activity is always unpredictable as the schedule always gets adversely affected because of scarcity of labourers, raw materials and government procedural delays which the builder has to suffer all through the construction activities. Once the building is complete, it is time for the customers to enjoy. The new customer enjoys this situation without any bottlenecks. Hence there is a perceived additional value for the customers to invest on ready to move in flats without a long wait. Harinder Dhillon, VP, Raheja Developers Ltd, says, “The primary market for
Vivek Shukla
new launches is extremely active at the moment & transaction volumes are significant. Under-construction projects are generating as good a response if not better, than that of ready to occupy apartments.” So the real question is what is the purpose of purchasing a property? “If it is for investment then under construction property is generally preferred, meanwhile first home or self-use buyers go for ready to move in flats,” Sanjay Khanna concludes. l
| ProPerty observer |
25
SPECIAL STORY
The Waiting Game is Over Buyers Should Reap the Windfall from Good Tidings For generating liquidity for better cash flow, developers will likely to focus on selling their existing projects at a relatively lower rate. The move will also help them stave off the stagnation in sales.
B
Achyut Nath Jha efore we go euphoric over the emergence of a property market which appears to be slightly tilted towards home buyers, an introspective view of global housing performance could be of great help. We all know that many of the world’s financial
26
| ProPerty observer |
woes since 2008 began with the collapse or rather bursting of the property bubble in history. House prices rose so fast, for so long, in so many countries. Yet this infection has been much less widespread than the growth it achieved. Prices tumbled by 34% in America from 2006 to their low point earlier this year. Prices have fallen by around 15% in Spain and
Denmark. But in most other countries they have dipped by less than 10%, as in Britain and Italy. In some countries, such as Australia, Canada and Sweden, prices tanked for some time but then surged to new highs. As far as India is concerned, hike hovered around what most of developers put as 'manageable increment.’
As the number of customers dwindled in 2011, most of the developers had to put their expansion plans on hold. The slowdown on sales of existing projects also came as a setback resulting in stacking inventory Buyers vs Investors However, ‘manageable increment’ couldn’t spur buyers or investors in 2011 as they were overburdened by a high interest rate scenario, shrinking profit margins and soaring input costs. As the number of customers dwindled in 2011, most of the developers had to put their expansion plans on hold. The slowdown on sales of existing projects also came as a setback resulting in stacking inventory. But that was then. Property experts now foresee a consolidation of the realty market in 2012. For generating liquidity for better cash flow, developers will likely to focus on selling their existing projects at a relatively lower rate. The move will also help them stave off the stagnation in sales. This will also result in churning out the genuine developers from the ones who strive and sustain on speculative marketing gimmick which creates hurdle for the end-users and investors. Experts also point out that more than the buyers who want homes to live in; investors are the lifeline of a developer. They are the ones who are keeping builders sustain even during the struggling period. They also keep the property prices staying firm. The continuous bearish scene in real estate stocks further left them with no option but to invest in property to get maximum returns before they exit. Thus, in some cases it is also because of these investors that the builders cannot reduce prices substantially.
The Demand and Supply Matrix Property prices not correcting on expected lines or affecting a marginal downward only in some locations are also linked to some extent with the demand and supply cycle in residential projects. According to Knight Frank, a real estate consultancy firm, the pace of new project launches was severely crippled in 2011. During 2010, roughly 3.61 lakh residential units were launched across the top seven cities of Mumbai, Delhi-NCR, Pune, Kolkata, Bangalore, Chennai and Hyderabad. Only 1.72 lakh units came up in 2011 — a decline of 52% over the previous year. The decline was sharper in locations, such as Mumbai, where prices were relatively high and buyers few. So, the restriction of supply was caused by lesser number of housing units. Even the projects which were launched two-three years back are in limbo, developers are delaying property buyers from possession, citing lack of funds, rising input costs and
sometimes restructuring their plan by adding more homes. This was despite the fact that lots of property buyers have already paid for their homes. Needless to say, they could be quite disappointed in such a scenario as they are losing possession as well as money. Regrettably, even some reputed developers resort to such tactics. The DLF-CCI spar last year was one such instance.
Planning and Strategy These are the few reality checks in realty but some property experts still advise buyers to not delay their plan to buy or invest in property as things are going to improve this year. There are positive signs for them as developers can’t hold on to their projects for getting substantial profit at the cost of buyers. A home buyer is interested to purchase a property to either reside in it or to invest or both. But the main bottom-line is giving due diligence to extract benefit from the prevailing condition. So, is it a good time to buy home? Yes, say
| ProPerty observer |
27
SPECIAL STORY
most of property consultants giving instances from developers who are offering very attractive discounts as they need liquidity and are left with a huge inventory. The Reserve Bank of India (RBI), in recent times, hogged more limelight for the rate hike which resulted in more EMI for buyers. Now there is buzz in financial and banking market that central bank could provide a relief in near future. However, developers may not continue with the freebies once interest rate falls as they have an improved position on the liquidity front. After all, economic trajectory, sometimes, functions in asymmetrical way — someone’s peril could be other’s bonanza. So why wait for an ideal situation and lose the opportunity! It’s better to customise purchase of the home for its location, size, price and other ‘positive’ aspects arising out of a sluggish market condition. Through better bargains, new buyers have the option of purchasing from a developer or as resale in the current market situation. What is needed is a cautious approach while finaslising home purchase. Also, when buying a home in an ongoing project, there are chances of delay in possession. To compensate the loss due to possession delay, the buyer must negotiate with developers to incorporate the delay penalty in the agreement. Of course, your gain or loss will depend how banks are putting interest rates on both floating and fixed ones. This can well be understood with the help of an example: Suppose a buyer named Sushil Sardana buys a home and takes a home loan at 10 per cent p.a. The developer promises to give the possession to Sardana within two years. In case he fails to do so, he agrees to pay a penalty at 1 per cent lesser then the bank’s interest rate, i.e. at 9 per cent. Now, Sardana has two options — he will either have to fix the penalty interest at 9 per cent or keep it floating at 1 per cent lesser than the bank’s interest rate. If the developer defaults on the promised timeline, Sardana will get benefit if bank reduces interest rate but he will not get
28
| ProPerty observer |
Mumbai property: Will prices fall in 2012?
P
redictions are also galore about residential property prices in Mumbai coming down in 2012. Bank of America Merill Lynch (BofAML) recently made a forecast that residential property prices in the city could fall by 15-25 percent over the next six months. It says that Mumbai’s residential property prices jumped 14.6 percent over the past decade, higher than the estimated 9-10 percent growth seen in earlier decades. “This growth appears unsustainable and prices should undergo mean revision over the next 1-2 years,” it predicts in a report. In support of its claim, its analysts also visited some building sites in Mumbai and discovered that developers were offering 5-8 percent discount to buyers depending on the project. BofAML predicted that given the financial difficulties being faced by developers, they would offer higher discounts in 2012. Given the financial difficulties being faced by developers (high debt loads, high funding costs and limited access to funds), they would offer higher discounts to push sales in 2012. Significantly, BofAML is not the only one that believes a price correction is around the corner. Jones Lang Lasalle, a real estate consultancy, also noted in a recent press release that there is already a price correction of sorts happening “below the radar”. “While the same benefit if interest rates are increased. In the case of floating penalty, he could hedge against increase or decrease of rates.
Availing the Opportunity Home buyers should avail the opportunity from the RBI mandate on prepayment penalty which is to be done away. Banks are working on to toe the RBI line. Prepayment can be
official prices have remained firm in readyto-move-in projects, prices have fallen by at least 10-20 percent in under-construction projects which are less than 30 percent complete,” it said. It expects moderately revised rates to be made official in several suburban residential projects in the next few months, which, it said, should spur a slow but steady recovery in demand. Record home prices and higher interest rates have hit demand badly. As a result, Mumbai’s residential home sales dropped to a three-year low in the quarter ended December. Unsold inventory or the number of months needed to clear stock at the existing absorption rate, also climbed to 44 months. However, there is a perception that there is no guarantee that property prices will fall, no matter what the experts say. When home prices soar and demand from buyers falls, developers tend to cut back on new launches to save on costs, but don’t slash prices on their existing/ongoing projects. Sometimes, they might even start a new project offering limited amenities or smaller units to attract buyers, but continue to sell their existing/ongoing larger projects at current prices. Sometimes, a buyer could get lucky and get a minor discount. It’s rare, however, for developers to cut home prices sharply in response to dwindling demand. done either as a one-time payment or partial prepayments or switching the loan to another bank with a lesser interest rate as the case may be. There is need of proper planning on the prepayment decision like loan amount, term and the other option with which the funds can be arranged. Complaints are galore from a slew of developers against compromising with the quality of construction materials. So, it is incumbent
for buyer to do cross-checking and if possible, consult some professionals for verifying the quality aspects. In the recent times, in Delhi-NCR, project sites turned into the battleground for buyers, farmers and developers and they got stuck,
forcing the court to rein in the disputes over legal aspects. Through the several judgements announced last year, courts have provided relief to buyers and original land-holders. So, developers’ credential is of paramount importance while taking decision on buying
or investing on property. In a nutshell, if a home buyer finds property in good location and the said project is being developed by a reliable builder, he should get ready to benefit from the discounted price and not wait for further ‘correction.’ l
But… property is not always a healthy investment!
T
he basket of properties abounds in paradoxes. Everyone wants property prices to come down, but nobody wants it to stay down. Prices are unaffordable and not economically viable at present in many parts of India. However, no interested property buyer will ever want property prices to stay down. The situation becomes more interesting when we are led to believe that property prices can only go up in our lifetime and levels of our investment will be property. Also prices are unaffordable to many in terms of value to income ratios. Value to income ratios have gone up multiple
times over the years with property prices rising much faster than income. For example, if your flat price has gone up by five or six times over the last 10 years and your income has gone up only three times, the value to income ratio has gone up. One could have afforded to buy a flat 10 years back, but someone earning as much or less than that cannot afford to buy a property now given than the income is not sufficient to service loan instalments. Taking into account the low rental yield earned to property price(it is as low as 1 percent in some areas of the country), it does not make economic sense to buy
property for investment as interest on fixed deposit is much higher. It actually makes sense to sell property and invest in fixed deposits at such low rental yields. Yet, despite the ground reality; one will continue to believe that property prices will keep going up. Even if prices do come down, you will believe it is temporary and prices will go back up. As an expert explained that overextending to buy a place to live in was fine but overextending to buy a second and third property for investment in the hope that prices could only go higher was downright irresponsible.
| ProPerty observer |
29
GOLF REALTY
Decoding Golf Realty and Pitching for New Golf Course
M
Property Observer Desk ost of us look at golf as a sport only but if we dig deeper some from us may realise that golf is a green goldmine waiting to be explored. Developers are already bringing in golf courses as the new bait to sell their property. The world economy and golf are closely linked. The rich and not-so-rich comfortably move from clubs to curves, as they relish the life as they aspire to. Unlike India, the property sector in China is clearly overheated and the government's efforts there will impact realty and of course, golf estates too. India is less of a bubble, but at this stage the potential for golf is still far off. In years to come, there will be more investment in India in terms of golf property, but, of course, it will need to overcome a hump in the property business first. In a sign of the country's booming economy, people are taking to the greens increasingly. The most well-known face in the sport is Jeev Milkha Singh, the highest-ranked Indian golfer and the first to break into the top 50 in the world. Also, golf in India is generating a huge following among young people and children from middle-class families. These are people who can afford to pay for expensive lessons and are keen to take it up as a career. The country boasts of more than 500,000 people who play golf - many of whom play regularly. This number is expected to grow rapidly. Golf's growth is also getting a boost from real estate developers, who are building luxury residences alongside golf courses, such as the Arnold Palmer-designed course outside Delhi called the DLF Golf & Country Club. Moreover, big businesses and celebrity endorsement make it an expensive sport in the country, limited to the elite few who can afford expensive private clubs. But with the inclusion of golf in the 2016 summer
30
| ProPerty observer |
Olympics, government will now fund staterun subsidised courses. Thus golf enthusiasts and businesses will be betting on this to boost golf's popularity even further. On January 24, Tuesday, Property Observer organized a workshop, “Convergence on Business of Golf” at Paharpur Business Centre & Software Technology Incubator Park, Nehru Place, New Delhi. The two-hour workshop was supported and hosted by Paharpur Group. The property portal, 55acres.com, was the online partner of this ideational and interactive event. It aimed to galvanize developers around strategic initiatives and grass roots activation to ensure the future vitality of the game of golf. The workshop, first of its kind in Delhi-NCR in recent times, was attended by several prominent invitees including CEOs and CMDs of real estate companies from Delhi and NCR region such as Mr Anit Mehrotra, CEO of Group Silver Glades, Vikash Gupta, director of Earth Infrastructure, Tariq Nawab, director, Marketing Times, Sushant Pawar, director of Mahavir Hanuman Group, Amit Gangal, senior architect of Supertech, Kapil Keswani from Unitech Limited, Sonu Goyal, GM, marketing of K World Sristhi, Dinesh Bhardwaj, project head- cum- architect of Assotech Realty, Bijendra Aggarwal, president, Builder Council of India. The workshop was on creating golfing
T
venture on the basis of existing international norms and be part of valid golf arena. The event also focuses golf as a trigger to explore the unexpected spaces and revitalize them in a systematic way which will be beneficial to every one. Pitch and Putt of Golf is like cricket’s T-20. By 2014, Indian Pitch and Putt Union will become a full-fledged body to supervise this form of golf which may be termed as mini golf .It will have parallel authority to conduct and affiliate as any national and international bodies in golf. “No hard terms of new golf course for developers,” said Rakesh Purohit, Secretary General of Indian Pitch and Putt Union (IPPA). Purohit further added, “No need of any affiliation from any other authority for develop new golf course in India”, while explaining the nuts and bolts of golf realty to developers and others during the workshop. As expected, they calmly listened to Purohit’s views and glued their till the end. ‘It was very nice and knowledgeable section, I hope it will be organized every year “said Amit Gangal. “It was quite interesting for us. We get more information about golf course and I like to attend such workshop again if I get invitations from organizers,” said Kapil Keswani. ”The workshop was very good and I am thankful to organizer for inviting me,” Keswani further added. l
Thailand: Asia's Golf Hub!
hailand has earned its stripes as Asia's Golf Hub. The Southeast Asian nation has worked hard to gain the right to be the golf capital of the region. In less than twenty years, Thailand has transformed itself into one of Asia's brightest stars on the golfing landscape. Today, it has more than 280 golf courses, which is more than any other country in Southeast Asia. It is reported that Thailand is also home to between 500,000 to 700,000 golfers and it has produced some of the greatest names in Asian Golf – Boonchu Ruangkit, Thongchai Jaidee, Prayad Markseang and Thawon Wirachant to name a few.
INVESTMENT
Income Tax Laws for Provident Fund Thus, if you are shifting from one employment to another employment and you are having a PF account and you have not completed five years of continuous service
U
By Subhash Lakhotia nder the provisions of I-T Law as per section 80(c) of the Income-tax Act, 1961 a deduction in terms of the said section is permissible to an assess contributing to the recognised Provident Fund. This deduction is permissible
32
| ProPerty observer |
within the overall limit of `1, 00,000. It may also be noted here that the maximum amounts which can be contributed by the employers to the PF of the employee is 12 per cent per annum of the salary. Thus, in case the employer’s annual contribution to the PF exceeds 12 per cent of the salary of the employee. In that case such excess contri-
bution will be treated as income of the employee. Likewise, if the interest credited on the balance to the credit of the employee in the PF account exceeds 8.5 per cent per annum, in that situation such excess interest over and above the said 8.5 per cent shall be deemed to have been received by the employee and will be added to the income of the employee and thus subjected to tax. All persons who are contributing to the PF should carefully study the provisions of PF as are contained in the fifth Schedule to the I-T Act, 1961. As per this schedule rule says about exclusion from total income of accumulated balance in the recognized PF. This rule is really one of the very important part of
Subhash Lakhotia
the contents of which must be carefully understood by all those persons who are in service. The relevant extract of this rule is as under:The accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be excluded from the computation of his total income – (i) If he has rendered continuous service with his employer for a period of five years or more, or (ii) If though he has not rendered such continuous service, the service has been terminated by reason of the employee’s ill-health, or by the contraction or discontinuance of the employer’s business or other cause beyond the control of the employee, or (iii) If, on the cessation of his employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account maintained by such other employer. Thus, if you are shifting from one employment to another employment and you are having a PF account and you have not completed five years of continuous service, in that situation please be careful and take a decision not to withdraw the money from your account or else you will be subjected to tax on the accumulation. The best course however, would only be to ensure that your
amount lying in the account is transferred to your new account with new employer and that the money is not withdrawn specifically when five years of service have not been completed. This simple tip is going to be really wonderful tip for all those persons who are in the process of shifting their job and have not been in service since five years continuously.
All those who are contributing to the PF should also carefully have a look into the provisions contained in rule 67A of the I-T rules 1962. This rule is says about nomination for your account. In case you have not yet made your nomination for the account, then please make the nomination in Form No. 40(a). The above-mentioned rule 67(a) while talking about nomination of the account states that
| ProPerty observer |
33
INVESTMENT
if an employee nominates more than one person, then the employee should specify the amount or share payable to each member of his nominees so as to cover the whole of the amount that may send to the credit of the employee in the PF. It is also provided that where an employee has a family at the time of making a nomination, the nomination shall be in favor of one or more persons belonging to his family and that any nomination made by an employee in favor of a person not belonging to his family shall be invalid. Sometimes, it may happen that at the time of making a nomination for the purposes of PF, the employee has no family, then the nomination may be made in favor of any person or persons but if the employee subsequently acquires a family, such nomination shall forthwith be deemed to be invalid and the employee may be allowed to make a fresh nomination in favor of one or more persons belonging to his family. Employees should
34
| ProPerty observer |
also remember that by ďŹ lling up application no. 40(b) a nomination made by the employee can be modiďŹ ed at any point of time. For the purposes of nomination under the recognized PF act, family would mean the employees spouse, legitimate children, step children, deceased son widows, deceased sons legitimate children, deceased sons step children and dependent parents. As an investment tool. If you want to withdraw money from PF account, then kindly look into rule 68 of the IT rules 1962 says about the circumstances in which withdrawals may be permitted to your account. Briey the law allows you to withdraw from your account to make payment of the expenses incurred in connection with the illness of the employee or the member of his family as also for meeting the cost of higher education. Similarly, the withdrawals from the PF are also permitted to pay the cost of the passage to a place out of India of an
employee or any member of his family. Likewise, expenses incurred in connection with marriages, funerals or ceremonies, which by the religion of the employee, it is incumbent upon him to perform shall also be allowed from out of the withdrawals made from the account. Finally, the most important purpose for which the withdrawal is permitted is to meet the expenditure on building a house or purchasing a site or a house and a site. It is suggested that all those persons who are in service should very carefully go through the various contents of the provisions contained in the I-T Act and the I-T rules relating to PF and try to make the best use of the same. Our recommendation is that the amount lying to your credit in the account should be withdrawn and invested in buying a house or a plot of land which we feel would be a wonderful management decision for which one has not to repent in the years to come. l
VAASTU
Vastu & Astrology:
Two Sides of Coin Vaastu is nothing but a balance of the five natural elements – Fire, Air, Water, Earth and Space
W
hy a bedroom should be in South? Why should be a kitchen in South East? Or why a Puja room to be located in North -East directions. There are many such questions arise in our minds. There are scientific reasons behind each dictum of Vaastu as explained in previous issues. One can find the answers to all these questions in astrology as well because Vaastu is a branch of Vedic Astrology. Connection between Vaastu and Astrology is the topic of discussions here and detailed further. Vaastu is nothing but a balance of the five natural elements – Fire, Air, Water, Earth and Space. These five elements are signified and owned by various planets of our Zodiac. There are 12 signs (Rashi) in our 360 deg Zodiac. Nine planets have ownerships of these 12 signs. Table – 1 gives the information about ruler planet, signs for each direction and the elements of that particular sign. Each of the nine planets signifies numerous things. Some of the significations of each planet relevant to Vaastu are listed in Table-2. Planets act like human beings and they have friendliness and enmity with other planets. They are benefic or malefic in nature. Their influence (Guna) is also varies from Satvik, Rajsik or Tamsik depending on a particular planet. Table-3 gives detail information about friends, enemy and nature of planets. If we consider the significations of various planets with respect to directions, then it is
36
| ProPerty observer |
obvious that – • Praying should be done in North -East because Jupiter is the owner of this direction. • Sleeping is best in South because Mars is owner of South and Venus for South-East. • Study, treasurers and business / commercial activities are most suitable in North
Direction
because Mercury represents all these significations and owner of North. • Old-age elders should sleep and live in South-West because Saturn represents old age and south for sleep. • Hall for meeting, where communication is important, should be in North.
Element Ruler Planet for Sign for Direction Represented by Direction Direction
East
Sun
Aries, Leo, Sagittarius
Fire
North
Mercury
Cancer, Scorpio, Pisces
Water
West
Saturn
Gemini, Libra, Aquarius
Air
South
Mars
Taurus, Virgo, Capricorn
Earth
North – East
Jupiter
South – East
Venus
North – West
Moon, Ketu
South – West
Rahu
Table – 1: Ruler Planet, Rashi & Elements for Various Directions
Planet
Significations
Sun
Health, Soul, Source of Life, Light, Father, Power, Authority, Name & Fame, Government, Eyes, Profession, Brokerage, Fire, Doctor, Politician, Forest, Orange & Light Red Color, Mouth, Copper, Ego, Strength.
Moon
Mother, Water, Heart, Travel, Mind, Emotions, Blood, Water Places, Silver, Life Giving Energy, Popularity, Milk, Gardening, Changes, Eating, nursing homes, White & Silver Color.
Mars
Fire, Affection, Courage, Beautiful Clothes, Independence, Youger Siblings, Blood, Surgery, Immovable Property (Land, house, etc.), Anger, Hatred, Violence, Defense, Management of wild elements, Deep Red Color.
Mercury
Intelligence, Treasury, Education, Friends, Business & Trade, Transport, Communications / Speech, Writing, Philosophy, Doctor, Teaching, laughter, Flourishing of Family, Smell, Green & Brown Colors.
Jupiter
Sons, Husband, Wealth, Knowledge, Religious, Good Qualities, Vedas, Holy Water, Sages, Control Over Senses, Devotion, Prayer, Mantra, Cow, God, Yellow Color.
Venus
Wife, Marriage, Pleasures of Senses, Conveyances, Ornaments, Beauty, Singing, dance, Happiness from Wife, Silver, Comforts, Flowers, Good Clothes, Pink Shades & Cream Color.
Saturn
Servants / Workers, Longevity, Slavery, Old Age, Black Grain, Calamities, Ailments, Poverty, Sins, Fear, Dis-honour, Debts, Legs, Grey, Navi Blue & Blackish Colors.
Rahu
Waste Material, Dirty, Harsh Speech, Life in Foreign Land, Skin Disease, Immoral Woman, Snake & It’s Bite, Low Caste, Gambling, Cunning.
Ketu
Moksha, Lord Ganesh, Lunacy, Life in Foreign Land, Philosophy, Smoky Color, Salvation, Leprosy, Detachment, Lean & Thin.
Table – 2: Planets and Their Significations
• And so on…. Elements and friendship among various planets also play a very important role to ensure harmony, happiness and prosperity to the owner and whole family living in a particular house. For example, Fire and Air cannot go hand in hand because both are inimical and opposite nature elements. So, in a house significations of planets should match with the friendliness and nature of the other planets for mixing of various aspects of a house. Mismatch in significations in the directions of opposite and inimical planet may cause disharmony and distress to the family
members. Vaastu is a subset of Astrology and should be studied together to select the right site and design the proper layout. If South direction for a native from his horoscope is lucky for him, then South-facing house can prove to be very fortunate and bring prosperity & happiness for him. I will discuss some live examples of good and bad Vaastu in our next issue. l For any vaastu related query please contact: E-mail: rkgoel1995@rediffmail.com M: 9810175400
Rakesh Goel
| ProPerty observer |
37
VAASTU
ProPerty related Zodiac Forecast ARIES
TAURUS Period between 11th & 28th Feb is good to buy or sell the property. Good gains expected from property dealings. Feb-12 is not a good month for any type of property dealings i.e. buy or sell. If possible avoid such decisions. However, it is good time to do soft furnishing in the house.
GEMINI
CANCER If planning to buy or sell your property, period after 11th Feb is suitable. You are likely to get a house of your choice. Period after 4th Feb is suitable to ďŹ nalize property deals. It is advised to check the property papers carefully.
LEO
VIRGO Right time to buy or sell the property. Ensure legal aspects of the property before ďŹ nalizing it. Avoid any property related matters in Feb. It is not the right time from real estate perspective.
LIBRA
SCORPIO Likely to get good gains by selling your property.
Good time to buy or sell your house. Avoid 28th & 29th Feb.
SAGITTARIUS
CAPRICORN You may get good price for your house if planning to sell. Good period after 4th Feb to furnish your house or even buy a new one.
Feb 12 is not right period to do any type of property dealings. So, avoid it.
AQUARIUS
PISCES You may change your residence. Gains from property are indicated in February.
February may not prove to be good from real estate perspective. If possible, avoid.
38
| ProPerty observer |
Planet
Sun Moon Mars Mercury Jupiter Venus Saturn
Friends
Enemies
Nature
Guna
Banefic
Satvik
Banefic
Rajsik
Malefic
Tamsik
Moon Mercury, Venus
Banefic
Satvik
Banefic
Satvik
Sun, Moon Sun, Moon, Mars
Banefic
Rajsik
Malefic
Tamsik
Moon, Mars, Saturn, Venus Jupiter Sun, Mercury None Sun, Moon, Jupiter Mercury Sun, Venus Sun, Moon, Mars Saturn, Mercury Mercury, Venus
Table – 3: Friends, Enemies, Nature & Guna of Various Planets
In the previous issue on the Vaastu section, a wrong diagram got inserted inadvertently. This is the right one: North- East Ishan
East Poorva Head
Eye
Eye
Mouth
Ear
Ear
Shoulder
Arm
South-East Agneya Arm
Nipple
Chest
Arm
Arm
Hard
Armpit Armpit
Shoulder
North Uttar
Arm
Nipple
South Dakshin
Heart Knee
Arm
Arm
Hand
North-West Vayavya
Thigh
Private Part Private Part
Arm
Arm
Arm
Armpit Armpit
Knee
Thigh
West Paschim
Feet South-West Nairuthya
Marmasthan of Vastupurush | ProPerty observer |
39
OUTLOOK
After Land, Cement, Steel and
Labour heating the industry After land price, there are three reasons heating the industry. Today construction companies are facing huge problem because of increasing cement price, short fall of labour and rising steel due to ban of mining in Karnataka and Goa by the Supreme Court .
T
Sanjeeb Kumar Sahoo he cement crisis has badly hit Indian real estate market. The reasons are not far to see cartelization, cut in supply and a sharp increase in the cement prices. Due to increase in cement rates, devel-
40
| ProPerty observer |
opers are facing problems like delay in project execution and high cost of construction. If this situation continues, it would impact the overall real estate market. It could also lead to delay in delivery of projects and increase in real estate prices. In the current scenario, where interest rates are going up, additional
increase in prices due to input cost will aect demand. This is not good for improving the economy, builders and developers say. The cost of cement has increased by 86% to 87% (from April 2010 to November 2011). As a result, the construction cost has increased by `43 per sq ft in areas like Noida
Extension (one of the prime location for affordable range of houses), Noida-Greater Noida Expressway, Dwarka-Gurgaon Expressway, NH-8 and NH-24, among others. The present crisis and steep rise in cement prices are leading to projects getting delayed in these areas. "Black marketing is the only cause of cement crisis because if we pay more money then there is no shortage of cement. This clearly indicates it is an artificial crisis all over India. There is ample supply of cement and the government should take action against these people (cement manufacturers). It is delaying our projects and increasing the cost of projects," said an expert. "Cement prices have shot up by nearly 66% in the last three months and if the same upward trend continues, the cost of construction is bound to increase. This burden of the increase in raw material prices would ultimately raise the total cost of construction and result in increased prices for consumers. The artificial shortage in regular supply of cement may also lead to delay in various ongoing projects." said spokesperson of a leading real estate company. A report says that the Indian cement industry sustained its growth rate even in the tough conditions of economic slowdown. Cement production is expected to increase above 9% year-on-year during 201011 against the previous fiscal year. It is anticipated that the industry players will continue to increase their annual cement output in coming years and the country's cement production will grow rapidly. The origins of Indian cement industry can be traced back to 1914 when the first unit was set-up at Porbandar with a capacity of 1000 tonnes. These days cement industry comprises of 125 large cement plants and more than 300 mini cement plants. The Indian cement industry is the second largest in the world. It comprises of 140 large and more than 365 mini cement plants. The industry’s capacity at the beginning of the year 2009-10 was 217.80 million tonnes. During 2008-09, total cement consumption in
India stood at 178 million tonnes while exports of cement and clinker amounted to around 3 million tonnes. The industry occupies an important place in the national economy because of its strong linkages to other sectors such as construction, transportation, coal and power. The cement industry is also one of the major contributors to the exchequer by way of indirect taxes. Over the last few years, the Indian cement industry witnessed strong growth, with demand reporting a compounded annual growth rate (CAGR) of 9.3% and capacity addition a CAGR of 5.6% between 2004-05 and 2008-09. The main factors prompting this growth in demand include the real estate boom during 2004-08, increased investments in infrastructure by both the private sector and Government, and higher Governmental spending under various social programmes. With demand growth being buoyant and capacity addition limited, the industry posted capacity utilisation levels of around 93% during the last five years. Improved prices in con-
junction with volume growth led to the domestic cement industry reporting robust growth in turnover and profitability during the period 2005-09. Also it is a fact that the successful implementations of various governmental programmes like National Rural Employment Guarantee, low-cost housing in urban and rural areas under schemes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Indira Aawas Yojana hinges on the massive supply of cement. However, high transportation cost is affecting the competitiveness of the cement industry. Freight accounts for 17% of the production cost. Road is the preferred mode for transportation for distances less than 250km. However, industry is heavily dependent on roads for longer distances too as the railway infrastructure is not adequate. Cement industry is highly capital intensive industry and nearly 55-60% of the inputs are controlled by the government. There is a regional imbalance in the distribution of cement industry. Limestone availability in pockets has led to uneven capacity additions. Coal availability
| ProPerty observer |
41
OUTLOOK
Pradesh became hotspots for investments. But since the Nitish Kumar government assumed power in 2005, the economy has rebounded and government expenditure has gone up substantially. Deputy Chief Minister Sushil Modi says Bihar's economy grew by 14% in 2010-11, the fastest among all the states in the country.
Migration from Bihar down 30%
and quality is also affecting the production.
Steep hike in price While in 2010-11 prices have scaled to `275, `306 and `310 per bag, respectively from `243 per 50 kg bag in 2009-10 buoyed by increased construction and real estate activities. The cement's average price was `163 per 50 kg bag in FY'06. The price rise was the stiffest in 2006-07 as it became dearer by `43 per bag to stand at `206 but in 2009-10 it just went up by `5 a bag from `238 in 2008-09.During the 2007-08 fiscal, average price of cement was `238 a bag. However, as cement is largely a regional product and the price of it depends upon the dynamics of demand-supply in that particular region, cement's price also varies from region to region. India had produced 201.06 million tonnes of cement in 2009-10 and consumed 198.04 million tonnes during the year. Exports fell from `881 crore in 2008-09 to `665.73 crore in 2009-10.
Labour problem Bihar's recent economic growth has created a peculiar problem for real estate and infrastructure firms in other parts of the country. Migrant labour from the state constitutes around 50% of the unskilled workers employed in these sectors nationally, but
42
| ProPerty observer |
increased government expenditure and private investment has caused rural migration from Bihar to fall by a third in recent years, resulting in labour shortages and 35-50% higher wage bills for real estate firms. "There is a huge shortage of labour and that is leading to higher cost of construction as well as project delays," said spokesperson of leading company, one of the country's top three real estate companies. For many years, Bihar had trailed the rest of the country in terms of growth while some other states such as Maharashtra, Gujarat, Tamil Nadu and even neighbouring Uttar
But while this bodes well for people in the state who are finding employment avenues at home, it has slowed down the influx of labour to big cities such as Delhi and Mumbai. According to a study by the Bihar Institute of Economic Studies (BIES), migration of labour from Bihar in the past few years is down 25-30%. Instead of entire families migrating to cities to find jobs, only a few members are moving to cities while the rest are finding jobs in Bihar, either in state government projects or in NREGA schemes, says the study. "The government is making huge expenditure. While there is still a long way to go for the state in terms of development, massive expenditure along with the Centre's National Rural Economic Guarantee Act (NREGA) programme, that guarantees 100 days' employment in a year to every adult member of a rural family, has certainly reduced the pace of
migration,” said, director of the BIES. Many reason for increasing steel price The Supreme Court had earlier issued an order to ban mining activities in Bellery districts of Karnataka due to increasing environment degradation of area. Further, the SC extended an iron ore mining ban to two more districts in Karnataka (Chitradurga and Tumkur). Earlier, the court had imposed a ban on mining in Bellary over ecological damage concerns. According sources 50 percent of its iron ore requirements from these three districts, the SC decision is likely to raise costs for the company even further, which will surely hit its operating margins and steel output. Iron ore is a key input in steel-manufacturing. Karnataka accounts for 30% of india’s steel out put (more than 18million tones) and about 25% of india annual iron exports. Impact on Sponge units “As many as 105 sponge iron units face a serious threat of being shut down amid deepening raw material crisis in Chhattisgarh that has roughly 20 percent of India's iron ore reserves,” said chief of the trade body." Some 20 sponge iron units have been shut down since October 2011 and others have cut short production up to 60 percent as sponge units are just getting 4 MT (million tonne) iron ore as against the requirement of 12 MT per annum," said Anil Nachrani, President
Chhattisgarh Sponge Iron Manufactures' Association .According to Nachrani, sponge iron goes into the making of steel as a substitute for scrap. Chhattisgarh accounts for nearly 30 percent of India's total sponge iron output. "The future of sponge iron units in the state looks very bleak all of a sudden. The production has come down to a meagre 2.5 MT per annum from the earlier figure of around 8 MT per annum," said Nachrani. He said that the massive decline in sponge iron production was mainly due to the Odisha government's decision to close down dozens of iron ore mines since July 2009 in a bid to cleanse
the state of tax evaders and those mining without licences. "Some two years back, the iron ore availability was satisfactory as we were getting 9 MT per annum from Odisha and 3 MT per annum from NMDC (National Mineral Development Corporation) from its mines in Dantewada district.” But after the crackdown on mines in Odisha, the iron ore availability has come down to just 1 MT while the NMDC is still managing the figure of 3 MT," said Nachrani.
Remedial measures Centre has to take steps immediately to control the increasing prices of cement and steel. It needs to take some of the important decision in controlling price rise on essential commodities. The incentives given to exporters for exporting food items need to be completely withdraw and some tax need to be levied. India and other food exporting countries can play a vital role in controlling even global price rise by removing all export subsidies/ incentives and imposing new tax on food export into Middle East and OPEC nations. Such drastic decision need to take up because the international Oil cartel is not ready and willing to reduce oil prices while they are getting food items cheaper from India like nations. A price stability can ensure both domestic and international level. l
| ProPerty observer |
43
OUTLOOK
Apart from farmers, consumers, retailers, the real estate developers are sensing a big time opportunity in FDI in retail.
E
Vinit Kumar Koneru veryone seems to be vigil about the government’s next move on Foreign Direct Investment (FDI) in multi-brand bill. Last session of parliament has seen lots of ruckus over every bill that was tabled. Although the bill is an executive decision and needs no parliamentary approval, the bill was stalled from all quarters. Allies supporting the Manmohan Singh-led United Progressive Alliance (UPA) government blamed it on the lack of communication by the Congress. The voice in which its own allies opposed the bill makes the allegations of miscommunication
44
| ProPerty observer |
true. But the truth is that, in one form or other the bill will come to reality soon, because India needs investments. Neither the coming session of parliament will be same. Fate of many bills will depend on the outcome of elections in five pollbound states. The session may see major shift in equations and hence decide future of many bills. And there are many viz., multinational retail giants, domestic retail companies, and real estate companies that want the FDI in retail bill gets through. Moreover, there’s no point in politicians opposing this move, because sources in realty sector who doesn’t want to be quoted said, “most of the politi-
cians park their unaccounted money in real estate, and this move will directly benefit them.” With global economic dwindling and negative sentiments all over, India can become a good destination for foreign investment, depending on the decisions it takes on policy fronts. The moves like opening equity market for qualified foreign investors (QFIs) and raising the limits of external commercial borrowings (ECBs) for domestic companies, decision to allow FDI in pension funds, show that the country needs foreign investments for development. Apart from farmers, consumers, retailers, the real estate developers are
ply chain across the country. At present the cold storage market is worth USD 2.6 billion and is expected to grow to USD 12.5 billion by 2015. Well, whether the FDI in multi-brand retail is good or bad has many views. But this should only enhance the policy. One big apprehension is that the foreign companies will source produce from cheaper manufacturing economies like China and ASEAN. And hence the domestic manufacturers will suffer. But, that is happening even now, there are several trade routes (SAFTA, CECA etc.) open for companies to import from other countries.
Agriculture Boost Till early eighties, we protected our domestic industries from external competition by following domestic production and import substitution policy, and then we realized in early nineties that, it’s time our own manufacturing sector is ready to take on the world and opened it for foreign competition. The result is manifold. The country zoomed to growth of 9 per cent from meager two per cent Hindu-rate of growth. Now the country has reached stagnation in terms of farm productivity, and revamp is certainly the need of the hour. Our farm productivity stands at 2 million tonnes per hectare, whereas global average is 2.6 million tonnes per hectare. China’s farm
productivity is nearly 12 times of ours. The average farm sector growth is likely to be 3-3.5 per cent in 11th plan as against the targeted 4 per cent. This is due to poor public investment of `30,000 crore annually, as compared to government spending on agriculture in tune to `2 lakh crore, which comes out to be only 20 per cent of public investment and 80 per cent investment by government in terms of various subsidies. According to Mr Ashok Gulati, Chairman of Commission for Agricultural Cost and Prices (CACP), the growth in the sector can only be achieved when the investment by public raises to 80 per cent and government subsidies reduce to 20 per cent. So, all indicators are pointing towards further opening up of the sector. And foreign investment in multi brand retail can be seen as a step closer to enhance our farm production capabilities.
Job Creation and Organizing Workforce Government argues that this move will lead to creation of 10 million jobs, up to four million in small and medium industries and 56 million in logistics sector in coming three years. But these claims are hypothetical to be true. Actually there will be shift in job profiles. A middleman would better equip himself into logistics business of supply chain and many educated youth will find part time opportuni-
sensing a big time opportunity in FDI in retail. The infrastructure these investments will need will be enormous, to the tune of multimillion dollars. The bill requires company to invest half of the corpus in back-end infrastructure, which will mean building a strong supply chain and robust cold-storage system. According to one study, presently we have 21.7 million tonnes of storage capacity, which is short of another ten million tonnes. Lack of proper storage facilities amounts a loss to the tune of `50,000 crore annually, i.e. a loss of 7 per cent of total farm produce every year. The backend infrastructure will address this severe problem of wastage and serve as strong sup-
| ProPerty observer |
45
OUTLOOK
ties in big retail chains. Further, there may be a lot of research and development taking place in field of agriculture to enhance productivity. Also, there will be plenty of technical jobs in managing cold storages and in food processing industry. Besides this, the apprehensions like foreign companies dictating farmers what to produce and what not to may become true. Like East India Company forced our farmers to shift to indigo cultivation before independence. Well, these worst fears of capitalism can be dealt with strict checks and balances. The organized retail contributes a mere 4 per cent of total country’s retail sector revenue which is worth USD 550 billion as of now. This means there’s no systematic mechanism that the unorganized 96 per cent retailers pay their proper taxes. Don’t be surprised to know that a pan shop vendor nearby a good business locality might be earning `2000-2500 per day or perhaps more than that, which comes out to be `60,000 – 75,000 per month and `7.2 – 9 lakh per annum. But,
he escapes from paying taxes, because there’s no record of his earnings, whereas you may be earning a sum of `25,000 per month and yet pay an annual tax of `12,000. Assuming retail business in India is worth
USD 550 billion and only 4 per cent among the retailers pay correct taxes (i.e. on USD 22 billion business), and let’s say 50 per cent of the rest 96 per cent also pay taxes but not correctly (let’s assume they pay only 50 per
A victim of politics of economy “We will protect shopkeepers against FDI,” says Karat
D
enouncing moves to let 100 percent FDI in single-brand retail, the Communist Party of IndiaMarxist (CPI-M) vowed to mobilise support to protect lakhs of shopkeepers. "While the United Progressive Alliance (UPA) government suspended its policy of allowing 51 percent FDI in multi-brand retail, it increased FDI in single brand retail trade to 100 percent. It’s a backdoor effort to bring FDI in multi-brand retail trade," said Prakash Karat, CPI-M general secretary. He also pointed out that Prime Minister Manmohan Singh had also announced that the government will wait for the election in five states and again reintroduce the multi-brand FDI policy. He further added, we want to mobilise the public to stop the government from implementing this for multi-trade retail. We will continue to organise the people.
46
| ProPerty observer |
"We need FDI in retail," says CII’s Muthuraman
W
hile there should be measures to speed up the reforms process, there should also be greater emphasis on creating infrastructure, especially power, B. Muthuraman, president, Confederation of Indian Industry (CII), told media. He also wanted the budget to contain measures to promote agriculture and foreign direct investment. “One would like to see some agriculture reforms, the FDI in retail and more of FDI in other sectors and so on. We need to start the process of second phase of reforms as quickly as possible,” he said. Muthuraman also said he wanted to see a clear road map for reducing the fiscal deficit in the budget. The government had estimated a fiscal deficit of 4.6 percent at the start of this financial year, but now it seems like it will be around 5.2 percent.
cent of what they actually have to pay), which means approximately USD 380 billion business goes unaccounted for taxing. And irony of the whole situation is that government always runs on deficit budgets. Organized retail, apart from determining commodity prices, will also usher in tax collection, and will benefit consumers. What if a small section loses out of competition when the move benefits huge population?
Lot of Space at the Bottom The current policy allows the investment in only 36 million plus population cities and not into the 6 lakh villages and most tier-II and tier-III cities where most of our population
"It is just a pause. The decision has only been put on a temporary halt," says Anand Sharma, Commerce and Industry Minister
I
ndia assured global CEOs that its reforms agenda is well on course and the decision to put on hold FDI in multibrand retail is "just a pause", forced by compulsions of coalition politics. A firm assurance in this regard was given by Anand Sharma when he met top management functionaries of global retail chains Walmart and the Metro Group on the sidelines of the World Economic Forum meeting at Davos. This is for the first time that senior management of the two retailers met any minister after Indian government suspended the controversial decision to open FDI in multi-brand retail on November 24. Sharma said that the decision to open 51 per cent FDI in multi-brand retail "could not be implemented because of the compulsions of coalition politics as also partisan opposition."
lives. So the argument that the traditional vendors and local mom n pop stores will lose to these big retail chains is unnecessary. But yes, the local kirana shops in cities will have to mend their ways and adopt new ways of competing with the retail chains to stay and survive the competition, because it is obvious that consuming pattern of consumers will certainly change over a period of time. Innovate to stay in fray in competition is mantra, and also can look for retail franchising options. The country huge like ours has potential to absorb all the existing unorganized retailers and new class of organized retailers as well.
All is well for realty sector Apart from recent scenario of high interest rates, money supply and cost escalation in raw material, real estate sector is going to see opportunities at galore once the bill becomes reality. The infrastructure present today is poor, and to quote management guru C. K. Prahlad that, “India needs 500 cities to sustain its population”. The country is still a nation in
building for real estate players. While the multi nationals like Wal-mart, Tesco, Metro cash and carry are eagerly waiting for policy to be approved and are ready in investing their corpus in back-end infrastructure. But will country be able to supply them constant power is a big question? With green signal to this move, the 36 million plus cities, where the investment will be concentrated initially, will see cost escalation in land and further see huge infrastructure jump. Consequently the price of commercial spaces will rise and hence realty sector. Government seriously needs to think about the energy and infrastructure scenario of the country and let employment take care of social security. Definitely, social security of disadvantaged has to be taken care of, but to a certain extent. Subsidies are like sympathy, where as people need empowerment which will automatically come with employment. Be it energy, roads, industries or agriculture, realty sector has its role to play and hence is standing on winning side, though there is no losing side as such . l The author is freelance journalist and writes regularly for newspapers
| ProPerty observer |
47
COVER STORY
48
| ProPerty observer |
| ProPerty observer |
49
COVER STORY
50
| ProPerty observer |
| ProPerty observer |
51
COVER STORY
52
| ProPerty observer |
| ProPerty observer |
53
COVER STORY
54
| ProPerty observer |
| ProPerty observer |
55
COVER STORY
56
| ProPerty observer |
BOOK REVIEW
PRICE: USD 10.88 PUBLISHER: Simon & Schuster AUTHOR: Peter Lynch with John Rothchild PAGE: 304
I
just finished reading one of the greatest books on investment — One up on Wall Street by renowned money manager Peter Lynch. Thought of penning down took me away from the book. I would start with stating that the book is a great example of the common sense approach to investing. Simplicity, lucidity and the flow of book is absolutely amazing. Lynch has very generously shared tons of his experiences and investment philosophy, in simplest of language, while managing the money at Fidelity from 1977 to 1990 (the famous Magellan fund), with all of us. Some of the important messages are: When one (buys) sells in desperation, one always (buys expensive) sells cheap. It also means, when one (buys from) sells to desperate, one would always (buy cheap) sell expensive. Common sense approach to investing is being observant. Look at the developments around, search for products/services attracting and wowing customers! May be there lies
58
| ProPerty observer |
a potential opportunity for investment. Financial experts are different from experts in Engineering and or Medical fields. When 10 engineers/doctors suggest the same solution to a problem that is the way to go; but, when 10 financial experts suggest the same stock, stay away from that (probable, that is too hot!). It reminds me what Strategy Guru Garry Hamel said once – “Most of us are blind the same way. We look at the same thing and ignore the same thing”. Visiting stores and testing products/services is one of the critical elements of analysts’ job. “The stocks I try to buy are the very stocks that typical fund managers try to overlook” (off the radar stocks – we may call it contrary approach to investing!!). “In other words, I continue to think amateur as frequently as possible.” Segregated businesses are in various categories – Slow growers (very large corporations), Stalwarts (Large corporations with very strong pedigree), Fast growers (small, aggressive, new entrants growing at 20-25% per annum), Recession Protection (Education, Medical etc.), Turnarounds, Cyclicals and Asset Plays. By putting stocks into categories, one would have better idea of what to expect from them. Always write the thesis for buying a business (Just a para covering rational behind decision). Hold as long as thesis is in play, irrespective of highs or lows of the market. Big companies have small moves and small companies have big moves. “Any idiot can run this business” is one characteristic of a perfect company. Other features are – simple, serving to basic necessity, has clearly defined competitive advantage/niche. It reminds me what Warren Buffett said “We like mundane businesses with ultra slow rate of change”. Hottest stocks in the hottest industries are better avoided. Probably, they are too expensive deals. Book value in balance sheet could be quite deceptive – Debt is real number and assets may be worth less than the amount they appear for in balance sheet. It takes years, not months, to produce big results. Distrust diver-
sifications, which usually turn out to be diworseification. Lynch advises to suspend some of the following common thoughts from the mind: l If it has gone down this much already, it can’t go much lower (It may go, probably, to 0) l Stock has already hit bottom. (New bottoms may surprise you!) l If it has gone up this much already, how can it possibly go higher? (New heights may surprise you!) l It is so low priced stock, what can I lose (probably, entire invested capital!) l When it rebounds to Rs. 100 (say), I would sell. (Absolutely frivolous question to ask is whether it is a good business at the current price to buy? If yes, hold. Otherwise, just sell and free up capital. That is the reason I always say that hold is a frivolous recommendation). l Look at all the money I have lost: I did not buy it (It was someone else’s money. No point wasting time on this thought!) l The Stock has gone up, so I must be right. Or, The Stock has gone down, so Imust be wrong (You are not right or wrong just because others are willing to take the prices up/down!!) Lynch coined the term “Multibegger”. He states, “It takes remarkable patience to hold on to a stock in a company that excites you, but which everybody else seems to ignore. You begin to think everybody else is right and you are wrong. But, where the fundamentals are promising, patience is often rewarded”. To summarize, I would state that Lynch’s approach to investing was catch them-young approach (early stage investing. See above fast growers!). While there are reflections of contrarians and value investing philosophies as well in his approach. It may be noted that risks with the early stage investing could be significantly higher than investing in slow growers and stalwarts; But, that is where you have unseen so called “multibeggers” in Lynch’s language. l Reviewed by Achyut Nath Jha
BOOK REVIEW
PRICE: Rs. 750/PUBLISHER: Business Plus, Hachette
Book Group USA AUTHOR: Sharon L. Lechter and Garrett Sutton PAGE: 261
O
ffering financial education in motivational way has been a trusted tool for Robert Kiyosaki’s Rich Dad series. Not without any substantial reason did readers especially those with flush with liquidity but dearth of ideas receive Rich Dad Poor Dad overwhelmingly. Later on, the book could be listed as # 1 Bestseller by The New York Times. When Kiyosaki— a successful investor, author, and businessman — first published it, he stated, "Your house is not an asset." The so-called financial experts lambasted him. But today, Robert’s words ring truer than ever.” He has a simple definition for “asset”: something that puts money in your pocket. A “liability,” conversely, is something that takes money from your pocket,” in the introductory pages in Real Estate Advantages, slowly but steadily takes us to where real estate investing is poised to reach.
The book, running in 261 pages, is divided into five parts which are further distributed into 27 chapters, making readers comfortable while unfolding the pages and grasping the narrative the book follows. In the very beginning within Part One of the book authored by Sharon L. Lechter (who also co-authored Rich Dad Poor Dad) and Garret Sutton (Rich Dad’s advisor), real estate investment was explained as “a moneymaking business and a wealth builder” and how “the appreciation of your land and property values and the monthly cash flow you can earn by renting out residential, office, or commercial space in a structure.” While highlighting advantages of real estate investment, the following para is quite noteworthy which says,” Like first-time home buyers, real estate investors can secure bank loans and make monthly payments as owners of rental property. And as they watch their equity grow, they can parlay their initial investment property’s increased value into garnering a new loan to purchase a second property. Pulling this cash out has a second benefit in that they do not have to pay taxes on the money they receive because it is from their equity.” Two important things should be taken into account while analyzing finer points of the book. Firstly, the book was written before the sub-prime crisis hit the American economy and secondly, much of the contents relate to the way real estate functions in the USA where the sector is largely organized(it’s quite different story that lenders mostly mortgage companies and banks couldn’t stave off the impending crisis). However, as things are also getting streamlined here in India, issues detailed in Real Estate Advantages could be interesting and perceptible for country’s investors. And that is what interests me in the book. Designed to help develop a smarter real estate acquisition plan, it shows how investors can look hard at their assets and liabilities and develop a leverage plan for purchases and a tax advantage plan to maximize the cash flow. Then there is some good advice on networking, mentoring, joining a
local real estate club and building a team of advisors. Whether one is new to the business of real estate investing, or a seasoned real estate investor looking to maximize your returns, Real Estate Advantages has something for everyone. Continuing the tradition of good advices through investment tactics such as the 1031 exchange, propping buying power with the bank's money, and gaining advantage of tax code and decreasing legal risk, the book is a treasure-trove. Unlike self-help books which also include some of the bestsellers which throng the market, this book is an exception; it actually offers practical advice and tips on how to setup real estate investments and corporate assets properly. From chapter 2 which is titled as ‘The Benefits of Leverage’, the book offers to delve deep into the significance of education and experience: You must always make intelligent investment decisions based soundly on your education and experience, for if you don’t, you may end up overleveraged… you must be prudent and ensure that if, say, one of your properties goes vacant, you can survive the downturn in your anticipated income.” By using academic and research tools like case studies, tabular and graphic presentation, with occasional inputs in the form of Rich Dad Tip, authors succeed in not only cementing ideational rapport with readers but also breaking monotony which may crop up while discussing a serious issue like investment or leveraging. For those, who are at the fag end of their career and wish to enjoy their retirement period peacefully, the chapter— Real Estate and Retirement Plans —Is simply indispensible. There is a mention of ‘unrelated business income tax’ (UBIT) which is “the tax on income and profits related to your leveraged, or financed, part of the transaction”. In ‘Landlord Liability’, the whole issue is debated through a case study (case No.18) on property holders namely Karen, Guy, Bruce and Davy to emphasize the need for landlords to legally protect their assets. l Reviewed by Achyut Nath Jha
| ProPerty observer |
61
GREEN DEVELOPMENT
Hot companies Innovative work interiors & environment have left far behind the cubicle cabins surrounded by white dull walls.
W
Kamal Meattle here do you spend your entire day? Is it worth spending your precious time there? Are you comfortable and satisfied? Think what bothers you! Change your gray, bland and boring office by colorful paints and adding innovative furniture with the help of designs which do not cost too much and ensure the end result will look good. To make the day more productive the workplace should have enough reasons to inspire the employee to do the job successfully. Unconventional workplace pushes the clients and prospective employees to take the company seriously. Paharpur Business
62
| ProPerty observer |
Centre and Software Technology Incubator Park (PBC- STIP) is one among the premium offices state-of-the-art services and facilities. More people are embracing the idea that creative work environment helps stimulate minds and inspire innovation. Innovative work interiors & environment have left far behind the cubicle cabins surrounded by white dull walls. PBC has wellconstructed modern offices and its architect have shown tremendous potential in attracting the genius minds at workstations. One way to motivate and inspire the employees is to redesign cool office space which projects on comfort and betterment of employees. Likeable surroundings create a desire among employees for coming to work.
Cool tips to design the workplace, which creates “The Place of Your Own” Evaluate the office space i.e. a check of presence and absence of desirables. Arrangement of equipments that is productive instead of wasting on fancy artworks. Picking up the inspirational and motivational pieces to space around the workstations. Cover up the golden principles of design, which are harmony, cooperation, employee’s welfare and peace. Flexible office space and its services satisfy the need of business and it is an early beneficiary during an economic upturn. With the emergence of Hot - desking
Kamal Meattle, CEO
which is regularly used in places where not all the employees are in the office at the same time, which means actual personal offices, would be often vacant, consuming valuable space. PBC practices hot desking, BPO people occupy the workstations at night. From a managerial perspective, hot - desking is attractive because it can cut overhead costs significantly. Employees and management recognize that each employee is involved in running the business, therefore employees are encouraged to hot - desk while in the office and to work from home several days each week to make that possible. Hot - desking forces you to clear your desk once you're finished with it, to leave it tidy for whoever uses it next, which means that you have to file away unwanted paper into recycle and confidential waste bins. PBC, rents out space to the offices who come from foreign countries so that they work on “plug and play” basis. The key reason for taking flexible office space is either to reduce fixed costs or to meet the needs of project based work. The flexible office space includes the serviced offices, virtual offices, single-day –stay offices, meeting rooms and video conferencing. The flexible office space includes instantaneous availability, greater affordability, convenient and high profile locations etc. By moving desk people can sit with different people hence learn new things about work and it is a good opportunity to develop new contacts and learn about possi-
ble areas to work in future. Thus, the flexible office space is demanded concept as it has a high degree of convenience. To grease the employee’s efficiency, offices should be designed with mindful pieces such as paints of different colors and cabins structure should have comfortable chair with peaceful environment, which helps the person to implement and work upon the inventive ideas. Many companies fail to retain their employees due to the uncomfortable and unfriendly environment, as it conveys a wrong message to the candidate. A sleek, modern, architectural glass-steeland-cement sculpture on the outside drives the attention of the destined candidate but it might not convince him to work for long if it appears tired and ignorant from inside. The employee tends to work in a Playful and organic place, which even benefits the organizations, as the production is high.
Consequences of well-framed offices Increases the productivity of the company and it helps in generating the revenue in large amount. Retaining the employees with tremendous potential and equally contributing in grabbing the candidates with extra ordinary talent. Increases the innovative segment of the
mind and it helps in widening of gray matter, hence employee’s efficiency gears up. Customer’s trust builds up in the company when the office spaces are unconventional. PBC is the first retrofit existing green building in India which is USGBC platinum rated. USP of Paharpur Business centre is Indoor Air Quality which is purifying the air with the help of toxin removing plants. The conventional office buildings are ordinary glass fronted structures, which let in heat and consequently use up more energy in cooling its interiors. Fortunately the developers are realizing these challenges. Builders have come up with innovative concepts such as green buildings and green office interior space. Green building is one of the major concepts which can act constructive in making the company energy efficient as well as being a part in protecting the environment. It has proven to be the most capable and quick-witted in retaining its employees with increase in their productivity. A green office incorporates design, construction and operational practices that significantly reduce or eliminate negative impacts on the environment and its occupants. Green interiors refresh the work environment for people to work and live in. Green building, which forms the most important physical aspect of a green work space, essentially uses
| ProPerty observer |
63
GREEN DEVELOPMENT
processes that are environmentally responsible and resource efficient throughout a buildings life cycle: from site to design, construction, operation, maintenance, renovation and demolition. Green building proves to be healthy building, and the employees are less prone to diseases as they get a healthy and fresh surrounding to work. Maximum productivity yields when the people working in the organization are fit enough to dedicate in their work. Green buildings are eco- friendly, energy efficient which has employees who are people friendly and efficient in work. Employee involvement in the company is very important for the organization expansion, so the building interiors should be attractive, well equipped and resourceful for the employees. Hidden creativity among the employees come out when they show complete sincerity and put in full effort to complete their task in the given span of time. Until and unless they feel motivated and inspired they can’t come out with their actual
64
| ProPerty observer |
ideas as they have to spend more than half a day at work place. In order to boost the employees they have to be provided with the best resources and interesting surrounding which can keep the person engaged in their work with concentration. The interior of the offices enhances the employee’s talent. It creates a spark among the people to prove them at the place of work. Completing the task within the given deadline is achieved by most of the people just because of various motivating pieces inside the office building. Radiant color of the walls keeps them active throughout the day. Separate conference rooms for different work increases the involvement among the employees. Employee’s welfare is the vital element for an organizations growth, therefore it is important to retain them by taking care of their welfare. The well designed offices have attracted lot of qualified and talented people which in turn have increased the output of the company. Organizations have achieved
lot of certifications and they have been awarded which has taken their organization to heights. PBC believes “Work is Worship” so why not make it a place where people come by their wish and desire, which will indirectly increase the productivity and it, will enhance the quality of the organization. Cool office spaces help the organization not only grow financially but also achieve a rank among the fortune 500 companies. Ultimately the goal of the company is to improve the skills, personality and groom the individual to prepare him for the future challenges. Productivity is one very important factor by which companies grow and prove its existence. Finally, physical space is essential because an employer’s imagination and creativity applied to job design have the potential to yield impressive results. The more inspirational the workplace is, the easier it is to break the creativity block and discover new ideas. l
GADGET & GIZMOS
Gadget of the Month
T
aking a cue from our readers, most of whom are undoubteldly tech savvy in the digital age, Property Observer is introducing a new section — Gadget of the Month — which will be a regular feature. For several months, we have been flooded with queries about carrying a new slug which will quench the thirst for knowing what the coolest gadget is this month? Read on, as we round up the best gadget on the market right now.
| ProPerty observer |
65
GADGET & GIZMOS
The fine line between
Explored by
CAMERA Now, here’s the winner of a feature that is always terrible to use on a huge tablet. On the Note, however, it’s so much easier to use –with all its functions moment .The 8MP REAR-CAM IS LOADED WITH led flash that enables you to take great pictures even in low light conditions .The image quality is really tures even in low light conditions .The image quality in pictures taken in most conditions .Even the camcorder works great, with 1080p resolution videos being captured in MP4 format.
V-LINGO TAKES ON SIRI Even on the lockscreen of the Galaxy Note, all you need to say is “Hi Galaxy” and then simply say “set appointment for tomorrow” and the Note will do most things that it can. Especially if you can speak clearly and in certain syntax that most devices with voice recognition can understand .It’s not your free flowing natural English, but it’s still a cool feature to have.
First look
heavier than an LG Optimus 3D) and exceptional
ger smartphone (or a small), but indeed a very well
Walking the fine of creating new categories has
screen estate.
thought out and executed communication device
always been tricky, but Samsung can certainly feel
Review
.As far as sheer performance goes ,you can put it
like it can do it without much trouble .Their sales fig-
Once you get around the size issue, the Galaxy Note
through any benchmark test and see that it can out-
ures for 2011 notwithstanding, they have launched
is quite an exceptional device. It has the Android
perform any smartphone on the tablet .This is not
a huge smartphone ( or a small tablet ,depending
Gingerbred OS loaded on it, with Samsung Galaxy S
surprising considering the gadget .The 1.4 Ghz
on how you wanna look at this ) to bridge the gap
ii, which was released some time ago .But, what is
ensures that the HD multimedia and games are
that exists between smartphones and tablets and
more impressive is the excellent design which the
handled with ease , plus multi –tasking is something
tablets. What’s more –it comes with a stylus (called
Korean smartphone maker has implemented into
that the Gingerbread power Note will handle with
S-pen) that lets you be as creative and efficient as
this massive communication device. The lock screen
complete ease Note will handle with complete your
you want to be. It’s not meant for all pockets, but it
functions the same way, yet has better visuals .Same
gallery , mails ,messages, contact-or putting the
impresses with its light-weight body (only 10gms
goes with notifications. The device is not just a big-
device through its paces by playing HD content ,
66
| ProPerty observer |
tablet & smartphones
Samsung Galaxy Note
DISPLAY A 5.3’ Super AMOLED capacitive touch screen has been given an amazing 800*1280 resolution .That gives it a 285 ppi (pixels per inch) density, which may not be as high as the iPhone Retina Display – but is still very impressive indeed .The UI also has more space for icons on the home –screen with a 5*5 placing of icons .Using Pen Tile matrix, instead of a conventional RGB, the display could’ve suffered a bit, but the higher pixel density and the Super AMOLED ensure that the display is nothing but brilliant ! Like the other recent AMOLEDs by Samsung, the Note display has a setting for the colour saturation .You can choose between the super punchy but not quite real colours and a more natural look.
S Pen A capacitive touchscreen might never need a stylus, so even a passive S Pen is quite a change to be implemented. We had seen one on the HTC Flyer earlier this year did manage to impress – but only just .The similarity with Note is that this S Pen can be used pretty much anywhere on the device-just hold down the button on the stick, and start scrubbing where you want to .Of course whatever you scribbling on the home screen are stored as screenshots for the gallery. A press of the S Pen key and swipe to the left means back, so you can also navigate the interface with it. If you do the same thing but swipe upwards instead, the context menu will appear, as if you have pressed the left capacitive key. That means that S Pen allows you to operate your phoneblet without pressing any hardware keys making Gingbread an all-touch platform.
browsing flash heavy sites – it can do it all , without
Final Verdict
on, as to decide owning the Note outright, but it
so much as a tinker. The video player is especially
The hard thing to do with a device this huge, is to
does help .Its a fabulous product, no
impressing at handling all major video formats and
convenience people that they need a bigger smart-
with 1080p resolution support – it makes for a
phone that can take care of any portability issues
Specifications
great device to watch movies on. With plenty
they may have with the tablet. The guys at
Dual core 1.4core GHz ARM cortex
browser, or download any other browser of your
Samsung have tried very hard to create a splendid
5.3” Super AMOLED capacitive touchscreen
choice from the Android Market .The Organizer is
product, but we’re not sure how many are going to
Android OS sv2.3.5 (Gingerbread)
splendid – does everything without much fuss, plus
fall head over heels for the Note. With the Samsung
8MP rear cam, 2MP front cam
with the S Pen add-on, it works with complete ease.
Galaxy S-ii offering the same OS, similar power and
16GB internal, microSD card siot
All your office files can be handled in a much more
features, but only slightly smaller in size –you can
Wi-Fi with Hotspot, 3g Bluetooth NFC (optional)
efficient manner, since the screen size use is so gen-
own something similar for a few thousands rupees
S Pen Stylus
erous .The more you love it!
cheaper. The S Pen might not be such a great add-
Price `34,990/-
| ProPerty observer |
67
GADGET & GIZMOS
N
ext month onwards we will be featuring the prominent Builders Lifestyles, brand new luxurious cars, exotic items including watches, ashy cellphones and other latest gizmos, haute coutre clothes, latest fashion and lifestyle trends....
Checkout for Latest
Realty Lifestyles
68
| ProPerty observer |
PROPERTY OF THE MONTH
70
| ProPerty observer |
| ProPerty observer |
71
PROPERTY OF THE MONTH
72
| ProPerty observer |
| ProPerty observer |
73
NEW LAUNCH
Sikka Group launches Kaamna Greens Project
S
ikka Group has come up with its new offering — Sikka Kaamna Greens. It is an extension of Sikka Karnam Greens in Sector-143, FNG Expressway Noida. The project will offer stylish, spacious and luxurious homes. “Noida is becoming the hotbed of real estate with some of the very good infrastructure and lifestyle projects coming up here. After the commencement of F1 race, the demand of residential projects that can cater to the higher segment has increased manifolds. After the successful launch of our earlier projects, we have ventured out on this project – Sikka Kaamna Greens – to provide luxury to the customers in the best of location. We expect
stupendous response for Kaamna Greens because of the location and the luxurious lifestyle that we will give through it,” said Gurinder Singh Sikka, CMD of Sikka Group. It will not only elevate the lifestyle but will protect life by being a state-of-the-art earthquake resistant residential project complying with Earthquake Zone IV regulations. The project has been conceptualized by leading architect and planner, CP Kukreja Associates, who are ranked among the top 100 architects in the world. Thoughtfully designed, the project offers world class infrastructural facilities like 24 x 7 power backup & security, premium/five star ambience entrance lobby in every tower, exclusive club with party hall, car
wash facility, firefighting equipment as per latest norms, broad band connectivity, provision for gas pipeline infrastructure, etc. Earlier, it launched Sikka Karnam Greens situated in the heart of Noida sector 143 (B), which offered 1/2/3/4 bhk Apartments in the range of 590 sq. ft. and 1920 sq. ft. at affordable prices. It also successfully launched Karmic Greens in Noida Sector 78. l
BPTP brings in Chateau villas at Gurgaon
B
PTP Ltd, one of the fastest growing real estate companies inthe NCR, announced the launch of their new project Chateau. These villas are part of the company’s luxurious integrated township Amstoria in Sector 102, Gurgaon.
74
| ProPerty observer |
Located on the Dwarka Expressway, Amstoria has been one of the company’s most successful ventures with land value seeing significant appreciation since the township’s launch. With Chateau, the company is pioneering the concept of customizable homes, whereresidents will be given a semi-finished villa, and the limitless opportunities of customizing the interiors. This concept has been conceived keeping in mind the basic human desire for expressing individual creativity. By allowing customers the freedom to define the interiors of their home as per their own requirements, BPTP is opening up multiple avenues for customers, giving themthe sort of freedom of
expression that has been absent so far in real estate development. The company is also ensuring that there is no fixed time frame within which customers need to complete the construction work. With a ceiling to floorheight of 12 ft. these voluminous homes promise to bridge the gap that has sofar existed between fully-constructed homes built by developers and the realneeds of their residents. Thevillas will feature tastefully designed external façades that will ensureuniformity in the aesthetics of the township. Each home will have the mandatorybeam and pillar structures in place and will include an elevator pit forenhanced convenience. l
Acron Developer’s Fleur Greens homes in Goa
F
leur Greens is situated in a quiet cul-de-sac off the main road in Aldona at Carona, away from the busy areas of Goa. Fleur Greens is an eco-friendly residential development at Aldona in North Goa, comprising of 10 apartments in 1 and 2 BHK configurations. Aldona is the idyllic Goan village nestled in
the heart of the Bardez taluka in North Goa. This charming village has won the admiration of many eminent artists from within the state as well as several Bollywood personalities for its awe-inspiring landscape and characteristic Goan ambience. Fleur Greens is Ideal for home buyers and investors looking for reasonably priced and well designed residences close to Mapusa, which is close to all the services, markets, schools, temples, churches etc. Apartment owners can enjoy the peaceful countryside environment away from the hustle bustle of the city. The famous Calangute and Baga beaches are a 30 minute drive away. The project boasts of features like 3 phase
electricity with Finolex trirated double insulated wire, vitrified tile flooring, ensuite bathrooms, hardwood doors and powder coated aluminium French windows, built-in cabling for telephone and satellite TV, piped cooking gas, solar water heating, rainwater harvesting, and large open air area with rock garden. Acron Developers has developed many residential complexes in Goa and are constructing homes in Mumbai, Pune and Bengaluru. Acron Developers has also constructed some of the five star properties in Goa and Mumbai, which are managed by well-established national and international hotel chains. They are also building a 160 room star hotel in Navi Mumbai. l
Let Kids choose Pergo to laminate flooring
A
kid’s room is prone to a lot of wear and tear, scratches, stain and marks one can’t do much about it as kids will be kids. In that case one requires a flooring solution that is reliable and trouble free. Swedish based company Pergo – the best in laminate flooring have always aimed at providing the best choice when it comes to floorings, be it the living room, kitchen or even the kid’s room. With the scratch resistant and stain resistant features, Pergo has kept up with that very commitment and service it has always been associated with. The scratch resistant and stain-resistant features can be found in Pergo’s patented
Titan X surface making the floorings more wear resistant which is the ideal choice for kids rooms . The Titan X surface features an extra protective layer that offers the best scratch resistant in the market. This feature can be found in Pergo’s Domestic Extra collection, Living expression collection and Public Extreme collection. The floorings are designed to handle domestic areas with moderate wear, which means that it is ideal to handle the wear and tear that happens in our homes. “A perfect choice when it comes to kid’s rooms, the Pergo range of laminate floorings comes in a wide range of decors and designs giving you
an opportunity to experiment with various ideas for your floors. The residential guarantee that comes with range of their flooring reinstates the durability that company is much known for and takes away your worries of flooring in years to come.” said Naresh Maheshwari, CEO, Pergo India. l
| ProPerty observer |
75
NEW LAUNCH
Node chair a seating solution
S
teelcase, the global leader in the office furniture industry has unveiled its latest Node chair that is designed to fit anywhere and everywhere on campus and in the workplace. Mobile and flexible, Node chair is designed for quick, easy transitions from one teaching mode to the next. With node, a classroom or a discussion/training room can undergo a transition from lecture mode to team mode and back again, without interruption. Node chair offers comfort, flexibility and storage. The casters of the chair lend mobility for quick, easy transitions between teaching and training modes while the Swivel seat keeps open sightlines between individuals and instructor, whiteboard, and other stu-
dents/colleagues. The personal work surface swivels in tandem with seat and is adjustable for users of all sizes. It accommodates leftand right-handed individuals and is large enough to support the ' digital and analog resources. The base of the Node chair helps keep backpacks and valuable personal belongings out of the aisle and the flexible seat, without pneumatic adjustments to worry about; the node chair keeps individuals comfortable in a variety of postures. The open seat design of Node offers easy access, while arms serve as backpack hooks. Easy to maintain, Node is available in twelve different colours and up to 75 percent recyclable by weight. The classroom chair node was awarded the
coveted Spark Award. The Spark Award mission is to “promote better living through better design. This is a multi-level design competition and is open to professional designers, novices or students. Node classroom chair was also awarded with the coveted Innovation Best of Neocon. This award spans all product categories. l
Living in Style introduces Matrix Collection
A
fter a long hard day of work, your bedroom is the place where you unwind and relax at home. The furniture in your bedroom is what makes it the most comfortable and enjoyable space in your home. Living In Style, India has launched their latest bedroom col-
76
| ProPerty observer |
lection, Matrix, to lend a dramatic touch of elegance and timeless appeal to your bedroom. Imported from Camel Group Italy, the Matrix collection at Living in Style has a whole range of bedroom furniture featuring wardrobes, dressing tables, mirrors, beds, night tables, chairs, pouff, etc starting at Rs. 60,000 onwards. This collection has laminate, Italian HDF board with beech wood framing and PU moulds. The collection offers various options in headboards like headboard in ivory ecoleather quilted in traditional capitonne’ with buttons; headboards in black, pearlwhite or ivory and brown ecoleather with vertical double stitches and original Swarovski crystals and Ivory ecoleather Boiserie Maxi
Capitonne’ headboard with Led lights. The night tables are equipped with ‘blum motion’ soft closing metal runners that allow the drawers to be opened and closed silently and effortlessly. The vanity dresser comes with curved top and jewellery drawer with chromed drawer front along with round pouf. The collection also consists of ivory ecoleather rectangular capitonne pouf. “The neutral colours of this collection not only make it versatile but also accentuate the design of your bedroom. The chromed details give strength and emotional elements to the bedroom will effortlessly blend with any colour scheme thereby maximizing your decorating quotient.” said Afzal Chandiwala, Director, Living In Style, Mumbai. l
The Uber Cool Modular Kitchen from KIWA
K
IWA, offers an amazing range of Modular kitchens to suit every home owner’s requirement. The kitchen models are characterized by clean lines, functional storage and working space, which work equally well in traditional and contemporary environments. Company is proud to present its latest Amber styled modular kitchen that promises to revolutionize the
way you cook. By introducing this new contemporary style modular kitchens KIWA ensures the holistic satisfaction of style and design conscious connoisseurs in India. Customisation being the key to every design and style introduced by KIWA, the brand is committed to implement anything a customer ever imagines and dreams. The Amber Range of Modular Kitchens can be designed with a base unit equipped with aluminums grip-groove to give the utmost Linearity at the composition. The Amber Modular Kitchen allows your dreams to become reality bringing forth new textures, elegant colours and break through elements; Where technology and design come together to create the Kitchen. The latest innovation of Amber
kitchens is styled with fiery and bold lacquered doors with a combination of glass and veneers. The styled kitchens are innovated by the idea of well organized space and easy accessibility and give you the feeling that one can have a graceful looking kitchen with lots of storage. Tremendously modish, the Amber styled kitchen cabinets have ample of space design and colour options. As for colour options the Amber range of kitchens can be designed in various colour options like Matt white, Ivory, Corda, Gloss white, Black etc. To maximize space and functionality, company offers accessories, multi functional work island that is equipped with open units and professional work tops.l
Tulip Infratech launched its high end Villas
T
ulip Infratech pvt ltd launched its high end Villas with great fanfare at sector-70 Gurgaon. These captivating Villas have been built under the rock solid aegis of Tulip’s MD Mr. Parveen Jain. Everyone was mesmerized by the spellbinding Sample Villa and was all praise for the same. It was a spectacular evening with enthralling presentations about Tulip Villas and all Tulip’s projects and a great Cultural Bonanza fest involving famous song & dance sequences. The breathtaking great performances were given by Prince Group, Shweta dance troupe & the great Mika, all of them mesmerizing people who got into the same groove and wished
for more. The impressive anchoring of the programme was done by Nitin. There was Media coverage of the whole programme and everyone enjoyed the whole Tulip festival along with the sumptuous cocktail and dinner party. People’s interest has skyrocketed in Tulip’s Villas after this enthralling launch and queries about Tulip’s Villas has increased manifold with a lot of praise in the air for the same. Now everyone wants to invest in Tulip’s Villas and wants to be the proud owner of the captivating Villa. These are 48 High End Luxury Villas, each Villa has an area of 7500 sqft and costs around Rs 5 crore. Each Villa is G+2 with base-
ment & terrace along with an elevator. The out of the world experience of Tulip Ivory Villas can only be seen and felt. If you are fascinated by European Villas and always had a burning desire to settle abroad and live in them, Tulip group has made it possible right here at Sohna road Gurgaon. l
| ProPerty observer |
77
NEW LAUNCH
The Finest of French Classics
F
irst Impressions is last forever! People often enter into the living room of a home and the first thing one notices is the Furniture, most importantly the setting of the living room, the sofa and the side chairs that accompany it. The more elegant and comfortable the living room is the more welcomed do guests feel. The Great Eastern Home has been associated with Luxury and Opulence since its launch and has since then raised the bar when it comes to Luxury Furniture solutions and interiors. The Great Eastern Home unveils its most recent addition to its classical furniture with
an exclusive range of Louis XVI French Furniture Collection. “This exclusive Louis XVI French Furniture Collection comprises of a classic sofa and two accompanying chairs that are styled in gold leafing keeping in mind the royal elegance that The Great Eastern Home has come to symbolize. The Sofa and Chairs are purely hand made by a single artesian from start to finish, with utmost priority given to detailing and quality of the finished product that is a master piece in itself bringing alive is French aesthetics. This exquisite range from The Great Eastern
Home dawns a classic look that promises to transform a living room into a Classical French Ambiance, a place where you will feel like you’re in a luxurious French suite.”said Suman Shah, store manager of The Great Eastern Home at Louis XVI French Furniture Collection. l
Alpha G Corp launches Gurgaon One
T
he Alpha G Corp, FDI-funded real estate developer has announced the launch of the third phase of its group-housing condominium project, GurgaonOne in Sector 84. The company opened sales for two, three and four bedroom apartments ranging from 1181 to 3194 sq ft and priced at `4,450 per sq ft. To be built at a cost of `290 crore,
78
| ProPerty observer |
GurgaonOne 84 is spread over 12.5 acres of prime land in New Gurgaon. The area is adjacent to the Dwarka Expressway, billed as the widest expressway in the country. Situated at a distance of 2.5 km from the Metro Hub and the Inter State Bus Terminal, the project enjoys a prominent and convenient location. “The key concerns amongst stakeholders in the realty sector today are lack of transparency and timely delivery. To address these concerns Alpha G Corp has pioneered a secure model of operation, Real Estate Asset Management (REAM),” said S K Sayal, CEO and Director of Alpha G Corp. Leading Montreal based architectural firm ARCOP has designed the project. GurgaonOne 84 will comprise
seven independent towers. The project will feature facilities such as a club, swimming pool, cricket practice pitch, tennis courts, convenient shopping store, skating rink, basket ball court and community halls. The project draws its lineage from the original GurgaonOne in Sector 22, which was delivered in the year 2006 and stands apart as one of Alpha G Corp’s widely acclaimed projects. Work on the excavation of GurgaonOne 84 is complete and civil contracts have been awarded. HDFC, Deutsche First Blue, IndiaBulls and DHFCL are amongst the organizations which have tied up with Alpha G:Corp to offer home loan facilities to the current and prospective buyers of this project. l
Shubhkamna Group launches ‘Livia’
S
hubhkamna Advert - Realcraft Group launched its new residential Project- Livia in Greater Noida. Livia is situated adjacent to Yamuna Expressway and boasts of incredible range of facilities such as club, swimming pool, gymnasium, jogging
track, table tennis and lawn tennis courts amongst others. Livia offers large sprawling ultra-modern residential 2, 3 & 4 BHK and Studio Apartments built to maximize space utilization. The project is promoted by ShubhkamnaAdvert and Realcraft. These two companies are amongst the respected names in the field of real estate and have to their credit numerous residential and commercial projects in NCR Delhi. “Our company is committed to deliver state-of-the-art projects in NCR and therefore we assure that Livia, when completed, will usher in new concepts of luxury living,” Said Diwakar Sharma, Director, Shubhkamna-Advert. The project is spread
over 5 acres and amongst its major highlights are its contemporary design and use of latest construction technologies. Promoting the project are the star couple Hussain Kuwajerwala (of Nach Baliye and Zangoora fame) and his wife Tina Kuwajerwala (showered with rave reviews in Nach Baliye). For Hussain Kuwajerwala and Tina Kuwajerwala too, association with Livia has been a great experience. Expressing his delight Hussain quipped, “Livia has been the next big thing to have happened to me after Zangoora.” Tina added, “It has further strengthened our bond with NCR and will give us another reason to come back to this city again and again.” l
Laureate Buildwell’s Bhoomi poojan
O
ne of the emerging real estate companies of India Laureate Buildwell has organized the Bhoomi Poojan of its first luxury residential project “Parx Laureate” which is the most luxurious apartment at Express Way in Noida. The event started with the lighting of lamp by Mahendra Bansal, Rajeev Sharma and Ishwar Chand Mittal, all three are director of Laureate Buildwell Pvt. Ltd, then followed by the rocking and outstanding performances by regional dance troop. It is designed keeping in mind the aesthetics of the living area and the surrounding landscapes as well. It is designed keeping in mind the aesthetics of the living
area and the surrounding landscapes as well It is the ultimate destination for those who appreciate beauty and art in every sphere of life. “First and foremost I would like to thanks my entire dealer, business partner, associates, media and our team to make our project successful. We are really glad to announce that we have already sold 60% space of our first project,” said Mahendra Bansal Rajeev Sharma said that we are trying to aware the customer the real meaning of luxury living where dreams will take shape of reality with innovative ideas at Laureate. He also said as a human being it’s our responsibility to make our planet healthier, safer and more environments friendly. In
Laureate we are quite innovative & follow the Green concept in our projects, as now a days people are more conscious about making their surrounding a better place to live, they have started following the green concept, saving natural resources, using eco-friendly items….beside this they are looking for a home where they can get comfort as well as healthy atmosphere. l
| ProPerty observer |
79
ProPerty observer We are taking the real estate to the next level. To connect and communicate the right information at the right time to all the stake-holders, we have joined hands with
PERSPECTIVE
High time to
invest
NCR, Noida and Gurgaon have given good returns to the investors, and these places have also been good for the end users.
H
Property Observer Bureau ow is the realty sector poised for investment in the present scenario? What are the things that one should keep in mind while making an investment in real estate sector? These are some of the aspects on which Neeraj Gulati, MD, Assotech Realty Pvt Ltd throws some light. Do you think this is the right time to invest in real estate sector? As far as real estate sector goes you can invest at any point of time. You should know where to invest, the price, and the location. If you buy a property at good prices and good location then returns on such a property would be handsome. Last year in Q3 a lot of new projects were launched. This has provided varied options to the buyers/investors. Simultaneously, there have been signs that RBI might bring down the home loan interest rates. So this is the best time to invest in real estate sector. Which are the best places in Delhi-NCR to invest in? In NCR, Noida and Gurgaon have given good returns to the investors, and these two places have also been good for the end users. For upper-middle and upper class the best locations were Noida-Greater Noida Expressway, Yamuna Expressway, DwarkaGurgaon Link Expressway, Gurgapon Sohna Road and Golf Course Road (Gurgaon). Greater Faridabad and Raj Nagar Extension have been good for middle class. The best part about NCR is that it has homes available in varied price range. You are also coming up with a project at Noida-Greater Noida Expressway. Tell us something about your project. We are com-
88
| ProPerty observer |
ing with a business park ABC (Assotech Business Cresterra) in Sector 135. Being developed by keeping in mind the good connectivity and future needs, the project is spread over an area of 14 acres and will have 6 office towers of G+8. This project will have retail also along with commercial. It will also have
Neeraj Gulati, MD, Assotech Realty Pvt Ltd recreational, entertainment and health facilities. We are also building serviced residences in the project. What are serviced residences and what is the scope in NCR? In ABC we are coming with serviced apartments named Sandal Suites and we are calling them serviced residences. Before this we had developed Cabana serviced apartments in Indirapuram, Ghaziabad. After the success of Cabana we are coming up with this project in Noida. What are the options of serviced apartments available in ABC? We have 142 serviced apartments in this
project. There are two options -- premium (776 sq. ft.) and Deluxe (975 sq. ft.). The best part of these serviced apartments is that apart from drawing room, bedroom and kitchen, one will also get a balcony. How is this location connectivity-wise? Today customers look for good connectivity and this project fits that demand. It is on Noida-Greater Noida Expressway, FaridabadNoida-Gurgaon Expressway (FNG) is near the project, and Noida-Greater Noida metro station will be at a walking distance from the project. What kind of location is good for serviced apartments? We developed Cabana in Indirapuram which is a residential area and across the road was Noida’s institutional area and electronic city. Serviced apartments work best in areas that have commercial and residential activity are in full swing. Areas near Sector 135 are witnessing good commercial activity that is why we believe that demand of this project will be good. What are your future projects? After Noida, we will come up with serviced apartments in Gurgaon. We want to take Sandal Suites to various parts of the country. We are planning to build Sandal Suites in more than 25 cities. In the first phase we will bring serviced apartments in Ahmedabad, Pune, Bangalore, Kolkata, Mumbai, Hyderabad and Goa. We have started looking for land in these cities. l
INVESTMENT
Investing in Real Estate Private Equity Funds
The preferences of commercial space occupiers (particularly MNCs) as well as residential space buyers are driving improvements in design, engineering and construction quality.
T
Ramesh Nair he Indian real estate sector has grown rapidly over the last few years, with its stakeholder profile evolving from locallyfocused, privately-owned enterprises to increasingly corporatized, professional organizations funded with public capital and having multiple market and product strategies. As a result, Indian real estate has seen a considerable flow of capital in recent years, both from foreign and domestic sources. The developer community is adapting to the requirements of joint venture arrangements with institutional capital sources by providing improved transparency and higher professional standards. The preferences of commercial space occupiers
92
| ProPerty observer |
(particularly MNCs) as well as residential space buyers are driving improvements in design, engineering and construction quality. Interestingly, the fragmented nature of the Indian developer community provides scope for Real Estate Private Equity (REPE) funds to source off-market investment opportunities and strategic relationships. This has led to Indian HNIs viewing domestic REPE funds as a preferred asset class for diversified investment. The demand for quality residential and commercial real estate in India is proven and sustainable; presenting investors at many levels with opportunities for income growth and capital appreciation (REPE is not suitable for small retail investors, since the minimum ticket size in most funds is `25 lakhs). There are many different strategies adopted by PE fund
managers. The most common investment strategies include: l Core investing l Core plus investing l Value added investing, and l Opportunistic investing REPE funds usually have a five-to-seven year life span. The period includes a two-year investment period where properties are acquired, followed by a 3-5 year holding period where active asset management is carried out. At the end of the whole period, the investors make an exit when the acquired properties are sold. The typical expenses for such investor include: l Annual management fees l One-time setup fees l A performance-based fee (also known
as carried interest) As in all other types of private equity investing, REPE investor have to review their financial condition, investment purpose, risk openness, time horizon, diversification and liquidity needs before making an investment decision. They also need to evaluate a number of aspects of the REPE fund itself. These are Integrity, quality and stability: The integrity of the fund manager and the quality and stability of the management team are extremely important, as are the quality of financial and operating controls, corporate governance and reporting. Financial soundness: The investor also needs to evaluate the REPE fund’s overall capital structure, the soundness of the company assets and the sustainability of earnings. The due diligence should include its historical and prospective financial health and the potential returns on investment weighed against the perceived risk. Market responsiveness: The fund’s ability to source off-market deals also need to be studied. Commitment to ROI: The capital commitment by the fund manager and ability to enhance returns with leverage should be evaluated, as also the fund’s cash distribution structure and management fee. Asset focus and investment structure: The investor should look at the fund manager’s geographic and asset class focus, diversity of the investment structures, methodology for selection, management of JV partners and focus on asset management. Growth potential: Finally, the growth prospects of the company and its competitive position within the industry should be evaluated. REPE funds attempt to provide returns independent of traditional asset classes. As a result of the low correlation to traditional asset classes, investments in REPE increase the diversification of an overall portfolio. A typical REPE fund seeks both income and capital appreciation from its portfolio investments, the overall goal being to achieve a
gross IRR in excess of 25%. The fund’s manager will seek to achieve returns through several means, including: l Capital appreciation on land holdings Net operating income on real estate projects l Capital gains from disposal of real estate projects l Income and capital gains on equity stakes in real estate development companies l Projects rental yields, and Proceeds from financing activities The objective of most of these funds is to invest opportunistically in the Indian property market in order to generate sustainable, scalable returns that fully compensate for the inherent risk in the underlying investments. Currently, the leading players in the domestic REPE industry are Kotak, ICICI, HDFC, Indiareit, ILFS, ASK, Aditya Birla, UIOF, Anand Rathi and Milestone.
Cautionary Notes The history of REPE funds in India is still limited to the first couple of chapters, since real estate itself emerged as an independent asset
class only after the Indian Government opened FDI in the real estate sector in 2005. As such, there is still not a lot of research and data available about the performance of the REPE sector in India. Unlike mutual funds, which generally invest in publicly traded securities that are relatively liquid, REPE funds generally invest in illiquid securities of private companies. Depending on the strategy used, REPE funds will have illiquid underlying investments that may not be easily sold, and investors may have to wait for extended periods before actual redemption. The portfolio holdings in REPE funds may be difficult to value, because they are not usually quoted or traded on any financial market or exchange. Some REPE funds may employ leverage as a means to enhance returns, but leverage also increases risk because it magnifies negative returns if investments are poorly underwritten or executed, or if market conditions deteriorate. Other risks include the sizeable entry costs – and, as in any other equity investment, the possibility of losing significant amounts of money if not invested well. l (The writer is MD– West, Jones Lang LaSalle India)
| ProPerty observer |
93
OPINION
The Reality of
Real Estate
Dr.Kunal Banerji
T
he real estate sector will see a quite transformation in 2012. The market itself has matured in a way that was expected in terms of evolution of the Real Estate demand- supply equation. There were multi- pronged economic factors that had been thrust upon us; A) The effect of the global slowdown. The world economy is interconnected and has repercussions that affect our lives and businesses. As global demand for Indian IT/ BPO services and other goods declined last year, the high growth in IT/SEZ did slow down. But I feel this is a fairly resilient sector and will again spur further growth in this area. B) The price of oil/ petroleum has been fluctuating. This has caused increase in the price of the essential construction items. Steel and Cement prices have risen manifold. C) Rising inflation has led to the RBI getting strict about lending, especially to the Real Estate developers, and raising interest rates on home loans. D) Strapped for cash, developers had to slow down construction activities. All the above has led to certain "sluggish-
94
| ProPerty observer |
ness" in the overall real estate scenario. However, in spite of all this, the luxury segment has hardly been affected in the top metros. Looking at the current macro-economic scenario, one may expect inflation to come down, and interest rate to stabilise. This will lead to an overall re- surgence of the real estate demand, in the next quarter of 2012. Prices, however need to be more realistic and in line with the customer's propensity to invest. The demand (latent) for housing has never gone down. There are Millions of houses to be built. But the question is what price and for which segment. There is a political will for "inclusive growth". If we are to build modern megametropolises, then one must plan for good quality "Affordable Housing". This is as everyone knows, is a much touted word. It is a relative word. If we slide past the official government version of "affordable "then, from a realistic point of view any flat in Delhi/NCR would be priced at around `25- 40 lakhs would be in the' affordable sector'. For this genre to succeed, must construct an acceptable quality standard. Most definitely new technologies will need to be applied, using pre- fabricated materials and components. All this provides the real estate industry
with new opportunities to create different business modules. Schemes which combine multi-use, mini -towns. Developing "hubspoke" pattern of habitats. Innovation is required not only in the way we build, but also in the way we fund the development. In the past, developers were over leveraged and dependent only on banks to bail them out. The future will see the entry of many asset managers and overseas companies like 'TEMASEK'(Singapore), KHAZANA(Malaysia), Blackstone etc. They are showing renewed interest but on different terms. The spirit of SPVs and JVs are back in fashion where the large investors not only have equity but some measure of control on the construction and employment of funding. The local and central government must play an important role. The ways of PPPs and SEZs, and growth- oriented zones are very much the order of the day. It is imperative for the government to play its role in this. One is encouraged to see that this seems to be happening at the Bureaucratic as well as Ministerial levels. The game is changing and we must change with it! New players and old players with new skills and professionals are coming to the fore. l
Making Delhi more Livable
I
Hariom Tyagi ndia is a Pandora’s Box, say our leaders and bureaucrats time to time, but the country is also a basket of resources. As the second most populous country with 1.2 billion people i.e. one-sixth (more than 16%) of the world population, its significance as a powerful nation can’t be underestimated. A peep into its glorious past attests to its resourcefulness which led foreign rulers to invade and plunder India and enrich their countries. But that was then. What about our own people, both affluent and common ones who are recklessly exploiting the nation’s resource? Except passing the blame to others, which is easier, they do little to solve the problems. The capital of the country is the most important city but we do not know what awaits Delhi in next fifty years? Inevitable traffics jam, public agitation on the streets for basic amenities like electricity and water are too common to attract any attention. The 2010 Commonwealth Games (CWG) did spur some activities on these fronts, but these were some cosmetic changes to brand image Delhi for foreigners and global media. Two years have passed and the capital city is back to square one — same problems exit even today. Now we have some multistorey towers on the Yamuna bank as the memories of the spectacular CWG. All of us know that Delhi and other parts of NCR are turning into illegal colonies rapidly. This is great unfortunate and a great failure of our system that after having the development authority in each part of NCR, entire area is being suffered by illegal construction. Of course, Noida and HUDA could provide some relief to Delhi by developing townships to accommodate people. Otherwise to breather in Delhi would have been a herculean task. Even
then in places like Ghaziabad and Faridabad there is no place left for widening roads and in the coming 50 years, we will not able to move one place to other place. If an accident happens on the road connecting the cities of Delhi, a long jam can be seen on these roads. And this is due to our expired and outdated system. The way Delhi and NCR and its surrounding area are evolving, it seems this area will not be left worth of living after 50 years. This whole area will be inhabitable due to illegal development and construction. A cursory look at the backyard of Delhi’s Chandni Chowk will give a narrative. Once, Chandni Chowk was residential colony of Delhi. Today there is hardly any decent families which are living there. Chandni Chowk has been turned in a market; desolate building where the powerful people used to lived in peace one upon a time has become the favorite place for rats and pigeons. This area now abounds in construction of illegal shops, encroachments and what not. Government officials say that they have no better way but to regularize illegal construction and colonies. But if government gives assurance or provide rehabilitation for those who live in these illegal colonies, they will easily accept the offer because nobody wants to live in slums. Government should provide land, plot or flat as they have in slums. The land or colonies are in the middle of city so the cost of theses land is much higher. So government can recover their cost by selling/developing them. Another way is that government could develop high-rise building in which actual owner of land would be accommodated. In Noida, Ghaziabad, Faridabad, Gurgaon and near these places, state governments are giving Rs 1000 to 2000 per square yard as compensation. As this land is much cheaper than where unauthorized colonies are, it could be under-
Hariom Tyagi stood like this: near Akhshardham Temple is many unauthorized colonies in Delhi. Where, in the narrow streets somehow people are living. If government offers them with a plot or flat in well-developed or posh colony nearby this area, they will accept this proposal with great joy. And in this way this area could be developed in a planned way. Noida Authority has worked on the formula already. In Noida sector-14, which is oldest sector of Noida some houses had to give way to constructing the metro track. Authority officers went to house owner, whose house lies in way of track and asked them to vacate their houses and surprisingly all house owners moved happily because they are getting placed in newly developed houses with modern amenities in sector-44. They accepted authority’s proposal because the sector-44 was a new sector and was growing better than sector-14. This is the way Delhi could prepare for the future. And we can make Delhi beautiful like Metros in Europe. Delhi is located on the Yamuna River banks, London is on the River Thames and Paris is on the Seine River. There was a time when river Seine was dead like Yamuna River. But Paris administration, after cleansing it completely, provided it with clean water. Currently water is poured in the Seine River only after treatment. Paris is a beautiful city and the River Seine makes it more beautiful. But Delhiites can have the same only when planners and policy makers show the same zeal. l
| ProPerty observer |
95