Real Estate News Letter
13th
October 19th October, 2014
For private circulation only
CONTENTS
2. Interest Rates
3. Infrastructure
4. Industry News
5. Private Equity News
6. Regulatory Buzz
8. Land
9. Residential
10. Commercial/ Retail
11. Township
12. SEZ
13. Hospitality
14. Input Cost
7. Public Markets
1. Snapshot
Snapshot
Source : NSE
Source : NSE
Note : Data indicates inflation over previous years month Source : Ministry of Commerce and Industry
6.3%
7.7%
7.0%
8.6%
6.8% 6.8%
3.9%
2.2%
1.0%
3.0%
5.0%
7.0%
9.0%
Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14
Per cent
WPI-inflation data (primary articles)
0.3-0.3 -1.5
0.4
-1.7
-9.0
-0.5
0.8
-11.0-10.0
-9.0-8.0-7.0-6.0-5.0-4.0-3.0-2.0-1.00.01.02.03.0
13/Oct 14/Oct 16/Oct 17/Oct
per centTrends in Nifty and CNX realty index
Nifty CNX REALTY
26 25 29
42
32 31
36
53
20
30
40
50
60
13/Oct 14/Oct 16/Oct 17/Oct
Rs billionTrends of FII in equity markets
Buy sell
Interest Rates
No news in this section for the week
concessionaires to exit both ongoing and completed
highway projects by forming a new special purpose
vehicle. The policy was criticized and did not find
takers as it threw up legal and tax complications.
After taking the industrys feedback, the roads ministry began work on a fresh proposal in January to
allow developers to exit road projects through a stake
sale. It was this proposal that was moved in a cabinet
note in August and is currently being revised by the
roads ministry. The revised note is likely to reverse
some of the changes suggested earlier to provide
limited relief to road developers, said the second
roads ministry official. It is likely that the note will now permit developers to sell complete stake after
two years of project completion which is the same as
now but will extend this relief retrospectively to all old
road projects too, he said.
The move is expected to free up capital and speed up
execution of delayed projects. Earlier, a
concessionaire could exit only two years after the
start of commercial operations for contracts awarded
after 2009. The ministry, however, is yet to receive
the report from Deloitte and will incorporate that in
finalizing the draft. Exit policy should be practical and at the same time should not encourage reckless
behaviour from developers. Relaxing the exit policy
for concessions awarded pre-2009 is the right thing to
do as it removes the disparity with projects awarded
after that. The move will free up capital for re-
investment, said Abhaya Agarwal, a partner at EY who oversees the infrastructure practice at the
consultancy.
Live Mint,16 October 2014,New Delhi
60-km Metro loop to connect Noida,
Greater Noida
To ensure a smooth ride to commuters, the Delhi
Metro Rail Corporation (DMRC) has planned to
connect Noida and Greater Noida through a Metro
link. According to officials of the DMRC, the proposed
ring like Metro link of about 60-km- would first
connect Noidas City Centre Metro station with Greater Noidas
Infrastructure
Roads ministry reworking exit
policy for project developers
The roads ministry is reworking a proposal to provide
an early exit to project developers after an earlier
cabinet note was returned by the Prime Ministers Office, citing reservations. The ministry is likely to put
out a revised draft for comments from other ministries
in a week, said two government officials who did not
want to be named.
The exit policy for road projects has assumed
importance because the recent economic slowdown
led to a fall in traffic numbers, affecting revenue
projections from tolling road projects over the last two
years. Most road developers had bid for projects based
on these projections but the drop in traffic numbers
affected the viability of the projects. The industry has
since been demanding a bailout from the government,
and easing the exit policy is one of the key measures
being considered by the roads ministry to enable
stressed developers to exit.
The Indian economy slowed to 4.7% in the fiscal year
ended March after growing at over 9% for three fiscal
years from 2006 to 2008.The roads ministry, in a
cabinet note moved in August, had sought a change in
the existing exit policy to allow concessionaires of
ongoing or completed road projects to exit completely
at any stage by selling their stakes.
Both the finance ministry and the Planning
Commission opposed this change in policy.The roads
ministry then appointed Deloitte Touche Tohmatsu
India Pvt. Ltd, an audit and consulting firm, to study
exit policies for road projects followed elsewhere in the
world, after the finance ministry resisted its new policy
saying such a move was not permitted in other
countries. The finance ministrys basic reservation was that contract conditions should not be diluted to
concede any unfair advantage to road developers, said one of the two officials cited above.
The roads ministrys efforts to tweak the exit policy has seen a series of back and forths. The government had
approved a new exit policy for highway projects in
June 2013 that relaxed the exit norms by allowing
Infrastructure
Bodaki via Noida Expressway link from one side, while
another 30-km stretch of this link would be via Greater
Noida West area. The Metro link will have about 22
stations catering to sectors 50, 143, 144 and Greater
Noidas Pari Chowk among others.
The proposed Metro link will have two parts Greater Noidas Bodaki to Noidas City Centre via Greater Noida West and Greater Noidas Bodaki to Noidas City Centre via Pari Chowk. Officials of the corporation
said that the 60-km loop would consist of two separate
stretches, which would be built in next four-five years.
According to the DMRC and the Noida authority, work
on Noidas City Centre to Greater Noidas Bodaki, a 30-km-long link, is likely to begin by January next year.
Detailed project report (DPR) of seven-km-long link, a
part of 60 km rings second stretch- Noidas City Center to GreaterNoida West (Noida Extension)
crossing is being made.The DMRC spokesperson said
they would expedite the proposed Metro projects
connecting Noida and Greater Noida with Delhi or
other parts of National Capital Region (NCR).
The Noida Metro Rail Company (NMRC) is about to be formed. Also, MOU with the DMRC is likely to be
executed soon. Once the MOU is done, we will start
work on the 30-km-long link next year, said Rama Raman, chairman of the Noida and Greater Noida
authorities. The two authorities Noida and Greater Noida have allocated a budget of about Rs. 10,000 crore for four Metro projects to be completed in next
four-five years.
Hindustan Times,16 October 2014,New Delhi
festive season.
This festive season in overall market 15 and 25 percent sales have been improved. We are expecting
some more sales in the coming days, more positive
sentiment injected in the sector will help in converting
queries into sales, said Gupta. According to an informal survey of top property consultancies in India,
top corporate across sectors are looking to lease over
40 million sq ft of space in the top seven cities over
the next 12-18 months.
The Pioneer,13 October 2014,New Delhi
Gurgaon, Noida lead demand in
premium projects
Gurgaon has the third highest per capita income in
India and this reflects in the premium housing market,
which is seeing a greater influx of end-user
demand.The NCR will continue to see increased
investments in the superluxury housing space due to
strong demand in the region. The NCR regions today
sport a growth story that mirrors India's growth over
the last decade. Today, Gurgaon registering rapid
urbanization has the third highest per capita income
in India.
The elite class aspires to a luxurious lifestyle in the
company of like-minded people. Developers have
been quick to notice this demand with realty majors
like Sobha Ltd (International City), Saha Group, ATS,
BPTP, Puri Constructions, Homestead (Michael
Schumacher World Tower and Maria Sharapova
signature project), Raheja Group (Revanta), DLF
(Garden City), Supertech Ltd (Jade Jagger or Steve
Leung's distinctive styles luxurious projects), etc,
coming up with projects providing the perfect living
environment for the wellheeled citizens.
A report says that the luxury housing market of the
NCR regions, especially Gurgaon and Noida, is
currently seeing a greater influx of end-user demand,
in contrast to the previous trend of the investment-
driven purchases. The sale of luxury projects has
gone up by nearly 30% in the last few years with the
luxury homes in Gurgaon registering demand and
Industry News
Festival season fails to cheer real
estate sector
Festive season has failed to bring cheers to the real
estate market as despite attractive offers and
discounts developers are not getting sales they were
expecting.The festival season is considered auspicious
for home buying and real estate developers are always
keen to battle the inventory pile-up with a slew of
discounts. According to experts there are about nine
lakhs of unsold inventories across the country by the
end of the last week adding that developers are not
reporting sales as they were expecting.
The real estate market in the festival season has not taken off as expected because all developers are
offering discounts and gifts so buyers are confused
this time, Property Guru CMD, Vikas Sahni told The Pioneer. However, he added that Market has performed better than last year, This festive season has not been a time for new launches. Buyers are not
too keen and companies have a pile of unsold
inventory.
According to Liases Foras, the combined unsold
inventory as of June was 765 million sq ft, or
equivalent to 760,000 two-bedroom apartments, which
will take about 35 months to clear at the current pace
of sales. Builders, especially in areas where the pain is
greater (Noida, Greater Noida, Gurgaon, Navi Mumbai
and Thane), are offering schemes on existing projects.
Vatika, for instance, is offering ready apartments in
Gurgaon on a 20 per cent down payment and the
remaining after 18 months, with no EMI or rent in the
interim
But on the other hand there are developers who are
claiming good business. Gaursons Managing Director
Manoj Gaur said: We are doing pretty well as compared to last season, we have sold 1000 units till
now in affordable sections. We also are expecting sales to go up in coming months due to positive
sentiments, he added.Similarly Amit Gupta, Managing Director, Orris Infrastructure said, The market have started reviving. Both sales and queries have gone up.
Due to stable Government and some good news for
real estate sector has helped to boost the sales during
planned way and the infrastructure is very promising,
which is an attractive proposition for buyers as well as
investors.
Dwarka Expressway (Dwarka-Gurgaon Expressway)
is gradually developing as a hub for not only
commercial and residential properties but also
entertainment activities and will act as a new
business channel between Delhi and Gurgaon. Tata
Housing has recently launched a new ultraluxurious
residential project, Gurgaon Gateway, in Sectors 112-
113, on Dwarka Expressway in Gurgaon.
Located right off the expressway, and in close
proximity to the airport, this project boasts of
connectivity and strategic location. Aniel Kuumar
Saha, CMD of Saha Group, says: We are developing an ultra luxury , group-housing, residential proj ect,
Amadeus, in Sector 143, on Noida Expressway . The
project offers 300 units of 3and 4BHKs.
Wave Group has a superluxury project in Sector 32,
Noida. The superluxury segment is more or less recession proof. Buyers are typically celebrities or
businessmen and their appetite for luxury homes is
not governed by economic considerations. Club 51 at
Belleville Park, our signature, limited-edition project,
is a luxury and lifestyle project, Amar Sinha, executive director of Wave Infratech, said. Ambience
Group has launched Ambience Tiverton, a residential
apartment complex on 3.5 acre in Sector 50, Noida.
The Times of India,13 October 2014,New Delhi
New home launches rose 30 per
cent in March quarter: Assocham
Launches of new homes rose by 30 per cent during
January-March period of 2014 in anticipation of
recovery in the property market post-election,
according to industry body Assocham. The launches
of new homes amid slowdown in demand led to rise
in unsold inventory by nearly seven per cent, it added.
"After four consecutive quarters of muted launches,
such activities showed improvement at the country
level. Ahead of general elections, developers had
launched many projects to gain competitive
Industry News
value appreciation from end users, NRIs, etc, thus
creating a separate market.
Spurred by new product offerings, greater influx of
end-user demand, and an increasing upwardly-mobile
segment, luxury and ultra luxury housing projects, with
prices ranging between Rs 1.5 crore and Rs 15 crore
are evoking higher demand in the residential market of
Gurgaon like Dwarka-Gurgaon Expressway, NH-8,
Golf Course Extension Road, and Sectors 50 and 32 in
Noida, and Noida Expressway. Sobha Developers,
which has 88 real estate projects and 234 contractual
projects in more than 20 cities under its belt, has come
up with International City, a super-luxurious realty
project in Sectors 106 and 109 along Dwarka-Gurgaon
Expressway .
Well-planned infrastructure, high quality of
construction, and ample green and open spaces make
International City an aspirational residential destination
in the NCR. The project offers a modern clubhouse
and with just six villas per acre, International City is a
good example of low-density living. On the supply side,
some new superluxury project launches continued to
focus on cost-effective options in alternative markets,
particularly in Noida and New Gurgaon.
Developers largely focused upon luxury housing in
Gurgaon during the first half of 2013, while the second
half saw new launches, primarily in the high-end and
mid-end segments along the Dwarka Gurgaon
Expressway and New Gurgaon area. Even though
units in residential projects launched by established
developers attracted maximum buyer interest and
purchases, developers across segments continued to
adopt various strategies, including discounts and free
merchandise, to boost sales.
A Harikesh, senior vice-president (Marketing & Sales)
of Tata Housing, says: With an increasing number of Indian corporates and MNCs operating out of Gurgaon,
combined with limited availability of quality residential
space in Delhi, Dwarka Expressway is emerging as a
destination where real estate projects have swelled at
an exceptional rate. Its proximity to the IGI airport,
Delhi Aerocity, and the forthcoming Diplomatic Enclave
gives Dwarka Expressway an edge over other new real
estate destinations. The area is being developed in a
"Although the current sentiment score merely
breached the 50 mark in Q2 2014 (AprilJune), results for this quarter (JulySeptember) has risen to 63 which is attributable to the stakeholders' positive
perception regarding the economy, residential sales
and price appreciation compared to six months back,"
Knight Frank said in a statement. The Union Budget
2014-15 has laid considerable emphasis on the realty
sector and this has infused a positive sentiment for
the future, it added.
However, the report said the euphoria seen in the
housing segment about sales and launches during
the previous survey has been rationalised. The
optimism about housing price rise continues to hold
steady in this quarter. "Festival season have not
really kept up to the expectations in terms of housing
sales. Home buyers are on wait and watch mode
hoping that interest rates will fall and economy will
improve. We feel that in another 6-8 months, the
actual transactions will start picking up," Knight Frank
India Chief Economist and Director Research
Samantak Das said.
He noted that although enquiries have increased, the
actual buying is not taking place. The festive season
has not brought in the expected cheer to the realty
sector, with markets reporting "not so-encouraging"
housing sales over the past two weeks, the report
said. "Unlike the boom years, stakeholders this year
had resisted the temptation to launch new projects in
the season, focusing instead on reducing the
inventory that has piled up over the past few
quarters," it added.
The Financial Express,16 October 2014,New Delhi
Real estate sentiment index up
marginally
Real estate purchase sentiment index has improved
by almost 2.5 points to 32.3 in September this year
reflecting an improvement in consumer interest after
a long period of lull, says a survey. According to
ZyFin Research, the index improved by 2.5 points to
32.5 compared to 29.8 in August, suggesting a
recovery in consumer interest after the score
Industry News
advantage and, at the same time, anticipated a
recovery in market conditions post-polls.However, a
slump in demand led to buyers taking a cautious
approach. The number of unsold units rose 6.7 per
cent quarter on quarter because of the large number of
new launches amid a prolonged slump in sales. New
launches increased by about 30 per cent q-o-q in Q1
2014," Assocham said in a statement.
While there was an improvement in new launches,
sales continued to remain low despite developers
offering attractive pricing schemes and discounts to
attract buyers, it added. "Liquidity and high level of
leverage remain big issues with the real estate
developers. These two issues can ultimately get
resolved with pick up in the economy and a smart
recovery in demand for housing units," Assocham
Secretary General DS Rawat said.
"But there is a lag between improvement in macro
picture and its impact on the real estate market,
particularly in the residential segment which is highly
sensitive to the interest rates and the job market, which
needs to be robust for the demand rebound," he
added.
The Economic Times,14 October 2014,New Delhi
Housing demand to pick up in 6-8
months: Report
Housing sales have remained lower than expected so
far during the current festival season mainly due to
high interest rates and the demand is likely to pick up
only in the next 6-8 months, according to a report by
Knight Frank and Ficci.Property consultant Knight
Frank and industry body FICCI today released the
Real Estate Sentiment Index for Q3 2014 (JulySeptember) based on a survey of various supply-side
stakeholders including developers, private equity,
banking and non-banking financial firms.
The current sentiment index, for all asset classes and
all locations, surged by 12 points to 63 points, while
the future sentiments have also improved by 2 points
to 71 points.
Industry News
bottomed out in April this year.
This improvement in the overall index signifies that a larger number of Indian consumers are planning to
purchase homes within the next 612 months, ZyFin Research Chief Economist Debopam Chaudhuri said.
According to the survey of 4,000 consumers in 18
cities across the country representing urban
consumers, the improvement was led by stronger
confidence levels in the North and South India
compared to those in the East and West.
While the index in the North rose to 44.8 in September
from 40.2 in the previous month, in the South, the
score increased to 40.5 from 36.4. The index is at its
lowest in the East at 20.7, but this is also an
improvement over the previous months score of 19.1. The West registered a score of 27.5 in September, as
compared to 26.7 in August. Historically, the sentiment index has had a strong correlation with
actual sales of homes. With the festive season
coinciding with the recovery in sentiment, home sales
are expected to be better this season, as compared to
2012 or 2013, Chaudhuri said.
Of the 18 cities surveyed, Delhi, Bengaluru,
Hyderabad, Mumbai and Mangalore hold an optimistic
outlook on purchasing homes, the survey highlighted.
Of these, Bengaluru and Mumbai have turned
optimistic from pessimistic in the current month. While
Bengaluru posted a score of 62.5 in September, as
compared to 42.5 in August, Mumbai improved to 52.5
from 40.5. The remaining three, Delhi, Hyderabad and
Mangalore, have been consistently optimistic on home
purchase in recent months, the survey said.
The Hindu Business Line,17 October 2014,Mumbai
Private Equity News
IDFC Alternatives to launch $ 500m
funds in real estate
IDFC Alternatives Ltd, the private equity arm of IDFC
Ltd, has announced the close of its second
infrastructure fund, India Infrastructure Fund II, at
Rs.5,500 crore or nearly $900 millionthe largest private equity fund to be closed this year. The amount
comprises a commitment of $90 million from its parent
IDFC Ltd and the remaining $810 million from so-
called limited partners, the fund said in a statement.
In March, IDFC Alternatives had raised its maiden real
estate-dedicated domestic private equity fund of
Rs.750 crore. It is in the process of launching another
real estate fund where it plans to raise $200-500
million from the offshore market. Investors in India
Infrastructure Fund II include global institutional
investors from North America, Europe and the Middle
East. In November, the fund had raised $200 million
from the UK governments development finance institution CDC Group Plc. The commitment had
helped the second fund reach its first close of $644
million.
We are thankful to the existing investors in our first fund who have re-upped commitments to the second
fund and the new investors including some of the
largest global institutional investors for having placed
their faith in IDFC as their infrastructure fund manager
of choice and in Indias potential as an attractive investment opportunity in the infrastructure space, said M.K. Sinha, managing partner and chief executive
officer at IDFC Alternatives.
The second fund is the successor to IDFC Alternatives debut infrastructure fund, India Infrastructure Fund,
which closed in June 2009 with a fund size of $927
million, raised from Indian and international institutional
investors. The infrastructure fund will provide long-term
equity investment for both construction and operating
infrastructure projects across India. CDC is one of the
largest investors in Indian private equity funds with at
least $680 million invested and $1.1 billion committed,
supporting almost 300 companies in the country.
Live Mint,16 October 2014,Mumbai
buyer and the seller should be present before the
registering officer, along with their respective
witnesses, in order to admit the execution of the
documents. The buyer can authorize his
representative to execute the document. The seller
must be present and transfer the title by signing the
transfer deeds and all appropriate documents.
The parties may appoint a Power of Attorney (POA)
to represent them on their behalf and admit the
execution of the documents. The buyer should then
carefully preserve the receipt issued by the
registering office. After the prescribed period, the
buyer can collect the registered documents
personally or through a duly authorized agent, after
production of the original receipt at the registrar's
office.
Once the documents are registered, the buyer can
apply for an extract of the document from the office of
the sub-registrar of assurance. Under the Transfer of
Property Act 1882, the sale of property costing more
than Rs 100 should be registered. If the value of the
property is less than Rs 100, the registration of its
sale deed is not mandatory .So, effectively, all sale
deeds need to be registered.
The Times of India,13 October 2014,New Delhi
Sebi bars DLF, six senior officials
from market for 3 years
The Securities and Exchange Board of India (Sebi)
has barred real estate firm DLF, chairman KP Singh
and five key executives from accessing the securities
market for a three years for withholding material
information on the companys subsidiaries and legal cases against them in the prospectus it filed for its
initial public offering (IPO) in 2007. The order follows
a show-cause notice issued by Sebi in June 2013 to
the company and its executives in which it alleged
DLF had failed to disclose related-party transactions.
The capital markets watchdog has prohibited the
company and the executives from buying, selling or
otherwise dealing in securities, directly or indirectly.
The persons impacted by the ban are executive
Regulatory Buzz
Registration of sale deed is
mandatory
According to the Indian Registration Act 1908, the
purchase of a property should be registered at the
office of the registrar or sub registrar of the district
within whose jurisdiction it is located. The registration
should be done after the buyer and seller have
executed the documents. A sale agree ment should be
registered with the sub-registrar of assurances within
four months from the date of execution of the
document. In case this is not done within the
prescribed time limit, the document can still be
registered within a further four months after paying the
applicable fine. After eight months, the document
cannot be registered.
Before registration of a property, the final sale deed
should be prepared on stamp paper of appropriate
value (the prevailing rate of stamp duty in the state).
The documents should be executed by the seller and
buyer. Once registered, the seller cannot resell the
same property to someone else. In case the sale
agreement has not been registered, the buyer should
prepare and execute a Deed of Confirmation and
attach it with the original document, which earlier could
not be registered.
Thereafter, he should register the Deed of
Confirmation at the office of the sub-registrar of
assurances. Nowadays, many states have the
provision of a prior appointment through the internet.
On the given date and time, the buyer should approach
the sub-registrar's office along with the seller and two
witnesses. The document to be registered should be
presented in original.Similarly , in many states, e-
stamping has been started, where the stamp duty is
paid online through authorized representatives.
The documents should state the names of the parties,
buyer and seller, along with their full addresses, date
of construction of the building being sold, its area,
description, address, etc.Further, a copy of the
building's plan should be attached. In addition to the
stamp duty , the buyer should pay the applicable
registration fee, copying fee, and file charge. The
registering office will issue a receipt to the buyer. The
transactions needed to have been disclosed.
Sebis order noted that the process of share transfer of three subsidiaries of DLF in Sudipti, Shalika and
Felicite was through sham transactions as alleged in
the show-cause notice and that the noticees
employed a plan, scheme, design and device to
camouflage the association of DLF with its three
subsidiaries namely, Felicite, Shalika and Sudipti. I find that the case of active and deliberate suppression
of any material information so as to mislead and
defraud the investors in the securities market in
connection with the issue of shares of DLF in its IPO
is clearly made out in this case, the Sebi order noted.
The Financial Express,14 October 2014,Mumbai
Ministry says trusts can become
partners in LLPs
Any trust set up under the law governing the capital
markets regulator can become a partner in a limited
liability partnership, the government said on Tuesday.
Clarifications have been sought on whether a trust or a trustee representing a trust in the case of real
estate investment trust (REIT) or infrastructure
investment trust (InvITs) or such other trusts set up
under the regulations prescribed under the Securities
and Exchange Board of India Act, 1992, can become
a partner in an LLP, the corporate affairs ministry said in a statement.
On 27 September, the Securities and Exchange
Board of India (Sebi) allowed property funds to invest
in limited liability partnerships. The government has
also allowed boards of not-for-profit companies to
decide whether they will forfeit the security deposit of
Rs.1 lakh in case a person is not elected as a director
on the board of such a partnership. The government
has granted a years exemption to auditors from validating the effectiveness of the internal audit
systems of the company they are preparing the audit
report for. This exemption has been granted till 1
April.
The government has also given a relaxation in the
case of consolidation of accounts. While holding
Regulatory Buzz
chairman Singh, Rajiv Singh, vice-chairman, Pia
Singh, whole-time director, TC Goyal, managing
director, Kameshwar Swarup, executive director (legal)
and Ramesh Sanka, CFO. The violations relate to,
among other laws, the Disclosure and Investor
Protection (DIP) Guidelines and the PFUTP
(Prevention of Fraudulent and Unfair Trade Practices)
norms.
Rajeev Agarwal, whole-time member of Sebi, noted in
his 43-page order he was satisfied that the violations
were grave and had larger implications on the safety
and integrity of the securities market. In my view, for the serious contraventions as found in the instant case,
effective deterrent actions to safeguard the market
integrity. It, therefore, becomes incumbent to deal with
contraventions, digression and demeanour of the
erring Noticees sternly and take appropriate actions for
effective deterrence, Agarwals order read.
Among the transactions that drew the attention of the
regulator were those in which three of DLFs subsidiaries, DLF Estate Developers (DEDL), DLF
Home Developers (DHDL) and DLF Retail Developers
(DRDL) subscribed to the share capital of three
companies Sudipti, Shalika and Felicite to various extents and, subsequently, in November 2006,
sold these stakes to three persons, Madhulika Basak,
Niti Saxena and Padmaja Sanka.
These three persons were the wives of Surojit Basak,
Joy Saxena and Ramesh Sanka, respectively, all key
management personnel of DLF. However, even after
the sale of the entire shareholding in Sudipti, Shalika
and Felicite by the wholly owned subsidiaries of DLF,
there was no change in the composition of the board of
directors of these three companies.
The directors in Sudipti, Shalika and Felicite, who were
employees of DLF, continued to be the directors of
these companies even after the sale of shareholding.
The arrangement allowed DLF to control the boards of
these three companies. Sebi had alleged that in terms
of the Substantial Acquisitions and Shares and
Takeovers Regulations, the three companies were
controlled by DLF even after the date of claimed
dissociation. Therefore, Sudipti, Shalika and Felicite
were related parties of DLF in terms of AS-18 and the
seafronts would continue to get the same protection,
but at bays the construction restriction would be
reduced from 500m to just 100m. Early this year, the
MCZMA redefined the Mahim coast as a bay .Soon
enough, Hoary Realty (part of the Hubtown Group)
put in a proposal to get its plot removed from CRZ
and the 500m protection ring.
Hubtown cited a report from the Institute of Remote
MAHIM BAY ROW Sensing in Chennai, showing the
plot almost outside the 100m zone of the Mahim
coast.In May end, MCZMA approved the proposal.
When TOI reported on this case, the state
government stayed the MCZMA 's decision to declare
Mahim shore as a bay and the clearing of building
proposals near the coast, including the Prabhadevi
plot. Hubtown then approached the court against the
government stay and succeeded in getting a
favourable order.The developer's plot measures
21,475 sq m of which only 1,475 sq m falls within the
new 100metre rule. The court's ruling will now allow
Hubtown to fully develop the remaining 20,013 sq m.
We also find that in the petitioner's case the National Hydrographer Office in Dehradun has also certified
that Mahim Bay is considered as a bay and is also
depicted as bay on its official navigational chart. The
petitioner is therefore justified in contending that its
case is similar to the case of Deepak Rao,'' it said.
Rao is a developer whose slum plot was earlier
cleared under similar circumstances for development
near the Mahim shore.
The Times of India,16 October 2014,Mumbai
Regulatory Buzz
companies will continue to have to consolidate their
accounts with all their step-down subsidiaries, the
latter have been exempted from mandatory
consolidation of accounts with their own immediate
subsidiaries during the current fiscal year.
Further, joint venture and associate companies have
also been exempted from mandatory consolidation of
accounts with the parent companies till 1 April 2015,
provided the parent companies do not have any
subsidiaries. Ambar Maheshwari, managing director,
corporate finance at property advisory Jones Lang La
Salle India, said that with trusts being allowed to
partner in LLPs, it brings about much-awaited clarity on
a matter that was mired in uncertainty till now. Most domestic funds are structured as trusts that act on
behalf of its trustees but most of them couldnt invest in them and were looking to invest through other
structures such as private limited companies, said Maheshwari.
Live Mint,16 October 2014,New Delhi
Builders win as HC rules Mahim is a
bay
In a major victory for developers, the Bombay high
court has upheld the redefinition of Mahim shore as a
bay and allowed construction in an area which earlier
fell under the highly restrictive coastal regulation zone
(CRZ). A division bench of chief justice Mohit Shah
and Justice M S Sonak last week directed Maharashtra
coastal zone management authority (MCZMA) to issue
a clearance certificate to developer Hubtown for its
5.5-acre Prabhadevi plot within four weeks. After receiving clearance from the MCZMA, the municipal
corporation is directed to consider the petitione r's
application for development on the land which falls
outside the CRZ area,'' said the court order.
The high court order comes as a huge relief for
developers whose plots are located close to the shore.
Earlier, the development potential of these plots was
severely restricted because CRZ norms restricted
construction activity 500 metres from the sea's high
tide line. But the rules were qualified in an amendment
three years ago. The amendment stipulated that
affect DLF's future projects in the region, analysts
say.
An official at the Securities Appellate Tribunal said
DLF could try and ask for a stay on the order until the
appeal is heard. DLF declined to comment beyond the
statement it issued late on Monday. The company
said it would defend itself against the order passed by
SEBI. SEBI is embarking on a plan to standardise
corporate reporting in India, and chairman U.K. Sinha
has warned that non-compliant companies will be
punished.
INSUFFICIENT FUNDS
DLF's net debt stood at about 185 billion rupees ($3
billion) at end-March and its rate of interest was 12.08
percent, according to the company's annual report. Its
free cash flow for the fiscal year ended March 31 fell
to 5.18 billion rupees, the lowest in four years,
Reuters data shows.ICRA estimates about 59 percent
of DLF's total outstanding debt of about 224.11 billion
rupees at end-March to be bank-funded and the
remainder as non-bank, according to Rohit Inamdar, a
senior analyst at the Indian credit rating agency.
"In the short term, this is a big issue for DLF clearly
because there is a looming liquidity crisis in case the
sales velocity does not pick up," said V Krishnan, a
sector analyst at Mumbai-based brokerage Ambit
Capital. Ambit estimates that with about 57 million
square feet of projects under development, DLF
needs about 2 billion rupees a month towards
construction costs, and its interest outflow to service
debt is also about 2 billion rupees a monthly currently.
The company's operating cash flow of about 3 billion
rupees will barely cover its construction costs and half
its interest cost, given the slow pace of home sales in
DLF's primary market of Delhi and the surrounding
region, Krishnan said. "DLF will either need to slow its
pace of execution in under-construction projects or
monetise some of its assets at distressed valuations
to contain or improve its operating cash inflows," said
Krishnan, adding that it could look for term loans from
banks though that will not come cheap.
The Economic Times,16 October 2014,New Delhi
Public Markets
DLF Ltd faces tough choices after
fund-raising ban
DLF Ltd will be forced to sell assets, even unfinished
projects, to meet debt obligations, say bankers, after
India's biggest property firm was banned from the
capital markets for three years - the market regulator's
harshest penalty ever. The Securities and Exchange
Board of India (SEBI) ruling on Monday will cut off
DLF's access to the Mumbai stock market, Asia's
best-performing bourse this year. The company,
shouldering $3 billion of debt, will also be barred from
the bond market just as its free cash flow sinks to
multi-year lows.
The ban follows what SEBI said was DLF's failure to
provide key information on subsidiaries and pending
legal cases at the time of its record-breaking 2007
initial public offering. On Tuesday, DLF shares fell to
a record low at the market close, wiping out $1.2
billion in market value.The SEBI ban comes as
slowing home sales due to poor consumer sentiment,
high inflation and interest rates hit developers in
Asia's third-largest economy. Bankers and analysts
say the only option left for DLF, India's most indebted
property developer, is to divest assets, even half-
complete projects, if the SEBI order is upheld.
"That's the only practical option because the banks
are also very cautious in lending to the sectors like
real estate. So refinancing would not be that easy," a
banker with a large U.S. bank that previously worked
with DLF said, declining to be named as he was not
allowed to speak to the media about client-specific
issues. The ruling also adds to the regulatory
pressure and political scrutiny on DLF. DLF is facing a
probe from the antitrust watchdog and has been
accused by the media and political opponents of
entering into improper land deals with well-connected
businessman Robert Vadra. DLF and Vadra, the son-
in-law of opposition Congress party chief Sonia
Gandhi, have denied the allegations.
The SEBI ban also comes ahead of the state
assembly elections in the northern state of Haryana
on Wednesday. Any change in government could
Land
No news in this section for the week
received very good response from the market. It is a
good sign that the market is picking up, said Suresh Krishn, managing director of Isha Homes. The
company has announced an initial launch price of Rs
4,500 per sq ft for the project.
According to him, the response for the project also
indicated that the buyers will come forward, if the
location and the pricing is right. The project site is located close to four leading schools, besides large IT
parks and corporate offices. Further, the travel time to
the city from Kolapakkam is very little, Krishn pointed out. The project offers various amenities including a
multi-purpose hall, gymnasium, aerobics room, indoor
games, kids play area, jogging track, landscaped garden, power back up for common areas, STP, lift
for all the blocks, supermarket and an association
office. Each block is being built as stilt plus four
floors, in order to provide ample open space to
residents. While the construction has already started,
the project is likely to be completed and finished
apartments handed over to homebuyers by October,
2016.
Financial Chronicle,16 October 2014,Chennai
MLDLs second Happinest project in Maharashtra
Mahindra Lifespace Developers (MLDL), the real
estate and infrastructure development arm of the
$16.5 billion Mahindra Group, recently launched its
second Happinest project in Boisar, a suburb of
Mumbai. Currently, urban India has an estimated 19
million families either living in slums or in low income
neighborhoods on rent and this housing deficit is
likely to rise to 38 million by 2030. This project is
targeted at the large, under-served home ownership
market in India, the company said in a statement.
Our first Happinest project at Avadi near Chennai has received a very encouraging response in the first
month itself. Built on the three pillars of trust, better
living and affordability, the new project at Boisar
signals our continuous efforts to enable a larger cross
section of Indians to fulfil their dreams of home
ownership in a safe, secure and healthy
Residential
Assetz Property launches
residential project in Bangalore
Assetz Property Group, Singapore headquartered
property development group, has launched its project -
Assetz Marq, on the Whitefield -Hoskote main road,
Bangalore. This is a mix development residential project spread over 28 acres and offers a vibrant living
along with retail, entertainment and service zones at
the doorstep, said Ben Salmon, CEO Assetz Property Group.
Assetz Marq project comprise of 2,000 units, in a
combination of two bedroom (1245-1286 sq feet), three
bedroom (1457-1639 sq feet) apartments, duplex
(2267 sq feet) and pent house (3109 sq feet), which
will be completed in three phases. Each phase will
consist of six to seven towers with plenty of open and
green spaces.
The Hindu Business Line,16 October 2014,Bangalore
Isha Homes floats apartments in
Chennai
Isha Homes, a leading property developer with focus
on Chennai and Coimbatore, has recently announced
the launch of a residential apartment project at
Kolapakkam, a fast growing western suburb in
Chennai. The project Isha Gayatri is being developed over 2.88 acres of land and will offer 216
high-end apartments offering a choice of 2BHK
(compact), 2BHK, 2.5BHK and 3BHK units with sizes
varying between 590 sq ft 1,406 sq ft
The project is ideally situated between Manapakkam
and Porur. While the Chennai Trade Centre is just five
kms away from this, the Porur junction is around four
km. Several major schools, IT parks including the DLF
IT SEZ, colleges, hospitals, including Miot, besides
banks and supermarkets are all located closeby. The
Mount Poonamallee Road as well as the Porur Kundrathur Road are easily accessible from the
projects location.
We launched this project last Saturday and it has
thereby reducing on-site work and quality variation to
enable faster delivery to customers. Happinest,
Boisar, is a green building project that has currently
been pre-certified by the IGBC (Indian green building
council), Arjundas said.
Financial Chronicle,16 October 2014,Mumbai
Chintels offers premium residential
project in Dwarka
The Chintels Group, that is in the process of
developing over 600 acres of self-owned prime land
in and around Dwarka expressway bordering and
including Delhi, has announced the launch of its
premium residential project Chintels Acropolis in
sector 108 on the edges of Dwarka, Phase II, New
Delhi.
Spread over nearly 40 acres, Chintels Acropolis
would have 23 residential towers with 1,341 flats. The
size of the 3, 4, 5 BHK would range from 181.16 sqm
to 603.86 sqm (1,950 sq ft to 6,500 sq ft). The project
is surrounded by luxury farmhouses in Delhi on one
side and villas of the upcoming international city on
the other. It is positioned on a 75-metre wide road
with a wide frontage of 500 meters and would be built
according to green design standards, offering
contemporary architectural style residential
apartments.
At the launch, Prashant Solomon, managing director,
Chintels India, said, Chintels Acropolis is uniquely positioned amidst luxury farmhouses in Delhi and
villas of the international city. The project follows
green design standards to offer environment friendly,
healthy and cost-effective living standards to its
residents. The areas of New Gurgaon comprising sectors 109, 108 & 106 bordering Dwarka Phase-II
are expected to follow the same growth curve as
premium Gurgaon locations, he added. Chintels Acropolis is a part of Chintels Metropolis a self-sustained area development by the Chintels Group.
Chintels Acropolis will be equipped with a large and
luxurious state-of-the-art amenities.
Financial Chronicle,16 October 2014,New Delhi
Residential
environment, said Anita Arjundas, managing director and chief executive officer, Mahindra Lifespace
Developers.
Spread over 14 acres, Happinest Boisar will offer 1
RK, 1 BHK, and 2 BHK apartments in the range of 351
sq ft to 695 sq ft. The price of the apartments ranges
from Rs 9 lakh to around Rs18 lakhs, depending on
the size of the apartments. It is not only home to
Maharashtras largest Maharashtra PSU Industrial Development Corporation (MIDC) but also offers
seamless connectivity to Mumbai and Gujarat by local
and outstation trains. The proposed DMIC (Delhi-
Mumbai industrial corridor) will also be in the vicinity.
The project is also well situated with the railway
station, bus stands, hospitals, schools and colleges in
close proximity, said Sriram Mahadevan, the business
head of Happinest.
Happinest homes are focused on offering customers
safe and secure neighbourhoods with good transport
connectivity and addressing the cultural and social
nuances of the target customers lifestyle have been important elements of the design process, like the
provision of balconies, and community spaces, among
others. Designing of the project has been done in a
way which would help in energy conservation while
ensuring that these homes are equipped to address
the future lifestyle needs of the customers.
Units at Happinest will have provision for appliances
like air conditioners and washing machines. The
development will have 24X7 power backup for
common areas, elevators, open car park, an
amphitheatre, walking track, and there are plenty of
open spaces for senior citizens. Children of all ages
will be able to enjoy themselves in open areas ranging
from tot lots and toddler play areas to cricket grounds,
a volleyball court and a badminton court. A dedicated
community hall for festivals is aimed at fostering
community living within this safe and secure
environment, the company sattement said.
The key to deliver affordable housing is to keep costs
low without compromising on quality or speed of
execution. This has been made possible in Happinest
projects by focusing on innovations and value
engineering. Ready-to-fit components have been used,
rates rising in the range of 1215 per cent during the quarter. Similar demand trends also led to rental
appreciation in select developments along the IT
corridor in Hyderabad.
However, subdued demand and existing vacancy
pressures caused values to dip by 23 per cent q-o-q in Mumbai's Nariman Point and BandraKundra Complex. In NCR, the rentals maintained their
equilibrium over the previous quarters in most
prominent office developments in the Central
Business District (CBD) of Connaught Place. Similar
trends were noticed across commercial office as well
as IT/SEZ segments of Gurgaon and Noida. "Going
forward, rentals are likely to remain stable across
most markets due to a significant pipeline of under
construction projects," CBRE said.
The Financial Express,17 October 2014,New Delhi
Commercial/ Retail
Office space leasing up 31% in Jul-
Sep at about 8 mn sq ft
Office space absorption rose 31 per cent in the
country's seven major cities during the July-September
period at about 8 million sq ft on higher demand from
corporates looking for expansion, property consultant
CBRE said today. Absorption of office space stood at
around 6 million sq ft during the same period last year
in the seven major cities of the country - Delhi-NCR,
Mumbai, Kolkata, Chennai, Bangalore, Hyderabad and
Pune.
"Positive market sentiments and a gradual global as
well as domestic macro-economic recovery may finally
be signalling the beginning of a revival in India's
corporate real estate segment," CBRE South Asia Pvt
Ltd Chairman and Managing Director Anshuman
Magazine said in a statement. "Various corporate
firms, who had put their office space consolidation and
expansion plans on hold over the previous couple of
fiscals, finally began their transaction processes; and
many concluded the same during the penultimate
quarter of 2014," he added.
The consultant noted that the third quarter of 2014 saw
stable, yet significant demand for office spaces on a
quarter-on-quarter basis across the leading urban
centres, clocking a total absorption of about 8 million
sq ft. "On an annual basis, investment-grade office
space take-up also rose by around 31 per cent," CBRE
said.
New grade A office space addition, meanwhile, fell by
about 3 per cent q-o-q across key cities, to stand at
about 6.7 million sq ft, helping to balance out the
supply/demand dynamics in these seven cities. With
the expected increase in India's GDP growth, the
commercial real estate market is likely to witness
accelerated activity in forthcoming months.
"Rental values for commercial office space remained
stable for the most part across cities such as Delhi
NCR, Bangalore, Pune and Kolkata; while appreciating
across select micro-markets of Chennai and
Hyderabad," CBRE said. Sustained occupier interest in
prominent SEZ developments of Chennai led to rental
Township
No news in this section for the week
do the feasibility report. The port is planning to
promote the zone primarily for manufacturing
industries.
He said the Port had signed an MoU with the
Puducherry government on Wednesday to develop a
port in the Union territory. A special purpose vehicle
(SPV) will be floated shortly to promote the port, which
will have two or three berths to handle clean cargo,
containers and cruise. While the government will allot
the land, Kamaraj Port will invest in developing the
port, Bhaskarachar said.
The Kamaraj Port also held talks with the Tamil Nadu
Tourism Development Corporation to start a cruise
service from Ennore, about 45 km from Chennai, to
Kanyakumari via tourist destinations of
Mahabalipuram, Puducherry and Rameswaram.
Tenders will be opened for an operator shortly, he
said. On the ongoing projects at Kamaraj Port,
Bhaskarachar said the port would add three to five
berths in the next three years, including one for
container terminal (at a cost of over Rs 1,200 crore),
one for a multi-cargo berth and one for coal. While
these projects would be developed by private players,
the port would invest around Rs 220 crore during this
year in dredging of berths and to create other infra like
railway yards.
Business Standard,13 October 2014,Chennai
Govt plans to revamp SME, SEZ tax
regime
The government is getting down to business to boost
local manufacturing and create jobs and is working on
a series of measures, including revamp of the tax
system for the small-scale sector, ship-building and
special economic zones (SEZs).Work has also begun
on speeding up the system of clearances for the
mining and power sector, including allocation of coal,
after the government managed to rework the
environment and forest clearance mechanism that was
seen as a major hurdle for projects to take off. Senior
officials said with elections in two states out of the way
, the Narendra Modi government is expected to speed
up decision-making in the coming weeks.
SEZ
Govt to set up Rs. 1 lakh cr petro
SEZ in Bina, MP
The government on Friday announced it would set up
a Petroleum, Chemicals and Petrochemicals
Investment Region (PCPIR) near the Bina refinery in
Madhya Pradesh at a cost of around Rs. 1 lakh crore.
This would be the fifth PCPIR in the country and the
first in a land locked state.
PCPIR is usually a delineated area of around 250 sq
km for setting up manufacturing facilities for domestic
and export led production. In March 2007, the Cabinet
Committee on Economic Affairs had approved the
proposal to set up PCPIRs in four states Gujarat, Andhra Pradesh, Odisha and Tamil Nadu.
We have held two meetings with petroleum minister Dharmendra Pradhan and the state Chief Minister
Shivraj Singh Chouhan and we have decided to set up
a PCPIR at Bina refinery, between Gwalior and
Bhopal, said Ananth Kumar, minister for chemicals and fertilisers at the concluding day of the 4th Global
Investors Summit at Indore. This project cost will be Rs. 1 lakh crore, Kumar said. Till now government has announced PCPIRs in Dahej, Gujarat, Paradeep in
Odisha, Vishakhapatnam-Kakinada in Andhra Pradesh
and Cuddalore-Nagapattinam in Tamil Nadu. These
projects entail a cumulative investment of Rs. 7.6 lakh
crore.
Hindustan Times,13 October 2014,Indore
Kamaraj Port to develop SEZ or FTZ
on a 650-acre land
Kamaraj Port Limited (formerly known as Ennore Port
Limited) is planning to set up a special economic zone
(SEZ) or free trade zone (FTZ) on 650 acre in the
vicinity of the port. Speaking on the sidelines of the
Confederation of Indian Industry (CII) conference on
Approach to Integrated Maritime Systems in Chennai, MA Bhaskarachar, chairman and managing director,
Kamaraj Port Limited, said that the Port had acquired
around 650 acre from the salt department to develop
an SEZ or a FTZ. We will soon appoint a consultant to
SEZ
The revenue department has asked the commerce
department to come up with options related to SEZs,
an issue that is being discussed for over a year but has
seen no progress, a senior government officer told
TOI. At the same time, the finance ministry has made it
clear that all tax related proposals -such as those
related to restoration of minimum alternate tax and
dividend distribution tax exemption -will only be taken
up at the time of the Budget.
Similarly , discussions on a new policy for the small-
scale sector, including a reworked tax regime, have
also started with the cabinet secretariat stepping in on
Friday to work out steps that will boost the sector that
accounts for around 45% of the manufacturing activity
in the country and employs close to 6 crore workers.
A large section in the government believes that a push
to the micro, small and medium enterprises is critical to
boost job-creation and to check unnecessary
imports.The ship-building industry is seen to be a
significant employment generator, a key theme of the
`Make In India' campaign launched by the government
last month.
At the same time, the government realizes that there is
a need for a massive infrastructure creation drive and
is trying to make sure that procedures related to
getting mining approvals are eased at the earliest. In
fact, the project monitoring group in the cabinet
secretariat has already begun work on the issue and is
working with the private sector to remove bottlenecks.
A similar exercise has also been initiated for the power
sector, including work on how coal blocks and linkages
will be given to those setting up electricity generation
units.
Delay in approvals has held up investments of close to
Rs 20 lakh crore over the past few years, and even
impacted the financial sector.The government has
already started working towards solving the land
acquisition problems, another complaint of the industry
, to make the process simpler.
The Times of India,18 October 2014
Hospitality
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Input Cost
No news in this section for the week
Disclaimer
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