Hapy New Year 2013

DLF sells Aman Resorts to its founder Adrian Zecha for Rs 1,600 cr

BS Reporter / New Delhi Dec 20, 2012, 00:31 IST

The transaction proceeds to help real estate company lower its Rs 21,000-cr debt

In line with its strategy to exit non-core assets and reduce debt, DLF, India’s largest realty company, has announced the sale of Aman Resorts to Adrian Zecha, the luxury hotel chain’s founder and chairman, for $300 million (about Rs 1,600 crore).

The transaction, which will see DLF Global Hospitality selling its full stake in Silverlink, the controlling entity of Aman Resorts, to Indonesian hotelier Zecha, is expected to be closed by mid-February. The present deal, besides its sale of Mumbai’s NTC Mill and the wind energy business, brings DLF closer to meeting its target of reducing the Rs 21,000-crore debt on its books to Rs 18,000 crore by March-end.

The company would, however, retain the six-acre Aman property on Delhi’s Lodhi Road. The book value of this property is about $85 million, but its market value, given its location, is estimated to be much higher.

DILUTION DRIVE Some of DLF’s recent sales

December 2011 Offloaded its stake in Galaxy Mercantile to its joint venture partner IDFC for Rs 450 crore September 2011 Sold 28 acres in Gurgaon to M3M for Rs 440 crore  December 2011 DLF and its JV partner Hubtown sold an IT SEZ in Pune to private equity firm Blackstone for Rs 810 crore  June 2012 Sold the entire stake in Adone Hotels and Hospitality Ltd (‘Adone’) for Rs 567 crore to Kolkata-based Avani Projects and Square Four Housing & Infrastructure August 2012 Sold NTC Mill land in Mumbai to Lodhas forRs 2,727 crore December 2012 Sold Aman Resorts to its founder and chairman, Adrian Zecha, for $300 million, or Rs 1,600 crore Source: Company

“The company’s focus will be on core business and a few significant launches coming up in the next four-five months,” said Sriram Khattar, senior executive director, DLF. The realty major has not had a big launch so far this financial year.

Khattar said 90-95 per cent of the deal amount would be used to reduce debt. The firm’s net debt, at Rs 23,220 crore as on September 30, had come down to Rs 21,220 crore after realisation of Rs 2,727 crore from NTC Mill land sale to the Lodha group.

Besides, the sale of its wind energy business — the 228.7-Mw installed capacity and wind energy farms in Gujarat, Rajasthan, Tamil Nadu and Karnataka — is expected to fetch DLF Rs 800-1,000 crore. “We aim to close the wind energy deal this financial year itself,” said Khattar.
The Aman Resorts properties had been put on the block two years ago, but the deal could not go through because of an economic slowdown in the Euro zone and the US. The hotel chain has 25 properties in 12 countries.

In 2007, DLF had bought Aman Resorts, founded by Zecha in 1988, at an enterprise value of $250 million — $150 million of debt — and rebuilt the Delhi property, now known as Aman Lodhi. Of the realty major’s $300-325-million investment in the chain so far, $20 million were invested in this property.

ICICI Venture eyes 100% gain in Express Towers exit

Business Standard

ICICI Venture, one of the largest private equity firms in the country, is looking to sell its 49 per cent stake in Indian Express Newspapers (Mumbai) Ltd (IENL), which manages Express Towers, located at Mumbai’s Nariman Point.

ICICI Venture was currently in talks with a number of investors like Blackstone, two executives in the know of the plans said. It was looking at getting around Rs 1,000 crore for its stake, which is double the Rs 500-crore investment it had made four years ago, sources familiar with the developments confirmed.

IENL is jointly owned by the Indian Express Group and IAF III, a fund managed by ICICI Venture.
“They have received a number of enquiries from private equity funds and investors who want to buy the stake. But the talks are preliminary so far,” said the executive.

When contacted, an ICICI Venture spokesperson said the company neither confirmed nor denied any speculation on its deals/transactions, as a matter of policy. A senior executive of Blackstone, which, in fact, occupies a floor in the 25-storey building owned by housing finance major HDFC, offered “no comments”.

Though the executives said investors had also shown interest in buying stake from the Express group, this could not be independently verified. Mails sent to Indian Express Group Chairman Viveck Goenka did not elicit any response.

In early 2008, ICICI Venture had picked the stake in the company through its fund IAF III. After buying the stake, the private equity firm also renovated the lobby area and installed high-speed lifts in the building.

ICICI Venture was earlier planning to list yield-generating assets such as Express Towers, but the tough market conditions played spoilsport.

Punjab entrepreneur sets up 10-storey building in Mohali in 48 hours

IANS | Dec 1, 2012, 08.20PM IST

MOHALI (Punjab): It was a promise delivered floor by floor. In just 48 hours, an entrepreneur has constructed a 10-storeybuilding in this suburban town in Punjab.

The red and grey facade building, Instacon, stood tall on an industrial plot in Mohali, 10 km from Chandigarh, Saturday, two days after Punjab deputy chief minister Sukhbir Singh Badal had laid its foundation stone.

Work on the building's construction started around 4.30 pm Thursday. By Friday evening, the building saw seven floors in place.

As the deadline of 48 hours approached, all the 10 storeys of the building were in place even though the glass-panes on the windows and other fittings inside were still being put by the workers and engineers.

The building used pre-fabricated material, including 200 tonnes of steel.

"Our effort was to put the 10-storeyed structure in place within 48 hours. We wanted to prove that this could be done. That feat was achieved well within 48 hours. Just some finishing touches remain. This is only a sample structure," an official of Synergy Thrislington infrastructure company told IANS at the site.

Entrepreneur Harpal Singh, who heads the Rs.1,000-crore infrastructure company, had promised that the 10-storey building would be completed within 48 hours.

"This will be the first building of its kind in the country to be built in just 48 hours. The model has been cleared for Zone-V seismic area, the highest risk area (for earthquakes)," Harpal Singh, who owns the JW Marriot Hotel in Chandigarh, said here earlier.

Three floors of the building were constructed in just six hours Thursday.

Over 200 skilled workers, technicians, engineers and equipment were engaged in the building construction.

The material being used was manufactured in the past two months in a nearby factory.

"No bricks and sand has been used. The outer wall is a double-skinned PUF panel. The cost is almost the same as of conventional construction material. It saves a lot of time that goes into construction otherwise," said officials at the site.

Harpal Singh said that the idea to construct such a building came to him when he was constructing his own house, which took two years to complete - thanks to truant workers.

Singh's company, Synergy, took over Britain-based Thrislington Products, a re-locatable steel partition manufacturer, to set up the new infrastructure company here.

விண்ணை எட்டும் வீட்டு வாடகை: மும்பைக்கு முதலிடம் சென்னைக்கு 10 வது இடம்

 Goodreturns :Mayura Akilan :Tuesday, November 20, 2012, 14:56 [IST]

டெல்லி: சர்வதேச அளவில் மும்பையில்தான் வீட்டுவாடகை அதிக அளவில் உயர்ந்துள்ளதாக கணக்கெடுப்பு ஒன்றில் தெரியவந்துள்ளது. சென்னை நகரத்தில் வீட்டு வாடகை 36 சதவிகிதம் வரை உயர்ந்து 10 வது இடத்தில் உள்ளதாம்.

வீட்டு வாடகை நாளுக்கு நாள் உயர்ந்து நடுத்தரமக்களின் கழுத்தை நெறித்து வரும் நிலையில் பெருநகரங்களில் வாடகை உயர்வு குறித்து, கஸ்மேன் அண்டு வேக்பீல்டு என்ற சொத்து ஆலோசனை நிறுவனம் ஆய்வு மேற்கொண்டது. அதில் சுவாரஸ்யமான தகவல்கள் தெரியவந்துள்ளன.

சர்வதேச அளவில் ஒப்பிடுகையில், இந்தியாவில் மும்பையில் வாடகை விகிதம் பெருமளவில் உயர்ந்துள்ளது. கொலாபாவில் ஒரு சதுர அடிக்கு ரூ.700 வாடகையாக வசூலிக்கப்படுகிறது. இது கடந்த ஆண்டு ஜூனில் இருந்த வாடகையை காட்டிலும் 75 சதவீதம் அதிகம்.இதற்கு முக்கிய காரணம், இங்கு தேவை அதிகமாக இருப்பதுதான்.

பிரேசிலின் ரியோ டி ஜெனிரோ நகரில் உள்ள கார்சியா டாவில்லா பகுதி மற்றும் அமெரிக்காவின் நியூயார்க் நகர டைம்ஸ் சதுக்கம் ஆகியவை முறையே வாடகை உயர்வில் 2 மற்றும் 3வது இடங்களை பெற்றுள்ளன. இங்கு வாடகை முறையே 64.7 சதவீதம் மற்றும் 55.6 சதவீதம் உயர்ந்துள்ளது.

இதேபோல் கொல்கத்தாவின் பார்க் ஸ்டீரீட் (53.8 சதவீதம் உயர்வு), சென்னையில் காதர் நவாஸ் கான் ரோடு (36.7 சதவீதம் உயர்வு) ஆகிய பகுதிகளிலும் வாடகை பெருமளவில் உயர்ந்துள்ளன. இவை முறையே வாடகை உயர்வில் 5 மற்றும் 10வது இடங்களை வகிக்கின்றன.

அதிக வாடகை உள்ள இந்திய நகரப்பகுதியில், தலைநகர் டெல்லியின் கான் மார்க்கெட்தான் முதலிடம் வகிக்கிறது. ஆனால், உலக அளவில் 21வது இடத்தில் இருந்து தற்போது 26 இடத்துக்கு தள்ளப்பட்டுள்ளது. இதற்கு முக்கிய காரணம், அமெரிக்க டாலருக்கு எதிரான ரூபாயின் மதிப்பு சரிந்ததுதான். இவ்வாறு அந்த சர்வேயில் கூறப்பட்டுள்ளது.

Chennai developers make all efforts to woo buyers

Times Property, The Times of India, Chennai05 Nov 2012 

Promotion is one of the four major pillars of marketing and it is through this mechanism that the product gets a visibility in the consumer mind space. Two weeks ago, Akshaya Pvt Ltd launched its 150th project Abov, the tallest residential tower of Tamil Nadu and the event was noted for its innovation and even its larger-than-life allure.

Akshaya had created a 15 feet high model of the skyscraper for the event and has placed the model at the Chennai airport and has plans to take it to the airports in Bangalore, Mumbai and Delhi. T Chitty Babu, CEO, Akshaya Pvt Ltd, feels that a project that is grandiose like Abov, needs a lot of work to back it up. “Innovation is required in every sphere of work, and in terms of marketing a product, a lot of work is required,” he says. Akshaya also has a cut model in its offices, where customers can get an idea about the apartments they plan to buy. A five-minute walk through is also designed for their projects.

To make their presentations more engaging, the developers are also willing to go the extra mile and import the technology required for the effort. “We have got something called virtual reality, where the inner portals of the apartment can be viewed according to the movement of the hands. Then we have brought our kinect tables, where four people can view four different aspects of a property at a time. Both these technologies have been brought from Singapore and were the first of their kind in India,” says Chitty Babu.

Of course, these promotional methods work only when they are designed with the target audience in mind. “It depends on multiple factors. When I launch a high-end product, they require promotions which are tailor-made for the customer base I have in mind. Mass advertisements still hold their value and that explains the increasing number of front-page advertisements for project launches these days,” says Suresh Krishn, Managing Director, Isha Homes. When it comes to the high-end market, it makes sense to employ tailor-made promotions, considering the fact that the target base is less, when compared to the mass market. Suresh feels that in these cases, there is no hard-selling that is done. “We know these customers from our previous interactions and know their tastes. What we do in the evening launches are to showcase what we have. A walkthrough or a miniature model will help them visualise better and make the right choice,” he says.

Advertising is a traditional tool and if innovation is what a developer wants to go for, then sky is the limit. S Ramakrishnan, CEO, Marg ProperTies, feels that there is a need to constantly come up with something new depending on the project. “While one can always go for advertisements, promotion works at many levels. For example, one can tie up with a matrimonial site to promote the projects. Once people feel the need to move out to a new home after their marriage, this will be the right moment to make a pitch and it works,” says Ramakrishnan. Marg, he says, has always believed in a combination of traditional and modern methods of promotion, using a 360 degree approach.

It is a well-known fact that customers today are spoilt for choices. While at one level, these promotions are meant to meet those requirements, there is also an attempt to create a desire for something new. “While organising events like music shows do help, the internet, today, is full of options. Once you know how to sell the concept, then these tools can be put to best use,” says Ramakrishnan, who feels that all promotional methods evolve over time and are required for all the segments of customers.

“Whether it is an affordable home, a smart township or ultra luxury villas, there is a need to reach out. The core idea remains the same; it is the final form that differs in each case,” he says. All this requires excellent PR and a degree of uniformity in the communication. “From a call centre employee to a CEO, everyone must speak the same language. Only then can the communication be effective,” says Ramakrishnan. While the effectiveness of these tools can only be gauged in the time to come, one can definitely expect a lot of activity in the promotional scene in the real estate sector in the days to come.

Source: Times Property, The Times of India, Chennai

Realtors wary of commercial space

BL: Vidyabala:April 28, 2012:

The real-estate developers, unlike their peers in Asia, are into building rather than owning assets for which they need cash.

Since 2008, most real-estate developers in the listed space have scaled down their exposure to the commercial property segment. Instead, they have turned their attention to residential development sale of plots too.

Even if they did venture into commercial projects, quite a few preferred to sell the property than hold them as assets and lease them.

In the last one year, for instance, DLF's rental business hardly added any fresh-leased assets and, in fact, scaled it down a bit.

Why have realty players stayed away from building a portfolio of lease assets and deriving rental income from them, like their peers in the Asian countries?

SLUGGISH DEMAND

A look at the demand-supply scenario suggests that poor absorption of space is one reason. A report by consultant Jones Lang Lasalle states that 24 per cent of the office space that was built in 2011 in the top seven cities, remained vacant. To put that in perspective, over 2005-07, this number was lower than 8 per cent.

In a booming economy, all sectors — IT, financial services and manufacturing — take up more realty space. The first two are the key drivers of volumes, together accounting for over 60 per cent of leased volumes in the last five years. But there has been a dip in space occupied by these sectors in the last one year, according to data by Knight Frank India.

However, there was a strong pick up in the manufacturing sector. Clearly, manufacturing cannot be expected to drive volumes in a sustained manner.

Quite a few IT companies have used the price slump to set up their own offices in SEZs or outside. The recent Rs 985-crore commercial space deal by the Citigroup in the Bandra Kurla Complex is also evidence to the buying trend. That means, these companies will actually vacate leased assets, thus increasing supply.

In the retail space too, close to a third of the projects completed in 2011 remained vacant. Mumbai, Delhi and NCR make up for two-thirds of the retail mall space in the country. And these are the places where fresh additions are happening. They could, therefore, run the risk of oversupply unless FDI in multi-brand retail takes off soon.

PRICING POWER

Sluggish demand scenario means pressure on price. While prices in top cities remained flat for a good part of 2011, data from companies such as DLF, over the first half of 2011, suggested weakness in both the sale price and lease rates of commercial complexes. Even over the last quarter, rentals in some of the Central Business Districts of Mumbai dipped 3-4 per cent.

WE ARE DEVELOPING

It is not just the demand and pricing aspects that have kept commercial space development muted. Real-estate developers, like their cousin infrastructure developers, are at a stage of building/constructing and not merely owning assets.

And construction requires massive capital; one that cannot be locked in to fixed assets for too long. Simply put, they need cash to buy land and build.

And unless the built properties are sold, the players cannot think of replenishing their land inventory or ploughing fresh working-capital into new projects.

This is one of the primary reasons why companies, including traditionally asset heavy players such as Phoenix Mills, Unitech or DLF, have been guarded in their strategy.

Despite a reasonably large lease portfolio, DLF's annuity income accounts for just about a fifth of its sales. Clearly, it is the development and selling activity that provides sufficient revenue and cash flows to carry on business.

On the other hand, while Phoenix Mills continues to actively let out retail space, it adopts a strategy of selling all its office space and not leasing them to ensure that it does not lock too much capital. In the retail space too, it has only large licensees as tenants, who can also absorb any hikes.

Others such as Unitech, which already suffer from severe cash crunch, delivered negligible projects in the non-residential space. Residential demand is less affected by economic activity, as evidenced by reasonably steady off-take of home loans.

REIT POSSIBLE?

It is for this reason that a real-estate investment trust — where a pool of leased assets generate cash flows and are listed — may not be possible by the Indian developers.

But investment companies are taking a step towards the REITS model by buying property in the current sluggish scenario. The recent office space deal by Singapore-based investment group, Xander, in Chennai, is an example. The same will be let out, adding to its income-generating assets in India.

When rupee is down, real estate is preferred investment for NRIs. Here's NRI's guide to buying property

20 FEB, 2012, 04.59PM IST, SAKINA BABWANI,ET BUREAU 

When it comes to smart investing, timing is of essence. So if you are a non-resident Indian (NRI) wondering where to invest, real estate could be a good option given that the rupee is still floundering. "NRIs have always been interested in investing in India as they are familiar with the location, and realty has traditionally yielded good returns in the short to medium term," says Shveta Jain, director, residential services, Cushman & Wakefield. There are two distinct types of purchasers. One comprises pure investors, who want to reap good returns on their investment, and the other category is the end-users, who purchase property to provide for their families in India. Says Anand Narayan, director, residential services, Knight Frank: "NRIs look at their property in India as a second home, a place they may want to come back to when they retire." 

Where can NRIs invest? 

All the options that are available to resident Indians are also open to NRIs, but apartments are the most sought-after. "Almost 70% of the purchases are residential units," claims Narayan. However, commercial office spaces are also worth considering. This may be particularly useful if the NRI has a business in the country and is planning to set up an office here. Says Ashish Bhakta, partner, Advaya Legal: "NRIs can also buy commercial land as there is no restriction on such purchases." Agricultural land, on the other hand, is not an option since it is only available to farmers. 

How to finance a purchase? 

If you are considering financing your property, you needn't worry. "NRIs can avail of a home loan from approved banks or financial institutions to purchase a property or for repair/renovation of their house," explains Suresh Surana, founder, RSM Astute Consulting Group. However, one has to adhere to the RBI guidelines before taking a loan (see graphic). An NRI needs to route the down payment as well as EMI payouts through legitimate banking channels, either via remittances or through non-resident banking accounts. 

Before applying for a loan, you may also have to get a power of attorney made in favour of one of your relatives. "Since an NRI is usually out of the country, he may require a relative to do the documentation on his behalf. This is the reason that banks insist on a power of attorney, though it is not mandatory," says Bhakta. 

What are the applicable taxes? 

NRIs are entitled to the same tax benefits on their home loan interest payments as a resident Indian. "When an NRI purchases a property in India, there is no income tax implication at the time of purchase. However, he will have to pay stamp duty and registration charges," says Surana. 

The tax angle becomes trickier if you lease out the property. If you are staying in countries like the US and Australia, you are liable to pay tax on your worldwide income. "The taxability of income from an NRI's property in India needs to be considered on the basis of regulations applicable in his country of residence and the Double Tax Avoidance Agreement with India," says Surana. "The rent proceeds can be credited to his NRE or NRO account. This is freely repatriable provided a chartered accountant certifies (Form 15 CB) that the amount is eligible for remittance and that the applicable taxes have been paid," he adds. 

What to watch out for? 

NRIs need to be cautious while buying real estate because it is difficult to monitor property while staying abroad. "It is advisable to physically inspect the property before finalising a purchase," warns Jain. To avoid getting a raw deal, make sure that you verify the title of the property. If you are unsure, seek a lawyer's help. While buying property directly from a builder, ensure that all the statutory and regulatory clearances for the project are in place. "Check the repute and track record of the builder and be aware of the payment schedule and modalities," adds Jain. 

An easier way to dabble in realty is to hire a reputed real estate firm. They will take care of the entire process for you in exchange for a fee. "You can opt for reputed intermediaries like real estate agents or brokers, who will give you a good idea about the various options in the market as well as the prices, and let you know if you are getting a good deal," says Narayan.

Purchase of Immovable Property in India – Reporting requirement

RBI/2011/12/399
A.P. (DIR Series) Circular No. 79, Dated- February 15, 2012


Clarification – Purchase of Immovable Property in India – Reporting requirement


Attention of Authorised Dealer Category-I banks is invited to Regulation 5 of Notification No. FEMA 21/2000-RB viz. Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000 dated May 3, 2000, as amended from time to time. In terms of the above Regulation, when a person resident outside India, who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business, excluding a liaison office, acquires any immovable property in India in accordance with the provision of said regulation, the said person has to file with the Reserve Bank a declaration in the form IPI annexed to those regulations, not later than ninety days from the date of such acquisition. As the form is required to be submitted by such persons only, the form is suitably amended to reflect the position.


2.  It is clarified that the extant regulations do not prescribe any reporting requirements for transactions where a person resident outside India who is a citizen of India or a Person of Indian Origin (PIO) as defined in Regulation 2(c) of Notification No. FEMA 21/2000-RB, ibid, acquire/s immovable property in India in accordance with the said provisions of the aforesaid Notification. Form IPI has been, accordingly, amended for greater clarity.


3. Authorised Dealer Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.


4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.


Yours faithfully,


(Meena Hemchandra)
Chief General Manager-in-Charge


Annex


[Annex to A.P. (DIR Series) Circular No. 79
dated February 15, 2012]