possibility

Credai Evaluating Possibility to Replicate Pune’s Onsite Training Model for Other States

by Paul Joseph June 20, 2011 Uncategorized

The Confederation of Real Estate Developers Association of India (Credai), the apex body for private real estate developers in the country, is currently evaluating the possibility of replicating the onsite training model for construction workers, being implemented by its Pune chapter, to more states shortly. “At present, Credia’s national skills development committee is studying the model and is in the process of doing certain modifications to it. We have already received enquires from Andhra Pradesh, Chhattisgarh, Jharkhand , Orissa and Mumbai for implementing the same,” C Sekhar Reddy, vice-president, Credai India and president of Credai Andhra Pradesh, told Business Standard. Credai Pune, under the aegis of the National Skills Development Corporation (NSDC), provides onsite training to construction workers in plastering, masonry, plumbing, electrical works, tile-laying and other allied activities with a Rs 18-crore fund sanctioned by NSDC last year. Reddy said lack of skilled labour was a cause for concern and the construction industry was currently facing a 30 per cent shortage of skilled workers. “Onsite training will bridge this gap,” he said. In onsite training, the training campus shifts to the construction site rather than the trainees shifting to a fixed campus. “It (onsite training) improves productivity and quality, besides providing an earn-while-you-learn’ opportunity to the workers. A certificate will be given to the worker who has passed the training, which will entitle him to a better pay,” Reddy said. Reddy said recession, which was followed by the agitations for a separation Telangana statehood, dealt a blow to the real estate sector in Hyderabad, resulting in the sales plummeting by 25-30 per cent. “Since October 2010, the sector is doing well and we expect to witness sales of 18,000 units a year in Hyderabad, from 10,000 units until two years ago. This projected uptick will primarily be driven by the increase in employment opportunities in the city,” he added. Meanwhile, Credia India, represents over 6,000 developers through 20 member associations across the country, today announced Ashoka Developers and Builders managing director N Jaiveer Reddy as chairman of Credai Hyderabad, Manjeera Group chairman Yoganand Gajjala as its president and SMR Holdings chairman and managing director S Ram Reddy as general secretary.

Tagged as: bangalore, business, chennai, development, jaiveer-reddy, mumbai, national, national-skills, possibility, real estate india, since-october, worker

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Maha to levy charges for construction near mega project sites in Mumbai

by Paul Joseph July 2, 2010

Maharashtra is considering imposition of betterment charge and service tax on developers of residential and commercial complexes adjacent to the mega-infrastructure projects lined up in Mumbai. Besides, the state government plans to recover premium from builiders and developers for the sale of additional floor space index. The proceeds of such levies and charges would be contributed for the creation of a separate Mumbai Development Fund (MDF). The MDF would be mainly utilised for various infrastructrure projects in the metropolis. At present, the government has launched infrastructure projects of over Rs 60,000 crore in Mumbai including metro rail, mono rail, upgrading roads and construction of flyovers. Chief Minister Ashok Chavan told Business Standard, “Due to the implementation of mega projects such as mono rail and metro rail there is an appreciation of property value in the adjoining areas. The government is mulling the possibility of a betterment charge from residential and commercial establishments in those areas.” “Besides, some private projects do need assistance of the BrihanMumbai municipal corporation (BMC), Mumbai Metropolitan Region Development Authority (MMRDA) and other undertakings for infrastructure development and supply of various amenities. The idea is to levy service tax on the beneficiaries. These proposals are at the discussion stage and the final decision will be taken by the state cabinet,” he added. A senior government official, who did not want to be quoted, said imposition of these taxes and charges would be done through an enactment. “The existing BMC Act and MMRDA Act need to be amended to levy these charges. Similar charges are recovered in the US, European countries and Canada. These are known as impact free and development or betterment charge.” The official said that Maharashtra will be the first state to explore these options to mobilise funds for financing infrastructure projects. Office bearers of the Mumbai’s realty sector association, who did want to be identified, said the government needs to explain the concept before taking any final decision. “Its obvious that appreciation of property takes place when a major infrastructure project is launched. But in such a case why should the developer of residential and commercial properties be burdened. In any case, the builder and developer will pass it on to the buyer.” Source : http://www.business-standard.com/india/news/maha-to-levy-charges-for-construction-near-mega-project-sites-in-mumbai/400135/ Filed under: Builders/ Developers , Mumbai Tagged: Real Estate in Mumbai

Tagged as: builders/ developers, chief-minister, european, implementation, mumbai, possibility, real estate in mumbai, state

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Record Real Estate Deal in Mumbai

by Paul Joseph May 25, 2010

It’s called the biggest land deal in Mumbai . A plot of 25,000 sq metres, with a built-up area of 4,95,000 sq metres was bagged by Lodha Crown for a whopping Rs 4,053 crore, coming to Rs 81,818 per sq m. The auction was held for the built up area on Tuesday. The Lodha group quoted more than double the reserve price of Rs 1,980 crore set by MMRDA — the owner of the plot — which will now be leased to the group for 65 years. After MMRDA did not receive any bids for the same plot last month, it reduced the reserve price from Rs 50,000 per sq m to Rs 40,000, also staggering the payment schedule over five years. This generated interest from 14 developers who had collected the bid document. Only four had submitted bids. The second closest bid was by Sunteck India at Rs 3,465 crore, followed by Indiabulls Real Estate at Rs 3,327 crore, while Gaurhari Estate quoted Rs 2,251 crore. Said SVR Srinivas, additional metropolitan commissioner, MMRDA, “It has been a great deal for us and will go a long way in the over-all development of the region. It also indicates that markets are bouncing back and could set the tone for other auctions.” Initially the plot was meant for a 101-storey high-rise labeled Iconic Tower. Later MMRDA reduced this to about 80 floors. However, altering few other conditions like allowing only-residential development and multiple towers to attract bidders has meant virtually falling out of the tallest building race. Said Abhisheck Lodha, managing director, Lodha Group, “Though our tower will be 60-70 storeys high, it is not about racing for the tallest building. It’s about creating good development. We’ll get to sell about 75 lakh sq ft, which is the single largest development in the city, giving us a great opportunity. 70 per cent of our development will be residential.” Real estate experts call it the biggest deal in the city till date, on basis of the sheer ticket-size. But they are not convinced about the economics of the deal. “There are at least 2,500 apartments in the vicinity of Wadala in various stages of development. This will put downward pressure on the prices,” said Gulam Zia, national director (Research and Advisory Services), Knight Frank, India. He added, “The winning bidder has paid around Rs 9-10,000 per sq ft. Since the location itself in the current situation is not commanding high rates, the flats may end up getting over-priced around Rs 20,000 per sq ft. Maintaining a rate of around Rs 14-15,000 per sq ft will bring profit margins under pressure.” This is the first successful auction MMRDA has carried out after 2008. It’s attempt at raising a minimum of Rs 435 crore by auctioning a plot with 14,500 sq metre built area in BKC three months ago found no takers. After this deal, sources say MMRDA, which was considering exploring different financial models for its other land parcels, could now get back to the leasing model, indicating the possibility of more big-ticket deals in the city.

Tagged as: abhisheck-lodha, city, development, location, mumbai, payment, possibility

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Interest rates may not rise sharply

by Paul Joseph April 19, 2010

State Bank of India (SBI) on Friday ruled out the possibility of bank rates going up sharply in the next 3-4 months stating that the credit offtake was usually low in the first quarter. “There is still a fair amount of liquidity in the system so possibly during the next 2-3 months despite the upward bias there may not be much hike in interest rates,” SBI Chairman O. P. Bhatt told reporters here at the launch of special concessional banking scheme for Air Force personnel. The SBI chief, however, said he would wait for the RBI monetary policy review on April 20 to decide on teaser home loans where interest rates were lower. SBI now offers home loans at 8 per cent under the special home loan scheme (teaser home loans), but revised the rates for the second and the third years to 9 per cent from 8.5 per cent earlier. Under the newly launched scheme — Defence Salary Package — Air Force personnel will get facilities such as free draft and free fund transfer from 16,000 branches of the SBI and its associate banks. “Our business correspondents appointed in un-banked rural areas will also be available for basic banking requirement of the Air Force and their families,” SBI said. Speaking on the occasion, Air Chief Marshal P. V. Naik said “I hope SBI would meet the expectations of the defence personnel,” adding that he would urge the SBI Chairman to translate it into reality at the earliest. Source:http://beta.thehindu.com/business/article399286.ece Filed under: Home loans Tagged: Home loan interest rates

Tagged as: chairman, expectations, home-loans, india, interest-rates, possibility

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Taj Group may open more brands of hotels

by Paul Joseph April 5, 2010

April 05, 2010 The Taj Group of Hotels is to further sharpen its brand focus, with more brands between its luxury and premium hotels, on the one hand, and the mid-market and budget offerings, on the other. “I won’t rule out the possibility of more brands going forward…Internationally, hotel companies have spawned many brands, more than one or two or three. So it (introduction of more brands) is possible,” said Ajoy K Misra, senior vice-president (sales and marketing) with Indian Hotels Company Limited (IHCL), promoters of the Taj Group. “There is space between each brand,” Misra said, without outlining details. The Taj Group had begun restructuring its brands in 2008. At present it has four brands — Taj Luxury, Vivanta by Taj (in the premium category), Gateway Hotels (in the mid-market segment), and Ginger Hotels in the budget or economy, segment. While Taj will be the company’s ultimate offering in luxury, every other brand category after that has space, he explained. The “brand proposition” will be the real differentiator among its existing brands and the ones that might come in the future, he added. At present, the room tariff for Taj’s Ginger brand varies between Rs 1,000 and Rs 1,500; for Gateway Hotel it is between Rs 3,000 and Rs 6,000; ‘Vivanta by Taj’ starts from Rs 6,000 up to Rs 15,000, and Taj Luxury starts at Rs 12,000 and goes to Rs 30,000. Taj’s brand sharpening exercise comes at a time when almost all global hospitality conglomerates have India on their radar. Source : http://www.realtyplusmag.com/rpnewsletter/fullstory.asp?news_id=8171&cat_id=1 Filed under: Builders/ Developers , Hotels/ resorts , New projects Tagged: hotels , Taj group

Tagged as: hotels, hotels/ resorts, indian, new-projects, possibility

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SBI Increases Interest Rates on Home Loan

by Paul Joseph April 5, 2010

State Bank of India (SBI), the largest bank in India and one of the leading players in the housing finance market, has raised interest rates on home loans . Although the bank will continue with its 8% teaser rate — which the SBI had introduced more than a year ago — for the first year, it has increased rates for the subsequent years, effective April 1. The hike in home loan rates by SBI was triggered by the recent increase in its cost of funds. Till March 31, SBI had two schemes — The Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh). ‘‘From April 1, both the schemes have been merged and extended for a month,’’ an SBI spokesperson confirmed to TOI. ‘‘The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI’s equivalent of prime lending rate, or PLR) thereafter,’’ the spokesperson added. So in effect, the home loan rates for the second and the third years have gone up by 50 basis points (100 basis points=1%), from 8.5% earlier to 9% now. While fourth year onwards, at the current structure, the interest rate will be at 10% per annum, since currently SBAR is at 11.75%. Earlier, from the fourth year onward, the floating rate was at 2.75% below the SBAR and the effective rate was 9%. Under the new rate structure (assuming a 10% rate from the fourth year), on a 20-year loan of Rs 30 lakh, a customer would have to shell out about Rs 3.9 lakh over the tenor of the loan. Thus the effective rate that the customer would be paying over the 20-year period is 9.5%. Explaining the rationale for hiking rates on home loans, the SBI spokesperson said it mainly reflected ‘‘the increased cost of funds from April 1 stemming from the new methodology for paying interest in savings bank accounts on daily balances.’’ In April 2009, Reserve Bank of India (RBI) had mandated all the banks in India to move to a new methodology of calculating interest rates on savings bank accounts that would add interest on a daily basis. This is a significant departure from the earlier practice of calculating interest rate on minimum balance after the tenth of every month. For sometime now, with the annual rate of food inflation hovering around 20% level and the yields on benchmark 10-year government securities around the 8% mark, bankers and home finance veterans were talking about the possibility of a hike in interest rate in the economy. And now with SBI, the country’s largest bank, hiking housing loan rates, industry players are almost sure that interest rates have bottomed out in the current cycle. Lately a number of banks and financial institutions, including the country’s home loan pioneer HDFC, have withdrawn their home loan products at 8% or at a slightly lower rates, and are moving to a more sustainable interest rate structure.

Tagged as: current, customer, home-loans, housing, interest-rates, possibility, rates-on-home

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Construction Giant Shapoorji Pallonji Group to Set up Real Estate Fund

by Paul Joseph April 1, 2010

The 140 year-old Shapoorji Pallonji Group, a homegrown construction giant, is setting up a real estate fund that may participate in developments worth over $2 billion in the next few years, said multiple sources familiar with the development. As part of the move, Rajesh Agarwal, who spearheaded AIG Global Real Estate in India as its Managing Director, is boarding Shapoorji Pallonji Group (SP), sources added. Agarwal is set to formally join SP from tomorrow, April 1. SP, one of India’s most tightly-held corporate houses, is also the largest shareholder in Tata Sons, which controls India’s diversified private conglomerate Tata Group. It is believed that SP has been working on a real estate fund for a while given the group’s interests in construction. The real estate fund is most likely to pursue investments where it will have control over the development rights. While more details on the fund were not available, sources did not rule out the possibility of it being a propriety play, akin to Wipro Chairman Azim Premji’s private equity fund vehicle called PremjiInvests. “The fund could look at developments worth about $2 billion,” said one source but he did not clarify on the exact size of the fund. Shapoorji Pallonji Group is believed to be sitting on large land banks across the country, which will be primed for development as the economic recovery gathers momentum. “Such a fund can come up with a good asset base considering that it will leverage on the group’s execution skills,” added a second source. A top private equity honcho confirmed that he was aware of SP working on a real estate, but did not have details at present. SP Group did not respond to VCCircle’s email query at the time of posting this report, while calls and messages to Rajesh Agarwal also failed to elicit any reply. AIG Global raised $282 million for AIG Real Estate Opportunity – India in June 2008. While construction firms turning developers is not new in India – in fact, some of them have innovated further to pick up ‘construction equity’ in real estate developments – one of them planning a large real estate fund could be precedent setting. The latest development comes at a time when activity in the real estate market is beginning to pick up, and real estate funds, which were dormant for well over a year, return to prospecting potential investments once again. While the real estate asset prices have recovered from the lows of 2008-09, it is still playing below the 2006-07 peak. With valuations improving, some of the debt laden real estate developers are hitting the market to sell-off revenue generating assets. This has thrown up opportunities for “opportunistic acquisitions” of real estate assets, which some of the less-leveraged Indian corporates are pursuing currently. Last year Tata Realty & Infrastructure Limited (TRIL), a wholly-owned subsidiary of Tata Sons, had announced raising of a $700 million offshore fund to invest in propriety real estate projects. Meanwhile, some observers claimed that SP might look at allying with a global marquee investor in setting up the fund. Several global funds had approached the group in the past to work on a large investment platform in the real estate sector, they added.

Tagged as: development, group, indian, infrastructure, possibility, real, real estate, real estate india, time

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Construction Giant Shapoorji Pallonji Group to Set up Real Estate Fund

by Paul Joseph April 1, 2010

The 140 year-old Shapoorji Pallonji Group, a homegrown construction giant, is setting up a real estate fund that may participate in developments worth over $2 billion in the next few years, said multiple sources familiar with the development. As part of the move, Rajesh Agarwal, who spearheaded AIG Global Real Estate in India as its Managing Director, is boarding Shapoorji Pallonji Group (SP), sources added. Agarwal is set to formally join SP from tomorrow, April 1. SP, one of India’s most tightly-held corporate houses, is also the largest shareholder in Tata Sons, which controls India’s diversified private conglomerate Tata Group. It is believed that SP has been working on a real estate fund for a while given the group’s interests in construction. The real estate fund is most likely to pursue investments where it will have control over the development rights. While more details on the fund were not available, sources did not rule out the possibility of it being a propriety play, akin to Wipro Chairman Azim Premji’s private equity fund vehicle called PremjiInvests. “The fund could look at developments worth about $2 billion,” said one source but he did not clarify on the exact size of the fund. Shapoorji Pallonji Group is believed to be sitting on large land banks across the country, which will be primed for development as the economic recovery gathers momentum. “Such a fund can come up with a good asset base considering that it will leverage on the group’s execution skills,” added a second source. A top private equity honcho confirmed that he was aware of SP working on a real estate, but did not have details at present. SP Group did not respond to VCCircle’s email query at the time of posting this report, while calls and messages to Rajesh Agarwal also failed to elicit any reply. AIG Global raised $282 million for AIG Real Estate Opportunity – India in June 2008. While construction firms turning developers is not new in India – in fact, some of them have innovated further to pick up ‘construction equity’ in real estate developments – one of them planning a large real estate fund could be precedent setting. The latest development comes at a time when activity in the real estate market is beginning to pick up, and real estate funds, which were dormant for well over a year, return to prospecting potential investments once again. While the real estate asset prices have recovered from the lows of 2008-09, it is still playing below the 2006-07 peak. With valuations improving, some of the debt laden real estate developers are hitting the market to sell-off revenue generating assets. This has thrown up opportunities for “opportunistic acquisitions” of real estate assets, which some of the less-leveraged Indian corporates are pursuing currently. Last year Tata Realty & Infrastructure Limited (TRIL), a wholly-owned subsidiary of Tata Sons, had announced raising of a $700 million offshore fund to invest in propriety real estate projects. Meanwhile, some observers claimed that SP might look at allying with a global marquee investor in setting up the fund. Several global funds had approached the group in the past to work on a large investment platform in the real estate sector, they added.

Tagged as: country, development, group, india, indian, infrastructure, possibility, real estate, real estate india, time

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Several Foreigners Investing Money from Criminal Activities in Goa Real Estate

by Paul Joseph March 15, 2010

Several controversial real estate deals by foreigners in Goa could well have been funded by proceeds from crime and narcotics trade, an Enforcement Directorate official Friday said. ‘We are probing the possibility of money sourced from proceeds of crime and through sale of narcotics being used to purchase of properties,’ the department’s Assistant Director Jyoti Sharma told media persons here. She said it has also been found that large volumes of money were being illegally routed by several foreign-run companies from tax havens abroad to purchase properties in coastal resort villages in the state. However, she did not name the countries or financial institutions from where the money was being sourced. Sharma was referring to the 350-odd cases being probed by the ED concerning properties purchased mainly in coastal Goa, by individual foreigners or by companies owned by foreign nationals in violation of the Foreign Exchange Management Act (FEMA) and violation of Reserve Bank of India guidelines. ‘Out of the 350 cases, we have put 45 to 50 cases involving companies on fast track. We will be submitting our report within a few months,’ Sharma said. The official said that in several cases where land, which was purchased for setting up hospitality industry units by companies headed by foreigners, was being used for ‘other purposes’. ‘In several other cases we have found that no stated business is conducted. And at times no IT returns are filed at all, which is in contravention of FEMA (Foreign Exchange Management Act) norms,’ she said. The state government 2007 had asked the ED to probe the properties bought by foreigners in the period between 2003 and 2007, after public outcry that large chunks of land were being illegally purchased by foreigners, especially in coastal Goa. Sharma also cited several cases where land graded as ‘agricultural holding’ was fraudulently converted to non agricultural used after it was bought by foriegners or companies owned by them. ‘We have already completed investigation involving a Swiss national, August Thommen, in February last month. He had violated FEMA norms while purchasing 1,000 sq metre land at Anjuna (beach village in north Goa). The government has confiscated the property,’ Sharma said, adding that Thommen had been fined Rs.2 lakh for violating the forex law. She further said that a lot of properties were bought by foreigners, while visiting India on a tourist visa, while FEMA stipulated that a foreigner should be a ‘resident of India’ (residing in the country for more than 182 days) at the time of carrying out a real estate transaction.

Tagged as: countries, country, department, foreign, money, possibility, real estate, real estate developers, time

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