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Mumbai Ranked as the Most Favoured Development Market in Asia Pacific Region

by Paul Joseph July 8, 2011

Mumbai is ranked third as the most promising investment market, and the first as the most favoured development market, in the recent Emerging Trends in Real Estate Asia Pacific 2011, a real estate forecast jointly published by the Urban Land Institute (ULI) and Pricewaterhouse-Coopers (PwC). “Projections for Mumbai in 2011 look good, as the city’s investment ranking rises five spots to third,” the report states, adding that this city is “clearly the best performing and most active real estate market” . Development in Mumbai continues to be an area of interest, with the city ranking first in the 2011 results, up from sec ond in 2010. Oversupply continues to be a serious risk for the area, but respondents “don’t think many people are worried about real estate turning into a bubble again” . “In terms of investment, buying opportunities ‘ring out’ in the retail, apartment and industrial sectors,” the report adds. The report also notes that India’s GDP continues to grow and shows “no real signs of declining anytime soon” . Over the past 30 years, it says, the country has managed to sustain a GDP growth rate average of 10%. Projections for 2011 are 8.5%, and forecasts are for growth of between 9% and 10% by 2015. This is a significant move from the mid-6 % range found in the early 2000s. To support this economic expansion, there has been a large amount of growth in the working population of India. Also, the government continues to make progress in introducing reforms that have helped the country introduce new private equity to capital markets, create a new platform of employment, and inject capital into infrastructure programmes. Exports of both goods and services from this region continue to increase, marking more business interest abroad. Speaking of the region as a whole, the ULI/ PwC report also states that the “cloud has been lifted” from Asia Pacific real estate markets , with the fiscal outlook for most of the Asian countries more promising than that for Europe or the United States. “Many , if not most, Asian economies have rebounded to pre-crisis levels, and real estate markets, although mostly slower, are headed towards some semblance of normalcy,” said ULI Asia Pacific chairman C Y Leung.

Tagged as: delhi, emerging-trends, europe, mumbai, pacific, pune, real estate, real estate india, region, retail, united, urban

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FDI Falls by 28%: Hits 4 Years Low & Trails Portfolio Inflows

by Paul Joseph May 13, 2011 Uncategorized

Foreign direct investments (FDI) last fiscal fell 28% to a four-year low, data showed on Thursday, raising concerns over stability of capital flows. This is also the first time in five years that FDI is lower than portfolio flows. A slowdown in FDI means the economy is not getting enough long-term foreign funds to invest in projects and add physical assets, such as plants and machinery. Provisional data released by the Reserve Bank of India (RBI) pegged total FDI at $27.024 billion as of end March. This included fresh equity in green-field projects, reinvested earnings as well as change in ownership of existing equity by new investors. Investments in new projects stood at $20.09 billion, the lowest that the country has received in the last four years. The central bank had said last week “this was mainly on account of lower FDI inflows under services and construction, real estate and mining. Also, the slowdown in domestic investments has proved to be a disincentive for global investments in the Indian market. If one looks at the Q3′11 GDP growth numbers, the investment growth is less than 7%, even though the economy grew 8.2%”. The bank has warned that the slowdown in FDI is because of concern over stability of capital flows. “The dominance of portfolio equity flows and the decline in FDI raise concern over the stability of capital flows,” it said. AGoldman Sachs report in November 2010 had said, “Given the excess spare capacity globally, FDI may remain weak going forward. Indeed, after the Asian financial crisis of 1997, FDI to the region remained weak for several years. Thus, the Basic Balance of Payments (BBOP) may be in deficit in FY12.” A section of the market feels that since globally FDI is expected to pick up this year, India too could benefit. According to the United Nations Conference on Trade and Development (UNCTAD), growth in global FDI flows is likely to accelerate to 15% to 30% in 2011 from 1% in 2010 and India should benefit from this, said a recent report by Standard Chartered Bank .

Tagged as: banking and finance, basic-balance, economy, fdi, india, indian, investment, property prices, real estate, real estate developers, reserve, such-as-plants, united

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Sathya Sai Passes Away: Question Crops over the Successor of Rs 40,000crore Trust

by Paul Joseph April 25, 2011 Uncategorized

With the passing away of the Sathya Sai Baba , questions have cropped up as to who will manage an estimated Rs 40,000 crore Sri Sathya Sai Central Trust which has been built through donations of millions of devotees and is core of all philanthropic activities under his name. The question assumes significance as the 86-year-old Sai Baba, born Sathyanarayana Raju, who died today, has not named his successor to head the trust. The trust established by the ‘Godman’ in 1972 runs free schools, a University, free hospitals, cultural centres and undertakes development and philanthropic works across 165 countries with money coming from donations of an estimated 30 million devotees. The empire of the trust spreads across Puttaparthi, Hyderabad, Bangalore, Chennai, Kodaikanal and many countries including the United States. It accepts only cheque or cash donation through banks but details of income and expenditure are shrouded in a cloak of secrecy. According to estimates, the value of the trust’s properties, movable and immovable, could be anywhere between a conservative Rs 40,000 crore and a staggering Rs 1.5 lakh crore spread across globe — all tax free, people closely associated with the trust said. The future of this gargantuan empire now hinges on the probable successors who will carry on Sai Baba’s legacy through the management of this trust. Even if the trustees, who include eminent personalities like former Chief Justice of India P N Bhagwati, ex-Central Vigilance Commissioner S V Giri, former CII National President V Srinivasan among others, manage to name a person to chair the trust, whether devotees will accept the name or not, will remain a question-mark. The trust, however, wants to allay fears of any such “vacuum” in carrying forward works envisioned by Baba. “Institutions like schools, university, hospitals and other organisations are run by respective Trusts. There is or will be no vacuum and we firmly believe that Baba will continue to guide the trustees. The interests of the institutions are paramount,” the trust said in a statement issued recently after Sai Baba fell ill.

Tagged as: accept-the-name, india, institutions, organisations, real estate, real estate india, sathya, sathyanarayana, successor, united

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Fears grow of emerging market ‘bubble’

by Paul Joseph October 11, 2010

India Property WASHINGTON: Fears are growing that the flood of cash into emerging markets could provide kindling for the next economic crisis and has already fueled simmering currency disputes. Amid sclerotic growth in the traditional strong markets of Europe, Japan and the United States, emerging giants like Brazil, China and India have

Tagged as: europe, india, india property, japan, property, united

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India Wins Property Tax Battle with New York City

by Paul Joseph August 18, 2010

India has won a seven-year legal battle with New York City with a federal appeals court ruling that nations with diplomatic housing do not have to pay city property taxes. The unanimous ruling by the federal Second Circuit Court of Appeals in Manhattan Tuesday lets India off the hook for $42.5 million in back taxes and interest, and Mongolia for another $4.3 million on their missions to the United Nations. The three-judge panel ruled a controversial June 2009 decision by the State Department to exempt diplomatic staff residences from $7 million a year in property taxes also applied retroactively to the past-due bills. The Foreign Missions Act allows the State Department to issue tax exemptions that pre-empt state and municipal tax laws, the court said. “While there is perhaps some unfairness to the city…this unfairness inheres in the federal government’s unquestioned supremacy in the management of foreign relations,” it said. “Certainly, we’re thrilled with the result,” said Aaron Stiefel, a lawyer who represented India and Mongolia in the litigation. “It’s a complete victory,” he said. “We got everything we wanted.”India and Mongolia were among several nations that were collectively billed a total of $260 million in taxes on property they own in New York. The appeals decision nullifies a lower court’s finding in 2008 that India owed $42.5 million in taxes related to a 26-story tower in Manhattan near the United Nations with 20 floors of apartments occupied by diplomatic employees. Mongolia was ordered to pay $4.3 million for a six-story building with two floors of staff residences while the Philippines was told to pay $10.9 million for a building on a prime stretch of Fifth Avenue that includes commercial tenants. Turkey had settled with the city for $6 million while the Philippines had agreed in a settlement to pay $9 million in property taxes and interest. It was unclear what effect, if any, the appeals ruling might have on the settlements. The city filed suit in 2003 seeking $16.4 million from India and $2.1 million from Mongolia for what it claims are unpaid real estate taxes on residential space. New York City Mayor Michael Bloomberg blasted the State Department last year after it quietly reversed a 136-year-old policy of requiring foreign governments to pay taxes on housing for UN and consular staffers. Officials said the rule was changed because other countries don’t impose apply similar taxes on US properties overseas and the issue was becoming a “diplomatic irritant.” City Corporation CounselMichael Cardozo said the city would take the case to the US Supreme Court. “We are extremely disappointed that the court has upheld the State Department’s extraordinary exercise of power to nullify New York City’s right, as previously upheld by the courts, to impose New York City real estate taxes on foreign missions,” Cardozo said. “This provides a free ride for foreign countries owning certain properties in New York City while unnecessarily burdening local taxpayers. We have prevailed in the US Supreme Court previously on related issues, and again plan to seek review of this decision in that Court.” The Supreme Court had ruled in 2007 that the city could sue countries to try to collect taxes on their properties.

Tagged as: city, real estate india, state, united

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Property Market in Developing Economies Outperform Europe, UK and US

by Paul Joseph July 29, 2010

Property markets in the more dynamic economies of South America, Asia and Eastern Europe are outperforming those in the United Kingdom and Eurozone, according to the RICS Global Commercial Property Survey for the second quarter. The Survey suggests that real estate performance in the United States has shown a marked improvement while in Latin America the commercial property market continues its bull run. Respondents in Peru and Brazil were most upbeat, topping all in the Americas for both rental and capital value expectations. Survey respondents in Canada currently view the market as stable. “The real estate world continues to be split, broadly speaking, between the emerging and developed economies,” said RICS chief economist Simon Rubinsohn. “Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market.” Occupier demand is rising in the majority of countries across the globe with the notable exception of the UK and Eurozone countries where the tough measures that have been taken to reduce fiscal deficits appear to be having a more pronounced impact on the appetite of businesses to take up new space. Significantly, France is bucking the negative Eurozone trend with more material signs of an upturn in sentiment towards real estate reflecting, in part, the relatively resilient performance from the domestic economy. Property professionals in the United States reported a rise in tenant demand across all three sectors for the first time in three years. Brazil is leading the way with the net balance of property professionals reporting a rise in occupier demand moving from 70 percent to 85 percent with markets in Peru and China also performing well. By way of contrast, demand in the UK turned negative for the first time in a year with the net balance falling from a positive 14 percent to a negative 4 percent while the net balances in Spain, Germany and Greece are all in negative territory. Indicators in China remain strong despite measures introduced by the Chinese government to address the property boom. Indicators for occupier demand, rental expectations and the number of investment bidders per property all remain firmly in positive territory. Elsewhere in Asia, the latest numbers from India suggest a strong showing from real estate in the second quarter despite the increase in interest rates. Looking forward into the third quarter of 2010, sentiment toward capital values is particularly strong in France, Peru and Brazil while property professionals are most optimistic on rental increases in Brazil, Hong Kong and Peru.

Tagged as: brazil, chinese, commercial, property, real estate, real estate developers, survey, united

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Singaporean luxury resorts chain Banyan Looking for Majority Stake in Aman luxury resorts

by Paul Joseph July 19, 2010

Singaporean luxury resorts chain Banyan Tree is in talks on buying a majority stake in fellow high-end hotel group Amanresorts, India’s Financial Express newspaper reported Monday. The daily quoted a person familiar with the matter as saying that DLF, the Indian real estate firm that owns Aman, was in advanced talks to sell most of the business for about 350 million dollars. Banyan Tree has a range of interests, from hotels and resorts to spas, shopping centres and golf courses around the world. The newspaper said DLF, India’s largest real estate group, was seeking to sell a “controlling stake” in the group as part of a plan to cut its debt in the wake of the global downturn in the real estate market. It bought Aman for 400 million dollars in 2007. Amanresorts owns and manages 24 small luxury resorts in countries including Thailand, Bhutan, Cambodia, China, France, Morocco, and the United States, according to its website.

Tagged as: india, real estate, real estate developers, real estate india, united

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Property Prices in Dubai Dropping Drastically

by Paul Joseph February 10, 2010

Property rates in Dubai are on a falling spree. Investors will have to wait 7-10 years for better returns, says an expert. Property prices in Dubai are dropping drastically. They may further decline by about 30%, says an expert. Real-estate investors will have to wait for 7-10 years to receive good returns. “There is an expectation of further reduction is property prices by 30% in Dubai. Prices are already one-third of their original levels,” said Pranay Vakil, chairman, Knight Frank India Pvt Ltd. He said, “A villa on Palm Island which was selling for 12 million dirhams about two years back is now available for 4 million dirhams and we expect it to go down to 3 million dirhams.” The peak price for the blocks surrounding the Khalifa Tower reached $20,505 per square metre in 2008, while the current price has dropped by nearly 70%. Dubai’s relentless pursuit of growth received an unprecedented jolt in November, when its heavily indebted flagship holding company, Dubai World, announced plans to restructure loans worth $60 billion. Dubai World’s real-estate arm Nakheel was in the doldrums, after a 50% drop in real-estate prices forced it to ask for a trading suspension of its Islamic bonds. Dubai World has sought a moratorium on its debt obligations for a period of six months. The central bank of the United Arab Emirates (UAE) had stated that it is setting up a facility to provide banks with extra liquidity, as it seeks to battle perceptions that Dubai cannot support its own companies. According to media reports, the key factor behind the crisis was the policy of the UAE central bank. After closing at 4% in October 2006, the yearly rate of growth of the central bank’s balance sheet (the pace of monetary pumping) climbed to 177% by December 2007. In response to this pumping, the yearly rate of growth of UAE’s monetary measure AMS jumped from 6% in October 2006 to 62% by April 2008. This massive monetary inflow supported various projects. In November, research firm Proleads said that some 1,845 projects worth a combined $657 billion were still active in the UAE despite the impact of the global slowdown. The study of the civil construction industry in the country showed that 69% of the total projects were ongoing (not cancelled or delayed). Meanwhile, according to an AFP report, managers of the Burj Khalifa, the silvery, needle-like skyscraper in Dubai, shut down the tower’s 124th-floor sky deck early this week, disappointing hundreds of tourists. The observatory, about two-thirds of the way up the tower, was the only part of the skyscraper open to the public.

Tagged as: dubai, knight-frank, real estate india, united

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