Real Estate News Letter

6th

October– 12th

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 year’s month

Source : Ministry of Commerce and Industry

6.8%

6.3%

7.7%

7.0%

8.6%

6.8% 6.8%

3.9%

2.0%

4.0%

6.0%

8.0%

10.0%

Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14

Per cent

WPI-inflation data (primary articles)

39

51

33 31 34

51

45

31

20

30

40

50

60

07/Oct 08/Oct 09/Oct 10/Oct

Rs billionTrends of FII in equity markets

Buy sell

-1.2

-0.1

1.5

-1.3

-1.0

1.5

2.6

-1.3

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

07/Oct 08/Oct 09/Oct 10/Oct

per centTrends in Nifty and CNX realty index

Nifty CNX REALTY

June 30, 2015.

Repayment for the new loans will be in 360

instalments (224 for principal + 112 for interest +

maximum moratorium of 24 months.) In the case of

existing loans, the original repayment schedule of 168

+ 72 installments will continue.

The Hindu Business Line,06 October ‘2014

Interest Rates

SBI announces revised, liberal

home loan scheme for staff

State Bank of India has revised the housing loan

scheme for employees by incorporating liberal

provisions in terms of maximum limits and expanded

repayment period across categories. The scheme

was last revised in February, 2008. The latest revision

was announced in a corporate circular dated

September 30, 2014.

Group insurance

The new housing loan entitlements were decided on

by a meeting of the executive committee of the central

board held in Mumbai on September 19. The benefit

of revised housing loan scheme will be applicable to

all eligible employees who are on roll as on

September 19. The revised ceiling and interest rates

will be effective immediately to all new loans

sanctioned/ disbursed on or after September 30. The

bank is considering the possibility of covering all new

staff housing loan accounts with a group insurance

policy as an added welfare measure to all employees.

The central board noted that the loan limits fixed six

years ago have lost relevance due to increase in

prices of land and construction materials Employees/

officers have had to resort to borrowing on

commercial rates to complete housing projects or to

acquire ready built-up flats/houses.

Loan conversion

Existing commercial housing loan may be converted

under the new scheme. Option for enhancement of

loans is also allowed to liquidate existing loan, subject

to conditions. On promotion, an employee will be

permitted to draw up the entitlement to the

grade/scale to which he/she is promoted, for repaying

loans taken on commercial/public terms.

The board noted that a number of employees have

raised additional housing loan from the bank at

commercial rates. Such staff members may be

permitted to take the housing loan up to their revised

entitlement for repaying the outstanding housing loan,

subject to conditions. This facility is available only as

a one-time measure and has to be used up before

Centre releases Rs 250 cr to DMRC

for Phase III project

Central Government has released its equity

contribution of Rs 250 crore to the Delhi Metro Rail

Corporation (DMRC) for construction work of Phase

III projects. “We have released an amount of Rs 250

crore to DMRC as part of the Government of India’s

share towards equity for meeting the cost of Delhi

MRTS Phase III projects for the current 2014-2015

year,” said an official of Ministry of Urban

Development. The official said that this amount shall

consist of 25,00,000 shares of face value of Rs 1,000

each.

“The audited statement of account relating to transfer

of this amount of Rs 250 crore to the equity of DMRC

shall be furnished to Urban Development Ministry

after the close of financial year together with a

certificate that the amount has been utilised for the

purpose for which it was sanctioned,” the official said.

He said that a total amount of Rs 7,883.36 crore has

been released earlier as equity to DMRC by Urban

Development Ministry. A month-and-a-half back,

Delhi Government had also released its equity

contribution of Rs 200 crore to DMRC for construction

work of Phase III projects with some “strict” terms and

conditions.

“Interest earned on equity before issue of shares, if

any, would be adjusted against the contribution of

Delhi Government. Besides, DMRC would ensure

time-bound progress of the project. It would also

furnish monthly physical and financial progress to

transport, planning and Finance Department,” Delhi

Government had said while releasing fund to DMRC.

The Pioneer,07 October ‘2014,New Delhi

Infrastructure

ECR to be 4-lane expressway

A year and a half from now, you could be zipping on a

four-lane East Coast Road.The state government

plans to complete four-laning of a 33.5-km section

between Akarai and Mamallapuram by March 2016.

With encroachments removed on the left of the road

heading to Mamallapuram, Tamil Nadu Road

Development Corporation (TNRDC) has started road

laying on the stretch. "Only small hindrances like

electric posts now remain," a TNRDC engineer said.

"Everything else has been demolished and we have

started widening 7km of the road."

On the right of the highway, several people have built

shops despite the government acquiring land several

years ago. "We are assessing the situation now and

will mostly start demolishing the illegal structures

within 15 days," the engineer said. Only around 5% of

the Rs 272.1 crore project has been completed so far.

"Removing encroachments is the biggest challenge.

When that is done, road-laying can be follow quickly,"

the engineer said.

When the stretch is widened from two-lane to four-

lane, nine of 13 curves on the road will automatically

be straightened. The 9.5-metre-wide road will be

widened to 23.5 metres. Officials of TNRDC say traffic

will be able to move much faster and road safety will

improve when the road is a four-lane expressway.

"The curves in the road currently are designed for a

maximum speed of 40kmph," the engineer said.

Alongside the road widening, the TNRDC will also

construct a median on the stretch, to prevent head-on

collisions, the primary causes of fatal accidents on the

highway. Officials of TNRDC said Rs 8.42 crore has

been set aside for streetlights. The project includes the

construction of 19 box culverts and a major bridge at

Muttukadu. One bridge in each direction will come on

either side of the existing bridge. "There will be a 1m

gap between the new bridge and the old one. The new

one will also be about 3 metres higher than the old

one," the engineer said. "While the old one will be

abandoned, it won't be demolished for now."

The Times of India,06 October ‘2014,Chennai

manufacturing. Also, issues like the Vodafone (tax)

controversy, transfer pricing and settlement issues

are expected to be dealt in a sane manner as the

Government has started addressing them accurately.

If we can have a growth rate of about 7 per cent, most

of the sectors will start performing well. We believe

the real estate industry is doing better in the overall

economy, so if GDP grows 6 per cent we should grow

9 per cent.

Do you think the Real Estate Investment Trust

(REIT) announced in the Union Budget will be

beneficial for the sector?

There will be misgivings as well as challenges as far

as the REIT structure is concerned. If someone wants

to play safe and invest in commercial assets, for

example International Tech Park in Bangalore, you

can see there is complete transparency with a near

full occupancy for the last 10 years. So, how things

will pan out only time will be able to tell, but one

cannot deny the fact that this is the first and critical

step in the right direction.

Can you tell us how have you managed the

company’s cash flows?

The investment graph of our company shows that we

have an annual cash flow of around Rs.2,800 crore

now. We have constantly improved our project profile,

area profile, launch profile and this has been possible

by keeping an eye on overall debt. This year, we are

doing things differently. We have started using the

available resources to a greater advantage by getting

certain opportunities like investing over Rs.100 crore

in Pune, Rs.170 crore in Kochi along with

Purvankara.

In the coming months, there will be more

opportunities and we should be able to improve as

well as keep debt under control. Today, we are able

to raise the debt at around 12 per cent, whereas in

the market rates are as high as 13-15 per cent and in

some cases, between 17 and 18 per cent. As far as

funds are concerned, 61 per cent is company-funded

assets and the rest is from the banks. The total debt

was around Rs.1,500 crore as on June 30 and last

year it was around Rs.1,300 crore.

The Hindu Business Line,06 October ‘2014,Mumbai

Industry News

‘If GDP expands 6%, real estate will

grow 9%’

Real estate player Sobha Ltd has had a tepid first-

quarter because of the slowdown in the economy. It,

however, expects to do better as it believes the “feel

good factor” among investors is back. In an interview

with BusinessLine, Sobha’s Vice-Chairman and

Managing Director JC Sharma shares the company’s

plans to pare debt and boost growth.

How has the first quarter been and the second

shaping up for the company?

It won’t be as good as the subsequent quarter, but we

believe the kind of presence we have and the (project)

pipeline will sort out the things. Eventually, we expect

to do well. For the next few quarters, we expect to see

improvement, though we know this improvement is

more due to the sentiment part, and the feel good

factor.

What about demand for the company’s projects?

I believe that from June onwards, there has been a

good improvement in Bangalore. We have reasonable

presence in Kerala, which too has seen an

improvement. Pune is also good for us, though the

NCR (national capital region) still remains challenging.

Overall, the coming quarters should be better.

Can you share with us city-wise contribution to

your top line?

Bangalore contributes between 30-35 per cent, though

it was 40 per cent last quarter. Earlier, Bangalore

contributed 50-55 per cent. But there have been

occasions when NCR contributed as high as 70 per

cent. But Bangalore has been a consistent performing

market in real estate for India as well as for Sobha.

What is the outlook for the next few quarters for

Sobha?

We expect to perform better (in the coming quarters)

as the market too is expected to perform better. There

has to be an improvement in investment cycle in India

as most companies have stopped investing. There is a

need of that investment cycle to start again and the

manufacturing process must be seen at the ground

level. India is booming with the excellence in

A realty firm from the NCR, CHD Developers, has

come out with festival offers under three categories -

existing client base, prospective buyers and

influencers. "For the existing customers, we are

offering one per cent discount on payment received

on or before time on EMIs (equated monthly

instalments). Besides, a three to four per cent

discount across all properties for a purchase made

during the festive season," said Ravi Saund, its head

of operations.

For channel partners, CHD is arranging foreign trips

for sale conversion target achievements and offering

a flat commission to influencers other than a non-

sales person, whose referral would lead to conversion

of a unit sale.

Brotin Banerjee, managing director, Tata Housing,

says: "Due to the recovering economy, there is some

improvement, resulting in an increase in enquiries.

Also, there is stability in prices over the past few

quarters. The stability in the market has resulted in

buyers coming forward in this festive season to

purchase their dream homes. We believe the

economy should completely recover by the first

quarter of next year."

However, despite the increased marketing activities

by developers, many experts feel a revival in the

sector is at least a year away. "Investors are still

shying away from coming in the realty market. Unless

the market starts picking up, which is expected by

next year-end, and all economic parameters are

moving in the right direction, it will be difficult to

attract investors (who look for appreciation in the

property in the short to long term)," says Magazine.

Over recent years, the realty market has been

witnessing a slowdown. Declining sales, high

inventory and a fund crunch have marked the past

two years for real estate developers, now banking on

the festival season to push up sales and give a

momentum to the sector.

Business Standard,06 October ‘2014,New Delhi

Industry News

Raining discounts for property

buyers this season

The realty market has been abuzz with activity this

festival season. Discounts, freebies, various financing

schemes and advertisements across various media

are making buyers sit up and look for the best deal.

On the back of positive sentiment, developers are

even going ahead with new launches, in contrast to

hardly any new projects in the past two years. This

was mainly due to an economic slowdown and a need

to clear the backlog. As many as 100 new launches

have been planned this season, mainly in the National

Capital Region (NCR), Mumbai, Bangalore and Pune.

One developer, Lotus Greens, launched four projects

on the same late last month, with an investment of Rs

4,400 crore.

This festival period from October to December is

expected to garner sales of at least 60,000 units

across seven major cities, almost double that recorded

in the past two years. Average annual sales are

expected to reach 200,000 units this year, with a good

festival season contributing 30-40 per cent to the total.

In the past two years, sales were 120,000-140,000

units annually, with very few of those during the festival

season, according to sector estimates.

"This time (festival season) has created a buzz. This

will definitely encourage more people to come and

invest in the real estate. And, there is more on the

supply side as well, with so many new launches. The

activity on the ground will improve and this a good time

for end-users to enter the market," said Anshuman

Magazine, chairman and managing director, CBRE

South Asia.

Developers and brokers are giving discounts in the

range of eight to 12 per cent, along with offers such as

free parking space or club membership, beside free

LEDs, iPhones and gold coins, along with a chance to

win tickets to a foreign trip.

Many developers are also offering schemes wherein

one pays 10/20 per cent upfront at booking and rest at

the time of possession. In between, the buyer pays no

monthly installments.

Big realty sets sights on Port City

The Port City's newfound status as Andhra Pradesh's

largest city seems to be attracting national realtors to

its shores. In fact, if realty industry sources are to be

believed, several national players, including the likes

of Indiabulls, Emami Realty Apex Group, Aditya

Construction Company and NorthStar Apartments,

have already charted out a foray with housing

projects in the city. So far, the Vizag market has been

catered to primarily by local players.

At the same time, Shriram Properties, which has

already begun construction on an 80-acre plot, is also

planning to launch a mega Presidential Tower project

at Madhurawada comprising nearly 15 towers of 20-

25 storeys with two units on each floor. According to

Shriram Properties senior marketing manager Ravi

Shankar, the premium project will comprise duplex

and triplex apartments with a built-up area of around

4,000 sqft and 6,000 sqft, respectively.

Sources said that Lansum Estates is also

constructing 35-storeyed residential twin towers,

which is expected to be the tallest residential complex

in Vizag. The project will have 650 flats spread over

an area of 4.2 acres in Seethammadhara.

Realty sources said that Indiabulls group is also

constructing around 500 flats in Madhurawada over

an area of 4.5 acres. Sources added that Aditya

Construction Company, which is constructing housing

projects comprising around 300 flats at Madhurawada

and Rushikonda, is also planning to take up another

400-flat project in Madhurawada. Also, NorthStar

Homes, which has various projects in Hyderabad, is

taking up the construction of a 150-apartment housing

project in MVP Colony.

While market sources indicated that Emami Realty

has clinched a deal for 20 acres near Madhurawada,

a spokesperson for the firm dismissed it as a rumour.

However, the spokesperson said that the company

feels Vizag is one of the cities offering a huge

potential as it is an industrial base and that the

company would consider looking at Vizag if there

were suitable opportunities.

Industry News

Less than a lakh applicants so far

for DDA scheme

With just three working days to go for the Delhi

Development Authority’s (DDA) housing scheme 2014

to close, less than one lakh applications has been

received by the land development agency till Saturday.

The housing scheme 2014, with 25,034 flats on offer,

is DDA’s biggest scheme till date but with the figures

that have emerged till now, it might go down as the

scheme that got the poorest response.

In the 2010 housing scheme of DDA, about 16,000

flats were on offer and the number of applications that

came was 7.4 lakh. For the latest scheme, while the

number of flats is much more, the number of

applications received till the last working day was just

92,000. Unless there is an unprecedented rush for

filing forms in the last three working days beginning

Tuesday, it seems unlikely the response this time

would be anywhere near the 2010 scheme figures.

“We have sold more than 16 lakh forms through our

office counters and bank branches and we expect a

large number of these to be filled and submitted but the

response till now has been very poor,” said a senior

DDA official who didn’t wish to be named. One major

reason, according to DDA officials, is the clause of a

five year lock-in period introduced for the first time.

According to the clause, the flats wouldn’t be

registered in the name of the allottee till five years from

the date of possession. The idea is to keep speculators

at bay and encourage only those who want to live in

their allotted flats.

“It appears that speculators and people who want to

get a DDA flat only for investment purposes are

keeping away from applying as most people do not

want to park their money for five years,” said the

official. Though the total number of flats is the biggest

offered by DDA ever, the lion’s share of it — 22,627 —

consists of one bedroom flats. Number of three

bedroom flats is just 21 and that of two bedroom flats

is 561.

Hindustan Times,06 October ‘2014,New Delhi

markets have launched subvention schemes in

existing projects to perk up the demand.

Only 27 new projects were launched this September

across the top 15 cities against 279 in the same

month last year, according to PropEquity. "There is

too much existing inventory waiting to be sold," said

Samir Jasuja, managing director at PropEquity.

Santhosh Kumar, chief executive-operations, at

property advisory firm JLL, said there is not enough

confidence among developers to launch new projects.

"Sales during the festive season are much lower than

expectation," he said.

Brokers say many buyers are making enquiries, but

sales are still not happening at the pace that is

usually associated with the festive period. Abhishek

Anand of Noida-based brokerage KR Associates said

his firm had sold 40-50 apartments every week during

the 2012 festive period, but now they are hardly able

to sell five. "Buyers are still a scared lot," he added.

But with the job growth data for the quarter to

September reflecting a two-year high, some builders

see a revival in the real estate market by the end of

March. "The sentiments have started to change, but it

will take time for sales to come back," said Arora of

Supertech.

Sanjeev Srivastava, managing director of Assotech

Developers, said this is just the beginning and sales

may pick up over the next few months. "Sales might

not be up to the mark now, but things are improving

fast," he said.

Demand for homes is also expected to improve on

the back of higher office-leasing activity across the

country in the last two quarters, which would mean

creation of more jobs. Several large office-lease deals

were signed in the past few months.

According to an informal survey of top property

consultancies in India, top corporates 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 Economic Times,08 October ‘2014,New Delhi

Industry News

With the US government offering to extend support for

turning Vizag into a smart city and the state

government planning to make it into an IT hub, realty

sources expect many other construction giants to troop

in to tap the city's potential. "Vizag is going to be a hub

of activity in the next three to five years, with several IT

companies slated to set up base in the city thanks to

the initiatives being taken by the state government.

Moreover, Vizag will also be the financial capital of the

new state, so it makes all the more sense for realty

houses to tap the market before it becomes too

pricey," said a developer.

"The city is also going to gain from the Vizag-Chennai

industrial corridor and slowly but surely land prices are

set to rise in the coming days. If construction

companies are late in seizing the opportunity, it will be

very difficult for them to offer competitive prices in the

market," said the manager of another construction

company.

The Times of India,07 October ‘2014,Hyderabad

Real estate market cold as realtors

fail to woo customers this festive

season

The festive season has failed to bring cheer to the real

estate market, with builders and brokers reporting

"notso-encouraging" sales over the past two weeks.

Unlike the boom years, builders this year had resisted

the temptation to launch new projects in the season,

focussing instead on reducing the inventory that has

piled up over the past few quarters.

According to property research firm Liases Foras,

there were about 7.6 lakh unsold apartments across

India at the end of June. "There isn't such a big boost.

The festive season is not so encouraging this year,

despite the offers," said RK Arora, managing director

at Noida-based real estate firm Supertech. "But we are

hoping for a turnaround soon.“The company has

launched a festive season scheme for its existing

projects in Noida, where buyers can pay 10% at the

time of booking and the rest on possession. Real

estate market cold as realtors fail to woo customers

this festive seasonSeveral other builders across

about the smart city concept.

“Companies push the concept based on their agenda

and there is no holistic view,” said Ashwin Mahesh,

CEO of Mapunity, which builds GIS and mobile

technologies for government departments.India

currently has 360 million people living in cities and

this number is expected to double by 2030, which is

expected to put pressure on resources such as water

and electricity, according to a report released by CII

and PwC.

The Hindu Business Line,09 October ‘2014,Bangalore

Industry News

Centre, States divided over concept

of ‘smart city’

In what could be a standoff similar to the GST rollout,

the Central and State governments are divided over

the implementation of smart city projects. Addressing

businessmen at a conference organised by CII on

‘Infrastructure and Technology Opportunities in Smart

Cities,’ Karnataka government officials pointed out that

the concept of smart city should be looked into more

closely from a physical infrastructure point of view,

rather than implementing technology to manage traffic

or put in fancy e-toilets.

Reservations

“First, there is a need to improve physical

infrastructure, then comes the rest,” said Roshan Baig,

Minister for Infrastructure, Karnataka. Vandita Sharma,

Principal Secretary, Infrastructure Development

Department, Karnataka, added that the government

will not use technology just for the sake of it, unless a

large number of people can afford to use it.

The officials maintained that it is a State subject and

the Centre, unless it is funding these projects, should

not dictate terms. Also, there are differences of opinion

among stakeholders on the definition of ‘smart city’ and

whether it should be a public-private partnership (PPP)

or completely private initiative.

“Many of India’s growing cities are suffering from years

of inadequate investment in infrastructure and it is time

the government remedies the situation,” said

Mohandas Pai, Chairman, Manipal Education

Services. Some stakeholders pointed out that a

framework is needed for implementing ‘smart city’

projects and making it work for a large number of

people.

“We need to work on a sustainable roadmap, which

should be come under the purview of an urban

services regulator,” said V Ravichandar, Chairman,

Feedback Consulting.

Lack of clarity

Industry watchers also believe that not only the

government but even the private sector is not clear

Realty player Amit Enterprises in

talks to raise Rs 100-150 crore

Pune-based real estate developer Amit Enterprises

Housing Ltd is in talks with three to four fund houses

to raise Rs 100-150 crore as it prepares to launch

five projects in the next three months, said senior

officials. The company today announced the launch

of its affordable residential project ‘Astonia Classic’ at

Undri in Pune.

“There is lot of interest from investors to invest in

real-estate. We are in talks with atleast two to four

funds. These are investments for specific projects.

The talks are at advance stages and we are yet to

decide on the fund houses,” said Kishor Pate,

chairman and MD, Amit Enterprises Housing.The

company has lined up five projects for launch in the

next six months that include locations like Sahkar

Nagar, Ambegaon, Punawale and Baner Road in

Pune along with a premium residential project at

Prabhadevi in Mumbai. It already has a township of

2,000 plus homes under construction in Nashik. It

has a total land bank of 400-450 acres. Of this about

200 acres is in Kalyan.

In 2010, Ask Group, a private equity firm, had

invested Rs 30 crore in Amit Enterprises project in

Baner area.They are looking for an exit,” added Pate.

Amit enterprises that has developed a total of 4

million square feet of propert in the last 31 years, has

plans to construct over 7,000 plus homes in the next

five years that involves construction of over 8 millions

square feet. The Astonia Classic project is spread

over 15 acres and will have 12 towers. The project

will have only two-bedroom flats with 905 square feet

area. As a special launch offer, the company is

providing an all inclusive price of Rs 50 lakh for the

first 100 customers.

“We see a huge opportunity in the affordable housing

segment. Most of the projects that are being

launched are in the category of Rs 1 crore and above

and in that segment sales to take some time as the

client is different. But in the affordable housing

scheme especially in the Rs 50-75 lakh range we

have not seen any demand-supply issue,” said Pate.

Private Equity News

US private equity firm Kohlberg

Kravis Roberts to invest Rs 750

crore in 2 realty projects in metros

US private equity firm Kohlberg Kravis Roberts & Co

has made its entry in the country's real estate sector by

finalising investments of Rs 750 crore in two property

projects. KKR has struck a structured debt transaction

for Rs 400 crore for the Bhartiya Group's integrated

township project in Bangalore, two people with direct

knowledge of the transactions said.

It also agreed to provide a Rs 350 crore structured

loan to the Wadhwa Group's luxury home project in

west central Mumbai, they said. The group will use the

money to repay other lenders of the project, where the

cost of apartments ranges from Rs 1.5 crore to Rs 10

crore. The Bhartiya Group plans to invest Rs 10,000

crore in the township project, which includes houses in

various formats, an IT zone and a shopping district.

The project, which will come up on 125 acres of land in

north Bangalore, will be developed over 7-10 years.

"These two investments represent KKR's commitment

to participate in India's long-term growth story for the

sector. The idea is to do investments in a calibrated

manner with high quality partners," one of the people

said.

It also agreed to provide a Rs 350 crore structured

loan to the Wadhwa Group's luxury home project in

west central Mumbai, they said. The group will use the

money to repay other lenders of the project, where the

cost of apartments ranges from Rs 1.5 crore to Rs 10

crore."These two investments represent KKR's

commitment to participate in India's long-term growth

story for the sector. The idea is to do investments in a

calibrated manner with high quality partners," one of

the people said. The focus on the Indian real estate

market comes after KKR's broader plan to move

beyond leveraged buyouts worldwide. Ralph

Rosenberg, a real estate industry veteran who was

previously a partner at Goldman Sachs Group, joined

KKR in 2011 as the global head of its real estate

platform.

The Economic Times,06 October ‘2014,Mumbai

developer is close to completing construction of

phase I of the project and is in advanced stage of

construction of phase II."The loan disbursement will

be made in tranches linked to the progress of

construction, while repayment is expected to be

completed in 30 monthly installments starting from

March 2017," said one of the people quoted earlier.

The Economic Times,08 October ‘2014,Mumbai

ASK to launch its fourth real estate

fund

ASK Property Investment Advisors, the real-estate

private equity arm of ASK Group, announced on

Wednesday the launch of its fourth real estate fund -

ASK Real Estate Special Opportunities Fund II, which

aims at raising Rs 1,500 crore. The fund will invest

predominantly in self-liquidating residential projects in

six major cities — Mumbai, Pune, Chennai,

Bangalore, Delhi-NCR and Hyderabad. The fund

raising for the ASK Real Estate Special Opportunities

Fund II will be open for a year, an official from ASK

Group said.

Currently, ASK Group manages Rs 2,100 crore of

real estate assets under management. With the

launch of Rs 1,500 crore real estate fund, it will be

aiming for Rs 4,000 crore of real estate assets, the

company said in a release. Sunil Rohokale, MD &

CEO, ASK Group said, “Our previous real estate

funds have generated superior returns during tough

times. This has encouraged us to launch a larger

fund considering the opportunities in the markets and

investors are willing to invest with a group that has a

focused investment strategy with impeccable track

record. We intend to raise this through domestic

institutions and high net-worth individuals.”

“Our ability to repeat deals with existing partners has

been a differentiator reflecting our understanding and

strong relationships,” Rohokale said. Amit Bhagat,

MD & CEO, ASK Property Investment Advisors,

said,“our focused strategy of mid-segment residential

projects and partnering with regionally strong reputed

developers has been appreciated by investors.

Investors have appreciated our risk management

Private Equity News

The possession for all the flats in the Astonia Classic

project will be done in two years. “We have already

booked 200 flats, now we are opening up our

marketing channel,” added Rohan Pate, director, Amit

Enterprises.

The company is also looking for redevelopment

projects in Pune city area. “We have done a lot of

redevelopment projects in the Pune city area in the

past. Some of our projects itself are completing 20-25

years and several people have approached us. We

may soon announce are foray again in this segment,”

added Kishor Pate. The company which has about 35

acre land in Hinjewadi, a fast developing IT hub, may

also look at developing a IT park.

Business Standard,07 October ‘2014,Pune

ICICI Bank-led consortium inks deal

with Wadhwa Group

A consortium led by ICICI Bank entered into a

milestone debt funding agreement with realty

developer Wadhwa Group and its joint venture partner

for around Rs 450 crore.The construction finance,

carrying nearly 14% borrowing cost, is for a 12-acre

residential project in Mulund, a suburb of Mumbai, said

two people familiar with the development. The

consortium has already disbursed Rs 150 crore to the

developer under the agreement, which was signed last

week.

The project is being developed as a joint venture

between Wadhwa Group and another realty developer

that owned the land parcel on LBS Marg between

Nahur and Mulund. The project has an estimated

saleable space of 1.5 million sq ft. Construction is

scheduled to start in January. The consortium led by

ICICI Bank also includes ICICI Home Finance

Company. An email query to ICICI Bank did not elicit

any response.

A spokesperson of Wadhwa Group also declined to

comment. Recently, US private equity major KKR

entered into an agreement to invest in Wadhwa

Group's 18-acre high-end residential project, The

Address, at Ghatkopar suburb of Mumbai. The

Private Equity News

combined with margin of safety yielding multiple of

capital. We have demonstrated track record of 15

performing investments in five cities.”

The Group has successfully raised two domestic funds

and an offshore fund. ASK Real Estate Funds has

already announced first exit with a multiple of 2.45 in

just over 2 years and second with a multiple of 2.35 in

Pune in just over 3 years. ASK Group manages assets

of more than US $1 billion of its clients in equity

PMS(portfolio management services), wealth advisory

and real estate PMS, the company said.

Financial Chronicle,09 October ‘2014,Mumbai

Building construction norms to be

simplified in 3 months

The urban development ministry has set a three-

month deadline to notify simplified rules for obtaining

sanctions for building construction in Delhi.

In an official statement, the ministry on Tuesday said

that the proposed Unified Building Bylaws, which

seeks to speed up grant of sanctions, will be now be

put in the public domain so that citizens can share

their suggestions.

The decision was taken following a direction from

urban development minister Venkaiah Naidu for early

notification of simplified and user-friendly building

bylaws in place of the current bylaws, which have

been in force since 1983.

Under the existing building bylaws, sanctions for

building construction take more than the stipulated 60

days owing to the complex procedures,

documentations, rules and their open ended

interpretation. "The present norms are so complex

that the common man often ends up facing more

problems and government officials have greater

liberty to interpret them. The idea is to put all of them

under one category and make the provisions clear for

easy understanding and interpretation," an urban

development ministry official said.

People can send their views in the next two weeks.

Thereafter, a consultative workshop will be organized

involving all stakeholders including experts, architects

and citizen bodies before notifying the final building

by-laws.

The proposed building by-laws also intend to

incentivize green and energy efficient construction. "A

simple and self-explanatory version of bylaws along

with simplified proformas is intended to be made

available which facilitates easy interpretation. Self

sanction by architects and electronic processing of

sanctions by the local authorities are sought to be

provided," an official release said.

The Times of India,08 October ‘2014,New Delhi

Regulatory Buzz

Reits may not get complete pass-

through status

Contrary to a promise made in the Budget for 2014-15,

the proposed real estate investment trusts (Reits)

might not get a full pass-through status. Reits are listed

entities investing in income-producing real estate

assets, the earnings of which are mostly distributed to

shareholders. While Budget 2014-15 had announced

pass-through status for these trusts, the Securities and

Exchange Board of India (Sebi) announced the

guidelines for Reits late last month.

Pass-through status means taxes on the income

distributed by Reits to unit holders will be paid by unit

holders and not the Reits. This was one of the major

demands of those interested in coming out with Reits.

However, tax experts say a complete pass-through

status has not been given to the trusts for the purpose

of taxation. Provision for tax on Reits is contained in

the Finance Bill, 2014.

Hemal Mehta, senior director, Deloitte India, explained

the Sebi norms allow Reits to either acquire the shares

held in a special purpose vehicle (SPV) by the

developer or acquire the real estate asset directly

under the trust. If a developer transfers shares held in

an SPV to a Reit, capital gains tax would not be

immediately applicable.

The developer would be liable to pay when he sells

units of the Reit to investors, which may be retail

investors on a stock exchange. At this time, capital

gains tax would be payable by the developer on sale

price of units minus indexed cost of holding of shares

in the SPV.

If it is interest on units, then the SPV will pass it to the

Reit, which will cut the withholding tax - 10 per cent in

case of resident Indians and five per cent in case of

non-residents. The unit holders will pay tax on such

interest depending on their income slab and take credit

of withholding tax. Non-resident will pay according to

rules in his country, but nothing further in India. In this

case, it is a some sort of a pass-through.

Business Standard,06 October ‘2014,New Delhi

Public Markets

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will have a built up space of 4,000 sq ft.

According to managing director M Narsaiah, the

project, work for which is already underway, will be

ready in about two years. The villas will cost Rs 4

crore. The location of the project, close to the work

hubs at Gachibowli in Hyderabad, will enable the

developers to target the business community and the

top management of the workforce nearby. The units

can be booked by paying about 25 per cent in three

months the balance as per progress of the project.

The booking advance is Rs 5 lakh.

The project will be vastu compliant and will have

round the clock water supply, centralised security

system, solar power and generator back-up. There

will also be ample parking facilities, mini theatres,

cafetaria, facilities for indoor and outdoor games, fully

equipped gym, a multi-purpose hall, party lawns,

library, guest rooms, conference rooms and

meditation hall among others, said Narsaiah.The

project will also have a yoga studio, waiting lounges,

spa and massage centre, swimming pool, children

play area, hobby centre as well as landscaped

gardens, he said. According to Narsaiah, the real

estate market conditions are improving and the

demand for highend residential projects are on the

rise.

Financial Chronicle,09 October ‘2014,Hyderabad

Mahindra Lifespace unveils

affordable housing project in

Mumbai

Mahindra Lifespace Developers, the real estate arm

of Mahindra Group, today launched its second

affordable housing project under its ‘Happinest’

vertical at Boisar near here. “Our intent is to provide

good quality housing at affordable rates. We have

decided to undertake two pilot projects — one in

Chennai, which we have already launched in August

and the second one is in Boisar (in Maharashtra),”

company’s Managing Director and CEO Anita

Arjundas told reporters here.

Residential

Godrej Properties adds new

housing project in Mumbai

Realty firm Godrej Properties Ltd today said it has

entered into an agreement with a land owner to

develop an affordable housing project near Mumbai.

The project will have 1.3 million sq ft of saleable area.

“Godrej Properties has entered into a development

management agreement to develop a property situated

in Badlapur, Mumbai Metropolitan Region. It will be

developed as an affordable housing project,” Godrej

Properties said in a statement.

Godrej Properties is the real estate arm of the Godrej

Group. “We are happy to add this new project in

Badlapur, which strengthens our development portfolio

in Mumbai. We will seek to ensure that this project

delivers an outstanding lifestyle for all its residents,”

company’s Managing Director & CEO, Pirojsha Godrej

said. odrej Properties is currently developing

residential, commercial and township projects spread

across 103 million square feet in 12 cities.

Mumbai-based Godrej Properties posted 16 per cent

increase in its consolidated net profit to Rs. 45.61 crore

for the quarter ended June against Rs. 39.47 crore in

the year-ago period. Total income rose by 49 per cent

to Rs. 363 crore in the first quarter of this fiscal

compared with Rs. 244 crore in the corresponding

period of previous year.

During the quarter ended June, Godrej Properties’

sales bookings rose to Rs. 824 crore from Rs. 606

crore in the year-ago period. In volume terms, sales

bookings increased to 1.09 million sq ft from 0.6 million

sq ft during the period under review.

The Hindu Business Line,07 October ‘2014,New Delhi

Shantha launches luxury villa

project near Hyderabad

Shantha Sriram constructions has announced a luxury

villa project — Spring Villas — at Manikonda near

Gachibowli. The gated community project will have

limited number of villas built in 325 sq yds. Each unit

Residential

The company, this year in June, had launched a new

business vertical called ‘Happinest’, focused on

developing affordable housing projects.

Spread across over 14 acres, the Boisar project offers

1RK, 1 and 2 BHK apartments in the range of 351 sqft

to 695 sqft and would have a total of 1,400 units. The

apartments will be priced between Rs. 9.1 lakh to Rs.

17.5 lakh. In the first phase, where construction will

commence from next week and is scheduled to be

completed in a year, the company will build nearly 359

units.

When asked whether the company is looking at other

locations to launch similar projects, Arjundas said,

“There is a huge demand for affordable housing. We

are evaluating opportunities and we may come up with

such projects in Maharashtra itself considering the

increasing demand for affordable housing and

development of infrastructure and industries in the

state.”

The company expects the business to contribute

nearly 20—25 per cent of its revenues in the next few

years. ‘Happinest’ endeavours to meet the housing

needs of families with current combined monthly

income of Rs. 20,000 to Rs. 40,000, Arjundas said.

The company has tied up with credit scoring agencies

like Inventure and micro home finance companies like

Mahindra Finance and Muthoot to reach out to right

customers.

The Hindu Business Line,10 October ‘2014,Mumbai

manufacturing and services sectors is expected to

help resuscitate demand for corporate office space in

the forthcoming quarters.” Bangalore, the IT hub of

the country, has seen 16 transactions in the one lakh

sq.ft and above category in the first six months of

2014, leasing out a total of 36.9 lakh square feet

office space. Hyderabad has seen five deals with 7.47

lakh square feet leased out in the first half of the year,

data sourced from global property consultant DTZ

reveals.

“E-commerce is taking a large share of the office pie

as companies foresee rapid growth in their

businesses in the next few years,” says Satish BN,

executive director (south), Knight Frank India. Apart

from the positive sentiment that is riding high on India

Inc post a stable government at the Centre,

infrastructure development in terms of metros, roads

and ports is expected to prove a shot in the arm for

commercial leasing activity, especially in cities that

have not seen much growth in commercial space off-

take like Kolkata and Hyderabad.

“Demand for office space in Kolkata is slowly picking

up post June. High quality education institutes and

healthcare facilities, along with educated skilled

labour, port, road and air connectivity, is driving

demand in city’s commercial real estate,” says

Surekha Bihani, transactions head (Kolkata), Jones

Lang LaSalle India. The IT/ITeS segment is likely to

remain the major contributor to Kolkata’s overall office

space absorption, while significant supply addition is

expected in the peripheral locations of Rajarhat and

Salt Lake by end-2014, CBRE notes in a July 2014

report.

As for Hyderabad, IT corridors of Gachobowli and

Madhapur are seeing an increase in leasing activity

post the resolution of the Telangana issue, says

Satish of Knight Frank.Moreover, the rents when

compared to Mumbai or Delhi are low in other Indian

cities, which aids in cost control. In Mumbai and

Delhi, too, it is the peripheral business districts in the

suburbs that are seeing absorption in office space

due to competitive rentals. Ravi Ahuja, executive

director, Cushman and Wakefield India, says:

“Sectors like e-commerce operate on a high volume

less margin model, so rents play an important role in

Commercial/ Retail

Ground realty: Small cities lap up

office space

With high rentals, Mumbai and Delhi are losing out on

demand for office space, while cities like Bangalore,

Hyderabad, Kolkata and Pune are gaining currency.

Looking for large spaces, e-commerce, telecom and

IT/ITeS firms are preferring to set up base in cities that

can offer both space as well as lower rentals. Over the

past year or so, Accenture, SAP and Morgan Stanley

have leased out between 1-2 lakh square feet (sq ft)

spaces each in Bangalore. Pune, of late, has seen

some good traction in commercial and office space

leasing.

According to Jones Lang LaSalle India, Pune saw

approximately 4.7 million sq ft of Grade A office space

leased in 2013, garnering a share of 17.4% in the total

commercial/office space leasing in India. Earlier this

year, US-based supply chain solutions company

Flextronics leased 1.08 lakh sq ft space in the city,

which has become home to a number of multi-

nationals like Barclays, AXA, Calsoft and HSBC, to

name a few.

Capgemini, Symantec Space, UHG, Karvy are some

companies that have leased large office spaces in

Hyderabad, while British Telecom and Jacobs

Engineering leased 50,000 sq ft space each in Kolkata

recently. Among big names back home, Reliance Jio is

understood to have picked up a total of 1.15 lakh

square feet space between two offices in Kolkata’s

upcoming business district of Rajarhat and Salt Lake

Sector V area.

Home-grown e-commerce firms Flipkart, Snapdeal and

Jabong are all said to be looking for large

commercial/office spaces. Flipkart is said to be looking

to lease one million square feet space in Bangalore.

The company reportedly plans to lease 3-4 lakh sq ft in

the first year and the balance over the next two to three

years. The industry is estimating that requirement of

the other two companies is also likely to be in the

range of 0.5 to one million sq ft.

Said Anshuman Magazine, chairman and managing

director, CBRE South Asia, “Rejuvenating the

checks, Blackstone has managed a slew of

acquisitions this year.

In September, Blackstone bought two properties—a

special economic zone (SEZ) in Pune and an

information technology (IT) park in Noida—from IDFC

Alternatives Ltd, the PE arm of IDFC Ltd, for Rs.1,100

crore. Noida also happens to be the fund’s first

investment in the National Capital Region (Delhi and

its environs), and it is now also looking at another

transaction there.

In September, Blackstone committed Rs.200 crore for

a 50% stake in a 6.5 acre project in Bangalore that

will have a Four Seasons hotel and luxury homes.

Blackstone, with its partner Embassy Property

Developments Pvt. Ltd, bought it from Goldman

Sachs Group Inc. and real estate firm Century Real

Estate Holdings Pvt. Ltd.

In April, it invested Rs.550 crore to acquire a 60%

stake in Vrindavan Tech Village, an SEZ in

Bangalore, to be developed by Embassy Property

which invested Rs.450 crore. In another large

transaction, Blackstone, along with Pune-based

developer Panchshil Realty, acquired Express

Towers, a well-known office building in Mumbai’s

oldest business district, Nariman Point.

It also invested in Ozone Group’s residential project

in Chennai, where it bought inventory worth Rs.175

crore. Blackstone’s presence and its massive portfolio

in India is particularly relevant at a time when India

has approved the entry of real estate investment

trusts (REITs), allowing an exit route for large rental

portfolio owners.

Live Mint,09 October ‘2014,Bangalore

Commercial/ Retail

their costs.” Ahuja says these companies do not

require fancy front offices, but instead large

warehousing spaces and efficient supply chain

networks, so they are looking for locations that do not

command high rents, but can provide with good call

quality and broadband networks.

The Financial Express,06 October ‘2014,Mumbai

Blackstone set to become India’s

largest office assets owner

Blackstone has acquired 29 million sq. ft of office

space in cities such as Bangalore, Pune, Mumbai and

Noida, on the outskirts of New Delhi. This includes 26

million sq. ft of operational, leased-out space and three

million sq. ft under construction, said people familiar

with the development. To be sure, Blackstone doesn’t

own a 100% stake in its real estate portfolio and has

partners in some of the investments. The New York-

based PE firm’s office portfolio in India closely rivals

the size of the country’s largest developer DLF Ltd’s

rental assets that include both office and shopping

malls. Until some time ago, DLF was the single-largest

office portfolio owner in India.

Property analysts and fund managers stress that

Blackstone has not only built such a large portfolio in

as short a duration as three years, but that it has

bought the best of what was available in the office

segment at a price that it was willing to pay. “We are

here for the long term. We are also disciplined, patient

investors. We are focused on ensuring the best in

class, institutionally led portfolio,” a Blackstone

spokesperson said.

Blackstone opened its real estate division in India in

2007, but started buying office assets only in 2011,

when not many investors were interested in the prime

rental asset class. It has invested close to $900 million

so far. The effort has been helmed by Tuhin Parikh,

senior managing director, real estate.

Even in the current scenario in which many PE and

sovereign funds take several months to close a

transaction, owing to strict due diligence and quality

Township

XRBIA unveils phase 2 of Eiffel City

in Pune

After having sold out phase I of its residential project,

Eiffel City, Pune-based XRBIA Developers has now

launched phase II at the fast growing Chakan area to

meet the rising demand. Spread over a 20-acre green

campus, phase II will consist of six towers comprising

1BHK, 2BHK and 3BHK apartments. With a price tag

of Rs 3,000 per sq ft, these homes cost approximately

Rs 14 lakh onwards. While 1BHK apartments range

from 396 sq ft to 461 sq ft, 2BHK units range from 650

sq ft to 814 sq ft. The three BHK apartments varies

between 877 sq ft and 1,200 sq ft.

“We are happy to present our new offerings to potential

business investors and local residents,” Rahul Nahar,

managing director at XRBIA developers, said in a

statement. Eiffel City has a revolutionary convertible

apartment design with courtyards by well-known

architect Hafeez contractor, the company said.

Nahar said the upcoming project is in close proximity

to schools and hospitals such as Dhirubhai Ambani

School, Poddar International School, Cambridge

International School and Aditya Birla hospital.The

developers hope that the upcoming festival of Diwali

will push more sales. “Chakan is not only emerging as

a destination for residential projects, it is also

developing into a realty investment area. With rapid

expansion in infrastructure, growth figures will gain

momentum with each passing year,” Nahar said.

“The success of phase I, which was spread over a 15-

acre complex comprising 700 apartments, encouraged

us to launch the second phase on popular demand,”

Vishal Nahar, director at XRBIA Developers told

Financial Chronicle. According to Nahar, the second

project, with an estimated cost of Rs 100 crore, will be

ready for delivery over the next 24 months. “We are

targeting sales revenue of about Rs 150 crore,” Nahar

said. Chakan, an important automobile hub, is listed as

one of the top investment destinations in India.

Financial Chronicle,09 October ‘2014,Pune

operation. According to the Export Promotion Council

for EoUs and SEZs, this gap is mainly due to

introduction of MAT and DDT. The increase in cost of

production for units due to imposition of MAT differs

based on the profit margin of the sector and would

roughly range between 0.5 per cent and 4 per cent.

The Hindu Business Line,09 October ‘2014,New Delhi

SEZ

PMO to take a call today on

restoring tax benefits for SEZs

The Prime Minister’s Office (PMO) is likely to take a

call on restoring tax benefits to Special Economic

Zones (SEZs) in a meeting with the Commerce

Ministry on Thursday. Principal Secretary to the Prime

Minister Nripendra Mishra will meet Commerce

Secretary Rajeev Kher to discuss the taxation issue in

detail and the various options available to deal with the

matter, a Commerce Ministry official told BusinessLine.

“The meeting will be a decisive one. Whatever the

PMO decides is likely be the final word on the matter,”

the official said. The PMO will also meet officials from

the Department of Industrial Policy & Promotion (DIPP)

to discuss progress in the industrial corridors and

smart cities. The Commerce Ministry has been trying

to convince the Finance Ministry to withdraw the

Minimum Alternate Tax (MAT) of 18.5 per cent and

Dividend Distribution Tax (DDT) of 15 per cent abruptly

imposed on the zones in 2012 which had brought to an

end the 100 per cent tax holiday promised to units and

developers for a 10-15 year period.

It has argued that the taxes were driving away

investments from the zones at a time when the BJP

Government stressing on boosting manufacturing. The

Finance Ministry, however, is worried about the

revenue losses involved estimated at about Rs.13,000

crore a year.

While the Commerce Ministry wants a complete roll-

back of MAT and DDT, it could also be ready for a

compromise solution if the PMO suggests it. One such

solution could be restoring tax benefits to

manufacturing SEZs, not including gems & jewellery

and petroleum products, as these account for only

Rs.50,000 crore of exports every year.

Since profit margins in such sectors are lower than IT

SEZs, these would account for revenue losses not

more than Rs.400 crore a year, the official explained.

Another solution could be to roll-back the taxes

partially. Out of 566 SEZs approved by the

Government so far, only 185 SEZs have come into

Hospitality

Blackstone, Embassy buy Four

Seasons Bangalore

Private equity giant Blackstone has agreed to acquire

a 50% stake in India's second Four Seasons Hotel

project in Bangalore, which was put on sale by majority

owner Goldman Sachs. Blackstone, which owns the

over $10-billion global hospitality firm Hilton

Worldwide, stepped in at the last minute to partner

developer Embassy Group to clinch an acrimonious

deal that was in the making for nearly two years.

Blackstone and Embassy will jointly acquire the

shares of Goldman Sachs and those of minority

shareholder and Southern land tycoon Dayanand Pai,

in the project valued at Rs 605 crore. The debt

component of the project is around Rs 275 crore, owed

to a consortium led by State Bank of India. Located in

Bangalore's northern suburb, the hospitality project is

part of a 1-million-sq-ft lifestyle development CityView

that comprises a 230-room Four Seasons hotel, 110

branded residences, and 200,000 sq ft of office and

retail space.

Some of Infosys co-founders and actress Deepika

Padukone have invested in the Four Seasons-branded

residences that carried a price tag of over $1 million. In

2012, Blackstone partnered Embassy Group in an

equal joint venture firm Embassy Office Parks, which

controls about 15 million sq ft of rent-yielding office

space across the two IT hubs of Bangalore and Pune.

TOI wasn't able to ascertain if the Four Seasons Hotel

project would come under this JV, which is expected to

be taken for a REIT (real estate investment trust)

listing in the near future.

Blackstone has till date been lapping up iconic

commercial office spaces in the country, spending

close to $1 billion, with little interest in other real estate

asset classes. While Blackstone exited from a luxury

residential project in Bangalore with an IRR of over

40%, the private equity fund has invested in a

hospitality project in Kolkata that is being developed by

the Salarpuira Group.

The Times of India,07 October ‘2014,Bangalore

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newspapers and magazines. ASK Property Investment Advisors has reproduced the articles and reports

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