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Tuesday, March 15, 2011

Realty Firm Supertech to Develop 255 metre Residential Tower in Noida

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Realty firm Supertech today will invest Rs 600 crore to develop a 255 metre tall residential tower in Noida. The company will offer a total of 1,326 housing units with prices of up to Rs 2.25 crore in the tower that it claims will be the tallest in North India. “The project, North Eye, will be the tallest in entire region with 60 floors and 255 metre height. We will invest Rs 600 crore to develop the project,” Supertech chairman and managing director RK Arora told reporters.

Asked about the source of funding, Arora said it would be largely met through internal accruals and advances from customers. The company is in talks with private equity players to raise funds. When asked at what prices the housing units will be sold, Arora said: “We will offer these for Rs 7,700 per sq ft. The prices will start from Rs 35 lakh and will go up to about Rs 2.25 crore.” The project will house 186 large flats and 1,140 studio apartments. While the sizes of the flats will vary between 1,650 sq ft and 3,350 sq ft, the studio apartments will be constructed with a fixed floor size of 520 sq ft.

Arora said the company is targeting young professionals for studio apartments. Supertech will hire an operator to manage the tower and is in talks with global hospitality brands such as Radisson and Marriott for this, he added. The National Capital Region-based company is currently developing a number of projects across various cities such as Noida, Greater Noida, Meerut and Moradabad.

Govt Plans to Widen Real Estate Definition in its FDI Policy

The government plans to widen the definition of real estate in its foreign direct investment (FDI) policy to include consultants, advisers , valuers and brokers, a move experts say could restrict entry of foreign players in these specialized services. The department of industrial policy and promotion, or DIPP, has circulated a draft note for comments of various ministries on the proposal.

“The idea is to explicitly state what all services does the definition (of real estate) cover,” a government official privy to the discussions said. The wider definition is likely to be included in the half-yearly update of FDI policy due to be released by the end of this month. The current FDI policy lacks clarity on several issues, including what constitutes real estate. The policy prohibits FDI in real estate business but allows 100% foreign investment in construction and housing development. In construction and housing, the FDI is subject to several riders including a three-year lock-in period, minimum capitalisation of $10 million for wholly-owned subsidiaries and $5 million in case of joint ventures.

The government hopes to clear the air by defining the scope of the real estate business. According to the proposal, consultancy or advisory services related to locational space and property issues of any kind will be included in the real estate business. Agents, advisers, brokers and consultants dealing with any facet of residential, commercial and industrial property will also be included if they offer certain services. To preclude any chances of misinterpretation, the policy will mention a comprehensive list of services.

The move follows queries received by the Foreign Investment Promotion Board and DIPP from foreign investors asking if FDI was permitted in broking services in the realty sector. Experts, however, say the changes, if accepted, could make the FDI policy more restrictive. “This would be a retrograde measure particularly at a time when the country needs foreign direct investment,” said Akash Gupt, executive director at PwC. The proposal could affect even the existing players who largely offer advisory services.

“It will have a dampening impact on the services sector as the lot of players who are waiting to tap the booming sector will have problems entering the country” said Anuj Puri, chairman and country head at real estate consultancy firm Jones Lang LaSalle India.
Some of the players said the restrictions made no sense for service providers. “We do not control liquidity in any way, nor do we make investments in the sector,” said Anurag Mathur, managing director at Cushman & Wakefield. “We just offer our advisory services to the sector.”

IT Department Keeping Watch on Sources of Real Estate Funding

Suspecting the use of black money to finance deals in the country’s booming real estate sector, the Income Tax Department is keeping close tabs on the sources of funding for developers’ lucrative projects. “The focus of the Income Tax Department is real estate developers as the department has received many complaints of the involvement of black money in these deals. There is a large amount of money involved in the sale and purchase of land and huge income is generated,” a Finance Ministry source told PTI.

Recently, a well-known Mumbai developer admitted to undisclosed income of Rs 200 crore. In addition, Rs 100 crore was recovered from a Surat-based real estate company in a separate case.
Besides real estate, other sectors which are under the scanner of the Income Tax Department include mining, civil construction, education, jewellery and manufacturing, the source added. In 2009-10 and 2010-11, the I-T Department unearthed unaccounted income of over Rs 15,000 crore in its search and seizure operations.

In addition, around Rs 8,000  crore was detected by the Income Tax Department during surveillance of firms and individuals that suppressed their income during these two financial years. “In January, Rs 73.8 crore cash was seized by the department in the survey operation, the highest-ever cash seizure in any month,” it added. The Income Tax Department is also keeping a close eye on ponzi financial schemes, where the money from new investors is used to pay existing investors.

“This is a new area which the Income Tax Department is tracking closely. Many such schemes are under the scanner of the department,” the source said. Recently, the I-T Department recovered Rs 300 crore of unaccounted money raised through such schemes from Delhi and West Bengal-based commodity traders.

Thursday, March 3, 2011

Indiareit, Paranjape in Talks to Sell Stake in Pune SEZ

Indiareit Fund Advisors Pvt Ltd and Paranjape Schemes (Constructions) Ltd are in talks again to sell all, or part of their stake, in the 130-acre export zone they are developing near Pune, after earlier discussions with a Tata Group company failed, reports Mint. Flagship Infrastructure Pvt Ltd, their special purpose vehicle (SPV) for the Blue Ridge special economic zone (SEZ) in Hinjewadi, is looking to dilute a majority stake in the 1.4 million sq ft of space it has developed and almost fully leased out, said Shashank Paranjape, chairman of Paranjape Schemes, a Pune-based developer.

The total 2.9 million sq ft of space that can be developed at Blue Ridge is valued at Rs 1,000 crore, he said. Flagship was in advanced talks with Tata Realty and Infrastructure Ltd’s fund till December, but the deal didn’t go through. “We are now talking to a number of funds which are focused on investing in rental yield generating assets,” Paranjape said without giving more details. The 1.4 million sq ft of developed area in the SEZ is expected to generate a monthly rental income of Rs 4.9 crore, escalating at about 15 per cent a year.

Property analysts predict 2011-12 will be a year of exits for realty funds as a horde of assets are already in the market for sale. Several office and rental assets are likely to be on the block as the market for office space is on a rebound after the slowdown of two years ago. In 2007, Indiareit, which typically invests in unlisted real estate developers at an SPV level, picked up a 24 per cent stake for about Rs 250 crore in the Blue Ridge SEZ, which includes a residential township. The realty fund recently exited an office project in Kurla, a Mumbai suburb, with thrice the return on its investment of Rs 145 crore.

The project is being developed by Neptune Realtors Pvt Ltd. “We are in the business of buying into projects and exits, and that will continue to happen,” said Ramesh Jogani, chief executive, Indiareit. Maheswari said that among the many properties on the block, interest would be higher in assets that yield rental income, but sales would depend on valuation. HDFC Property Ventures Ltd has put up nearly half of its 3.4 million sq ft of office space for sale for Rs 640 crore. The fund invested in these properties almost four years back.

Tata Housing to Invest Rs 3,000 crore on Affordable Houses

Tata Housing Development Company would invest up to Rs 3,000 crore next fiscal to develop affordable homes across the country. The company already has five projects in the affordable segment and plans to launch 7-8 more projects next fiscal. Tata Housing has formed a subsidiary Smart Value Homes to develop affordable houses in the price range of Rs 5-35 lakh.

“We plan to invest Rs 2,500-3,000 crore in 2011-12 to develop existing and new projects in the affordable housing segment,” Tata Housing Development Company managing director Brotin Banerjee, said. Smart Value Homes is developing two projects each in Mumbai and Pune, and one in Chennai with a total saleable area of 10-12 million sq ft, Banerjee said.

“We will launch three more projects in Mumbai, Bangalore and Ahmedabad during the first quarter of 2011-12,” he said, adding that the company is looking at more projects in other parts of the country. The company plans to build affordable homes in Ludhiana, Jalandhar and periphery of Chandigarh on public-private-partnership (PPP) model in the wake of high land prices in the state.

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