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Tuesday, October 25, 2011

Ambuja Realty Acquires RMZ’s Ecospace Business Park for Rs 300cr

In one of the largest real estate deals in Kolkata, Ambuja Realty has acquired the RMZ’s Ecospace Business Park in New Town in Rajarhat for little over Rs 300 crore. The acquisition will provide Ambuja Realy a large chunk of premium commercial property adjacent to its existing one, Ambuja Realty Campus. The project, which is 80% complete, is spread over about 9 lakh square feet constructed area. International property consultant Jones Lang LaSalle facilitated the deal. JLL said the deal signified the importance of Rajarhat in Kolkata’s business landscape.

Ambuja Realty chairman Harshavardhan Neotia said that RMZ and Ambuja Realty had got two adjacent plots of land in Rajarhat. “Even our architects and structural consultants are the same. Therefore, we decided to call the entire property Ecospace Business Park. Their end is called the RMZ campus and ours is called the Ambuja Realty Campus. Therefore, the acquisition will only help Ambuja Realty in consolidating its position in the upcoming area.”

The opportunity to acquire the company emerged as RMZ and AIG, who were managing the RMZ Campus, wanted to exit, he said. “Given that we are already housed at Ecospace and have part of the campus, we responded affirmatively to acquiring the other part, as well,” he said. JLL said with the acquisition, Ecospace became one of the largest non-SEZ office spaces in Kolkata, offering nearly 19 lakh square feet of ultra-modern and environmentally sustainable business space. According to a person close to the deal, the cost of the realty space after completion of the project would be around Rs 4,000 per sq feet, which is very competitive.

Rajarhat area has emerged as one of the most attractive area in Kolkata as it is close to the airport. Besides, a large chunk of land is available for the development. JLL MD (Kolkata) Mayank Saksena said Rajarhat is Kolkata’s brightest rising star in terms of real estate growth, with both the commercial and residential segments holding immense possibilities for developers, occupiers and real estate investors alike.

Govt Provides Extra Time to 37 SEZ Developers

The government has given more time to as many as 37 special economic zone developers, including Navi Mumbai SEZ, DLF Commercial Developers and Tata Consultancy Services, to execute their projects.
At a meeting on September 19, the Board of Approval (BoA) headed by Commerce Secretary Rahul Khullar also allowed five SEZ developers to surrender their projects. The BoA is a 19-member inter-ministerial body that deals with Special Economic Zones (SEZs) and related issues.

However, the developers surrendering their projects have to obtain a certificate from the respective Development Commissioners that “they have refunded all the tax/duty benefits availed under SEZ Act/Rules,” a senior Commerce Ministry official said.
SEZ developers, including Maharashtra Industrial Development Corporation and Benchmark Realty, had approached the BoA to surrender their projects.
According to an industry expert, uncertainty over whether new SEZs will be eligible for tax exemptions — which are proposed to be confined to existing units in the latest draft of the Direct Taxes Code Bill — has dampened interest in the tax-free enclaves.

Other developers that got more time to execute their projects include Raheja SEZ, Parsvnath SEZ, and Wockhardt Infrastructure Development.
It has deferred the extension of two applications — Peninsula Pharma Research Centre and Meditab Specialties — as the issues were sub-judice before the apex court.
The BoA also approved three new proposals, including one for setting up a sector-specific SEZ for the petroleum and oil and gas industry in Visakhapatnam.
Regarding the revision of guidelines for power generation, transmission and distribution in SEZs, the board gave two weeks’ time to the Department of Revenue for their comments.

Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned in the first five years of operation, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.
SEZ developers, on the other hand, get 100 per cent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.
Merchandise exports from the 143 operational SEZs in the country totalled Rs 72,255 crore in the April-June period, an increase of 23 per cent vis-a-vis the same period last year.

Less Fireworks for Builders This Festive Season

The period around Diwali is usually the best time in the building trade, but this festive season a triple cocktail of volatile markets, double-digit interest rates and poor consumer confidence in a slowing economy has hit sales volumes, portending hard times for India’s real estate sector. Some brokers and market experts are bracing themselves for a 25-30% drop in transaction volumes in the country’s top six property markets during the October-December busy season, which, if it happens, could trigger a competitive spiral of discounting to get rid of mounting inventories and restore depleted cash levels.

But builders are holding on to price levels while buyers, reluctant to book flats at current price levels and interest rates firmly in double digits, remain convinced that it’s only a matter of time before the penny drops. Which side will blink first is still not certain, even though some builders concede all is not hunky dory. “There may not be much of a light for developers during this Diwali,” said Niranjan Hiranandani, chief of Mumbai-based builder Hiranandani Group. “It may not turn out to be a good one in terms of sales activity.”

Property developers are trying their best to woo buyers with festive offers, although these have failed to have much of an impact so far. With high inflation eating away at their earnings and financing costs high, buyers are looking for a significant correction in property prices rather than some festive season freebies. “Builders need to accept reality. This acceptance will lead to price correction and revival in volume,” said Pankaj Kapoor, managing director of Liases Foras Real Estate Rating & Research. Kapoor attributes the drop in sales volumes to steep property prices, rising interest rates and poor supply of socalled ‘affordable housing’ projects.

“Usually, during the festive season, prices firm up and there are new launches as well. But this season, both the inventory and prices of residential properties have remained static,” said Samarjit Singh of Agni Property, a property brokerage. The National Capital Region (NCR) comprising the satellite towns of Noida, Gurgaon and Faridabad bordering Delhi, which turned in good sales numbers in the past two years, is facing supply constraints.

This is particularly true for Noida, which has seen a slew of regulatory actions prompted by farmers’ agitation over land acquisition. Singh says a lot of developers are repackaging their previously unsold inventory with special discounts to push sales. Lodha Developers in Mumbai and Ansal API in Delhi are among the builders who are repackaging their older inventories with newer discounts. “As far as sale of plotted land and mid-income housing is concerned, demand is intact in NCR and good sales traction is expected during this season,” said Anil Kumar, CEO of Ansal API. “However, sales may take a hit wherever there are issues of land title.”

DLF Stocks Fall on Sebi’s IPO Probe

Shares of India’s largest real estate player DLF fell over 2% on the bourses after capital market regulator Securities and Exchange Board of India (Sebi) said it would probe the allegations a Delhi businessman against the realty major. The stock fell by 2.7 % to end Friday at Rs 225 on BSE, after plunging by as much as 4.3% during the day. On the National Stock Exchange, the scrip closed 2.3% down, also at Rs 225.

The capital market regulator had on Thursday said it would investigate certain allegations levelled against DLF Sudipti Estates Pvt Ltd by one Kimsuk Krishna Sinha. “The company’s operations may not witness any significant impact due to Sebi’s investigation but its goodwill could be impacted,” said a real estate consultant, adding things would become clearer once Sebi’s probe concludes. Sinha had accused DLF and Sudipti Estates of duping him of Rs 34 crore.

In a draft prospectus filed for its public issue in May 2006, DLF had mentioned Sudipti as its associate company. But it was later withdrawn and a fresh prospectus filed in January 2007, this time without the Sudipti name. Sinha claimed that Sudipti, DLF Home Developers and DLF Estate Developers were sister concerns and part of DLF Group, but DLF said Sudipti is a separate legal entity owned and controlled by different individuals. The Delhi High Court had in July directed the regulator to look into the complaint and pass an order within three months.

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