News About Real Estate in India: Office Space, Courses

Weekly news updates on trends in the Indian real estate market

The Indian government and Reserve Bank of India are increasingly worried about the large inflow of foreign funds in the booming real estate market. They are trying to curb the flow of money into commercial and residential construction, with mixed results. The idea is to prevent overheating and keep inflationary pressures in control. Is the India real estate market heading for a correction?

- Chillibreeze Business Research Team

India is trying to introduce curbs on foreign borrowings to tackle inflation and control the huge volumes of capital inflows into the real estate market.

Towards this,

• India has set limits on the costs at which companies may borrow abroad
• Banned the use of foreign loans for certain types of property developments.
• Capped external commercial borrowing at $22 billion per financial year (a debatable aspect)

May 25, 2007
Source: Reuters

Real estate bubble: Increased supply is the solution

The governments’ attempt to regulate foreign funds in real estate is bound to have an affect on investments in other sectors too. For example, preference shares issued to foreign investors ought to be treated as debt according to the Finance Ministry.

While real estate companies look for ways to get in funds, it is important that policy decisions focus on increasing supply of property by:

• change land use from agriculture to industry,
• increasing the floor-area ratio and
• releasing land which is under-utilized by the government
  

May 25,2007
Source: Economic Times

Grey market demand for DLF IPO suggests a soft landing

DLF Ltd’s initial public offer (IPO) is in for a soft landing according to grey market activities.DLF announced a price band of Rs500-550 for IPO of 175 million shares, which will hit the market on 11 June and close on 14 June.

May25, 2007
Source: Livemint.com

Delhi, Mumbai among most expensive in Asia for office space

Surveys by different global realty consultants rank Delhi and Mumbai as the most expensive cities for corporate offices.

According to DTZ, Mumbai and Delhi have become costlier and occupy 18th and 51st positions in global rankings. Mumbai with occupancy costs of 11,400 dollar per annum per workstation ranks fourth in the Asia Pacific region while Delhi is at eighth place having an occupancy cost of 8,150 dollar.

DTZ`s 2007 annual global office occupancy cost survey is a guide to accommodation costs in prime office locations covering 134 business districts in 48 countries. The ranking for the survey has been focused on a per workstation basis. Occupancy costs are average total cost of leasing prime net usable space. This is defined as modern, well specified office space of 10,000 sq ft within a prime CBD location. They include rent and outgoings, such as maintenance costs and property tax.

CB Richard Ellis survey points to New Delhi and Mumbai among the top ten most expensive office locations in the world. Mumbai is at fifth place in the world`s most expensive cities with an occupation cost of 138.41 dollar per sq ft per annum and New Delhi ranks seven with cost of 116.19 dollar.

May25,2007
Source: ZeeNews

Realty investment trusts: Mirage or reality?

India’s real estate is booming.

Real Estate Investment Trusts (REITs) may emerge as the next big thing to encourage participation of the small and medium investor in the commercial sector. As of now, this investor category cannot afford investing in commercial property.

The draft regulations for the The Real Estate Mutual Funds (REMFs) has been made and are under review by Securities & Exchange Board of India (Sebi), Association of Mutual Funds in India (AMFI) and Institute of Chartered Accountants of India (ICAI).

REITs, are generally open or close-ended companies/trusts that hold, manage, lease, develop and/or maintain properties for investment purposes. An investor purchases units/shares in a REIT, similar to purchasing units issued by a mutual fund.

India needs to put in place a regulatory framework similar to that of mutual funds is required to allow investments by players of all levels in the real estate market.

May 24, 2007
Source: Economic Times

RICS to start property courses in India

The Indian real estate sector faces a human resource crunch and capitalizing on the same is the UK-based Royal Institution of Chartered Surveyors, or RICS.

RICS is expected to draw up plans for training manpower for the Indian real estate sector and foster partnershis with business schools and universities.

May24, 2007
Source: Moneycontrol.com

Farmers may join India Inc through Land share firms

The National development Council is expected to dicuss a plan to let farmers from land share companies either on their own or with corporates engaged in agro processing or trading. The farmers would pool their land as contribution to the capital base of the company, holding equity stake in proportion to land contributed. The corporate stake is to be capped at 25% and the firms are to bring in capital, technology and marketing capabilities.

May24, 2007
Economic Times

GE earmarks Rs8,200 crore for real-estate investment in India

GE Commercial Finance plans to invest $2 billion across townships, SEZs and equity investments.

GE already has a joint venture with Ascendas Pte Ltd in India for development of IT parks. GE Commercial Finance Real Estate was one of the earliest foreign real-estate investors in India having invested $63 million in the Ascendas India IT Parks fund that owns the International Tech Park Bangalore and also has stake a tech park in Hyderabad and International Tech Park Chennai.

GE plans to target mega metros in phase one and tier II cities subsequently.

May23,2007
Source: Livemint.com

DDA picks 10 bidders for C'wealth village

The Delhi Development Authority (DDA) has shortlisted 10 bidders to develop the residential complex of the Commonwealth Games Village in East Delhi including DLF, Parsvnath Developers, Nagarjuna Constructions, Shapoorji-Pallonji, Larsen & Toubro, Ansal Properties & Infrastructure and a few regional consortiums

May 22, 2007
Economic Times