For private circulation only

Real Estate News Letter

7th June to 13th June, 2010

CONTENTS
1. Interest Rates
2. Infrastructure
3. Industry News
4. Private Equity News
5. Regulatory Buzz
6. Public Markets
7. Land Deals
8. Residential
9. Commercial/ Retail
10. Township
11. SEZ
12. Hospitality
13. Input Cost
Interest Rates
MAJOR BANKS BUILD UP HOME ICICI BANK COMES BACK WITH
LOAN MARKET SHARE TEASER HOME LOAN
Even as growth in the home loan market stayed in ICICI Bank has reintroduced the special home loan
the single digit in 2009-10, larger banks managed to scheme it had launched in April this year with fixed
expand their market share in this segment, by and floating rate options. The scheme is open from
edging out smaller players. June 1 to June 30, 2010, and the bank will charge
an interest rate of 8.25 percent in the first year and 9
The top 10 banks' home loan portfolio grew at 13.8 percent in the second. The bank has sent e-mails to
percent for 2009-10, even as overall bank lending to customers about the special home loan scheme. It
housing grew only 8 percent. State Bank of India had withdrawn the scheme at the end of April.
saw a 32 percent growth in its home loan portfolio
for 2009-10 and became the top mortgage lender Financial Chronicle, 8 June, 2010, Mumbai
among banks. The top ten banks garnered 65
percent of the total outstanding housing loans (of
scheduled commercial banks) in 2009-10, up from
61.5 percent last year.
Housing loans were among the rapidly growing
segments of retail lending, which saw a tepid 4
percent expansion in 2009-10.

The Hindu Business Line, 7 June, 2010,

HOME LOAN RATES LIKELY TO

RISE
Teaser home loan rates of some banks, including
State Bank of India (SBI), which charges only 8
percent for the first year may rise, as Reserve Bank
of India (RBI) has not allowed banks to lend below
the base rate. While SBI indicated that its base rate
is likely to be around 8 percent, for others banks the
rate will be 8.25-8.5 percent.

Business Standard, 7 June, 2010, Mumbai

TEASER LOANS MAY GET

EXTENSION
Teaser loans that insulate home loan borrowers
from interest rate fluctuations in the initial years is
here to stay with the country‟s largest lenders
looking to increase their share in the lucrative home
loan market.

The Financial Express, 8 June, 2010, New Delhi

Infrastructure
METRO BOOST FOR WADALA ON
CARDS
Days after its Wadala plot got sold for a whopping
Rs 4,050 crore, the Mumbai Metropolitan Regional
Development Authority (MMRDA) is taking a keen
interest in developing Wadala by contemplating
providing Metro connectivity for the suburb.

“We are thinking of extending the Metro line up to

Wadala. One of the nine corridors in the pipelines is
the Ghatkopar-Mulund line which we can extend it
up to Wadala,” said Metropolitan Commissioner
Ratnakar Gaikwad.

The MMRDA is constructing a nine-route Metro rail

across Mumbai.

Hindustan Times, 7 June, 2010, Mumbai

FROM DHARAVI TO SHANGHAI
Industry News
A‘BAD AMONG 11 CITIES ON
RBI’S REALTY INDICES LIST
The city happens to be among 11 in the country for
which Reserve Bank of India (RBI) would prepare
two realty indices — one each for commercial and
residential properties. This is to curtail speculations
and another realty bubble burst in the years to
come. Two months back an RBI report on asset
price monitoring system (ASMS) advised
formulating of the indices at the earliest.
Countries like the US, France, Singapore and
Canada, have such indices to refer to realty prices.
The Times of India, 7 June, 2010, Ahmedabad
Realtors wait for new regime
With the Left Front losing the mandate in the Kolkata
Municipal Corporation (KMC) elections, city real
estate developers are keenly awaiting Mamata
Banerjee's policies towards the development of city
infrastructure.
Interestingly, KMC for the last five-six years, had
been earning money by selling land to developers in
prime locations through the bidding process.
According to sources, KMC still possess pieces of
land in plush locations such as EM Bypass, by far
the most expensive area in the city.
In fact, back in 2006-07, KMC had earned about Rs
629 crore, just from three land deals.
DLF Hilton, Emmar MGF and LIC were the winners
in land bidding process, with LIC setting a record by
paying Rs 55.24 crore per acre for a 5-acre plot on
the road.
“There are still land in possession of KMC on EM
Bypass, and we hope that they start bidding process
for the land in a more transparent and expeditious
manner soon,” said a realtor.
However, in the new KMC regime also, the
developers are not clear if there will be more
transparency in land dealings.
“No one can say that if the land deals will be more
transparent,” said a prominent city based developer.
“The new KMC regime is expected to form an
advisory group for land dealings, though the group
will not have any legal binding. The mayor is
expected to listen to the recommendations of the
group,” said Santosh Rungta, President,
Confederation of Real Estate Developers
Association of India (CREDAI).
It was not only KMC that had been selling land at
exorbitant prices, but the two other government
agencies, the the Kolkata Metropolitan Development
Authority (KMDA) and West Bengal Housing Board
(WBHB), had earned through land deals.
“We are quite positive about the new regime in the
KMC, and have lots of expectations,” said Pradeep
Chopra of P S Group.
One of the impending issues before the KMC has
been the adoption on unitary method of taxation.
While many state governments have replaced the
old system, West Bengal has been lagging behind,
although the KMC had appointed a consultant for
bringing in the new system. The new system of
taxation was expected to come into effect by the
financial year 2010-11. “At present, 56 per cent of
the total rental is paid to the municipality as tax. Out
of the rest, 33 per cent is paid to the income tax
department. About 10.50 per cent is service tax.
This kind of taxation is there no where in the world,”
said Rungta.
“We expect the new tax system to come into effect
soon, as the old system is an outdated one,” said
Chopra. “The unitary system of tax collection will
help the real estate industry to a great extent, as it
will reduce complexities and increase revenue for
the government as well. The old system is outdated
and an inspector raj regime,” said Pradeep Sureka
of the Sureka Group.
Industry News
This apart, realtors are looking opportunities in
areas like slum development, and expect the
problems of waterlogging to be a solved soon. “We
have great expectations from the new regime. I
expect it to be proactive in reforming the whole
KMC,” said Rungta.
Business Standard, 7 June, 2010, Delhi
REALTY PRICES IN MUMBAI
SEEN STABLE: LOKHANDWALA
CONSTRUCTION
Real estate prices are unlikely to witness a
correction and may remain stable at current level, a
senior industry player said.
"Real estate prices are unlikely to decline but it will
stabilise at the current level. The prices in Mumbai
are unlikely to correct due to scarcity of land,"
Lokhandwala Construction's chief operating officer,
Arshad Usmani, said here.
However, there may be some correction in prices in
Tier II cities, which have witnessed a sharp jump in
real estate prices, Usmani said.
The Economic Times, 7 June, 2010, Mumbai
Niranjan Hiranandani, MD,
Hiranandani Group
'Home prices are shooting up due to overwhelming
demand'
The Hiranandani Group, one of the largest privately-
held realty developers, recently announced a foray
into the power sector with a gas-based power
project near Pune. In a chat with Raghavendra
Kamath, the group's co-founder and managing
director, Niranjan Hiranandani, talks about the
company‟s plans and the property market in the
country. Edited excerpts:
Why did you go into power, when you could have
gone into other related areas?
Actually, we were looking at an infrastructure area
such as roads, bridges and so on. We had also
zeroed in on a company to buy. When we were
doing our due diligence, we realised it was not
worthwhile and dropped the idea. Then we thought
of power as a second option and that's why we are
here. There are opportunities in multiple areas, but
we have limitations to execute these.
What are your plans in power? Will you also be
doing other power plants?
First, we will do 400 Mw. Then we will ramp up to
1,000 Mw and ultimately to 2,300 Mw. We have all
processes, environmental clearances and raw
materials in place. Now we are concentrating on the
single plant and later we can look at multiple plants.
Have you tied up funds for this project?
Up to 400 Mw, we can do on our own, with the help
of debt. After that, we have to look at external
sources, such as private equity (PE).
Why are you not looking at public markets to raise
money for your property company?
There is a time and place for everybody. We still
have sufficient money to do our projects. My brother,
Surendra, has roped in PE investors in Hiranandani
Realtors, which is doing projects in Chennai and
other places. We have also fully invested the fund,
which is listed on the AIM (Alternative Investment
Market) in London.
You were planning to develop five hotels in the
country with an investment of Rs 650 crore. What is
the progress on that?
We are completing a 160-room hotel in Mumbai by
September. We have postponed the rest, as
markets went down. Markets must justify the
investment.
Don't you think home prices have shot up too fast in
too short a time and have become unaffordable for
the common man?
It is bound to happen, when volumes are not enough
to meet the growing demand for homes. Supply has
to increase. More land has to be made available for
developers.
Industry News
Don‟t you believe property developers have to be
blamed for the price rise?
Everybody has to be blamed. Government,
municipality, developers and so on. If so many
people come to Mumbai, if you do not provide them
housing, either they will go to slums or the rates of
existing properties will go up because of
overwhelming demand.
Property consultants say home sales are down by
20-30 per cent since the March quarter. What has
been your experience?
Volumes have come down but it is very seasonal.
On weekly and monthly positions there are hiccups,
but on a six-month trend, there is a growth.
A lot of developers who have turned to affordable
projects during the slowdown are once again
focusing on premium housing. How do you look at
it?
One has to be there in the affordable segment to
stay as a big player and generate big volumes. By
affordable, I mean a house equivalent to four years‟
income. In the past 10 years, private developers
must have done 10 to 15 per cent of affordable
housing projects. I believe in the next 10 years, they
will do 50 per cent of these projects.
You were planning to launch affordable housing
projects by the end of 2009. What happened to that?
We will do it. It is taking time to get the land together
and obtaining permission
Business Standard, 7 June, 2010, Mumbai
Property ads promising returns:
buy at own risk
Invest Rs10.8 lakh in a fully furnished five-star flat.
Get Rs13,000 per month return till possession and
lease it out at Rs18,000 per month after pos-
session.“ Does that sound famil- iar? In all
probability, you may have received an SMS claiming
to give you such a deal or read an advertisement
somewhere in a newspaper.
Own a property and get as- sured returns, in most
cases, higher than what a regular bank fixed deposit
would give you. If it were really true, what more
would you ask for. Mint Money read the fine print for
you to ex- plain how such schemes work and
assess whether it makes sense for you to go for
them.
What's the scheme?
To avail this scheme, being offered by only a few
developers in north India, you need to sign an
agreement with the develop- er specifying the
monthly return you would get till you get pos-
session of the property at an agreed rate of interest.
Before possession: The de- veloper gives you post-
dated cheques for a specified period for your
monthly returns. At the end of this period, if the con-
struction is not over, you will get another set of post-
dated cheques. Usually, developers give 12
cheques in advance. Af- ter a year, they will give
you an- other set of 12 cheques.
During the agreement period, it's the developer's
responsibili- ty to maintain the premises and keep it
clean.
After possession: Once you get the possession of
the proper- ty, you can either exit the project or
continue with the agreement.
In case you decide to contin- ue with the contract,
the proper- ty is further leased out to some tenant.
Says Vikas Gupta, direc- tor, Earth Infrastructure
Ltd, a Delhi-based developer: “The developer will
find a tenant for you or you decide to sell the
property at a premium or you set your own business
in that space. Often, the developer signs the
agreement with the owner for two to three years af-
ter the date of possession. The developer finds a
tenant for the space on a rent-sharing agree- ment.“
So, how long would you have to remain in this
agreement af- ter possession? “There is no lock-in
period, but generally we try to sign an agreement for
the next two years after possession,“ says Gupta.
Earth Infrastructure, for in- stance, has a tie-up of 51
months, including 27 months of construction, with its
Industry News
buyers for one of its commercial complex- es
coming up at Knowledge Park 5 in Greater Noida.
The process is the same for such offers across all
property categories. However, in case of service
apartment projects, the lock-in period is usually
higher.
Service apartments are meant for business
travellers and tour- ists.
Says Anil Sharma, chairman, Amrapali Group,
which ran these schemes on two of its pro- jects:
“These schemes have been widely used for
commer- cial projects till date. Major developers had
such schemes in the past. This gives them the
necessary cash to complete the project and the
buyer gets healthy returns.“ Can you renew
contract?
Once the agreement gets over, you have the option
of re- newing the contract. Says Sunil Kumar
Dahiya, managing direc- tor, Vigneshwara
Developers, a Delhi-based developer, “Usual- ly, it
is profitable to renew the contract as the property by
then matures and the rental return, too, increases.“
Developers usually fix the rate of rental return at the
time of signing the contract for the term after
possession. This is in the range of 13-18%. This rate
may go up if the project looks up and, thereby,
increase your rental income. However, getting your
own tenant may work bet- ter for you since if you
renew the contract, you will have to share the rent
with the developer.
Apart from the clear advan- tage of increased rental
return, the value of property increases at this stage.
“Price escalates at the time of the completion of the
property,“ says Amit Goen- ka, national director
(capital transactions), Knight Frank In- dia Pvt. Ltd, a
property consult- ing firm.
The caveats They say you need to give some to
take some. So, to get monthly assured returns, you
need to agree to certain terms and conditions of the
developer and come to terms with some risks.
Live Mint, 8 June, 2010, Mumbai
PAREKH: BREAK NEXUS OF
BUILDERS, POLITICIANS
Warning that a nexus between builders and
politicians was behind high real estate prices, HDFC
chairman Deepak Parekh on Monday asked the
government to break it and make it easier for the
common man to buy a home. “I think scarcity
creates more value and scarcity keeps prices up
and there is nexus between developers, builders
and politicians. The number of approvals that are
needed if you have the land and you want to build
on your own, it will be nightmare to get these,” he
said.
The Indian Express, 8 June, 2010, Mumbai
REDEVELOPMENT IN CROWDED
MUMBAI A FILLIP FOR REALTY
Greater clarity in rules and pressing need for more
houses in land-starved cities like Mumbai has had
builders eyeing opportunities for redevelopment
after a 2-year market slump and recession.
"Now we have the opportunity to do large
redevelopment projects, as the policy on
redevelopment has been clarified. We are hopeful
that within the next six months, we will announce
few large redevelopment projects," Godrej Group
Chairman Adi Godrej said.
Besides Godrej realty unit, Godrej Properties,
Housing Development and Infrastructure, DB
Realty, Ackruti City and the unlisted Shapoorji
Pallonji & Co and Kumar Urban Developers are
chasing redevelopment contracts.
The Economic Times, 8 June, 2010, Mumbai
REALTORS EYE SMALL CITIES
FOR MORE GAIN
As buyers in metros turn wary of rising home prices,
developers are turning their focus to Tier- II and
Industry News
Tier- III cities where the margins are good and
demand high.
“Developing smaller cities always have good
potential for realty developers and many of the top
developers had projects planned in these cities. But
because of the slowdown, the projects were either
scrapped or delayed. Now that the economy is
improving developers are once again focusing on
these smaller towns,” says Anurag Mathur,
managing director, Cushman and Wakefield India, a
global realty consultancy.
Most major developers are lining up projects in
these cities. Omaxe has shifted its focus to smaller
cities. Ansal Properties, too, is focusing on smaller
cities like Meerut and Agra. Even the metro player,
DLF, is now exploring smaller cities.
Mail Today, 8 June, 2010, Delhi
Chavan to decide on FSI for
Dharavi redevpt plan
Chief minister Ashok Chavan reviewed the p ro p o
s e d Dharavi redeve l o p m e n t project in
Mantralaya on Monday.
The project, aiming to turn Asia‟s largest slum into a
commercial and residential hub, has been stalled for
several years. According to senior Mantralaya
officials from the housing department, in the
meeting, Chavan asked for options available with
the government if private bidders failed to turn up for
redeveloping the project. “The delay in taking a final
decision and a slump in the property prices may
make the project unviable for bidders. Of a total of
19 bidders, only seven are still in the race to develop
the project,‟‟ the official said. He added that the
option of Maharashtra housing and area
development authority (Mhada) developing the
project was also discussed.
“If Mhada develops the project, the state will not get
the premium that it would have got from private
bidders,‟‟ he said, adding, “The state plans to divide
the project into five zones of about 30 hectares
each. The administration is considering developing
Sector 5 first but no conclusive decision has been
taken in connection to the issue.‟‟ The meeting
chaired by Chavan was attended by T C Benjamin
(principal secretary, Urban Development), Sitaram
Kunte (secretary, Housing) and Mhada CEO
Gautam Chatterjee.
Meanwhile, the state‟s proposal to give an FSI of 4
for redevelopment will be forwarded to the CM for
his approval. “The proposal seeking permission to
give FSI of 4 for the project will be put up before the
state in a day or two,‟‟ said Benjamin. There are
different kinds of land use and differential FSI in
Dharavi. For private and open land, the FSI cap is
1.33 and the same for government properties is
3.11.
The Times of India, 8 June, 2010, Mumbai
STREET SMART IN TOUGH TIMES
India‟s high net worth individuals are heavy on gold
and real estate but have kept currency out of their
investment plans as they look beyond equities to
maximise their returns. Other than going long on
gold and cutting deals in the real estate space they
have entered the private equity space. Some of their
more defensive strategies include investing in short-
term debt instruments and structured products with
capital protection.
HNIs are tapping opportunities in the realty space in
countries like the US, UK and Singapore. Some are
even scouting for houses in debt-ridden Spain and
Greece, part of euro zone. This is because many
houses abroad have become dirt-cheap after the
financial meltdown. In the US, some houses priced
at half a million dollars in 2006-07 are now available
around $200,000. “Many HNIs with children studying
in the US are used to paying $2,000-3,000 per
month on rents; so they are saying—why not buy a
house,” says Maneesh Kumar, MD, Burgeon Wealth
Advisors. Under the Liberalised Remittance Scheme
of RBI, every resident individual can remit up to
$200,000 overseas every year.
The Financial Express, 9 June, 2010, Mumbai
Industry News
PROPERTY PRICES UP 54
PERCENT
Property prices in the national capital region (NCR)
has increased by up to 54 per cent during the first
three month of this year due to higher demand,
according to a study conducted by realty portal
99acres.com.
Gurgaon's Golf Course Road and Sohna Road have
seen the highest appreciation in prices with 54 per
cent and 43 per cent jump during January-March
quarter, respectively, compared to the year-ago
period.
99acres.com Business Head Vineet Singh said in
statement. The national capital region (NCR) region
has always been an attractive destination for buyers
as it provides high return on investments, he added.
The Financial Express, 9 June, 2010, New Delhi
AFFORDABLE HOUSING
PROJECTS HASTEN RECOVERY
IN REALTY
The flexibility shown by developers in converting
luxurious residential projects into smaller,
inexpensive ones have helped the realty sector in
many parts of India recover fast from last year‟s
slump.
“This time, residential real estate demand did not let
the global slump affect the Indian market (for too
long),” said Anshuman Magazine, chairman and
managing director, CB Richard Ellis South Asia Pvt.
Ltd, a property consultancy.
Ashutosh Limaye, associate director of strategic
consulting at property consultants Jones Lang
LaSalle Meghraj, said this happened because
developers decided to reformat their large, luxurious
projects to build smaller apartments at reduced
prices.
For instance, Grande, which had been launched as
an ultra-luxury residential project in Noida, was
relaunched by its developer Unitech Ltd—now with a
major portion converted into smaller flats available
at discounted rates.
Similarly, Gaursons India Ltd reformatted luxury
apartments at a project in Indirapuram in
Ghaziabad, on the outskirts of New Delhi, reducing
their sizes and selling them at lower prices. And
developers Vipul Group relaunched Vipul Gardens
at Dharuhera, near Gurgaon, with smaller, cheaper
apartments. Experts said most of the launches in the
latter half of 2009 were in the affordable housing
segment.
“A key reason for their emergence is the fact that
there are no entry barriers for these developers,”
said Anand Narayanan, national director, residential
agency at Knight Frank India Pvt. Ltd, a property
research firm. “And in a corrected market, several
smaller developers started offering apartments at
discounted rates.”
Live Mint, 9 June, 2010, New Delhi
Retirement complexes gain
ground growing number of aged
makes such projects viable
economically
lHarpal Singh, mentor and chairman emeritus of
Fortis Healthcare, and Deepak Nirula, the erstwhile
managing director of restaurant chain Nirulas, have
set up Impact Senior Living Estates (ISLE), a
company that develops specialised housing for
senior citizens at Amritsar, Rajgarh (Himachal
Pradesh) and the NCR.
lChennai-based realtor Baba Shankar has founded
Clasic Kudumbam, a retirement community
development in Chennai.
lLIC HFL Care Homes operates a retirement village
in Bangalore and plans to take it national.
lMumbai-based NGO Dignity Foundation has
developed a retirement township over 25 acres at
Neral (an extended central suburb of Mumbai).
Industry News
set up retirement complexes in 10 locations,
lDelhi-based realtor, Ashiana Housing, operates a
including Kerala, Coorg and Pondicherry.
chain of retirement resorts christened Utsav in
Bhiwadi, Jaipur and now at Lavasa in Pune.
Pranay Vakil, chairman, Knight Frank India, said
parents living separately is no longer being
lGoa-based diversified entity Acron Group, with
considered a stigma. “Companies are targeting
interests in realty, infrastructure, hospitality and
people who believe in lifestyle living. These are
retail, will launch a 56-appartment retirement
elderly citizens whose sons and daughters are well-
complex at Baga beach in three months.
settled in their personal and professional lives and
are living separately (within India or overseas).
All these examples show that the idea of having
These are people who are financially well-off and
retirement homes, which is a popular concept in
would want a more comfortable life with the same
developed countries, is catching up with corporate
age group,” he said.
India, particularly real estate companies.
Most of these retirement complexes offer the best of
Such a move makes economic sense, considering
healthcare, security and wellness features, with a
the rising number of the aged who are financially
focus on the elderly. For instance, there are grab
sound.
rails in bathrooms, hallways and stairs, seats near
A recent report by Jones Lang LaSalle Meghraj
lifts, anti-skid tiles in bathrooms and kitchens, and
(JLLM) said there are over 81 million elderly people
emergency alarm buttons within the dwelling unit.
in India. “It is expected that by 2025 this figure will
be 177 million and by 2050, about 240 million, or
But these facilities do not come cheap. For instance,
more than one in five persons, will be senior
Utsavs Lavasa project costs between Rs 27 lakh for
citizens,” the report said.
a 915 sq ft (chargeable area) 1BHK to Rs 82 lakh for
a 2,430 sq ft (chargeable area) for 3BHK duplex
Saumyajit Roy, associate vice-president (senior
villa. Maintenance and parking is over and above
living), JLLM, said senior citizens are no longer
the cost of the apartment.
considered withdrawn, risk averse and financially
dependent. “The immense potential of this segment,
Companies also offer lifetime lease option. The new
with its unique needs and promises, offers an array
entrant Acron is pursuing the long-term lease model.
of opportunities to the Indian real estate market,” he
Its apartments can be leased for 20 years with a
said.
minimum lock-in of 12 months. The one-time deposit
for a 1BHK apartment is Rs 20 lakh (fully refundable
John Britto, director, Acron Group, said theres a big
with an option of capital appreciation). There is also
market for companies catering to the retired
a monthly rental charge of Rs 8,000 towards
provided they have a right mix of housing products
maintenance and upkeep of the residential
and specialised support and lifestyle services.
community.
“While there are old age homes run by charitable
DNA, 9 June, 2010, Mumbai
institutions / NGOs catering to the particular strata of
the society, the concept of a lifestyle senior living
community is still in its infancy in India. There is a REAL ESTATE TRANSACTION
significant percentage of the existing and would be WEBSITE LAUNCHED
senior citizens who are accustomed to a certain way
of living and would want to maintain that quality Tian Constructions, a real estate firm in the city, has
lifestyle minus the routine hassles,” said Britto. announced the launch of its web-based real estate
transaction website (www.tain-con.com).
The company plans to invest Rs 150-200 crore to
Industry News
“The transaction website is the one-point contact for
the investor for all buying solutions. The customer
can customise their residential units simultaneously
viewing its cost implications. They have the
opportunity to choose the layouts according to their
budgets. From simple bathroom fittings, colour of
the tiles to the number of rooms. It acts like a
decision-making tool,” stated a release issued by the
company.

The Indian Express, 10 June, 2010, Pune

Private Equity News
IL&FS MILESTONE BUYS 74
PERCENT IN HCC PROJECT FOR
RS 574 CRORE
IL&FS Milestone Realty Advisors, a joint venture
between Milestone Capital Advisors and IL&FS
Investment Managers, has acquired a 74 percent
stake in 247 HCC Park for Rs 574 crore from the
Hindustan Construction Company Group. The
commercial property of 18-lakh sq. ft at Vikhroli in
northeast Mumbai is valued at Rs 775 crore
(enterprise value). IL&FS Realty Advisors said the
area under investment was 11-lakh sq. ft.

Ashish Joshi, Managing Partner of Real Estate,

Milestone Capital, said the investment was through
a real estate investment trust modelled fund of Rs
500 crore, besides two other funds. The average
lock-in period for the closed-ended funds was four to
six years. The ticket size of the fund was Rs 10 lakh
for individuals and Rs 25 lakh for institutional
investors.

Ved Prakash Arya, managing director and chief

executive officer, Milestone Group, said, “In the
current scenario, there is a supply overdose for all
kinds of commercial properties and we were on the
look out for properties with stable rentals rather than
unnaturally high rentals which can lead to artificial
yield assumptions.

The Hindu, 11 June, 2010, Mumbai

Regulatory Buzz
REALTY FIRMS COME UNDER CCI
SCANNER
The commission plans to probe complaints against
DLF.
In a bid to check the rampant malpractices in the
realty sector, the Competition Commission of India
(CCI) has decided to, on its accord, enquire if
various developers are misleading the buyers, apart
from looking into specific complaints against the
market leader, DLF.
Taking note of the general complaint of delayed
possession, change in terms and conditions of sale
agreements and developers making it almost
impossible for a customer to opt out, CCI has also
decided to look into complaints of misleading
advertisements, a CCI source said.
On the basis of complaints from individuals who
have booked flats from various developers, CCI has
referred the complaints against DLF to the director
general-investigations for a probe, the source said.
When contacted, DLF officials declined to comment
saying they had not received any notice from CCI, a
market watchdog created to check abuse of market
dominance.
“We have not received any letter from CCI in this
regard so far. Therefore, we would not like to
comment on this matter, without knowing the exact
nature of the complaint,” a DLF spokesperson said.
According to one such complaint, DLF had promised
to complete its Blair residential project in Gurgaon in
2009, but the buyers are yet to get possession.
Another individual has alleged DLF had initially
announced a project as an 18-floor apartment, but
later on added 10 storeys without informing the
buyers.
These complaints were admitted under Section 4 of
the Competition Act of 2002, which pertains to
abuse of dominance by a player in a relevant
geography.
CCI is learnt to have “prima facie” found that DLF
had abused its dominant market position and the
agreement was "one-sided" in nature and there
were "variations from the initial stipulations".
CCI, sources said, could also look into similar
practices by other developers.
The commission, which became fully functional last
July, is empowered by an Act of Parliament to
penalise the guilty or ban a prevalent malpractice.
The commission sources said it was more of an
industry issue and buyers in general, were facing
such problems, irrespective of any specific
developer. It is, therefore, appropriate to look into
the general practice, along with specific complaints
Business Standard, 7 June, 2010, Delhi
GOVT TO APPEAL AGAINST HC
STAY ON SERVICE TAX ON
RENTALS
The Indian government will appeal against a Delhi
high court order that asked the government not to
levy service tax on rentals of commercial property.
The high court on 18 May stopped the government's
move in a temporary order on a petition filed by
Future Group's unit Home Solutions Retail India Ltd.
Many other retailers are also moving court in this
matter.
“Petitions are coming every day. We will definitely
file an appeal,” said a lawyer representing the
government on the Home Solutions Retail case.
Nearly 30 firms have filed for a stay on the service
tax being levied after Home Solutions Retail secured
the injunction in May, says Rishi Agrawala, a lawyer
representing the store operator. Agrawala is now
representing a dozen such clients that include Tata
group's Trent Ltd and Infiniti Retail Ltd, Dubai-
based Lifestyle International and department store
operator Shoppers Stop Ltd.
Live Mint, 7 June, 2010, New Delhi
Regulatory Buzz
BUYING PROPERTY MAY GET
MORE EXPENSIVE
Brace yourself to shell out more for purchasing
property in the national Capital. After increasing the
registration fee for properties and road tax for luxury
cars, the Delhi Cabinet is set to give its nod to a
proposal to hike circle rates for sale and purchase of
properties in the capital on Monday.
In order to meet the expenses and deficits, the Delhi
Government is likely to increase the circle rate of
properties ranging from 30 percent to 150 percent.
The new circle rates will be fixed according to the
properties falling under various categories. The
circle rate of properties is the system in which the
Government fixes the minimum or maximum rate of
the land depending on the categories of colonies it
falls in.
As per the proposed circle rates, Rs 1.25 lakh is
proposed for colonies falling under category A while
Rs 1 lakh per sqm for category B colonies. Both A
and B colonies are posh colonies divided into rich
and super rich categories, the two new categories
added this time.
The Pioneer, 7 June, 2010, New Delhi
PROPERTY TITLING BILL HITS
HURDLE
The Delhi government will have to carry out fresh
drafting exercise for its Property Titling Bill, as the
Central government has asked all state
governments to model their respective legislative
proposals on the Model Land Titling Bill, 2010.
The city government, after completing all exercise
by seeking public feedback, had drafted its Delhi
Urban Property Bill, 2010, which was to be sent to
the Union government for approval.
The Asian Age, 7 June, 2010, New Delhi
GOVT AGREES TO CUT DOWN
STAMP DUTY
The state government has in principle agreed to
reduce stamp duty from 7 percent to 5 percent after
taking into consideration various factors, including
the enhancement of land value in commercial areas
and tier-II cities across the state.
Stamps minister Gade Venkat Reddy said on
Wednesday that officials of the stamps & registration
department were readying proposals to reduce the
stamp duty keeping in mind the revenue targets set
for the department in the budget.
The minister said the registration charges were
periodically reduced from 13.5 percent to 11 percent
and then to 9.5 percent since August 2005 under
pressure from the Centre, which wanted a uniform
stamp duty of 5 percent across the country.
The Times of India, 10 June, 2010, Hyderabad
New real estate exposure norms
for urban co-op banks
Reserve Bank of India has revised the norms for
urban cooperative banks for giving loans to the
housing and real estate (RE) segment.
Working capital loans to small contractors against
hypothecation of construction material are exempted
from the existing norms that allows UCBs to use 15
per cent of the total deposits for giving loans for
housing and commercial real estate, RBI said.
In a communication to chief executive officers of
UCBs, RBI said it has fine-tuned the rule for
aggregate limit for housing finance. Now, urban
banks can use up to 15 per cent of deposits to
provide housing, real estate and CRE loans.
Earlier, the RBI norm permitted them to use up to 15
per cent of deposits for giving advances to housing
loans and other block capital loans.
The 15 per cent ceiling was reckoned on total
deposits at the end of March 31 of the previous
financial year. The exposure to compute the ceiling
will include fund and non-fund based facilities
Regulatory Buzz
extended to customers.
Many urban banks and federation of cooperative
banks had approached the central bank for
clarification on norms that restricts exposure to real
estate including housing loan and commercial realty
to 15 per cent of deposit base.
Business Standard, 10 June, 2010, Mumbai
LAND REGISTRATION FEE TO COME DOWN
After wavering for months, the State government
has finally decided to reduce registration charges
from 9.5 percent to 5 percent in urban areas in
compliance with the condition laid by the Central
Government to be eligible to receive funds under
Jawaharlal Nehru National Urban Renewal Mission
(JNNURM).
Disclosing this at a media conference here on
Wednesday, Minister for Endowments, Stamps &
Registration Gade Venkat Reddy said the date from
which the reduction of the fee would be
implemented, would be announced soon.
HC FLOORS MAHARASHTRA ON
FSI
The Bombay High Court on Thursday dismissed a
Maharashtra government decision that would have
allowed more building activity in the suburbs of
Mumbai. The court set aside the permission given
by the state government to increase floor space
index (FSI) from 1 to 1.33. A higher ratio allows
more construction in the same plot.
Jones Lang Lasalle Meghraj‟s Joy Sanyal said
apartment prices would climb. Surjeet Pal of Elara
Capital added that developers will have to rework
costs of projects in suburbs and prices will most
likely rise since projects had been planned with 1.33
FSI in mind. “Affordable housing may also take a
hit,” he said.
The Financial Express, 11 June, 2010, Mumbai

Officials have been asked to work out details of the

loss to the exchequer due to this reduction as
compared to the additional funds expected from the
Centre under JNNURM, the Minister added.

The Hindu, 10 June, 2010, Hyderabad

TAX LIABILITY SET TO RISE FOR

REDEVELOPED BUILDINGS

The tax liabilities of redeveloped housing societies

are set to skyrocket after the Bombay high court
upheld a new rule allowing I-T authorities to
calculate capital gains tax based on stamp duty paid
on the development agreement.
A division bench of Justices F I Rebello and Amjad
Sayed dismissed the petition filed by Bhatia Nagar
Cooperative Society in Kandivli (west), claiming that
under the new rule, its tax liability had shot up to Rs
1.91 crore from a little less than Rs 50 lakh after its
redevelopment agreement with Ankur Realty, which
paid

The Times of India, 10 June, 2010, Mumbai

Public Markets
SATRA PROPERTIES NET RISES
TO RS 9 CRORE
Satra Properties has reported that its net profit in the
financial year 2009-10 has risen over four times to
Rs 9 crore (Rs 2 crore) on revenue of Rs 206 crore
(Rs 106 crore). Praful N. Satra, Chairman and
Managing Director, Satra Properties, said the new
projects being undertaken by the company will
improve the financial performance in the coming
days.
The Hindu Business Line, 8 June, 2010, Mumbai
MARATHON FY10 NET ZOOMS
Marathon NextGen Realty has clocked a 251
percent vault in its net profit to Rs 146.7 crore in
FY10 against Rs 41.8 crore in the previous fiscal. Its
total income rose to Rs 250 crore in FY10 against
Rs 131 crore the previous year. The company
announced a dividend of 35 percent, inclusive of an
interim dividend of 15 percent already paid, and a
one-time special dividend of Rs 1.50 per share. In
the fourth quarter net profit rose to Rs 47.86 crore
from Rs 9.64 crore a year ago.
The Economic Times, 8 June, 2010, Mumbai
Unitech Infra eyes Rs 2,200 crore
construction orders this fiscal
Listing likely by year end
Unitech Infra, the demerged entity of Unitech, the
second-largest real estate developer in the country,
is looking at an order-book of Rs 2,200 crore from
just the construction business this fiscal.
The new entity will have an order-book of about 14
million square feet (msf) for the construction
business, primarily from Unitech. The real estate
developer will use its existing relationships to get
large government and private contracts awarded to
Unitech Infra.
Unitech had said it has about 35 msf under
construction and plans to undertake aggressive
launches. It plans to award most of the construction
projects to Unitech Infra.
Unitech is expecting to list the infrastructure
business before the end of calendar year 2010. The
infrastructure firm would pursue build-operate-
transfer (BOT) opportunities in the highway and
power transmission sectors. It intends to generate
and distribute captive power within the existing and
future developments of its parent firm.
The New Delhi-based Unitech Infra has an order-
book of about Rs 500 crore from the power
transmission business. Unitech spokesperson was
not immediately available to comment.
The demerger is aimed at increasing the focus on
the companys infrastructure businesses and
providing significant financing flexibility for the
infrastructure projects in terms of access to longer-
term and cheaper financing as compared to real
estate projects.
The company is also expecting the area under
management for the facilities and property
management services to increase from 10.3 msf in
fiscal 2010 to 35 msf by 2013 and to 50 msf by
2015. Unitech Infra has valued itself at about Rs
5,000 crore, based on assets it owns and has a debt
of Rs 350 crore, which gives it a low leverage.
However, the final valuation is underway and
financial details would be available after it gets
approvals from regulatory bodies.
DNA, 9 June, 2010, New Delhi
ORBIT BETS ON ACQUISITIONS
TO PROPEL GROWTH
Orbit Corp. Ltd is buying three plots on south
Mumbai‟s posh Napean Sea Road for about Rs350
crore for its first block redevelopment project in the
tony neighbourhood. The three sea-facing plots with
old buildings on them will be consolidated for a
luxury housing project, generating 300,000 sq. ft of
Public Markets
saleable area to be priced at Rs 50,000-60,000 per
sq. ft.
The Mumbai-centric developer, known for its
upscale residential projects, is also acquiring the
palatial Kilachand bungalow in the same area to
redevelop it into a luxury residence. Orbit is in the
final lap of raising Rs 350 crore from a private equity
fund for the project.
“Though there is a potential problem of supply
overhang of luxury projects in central Mumbai areas
such as Lower Parel, there is huge demand for such
high-end residential developments in south Mumbai
because supply is restricted,” said Anand
Narayanan, national director, residential agency,
Knight Frank India, a property advisory.
Consultancy firms Jones Lang LaSalle Meghraj and
Knight Frank India have estimated that around 7,000
luxury apartments will be sold within a year in
Mumbai, with each unit priced at more than Rs4.7
crore, PTI reported in April. Another 400 units in the
Rs1 crore-plus bracket are expected to come up in
Bangalore.
Live Mint, 10 June, 2010,
DLF presages operating surplus of
Rs 2,500 cr
Targets sales booking of 18 msf this fiscal over 12.6
msf in fiscal 2010
DLF Ltd, the largest real estate developer in the
country by market capitalisation, is looking to end
the year with operating cash surplus of Rs 2,500
crore, as it looks to raise Rs 2,700 crore through
non-core asset sales and healthy cash flows.
The developer is also looking at sales booking of 15-
18 million square feet (msf) this fiscal as against
12.6 msf last fiscal. It will launch about 1-1.5 msf of
the 4.5 msf luxury project at NTC mill in Mumbai
around September, but necessary approvals are still
awaited.
The residential launches would be a mix of luxury,
mid-income and affordable housing and would be
primarily launched in the national capital region,
Mumbai and Chennai. It recently sold 2 msf in
Chandigarh.
DLF spokesperson was not immediately available
to comment on the developments.
DLF had decided to raise Rs 5,500 crore last fiscal
via sale of non-core assets, but was able to raise
only Rs 1,800 crore. It will raise funds from land sale
at Dwarka, Delhi, for Rs 800 crore and Tidco in
Tamil Nadu for Rs 900 crore.
Chetan Majithia, analyst with Crisil, in a note to
clients, said, “DLF had planned to divest its non-core
assets and use the cash to lower its debt. The
company expected divestments to generate cash of
Rs 5,500 crore in the fiscal 2010. However, the
company was able to monetise only Rs 1,800 crore
during the year. Less-than-expected divestment of
non-core assets resulted in lower repayment of debt
in fiscal 2010. This led to higher-than-expected
interest costs.”
DLF is also looking to retire over Rs 5,000 crore
outstanding debt in 2010 by cash flows and asset
sales. The realtor has a mandatory debt repayment
of Rs 2,600 crore in 2011.
The New Delhi-based company seeks to bring its
debt equity ratio to 0.5 by 2011-end through debt
retirement. It currently has gross debt of Rs 21,700
crore and over .8 gross debt-equity ratio. It repaid
about Rs 5,600 crore last year against mandatory
repayment of Rs 3,549 crore.
The company is also seeing increased commercial
leasing enquiries in Hyderabad, Chennai, Pune and
Gurgaon, but actual transactions have not picked up
at the same pace. Enquiries are coming in from
sectors such as BFSI, IT, KPOs and BPOs.
The realtor leased 0.76 msf last year and is looking
to lease out at least 1 msf per quarter. It earned
rentals of Rs 750 crore last year and is looking at
rentals of Rs 1,600 crore in 2011. The Singapore
listing of its subsidiary DAL would materialise once
the substantial portion of the portfolio is leased out
which currently is at 6 msf out of the total 13 msf.
DNA, 10 June, 2010, New Delhi
Land
LODHA EXPECTS WINDFALL
FROM WADALA PLOT
Abhisheck Lodha joined family-run real estate
company Lodha Developers Ltd in 2003 after a stint
with McKinsey and Co. The Mumbai-based firm
recently bought a 6.1 acre (25,000 sq. m) plot in
Wadala in central Mumbai for Rs 4,053 crore,
beating companies such as Indiabulls Real Estate
Ltd and Reliance Infrastructure Ltd. Next week,
Lodha is to announce plans for what it calls the
world‟s tallest residential tower. “We have made
some right calls and are lucky to have good people,”
said the company‟s 30-year-old managing director in
an interview.
Edited excerpts:
Let‟s start with the deal that everyone‟s talking
about. How do you justify the price you paid?
The latest land sale by the MMRDA (Mumbai
Metropolitan Region Development Authority) in
Wadala, which has an FSI (floor space index) of
about 55-lakh sq. ft and a total developable area of
80 lakh sq. ft is by far the largest development in
Mumbai.
Given the supply demand economics in Mumbai, we
feel it is a very attractive proposition to have such a
large, clean piece of land available in the city,
catering to a target audience who can pay Rs1-2.5
crore per flat. This particular location is getting great
connectivity—both the headquarters of the monorail
and the metro rail are coming here plus the new
Eastern Seaboard Express (Highway) from Prince
Charles Museum, all the way to Chembur, passes
through this side.
Live Mint, 7 June, 2010, Mumbai
CM wants NTC plot for Mhada
Urges Centre To Give 8-Acre Plot For Low-Cost
Hsg Project
Days the National Textiles Corporation (NTC)
announced its decision to auction a prime piece of
land in central Mumbai, chief minister Ashok
Chavan has knocked on the doors of Union textiles
minister Dayanidhi Maran, requesting transfer of the
land to Mhada for construction of affordable houses.
“We will pay the reserved price of Rs 750 crore to
the NTC. Kindly, stay the bidding process and
consider the proposal to transfer the land of Bharat
textile mills at the reserved price to Mhada,‟‟ Chavan
said in a letter to Maran.
A day after the NTC published an advertisement for
sale of land in Worli, housing secretary Sitaram
Kunte and Mhada managing director Gautam
Chatterjee swung into action. Chatterjee submitted a
comprehensive proposal to NTC chairman and
managing director K Ramchandra Pillai. “We felt
that since NTC is owned by the Centre and Mhada
is controlled by the state government, it will be
appropriate for NTC to transfer the land to Mhada at
the reserved price,‟‟ a senior official said.
So far, NTC has auctioned its prime lands in
Mumbai to leading developers—DLF for Rs 702
crore, Lodha for Rs 180 crore and Kohinoor for Rs
421 crore.
If Chavan succeeds, then the Mhada will be able to
construct well over 5,000 flats on the NTC land. “We
propose to develop it as a special project. As a
result, we will get an FSI of 4. We plan to construct
flats for mill workers, lower, middle and higher
income groups. If we succeed, we will be able to
regulate real estate prices in the area,‟‟ he said.
“As on January 1, 2010, we need 25 lakh flats in
Maharashtra, while Mumbai needs 13 lakh flats.
Due to non-availability of land, we are unable to
meet the demand and builders are taking advantage
of the situation. It was felt that Mhada should
procure the NTC land to meet the demand for
affordable houses,‟‟ he said. The official made it
clear that as per the Mhada Act, it was well within
the powers of Mhada to procure land from the open
market.
Times of India, 10 June, 2010, Mumbai
Land
Shree Ram to sell part of mill land SRUI plans to acquire land banks to develop high-
end properties, starting with areas where it has
for Rs 2,500 crore inherent strengths. It is targeting Bangalore,
Hyderabad & Ghaziabad. It also plans to come up
Also looking to acquire land parcels in Bangalore, with township projects in Indore and Mysore.
Hyderabad & Ghaziabad
The company expects to register a profit after tax of
Shree Ram Urban Infrastructure (SRUI), the Vikas Rs 2,400 crore from its Worli project, which it
Kasliwal-run real estate company, is set to sell a expects to complete by the end of 2012. Its present
part of its 26.5 lakh square feet in Shree Ram Mills realisation is Rs 50,000 per sft. The companys
in Worli (central Mumbai) for Rs 2,475-2,500 crore, market capitalisation is Rs 400 crore at present.
sources close to the development said.
DNA, 10 June, 2010, Mumbai
The company is in talks with a venture fund that also
has realty parcels and a few local developers for the
same.
However, before the sale, the company will have to
sort out a dispute over a part of the Mill land with the
Kalpataru group.

“Though the exact size of the land parcel that will be

hived off is not available, it is estimated to be about
5 lakh sft and would fetch Rs 4500-5000 per sft. The
deal is expected to be closed before the month end,”
said the source who did not wish to be identified.

Repeated attempts to contact the company officials

failed.

“SRUI is developing a luxury residential project,

Palais Royal, in the Mills land, which would have a
saleable area of 8.8 lakh sft,” the source added. The
Palais Royale was slated to be the tallest tower in
Mumbais skyline before the Lodha group announced
plans to build Mumbais tallest tower in Wadala and
worlds tallest tower at Shrinivas Mills, Lower Parel.

The project was earlier projected to have 88 flats.

However, it recently received approval from for a
FSI (floor space index) of 4 from the Brihanmumbai
Municipal Corporation. Now the company can build
an additional 30 flats at the project, taking the total
to 120. Of the proposed 88 flats, SRUI has already
booked 51 and has received Rs 231.65 crore as
booking amount.
Residential
Worlds tallest residences will
be in Lower Parel
Lodha launching project on 17.5 acres in Shrinivas
Mills compound
A Dubai-based Gujarati-Jain business family with
interests in real estate, shipping and logistics owns
two apartments above the 65th floor of Burj Khalifa,
the tallest residential-cum-mixed-use tower in the
world, currently at 828 metres. A family member
graciously proffered his visiting card when the
correspondent was visiting in January. The address
on it was, inevitably, highlighted.
Incidentally, the top penthouse in Burj Khalifa is also
owned by another Indian.
Now, Lodha group, the Mumbai-based developer, is
giving such connoisseurs of the skies a desi option
bang in the middle of the metropolis.
It is launching the worlds tallest residential tower on
17.5 acres in the defunct Shrinivas Mills compound
at Lower Parel. Lodha had bought the plot in 2005
after a court case on compensation to the mill
workers was settled.
The base price of an apartment in Lodha World
Place is expected to be Rs8 crore, while villas in the
sky are expected to cost up over Rs40 crore. It will
be interesting to note how the builder can arrange
for the massive water supply that will be needed.
Burj Khalifas water supply system pumps up an
average of 946,000 litres per day.
Lodha has hired New York-based architects Pei
Cobb Freed and Partners, who have designed iconic
buildings like the The John Hancock Tower in
Boston, the Louvre Pyramid in Paris and the
Waverock, an integrated township in Tellapur in
Hyderabad in 2008.
The architectural team will collaborate with structural
engineering firm LERA. The main tower will have
117 floors and 350 flats. The company is still
awaiting some permissions.
The towers have been designed like a petal with
three leaves protruding outside. “All three leaves will
rise up to 45 floors; two of them will go up to 81
floors; only one will reach the 117th floor,” said a
source close to the development.
The project will take 4.5 years to complete. Lodha
has roped in Samsung Engineering and
Construction for construction work, the company
responsible for the twin Petronas Towers in
Malaysia, once the worlds tallest.
The project requires funding of close to Rs1,000
crore
DNA, 8 June, 2010, Mumbai
Sj Developers plan Rs 15-cr Royal
Heritage project
Sj Developers & Housing Limited, a city-based real
estate player, has announced its latest residential
project called 'Royal Heritage'. The Rs 15-crore
project, which is to be developed at Patrapada,
close to the site of the proposed All India Institute of
Medical Sciences (AIIMS) on the outskirts of the
city, is expected to be operational by December
2011.
Debidutta Mishra, managing director, Sj Developers
& Housing Limited said, “The Royal Heritage project
is being developed on 1.3 cares of land and it will
have a total built-up area of 1.3 lakh sq ft.
Construction work has already taken off and the
project is set to be commissioned by December
2011.”
The company, which has the distinction of
developing projects like Royal Garden, Royal Tower
and Royal Heights in the city, has already invested
Rs four crore on the Royal Heritage project.
The Royal Heritage would consist of 70 flats in all in
eight storeys and it would offer a mix of one BHK
(bedroom hall kitchen), two-BHK, three-BHK and
four-BHK flats. While the built-up area of a single
BHK flat would be 650 sq ft the carpet area for
Residential
two-four BHK flats would range from 1300-3000 sq
ft. The flats are priced at Rs 2500 per sq ft.
Bookings for these flats have already begun and so
far 37 flats have been booked, Mishra claimed.
The Royal Heritage would offer to its occupants a
fully equipped gymnasium, a separate and secured
play area, a recreation room, a large banquet hall
and a library.
“With our emphasis on customer requirement, we
are working more to develop sustainable
infrastructure, landscaping, clubs and facility
management in all our projects.
As the developers of this project, Sj brings with itself
more than seven years of experience in the realty
sector in the state. Being a local player, we have an
advantage to judge the mindset of the customers
and their basic needs”, said Mishra.
Sj Developers is planning to launch real estate
projects in other towns of the state like Angul,
Berhampur and Puri and the company is the
process of creating land banks in these locations.
Business Standard, 8 June, 2010, Kolkata
117-STOREY CITY PROJECT HITS
ECO ROADBLOCK
Even as the Lodha Group announced the
construction of a 117-storey tower in Lower Parel on
Tuesday, purported to be Mumbai‟s tallest
residential building, the project has hit a hurdle. The
State Expert Appraisal Committee (SEAC), an
environment body comprising independent experts
and former bureaucrats, has objected to the plan
and asked the developer to revise the proposal.
An advisory body set up by the Centre to scrutinise
construction and infrastructure projects in the state,
the SEAC criticised the Lodha Group and two other
developers — IndiaBulls and DB Group — in its
meeting on May 24-26, saying their projects sought
“unacceptably high” construction area.
Lodha‟s construction area is more than 13.3 times
the net plot area. “Unless these are significantly
reduced, it would not be possible to consider the
proposal,” it was noted in the minutes of the
meeting.
Hindustan Times, 9 June, 2010, Mumbai
AMEND PLANS, ECO PANEL
TELLS BUILDERS
The State Expert Appraisal Committee (SEAC), the
environment body, which has raised questions over
the Lodha Group‟s, plans to build a 117-storey tower
in Lower Parel, has also objected to development
proposals by Indiabulls and DB Realty in central
Mumbai.
It has asked the groups to revise their plans, saying
they need to reduce the proposed construction area,
and raised concerns over strain on infrastructure —
water supply, waste generation, population density
— in overcrowded areas in the island city.
Hindustan Times, 9 June, 2010, Mumbai
Lodha to invest Rs 2kcr in 117-
storey project
REAL estate firm Lodha Developers will invest Rs
2,000 crore to develop the world‟s tallest residential
tower in Mumbai to cash in on the continued surge
in home prices in India‟s commercial capital.
“We will fund the project through internal accruals
and pre-launch sales,” managing director Abhisheck
Lodha told a press conference. “We are also looking
at some private equity investments for the project.”
Although he declined to disclose details of the PE
investments, sources familiar with the matter said
Lodha have initiated discussions with leading
Singapore funds GIC and Temasek, and a property
fund of mortgage giant HDFC, to raise over Rs
1,000 crore.
Residential
Lodha Developers will start bookings by end of this
month and expects to complete the project by 2014.
“We expect to roll out 300 residential apartments
and notch sales of about Rs 5,000 crore from the
project, “ said Mr Lodha.
The company will also construct a two-acre
government car park in the adjacent area, which,
real estate experts said, will help it to get additional
FSI for the residential project.
Once completed, the 117-story tower will stand
close to half-a-km tall, dwarfing the tallest building
Queensland Number One in Australia, whose height
is 323 metre. Christened as World One, the tower
will be higher than some of the iconic global
landmarks including Sears Tower in Chicago, Jin
Mao Building in Shanghai and Empire State Building
in New Work.
“It is not about the tallest tower, but we are looking
at providing our customers a great experience to live
in, “ said Mr Lodha.
The company, which deferred its initial share sale
last year, will launch an IPO once the market is
stabilised, said Mr Lodha. Lodha can now ask for
higher valuations due to its ownership on two iconic
buildings, said owner of a real estate company who
did not wish to be named. Last month, the company
bagged a 22.5-acre property in Mumbai after bidding
Rs 4,050 crore in the country‟s biggest land deal.
The tower will come up on the 17-acre plot of the
defunct Shrinivas Mill in Lower Parel, central
Mumbai, which the Lodhas bought nearly five years
ago. It will house three and four BHKs, lavish villas
with private pools and some super-luxurious duplex
flats. It will have over 5 acres of landscape area,
including a 80,000 square feet sports club at a
height of 175 feet above ground. It will also have an
observatory at a height of 1,000 ft. Flats will carry a
minimum price tag of Rs 7.5 crore. The company
has hired the services of New York-based architect
Pei Cobb Freed and Partners, which has completed
nearly 200 architectural marvels across the globe,
including Louvre Pyramid in Paris, Bank of China
Tower in Hong Kong, and John Hancock Tower in
Boston. “We can assure you that the building will
have all the necessary safety measures in case of
an emergency,” Jay Berman, partner at Pei Cobb
and Freed told ET.
The Economic Times, 9 June, 2010, Mumbai
HIRCO HANDS OVER FLATS AT
PALACE GARDENS
Hirco Developments, which launched a large
residential township project, Palace Gardens, couple
of years ago during the realty boom at Oragadam
near Chennai, handed over the first set of residential
apartments last week.
Palace Gardens is among Chennai‟s largest
township projects and will have 10,000 apartment
units, when fully completed over multiple phases.
However, in the first phase, it took up the
development of only 928 apartments for construction
across two towers of 15 floors, six towers of 27
floors, and 11 low-rise buildings (ground plus three
floors).
Financial Chronicle, 10 June, 2010,
Oversupply in Mumbai luxury
housing looms large
Property developers are dreaming of making Lower
Parel, a former textile hub in central Mumbai, into a
super-luxury residential address for the country‟s
ultra-rich.
However, analysts and property consultants see
oversupply of premium houses looming large on the
island city‟s skyline.
In all, Lower Parel is expected to see over 10 million
sq ft of residential supply in the next three to four
years, according to Religare Capital Markets.
Whenever developers see demand in one area, they
launch projects there. But when the projects get
completed, the demand may not be there,‟‟ says
Pranay Vakil, chairman of Knight Frank, a property
consultant.
Too much, too soon?
Vakil‟s words clearly reflect the movement in
Mumbai. Prices of high-end properties in South
Residential
Mumbai went down 50-60 per cent during the
slowdown of 2008-09. “I feel there is a limited
demand for high-value apartments of Rs 5 crore.
Demand will not sustain unless the whole supply is
spread out over the five years,‟‟ Vakil adds.
According to estimates, about 7,000 new luxury
apartments are expected to be available in the city
in within a year, for over Rs 4.7 crore each.
On Tuesday, the Lodha group announced a 117-
storied residential tower, World One, touted as the
world‟s tallest residential tower, on the defunct
Shreeniwas Mills plot in Lower Parel. The tower will
have 276 apartments and a built-up area of 1.2
million sq ft. With prices only millionaires can
afford—Rs 7.5-50 crore—the project is expected to
have over 200,000 sq ft of landscape area for the
residents, with am 80,000-sq-ft sports club at 175 ft
above the ground.
Karthik, senior vice-president of the Lodha group,
which has almost sold off its Bellissimo project in the
Mahalaxmi area of Mumbai.
“There will be demand for projects in these areas as
no major supply is coming up in other parts of
Mumbai. I feel there is sufficient supply in this area
to meet the demand,‟‟ says Vinod Goenka, chairman
of DB Realty, which is developing premium
residential buildings in nearby localities.
Goenka believes prices in the area will not go below
Rs 20,000 per sq ft, given the cost of land and
construction.
Business Standard, 11 June, 2010, Mumbai

Just a few yards away, DLF, the country‟s largest

developer, is planning to launch Mumbai‟s largest
luxury residential project with a built-up area of 4.5
million sq ft, where it is building three towers of 90
floors each. The entire project is expected to have
around 1,000 apartments in a price range of Rs 5-10
crore.

Many say pricing will be the key in selling such

apartments. While Lodha did selective marketing of
its World One project among its old customers at Rs
25,000 a sq ft, DLF is also expected to sell the
apartments in the similar price range.

“We believe new launches from DLF, Lodha and

Raheja have to be at a decent price (Rs 15,000-
20,000 per sq ft) to bring absorption in Lower Parel,‟‟
said Religare analysts in a report. Adds Raminder
Grover, chief executive of Homebay Residential, a
property consultant: “Developers need to be
realistic.‟‟

Developers unfazed
Developers, however, believe there is enough room
for their projects. “There may be some moments of
oversupply but there is a depth in the market. Good
products definitely sell in the market,‟‟ says R
Commercial/ Retail
TIME FOR MALLS TO THINK
LONG-TERM
While the shopping mall phenomenon is fairly new
in India, the industry has already seen its ups and
downs in a very short span of time. Three-four years
ago, almost every developer was able to sell mall
space to investors or signed leases with retailers
even before starting construction. Now, almost 30-
40 percent of shopping malls are lying half-filled and
others have to rework lease agreements or work on
just revenue share.

So what will make the mall business viable and

more successful? The key is to accept that any
longer term success comes only from long term
planning and short terms gains are always short-
lived. Most malls were conceptualised on very little
homework or research about the future catchment
dynamics or financial feasibility for a retailer. Malls
were planned either because there was already a
popular mall in the vicinity (so the footfalls were
already there) or just because there was a property
available to the developer (without considering the
accessibility and relevant catchment).

Hindustan Times, 7 June, 2010,

Township
BIDS FOR UP TOWNSHIPS TO The aim is to promote and facilitate private
investment in developing new townships with
OPEN ON JUNE 10 modern amenities in all the 71 districts.

The financial bids for the townships proposed to be Business Standard, 7 June, 2010, New Delhi
developed by private developers and consortiums in
Uttar Pradesh will open on June 10.

Five companies, including Eldeco, Mantri Housing,

Supertech, Shristi and DLF, are in fray after
qualifying the Request for Proposal (RfQ) round in
January.

“Seven companies had submitted their technical

bids, of which five qualified for the final bidding
process,” a senior housing and urban planning
department official told Business Standard.

The deadline for filing Request for Proposal (RfP)

was extended last month on the request of
prospective bidders. Awas Bandhu under the state
housing department is the lead agency. The
companies have bid for developing townships in
Lucknow, Ghaziabad, Gautam Buddha Nagar and
Kanpur. The townships would be developed outside
the jurisdiction of the local municipalities and
development authorities.

“The private parties have bid for these towns on

basis of their due diligence and demand analysis,”
he added. Feedback Ventures is the consultant for
these modern townships proposed to be developed
all over UP.

Earlier, the state government had amended its New

Township Policy on suggestions of the private
parties during pre-bid meetings and conferences.

“Considering the real estate slowdown last year, we

are happy with the response the companies have
evinced in developing townships,” the official noted.

The minimum land area and investment criteria for

each township is 1,000 acres and Rs 1,000 crore,
respectively. The flow of investment is likely to be
over Rs 10,000 crore in this round, as it would entail
investment of almost Rs 3 crore to develop an acre
of land.
Township
Inaugurating the Phase-I of Waverock, chief minister
K Rosaiah said creation of physical infrastructure of
international standards was a prerequisite for the
ICT industry to set up shop and operate in a most
optimal manner.
“Andhra Pradesh has got the highest number of 57
IT special economic zones (SEZs), as against the
total number of 351 IT SEZs approved by the Centre
in the country. When all the SEZs are fully
operational in the next three years, these will create
more than 100 million sft of office space and about 1
million direct employment in the IT sector,” the chief
minister said.
Business Standard, 2 June, 2010, New Delhi
HIRCO COMPLETES FIRST
PHASE OF TOWNSHIP
Hirco Developments, the project management
company, announced on Wednesday that the first
group of flats in its Hiranandani Palace Gardens
Township coming up in the suburban area of
Chennai at Vadakkapattu village near Singaperumal
Koil would be delivered soon.
Addressing presspersons here V. Suresh, Principal
Executive Officer, Hirco, said the township, set on
369 acres, would have 10,000 apartment units with
the accompanying physical and social infrastructure.
As part of the first phase, 928 apartments were
under construction across two towers of 15 floors;
six towers of 27 floors and 11 low rise buildings.
Suresh said that out of 2.9 million sq. ft. the
company had already sold 2.14 million sq. ft. in the
Chennai township. The prices per sq.ft. ranged from
Rs. 2,400 to Rs. 3,600, he said. Hirco is also
developing another master planned township
„Palace Gardens' set on 583 acres in Panvel, in the
Mumbai Metropolitan region. The two projects
combined will have 66.4 million sq.ft. of buildable
area of residential, commercial, retail and social
space.
The Hindu, 3 June, 2010, Hyderabad
Eco-friendly Township
Golf City, a project by a consortium of three
developers, promises customers an eco-friendly
ambience with all the amenities of an advanced
urban township.
Ravi Kumar Mangalam writes
Aconsortium of three builders is coming up with
“Golf City” in Noida‟s Sector 75, a project that has
been notified as “Eco-friendly Township by the
Noida authority in the tender bid”. The consortium
comprising Gardenia Group, Maxblis and AIMS are
proudly showcasing it as one of the few integrated
townships in the whole of Noida.
“Golf City is an integrated township, and that is our
USP. From commercial space to residential space,
from institutional to entertainment facilities — not to
speak of a 50-acre green belt with parks, water
bodies and various kinds of flower gardens — it is a
self-sufficient township where residents need not
step out of the complex for any of their domestic or
social needs,” Sanjeev Sharma, MD of Gardenia
Group, says.
The project is located adjacent to Sectors 76, 77
and 78, which are all chock-a-block with group
housing projects. The other significant feature of
Golf City is its connectivity. Just across the fully
developed Sector 50, the proposed Metro line from
Sector 32 to Sector 82 will pass by the township. It
is also only about 2km from Noida‟s City Centre
Metro station. The project is very close to the
proposed FNG Expressway and lies on a 75m-wide
road connecting to Greater Noida.
The whole project is going to be raised on a 150-
acre plot and has 2.5 million sq ft of commercial
space, which is spread over 15 acre. The
commercial space includes retail, daily-utility shops
and office space. The residential area will have 20
million sq ft of built-up area with flats and duplex
villas, and ample parking space. The flat sizes will
be in the range of 950 sq ft to 2,950 sq with a basic
selling price of Rs 3,200/sq ft (plus charges). Thus,
the township will encompass housing for the
affordable segment on one end and premium
segment on the other.
Township
Citing the other USPs of the integrated township,
Sharma says: “Unlike gated communities and group
housing projects, we have put emphasis on having a
lot of open space for residents of Golf City. We are
also providing an incampus practice golf course.
The campus has an integrated sports complex with
12 tennis courts, an Olympic-size swimming pool,
squash courts, a cricket ground, a football field and
volleyball courts. There is also a 2-lakh sq ft club
with world-class amenities. Perhaps, the most
enchanting feature of the township is the central
boulevard with a musical fountain where residents
can relax in the evening. This is a feature in
European townships, as well as the recent Dubai-
based real estate residential developments. The
boulevard is surrounded by residential flat towers,
whose ground floors will have shopping centres
[apart from the retail space already earmarked in the
designated areas of the project‟s plan] for the ease
of residents. Apart from this central musical
fountain, there will be other musical fountains and
gushing waterfalls.”
flats on offer in the township with each tower being
15-floor high, along with independent villas. The
project will be executed in three phases and two
phases have already been sold out. The whole
project will be handed over to customers, phase
wise, within the next three years,” Sharma says.
Other projects of the consortium include Glory in
Noida‟s Sector 46 (to be handed over in Q4 of 2012)
and Grace in Sector 61 (to be handed over in mid-
2011). Both the projects have been sold out. Apart
from those in the NCR, AIMS Krishna Dham on
Mera Road, Mumbai and AIMS Tower in Basai,
Mumbai are projects executed outside. Gardenia
Group‟s earlier projects include Gardenia Green,
which has been completed and handed over in
Vasundhara, Sector 18 and Le Gardenia Goa in
Goa, a villa project, which has been completed and
sold out. Gardenia Group is also one of the
promoters of Crossings Republik township.
The Times of India, 5 June, 2010, Delhi

The whole project will be built using earthquake-

resistant RCC material and the layout plan is
vaastu-compliant. The prospectus of the townships
lists in its specifications vitrified tiles to be fitted out
in drawing room, dining room, kitchen, and
bedrooms, while the master bedroom will have
laminated wooden flooring. Toilets and balconies
will have ceramic tiles. Provision has been made for
modular kitchens, with granite-top working platform
and stainless steel sinks; the kitchen would also be
embellished with designer ceramic tiles up to 2ft
above the granite-top working platform. Toilets
would be fitted out with ceramic tiles up to 7ft high.
To give an artistic finish, the interior walls would
have designer-concept paint with a combination of
texture and rich oilbound distemper. Modular
electrical fittings have been provided for in all the
rooms.

“We will have primary schools, a hospital, and a

hotel among the institutions in the township. We are
in talks with a US-based entity, Stanford Group, for
building the hospital in Golf City. There are 9,000
SEZ
GOVT TO TAKE UP 6 FRESH SEZ
PROPOSALS TOMORROW
The government will take up six fresh requests for
setting up special economic zones (SEZs), which
have emerged as major sources of exports,
tomorrow. The inter-ministerial Board of Approval
(BoA) on SEZs headed by Commerce Secretary
Rahul Khullar will also consider framing rules that
will allow migration of units from one zone to
another, an official said.

As of now, there is no specific provision for transfer

of a unit from one SEZ to another. The new SEZ
proposals include Hindalco Industries Ltd's
proposed aluminium sector SEZ at Bargwan,
Madhya Pradesh, and Larsen & Toubro's IT SEZ at
Mysore, Karnataka. The board will also take up the
request of real estate major DLF for re-notification of
its SEZ in Kolkata.

The Economic Times, 8 June, 2010, New Delhi

NO CLARITY YET ON SOPS TO

SEZS IN DIRECT TAXES CODE
Even as Larsen and Toubro withdrew its proposal
for an IT/ITeS Special Economic Zone (SEZ) citing
uncertainty in tax treatment towards SEZs in the
Direct Taxes Code (DTC), the Commerce Ministry
has said the Finance Ministry is yet to consult it on
the continuity of fiscal sops in the DTC to these tax-
free zones.

The Board of Approval (BoA) for SEZs on Tuesday

approved the withdrawal of formal approval to L&T's
IT/ITeS SEZ in Mumbai. Dr L.B. Singhal, Director-
General, Export Promotion Council for EOUs and
SEZs (EPCES), said, “If there is no income tax
exemption, no entrepreneur will set up a unit in
SEZs. Naturally, no developer would want to
develop SEZs in such a situation.” He said many are
now holding back their investments in SEZs due to
the uncertainty created by the DTC.

The Hindu Business Line, 9 June, 2010, New Delhi

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