With the Left parties out of its way, the UPA government is likely to relax the SEZ policy and may consider the demand from developers for raising the land ceiling of 5,000 hectares.
The empowered Group of Ministers (eGoM), headed by External Affairs Minister Pranab Mukherjee is scheduled to meet tomorrow for clearing long-pending grey areas in the SEZ policy backed by a legislation.
The issues expected to be taken up by the ministers’ panel include demand from developers to revise the 5,000 hectare land ceiling for a SEZ. It would also provide clarification on the definition of what constitutes a ‘vacant land’ for the purpose of using it for SEZ units.
Mall mania seems to be fading. With inflation cautioning consumers, retailers, too, are watching their step.
“Despite lack of quality space in the market, the top eight cities in India are currently witnessing around 18% vacancy across the 40 mn sq ft of operational malls. This is because most of the supply has come within the same micro-markets targeting the same catchments, creating an oversupply,” says Rajneesh Mahajan, director of retail services at real estate consultancy firm Cushman & Wakefield.
This has had two major implications — malls have slashed rentals or are converting their projects into office projects.
The FDI in real estate will increase by $21 billion to touch $25 billion in next 10 years, said Assocham.
Assocham said that its forecast is based on the fact that real estate in India would be a hot market.
It said that investors are constantly looking at India to park their surpluses as returns on such investments would be the highest in near future.
At present, the domestic real estate market is expected to be of $15 billion in which the foreign direct investment contributions is estimated around less than $4 billion.
The bank credit to this sector by end of 2007-08 has been estimated over Rs 3,50,000 crore which will multiply substantially in the coming years in view of the growth that the sector is expected to register, adds the Assocham analysis.
JPMorgan plans to invest more than $1 billion in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and lenders and rival investors recoil from property markets.
The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to subprime mortgage investments, is using its global special opportunities group to finance Asian property firms and their projects.
“It’s a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet,” the group’s Asia real estate head, Bryan Southergill, told Reuters in an interview.
“In the next three years we aim to invest north of a billion dollars in this part of the world, if market conditions allow,” Southergill said.
Hit by slowing demand for upscale housing as financing costs touch the highest level in seven years, realty developers are building homes in the Rs40 lakh-Rs60 lakh range to tap higher consumer demand in that price bracket.
Property firms are reducing the sticker price on flats by building low-rise (up to three floors high) blocks and reducing the floor area in each unit.
Last month, Unitech Ltd, India’s second largest listed developer, launched flats in that price range at its 320-acre luxury residential township, Nirvana Country, in Sector 50 of Gurgaon, near New Delhi. The township was initially planned for building villas, high-rise apartments and developing individual plots.
The newly launched section called Woodstock Floors offers two- and three-bedroom flats. The launch followed waning demand for villas costing between Rs1.2 crore and Rs3 crore. “But there is strong demand from buyers in Gurgaon for products priced in the Rs40-75 lakh range,” Sanjay Chandra, managing director of Unitech, said last week after the firm announced its results for the April-June quarter.
Venture Capital Funds (VCFs) and Foreign Venture Capital Investors (FVCI) have reduced their investment in real estate companies during the June-2008 quarter. However, the overall investment by VCFs and FVCI rose a modest 2.2 per cent to Rs 32,379 crore against March quarter figure of Rs 31,682 crore, according to a latest data available with SEBI.
The report has been compiled on the basis of quarterly information submitted to SEBI by registered VCFs and FVCIs.
While flows into real estate fell nearly 14 per cent to Rs 6,286 crore from March end quarter figure of Rs 7,285 crore; the other sector that took a hit was biotechnology, where their investment slipped to Rs 346 crore from Rs 385 crore.
However, media, Industrial and services sectors witnessed growth in inflow from VCFs and FVCI.
Kishore Biyani-promoted Future Capital Holdings has identified the Eastern Paper Mill property in Kolkata for its hotel. The company has signed a deal for mixed-use development on the 5 lakh sq ft plot.
Earlier, Financial Chronicle had reported that Future Capital’s Hotel Fund is close to signing a deal to start its hotel in Kolkata and Thiruvananthapuram. Besides these two cities, the talks are also on in cities such as Bangalore, Hyderabad, Mysore, Mumbai, Chennai, Bhubaneswar, Ahmedabad and Pune.
A property consultant involved in the deal said the market value of Eastern Paper Mill plot on Kolkata’s VIP Road could be around Rs 70-100 crore.”They plan to develop a hotel, mall and commercial place in this property,” said the official.
“This is part of their initiative to leverage their existing property,” he said. FCH Hotel Fund is in the process of tying up a master management contract with a leading international business brand to manage the business hotel portfolio.
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