The unending euphoria of real estate sector in India witnessed during the last few years is finally starting showing signs of ebbing. The talks of new malls, complexes, residential projects being built are all now being kept under bags.

There is an overall slowdown in demand across India as has been experienced by industry players. Property prices and rentals are correcting which have led to the erosion in market capitalisation of many listed players like DLF and Unitech.

The slowdown is aided by the fall in stock markets as wealth creation does not happen and there is lack of capital among investors to invest in real estate projects. Also, to adjust their share market losses, many investors are forced to sell off their real estate properties.

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Among the pioneers of organised retail in India, Shopper’s Stop may be up for sale if The Economic Times is to be believed. Though the management has dismissed the news as ‘baseless rumours’.

If the deal happens, it would be the second major deal in retail space in recent times after the Indiabulls-Piramyd buyout.

Shopper’s Stop is owned by the K. Raheja Group which has interest in real estate development and hotels, and was the first retail company to be listed on the stock exchange.

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India’s third largest property developer after DLF and Unitech, Indiabulls is using its zooming market capitalisation in financial services and real estate to venture into retail via its arm Indiabulls Real Estate Ltd. which currently holds a land bank of 4,000 acres.

And pipping up Aditya Birla in the race for acquiring Piramyd Retail, Indiabulls has acquired 64% stake in the company from its promoter Ashok Piramal for Rs.133 crore. This would give Indiabulls Wholesale Services access to seven lifestyle ‘Piramyd Megastore’ and 35 neighbourhood ‘Trumart’ stores in prime locations across the country.

The acquisition would complement Indiabulls plans of opening 30 hypermarkets in Tier II cities with an investment of Rs.1500 crores. Now it also has lifestyle and convenience stores under its fold. The company’s wholesale stores are also taking shape and are modelled on a B2C concept rather than current B2B stores like Metro and Wal-Mart in India.

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McDonald’s is soon going to have a competitor in India with the entry of US fast food chain, Burger King into India in partnership with DLF, if reports are to be believed.

Burger King may set up a 51:49 partnership with DLF and operate on a franchisee model. The venture will take a larger shape once DLF puts in its retail plans of building malls and shopping centres across India within next 3-4 years.

Earlier Burger King was in talks with Future Group but the deal fell mid-way when Kishore Biyani started negotiations with Starbucks.

The primary reason for Burger King choosing to partner DLF instead of any player in food business is the availability of prime real estate with DLF and rising rentals and real estate costs across India. Rentals to sale ratio in India is very high at 30-35% while global figures are pegged at just 10-12%, making it an unsound business proposition.

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After the successful models of Navi Mumbai and Noida, Bangalore is also soon going to get its ‘New Bangalore’. This would would help Bangalore in overcoming its infrastructural and basic problems which was making it less attractive to companies, investors and residents.

The project would be developed in Bidadi Township through an equal Joint Venture between DLF and Dubai-government owned Limitless Holdings, a sister company of Nakheel. The Bidadi Knowledge City will be situated at about 30 km from Bangalore and 15 km from Mysore.

The total area to be developed under the project would 9,884 acre and entail an investment of around Rs. 60,000 crore over next 7 years, which would be the largest ever investment by any private sector company.

DLF and Nakheel are already developing two townships of 20,000 acres each at Gurgaon and south Maharashtra at an investment of Rs 40,000 crore. Bidadi Knowledge City will be three times the size of DLF City in Gurgaon.

‘New Balngalore’ would have metro rail and ring roads connection with Bangalore along with airports inside the township.. it would have shopping malls, multiplexes and hotels and homes for around 750,000 people.

The project location may work to its advantage as it is located on the Bangalore-Mysore railway line and part of the Southern Freight Corridor. Also, it is well connected to existing and upcoming international airports of Bangalore though an expressway. 

Once the project gets fully functional, it would surely aid in taking Bangalore to the next league and help in bringing more investments to the city.

World’s second largest retailer, France based Carrefour, is again planning for an Indian entry into the growing organized retail market. Earlier in June, it had decided to pull out of the Indian market after talks failed with various local partners.

But this time Carrefour is taking a more measured approach and looking at a partner who has access to prime real estate and has considerable political clout rather than having an expertise in retail, and DLF has emerged as the front runner for partnership.

Reports also say that it is also in touch with Reliance ADAG, Essar Group and Kishore Biyani’s Future Group. For Anil Ambani and Essar, it may mean exploiting the retail potential by partnering Carrefour and for Future Group, it may provide a foreign partner for Big Bazaar which could be useful owing to increasing competition.

Earlier, Carrefour had talks with HDFC, Tatas, Bharti, Landmark and Bombay Dyeing for the retail foray. But the talks failed since Carrefour wanted a conservative and slow rollout much to the dislike of Indian players.

If Carrefour indeed partner DLF, then it will be a step forward for DLF as it can get a sizeable retail presence with a global partner at prime locations. It will also integrate well with the large malls that DLF plans to build as Carrefour could become the anchor tenant.

But among all this, the opposition to Indian and foreign retailers would be a big question mark before the actual deal materialises. via

With the government contemplating amendments in the pre-independence enacted Indian Trust Act, 1882, the trusts will have greater flexibility with their investment decisions.

According to present law, registered trusts can invest their resources either in securities notified by government or prescribed by the trust’s charter or under a high court ruling. The investment options prescribed mostly refer to  the British Crown, the securities issued by the then governor general and hence are not sufficient in today’s context.

Moreover, while the newer trusts have framed their charters with wide-ranging options to provide for freedom in investment decisions, the older trusts find it hard to meet their investment needs in the present scenario.

The Income Tax Act makes it mandatory for the registered trusts to invest 85% of the funds received in a year in specified securities in order to get tax exemption. Thus the trusts have huge resources for investment purposes.

The amendment in the Act will necessarily open up a new investment gateway for Indian trusts thereby helping in capital appreciation, mobilisation of funds in economy and optimum utilisation of resources . The trusts can also take advantage of investment opportunities in booming sectors like capital market and real estate.

via economic times

India’s largest real estate company, DLF is strengthening its hotel portfolio by adding new hotel properties to its list.

After announcing a partnership with Hilton in November 2006 to build 75 business hotels and service apartments throughout India, DLF Hotels would open a luxury hotel in Gurgaon before 2010 Commoniwealth Games in partnership with Four Seasons Hotels and Resorts.

This would be second Four Seasons hotel to come up in India. The first one is scheduled to open in Mumbai this year.

The DLF-Four Season Hotel would be a 230 room five star hotel located at the DLF Golf & Country Club in DLF City, Gurgaon. It would have facilities for meetings, functions, a spa and several dining options.

By adding a luxury hotel under its kitty, DLF would certainly achieve its target of having 30,000 rooms in next 7-10 years. Currently, DLF has 6,000 rooms under development. Going by scale of DLF’s operations and history, the ambition can be least doubted upon.

The Finance Ministry is busy drafting the new Direct Tax Code which would be tabled in the winter session of Parliament. The new Code would make it mandatory to pay Wealth tax alongwith Income tax. There would be a combined form for payment of both taxes together.

Wealth tax is levied on individual, HUF and company@ 1% on net wealth in excess of Rs.15 lacs. The assets which constitute wealth for the purpose of wealth tax are residential or commercial building, farm house within 25 kms from the local limits of any municipality, motor cars, jewellery, bullion, yachts, boats, aircrafts, urban land and cash in hand in excess of Rs.50,000.

It is felt that the real estate boom would give impetus to the trend of owning more immovable properties, thereby making the owner liable for wealth tax.

The government’s move to interlink wealth tax with income tax would make wealth tax evasion difficult since till now this tax has been a little of neglected kind. It would also streamline the process of tax collection by cutting down costs.  

To cash in on low mobile penetration and hopes of number portability introduction, real estate firm Parsvnath Developers has applied for a pan-India ‘Unified Access Services’ licence to offer 2G GSM services along with IPTV, Wi-max, Broadband, Internet among others.

Most probably, Parsvnath will form a SPV for the venture in which it would hold 26% stake. It would collaborate with a foreign telecom player holding 51% stake while the rest 23% stake would be with financial investors.

Parsvnath wants to concentrate on smaller tier II cities and rural areas for mobile telephony as these have a lower penetration in comparision to metros. It can draw synergies from its presence in 48 cities in 17 states across India.

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