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Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

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Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

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  • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

    Embassy Plans to List Select Office Assets Via REIT

    Bengaluru real estate major looking to raise about $600 m by the end of this year
    Bengaluru-based real estate firm Embassy Property Developments said it plans to list select commercial assets through its real estate investment trust (REIT) by the end of 2017.

    According to industry sources, the company is aiming to raise about $600 million.

    “We want to do REIT by this year, but there is a lot of work that goes into listing assets,“ said Mike Holland, CEO at Embassy Office Parks, the Embassy Group's joint venture with New York-based private equity firm Blackstone Group. “We have a series of legal meetings on the same this week. We are currently deciding on the structure and the assets that will go into the REIT.“

    Holland did not share the valuation of the REIT, citing compliance issues. The company had in December filed an application with markets regulator Sebi for an in-principle approval to register its REIT.

    “Embassy is also considering if it should put its entire portfolio under the same special purpose vehicle (SPV). We will have around 3.5 million sq ft of office assets that will be completed and can be considered for listing too,“ said Holland.

    In 2012, Embassy divested 50% in its office portfolio to Blackstone.The joint venture company, Embassy Office Parks, has 16.2 million sq ft of office assets, which include properties such as Embassy Golf Link and Manyata Embassy Business Park in Bengaluru, and Embassy Tech Zone in Pune.

    Many large commercial office developers have been looking to list assets through REITs in an effort to generate liquidity.

    These include RMZ Corp, a Bengaluru-based property developer backed by Qatar Investment Authority (QIA), which is looking to list its REIT by the third quarter of 2017. DLF, India's largest developer, is also looking to list its REIT in the current financial year.

    Sebi recently allowed REITs to invest up to 20% in under construction properties. It also allowed REITs to invest in the 2-level SPV structure through a holding company, subject to sufficient shareholding in the holding company and the underlying the SPV.


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    • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

      OVERSEAS EXPANSION - Lodha Bets Big on UK Capital, Looks to Buy More Properties

      Realtor to reinvest revenue from Grosvenor and Lincoln Square projects in the city
      Realty developer Lodha Group is looking to grow its business in the London property market by acquiring more development projects in the city as the Mumbai-based company is planning to reinvest the revenue generated from its two ongoing projects in central London to pick up more properties there.

      Lodha is currently developing two residential projects in Grosvenor Square and Lincoln Square that it acquired in 2013 and 2014, respectively . The company has booked sales worth £170 million at Lincoln Square development so far and has also started sales at Grosvenor Square this week.

      “These two projects together will generate revenue, at current prices, of £1.5 billion (over `12,000 crore) and provide us with the potential to further grow our business here... We are pleased that our first two developments in London have taken off strongly,“ said Abhishek Lodha, managing director of Lodha Group.

      In May, Lodha UK, the London-based development arm of the realty developer, anno unced raising $375 million as construction funding for Lincoln Square development. The facility, which is one of the largest-ever loans from a single provider for a UK residential project, has been provided by Cain Hoy, a private investment company.

      Lincoln Square development includes total 221 apartments with a configuration of studios to four-bed apartments and two penthouses with prices starting at £1 million to £13 million.The development is currently under construction and is expected to be completed in the last quarter of 2018. Over 60% of the first phase of Lincoln Square apartments have been sold to buyers from domestic, Chinese, European, the Middle Eastern markets along with some interest from the US.“This is the best time to look for growth opportunities here (in London property market) and we are looking for new sites in the city for development. Hopefully, over the next one year, we will have another property in our development pipeline,“ said Gabriel York, director, Lodha UK.

      The Lodha Group is currently developing around 41 million sq ft of residential real estate across 31 projects in London, Mumbai Metropolitan Region, Pune and Hyderabad.In FY16, the group delivered 6,800 units across projects.

      (The correspondent was in London at the invitation of the Lodha Group)


      Last edited by yogeshraja; June 19 2017, 01:40 AM.

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      • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

        Lodhas sell £130m flats in London project

        More than three years after it bought two prime properties in London for around Rs 3,900 crore, the Mumbai-based Lodha Group said it sold apartments worth 130 million pounds (roughly Rs 1,100 crore) in its under-construction Lincoln Square property located next to the London School of Economics.

        Lodha UK director Gabriel York said around 80 of the 221 residences in the project have been sold since bookings opened last year. “We are looking at revenues of about 500 million pounds (approx Rs 4,200 crore) when the project is completed,“ he said. The Lodhas acquired this property in early 2014 for 90 million pounds, or Rs 900 crore.The developer will spend another 150 million pounds (almost Rs 1,300 crore) on construction and design cost. Last month, the developer raised $350 million (Rs 2,200 crore) as construction funding for this project from Cain Hoy , a private investment company . “The facility received the largest ever loan from a single provider for a UK residential project,“ said the developer. Lodha Group MD Abhishek Lodha said the Lincoln Square project “befits the area's impressive heritage“ -the imposing 19th century Gothic Royal Courts of Justice building and the landmark Lincoln's Inn is next to the Lodha property . “These two projects together will generate revenue, at current prices, of 1.5 billion pounds (over Rs 12,000 crore) and provide us with the potential to further grow our business here,“ Abhishek said.

        The nine-storey building, when completed in 2019, will have studios to four-bed apartments and two penthouses. The price range starts from Rs 8.5 crore to Rs 120 crore for the penthouse, said Lodha officials.

        The developer also launched its No 1 Grosvenor Square project in London's Mayfair last week.

        Last edited by yogeshraja; June 19 2017, 01:41 AM.

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        • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

          Indiabulls Eyes Farallon's Stake in its 2 Properties

          Co may use funds from share sale by trust to raise holding in office buildings
          Realty developer Indiabulls Real Estate is looking to acquire US-based private equity firm Farallon Capital's 45% stake in two of its key commercial properties in Lower Parel locality of Mumbai, two persons familiar with the development said.

          Earlier on Thursday, IBREL IBL Scheme Trust, a promoter group entity of Indiabulls Real Estate, sold 3.3 crore shares of the realty developer on the stock exchanges during early trading hours.

          The trust, of which Indiabulls Real Estate is the sole beneficiary, has realised around . 662.83 crore at an average pri` ce of about ` . 200.85 per share, the realty developer said in a notice to BSE.

          The company is planning to utilise the funds raised through this share sale to consolidate its holding in its Mumbai office buildings -One Indiabulls and Indiabulls Finance Center -from 55% to 100% by acquiring Farallon Capital's stake, according to the people cited earlier.

          “The fund's stake in these assets with 3.3 million sq ft leasable space is expected to be around ` . 650 crore. The stake buy will take place through the listed Singapore REIT, which controls these two properties,“ one of them said.

          Email queries to both India bulls Real Estate and Farallon Capital remained unanswered as of press time on Thursday .

          The company in its regulatory announcement had stated the sales proceeds would be used for meeting its funding requirements for ongoing businesses and general corporate purposes or any other purposes as may be approved by its board.

          It may be recalled that the company had in April announced reorganising its business in two parts -development arm and the rental arm under Indiabulls Commercial Assets Ltd. The rental income for the company in the current financial year is `. 700 crore from its portfolio of total 5.2 million sq ft of office assets.These also include both of its Mumbai commercial buildings that have an occupancy level of 95%.

          Following the consolidation the company expects ` . 1,357 crore of rental income starting from financial year 2020 from the existing office assets and the ongoing commercial development projects.


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          • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

            Sebi launches online registration system for REITs, InvITs

            The new system would help REITs and InvITs to complete registration and other regulatory filings with Sebi much faster and in a cost-effective manner

            NEW DELHI: To make it easier to do business, markets regulator Sebi today said it has introduced an online registration system for REITs and InvITs.

            The new system would help REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) to complete registration and other regulatoryfilings with Sebi much faster and in a cost-effective manner.

            "All applicants desirous of seeking registration as REITs or InvITs are now required to submit their applications online only, through Sebi intermediary portal," the Securities and Exchange Board of India (Sebi) said in a circular.

            The online system, which can be used for application for registration, reporting and filing under the provision of REITs and InvITs regulations, has been made operational, the regulator noted.

            Also, the existing Sebi registered InvITs have been advised to activate their online accounts.

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            • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

              Foreign and local funds home in on Indian real estate

              Kailash Babar
              MUMBAI: In the backdrop of an ongoing transformation in business environment, Indian real estate is witnessing a robust rise in investment inflow as both foreign and domestic institutional investors are infusing more funds into the sector.

              The Indian property market has posted a 40% on-year jump in inflow of funds since the beginning of this year. Institutional investors, including private equity, pension funds, sovereign funds, domestic investors, and non-banking finance companies have pumped in $3.15 billion in the country’s real estate between January and June end, showed a Knight Frank India study.

              According to a separate study by JLL India, India has witnessed private equity inflow of Rs 16,008 crore until June this year compared with Rs 15,601 crore a year ago.

              Over the past 18 months, the government has launched a number of policy initiatives including the implementation of the Real Estate Regulator Act (RERA), implementation of the Goods and Services Tax (GST), Real Estate Investment Trusts and the demonetisation drive. “The global economy has started recuperating with improving job prospects, decline in unemployment rates and rising rate of inflation in the developed economies. Investors in these countries are expecting diminishing inflation adjusted returns. With the strengthening of domestic currency they are finding assets in emerging markets (EMs) cheaper from an investment perspective,” said Samantak Das, Chief Economist and National Director, Research, Knight Frank India.



              Stable government and implementation of reforms such as the GST is helping India attract the highest interest of global investors. Real estate as the most important investment asset has witnessed a surge in flow of foreign investments. With the sector undergoing a transformation through the Real Estate (Regulation and Development) Act 2016, affordable housing focus and the Real Estate Investments Trusts, domestic investors have also joined the bandwagon.

              “A slew of reforms unleashed by the government is changing the investment scenario in the country and has made India one of the most attractive emerging markets from an investment point of view. So much so that a comparison between debt and equity investments seen between 2014 and first half of 2017, which stand at more than Rs 98,000 crore, are higher than the Rs 95,000 crore seen during an entire decade from 2003 to 2013,” said Shobhit Agarwal, MD - Capital Markets & International Director, JLL India.

              Among all the segments, commercial realty has witnessed the highest interest from investors owing to falling capitalization rates. With lowyield environment and rates further expected to go down, yield-generating commercial assets have been turning out to be a good bet to generate healthy risk adjusted returns.

              “Excess liquidity in the market has created compression in interest rates that will lead to fall in capitalization rates in future, hence locking such investments at higher yields will be helpful for appreciation in capital values of these assets. Corporates are also increasing head count as they are focused on growth due growing GDP numbers thus leading to higher absorption. Overall, it has a momentum impact in investment for commercial real estate,” said Rubi Arya, executive vice-chairman of Milestone Capital Advisors.

              Milestone Capital Advisors itself has invested in two offices in this quarter and are aggressively scouting for more opportunities.

              Global investors, including Blackstone Group, Singapore's sovereign fund GIC, Canada Pension Plan Investment Board (CPPIB), Goldman Sachs and Qatar Investment Authority have already been investing in Indian realty assets for the past few years. In addition to this, more funds are eyeing investment and alliance opportunities.

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              • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

                Firms wait and watch as investors turn cautious on InvITs

                Reliance Infrastructure is confident of launching its InvIT for seven road projects in this quarter

                Amritha Pillay
                Initial performance of the country’s first two infrastructure investment trusts (InvITs) has turned investors cautious on such investments. Companies, however, are hopeful that with the current InvITs stabilising, investor confidence will return.
                IRB Infrastructure and Sterlite Power are the two companies that have listed InvITs; both are currently trading below their issue price. “The performance of these two InvITs has forced other companies, which were considering tapping this market, to go into a wait-and-watch mode. We may see more issuance happening only when there is stability to the two listed ones,” said an industry expert, who did not wish to be identified.
                Lalit Jalan, chief executive officer of Reliance Infrastructure, said investors were on the back foot. He, however, added that the market had now stabilised. R-Infra is confident of launching its InvIT for seven road projects in the current quarter.
                IL&FS Transportation Networks Ltd (ITNL), Reliance Infra, and MEP Infrastructure are the three companies which had plans for an InvIT at various stages.
                “We have got an in-principle approval. We should be getting authority clearance, which is required as a precondition, in the next few days, post which we should be able to prepare the draft red herring prospectus (DRHP) and file it,” Jayant Mhaiskar, managing director for MEP Infrastructure said in an email response.

                ITNL, which plans for a private placement for its InvIT issue, is also expected to take a few more months. “They may look at it before the end of the current calendar year. The main concern has been the investor response based on the post-listing performance of the first two InvITs,” said a person with direct knowledge of the development.

                IRB InvIT Fund early this week also announced its first distribution of cashflow to the tune of Rs 90 crore. Industry experts say this could help bring back investor interest to some extent.

                There is another set of companies across the renewable and infrastructure space which could look at this instrument next year based on how the initial InvITs perform. However, not everyone is yet writing off the instrument as a viable infrastructure financing model. “InvITs are long-term investments, investors cannot expect an upside in the first few months of listing. We are optimistic in the long run this will prove as a good instrument for infrastructure financing,” said Venkataraman Rajaraman, senior director and head of infrastructure and project finance at India Ratings.




                http://www.business-standard.com/art...0400012_1.html

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                • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

                  Funds flood into India real estate in record first half

                  admin
                  Share 27/07/2017 , by , in News/Views
                  Investment funds are renewing their liking for Indian property — in the first six months a record Rs160 billion (Dh9.1 billion) poured in and with more on the way.

                  That’s far more than was achieved in the glory year of the first half of 2007 (when Rs130 billion came calling) and the first six months of 2016 (when they crossed Rs150 billion), according to estimates by the consultancy JLL India.

                  The Indian economy’s growth rate might have slipped a few basis points here and there; its manufacturing sector is yet to break the shackles of legacy regulations; and stock markets continue on their volatile ride. But India’s real estate is rocking. And nobody is even mentioning demonetisation inspired fears for the sector.

                  “With the roll-out of RERA — the Real Estate (Regulation and Amendment) Act — and uniformity of a single tax with the introduction of GST (Goods and Service Tax), we will definitely see the advent of a more transparent real estate industry,” said Anuj Puri, Chairman of newly launched Anarock Property Consultants.

                  “It bears remembering that with the opening up of FDI (foreign direct investment) in 2006 and institutional investments pouring into the sector over the last 10 years, we have already seen an increased level of transparency. That said, it was evident that more regulation was required — and RERA will bring unprecedented levels of discipline and transparency into the sector.

                  “The Indian government is committed to bringing in the necessary changes that will help home buyers, investors, the various other industry stakeholders and the sector at large.”

                  Empowering property buyers

                  On reforms, and especially on real estate specific ones, the current Indian government is into overdrive. The RERA itself represents a radical shift, by empowering property buyers in ways that were never thought possible in an Indian context. Last week, as per RERA, developers will have to provide for a 5-year structural warranty. It is the first time that such an ironclad condition is being laid down. Earlier, the rule of thumb was a property buyer was lucky to get any sort of long-term guarantee over a building’s structural soundness.

                  India’s real estate market is indeed going through a transformation. “(The) GST, RERA, REIT (real estate investment trust), the Benami Property Act, demonetisation and constant focus on affordable housing will lead to the sector evolving into a more mature, consolidated and highly transparent industry,” said Shobhit Agarwal, Managing Director — Capital Markets & International Director, JLL India. “This, in turn, is expected to attract further private equity from abroad.”

                  But Anarock has already made that move. It was in June that Anarock confirmed plans to create a Rs300 million residential portfolio — from the seven Indian metropolises — and to raise it to $500 million by 2020. Puri, formerly chairman and country head of JLL India, did surpass a few by focusing on residential assets than commercial real estate, where there is significant demand for new space in the major cities.

                  Bounce back

                  But Puri has his justifications. “The current residential market with its limited new launches provides a great “buy” opportunity across our target markets,” he added. “The average residential rates have remained stagnant over the last 12 months, and we are of the view that the southward journey of the rates has been arrested.

                  “We expect prices to bounce back over the next 8-12 months. However, the rental market and yield on residential rents remain at current levels in the major metros.

                  “The capital growth opportunity at current prices is compelling. For residential rentals to be at par with commercial leases, one will need to redraw the tenancy laws in the country.”

                  Anarock will do the bulk-purchase of apartments through a proprietary investment fund, and will also provide debt, equity and mezzanine funding to residential-focused developers.

                  On whether Anarock was specifically talking to Gulf-based institutions for new funding, Puri said: “We are in advance talks with global institutions for strategic tie-ups across our investment platform, which includes asset management and managed account allocations.

                  “We see residential as severely underserved in India, and funding residential projects by credible developers is part of our overall sharp-focus on this sector at this time. We do see REITs as a crucial vehicle for annuities, which will help the growth and holding of lease assets, and we will enter the segment at the right time.”,,


                  http://realtyplusmag.com/funds-flood...rd-first-half/

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                  • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

                    Lodha Developers Has Received ₹ 500 Crore Investment From HDFC Property Fund

                    Soumit nath

                    HDFC Property Fund, private equity division of HDFC, will invest₹ 500 Crore in real estate firm Lodha Developers, which is seen by many as early signs of revival and more transparency in the Indian real estate sector post reforms like Real Estate Regulation and Development Act and GST.

                    Mumbai based real estate giants Lodha Developers will receive the credit for a six-year period at very lucrative market rates. According to sources, Lodha Developers will use the funds to develop its residential project on an 88-acre land parcel in Thane.

                    HDFC Property Fund, a division of Housing Development Financial Corporation, is one of the biggest private equity players in the country which invests in residential, commercial and mixed-use projects. However, HDFC Property Fund has not given any official confirmation about the deal neither Lodha Group has released any official statement.

                    Lodha Developers purchased the land parcel in Thane from Calriant Chemicals (India) back in 2014 for a total amount of ₹ 1,154.25 crore. Lodha Developers has sold more than 2000 homes in this project before its launch last year, and the total value of booked apartments was more than ₹ 1600 crore. The proposed project will be developed in multiple phases, consisting of 3500 apartments which includes 27-30 storeyed towers of 1&2 BHK units built on a master development plan.

                    Ajai Kapoor, founder of 360 Degrees Real Estate Services, which deals in premium and luxury properties in Mumbai said that such transaction are very crucial in building trust and confidence, helping the growth of the industry. Reforms like RERA and GST will bring a bright future for the real estate industry, and there will be higher demand for investment due to these reforms ensuring good returns on current investment.

                    Big developers are turning to private equity funds after banks started cutting down credit to developers few years back due to increasing bad debts. Earlier this year, Lodha Developers opted for a loan of about ₹ 1800 crore from the financial wing of Piramal Group, Piramal Fund Management.

                    In one of the largest private equity exits in Indian real estate last year, HDFC Property Fund withdrew investments over ₹ 1500 crore from Lodha Group’s highly ambitious project, World Towers, at Lower Parel in Mumbai. HDFC Property Fund also invested ₹ 216 crore in Lodha Developer’s project in Hyderabad...


                    http://realtynxt.com/2017/08/12/lodh...property-fund/

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                    • Re : Sources of Funds in Mumbai Real Estate - REITS, Pension Funds, Finance Companies, Property Fund, Private Equity and many more

                      FINANCING REAL ESTATE IN INDIA

                      Financing Real Estate in India

                      First Published: Thu, May 10 2007. 07 21 PM IST
                      Updated: Thu, May 10 2007. 07 21 PM IST
                      It’s a huge figure we are looking at US$ 90 billion. That’s what Merrill Lynch forecasts that the Indian realty sector will grow to by 2015. As industry is enthusiastic about that figure, RBI has raised its voice of concern. It reasons that the portfolio inflows should confirm to the norms applicable to foreign direct investment (FDI) in the sector. Analysts feel that the central bank should revisit the FDI norms rather than curbing the portfolio inflows.
                      As they say, no matter how thin you slice, there are always two sides. A growing economy comes with its own burdens creating demands on infrastructure and real estate. The relevance of real estate further enhances when we look at the following statistics:
                      1) It is the second largest employer in India (including construction and facilities management)
                      2) It is linked to about 250 ancillary industries like cement, brick, steel through backward & forward linkages
                      3) A unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times
                      Thus, to support growth, various concessions and benefits have been given to the sector. This would help change the current contribution of housing and real estate to India’s GDP which is at 1% against 3-6% for developing countries.
                      Funding can be sourced using debt, equity or a mix of both. Debt funding could be done from sources like banks, Non Banking Financial Corporations (NBFC) or via External Commercial Borrowings (ECB). Equity participation would involve investments in the firm at an entity level or project level. FDI is one of the ways of financing a firm’s projects. FDI in real estate is permitted in construction and project development related to both residential and commercial development in housing townships and commercial office space subject to certain project conditions. With yields at around 11.0% for office space, which go upto 20-25% in greenfield projects, investing in India is certainly a good option. A November 2006 ASSOCHAM study estimates share of real estate in FDI to rise to 26% by the close of 2007 from around 16% last year. Table 1 shows the levels of investments that have taken place in the first quarter of 2007.
                      Investor Entity Location Investment Type and Sector Stake (%) Investment Amount (USD million)
                      Evolvence India Emaar-MGF Delhi Entity level n/a 41
                      Evolvence India CCCL (Consolidated Construction Consortium Ltd) Chennai Entity level n/a 12
                      IL&FS Ansals Properties & Infrastructures (APIL) Delhi SPV 49 29
                      HDFC Realty Fund Ansals Properties & Infrastructures (APIL) Delhi SPV, commercial IT Parks 33 n/a
                      Nakheel Group Parsvnath Pan India Entity level, residential and commercial 50 550
                      Nakheel Group DLF Gurgaon, Mumbai and Pune Entity level, residential 50 10,000
                      Morgan Stanley Special Situations Real Estate Fund Oberoi Constructions Mumbai Entity level, mixed use 10.75 152
                      Samsara Capita IDEB Projects Bangalore Entity level n/a 33
                      TPG-Axon Capital DivyaSree Developers Bangalore Entity level n/a 100
                      Vornado Realty Gurgaon SEZ Delhi SPV, industrial 50 n/a
                      Starwoods Hotels & Resort Brigade Hotels Bangalore SPV, hotels n/a n/a
                      Citigroup Venture Capital International Maurtius Ltd Indu Projects Hyderabad Entity level 9 33
                      Goldman Sachs Unitech Delhi, Mumbai and Bangalore SPV, mixed use 33 66
                      Name Date Capital(USD million)
                      Trinity Capital April 2006 500
                      Eredene Capital May 2006 115
                      India Hospitality Corp August 2006 100
                      Ishaan Real Estate Plc (K.Raheja) November 2006 405
                      Unitech Corporate Parks Plc December 2006 750
                      Hirco Plc (Hiranandani December 2006 750
                      Source: Jones Lang LaSalle Research, 1Q07
                      SPV: special purpose vehicle
                      As listing in local markets (BSE/NSE) gets difficult many investors are trying to look west. The Alternate Investment Market (AIM) with its easier norms has been one of the easiest foreign shores where various players have raised money (Table 2). These funds will be used in FDI (foreign direct investment)-compliant mega property projects ranging from residential townships to commercial establishments across the country.
                      Table 2: Firms listed in AIMNameDateCapital(USD million)Trinity CapitalApril 2006500Eredene CapitalMay 2006115India Hospitality CorpAugust 2006100Ishaan Real Estate Plc (K.Raheja)November 2006405Unitech Corporate Parks PlcDecember 2006750Hirco Plc (HiranandaniDecember 2006750
                      Source: AIM
                      Lately, there have been many flags raised and questions asked in this context. As investments increased so did the prices and the obvious fear of a real estate bubble. With no clear methodologies and norms on valuations, there was the imperative fear of the bulls chasing away the bears and shattering many dreams. There were doubts raised on what to define as an FII investment vis-à-vis FDI.
                      Some of the issues, which have been raised or resolved, are –
                      1) On issues of pre-IPO placement, the finance ministry has concluded that if FIIs wish to invest in a pre-IPO placement of realty companies, the investment would be classified as foreign direct investment, or FDI, which is subject to a longer lock-in period, thus trying to eliminate the speculation in such investments.
                      2) On valuations, the SEBI issued directives that valuations of real estate companies to be based on their development plans and not on their land banks. There is also a proposal for valuers to be registered with the SEBI.
                      With the advent of Real Estate Mutual Funds (REMFs), corporate governance issues, stricter compliance by players, maturing markets and greater transparency this market offers great potential for its players – be it the developers, funds, FIIs or retail investors. Also the new locations in mind of investors would be the Tier III cities which offer fewer entry barriers in the form of competitive land prices and availability of land banks.

                      Last edited by yogeshraja; 4 days ago.

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