IDFC Alternatives raises Rs 750 crore real estate fund

Source: ET 20/03/2014

IDFC Alternatives, a wholly owned subsidiary of IDFC Limited has raised its first Rs 750 crore through its first fund focused on residential sector in India, a progress that marks a precautious return of risk capital to the country's stressed real estate market.

The maiden real estate fund - called the IDFC Real Estate Yield Fund - will invest Rs 60 to 80 crore and gross target of 22 per cent returns. The four year (extendable by one year) close-ended private equity fund will invest in projects in prominent locations across six cities in India including Delhi, Mumbai, Chennai, Bangalore, Hyderabad and Pune.

"This is our first real estate fund and we feel confident about its performance. The real estate sector is going through a tough phase in the backdrop of a market slowdown and most developers are stretched with reduced cash flows. We will not invest in speculative markets," says M.K. Sinha, Managing Partner & CEO, IDFC Alternatives. The firm is looking to step up presence in the country's real estate sector.

IDFC Alternatives, one of the largest multi-asset class fund managers with a corpus of Rs 14,414 crores, managed to raise the money from domestic investors within short span of 10 weeks. "This is the right time to plough money into the sector and structure transactions that will provide high yields going forward," says Sinha.

Andhra Pradesh favours illegal estates, shows irregularities: Report

Deccan Chronicle 10/03/2014

Hyderabad: The vigilance and enforcement department has exposed various loopholes in the revenue, panchayat raj, municipal and registration departments, which have resulted in loss of crore of rupees  as the officials favoured real estate companies who developed illegal layouts.

These departments have not been updating the prohibited list of government lands, which has resulted in real estate companies laying hands on assigned lands, and there was no monitoring of unauthorised layouts in panchayats.

The vigilance department has come out with several recommendations to the government departments, to correct the system, after finding that the city-based Janaharsha realtors had committed irregularities in violation of all existing rules and evaded requisite fees, such as nala conversion fee, amounting to `6.73 crore, layout processing fees, and development fees, causing huge loss to the government.

The vigilance department alleged that Janaharsha had purchased vast extents of agricultural land in Ibrahimpatnam and Manchal mandals, in RR district, and failed to secure mutation in the revenue records. The company did not file declaration before the revenue divisional office for acquiring land exceeding the ceiling limit.

When contacted, director-general of vigilance and enforcement R.P. Thakur said he had received the report from the Hyderabad rural regional unit regarding Janaharsha irregularities.

The report alleged, “An extent of two acres of reserve forest land at Naganpally block was encroached by Janaharsha, exploiting the existing difference between the boundary lines fixed by the forest officials initially, by way of trenching and later erecting pillars. Forest officials failed to protect the lands. A loss of `3.9 crore was detected on unauthorised consumption of minor minerals found, apart from 6.73 crore loss. It has acquired 535 acres of Bhoodan land and 266 acres  assigned to bonded labourers.”

The department has asked the government to devise penal procedures to initiate actions against illegal layouts. It also suggested integrated software for all the departments to avoid violations. The department asked the government to issue instructions, to collectors, to update the prohibition of transfer of state lands’ lists, including assigned lands, Bhoodan lands and lands acquired  by the government.

Hyderabad least expensive office market in 2013, says DTZ global report

Live mint & Wall street journal
3 March, 2014

Chennai, Pune, Bangalore and Kolkata were also among the 10 least expensive office markets in 2013, says the report
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_________________________________________ Hyderabad slipped a rung to become the least expensive office market in 2013, according to a new global study, mainly because of the prolonged strife in Andhra Pradesh over the formation of Telangana state.
Chennai, Pune, Bangalore and Kolkata were also among the 10 least expensive office markets in 2013, according to property advisory DTZ Research’s latest Global Occupancy Cost-Offices report.
Hyderabad, which was the second-least expensive office market in 2012 behind Surabaya (Indonesia), was at the centre of the four-year Telangana dispute.
Last week, Parliament passed a Bill for Andhra Pradesh to be split into Telangana and Seemandhra, with Hyderabad serving as the joint capital for 10 years before it is transferred exclusively to Telangana.
“Hyderabad has been mired by the Telangana issue and political instability because of which not many new occupiers have come in the last two years. Even with the Telangana Bill being passed, it’s a far cry from being business as usual,” said Rohit Kumar, head of research, DTZ India.
The DTZ report analysed the costs of occupying prime office space across 138 markets worldwide. Occupancy costs in the most expensive office markets exceeded $20,000 per workstation in 2013, and were less than $3,000 per workstation in the least expensive markets.
No Indian city features in DTZ’s 10 most expensive office markets list, even as rents and occupier interest in prime central business districts (CBD) in Mumbai and Delhi were robust last year.
London and Hong Kong continued to be the most expensive office locations in 2013. But the difference in costs between the two cities expanded from 13% in 2012 to 22% in 2013 as buoyant demand led to an increase in rents in London while cost-cutting measures in central Hong Kong drove rents down.
Surabaya saw office rents increase last year, pushing it a step higher to be the second least expensive office market in the DTZ study, swapping spots with Hyderabad.
In 2013, about 27 million sq.ft. of office space were absorbed across the seven Indian cities surveyed for the DTZ report—Delhi-national capital region, Mumbai, Bangalore, Chennai, Pune, Hyderabad and Kolkata—slipping marginally from 27.3 million sq.ft. in 2012.
But DTZ said in its report that rising demand for office space from information technology companies and high inflation is likely to push up occupancy costs in India this year.
Of the Rs7,000 crore of private equity money that flowed into Indian real estate in 2013, Rs2,476 crore was in commercial office assets, down from Rs3,231 crore in the year before, says a report on PE investments in real estate by property advisory Cushman & Wakefield, released on Monday.
Overall absorption of commercial office space in India was lower in 2013 primarily due to high relocation and consolidation activity with occupiers moving to better quality, larger and cheaper spaces in suburban and peripheral locations, it said.
Property consultants are still upbeat about investor interest in yield-generating assets.

“A number of large global investors, including a number of sovereign funds, have taken the first move by partnering with successful local investors and developers for investing in the Indian real estate market. This is expected to result in high transaction activity especially in income-yielding commercial office assets during 2014,” said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.