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.

Tier II cities in AP no threat to Hyderabad realty: Credai

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Hyderabad would continue to attract good interest in real estate activity and is capable of withstanding competition from Tier II locations in the event of state's bifurcation, according to The Confederation of Real Estate Developers Association of India (Credai).

"Due to the imbroglio surrounding the state bifurcation, many new deals have been put on hold. Once the issue gets resolved, we expect renewed interest from all segments in Hyderabad," Ram Reddy, general secretary of Credai, told mediapersons here today.

According to him, although there wasn't any notable appreciation here in the last one year, residential property prices might rise an average around 5% this year. In the next nine months, around 10,000 residential units would be launched here, he added.

The average cost of residential property in Hyderabad currently stands at Rs 3,200 per sft. The office space rental in the most sought-after Western part of the city --- home to big software establishments -- is Rs 40 per sft. This, according to Credai, is 25-30% lower when compared with a similar location in Chennai and Bangalore.

Answering to a query on whether the bifurcation would lead to any pressure on the price and volumes here, Anand Reddy, vice president of Credai, said most of the Tier II cities do not have Hyderabad's distinct cosmopolitan advantage. "The price appreciation evident in the recent times in Visakhapatnam, Vijayawada and Guntur among others was just a speculation and they do not reflect the actual demand," he said.

The realtors body today announced the launch of Hyderabad Property Show-2014 starting from February 28. Around 60,000 individuals are expected to visit the three-day event.

Source: Business Stanard  13/02/2014

Hyderabad Metropolitan Development Authority to soon implement land pooling scheme

Times of India 17/06/2013

HYDERABAD: For planned and systematic development in peripheral areas, the Hyderabad Metropolitan Development Authority (HMDA) will implement land pooling scheme (LPS) in its jurisdiction soon. Land pooling scheme can be undertaken either by the authority, the civic body or a licensed private developer provided the conditions are fulfilled according to the master plan of HMDA.

The draft LPS has been cleared by the municipal administration and urban development (MA&UD) department and would be placed before the HMDA executive committee on June 21 for its approval.

HMDA sources said the LPS would first be implemented in the Hyderabad metropolitan area as there are provisions in the HMDA Act, 2008, for LPS and will be extended to other parts of the state, especially urban development authorities since there are no such provisions in the AP Urban Areas (Development) Act, 1975.

The MA&UD department had constituted a committee for preparing detailed guidelines for land pooling projects. The committee has metropolitan commissioner of HMDA as the chairman, commissioner and director of municipal administration as member and director of town and country planning as member convener and vice-chairmen of Visakhapatnam and Vijayawada urban development authorities as members. The committee has prepared guidelines and submitted them to the state government.

Under this scheme, individual owners or farmers could come together to develop land to an extent of 25 hectares (100 acres) or more with the clearance of HMDA and provide basic amenities like road, drinking water and street lighting.

"It will be a win-win situation for both the land owners and the authority. The land owners will get developed land though they may lose some land with clear title and without any litigations and also appreciation of their property's land value. The authority or local body need not acquire any land for roads and other facilities," an HMDA official, who is associated with LPS, told TOI.

The HMDA has broadly divided the LPS into two types. The first type is Road Development LP area, which would be taken up for notified master plan and road network for already identified potential areas. The other category is Town Ship Development LP area. For the second type, the minimum size of layout should be 100 acres.

For LPS, at least two-third (66%) of property owners should be willing to take up land pooling schemes. If some of the owners do not come forward, the authority would acquire land invoking the urgency clause under the Land Acquisition Act, 1894. The land owners, who do not wish to be part of LPS, would get compensation as per the Act only. The developer has to hand over open spaces for public purpose to the authority as per rules.

"Initially, the committee had proposed some incentives like building rules relaxations for developers who come forward for taking up LPS. However, later it was decided to stick to the provision of the master plan and existing building rules only," another HMDA official said.

A shot in the arm for city realty

The LPS would first be implemented in the Hyderabad metropolitan area and will be extended to other parts of the state, including Vizag and Vijayawada.

Land pooling scheme can be undertaken either by the civic body or a licenced private developer provided the conditions are fulfilled according to the master plan of HMDA.

The MA&UD department had constituted a committee for preparing detailed guidelines for land pooling projects. The committee has metropolitan commissioner of HMDA as the chairman, commissioner and director of municipal administration as member and director of town and country planning as member convener and vice-chairmen of Vizag and Vijayawada urban development authorities as members. The committee has prepared guidelines and submitted them to the state government.

Under this scheme, individual owners or farmers could come together to develop land to an extent of 25 hectares (100 acres) or more with the clearance of HMDA and provide basic amenities like road, drinking water and streetlighting.

It will be a win-win situation for both the land owners and the authority. The land owners will get developed land though they may lose some land with clear title and without any litigations and also appreciation of their property's land value. The authority or local body need not acquire any land for roads and other facilities

The draft LPS has been cleared by the municipal administration and urban development (MA&UD) department and would be placed before the HMDA executive committee on June 21 for its approval.

Union Cabinet approves regulator for real estate, lays down norms to help home buyers

Times of India May 5, 2013

NEW DELHI: The Union Cabinet on Tuesday cleared a legislation to set up a long-pending real estate regulator aiming to protect home buyers from unscrupulous developers and builders.

A real estate regulator — to be set up in every state — will ensure that private developers get all their projects registered with it before sale and only after obtaining all necessary clearances.

"It will be mandatory for developers under the law to get every project registered with the regulator before selling any immovable property," an official said.

While the commercial real estate has been kept out of purview of the proposed bill, it will apply to residential buildings.

There is a provision for mandatory public disclosure of all project details like credentials of promoters, lay out plan, land status, carpet area and number of apartments booked and status of statutory approvals, addressing a major concern of buyers about incomplete or fraudulent land acquisition and pending clearances.

The consumer-friendly legislation will clearly define carpet area and private developers will not be allowed to sell houses or flats on the basis of ambiguous super area.

The builders won't be allowed to publish misleading advertisements to lure buyers while advertising the project. "They will have to use the pictures reflecting the actual project that will be delivered to homebuyers," an official said.

The developer will have to deposit 70% of funds received for a particular project in a separate bank account to cover the construction cost of the project. This provision was made to discourage developers from diverting funds of a particular project to another that often causes inordinate delay.

Punitive provisions ranging from a penalty which may be up to 10% of the project cost, de-registration of the project and imprisonment are being made in the bill.

The Real Estate (Regulation and Development) Bill 2013, which seeks to provide a uniform regulatory environment to the sector, was opposed by private developers in totality but housing minister Ajay Maken stuck to it, saying the basic tenet of the legislation is based on public disclosure that will infuse transparency.

Under the bill, there will be a model builder-buyer agreement which is expected to reduce ambiguities in real estate transactions that not many buyers are familiar with.

Real estate agents will also be asked to register with the regulator. Agents, an important link between the promoter and buyer, have been an unregulated lot till now. Once they are registered, it will help in curbing money laundering.

For fast tracking settlement of disputes, an adjudicating officer not below joint secretary in the state will be appointed by the authority. There will also be Real Estate Appellate Tribunal that will hear appeals from orders, decisions or directions of regulator and adjudicating officer.

NOC must for sale of church land in state

 Times of India July 2, 2012

A letter issued last month by the chief commissionerate of land administration to all district collectors has made it mandatory that, for any church property sale to be registered, a no objection certificate from the collector has to be produced first.

The directive comes as a shot in the arm for those resisting the large-scale sale of church land across the state. The letter was issued by the then CCLA and special chief secretary Minnie Mathew.

It states that the NOC rule has been made binding following several representations to the AP Christian Minorities' Finance Corporation regarding illegal sale of church assets in the state.

Incidentally, in March this year, a hostel for orphan children in a Lutheran Mission compound in Guntur district was sold to a private party for redevelopment into a commercial complex.

Although a government order was issued a few years back putting restrictions on the sale of church property, it was soon withdrawn, paving the way for unregulated sale. The order in question stated that church property should not be alienated and there even was subsequent correspondence between the departments of revenue and stamps and registration in this regard before the matter was put aside. "Will these properties, which were sold during the interim period and are being transferred even now, ever be restored," questions Bhaskar Benny of Christian Front, calling for the cancellation of these registrations.