AUGUST 2010 Real Estate Newsletter

Editorial

Contents Dear Reader,

Industry News ...... 2 The happy days are back. The Sensex has breached the Private Equity News ...... 5 psychological 20,000-barrier and is hovering near it. The rally is fuelled by high liquidity and huge inflows from Regulatory Buzz ...... 6 overseas fund houses. Public Markets ...... 7 Land Deals ...... 8 The bull-run in the Sensex has rubbed off to the realty market as well. According to a report by JLLM, the total Technology Parks/SEZs ...... 9 market value of real estate under construction in has Hospitality ...... 10 crossed the US$ 100 Bn mark for the first time in 2010. Of Commercial Properties ...... 12 this, , where property prices are among the highest in the world, has nearly a 40% chunk. The residential Townships ...... 13 component contributes 66% of this U$100 Bn, while the rest About Avendus Capital ...... 14 is contributed to by commercial office and retail space Contact Details ...... 14 combined. This growth is backed by a robust inflow of FDI, which has jumped a whopping 80 times between 2005 and

2010 from a mere US$ 40 Mn in 2005 to US$ 3,000 Mn in

2009-10.

While the supply-side is steaming ahead, one needs to have a careful watch on the absorption rates. The threat of a supply overhang leaving a glut of inventory, especially in the high-end segment, is very real.

Happy Reading!

Avendus Real Estate Team Disclaimer: The news contained herein has been taken from published sources as indicated under each item. Avendus will not be held liable for any erroneous data as published in the source indicated. Avendus also does not take any responsibility for any errors or omissions or results of any actions based upon this information.

Industry News the country. Since the debt raised was in dollar terms, the refinancing would also be done in dollar terms. RAK EYES INDIA FOR RESIDENTIAL DLF‘s prospects for refinancing becomes brighter SCHEME since RBI has recently permitted take-out financing Financial Chronicle arrangement through ECB under the approved route for infrastructure sectors like sea ports, airports, Burj Khalifa in Dubai, the tallest building in the world bridges, power sector and integrated townships. might have caught the fancy of Indians, however, it is the luxury residential projects in Ras Al Khaimah that THE EMERGENCE OF MIXED-USE RETAIL are vying for Indian consumers‘ attention. Rak FORMATS IN INDIA Properties, a real-estate company promoted by the The Financial Express government of Ras Al Khaimah, UAE, is eyeing Indian consumers for its $3.7 billion luxury waterfront There is no basis for the fear that malls in India will residential project named Mina Al Arab. lose their status as shopping and entertainment hubs now that many mall developers are offering space to NITCO TO INVEST RS 1,000 CRORE IN REAL hotels and offices. The fact is, this is not affecting the ESTATE VENTURES overall mall experience of the customer, since in most The Hindu Business Line cases there are separate entries for the hotel/commercial component and the retail part. The Having completed the expansion project, which reason why mall developers are now offering space to includes two new manufacturing bases with an hotels has more to do with the floor space index (FSI) investment of nearly Rs 205 crore, Nitco Tiles Ltd is and less with utility. In the case of retail, food, on course to revenues of Rs 650 crore this financial entertainment and multiplex, it is not always possible year up from Rs 465 crore it registered in 2009-10. to utilise the complete FSI of the plot. The managing director of Nitco Tiles, Vivek Talwar, said the new plants set up with investments of Rs 125 DELHI FIRMS LAUNCH MORE HOMES crore, in Alibag, Maharashtra, and Rs 80 crore in DESPITE SUPPLY SURGE Silvassa, respectively, will also help the company Mint scale up its export numbers from current five percent of total sales to about 20 percent within two years. Real estate firms in Delhi such as Ansal Properties and Infrastructure Ltd (APIL) and Anant Raj Industries DLF IN TALKS TO REFINANCE $300-MILLION Ltd (ARIL) are launching residential projects as ECB AT 7 PERCENT demand for homes in the national capital region The Financial Express (NCR) doesn‘t show signs of slackening amid a supply surge. NCR saw the launch of 45,000 The country‘s largest real estate developer DLF is in residential units in April-June, surpassing Mumbai, talks with leading domestic banks ICICI Bank and Navi Mumbai and Thane, collectively, which State to refinance a $300-million loan it witnessed the launch of 12,000 units in the same had raised via external commercial borrowings (ECB) period, according to Jones Lang LaSalle Meghraj last year. The company is likely to get the debt (JLLM), a property consultancy. The number of refinanced at a rate of around 7 percent. DLF had launches will increase in coming months as raised the debt from last year at developers focus on homes and existing projects. about 9.5 percent to develop integrated townships in

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REAL ESTATE RUSH MUMBAI BUILDERS REAP BENEFITS OF The Economic Times (Delhi edition) SLUM REHABILITATION The Economic Times Swanky looking high-rise buildings with chic glass exteriors and the ultra modern finish, were not a part Builders such as the Lokhandwala group, Ackruti, of the landscape of UP till a few years ago. Very few HDIL and Everest, that are said to have earned real estate markets in the world have undergone such around Rs 4,000 crore from the sale of over 400 a dramatic and rapid transformation in such a short properties under the slum rehabilitation scheme span of time. The hectic construction and (SRS) of Mumbai can now claim tax benefits on their development activity in the region has certainly profits, thanks to a Central Board of Direct Taxes completely transformed the skyline of the state. Major (CBDT) notification that exempts SRS projects from cities in UP are witnessing a sustained real estate income tax. The CBDT issued a notification in the demand, which has augmented the entry of many a first week of August granting exemption under the real estate giants like DLF, Ansal API, Rohtas, scheme. The CBDT is the authority that administers , UNITECH, Parasvanath and many more, in direct tax. This comes as a big relief to the developers this region. The construction and development of that constructed properties under SRS but were several world class townships, housing projects and unable to claim the tax benefits in the absence of a shopping malls, across the state, are testimony to the notification from the CBDT granting exemption under huge upswing in the real estate market of UP. The the scheme. boom in this sector is also more than evident in the sharp rise in property rates and the massive increase IFC LOOKS AT AFFORDABLE HOUSING in investment in this sector. Improved quality of real PROJECTS IN INDIA estate developments has also triggered a ‗market The Hindu Business Line rally' benefiting owners, occupiers and investors alike. The International Finance Corporation is in talks with Apart from Lucknow and Kanpur, Meerut, Ghaziabad, several real estate developers to create large Noida, Greater Noida, Agra and Vrindavan are the affordable housing projects in India. ―IFC has been some places in UP, where a flurry of construction talking with everybody; there have been discussions work is going on. The development works are with the Tatas and with other corporate groups on flourishing in these towns and cities due to different this,‖ said Paolo Martelli, director, South Asia, IFC. reasons. For example, Ghaziabad is fast growing as ―Everybody‖ includes both real estate developers and an industrial city and it is also influenced by Delhi's housing finance companies, he said. urbanization to a larger extent. Meerut is the fourth largest city in India in terms of its population. If the estimated housing deficit in India is 25 million Likewise, Agra holds significant importance, as it is units, then such a large requirement cannot be one of the major tourist destinations in India. The city tackled completely from a real estate point of view, has seen great growth in terms of infrastructure according to Martelli. IFC can help the Indian sector facilities and industry. Therefore, to fulfill the growing with advice on how affordable housing has been needs of these cities, commercial, industrial and tackled in other countries such as Mexico where individual real estate constructional works are going ―literally, they are building cities at a time, 15,000 to on the anvil in and around. 20,000 homes, costing between $7,000 to $15,000‖. (The Corporation is also in talks with home builder Homex in Mexico for such projects here in India.)

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But both the real estate and financial sectors here The department may ask the government must understand the underlying concept – that such to furnish factual position of the project, wanting to projects will not entail speculating on land. ―I mean if know whether the project has been cancelled by it, a you had to sell 15,000 houses, you cannot speculate senior official said. DLF-Limitless, in its application to the government has requested for granting Limitless on the price of land,‖ said Martelli. With respect to the an early exit from the JV on the grounds that financial sector, one ―cannot look at affordable Karnataka government has not allotted the required housing with the same concept as mortgage,‖ he said. land for the project over the last two years.

REALTY CHECK! FDI GROWS 80 TIMES IN 5 MAYTAS GETS NOD TO INDUCT SAUDI CO YEARS AS PARTNER The Economic Times The Economic Times

It‘s not Indians alone who are monitoring the real The troubled infrastructure company firm Maytas Infra estate market here. Foreign direct investment (FDI) in on Monday said it has received all regulatory India‘s booming real estate and housing market approvals for inducting the Saudi Arabia-based jumped 80 times between 2005 and 2010. Figures diversified group the Saudi Bin Laden Group (SBG) obtained by TOI show that in 2005, FDI in real estate as its partner and bring in Rs 301 crore in FDI. was a mere Rs 171 crore. That soared to Rs 13,586 crore in 2009-10. In April and May this year, Rs 737 REALTY FOCUSED PE FUNDS SLUMP 29 crore in FDI was pumped into the sector. More and PERCENT IN Q2 more money is being pumped into India‘s housing Financial Chronicle sector from abroad. And this despite the recent downturn. Since 2005, foreign direct investment (FDI) Money raised by realty focused private equity funds worth Rs 37,986 crore has come into the housing tanked to a six year low of USD 7.3 billion across the sector in India, including Rs 13,586 crores already globe in April-June period of this year as institutional this year. investors remained hesitant about committing capital. According to a report by global research firm Preqin, DUBAI WORLD ARM’S REPATRIATION PLEA "this was the lowest quarterly fundraising total since FACES REGULATORY HURDLE Q3 2004, when 30 funds raised an aggregate USD The Financial Express 6.1 billion." The report noted that private equity real estate funds are still struggling to raise capital in the Dubai World‘s real estate development arm Limitless current economic environment. In the April-June Holding‘s proposal to repatriate its investment in its quarter, 20 real estate funds made aggregate joint venture with DLF for developing 9,300-acre commitments of USD 7.3 billion, down 29.12 percent Bidadi (Karnataka) project is facing regulatory from USD 10.3 billion in the year-ago period. Besides, hurdles. The department of industrial policy and the aggregate set target of raising funds has also promotion (DIPP) –the FDI policymaking body – has steadily fallen in recent quarters, as fund managers put the proposal on hold as it will not allow the have started setting more modest targets. company to repatriate funds without substantial evidence. This is because the three-year mandatory lock-in period has not lapsed, since the initiation of the project.

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Private Equity News PARSVNATH TO RAISE RS 200 CRORE FROM PEs LODHAS SELL 10 PERCENT IN WORLD ONE Business Standard TO HDFC ARM The Economic Times Cash-strapped real estate developer Parsvnath Developers is planning to raise Rs 200 crore by Real estate firm Lodha Developers has raised 500 selling stakes in its projects to private equity crore by selling a 10 percent stake in a project that is investors, said an executive close to the development. developing a 117-story residential tower in Mumbai to HDFC Venture Funds. ―The deal shows the investor‘s TATA REALTY TO BUY STAKE IN IAL appetite for quality real estate projects in India,‖ said The Financial Express Abhisheck Lodha, managing director of Lodha Developers. Other investors include GIC, Temasek Tata Realty and Infrastructure is looking at buying a and Abu Dhabi Investment Authority. The deal is the significant stake in International Amusements Ltd second-largest private equity investment in India‘s (IAL), the promoters of the country's first theme realty space and puts the valuation of the project at amusement park, Delhi‘s Appu Ghar. In the proposed 5,000 crore, two-and-a-half times its estimated cost. deal, Tata Realty would buy out the stakes owned by private equity investors—DE Shaw, IDFC and The project has received bookings worth 1,200 crore IL&FS—for around Rs 400 crore. Gian Vigeshwar in the first month, said Lodha. In addition, Lodha holds the balance stake. When contacted, Tata Developers has invested 500 crore as equity Realty CFO Kishore Saletore and IAL promoter Giam contribution towards the project. ― With the PE fund, Vigheshwar denied the report of being in any talks for one may say that we will achieve the financial closure a stake sale. However, people in the know of things of the project,‖ he added. ―HDFC‘s investment will said DE Shaw has been looking for an exit as going also add credential to the project,‖ said Pranab Datta, by its nature of business in India, it does not want to VC & MD, Knight Frank India. ―Lodha Developers was lock its capital in this business for long. Later, the left with the option of selling stake to PE investors other two infrastructure finance firms—IDFC and after it shelved plans to raise money from the primary IL&FS —also expressed the desire to exit from the market.‖ venture.

AZURE CAPITAL EYES RS 500 CRORE FOR TPG CAPITAL TO INVEST $100M IN 1ST FUND SHRIRAM PROP Financial Chronicle Financial Chronicle

Azure Capital Advisors, which is focused on real Private equity player TPG Capital will be pumping in estate segments, is aiming to mop up Rs 500 crore $100 million into Shriram Properties, part of the from high net-worth individuals, family offices and -based with interests in financial institutions as total corpus for its first fund. finance and green power, among others. Talks are in The fund is expected to achieve closure by January an advanced stage and a deal is likely to be signed 2011. Azure is hoping to attract investors with Rs 5 anytime soon, said a person privy to the development lakh minimum ticket size and is promising over 20 on the condition of anonymity. The development is percent effective rate of return on the back of project- likely to further drive hard TPG Capital‘s penchant for based investments in tier-II and III cities and re- Shriram group firms. In 2008, it pumped in around Rs development initiatives focused on Mumbai housing 530 crore in Shriram City Union Finance. societies only, said top officials.

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J P MORGAN, BARING IN RACE FOR STAKE According to a person familiar with the development, IN EMBASSY GROUP the regulator feels having both real estate mutual Business Standard funds and real estate investment trusts could confuse investors. It also feels that the REIT guidelines may J P Morgan and Baring Private Equity Partners are in not be suitable for a country like India, where the the race to invest Rs 180 crore in a 14-acre property market is lacking in depth and liquidity. residential project being developed by - based developer Embassy Group. HOUSING SOCIETY TO BE OWNER OF

BUILDING LAND, NOT BUILDER Regulatory Buzz The Indian Express

STAY ON SERVICE TAX FOR BUILDINGS Now, housing society will be the owner of the land UNDER CONSTRUCTION where the society is constructed and not the builder The Economic Times said the state government. Around 20,000

cooperative housing societies in the city and 60,000 in The Mumbai High Court has granted an interim stay the state will benefit from the amendment to the on a petition filed by the Maharashtra Chamber of Maharashtra Ownership Flats Act, 1963. State Housing Industry (MHCI) challenging the levy of Housing Deputy Secretary P L Pathak said service tax on buildings under construction. The notification regarding the conveyance deed would be petition was filed challenging the constitutional validity published in a month when Chief Minister Ashok of the Finance Act 2010, which sought to introduce Chavan puts his signature. ―Within six months of service tax on residential projects under construction, formation of the society, the builder will have to hand or where a completed building has not received its over the possession of the land. If not, the society will occupation certificate as on 1 July 2010. Many have to submit a return application to District Deputy builders and developers said that the cost of Registrar of cooperative housing society who will then ownership would rise considering that the service tax summon the builder and issue a certificate,‖ he said. was being charged at the rate of 2.5 percent. Mayur

Shah, CMD of the Mumbai-based Marathon Realty, BUYER CAN OPT OUT OF HOUSING said that the service tax was not warranted as the PROJECT IF POSSESSION IS DELAYED National Housing policy had suggested taxation on The Pioneer home purchases should only be around 2 percent to 3 percent of the total cost, and that multiple layers of A buyer is entitled to opt out of a housing project if taxation would drive away buyers. there is delay in delivery of possession of the house

by the real estate developers, the National Consumer REITS MAY NEVER TAKE OFF AS SEBI HAS Commission has held. The Commission said that the 2ND THOUGHTS buyer is also entitled to refund of entire money with The Economic Times reasonable interest and any deduction on the said

amount is unjustified. Capital market regulator the Securities and Exchange

Board of India (SEBI) may drop its plan to introduce real estate investment trusts (REITs) in India. The regulator had issued draft guidelines for REITs a couple of years ago, but never finalized them.

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Public Markets price of Rs 168.25 per share. IDFC has also raised Rs 840-crore of capital through a preferential issue of EMAAR MGF TO TEST IPO MARKET A THIRD compulsorily convertible cumulative preference TIME shares (CCCPS) to Actis and Khazanah to the extent The Economic Times of Rs 460-crore and Rs 380-crore, respectively, it said. Real estate company Emaar MGF will soon set off an initial public offering (IPO) process for a third time in CRISIL ASSIGNS IPO GRADE 3/5 TO as many years, probably at a valuation one-fourths of RAHEJA UNIVERSAL what it hoped for in 2008. It‘s preparing a prospectus The Economic Times with plans to sell 10% of the company for Rs 1,500 crore from the Rs 7,000 crore it aimed for in 2008, CRISIL has assigned IPO grade ‗3/5‘ to Raheja when the market began to melt forcing it to abandon Universal Ltd‘s proposed issue of Rs 864 crore, which roadshows. It may seek regulatory approval by the indicates that its fundamentals are average relative to month-end, said two people familiar with the plans. the other listed equities. Raheja Universal is planning The joint venture between the Dubai-based Emaar to develop 70 million sq ft of saleable area (of which and auto lender MGF has been at the receiving end of 73 percent of saleable area is in the Mumbai the market for nearly three years, forcing it to trim Metropolitan Region), of which 44 million sq ft is in the valuations while rivals such as DLF managed to raise residential segment and 26 million sq ft in the funds at record valuations. commercial segment.

TATA GROUP PLANS TO LIST GINGER OMAXE AGM GIVES NOD FOR RAISING UP HOTELS TO 1,000 CRORE Business Standard The Economic Times (Delhi edition)

The promoted Indian Hotels Company Realty firm Omaxe said it plans to raise up to 1,000 Limited (IHCL) is planning to list its two-star economy crore in long-term funds, mainly to reduce debt and budget hotel chain Ginger Hotels (Roots Corporation complete ongoing construction work. In a filing to the Ltd) on stock exchanges as part of the company‘s (BSE), Omaxe said that expansion plans. shareholders at its annual general meeting (AGM) approved raising ―additional long-term funds up to IDFC COMPLETES CAPITAL RAISING OF RS 1,000 crore through further issuance of securities in 3,500-CRORE the company.‖ The company could raise the funds in The Economic Times one or more public or private offerings by way of public issue, rights issue and preferential allotment, Infrastructure Development Finance Company including QIP, it added. (IDFC), on Wednesday said that it has completed capital- raising of around Rs 3,500-crore as approved OBEROI REALTY LOOKS SET TO TAKE IPO by the Board of directors and shareholders. IDFC PLUNGE raised Rs 2,654-crore through the qualified The Hindu Business Line institutional placement (QIP) route by allotment of equity shares to qualified institutional buyers (QIBs), a Mumbai-based Oberoi Realty appears set to take the company statement said. The QIP was done at a plunge to tap the capital market for Rs 1,500 crore in

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a month's time, ahead of the list of 10-15 realty Poddar Mill bidding Rs 474 crore. The reserve price companies that are waiting for an ―improved market for the sea-facing property at Worli, the first to be sentiment‖ to garner better valuations. Among the lot, routed on the e-auction platform, was Rs 250 crore. It Emaar MGF, Sahara Prime City, Lodha Developers had attracted a bid of Rs 316.15 crore on Friday, the and Ambiance Ltd intend to raise a total of close to Rs second day of bidding in the three-day process 11,000 crore. As of August 20, Lodha Developers, conducted by the state undertaking. The next best bid Neptune Developers, Kumar Urban Development, of Rs 472-crore was from Runwal Developers of Emaar MGF and Prestige Estates figure in the list Mumbai, K. Ramachandran Pillai, managing director, under which SEBI observations need to be said. officials were unwilling to disclose addressed. their plans for the property. Mumbai-based Lodha Developers bid of Rs 710 for the 10.7-acre Finlay Mill HOTEL LEELAVENTURE TO ISSUE RS 48.5- land here was unacceptable to the Textile Ministry. CR SHARES The developer had hiked the price from Rs 657 crore The Financial Express to Rs 710 crore following a request from the corporation. Hotel Leelaventure on Monday said its board has given approval for issuance and allotment of 10 MAROL INDUSTRIAL PLOT SOLD FOR RS million preferential shares to promoter company Leela 875 CRORE Lace Software Solution Pvt. In a notice to Bombay The Times of India (Mumbai edition) Stock Exchange, the company said it will issue shares at Rs 48.50 per share (includes a premium of 46.50 An 18-acre industrial plot belonging to Borosil Glass per equity share) aggregating to Rs 485 million. Works in Marol, Andheri (East), is believed to have been sold to Ashwin Sheth of Sheth Developers for CENTURY REAL ESTATE RAISES RS 100 around Rs 875 crore. The transaction was finalised CRORE THROUGH NCDS recently and both parties are now reportedly ironing The Hindu Business Line out the paperwork.

Century Real Estate, a Bangalore-based full-service BHARAT MILLS LAND GETS RS 1,175- real estate development company recently raised Rs CRORE BID 100 crore through a private placement of non- The Hindu Business Line convertible debentures (NCDs), according to a press release from the company. The company, which has The penultimate day of the three-day e-auction for the plans to launch seven projects, will use these funds Mumbai-based Bharat Textiles Mill, owned by the for project development. National Textile Corporation (NTC), saw the highest bid of Rs 1,175 crore on Thursday. The reserve price Land Deals for the 8.37-acre property is Rs 750 crore.

INDIABULLS INFRA WINS PRIME MUMBAI INDIABULLS GETS ANOTHER MUMBAI PROPERTY FOR RS 474 CRORE PROPERTY FOR Rs 1,505 CRORE The Hindu Business Line The Hindu Business Line

Indiabulls Infratech has bagged the 2.39-acre south For the second time in as many weeks, Indiabulls Mumbai property of National Textile Corporation's Infra Estate has claimed another South Mumbai

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property put on e-auction by the National Textile Technology Parks/SEZs Corporation (NTC). On the final day of the three-day process on Friday, Indiabulls bid Rs 1,505 crore for INFOPARK SET TO EXPAND the 8.39-acre Bharat Textiles Mills' Worli land that had The Hindu a reserve price of Rs 750 crore. Indiabulls will pay at the rate of Rs 179.38 crore an acre. Lodha Structure The second phase expansion of Infopark has Developers came a close second bidding Rs 1,503 gathered momentum with 115 acres out of the 165 crore, while Peninsula Real Estate Management Pvt acres of land identified for the project being already Ltd finished third at Rs 1,409 crore. DB View Infracon acquired. Only those stretches of land that are Pvt Ltd, Ahimsa Realtors Pvt Ltd, Perspective Realty bogged down in court cases remain to be acquired Pvt Ltd and Videocon Realty and Infrastructure Ltd now. The presentation for selecting the master plan has also been in the race. consultants for the second phase would be held in the third week of this month, Infopark sources said. GODREJ TO BUY JET’S BKC LAND RIGHTS Besides domestic parks, it would house SEZs for IT FOR RS 550 CR and ITES. When fully completed it would generate The Economic Times about 80,000 jobs in the IT and ITES in addition to the large number of jobs in the service sector. Jet Airways is close to sell the right to develop its 2.5- acre plot in the Bandra Kurla Complex, to Godrej NOD FOR ZENSAR, ACCENTURE SEZ UNITS Properties for Rs 550 crore in a cash-cum-debt deal. The Hindu Business Line Godrej Properties is likely to pay Rs 200 crore in cash and to absorb Rs 350 crore of debt — the money Jet Proposals of Zensar Technologies and Accenture borrowed from HDFC Bank in 2006 to buy the land Services to set up their units at Special Economic from an arm of Maharashtra government for Rs 400 Zones (SEZs) have been approved by the Unit crore — for obtaining the right to develop the land Approval Committee of the Development located in the BKC, which has emerged as an Commissioner of Andhra Pradesh IT SEZs. The attractive alternative to expensive South Mumbai committee, which met here on Monday, approved locations. The deal is likely to be signed in a fortnight. Zensar's plan to establish a facility with 300 The deal has been structured so that both companies employees at DLF Cyber City SEZ Private Ltd. The will share profits from the project. The exact ratio of facility would come up in an area of 23,615 sq ft. the profit sharing is under negotiations, he added. Accenture Services would expand its presence by Godrej will pay Rs 500 crore if the government grants setting up 35,756 sq ft office at TSI IT Park at additional FSI, said the same person quoted above. Nanakramguda near here. It would employ 350 Godrej can construct 1 million square feet of saleable people. area, even if the project does not get the additional FSI. INDIA’S CANDY MAN TO PUMP RS 1,600 CRORE INTO SEZ Mint

Dhanjibhai Maksana could arguably be called the Willy Wonka of Surendranagar, a sleepy town in Gujarat some 160km from state capital Gandhinagar. His company, Makson Pharmaceuticals India Pvt. Ltd,

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has been making candies, lollipops and other sweets projects and attract more serious players to the as a contract manufacturer for companies such as business. Nestle India Ltd, Lotte India Corp. Ltd, Cadbury India Ltd, Nutrine Confectionery Co. Ltd, Hindustan Under the new Bill, introduced in the Lok Sabha on Unilever Ltd, India Ltd and Ltd for several Monday by finance minister Pranab Mukherjee, decades now. Maksana says his firm is the largest developers have to notify their SEZs by 31 March contract manufacturer for branded confectionary in 2012 and get them operationalized by 31 March 2014 India, with an output of 150 tonnes of sweets daily to benefit from existing profit-linked tax incentives. and an annual turnover of at least `125 crore. He now ―The extension of the deadline till 2014 is a welcome plans to set up a multi-product special economic zone relief and eases the pressure on SEZ developers. By (SEZ) that will house a greenfield manufacturing unit that time developers will be able to substantially for producing candy, chocolates and other sweets. absorb units,‖ said Vikram Bapat, executive director at The SEZ will also house other confectionary units, consulting firm PricewaterhouseCoopers. drawn by the prospect of tax and other incentives. Hospitality NEW DTC: SEZ SOPS MAY CONTINUE TILL 2014 HYATT WILL ADD 330 FIVE-STAR ROOMS IN The Economic Times CHENNAI The Hindu Business Line The direct taxes code (DTC) approved by the Cabinet gives a reprieve to special economic zones, or SEZs, The 18-level, 8-lakh-sq.ft concrete structure on the till 2014 from the proposed regime, but has imposed a city's arterial road, Anna Salai, where hotel Hyatt 20 percent minimum alternative tax, which is likely to Regency is slated to come up in the next few months, be opposed by the industry. The SEZ developers say is bustling with activity. The ear-splitting noise of the tax regime approved by the Cabinet on Thursday granite-cutting and grinding wheels, dust billowing does not reduce the uncertainty, which will make it inside, people wearing hard hats scurrying about and difficult for them to attract units. Developers are not the smell of fresh paint clearly indicate that sure whether investments that they have already completion is not far away. ―Over 600 people are made in zones under construction will attract units working almost round-the-clock. The idea is to though the direct taxes bill approved by the Cabinet complete the project in all respects in the next couple retains the tax exemptions available to them under months,‖ said a spokesperson of the promoter of the the SEZ Act. property, Robust Hotels Pvt Ltd.

SEZS GET A BREATHER UNTIL EARLY 2014 CEEBROS GROUP TO INVEST ABOUT RS Mint 440 CRORE Financial Chronicle In a breather for developers of special economic zones (SEZs) and units located in them, such Chennai-based Ceebros Group, an up-market brand enclaves that are operational by early 2014 can enjoy in realty, is investing around Rs 440 crore for its real the incentives provided in the present tax regime, estate as well as hotel projects. In hospitality, which will be replaced by a Direct Taxes Code, or Ceebros will soon come up with its third project — a DTC. The decision is expected to speed up ongoing 200 room luxury business class hotel in Chennai with an investment of Rs 180 crore. It has also opened a

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230 room hotel for Rs 200 crore along Chennai‘s ITC: UP TO 60 NEW HOTELS TO BE arterial road, Anna Salai. The company is awaiting for OPERATIONAL IN 3-4 YEARS necessary government approvals for the third project The Hindu Business Line as it happens to be near Chennai airport, said C Subba Reddy, managing director of the Ceebros Conglomerate ITC Ltd said it expects to have up to 60 Group. new hotel properties operational in the next 3-4 years as it expands to tap the growing potential of the Indian PRIDE HOTELS TO INVEST RS 140 CRORE hospitality sector. The company, which currently has IN HYD, KOCHI about 40 hotels at various stages of construction, said Business Standard it would start work on another 15-20 new in the next one year. ―So in the next 3-4 years ITC will have up to Pride Hotels, part of the Mumbai-based over Rs 60 new properties operational,‖ ITC Ltd Chief 3,000-crore SP group of companies, is planning to set Executive Hotels Division Nakul Anand said on the up two budget hotels in and Kochi under sidelines of Hoteliers‘ Conclave here. Asked about its ‗Pride Biznotel‘ brand, with a total investment of investments on the new projects, he said ―It is difficult around Rs 140 crore. to quantify as it will vary from property to property.‖

ZURI GROUP TO INVEST RS 1,200 CRORE IN RELIANCE TURNS WHITE KNIGHT, BUYS HOSPITALITY EIH STAKE The Hindu Business Line Mint

Zuri Group Global, the multinational conglomerate, Prithvi Raj Singh Oberoi, chairman of EIH Ltd —which has chalked out a multi-pronged expansion approach runs India‘s second biggest hotel chain—announced for its hotel chain, Zuri Hotels and Resorts, in India on Monday that he and his family had sold 55.4 and abroad over the next five years. The company is million shares, a 14.12 percent stake in the company, looking at an investment of Rs1,200 crore in the to an investment arm of Ltd (RIL), hospitality sector to set up its own brands and take up for Rs 1,021 crore. Goldman Sachs recently said RIL management contracts as part of its strategy to was looking to enter new businesses such as power, increase the number of wholly-owned properties. telecom, healthcare and hospitality. It has joined hands with Mumbai-based real estate developer DASPALLA'S HYDERABAD HOTEL OPENS Maker Builders to construct hotels in the city, The Hindu Business Line including two at the Bandra-Kurla Complex, which could together cost Rs 1,200 crore. Apart from the The Daspalla Group of Hotels has opened its latest deal with Maker Builders, Ambani also has plans to property in Hyderabad, its fourth in the State. Another build hotels in SEZs he is establishing in Mumbai, budget project is coming up in Kakinada. The Haryana and Gujarat. company invested Rs 40 crore in the project located in Jubilee Hills, and has positioned it as a three-star hotel with five-star features.

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Commercial Properties market. The rentals of office space have started firming up. AMBUJA REALTY TO PUMP IN RS 500 CRORE INTO MALLS AHMEDABAD, NCR MALLS HIT AS RETAIL The Financial Express COS PREFER HIGH-STREET STORES The Economic Times Real estate developer Ambuja Realty would invest around Rs 500 crore in developing three shopping Once considered a dream destination for retailers, the malls under the ‗City Centre‘ brand. ―We will set up much-hyped malls of Ahmedabad are fast losing three City Centres in Raipur, Haldia and Patna,‖ ground to the city‘s high-streets. As retail activity picks chairman of Ambuja Realty Harsh Neotia said on up, malls in the city continue to battle vacancy levels, Tuesday. He said that the Siliguri City Centre, to be which at 30 percent are the highest in the country. operational from December, was being built at a cost Malls in the National Capital Region (NCR) come a of Rs 280 crore. The other malls would be set up at close second with 27 percent vacant space. an approximate cost of Rs 500 crore, he said. Ahmedabad is the only major retail destination in the country, which has seen such a significant percentage OFFICE SPACE BACK IN DEMAND increase in mall vacancy in the second quarter as The Times of India compared with the first quarter of the calendar year 2010. According to global consultants, Cushman and Prospects of the commercial real estate have started Wakefield (C&W), the mall vacancy for Ahmedabad looking up along with the residential real estate stood at 23 percent in the first quarter (January- market, as the economy gathers steam — it has March). One major reason for the high vacancy levels shown a spectacular recovery from the downturn, is the retailers preference for high-streets. when the GDP dipped to 6.7% in 2008-09. According to the Centre for Monitoring Indian Economy (CMIE), For instance, during the last three months, high- the GDP is expected to grow by 9.2% in 2010-11 as streets of Ahmedabad, have managed to attract compared to 7.4% growth seen in 2009-10. The fashion brands like Orra, Adidas and others. The strong recovery of the economy made realty buoyant. vacancy levels in Ahmedabad are quite huge if the The office segment was especially impacted by the malls in Chennai and Bangalore are taken into global economic downturn, with most organizations consideration. While both these cities have just 1 putting their expansion plans on hold, and in a few percent of vacant space, others like Mumbai and cases, even giving up surplus space. In a report, Kolkata have not more than 6 percent vacancy. Apart Colliers International says that since then, demand from Ahmedabad, Hyderabad is the only other city, levels have improved across major cities resulting in which saw a rise in vacancy levels in the second improved transaction velocity. quarter of the calendar year. The vacancy of malls in the city had rose to 7 from the 3 percent in January- Global consultancy firm C B Richard Ellis also said in March. its report that after the gloom of later-2008 and early- 2009, the second Quarter (April-June) of 2010 closed with a sense of optimism. Increased demand levels coupled with substantial infrastructural developments in the NCR are likely to benefit the overall real estate

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Townships

MAHAGUN’S DESIGNER HOUSING PROJECT IN NOIDA Mail Today

Mahagun Real Estate Pvt. Ltd has launched Mahagun Moderne, a residential project in Sector- 78, Noida, designed by Hafeez Contractor. Spread on 25 acres of land, it will have 2,200 — 3BHK, 4BHK and 5BHK, with area ranging from 1,250 sq ft to 3,825 sq ft. It will also have tennis/ dance and music academies, restaurants, fitness centre and a banquet hall, at an outlay of approximately Rs 1000 crore.

GODREJ PROPERTIES PROJECT IN MANGALORE LAUNCHED The Financial Express

Godrej group company Godrej Properties announced the launch of its first project in Mangalore called Godrej Avalon. Located on the fast-developing Airport Road, the project is spread over six acre and will have a saleable area of over 6 lakh sq ft, according to a company release. The site is strategically located in Mangalore's growth corridor with the airport and the city centre located at a distance of about 12 kilometres and 5 kilometres, respectively.

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About Avendus Capital

Avendus uses its unique domain and industry- Avendus Capital (Avendus) is a leading financial focused approach in businesses such as M&A services firm with a strong transaction record and advisory, private placements for growing companies, established relationships with companies and structured finance advisory, equity capital markets, investors. Avendus has been consistently ranked institutional equities, alternative asset management among the top-five corporate finance advisors in India. and wealth management. Avendus has emerged as The firm is also a leading syndicator of private equity the advisor of choice for cross-border M&A deals—23 deals in India. Indo-US and Indo-Europe deals—in the past three

years. Headquartered in Mumbai, Avendus has

offices in New Delhi, Bangalore, New York and

London.

CONTACT DETAILS

Chirag Bagai | +91 22 6648 0977 | [email protected]

Seema Rao | +91 22 6648 0963 | [email protected]

Ajay Kumar | +91 22 6648 0964 | [email protected]

OUR OFFICES

Mumbai: IL&FS Financial Centre, 5th Floor, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051 Tel: +91 22 6648 0050 Delhi: Suite 22A/B, The Aman Resort, Lodhi Road, New Delhi - 110003, Tel: +91 11 45357500 Bangalore: The Millenia Tower, A-10th Floor, No. 1 & 2 Murphy Road, Ulsoor, Bangalore 560 008 Tel: +91 80 6648 3600 USA: 100 Park Avenue, 16th Floor, New York 10017, Tel: +1 212 351 5066 London: 32 Brook Street, London W1K 5DL, Tel: +44 20 7647 7700

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