IL&FS, Milestone launch real estate fund

For those who do not have time and where withal and also do not have the knowledge and nitty gritties of the real estate sector, there is a good news from IL&FS Investment Managers and Milestone Capital Advisors who have launched a real estate fund. The brief summary of the fund:-

• Description of the Fund: IL&FS-Milestone Fund-I is an yield-driven real estate investment fund based on a structure similar to the real estate investment trusts (REIT). Worldwide it is the most popular investment route for corporates and individuals to invest in real estate.
• Scheme: It is a close-ended scheme with a lock in period of four years, with an option to extend the term by a year and if required by one more year.
• Fund Size: The fund is targeting a corpus of Rs 1,000 crore, which includes a greenshoe option of Rs 500 crore.
• Last Date for Initial Offer: The fund will remain open for subscription till October 30, 2007.
• Minimum Investment: It will be the first real estate investment fund in India to offer a low minimum investment commitment of Rs 10 lakh for individuals (in multiples of Rs 5 lakh thereafter) and Rs 1 crore for corporates, with the convenience of draw-down spread over 12 months.
• Distribution of Profits: IL&FS-Milestone Fund-I will offer a quarterly yield distribution to investors and property appreciation benefits in the long term. The fund is targeting an annual yield of 11% (pre-tax) and an internal rate of return of 18-20% (pre-tax) with property appreciation.
• Portfolio: The funds raised in the initial public offer at par would be invested in office buildings, hospitals, hotels, warehouses and shopping malls. The managers would invest 30 per cent each in retail and office properties, 20 per cent in IT and ITeS and 10 per cent each in warehousing and office properties.

CONTACT DETAILS

IL&FS Investment Managers Limited

Mumbai

The IL&FS Financial Centre

Plot No. C - 22, G Block,

Bandra Kurla Complex,

Bandra (East),

Mumbai 400 051

Phone: +9122-2653 3333 / 2653 3232

Fax: +9122-2653 3056

Bangalore

Aum Plaza

1st FloorNo 76, 3rd Cross

Residency Road

Bangalore 560 025

India

Phone: +9180-4034 3333

Fax: +9180-4034 3310

Contact Email: sanjay.mitra@ilfsindia.com

Related News:-

• IL&FS, Milestone launch real estate fund - The Economic Times - September 10, 2007
• IL&FS, Milestone open door for realty investment - The Economic Times - September 11, 2007

Want big bucks? Try the realty sector

The following is the gist of article published by rediffnews.com on the emerging career opportunities in the real estate sector.

In the back drop of DLF raising India's biggest IPO, the Bombay Stock Exchange introducing an index for it, with foreign investment of $10 billion is expected to flow into the sector over the next 12-18 months and with the sector growing at 30-plus per cent in the next few years, the realy sector is slowly on its way towards consolidation and transparency.

The growth potential of real estate is immense for people looking to make a career in it. Among college students, graduates and working professionals -- especially those with management, engineering and architecture backgrounds -- realty studies are fast becoming a favourite.

Enrolments are increasing in institutes offering short-term diploma courses as well as in colleges offering real estate specialisation in their Master's programme. P.S.N. Rao, professor at the SPA, says that on an average 20 of the 75 students from the Masters in Planning program choose to do a thesis on real estate. "This figure was negligible when the course was introduced as an elective 10 years ago," he adds.

Dedicated institutes have sprung up and management schools have introduced specialised courses on the subject to cater to the increasing demand. Indian School of Business (ISB), Hyderabad, launched a course titled 'Property Finance and Investment' last year. The Pune-based Indian Institute of Real Estate (IIRE), affiliated with the National Association of Realtors (NAR), a leading association of realtors in the US, had 10 students when it was launched in 2001. "Today, we get more than 3,000 enquiries per month for our online course," says Suresh Malkani, founder and academic dean, IIRE.

A number of real estate MNCs have already set up shop in India; more are following suit. Home-grown firms, too, are joining the fray, pushing up the demand for qualified personnel. "There is an immense dearth of trained manpower in this sector," says Nirmal Purushottam, principal, Yajnas Academy of Real Estate Management, Hyderabad. His views are backed by Haresh Motirale, senior manager, marketing and sales, G:Corp Properties, Mumbai, who completed a course from the IIRE in 2002. "A specialised course definitely gives you an edge over those who haven't done it," he says.

Besides the technical essentials, realty education focuses on management studies. "Realty management courses give students a managerial perspective and help them understand finance and marketing," says Purushottam. Industry watchers say the day is not far when campus recruitments will become the norm in the real estate sector. "Our students are posted in companies like Tischman Speyer, JLLM and Macquarie Group," says Bhuvana Ramalingam, director (communications), ISB. "They are offered positions like general manager and senior manager."

Consider Delhi-based Anu Punj, 23, a graduate from the SPA with specialisation in Housing. She was snapped up immediately after her course by Emmar-MGF, a leading realty MNC. She is working as an assistant manager (planning) in the firm now.

Master's courses are generally comprehensive, covering several aspects related to housing and real estate. Says Madhu Bharti Sharma, head of the Department of Housing at CEPT, "The Programme of Planning, with Housing as a specialisation, covers housing policy, housing requirement, housing finance, land economics, real estate development and various methods of development (commercial, residential, resorts and leisure)."

Expect five-figure salaries at the entry level. As the property market gets more organised and competition intensifies, the figures are bound to get better.

The ISB, in partnership with two London-based schools, has instituted the country's first Research Chair in Real Estate and Urban Studies, besides forming a Real Estate Club to promote realty education.

Full Article:-

Want big salaries? Try the realty sector - Rediff News - September 07, 2007

GDR/ADR route unlikely for realtors

Real esate companies are likely to be barred from issuing American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). The reason: it may be difficult to enforce the conditions attached to foreign direct investment in real estate, particularly, the stipulation that investors must lock in their investments for a minimum period of three years.

This condition, which would be appliable to foreign institutional investments as well has been introduced to artificial inflation of prices and sudden flight of capital in this sector. The RBI is particularly cautious about the nature of capital invested in this sector, as it is easy to build up asset bubbles that could prove dmamaging for the entire economy.

The government is expected to come out with guidelines for pre-IPO placement in the realty sector soon. ADRs and GDRs are completely fungible and can change hands and defeat the verystipulation of the lock-in period which is present in the FDI guidelines. In fact, the government may keep a three-year lock-in period for even foreign institutional investment (FII) which comes in through the pre-IPO route.

Real estate is a sensitive sector for which the government has put in place certain conditions for FDI such as a three year lock-in period, minimum capitalisation of $ 5 million for joint ventures and $10 million for wholly-owned subsidiaries and development of at least 10 hectares of land. Though the government had fully opened FDI in real estate in 2005, it imposed these restrcitions because of the sensitivities involved with the sector.

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The Government is liberalising the FDI policy in Real Estate MFs

The government is considering allowing Foreign Direct Investment (FDI) up to 49% and tax benefits for real estate mutual funds. SEBI is in final stages of framing guidelines for products that will alow retail investors enjoy the benefits of owning a slice of the ever booming Indian real estate market. Internationally, real estate mutual funds are called Real Estate Invetsment Trusts - REITS in short. REITs are companies that buy, sell manage and develop real estate assets.

Much like mutual funds, REITs put together the investments of many individuals and institutions and then deploy this money in real estate. So, people wanting to have a pie in the real estate growth phase mo do so now by buying hsares in REIT or units in real estate MFs.

The main area of concern is disclosure norms and valuation of real estate assets of these mutual funds. It is difficult to value a property on regular intervals like day-to-day unlike other equity and money market instruments. Besides, valuations would depend on the valuer. The market regulator is expected to extend some of the strict disclosure and valuations proposed for real estate IPOs to real estate mutual funds as well. The advisory committee is suggesting a period not more than two months for declaring net asset values and portfolio. In line with real estate IPO norms, the projection of the value of the land may be made only on the present "realisable" value instead of the future projection.

Officials from the legal department of SEBI, a couple of key officials of HDFC Mutual, representatives from the Institute of Charted Accountants of India (ICAI), The Association of Mutual Funds in India (AMFI) and a SEBI nominated independent CA have been meeting over the past few months to finalise rules about disclosures and accounting standards to be adopted. The SEBI is also expected to announce which entities would be allowed to launch such a fund and the minimum investment amount for the investors.

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Office space prices may tapper off

India's buoyant economy would expect prime office-space rentals in the metros to spiral further. However, according to a recent survey conducted by real estate consultancy firm DTZ India, the ongoing boom in the prices in the A-Grade leasehold space is likely to flatten in the near future due to over supply situation that will arise in major cities across the country. DTZ India estimates the supply situation across 7 major metros for 2007 - Banglore, Delhi NCR, Chennai, Pune, Kolkota, Hyderabad and Mumbai - to be in excess of 90 million sq ft, while the estimated cumulative absorption for the year would hover around 55 million sq ft.

Pune tops the list with an estimated over supply of 208%. Next in line is Chennai with an estimated over supply of 192%. In Bangalore, this estimated excess supply stands at 38 per cent, in Kolkata at 66 per cent, in Delhi NCR at 20% and Hyderabad is at 33 per cent. Mumbai is the only market which has an undersupply. It’s going as strong as ever, with growth in the financial services business in the city driving this demand. Over the next three years though, there might be some significant sized developments that will come up in new places such as Navi Mumbai and Vashi.

To view the complete survey report, you can click on 'Research' and register at DTZ India

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Emerging Sectors in Ad spending

The year 2006 would not only be remembered for sky-rocketing property prices but also for the big ad moolah that was shelled out by realtors, making them the biggest advertisers on television and on print. Realtors edged out automobile brands and educational institutions in the race to emerge as the largest advertiser of 2006 with spends of around Rs 510 crore between January and November, a 60% growth over 2005.

Another emerging category, travel and tourism, registered the highest growth of 70%, a feat that propelled it into the top 10 league, according to media agency Mindshare Insight’s estimates. Cars and Jeeps vroomed with a 16% rise and occupied the number two slot. Educational institutions and two-wheelers were the third and fourth-largest advertisers respectively during the period, while independent retailers stood fifth in the pecking order with a 41% increase in ad bucks compared to 2005.

Real estate analysts attribute this surge in ad spends to IPO build-up of various companies. “With 350 malls coming up in the next two years, the retailers will have a choice of malls to locate themselves. So one will see a spate of ad campaigns by mall developers. Moreover, as real estate is emerging as a preferred asset class, developers are keen to enhance visibility to attract investors,” Knight Frank India chairman Pranay Vakil said.

Surprisingly, the FMCG sector, which used to take up a lion’s share of the ad spends, has only one entry in the top ten (toilet soaps), as shampoos and other categories saw sluggish spends. “Although, the FMCG sector recorded a positive growth last year, it was not able to match up with the growth in other buoyant sectors such as real estate, retail and telecom,” said Mindshare Insight national director Sanchayeeta Bhattacharya. Another trend that emerged in 2006 was the entry of branded jewellery segment in the top 20 rankings with a 40% increase in ad spends. Interestingly, despite the growth in travel and tourism, airlines have dropped out of the top 20 list. “Last year there were a larger number of airline IPOs. Also, as losses increased in the airline industry, ad spends got adversely impacted,” Bhattarcharya added.

Media planners say that as the Indian economy, increasingly, takes global cues, where retail and automobile sectors occupy the top most slots as the biggest ad spenders, India, too, is showing similar signs in the ad space as auto and retail gears up with more ad budgets. “Some categories which are obvious misses include financial advertising, which should have fared better considering the boom in the capital markets and an overall heathy economy,” said Lodestar Universal CEO Shashi Sinha.

Source : The Economic Times