Many developers are trying their best to create new zones and addresses across India that can appeal to HNI (high-net-worth individual) property buyers. This endeavour has met with varying degrees of success on the ground when it comes to swaying the ultra-rich clientele. Barring upgrades in design concepts and the addition of some new accoutrements to amplify a luxury lifestyle, the baseline concept of luxury homes has not materially changed in many cities. Prominent addresses or 'pin code value' still matter, and the ultra-rich are willing to pay extra premiums to get them.That said, cities like Delhi, Gurgaon, Bangalore and Pune have by now seen a high incidence of developers offering branded residences as alternatives to premium homes at the most sought-after locations within these cities. The success in swinging interest levels of the target clientele has varied markedly in tandem with the actual features being offered. While there is evidence of first-generation wealthy buyers evaluating and considering such options in these cities, the conversion rate among the historically rich has been negligible. The consensus among this segment is that branded residences offering very little value addition, and that the premiums charged on them are based on artificial factors that do not provide true value.Demand continues to be robust for options in bonafide premium locations of the key Indian cities, but newly tailored luxury addresses are also seeing their share of action as long as the projects on offer meet certain parameters. To begin with, deals conclude rapidly in sellers' markets where demand exceeds supply. Annual returns in such pockets are in the neighbourhood of 25 per cent, and this figure will continue to see northward movement over the coming years as supply constraint drive prices up further.In Delhi, the preference of HNIs when it comes to established and high-value locations is more or less inflexible. South Delhi is still the micro-market of choice for ultra-rich clients from Delhi, Punjab and Uttar Pradesh with budgets ranging from Rs. 50-300 crore. Golf Links in Delhi is a more vibrant market in terms of demand when compared to even to Lutyens Zone. Shantiniketan and Vasant Vihar are two other key HNI destinations where demand exceeds supply. Golf Links is actually the most sought-after location in South Delhi. Most other cities have similar pockets, but also show evidence of a certain degree of demand diversion to newer locations and concepts, which is not the case in Delhi.In Mumbai, with the Central Business District (CBD) shifting to BKC for all practical purposes, clients who would previously not have considered any options other than Malabar Hill or Nepean Sea Road zone are now evaluating newer areas like Worli, Bandra-BKC and Mahalaxmi as alternatives. Considering the limited supply in the historically prized locations, HNI buyers are looking for premium options that provide 24x7 security, a gated community experience and premium club houses as an amplification on their experiences in stand-alone buildings in the traditional premium areas.The arrival of K. Raheja Corp's ultra-luxury gated community Vivarea in Mahalaxmi, Mumbai has seen many wealthy south Mumbai residents accepting this as a luxury address in all respects. As such, K. Raheja Corp has definitely managed to create a new location that re-defines luxury in South Mumbai. There are similar examples in BKC and Goregaon, where Sunteck and Oberoi have played a similar role in creating new luxury housing addresses for HNI buyers - and in fact rebooting the whole concept of luxury living.Similarly in Bangalore, developers such as Total Environment and Chaitanya have provided the city with genuine luxury projects in brand-new premium locations. These developers have been instrumental in turning Whitefield into a high-value address and their completed projects command steep premiums. The offering, product design, specifications and buyer profile are remarkable enough to make a difference. Total Environment's project in one of the best luxury offerings in India, and demand for such projects in Whitefield significantly exceeds supply. Likewise, another project by this company has turned Bangalore's JP Nagar into a highly aspiration luxury destination which now commands the necessary clout of 'an address that matters'. What Ultra-HNIs Look ForUltra-rich buyers look at following parameters when it comes to buying a luxury residence:1. The Profile Of The Residents: It really matters whether or not you share the neighbourhood with the tycoons, celebrities and prominent CEOs of the city, as this makes a definite status statement and is also good for business. While ultra HNIs do gravitate to creamy layer environments for reasons of prestige, it is also true that many business deals are concluded at these residential locations during social interactions over weekends and holidays. In Delhi areas like Amrita Shergill Marg and Jor Baugh come readily to mind for these reasons. In Kolkata, Ballygunge and Alipore are practically defined by such a resident profile.2. Low Density: The rich and famous do not like to live in the crowded areas of a city, but prefer locations with lower population densities offer. For this reason, locations like Malabar Hill, Worli and Bandra Bandstand in Mumbai are traditionally locations where the rich pay very high premiums.3. View And Privacy: A sea view, a view of a golf course and a high level of privacy (integral to the concept of exclusiveness) matter a lot when it comes to defining luxury for India's ultra-rich. Luxury offerings in cities like Mumbai, Delhi and Bangalore rarely generate a lot of interest from the wealthy set of buyers if they do not score high on this aspect are addressed in most aspects. 4. Ready Access To The City's Nerve Centre: Apartments in Mumbai's legendary NCPA commanded highest premiums for various reasons, which included the profile of residents. However, their USP was that NCPA is closest to the erstwhile CBD of Nariman Point. Boat Club in Chennai and Golf Course Road in Gurgaon share this important attribute of proximity to these cities' 'centres of gravity. Mumbai's BKC area has become the new luxury address of Mumbai because the CBD as well as the Diamond Bourse have now shifted there.5. Overall Luxury Experience: The definition of luxury has been extensively abused in Indian real estate, and is being closely scrutinized by ultra-rich buyers when it comes to evaluating offerings. Luxury goes beyond club houses and the quality of fittings used in a project's apartments. Multiple aspects of a project are evaluated to discern if the 'luxury' tag indeed applies. Among notable success stories, One Avigna Park in Mumbai stands out as a clear winner when it comes to offering real luxury in most respects.It may seem strange that India's ultra-rich are indeed booking into luxury projects in new locations. However, this is nevertheless true in many cases such as Atmosphere on EM Bypass and Urbania by Bengal NRI, south of EM Bypass in Kolkata against the traditional luxury locations of Ballygunge or Alipore. However, this trend is catching on in cities where HNIs perceive a vacuum in terms of offerings at the traditional premium locations.The author is CEO - Residential Services at JLL India
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Adani Group company, Adani Mining and Posco E&C, an arm of South Korea's Posco, on Friday (18 July) signed an agreement to develop a rail line to the Galilee Basin coal reserves in Queensland."The rail project will lead to the opening of the Carmichael mine project which will deliver in excess of 10,000 jobs, and will also provide vital opportunities for Australian industry involvement," Adani Group said in a statement.The agreement gives exclusive rights to Posco E&C to be the EPC (Engineering, Procurement and Construction) contractor for the 388 km greenfield standard gauge rail.The binding agreement has set clear pathways to execute the final contract by the end of this year, the statement said."It will provide vital opportunities for Australian Infrastructure development and contribute to energy security of India by lighting the lives of millions of Indians," Adani Group Chairman Gautam Adani said in the statement."The binding agreement will enable us to develop a cost efficient rail solution and this relationship gives Adani access to Korean market, Posco's expertise and capital," Adani Australia CEO and Country Head Jeyakumar Janakaraj said."This is the largest EPC project in the region for Posco E&C, and we will put in our best efforts to maximise our engineering, procurement and financing capabilities to successfully complete the construction," Posco E&C President and CEO, Tae-Hyun Hwang said.Adani and Posco E&C will jointly manage the development of this rail line.The Queensland Government has declared the rail corridor as a strategic development area, the statement said.(PTI)
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In recent years, investors around the world have recognised real estate as an asset class that is an essential part of a diversified portfolio. They see REITs as a cost-effective and efficient way to access investment grade real estate in tandem with professional management. Basically, Real Estate Investments Trusts (REITs) are the entities that invest in revenue-generating real estate assets and sell their units like a stock on the major stock exchanges. With the announcement of tax pass through status for REITs in the recent budget, this wonderful investment instrument is expected to introduce soon in India. According to the draft guidelines, any investor, resident or foreign, can invest in REITs in India.However, initially, until the market develops, it is proposed that the units of the REITs may be offered only to HNIs/institutions. The minimum capital required to invest in REITs would be Rs 200,000 as according to SEBI, the minimum unit size is Rs 100,000 and one needs to buy atleast two units to invest in REITs. There are five major reasons why an investor should invest in REITs: returns, diversification, liquidity, transparency and efficiency. Consistent Income: REITs are required to distribute at least 90 per cent of the net income to the unit holders; thus, they offer anadvantage over equity stocks where companies may choose not to pay dividends. The earnings from a real estate asset is generated from long-term appreciation and leases thatprovide stable returns, while equity earnings vary monthly on the basis of sales, demand, supply and other factors. Diversification: A REIT has a low correlation with other asset classes, such as equities and bonds. The low correlation is due to the fact that real estate earnings donot behave like corporate earnings. Low correlation provides a better platform for diversification by reducing the volatility of a multi-asset portfolio. Secondly, the investment in REIT gives better diversification within the real estate asset class compared to direct investments that are capital intensive in nature. Thisprovides theexposure to invest in different micro-markets thatare indifferent phases of the real estate cycle.Easy Exit: REITs are publically traded, therefore provide moreadvantages in terms of liquiditycompared to direct real estate investment. In addition, they have potential for capital gains if the share price of the REIT rises. Transparency: The listed REITs will be registered and regulated by SEBI, and they will adhere to high governance and information disclosure standards, due to which, the market will provide better transparency and the interest of the investors will be intact. Professional Management: REITs are professionally managed and have access to a large capital base, which gives investors potential benefits, such as economies of scale, professional market knowledge and access to high value properties. The performance of REITs is monitored on a regular basis by independent directors, analysts, auditors and media, which provides an investor a measure of protection. These benefits are invaluable in cases where a general investor does not have time, money or expertise to manage hisproperty portfolio in such a professional way. REITs have been adopted worldwide and in some markets, they have become very successful as an investor's look for income-oriented investments putting dividends associated with REITs at the top of the list. The listed real estate and REITs are proved to be efficient and effective investment opportunities due to their transparency and liquidity advantages. SEBI is expected to come up with final guidelines by October 2014. Whether REITs will provide good returns to investors in an Indian context or not, only time will tell, as the feasibility and performance of REITs depend primarily on the market conditions and the regulatory framework governing them. This is one of the key factors that decides and drives the growth of REITs in any given market. Regulatory aspects, in general, constitutethe rules related to structure, borrowings, investment & asset acquisition, income & capital distribution, and taxing of REITs.The success of REITs in any country depends on its capability to customise the rules and regulations of REITs in such a way that they fit into their own markets.The authir is associate director of Colliers International
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As electricity demand peaks due to sub-normal monsoon, state-owned NTPC has warned that power plants are running on very low coal stock of less than two days, prompting government to take steps to fix the crisis.While the nation's largest power producer NTPC stated that six of its plants have critical levels of coal stocks, Central Electricity Authority (CEA) said 46 out of 100 electricity generation stations in the country have fuel stock of less than 7 days.In Lok Sabha, Power Minister Piyush Goyal said "corrective" action is being taken by the government to improve coal supply, including efforts by Coal India Ltd to raise production beyond current year's targets.Power utilities have been advised to use imported coal wherever necessary.Environment ministry nod is being sought to mine more coal and resource-rich states of Odisha and Jharkhand have been asked to help transport coal out quickly."We are increasing the (coal) crushing capacity, increasing (the number of) washeries in mining areas. We have also appealed to the Environment Ministry to allow us to mine additional fuel wherever there are possibilities," Goyal later told reporters outside Parliament.NTPC rang the alarm bells when it on July 14 wrote to the Power Ministry saying six of its plants with a combined capacity of 16,840 MW or 15 per cent of India's total energy capacity from coal-fired plants, have stocks of up to two days and cannot weather even a "small" disruption in supplies."With the ensuing monsoon, it will become more difficult to replenish the coal stocks and in case of even a small disruption, the total power generation at these stations will be adversely affected," NTPC Chairman and Managing Director Arup Roy Choudhury wrote in the letter.Stocks at three of the six plants would last less than one day. Goyal said the nation faced a peak power demand shortfall of 5,295 MW in April-June. The country has a total electricity generation capacity of 113,280 MW.He asked members in Lok Sabha to help the Centre mine coal in their respective states with support of locals so that power supply can be improved.State governments, he said, should ensure that land issues are settled so that railway tracks are laid to transport coal to power stations.A committee has been set up for rationalisation of coal links to work out "ideal" nearest coalfields for supply of feedstock to the power plants.He said the government wants to accelerate power generation during the 12th Plan with a proposed target of 88,537 MW from conventional sources sand 30,000 MW from renewable energy sources.Outside the Parliament, Goyal said the problem of coal supply had aggravated since 2009 and the "crisis was the result of five years of policy flip-flop and the uncertainty has to be resolved".He said the 'go' and 'no go' policy of the Centre in 2009 led to the fall in production capacity of several old mines while new mines could not be opened.Thereafter, in 2010, a comprehensive environmental pollution index (CEPI) was introduced which affected seven coal fields and hampered production of an additional 40 million tonnes of coal.While the government "withdrew" the 'go' 'no go' area in 2012, it replaced it with 'inviolate area' policy because of which the uncertainty in coal mining continued, he said."We have to import large quantity of coal and power plants do not have adequate supply," he added.(Agencies)
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Six of India's coal-fired power plants do not have enough stocks to weather even a "small" disruption in supplies, with fuel reserves sufficient for only up to two days, the country's largest power producer has warned.State-run NTPC has asked the power ministry to ensure more coal is sent to the six plants - which have a combined capacity of 16,840 megawatts or 15 percent of India's total energy capacity from coal-fired plants - particularly as the incoming monsoon rains could disrupt supply deliveries.India, which uses coal to generate more than half of its electricity, is struggling to provide enough power to meet rising demand and the country is regularly hit with blackouts."With the ensuing monsoon, it will become more difficult to replenish the coal stocks and in case of even a small disruption, the total power generation at these stations will be adversely affected," NTPC Chairman Arup Roy Choudhury said in a July 14 letter to the Ministry of Power.Stocks at three of the six plants would last less than one day, Choudhury wrote in the letter, which was obtained by Reuters. Choudhury was not immediately available to provide an update on stock levels on Thursday (17 July).State behemoth Coal India, the world's largest coal miner, has failed to raise its output fast enough, forcing India to import millions of tonnes of the black rock for its thermal power plants.Insufficient reserves are particularly problematic this year. Weak monsoon rains have limited the output from hydropower plants - which provide about a fifth of India's energy - putting added pressure on the thermal plants to raise output.But any onset of rains would also threaten to disrupt supplies of coal from mine to power station, hitting output.Last week Power Minister Piyush Goyal urged power companies to raise thermal coal imports after saying that 26 out of 100 coal-based power plants in India had "super critical" stocks - or only enough to meet requirements for less than four days.As of July 14, a total of 44 plants, including the super critical ones, have "critical" coal stocks - only sufficient for less than a week - with the majority of these in the state of Maharashtra, the home of India's financial capital Mumbai, Central Electricity Authority data shows.(Reuters)
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Indian Prime Minister Narendra Modi's government will decide next month on the sale of a $3 billion stake in state oil firm ONGC, in a major test of whether he will follow tentative reforms outlined in his first budget with actions.The nationalist leader won May's parliamentary election by a landslide with a pledge to create jobs and revive Asia's third-largest economy, which is beset with the twin evils of weak growth and high inflation.Yet Finance Minister Arun Jaitley's maiden budget last week drew criticism that his fiscal arithmetic did not add up. Capitalising on a record-breaking stock market run to complete asset sales could tip the balance.The government will decide next month whether to sell a 5 per cent stake in state-run Oil and Natural Gas Corp (ONGC), a senior oil ministry official said, in a deal that would be worth $2.9 billion at current market prices."The department of divestment has floated a note seeking our comments for a 5 per cent stake sale in ONGC," the official, with direct knowledge of the matter, told Reuters on Tuesday. He added that a decision would be taken in August.An official at the finance ministry, which houses the divestment department, said the government was interested in selling stakes in ONGC and other state companies given their high market valuations. He did not elaborate.If completed, the sale would raise more than a quarter of the $10.5 billion target for privatisation revenues announced by Jaitley for the fiscal year to March 2015. Oil explorer ONGC again is the highest profit-making PSU of the country during 2012-13 while telecom major BSNL turned out to be the biggest loss-making enterprise, according tothe Economic Survey.Oil and Natural Gas Corporation Ltd (ONGC), National Thermal Power Corporation Ltd (NTPC), Fertiliser Corporation of India Ltd, Coal India Ltd and Bharat Heavy Electricals Ltd (BHEL) were the top five profit-making CPSEs during 2012-13.(Agencies)
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India has disallowed Reliance Industries Ltd from recovering $2.376 billion invested to develop offshore gas fields in the D6 block on the country's east coast as output has fallen drastically and is way below the promised volumes, Petroleum Minister Dharmendra Pradhan said.Under India's exploration policy, the government allows companies to first recover their costs from oil and gas revenue, and subsequently share profits with the government.Reliance had set up facilities to produce 80 million cubic metres a day (mmscmd), but actual gas production has been much lower, resulting in underutilisation and creation of surplus inventories, Dharmendra Pradhan told lawmakers in a written reply.He said notices have been issued to Reliance, which is the block operator, for disallowance of cost recovery.The D1 and D3 gas fields in the block were to produce at a peak rate of 80 mmscmd in 2012-13 but actual production never reached that level. In April-June this year, production from the two fields averaged just 8.05 mmscmd, he said.The government disallowed Reliance to recover $1.797 billion as on March 2013, which had risen to $2.376 billion by March 2014, Pradhan said.Because of disallowance of cost recovery to Reliance and its partners BP and Niko Resources, the government has raised an additional claim of $195 million as profit petroleum for a period up to March 31, 2014, Pradhan said.Reliance had said earlier that unexpected geology caused the decline in output and drilling more wells would not help, but this has been rejected by the oil ministry, which believes output has fallen due to non-drilling of the promised number of wells."The issue is currently under arbitration," he said.(Reuters)
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Nearly half of India's coal-fired power plants have only enough stocks to last a week or less, a shortage that could become critical and drive up thermal coal imports by 14 per cent as weak monsoon rains are expected to cut output from hydropower.State behemoth Coal India, the world's largest coal miner, has failed to raise its output fast enough to meet demand, and millions of Indians still go without power.Blackouts are frequent, something new Prime Minister Narendra Modi is keen to fix, but that would require increasing coal shipments from Indonesia, Australia and South Africa.Shipments of thermal coal, used in power generation, could rise about 14 per cent to 152 million tonnes this year, according to commodities trader mjunction, a joint venture of Steel Authority of India Ltd and Tata Steel.A New Delhi-based trader, whose firm imports mainly from Indonesia for power companies in India, said his clients have already asked for more shipments as poor rains will force farmers to use more power to run their irrigation equipment."On the one hand you have less hydro electricity, and on the other you have more demand from the agricultural sector," said the trader, who did not want to be named as he is not authorised to talk to media.Coal is used to fire more than half of India's electricity, while power from dams accounts for about a fifth.With the weather office expecting below-average monsoon rains this year and private forecaster Skymet forecasting a 60 per cent chance of a drought, however, more coal could be needed to make up for lower-than-normal hydropower output.Weak monsoon rains contributed to one of the world's worst blackouts in 2012, when hundreds of millions were left without power.Power Minister Piyush Goyal on Monday (07 July) urged power companies to raise thermal imports after saying that 26 out of 100 coal-based power plants in India had "super critical coal stocks" - or only enough to meet requirements for less than four days.A total of 44 plants, including the super critical ones, have "critical coal stocks" - only sufficient for less than a week - with the majority of these in the state of Maharashtra."India's coal imports will continue to rise considering the fact that there are still a lot of new power plants coming up," said Viresh Oberoi, chief executive of mjunction.The new plants will need coal, and since domestic supply to the plants is guaranteed only up to 60 per cent of their total requirement, they will have to buy more imported coal to operate at optimum levels, he said.India is already the world's third-largest coal importer despite sitting on the fifth largest reserves, mainly due to delays in securing environmental clearances to add new mines and to build facilities to transport coal from remote mines.Coal-fired power plants are expected to see demand of 551.60 million tonnes this fiscal year ending March 31, but domestic supply will be limited to 466.89 million, Goyal said.In April-June, Coal India supplied 88.66 million tonnes to power companies against a target of 101.61 million.Thermal coal imports rose as a result, shooting up 11 per cent from a year earlier to 14.77 million tonnes in June, according to mjunction.(Reuters)
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