Cross border investments – Bangalore in top 10 in APAC list

Cross border investments – Bangalore in top 10 in APAC list

Cross border investments – Bengaluru entered the list of top 10 cities that attracted maximum cross-border investment in Asia Pacific (APAC) for the 1st time.  It will be receiving over USD 1.6 billion last fiscal according to property consultant CBRE.

APAC :

Asia-Pacific (abbreviated as APAC) is the part of the world  in or near the Western Pacific Ocean. The region varies in area depending on which context, but it typically includes much of East Asia, South Asia, Southeast Asia and Oceania.

APAC’s members include accreditation bodies, accreditation focal points and other organisations that have an interest in accredited conformity assessment results.

APAC is recognized by the Asia Pacific Economic Cooperation (APEC) as one of four APEC Specialist Regional Bodies (SRBs) that support the work of the APEC Sub-Committee on Standards and Conformance.

Cross-border investments :

Cross-border investment refers to the net inflows of investment to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor

Cross-Border Transactions include both outbound and inbound transfers of property, stock, or financial and commercial obligations between related entities resident or operating in different tax jurisdictions.

CBRE South Asia Pvt. Ltd, – Cross border investments :

CBRE South Asia Pvt. Ltd. –  India’s leading real estate consulting firm’s Asia Pacific Investor Intentions Survey 2019 findings revealed that Bengaluru – the capital city of Karnataka- for the first time has featured in the list of top ten destinations for cross-border investment across Asia Pacific.

The survey revealed that India was among the top five preferred markets in APAC on the back of the launch of the first Real Estate Investment Trust – REIT (Embassy-Blackstone) and the resulting improved market transparency. The drivers for this trend were new infrastructure and potential growth opportunities in the market.

REIT – Real Estate Investment Trust :

The first REIT by Embassy Group and Blackstone Group LP was launched in India in March this year and it is expected to catalyse investments in the country.

Improved investor sentiment in office assets is likely to expose potential quality buildings as a fundraising avenue for developers and also propel major corporations to lease/purchase space in these development.

Preferred investment destination :

Bengaluru featured as the first Indian city in the list of preferred investment destination on the basis of its growing reputation across the globe as the home base to several international corporates,” said Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE.

Bengaluru city with a significant talent base and world-class infrastructure offers several investment grade options in office, retail, as well as residential segments,

Bengaluru is considered as one of the fastest growing cities in India with the presence of important players from the areas of information technology, biotechnology, pharmaceuticals, manufacturing and other sectors.

Money and Borders :

Cross-border investments in a changing global marketplace – Governments appear to have become bigger players in economic affairs, and we may be entering an era in which nationalist ambitions will make globalization more difficult to manage.

What is clear is the need for companies and funds pursuing cross-border investments to adapt their investment strategies and operations to function effectively at the intersection of government, business and finance.

The upside story on cross-border investment is one that companies can use to good advantage. Inbound and outbound investments confer substantial benefits – they create employment, stimulate R&D, generate tax revenues, and enhance competition.

Bengaluru Development Authority to tie up with realtors – Bengaluru

Bengaluru Development Authority to tie up with realtors – Bengaluru

Bengaluru Development Authority (BDA) – planning to tie up with realtors to over come the cash crunch in Bengaluru. 

There are very few people who wants to own BDA flats and villas  in the last years.  This has made Bengaluru Development Authority to decide on teaming up with private realtors.  This move by BDA will take away the authority’s power to decide on the real estate prices.

BDA – Bengaluru Development Authority :

The Bangalore Development Authority (BDA) came into being with effect from 6th January 1976 under a separate Act of the State Legislature viz. the BDA Act 1976. This Authority combined in itself the Planning functions of the City Planning Authority and the developmental functions of the erstwhile CITB.

Focus of Bengaluru Development Authority :

Development of Bengaluru in a planned manner, creating quality infrastructure, provision of sites and services and catering to the housing needs of the underprivileged are the focus areas of the BDA.

Since inception, the BDA has allotted 76,000 sites to individuals for construction of residential dwellings. In addition, more than 800 civic amenity sites have been given for use by various public utilities, as also organisations, catering to the felt needs of the particular locality.

Functional Divisions of Bengaluru Development Authority :

The Authority has the following main departments

1. Land Acquisition Department

2. Town Planning Department

3. Engineering Department

4. Allotment & General Administration Department

5. Finance Department

6. Law Department

7. Public Relations Department

8. Environment & Horticulture Department

Real Estate – Realtors :

Real estate is “property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more generally) buildings or housing in general.

Residential real estate :

Residential real estate may contain either a single family or multifamily structure that is available for occupation or for non-business purposes.

Residences can be classified by and how they are connected to neighbouring residences and land. Different types of housing tenure can be used for the same physical type.

For example, connected residences might be owned by a single entity and leased out, or owned separately with an agreement covering the relationship between units and common areas and concerns.

Public Private Partnership model – Bengaluru Development Authority :

The BDA is cash-crunched.  The authority as sought the government’s permission to enter into the public-private partnership (PPP) model with private companies and realtors.

Real Estate word on newspaper

The plan is to make quick business and raise money for various infrastructure projects by constructing and selling villas and flats in namma Bengaluru.

The Bengaluru Development Authority is planning to undertake new housing projects under the Public Private Partnership model.  Once the government approves, the project will be undertaken on unused land.  The authority is also planning to sell the already constructed flats and villas with a more transparent and faster approach.

Unsold property by Bengaluru Development Authority :

The Bengaluru Development Authority is in possession of 2000 flats and 30 villas.  Under the new PPP model, the authority is planning to sell the land to a private company/realtor. 

Under the new model, good quality construction and the sale of the same will be the builder’s responsibility.  After the sales, the Bengaluru Development Authority will get a share of the apartments and villas.

According to the BDA Commissioner, the Government’s approval has been sought.

Implementation of PPP Model :

The PPP model is followed in the case of the BDA shopping complex in Koramangala.  In case of the housing projects, the Bengaluru Development Authority takes around 30 to 35% of the land or cash compensation along with flats and villas.

Under this model, the Bengaluru Development Authority will have a share in the project.  This divides BDA’s work. 

If this model goes well, the Bengaluru Development Authority plans to implement at the Dasanapura Village where work is on to construct 340 villas, 

Avinash Prabhu – Skyline Construction & Housing Pvt. Ltd.

Avinash Prabhu – Skyline Construction & Housing Pvt. Ltd.  and Kalmane Koffee’s owner.

The Co. started as a family owned enterprise with holdings in coffee plantations.  Later it branched out to property development.   Since two decades of its establishment Skyline Construction & Housing has become one of the trusted builders in Karnataka and recognized by CREDAI.

History of Skyline Construction & Housing Pvt. Ltd.

Skyline Construction recognized the opportunities in the real estate industry.  The team consists of dedicated architects and engineers. 

Skyline constructions

The Co. gained success by building world-class spaces giving outstanding high quality, value added buildings and services. 

The construction Co. has become one of the trusted builders in Karnataka.  Avinash Prabhu and Dhiraj Prabhu are the owners of the Co.

History of Kalmane Coffee:

Kalmane Coffee is Chikkamangaluru based.  It is a 125 year old coffee plantation company.  The main concentration was on exports but recently entered the domestic brand.  Avinash Prabhu is the Managing Partner.  They have coffee bars called Kalmane Koffees in the city.

Kalmane koffee outlet

The Kalmane group is a fourth generation coffee growers owning about 1,000 acres of coffee estate located in Chickmagalur district.

Skyline construction & Housing Pvt. Ltd. – Avinash Prabhu, Managing Director

Avinash Prabhu is the Managing Director of Skyline Constructions. He was arrested by Central Crime Branch (CCB) for cheating people out of Rs.100 crore after promising to build flats for them. This company swindled the money from  2OO members.

Avinash Prabhu

The CCB officials raided the house of Avinash Prabhu.   A case was filed against Abinash Prabhu by a buyer named Christopher Regel. 

Following the case filed at Hennur Police Station, the police arrested Avinash.  Later on the case was transferred to CCB.  The CCB team conducted raids at properties of Avinash Prahu and Dhiraj Prabhu. 

Avinash Prabhu was arrested at his office at Lavelle Road, Bengaluru on 3rd January 2019.  During the raid the officials discovered 15 different bank accounts throughout the city in Avinash Prabhu’s name.  All the 15 bank accounts have been frozen.  .

According to CCB reports, the police have recovered two vehicles a Range Rover and an Audi from Avinash Prabhu. His brother Dhiraj Prabhu is absconding. 

Conclusion :

Avinash prabhu and his brother Dhiraj Prabhu collected crores of rupees from people for constructing apartments at Hennur, Horamavu, Yelahanka andin Mangaluru.  The brothers used to take the customers to the location.  Then they used to show them around and collect a sum of money in advance.

After a few days the brothers Avinahs Prabhu and Dhiraj Prabhu used to pretend that construction had begun and again collect a large sum of money.  After collecting the sum they used to abandon the buyers.  The brothers neither repaid the buyers nor construct the apartment.

Unsold housing stock

Unsold housing stock in Bengaluru is stands at 80%.  Bengaluru sold only 20 of every 100 houses built in the year 2018.

Unsold housing sector in Benglauru

Unsold housing stock in Kolkata stood at 10 and Delhi-NCR around 5.  The forecast for the year 2019 is looking bleak.

Reasons for unsold housing stock

Booming commercial activity and a cutting edge startup culture had kept the real estate at Bengaluru vibrant.  But real estate market – the unsold housing stock has out performed all other metro cities in terms of unsold housing stock

The real estate market remains in the grip of a downturn as potential home buyers avoid purchases, leaving developers struggling with unsold housing inventory and interrupted projects.

Housing prospects in Bengaluru

The reasons for unsold housing stock can be due to the city’s evolution in terms of infrastructure development, transport and connectivity. Given the ever-escalating challenges the city faces on these fronts, a marked preference for walk-to-work options by home buyers has become evident.

Housing is the second-largest employer in India. It has seen a 30 per cent growth over the last two years. But new regulations, and a liquidity crunch after the NBFC crisis, has led to an increase in capital requirements for developers.

A large number of people are waiting for correction in GST rates. If you buy three months before the building is ready, then you pay 12 per cent GST post occupation there is no GST.

Prospects in future:

The industry as a whole has seen both the turmoil and the prospect that is likely to be the trend in 2019 as well. The big bang reforms implemented have brought about an imperative change in the tax, regulatory and business environment in India.

Affordable housing

Indian real estate has also witnessed a ‘systems re-boot’ – beginning with demonetization, the legislation on Benami Properties, RERA, GST followed by the amendment to the Bankruptcy and Insolvency Code.

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Maintenance charges for apartments

Maintenance charges for apartments is fixed by the owners of the apartment.

Every Housing Society or Apartment Owners Association at its formative stages has to decide on the structure of Society Charges it will collect.  This is called Maintenance charges for apartments.

Apartment maintenance charges

‘Maintenance charges for apartments’ is one of the  topics in the real estate realm. While most, if not all, the apartment owners have to pay these common maintenance charges.

Maintenance charges

When a rental property is contained in an apartment block or housing development, either the tenant or the landlord may be expected to pay an annual service charge. This charge will usually cover maintenance and repair work in communal areas.

These charges cover the costs incurred on amenities. The costs incurred on common areas, elevators, terraces, parking areas, expenses for building repair (covering all the charges for new additions and other structural changes).  The costs also includes water charges, parking charges, property tax, insurance premium charges, common electricity charges etc.

Real Estate Regulation Act

The Indian Parliament has passed an Act known as Real Estate (Regulation and Development) Act in 2016 – the most important flat maintenance charges law in the country.  This Act has established the long awaited Real Estate Regulatory Authority (RERA) in order to ensure transparent selling and buying process of all types of properties.

The builder or developer is responsible to provide maintenance for the sold property on a regular basis, the charges of which as Maintenance charges has to be borne by the resident.  However, it ensures that these charges are reasonable.

Government’s move to regulate maintenance charges for apartments:

The State government has issued a circular/notice that persuades the apartment associations to register.  The registration comes under The Karnataka Co-operative Societies Act, 1959.

There are increasing complaints on financial misuse and misappropriation by the apartment owners and associations.

All the apartment buildings, associations or societies charge for maintenance and indulge in financial activities.  There are no proper regulation if the apartment association is not registered under Karnataka Co-operative Societies Act, 1959 or Karnataka Ownership Flat Act, 1972.

Residents who are living in the apartments are paying charges towards maintenance and they also own an undivided share of land on which the building stands.

It is mandatory to register the apartment associations under the Karnataka Co-operative Societies Act or Karnataka Flat Ownership Act.  This helps in bringing financial accountability.

 

Jitendra Virwani – 2nd richest realtor in India

Jitendra Virwani-CEO Embassy Property Development

Jitendra Virwani started out in his father Mohan Virwani’s construction business as a teenager.  He went on to start his own development dynasty in 1993 with borrowed capital of $50,000 from friends.  The company was renamed as Embassy Property Developments.

The embassy brand is a well known brand in the real estate world.  The brand is known in business parks and housing industry.

He has a bachelors degree from Bengaluru University.  Jitendra Virwani is the CEO and Managing Director of Embassy Property development. The Co. is a privately held real estate developer based  in  Bengaluru and commenced operations in 1993 under Jitendra Virwani.

Jitendra Virwani’s  Embassy group is into real estate development like commercial, residential, hospitality, industrial warehouse spaces, services, retail and education.  The co. has also developed projects in different cities like Chennai, Hyderabad, Coimbatore and Pune.

The Co. has developed projects in 2 countries abroad i.e.  Malaysia and a business park  in Serbia.

Jitendra Virwani has been ranked the 2nd richest in the list with a net worth of Rs.23160 crore.  Mangal Prabhat Lodha of Lodha group tops the list with Rs.27150 crore.

Virwani’s achievement in real estate:

  • Embassy property development under Virwani is Bengaluru’s biggest developer of office parks.
  • Embassy Property Development, together with private equity firm Blackstone, will soon be listing India’s first-ever REIT
  • Embassy has a roster of multinational tenants such as Google, IBM and Warburg Pincus.
  • Son Karan, who works with him, is overseeing a joint venture in shared office spaces with WeWork.

Unlike some developers who consider only end-profits, Virwani is more focused on cash flows. He is not afraid to walk away from deals that would involve too much leverage.

Jitendra Virwani’s philanthropy:

Funds a State-run school for poor kids, now renamed as Stonehill Government Primary School

Passion :

He is passionate about horses.  Virwani owns a riding school in Bengaluru.

Owns the elite Stonehill International School, in the suburbs of Bangalore

The Way Forward: 

Virwani has a substantial commercial real estate portfolio which brings in steady rentals.  Jitendra Virwani’s Embassy Manyata Business Park stands tall as one of Bangalore’s premier office parks. Spread over 62 acres, it has 9 million square feet of office space and marquee tenants like IBM, Microsoft, Target and Cognizant.

Embassy’s office park business now covers over 14 million square feet generating approximately Rs 696 crore in rentals per year.