Trump and Lodha launch luxury project in Mumbai

Trump Tower Mumbai

Donald J. Trump, renowned American businessman and creator of iconic developments across the world, has recently unveiled Trump Tower Mumbai – the first Trump project in India, in collaboration with Lodha Group.

“It has been my desire for many years to be involved in a project in Mumbai, and it is my honour to bring the Trump lifestyles to the citizens of this metrolpolis with the launch of Trump Tower Mumbai. We are also thrilled to be working with the Lodha Group.” said Donald J. Trump, Chairman and President of the Trump Organization.

Seconding his views, Donald Trump Jr., Executive Vice President, remarked, “Every aspect of Trump Tower Mumbai bears the distinct touch of the Trump brand – incredible attention to detail, cutting edge design and an obsession with perfection; creating a unique, luxurious property we are incredibly proud of.”

Recognized worldwide, the Trump brand is synonymous with the highest levels of luxury, the finest locations and the most prestigious real estate. Trump Towers are among the most successful residences worldwide, creating exclusive value that commands significant premium over all others. Trump is very selective in choosing its projects, and Mumbai is one among international cities like Vancouver, Istanbul, Panama and Manila.

Speaking at the launch, Abhishek Lodha – MD, Lodha Group, said: “Mumbai is today a global megapolis and centre for talent, capital and industry. It is only fitting that we bring one of the biggest name in luxury living to our home market with Trump Tower Mumbai.”

“Our collaboration on Trump Tower Mumbai not only raises the bar in every sense for luxury and services, but sets a new benchmark for luxury living in India – creating a tower that redefines the Mumbai skyline.”

Trump Tower Mumbai brings the finest in luxury in a branded residence to India, and offers residents a host of exclusive lifestyle privileges, including a 24-hour Resident Manager and white-glove services, access to global Trump luxury properties and for the first time in India – a fractional membership to private jet service exclusively for Trump residents.

The Tower, with its crystal glass inspired architecture, will feature uber-luxe 3 and 4 bedroom residences with dazzling interiors designed by HBA Singapore – the world leading hospitality design firm. It also includes German Poggenpohl kitchens, five-fixture master bathrooms, indoor Jacuzzis, built-in TV’s, elite seven-level security and the very best in every aspect of interior design.

Housing shortage, an evergreen problem of India

With economic condition continues to haunt India’s middle and lower-middle income group, finding an ideal home becomes a distant dream for these section of the society. On one side, luxury homes are selling like a hot cake, while on the other side, thousands of flats made for lower and middle income people, are lying unsold/unoccupied across the nation.

But when one sees around us, the once luxury items such as LED TVs, Cameras, smart phones, home theater, designer furniture etc, have become a necessity and inherent parts of Indian homes.

According to Sachin Agarwal, Chief Managing Director of Maple Shelter, “Majority of Indians still find it difficult to buy a home. But surprisingly, luxury items like LED TVs, home theatre, etc have become affordable and housing is becoming more and more expensive.” 

Though average household income keeps increasing across various states in India, the phase at which housing prices are going up is alarmingly high and beyond anybody’s imagination. The gap between supply and demand is also growing steadily and people have no option but to settle for low standard of living in India’s ‘so-called’ modern cities. 

Making homes affordable is not an easy task. Concerted efforts should be made by government and other stakeholders of the society. With interest rates still high, those who can afford are only buying homes. Since India has no law that prevents people from buying multiple homes, several such homes are lying vacant without being occupied in major cities in Mumbai, Delhi, Bangalore, Chennai and Pune. In China and Singapore, people who buy second home will have to forgo certain privileges. Interest rate for second is very high and no subsidy will be available for people who have more than one home. 

If the government comes forward to formulate such law in India, there will be a huge change in the real estate sector and price rise will be largely arrested. There will be a economic balance will be maintained.

The government also should facilitate to build quality homes for the economically weaker section and middle income group. There is a huge potential to fill the gap for EWS as according to a rough estimate of the total short supply of homes this sector constitute more than 80 per cent. If the current backlog is maintained, then by 2020 the country will be facing an extra demand for more than 30 million additional homes. 

According to the 12th 5-year plan (2012 – 2017), the housing shortage in India has reduced to 18.78 million. However, the data collection is questionable and government departments continue to argue on the exact figure Also, it is not just the income of the EWS that seems to be a deterrent factor here. Land prices, financial and regulatory concerns and other factors also play a big role in the problem.

Today, land is not an easily available asset in India. In most cases, acquisition of a plot for housing development is a cumbersome, time-consuming and highly expensive process. With increasing population and rising urban density, the demand for land has also seen an exponential rise. The shortage has also been contributed to by poor municipal, state and central regulations. 

Land prices are higher than the rate which is compatible with the development of mass real estate development – read affordable housing. There also has been an increase in the cost of construction, directly reflecting in the housing prices. Another problem is the lack of infrastructure. Developers are bringing out projects in peri-urban locations to keep the housing cost down, but these locations are generally unattractive based on lack of public transportation and increasing pollution in these areas.

The majority of Indian home seekers are workers moving into cities and looking for housing that would be compatible with their starting incomes. The ones from the economically weaker sections look for properties that provide access to public transport, water and power supply systems, sewage treatment lines and other conveniences. 

No matter what measures are proposed by the government of self-governing bodies of real estate developers, they will not be able to reduce the figure of housing deficit if they do not start catering to the EWS-generated demand. The bulk of the existing shortage of homes remains squarely in the genuinely affordable housing sector. No amount of supply in housing units costing above Rs. 20 lakh is going to make any difference – in fact, supply priced above this will just add to the oversupply that we are seeing in most cities.

Gold rush continues to dent realty growth

Indians are always susceptible to investing in gold and real estate, irrespective of the market condition.  However, when there is a slump in any of the two mentioned basic investment options, people’s first choice would be to park their money in yellow metal, as unlike real estate, gold possesses better liquidity and provides long-time investment option too.

So, when the gold prices slumped in the international markets to August 2011 level, the bullion value in domestic markets too reached its nadir, though analysts say, it would be difficult to predict the lowest point of the current slump pattern.  

This means, if one buys ornamental gold today at Rs 2711 per gram, he would be buying it at the rate existing two years ago. No wonder, we are witnessing a heavy rush in all leading jewellary shops across the state. However, the slump has affected small time jewelers, who have to sit on the gold purchased at higher rate and have no option but to offload it at much lower rate.

So, it is natural that people in India, who are known for their affinity towards buying gold, are now shopping for the yellow metal. Some are even pledging old ornaments or taking loan to buy new gold thinking that the slump is temporary and gold prices will shoot again in future.

As investment in gold and real estate is inter-related, the slum in gold has come as God sent for people who wanted invest in real estate but were reluctant to put their money in the highly volatile and unpredictable real estate in India.

As there are low or negative returns on real estate, the demand for gold and other commodities typically is expected to increase, and that is what happening now, according to a few real estate consultants in Chennai.

According to Anuj Puri, Country Head Chairman, JonesLang LaSalle India, ”Indian real estate is definitely not the best route for short-term investors. When it comes to opportunistic trading, gold is doubtlessly a far more suitable asset class – not least of all because one can purchase it in small or large amounts and liquefy it quickly. Turning a profit with gold is really only a matter of timing the market.

Even retail investors are drifting away from the equity market investments to safer asset classes such as gold, according to industry sources.

However, the recent fall in gold price has raised questions whether the returns given by these relatively safer investments are likely to sustain. While the gold price has fallen 20% from the peak, are the real estate prices also likely to correct is the question asked by the most.

However, an analysis done by Karvy's research team on 20 years data of the Hong Kong real estate index and gold price showed that the prices of both have 81% correlation.

So, a fall in gold prices could prompt more money for precious metal and less for real estate, Karvy Stock Broking pointed out. This means when investors eye gold to make money, real estate will take the back seat of investment option, which in turn will make homes affordable for prospective buyers.

Experts also view that the correction between real estate and gold will make people sell their real estate investments and invest in the yellow metal. Will there be a large scale correction in realty prices if the prices of yellow metal further go down? Only time will tell.

RBI to allow NRIs buy property jointly with foreign spouse

Good news for Non-resident Indians (NRIs) who are planning to buy property in India jointly with their spouse holding foreign passports as India’s top banker is planning to allow such investment by relaxing certain norms.

The Reserve Bank of India (RBI) is planning to relax the restrictions under the Foreign Exchange Management Act (FEMA), to make such acquisitions easier.

Currently if an NRI wants to buy a house or any other real estate as a jointproperty with a foreign citizen spouse it is dealt as a special one needing a prior permission from the RBI on a case-by-case basis.

But RBI executive director, G Padmanabhan has said that he has asked for a review of these rules. “This is an issue that requires examination in consultation with the Government of India. In fact, I have directed a comprehensive review of FEMA 21 (notification) under which such transactions are dealt with,” he said.

Padmanabhan said there has been a spurt in such applications but because each needs a specific permission from RBI, the process takes time.

The regulation he referred to is Notification No. FEMA 21/2000 that specifies the rules which permit an NRI or a Person of Indian Origin (PIO) to acquire immovable property in India, other than agricultural land or, plantation property or farm house.

The rules also apply to foreign companies that have been permitted to open a branch or a project office in India provided the purchase is necessary to carry on their business.
 

But foreign nationals even if married to an NRI cannot buy immovable property in India, unless the person can provide a proof that he or she has been a “resident of India” as per FEMA rules. With the renewal of interest in Indian investments, a number of NRIs have planned to buy homes in India. But the restrictions on foreign nationals mean the NRI has to buy and plan to dispose of the property as the sole owner.

SEBI approves REIT rules

NEW DELHI—In a major boost to construction sector, country’s top market regulator Securities and Exchange Board of India (SEBI) has approved the rules for creation of real-estate investment trusts (REITs) and infrastructure-investment trusts in India.

The step comes a month after Finance Minister Arun Jaitley said these trusts would be given a tax ‘pass-through’ status, meaning they wouldn't have to pay any taxes as long as they pass most of their income to shareholders in the form of dividend.

Industry experts welcomed the rules issued by the Securities SEBI, saying that real-estate and infrastructure trusts will help provide a new source of funding for investors and developers in infrastructure projects.

"We expect this to be a positive move for the capital markets and could also free up some liquidity for real-estate and infrastructure players," said Bhairav Dalal, associate director at PricewaterhouseCoopers in India.

The rules finalized on Sunday state that only commercial properties, such as office buildings can be part of a REIT, and all REITs have to be listed on a stock exchange.

To be eligible for listing, the value of the assets owned or proposed to be owned by a REIT should be worth at least Rs 50 lakh.

REITs will be required to distribute not less than 90% of their net distributable cash flows to investors at least every six months.

Under the rules, at least 80% of the value of the REIT's assets must be in properties that are completed and generating revenue. A REIT can invest only 10% of the value of its assets in properties that are under construction, SEBI said, adding, REITs can also invest a small portion in other securities like mortgage-backed securities and money market funds.

Meanwhile, infrastructure investment trusts will own infrastructure projects. These trusts may or may not be listed on stock exchanges, depending on the kind of assets they own.