London house builders target cash-rich Indians

Prasun Sonwalkar London, (PTI):

As Britain''s housing market continues its downward spiral due to recession, London''s biggest builders are targeting cash-rich investors from India and other emerging economies to stay afloat. A pad in London is avidly sought by upwardly mobile Indian and other foreign entrepreneurs who see the metropolis as a safe and attractive destination.

Property dealers in London have reported sales to several foreign investors, including Indians. A weak pound sterling has added to the attraction of buying houses in Britain.

Housing industry sources say foreign buyers bought more than half of the London homes that sold for more than 2 million pounds each last year. The snapping up of houses in London by cash-rich foreign investors has sparked some concern that prices will remain artificially inflated, which will make it difficult for local British buyers to enter the market.

London is said to be particularly attractive to the global super-rich because of its accessibility, stability, safety and the global standing of its financial institutions. It is seen as a magnet to the world''s billionaires.

Berkeley Group, London''s largest volume house-builder, said that of the 2,000 homes it sold last year at an average price of 263,000 pounds more than 30 per cent were to buyers in China and India. This compares with a historic average of 10 per cent.

Rob Perrins, chief executive of Berkeley, told The Financial Times: "The demand from sophisticated investors, who want to get money offshore and into a stable investment, or want a place for their children to live in when they come here for university, has no match in the domestic market." Another builder, Barratt Developments, is reportedly planning to sell a third of the 750 homes it will build in London this year to Asian buyers, compared with about 5 per cent in a normal market.

"A lot of them have cash, or at least easy access to it, which you just don''t see with the local buyer anymore," said Gary Patrick, London sales director for Barratt. London is already home to 23 billionaires, 11 of them of foreign origin, including Indian steel baron Lakshmi Mittal and mining magnate Anil Aggarwal.

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Recommendations of New York green building codes

 By Yatin Pandya | Place: Ahmedabad; Source: DNA

After having looked at the lessons learnt from the New York city’s initiative, steered by the rich mayor Bloomberg and the speaker, at creating Green code taskforce to make New York city’s buildings 75% more energy efficient in 20 years, here is a summary of the 111 recommendations which all in an integrated manner would achieve this.

Environment, health, Costs & savings being the major criteria, the recommendations have been generated in ten major themes in response to climate change.

The ten themes include: Overarching code issues (seven recommendations), health and toxicity (20), energy & carbon emissions-fundamentals (17), energy & carbon emissions- energy efficiency (28), energy & carbon emissions-operations and maintenance (six), building resilience (nine), resource conservation (five), water efficiency(seven), storm water (seven), urban ecology (five).

The following is the representative list of the kind of concerns and directives covered in the recommendations:
Add environmental protection as fundamental principle of the construction codes, don’t exempt existing buildings from green codes, consolidate regulation of landscape practices, streamline approvals for green technologies & projects, enhance code training for architects & engineers, limit harmful emissions from carpets, limit harmful emissions from paints & glues, ensure ventilation airflow in residences, convene task force on recycling fluorescent light bulbs, phase out toxic & inefficient light fixture components, promote stair use through signage, build new homes to Energy Star® Standard, limit heat loss through exterior walls, increase allowable size of solar shades, provide window screens to encourage natural ventilation, reduce artificial lighting.

In sunlit spaces, ensure operable windows in residential buildings, allow large solar rooftop installations, improve energy modelling for building design, improve energy & water efficiency.

Upon sale of residences, increase lighting efficiency in apartment buildings, encourage installation of energy star® appliances, reduce overheating in apartments, turn off equipment in empty hotel rooms, reduce artificial lighting in sunlit lobbies & hallways, limit after-hours retail lighting, insulate pipes exposed during construction, reduce lighting power requirements for offices.

It recommended the analysis of strategies to maintain habitability during power outages, ensure toilets & sinks can operate during blackouts,include climate change in environmental impact statements, recycle construction waste, use recycled aggregate in concrete, provide recycling areas in apartment buildings, use recycled asphalt, protect forests by using sustainable wood, upgrade inefficient toilets, showerheads & faucets during renovations, facilitate use of recycled water, reduce use of drinking water to clean sidewalks, stop wasting drinking water for cooling, increase biodiversity in public landscapes, increase biodiversity in sidewalk plantings, preserve “100-year old” trees.

Thus these recommendations have been argued with data, cost repercussions and human responses. They have looked at technology to policy change to operational and maintenance to public health and ecological dimensions. We need to relook at our development codes at least in our local milieu but in the entirety of vision and clarify them with depth of issues and breadth of its far reaching implication.

India can Face Housing Shortage by 2012- Ernst and Young

India will face shortage of over 26 million houses by 2012, which would lead to spurt in housing prices as demand-supply gap widens amid rising purchasing power of the middle class people, a consultancy firm has said. “With India back on a high growth trajectory, demand for commercial and residential space is likely to witness an upward trend,” consultancy firm Ernst and Young said in a report.

Demand for residential property is rising sharply because of growing young working population, increasing urbanisation, declining household size resulting in more nuclear families with growing household income and improved availability of loans. Co-chairman of FICCI Real Estate Committee Pranay Vakil said over $1.2 trillion investment was needed to meet the rising demand for urban development.

He said that the urban population in India would nearly double to 600 million in the next 15 years from nearly 350 million now, and this would put massive pressure on urban infrastructure, including roads, power and water supply. Dean Hodcroft, partner-head of real estate for Europe, Middle East, India and Africa at Ernst and Young, said India needed institutional reforms to attract more investments in infrastructure development projects.

He said the country’s macro-economic fundamentals were in great shape and it was poised to reap huge benefits of growth. “India needs to fix the institutions to attract more private investments, including foreign investments,” he said. Comparing the investment climates in India and China, Hodcroft said: “While it is easy for investors to get into China, it is extremely difficult to get out. In contrast, it took time for foreign companies to enter India, but exiting is comparatively much easier.” He noted that India was lower ranked in areas that were easy to fix.

India Ranked as the 5th Most Attractive Destination for Future Real Estate Investment

India is ranked as the fifth most attractive destination for future real estate investments in a list topped by China, according to a latest report of FCCI and Ernst and Young. In the list of top nine attractive destination for real estate investments, China is followed by the US, UK and Singapore. “India ranks fifth on the overall index, as it scores better on the country economy development index and the real estate market index, but fairly low on the regulatory index,” the report released here said.

As per the report, there is no single clearance system for approval of investment in real estate sector in India. “In addition, the approval system is not time-bound and take up to two years,” it said. On China, it said: “Even amid cautious market sentiments and tightening of government policy, China remains attractive as an investment destination primarily due to its impressive economic growth record and favourable demographics.”

However, India has the potential to even overtake the Chinese attractiveness, “if government allows real estate investment trust (REIT) and real estate mutual funds (REMF),” said Dean Hodcroft, E&Y’s Head of Real Estate for India, Europe, Middle East and Africa here. Globally, REITs and REMFs have contributed significantly to the real estate finance and developers overseas have capitalised on the growth potential of the sector, the report said.

“However, this source of finance has not seen a similar response in India primarily due to policy issues and lack of clarity on government’s intention to promote such alternative source of funding,” it noted. Hodcroft observed that while global investors are wary of investing in China as they are concerned that Beijing can change the policy anytime, New Delhi should strive to make regulations more investment-friendly. “India has a strong macro economic story which needs to be supported by some regulatory changes like availability of liquid vehicle for investment such REMFs and REITs,” he added. Hodcroft said as much as $200 billion private equity fund is waiting to be invested globally and India has a chance to get more than its fair share.

India’s Organised Sector Expected to generate over 3 Lakh New Jobs

India’s organised sector is expected to generate over 3 lakh new jobs across sectors in the September quarter, a survey said on Wednesday. The country’s organised sector is set to create about 3,20,400 jobs between July and September 2010, according to the findings study on the employment trend by staffing services firm Ma Foi Randstad. “There is optimism in the economic scenario across all sectors and services sector has created most of the new jobs in the country,” it noted.

Around 650 companies across 13 industry segments were surveyed. According to the report, 4,18,564 new jobs were generated between January and June this year, with health care sector alone seeing over 121,000 jobs. Hospitality industry added 63,000 jobs during the same period. “The top five sectors leading the boom are health care, hospitality, real estate & construction, IT & ITeS and education, training & consulting,” it said.

When it comes to cities, Ma Foi noted that New Delhi, Mumbai and Chennai were the leading job generators. The three cities, together, saw the creation of 1,12,987 jobs for the period of January to September 2010. “Kolkata, Bangalore and Hyderabad follow closely creating 30,000 plus jobs during the same period,” the report added. Ma Foi Randstad’s Managing Director and CEO K Pandia Rajan said that there is increased optimism in hiring spread across all sectors.

“We see the service sectors like health care and hospitality spearheading the boom by adding significant number of jobs. “The buoyant economy has given a boost to real estate & construction sector, which has demonstrated the highest growth in employment figures,” he said. In the September quarter, real estate & construction segment is expected to see an average salary increase of four per cent. Pharmaceutical and health care industries are anticipated to witness an hike of 3.5 per cent and 3.4 per cent, respectively, during the same period. Among cities, Bangalore is projected to see an average salary jump of 4.9 per cent, followed by Delhi and Pune, with an increase of 3.5 per cent each.

IDFC Bolsters Top Deck For Real Estate PE Play

BOBY KURIAN & MADHAV A. CHANCHANI; VCCircle

Nimesh Grover, Chief Investment Advisor to UBS-Raheja Real Estate JV, boards as Senior Managing Director.

Infrastructure Development Finance Company Ltd (IDFC) is bolstering its team for private equity foray in real estate by roping in Nimesh Grover, till recently with UBS Raheja private equity joint venture.

Grover has joined as Senior Managing Director for real estate investments in an initiative being led by Chetan Dave, who joined earlier this year as president & CEO of Real Estate Investment. The move would be a comeback for Grover who worked as a principal at IDFC Private Equity for 3 years before moving as a vice president to Citi Property Investors. Grover holds a MMS from the University of Mumbai, and BE (Hons) in Chemical Engineering from University of Mumbai.

Grover was the Chief Investment Advisor for a JV between UBS and Indian real estate giant K.Raheja Corp, which has estimated commitments of up to $200 million. The JV had a small team operating out of Raheja Corp's corporate headquarters in Mumbai and had started scouting investments earlier this year.

It remains to be seen what happens to this JV, which was announced more than two years ago, and has seen significant rollbacks in its size and scope of operations. In 2007, just before the global economic crisis set in, UBS and Raheja had talked about setting up $1 billion real estate JV. UBS had a similar JV in China, operating with a local partner there.

While announcing the appointment of Dave, IDFC said, it plans on building and developing a portfolio of infrastructure focused real estate assets and a real estate private equity funds management business. Dave, former managing director & CEO of Sun Apollo Real
Estate Advisors, had helped launch and raise $630-million fund.

The establishment of a private equity real estate fund will expand IDFC's offering in the alternative investment area. The company's PE arm - IDFC Private Equity - already manages around $1.3 billion across three funds and it also has IDFC Project Equity, which is investing from the $930-million India Infrastructure Fund. The infrastructure financing major also launched a private equity fund of funds last year.

While there have been a few executive movements among realty fund executives, they have remained fewer as compared to general private equity professionals as realty deals still have to gather steam. US-based Starwood Capital appointed Sundaram Rajagopal, former country head for Lehman Brothers' Real Estate Partners, as managing director. Avnish Singh, former India head of GE Capital Real Estate, joined Tishman Speyer as head of acquisitions for the country.

Commercial Real Estate Witnesses Rise in Demand

Commercial real estate projects, including office and retail space, have started seeing increased demand after suffering poor sales during the economic slowdown, as firms and retailers revive expansion plans. In eight cities, including Delhi-National Capital Region (NCR) and Mumbai, firms leased out or sold 9.2 million sq. ft of commercial space in the three months ended 30 June, up 58% from 5.8 million sq. ft in April-June 2009, said Ravi Ahuja, executive director for development services at consultants Cushman and Wakefield India.

Some 16.4 million sq. ft of retail space is expected to be available in 2010, against 6.3 million sq. ft last year. Consultant Jones Lang LaSalle Inc. has predicted 8.9 million sq. ft will be absorbed this year, compared with 4 million sq. ft in 2009. “The commercial real estate space is again active with inquiries and transactions,” said Supreet Suri, director, The Three C Universal Developers Pvt. Ltd. The company is planning to launch a 12.5-acre commercial project in Noida, on the outskirts of New Delhi, by October. “We are getting inquiries for our Noida project, which is still in the planning stage,” Suri said.

Developers such as BPTP India Ltd, Assotech Ltd, Anant Raj Industries Ltd and Wave Inc. have also reported improving property demand. Metros have witnessed a large number of investment deals in office space development at information technology (IT) and corporate parks during April-June, according to a report by the Royal Institute of Chartered Surveyors. “While improved corporate profits seem to be the demand driver for office property, retail property has also seen an upswing, as a result of improved economic climate within the country, making it an attractive market for global retailers as well,” says the report.

Leasing and sale of office space in Mumbai and Delhi-NCR rose 69% and 18%, respectively, according to another consultancy, DTZ International Property Advisors. The report says 70% of transactions in Delhi-NCR have been recorded in Gurgaon, Noida and Delhi’s south business district. In Mumbai, most commercial realty projects are coming up in peripheral areas. Noida has attracted large multinational corporations from IT and the banking, financial services and insurance (BFSI) sectors who want to set up back offices, says an office market report from BNP Paribas Real Estate.

Mumbai’s Bandra Kurla Complex adjoining Santacruz, Andheri, Powai, Vikhroli and Vile Parle has also attracted buyers, says the BNP report. Consultancies say capital and rental values will remain stable in the near term as new projects inundate the market in the next few quarters. “Rental and capital values will remain stable as the markets will witness huge supply in coming months,” said Priyankar Bhikshu, head of research for India at DTZ International Property Advisors. “Increased absorption and reduced vacancy are likely to take place in most Indian cities by the end of this year. However, a complete revival of the rental market is unlikely until mid-2011,” Bhikshu added.

But deal sizes are getting smaller. “Multinational firms are looking for central locations in big metro cities. Since rental cost in these areas is still higher, the space occupied is smaller in comparison to the ones that were occupied during 2008,” said Rajesh Goyal, chairman and managing director of the Delhi-based developer RG Group. “In doing so, the occupiers have the dual advantages of cost saving and central location.”

Jerry Rao's Housing Venture Raises 2nd Round From IFIF

September 14 2010, 12:35:49 IST | J PADMAPRIYA & SHRIJA AGRAWAL; Source: VCCircle

With this deal, IFIF, which follows a mandate to invest in MFIs, has diversified its sectoral base.

Value and Budget Housing Corporation, the low-cost housing venture backed by Indian IT poster boy Jerry Rao (founder of Mphasis which was sold to EDS), has raised a second round of funding of Rs 17.3 crore from India Financial Inclusion Fund (IFIF), an India-focussed fund that invests in microfinance entities and MFI enablers, sources familiar with the development told VCCircle. 

IFIF is advised by Hyderabad-based Caspian Advisors Pvt Ltd, which also manages the Bellwether Microfinance Fund (Bellwether). With this investment, IFIF, which till now followed a mandate to invest primarily in MFIs, has diversified its sectoral base.

As of March 2009, India Financial Inclusion Fund’s size had risen to $58 million after having raised $20 million in fresh capital. 

Set up in Mauritius in August 2008, IFIF is an off-shore fund focussing on equity investments in companies that are directly or indirectly associated with bringing about the inclusion of the poor within the formal financial system. Its other investments include  Micro Housing Finance Corp. Ltd, Sonata Finance Pvt. Ltd, Sahayata Microfinance Pvt. Ltd.,Ujjivan Financial Services Ltd., A Little World Pvt. Ltd and Equitas Micro Finance India Pvt. Ltd.

The low-cost housing firm, which recently launched its maiden project Vaibhava (in the Rs 4.5 lakh to Rs 10 lakh price band for 354-640 sq feet units) in Bangalore’s Electronic City suburb, already has HDFC as a strategic investor with 10% stake at the entity level. Besides, HDFC PMS will invest between 25% and 49% at the project SPV level on a case-to-case basis. In the first project too, HDFC PMS is an investor at the SPV level.

Declining to be drawn into details of the second round of funding, Jerry Rao, chairman of VBHC, told VCCircle, “We are open to raise private equity funding. We intend to build 1 million homes in 10 years and PE funding will form a part of financing the plan.”

When contacted, an IFIF spokesperson confirmed the deal but declined to divulge details such as quantum of funding and valuation.

The firm is targeting cities such as Chennai, Hyderbad, Nashik, Pune and NCR apart from a second project in Bangalore in its first phase of growth. VBHC--whose other co-founders are P.S. Jayakumar (formerly Consumer Banking Head, Citibank) and Sunil Narayan (leading real estate specialist)-- will plan projects in the urban periphery and well connected to the city’s central transportation system. Each of the projects will have an on-site English medium school, working women's centre, day care medical centre and a local shopping complex. 

VHBC would be looking at deploying funds for land assets and would raise project finance for construction work. Unlike regular developers, it will not depend on customer pre-sales to fund the project.

“We are acquiring land only for specific projects. Land-banking is not part of our strategy,” Rao says on the different approach followed by his firm. Conventional developers typically accumulate land assets at historic values and construct and sell units much later reaping unbelievable returns on account of land value appreciation.

The sub-Rs 7 lakh housing segment typically works on an end price formula of Rs 1,500 per sq feet. The economics has to be worked backwards as cost of construction and infrastructure (at Rs 900 per sft) are more or less fixed. The idea is to procure land in such locations, mostly in the city periphery with some economic activity, to meet the end price band. Bangalore is also emerging as a test bed for nano-housing ventures. This year, Ramesh Ramanathan, founder of Janagrahaa, launched a low-cost venture in the city under Janaadhar Constructions, an affordable housing project promoted by Janalakshmi Social Services.

In a recent chat with VCCirle, Jerry Rao talks about VHBC’s business model and new approach to real estate development. Excerpts:-

What is the typical profile of your consumer?
After we launched our Bangalore project, we got more than 1,000 visitors and have sold 60 units so far. There is a lot of interest from the market. Typically, the customer has to make a down payment of 20% to qualify for a loan. We assume a variety of people would be interested in the product such as those working in the IT/BPO sector, self-employed people and so on. It is quite possible that a high-profile person buys a unit for a poorer kin or an entry-level IT employee invests in it although the assumption is that the target market is from the base of the pyramid. So, who buys it and who rents it will also vary from project to project. What we are trying to do is to increase the housing stock in the country.

What are the key approaches that you are following in your real estate venture?
One, we are a profit making company. Two, we want to buy land and get rid of it soon and not sit on it. Three, we use modern technology to reduce construction cost and time. Four, we are fixated on completion schedules. Five, we are totally transparent in disclosures such as carpet area etc. Six, we should be able to offer a return on equity of 20-30%. We are not looking at 100%.

What is your view on land-banking?
Land bank is not part of our strategy. For specific projects, once we identify land, we commission the survey, negotiate with the landlord, examine the legal issues and go ahead with construction. So far we have not done any joint development.

Carbon credit and how you can make money from it

Carbon dioxide, the most important greenhouse gas produced by combustion of fuels, has become a cause of global panic as its concentration in the Earth's atmosphere has been rising alarmingly.

This devil, however, is now turning into a product that helps people, countries, consultants, traders, corporations and even farmers earn billions of rupees. This was an unimaginable trading opportunity not more than a decade ago.

Carbon credits are a part of international emission trading norms. They incentivise companies or countries that emit less carbon. The total annual emissions are capped and the market allocates a monetary value to any shortfall through trading. Businesses can exchange, buy or sell carbon credits in international markets at the prevailing market price. India and China are likely to emerge as the biggest sellers and Europe is going to be the biggest buyers of carbon credits.

Last year global carbon credit trading was estimated at $5 billion, with India's contribution at around $1 billion. India is one of the countries that have 'credits' for emitting less carbon. India and China have surplus credit to offer to countries that have a deficit.

India has generated some 30 million carbon credits and has roughly another 140 million to push into the world market. Waste disposal units, plantation companies, chemical plants and municipal corporations can sell the carbon credits and make money.

Carbon, like any other commodity, has begun to be traded on India's Multi Commodity Exchange since last the fortnight. MCX has become first exchange in Asia to trade carbon credits.

So how do you trade in carbon credits? Who can trade in them, and at what price? Joseph Massey, Deputy Managing Director, MCX, spoke to Managing Editor Sheela Bhatt to explain the futures trading in carbon, and related issues.

What is carbon credit?

As nations have progressed we have been emitting carbon, or gases which result in warming of the globe. Some decades ago a debate started on how to reduce the emission of harmful gases that contributes to the greenhouse effect that causes global warming. So, countries came together and signed an agreement named the Kyoto Protocol.

The Kyoto Protocol has created a mechanism under which countries that have been emitting more carbon and other gases (greenhouse gases include ozone, carbon dioxide, methane, nitrous oxide and even water vapour) have voluntarily decided that they will bring down the level of carbon they are emitting to the levels of early 1990s.

Developed countries, mostly European, had said that they will bring down the level in the period from 2008 to 2012. In 2008, these developed countries have decided on different norms to bring down the level of emission fixed for their companies and factories.

A company has two ways to reduce emissions. One, it can reduce the GHG (greenhouse gases) by adopting new technology or improving upon the existing technology to attain the new norms for emission of gases. Or it can tie up with developing nations and help them set up new technology that is eco-friendly, thereby helping developing country or its companies 'earn' credits.

India, China and some other Asian countries have the advantage because they are developing countries. Any company, factories or farm owner in India can get linked to United Nations Framework Convention on Climate Change and know the 'standard' level of carbon emission allowed for its outfit or activity. The extent to which I am emitting less carbon (as per standard fixed by UNFCCC) I get credited in a developing country. This is called carbon credit.

These credits are bought over by the companies of developed countries -- mostly Europeans -- because the United States has not signed the Kyoto Protocol.

How does it work in real life?

Assume that British Petroleum is running a plant in the United Kingdom. Say, that it is emitting more gases than the accepted norms of the UNFCCC. It can tie up with its own subsidiary in, say, India or China under the Clean Development Mechanism. It can buy the 'carbon credit' by making Indian or Chinese plant more eco-savvy with the help of technology transfer. It can tie up with any other company like Indian Oil or anybody else, in the open market.

In December 2008, an audit will be done of their efforts to reduce gases and their actual level of emission. China and India are ensuring that new technologies for energy savings are adopted so that they become entitled for more carbon credits. They are selling their credits to their counterparts in Europe. This is how a market for carbon credit is created.

Every year European companies are required to meet certain norms, beginning 2008. By 2012, they will achieve the required standard of carbon emission. So, in the coming five years there will be a lot of carbon credit deals.

What is Clean Development Mechanism?

Under the CDM you can cut the deal for carbon credit. Under the UNFCCC, charter any company from the developed world can tie up with a company in the developing country that is a signatory to the Kyoto Protocol. These companies in developing countries must adopt newer technologies, emitting lesser gases, and save energy.

Only a portion of the total earnings of carbon credits of the company can be transferred to the company of the developed countries under CDM. There is a fixed quota on buying of credit by companies in Europe.

How does MCX trade carbon credits?

This entire process was not understood well by many. Those who knew about the possibility of earning profits, adopted new technologies, saved credits and sold it to improve their bottomline.

Many companies did not apply to get credit even though they had new technologies. Some companies used management consultancies to make their plan greener to emit less GHG. These management consultancies then scouted for buyers to sell carbon credits. It was a bilateral deal.

However, the price to sell carbon credits at was not available on a public platform. The price range people were getting used to was about Euro 15 or maybe less per tonne of carbon. Today, one tonne of carbon credit fetches around Euro 22. It is traded on the European Climate Exchange. Therefore, you emit one tonne less and you get Euro 22. Emit less and increase/add to your profit.

We at the MCX decided to trade carbon credits because we are in to futures trading. Let people judge if they want to hold on to their accumulated carbon credits or sell them now.

MCX is the futures exchange. People here are getting price signals for the carbon for the delivery in next five years. Our exchange is only for Indians and Indian companies. Every year, in the month of December, the contract expires and at that time people who have bought or sold carbon will have to give or take delivery. They can fulfill the deal prior to December too, but most people will wait until December because that is the time to meet the norms in Europe.

Say, if the Indian buyer thinks that the current price is low for him he will wait before selling his credits. The Indian government has not fixed any norms nor has it made it compulsory to reduce carbon emissions to a certain level. So, people who are coming to buy from Indians are actually financial investors. They are thinking that if the Europeans are unable to meet their target of reducing the emission levels by 2009 or 2010 or 2012, then the demand for the carbon will increase and then they may make more money.

So investors are willing to buy now to sell later. There is a huge requirement of carbon credits in Europe before 2012. Only those Indian companies that meet the UNFCCC norms and take up new technologies will be entitled to sell carbon credits.

There are parameters set and detailed audit is done before you get the entitlement to sell the credit. In India, already 300 to 400 companies have carbon credits after meeting UNFCCC norms. Till MCX came along, these companies were not getting best-suited price. Some were getting Euro 15 and some were getting Euro 18 through bilateral agreements. When the contract expires in December, it is expected that prices will be firm up then.

On MCX we already have power, energy and metal companies who are trading. These companies are high-energy consuming companies. They need better technology to emit less carbon.

Is this market also good for the small investors?

These carbon credits are with the large manufacturing companies who are adopting UNFCCC norms. Retail investors can come in the market and buy the contract if they think the market of carbon is going to firm up. Like any other asset they can buy these too. It is kept in the form of an electronic certificate.

We are keeping the registry and the ownership will travel from the original owner to the next buyer. In the short-term, large investors are likely to come and later we expect banks to get into the market too. This business is a function of money, and someone will have to hold on to these big transactions to sell at the appropriate time.

Isn't it bit dubious to allow polluters in Europe to buy carbon credit and get away with it?

It is incorrect to say that because under UNFCCC the polluters cannot buy 100 per cent of the carbon credits they are required to reduce. Say, out of 100 per cent they have to induce 75 per cent locally by various means in their own country. They can buy only 25 per cent of carbon credits from developing countries.

Tell us what's the flip side of your business?

Like in the case of any other asset, its price is determined by a function of demand and supply. Now, norms are known and on that basis European companies will meet the target between December 2008 and 2012. People are wondering how much credit will be available in market at that time. To what extent would norms be met by European companies. . .

As December gets closer, it is possible that some government might tinker with these norms a little if the targets could not be met. If these norms are changed, prices can go through a correction. But, as of now, there is a very transparent mechanism in which the norms for the next five years have been fixed.

Governments have become signatories to the Kyoto Protocol and they have set the norms to reduce the level of carbon emission. Already companies are on way to meeting their target.

Other than this, it's a question of having correct information. How much will be the demand for carbon credit some years from now? How much will the supply be? It is a safe market because it is a matter of having more information on the extent of demand and supply of carbon credit market.

Source: rediff.com

Israel's Elbit In Talks With K Raheja To Shed Stake In Realty Assets

September 08 2010, 08:51:14 IST | BOBY KURIAN & MADHAV A. CHANCHANI; Source: VCCircle

Elbit explores investor interest in Chennai and Thiruvanathapuram projects as it wants to pare Indian realty exposure.

Israeli billionaire Mordechai Zisser's Elbit is holding talks to offload majority interests in its Indian real estate investments as part of a strategy to pare exposure to the local market, said sources directly familiar with the situation. Indian developer K Raheja is among the potential suitors discussing a buy into Elbit's assets in the southern cities of Chennai and Thiruvananthapuram.

In 2007, Tel Aviv and Nasdaq-listed Elbit Imaging Ltd, through its real estate and retail arm Plaza Centres NV, acquired land banks in India's southern and western cities just ahead of the global economic crisis, and unveiled plans of over $1 billion investment into developing shopping malls, hotels, hospitals, office and residential units.

One source said, Elbit may consider outright sale of the land as it was coming out of the three-year lock-in on FDI in real estate. This source added that Elbit would be open to exiting mainstream real estate play in India and stay focused on other growth sectors like healthcare in the country. Globally, Zisser's diversified conglomerate Elbit carries interests in real estate, healthcare, agriculture, shopping malls and retail.

K Raheja Corp is believed to be discussing a joint development, in which it would have 70% interest, while Elbit and the other shareholders will keep the remaining 30%. This 70:30 JV is under discussion for developing Elbit's 130 acre land in Chennai, located 
near Sirusseri, and 9 acre property in Thiruvananthapuram, in close proximity to the city's Aakulam Lake. Industry sources said the Chennai land holds potential for developing 8-10 million sqft of mixed use real estate, and the Thiruvananthapuram project could be well over one million sqft by size.

If the deal goes through, it would essentially mean Raheja taking charge of the real estate development, while Elbit and other shareholder will keep minority interests in lieu of the land ownership. Alternatively, if Elbit was to sell the land, it could fetch around Rs 5 crore per acre for the Surusseri propery near Chennai.

The ongoing talks between Raheja and Elbit are still in early stages and a positive outcome is not definite, sources added.

Emails sent to Elbit Imaging and K Raheja did not elicit any response at the time of publication of this article. Text message sent to Elbit India Real Estate executive also did not elicit a response.

Elbit along with local partners had acquired land in Chennai, Thiruvananthapuram, Bangalore, Pune and Kochi nearly three years ago. Sources said Elbit's proposed projects in Bangalore and Kochi, in partnership with Mantri Developers and Salarpuria Group respectively, did not take off. The Israeli firm took complete control of a 6,50,000 sqft mall and hotel project in Pune, which was planned along with Avinash Bhosale Group . The fate of its second project near Pune, in partnership with Panchshil Group, is not clear.

Elbit was the most prominent among a wave of Israeli investments into Indian real estate during 2007, most of which have been rolled back in the wake of the worst global economic slowdown since the 1930s. The  Israeli groups that came with ambitious plans in Indian real estate include Property and Building Corp, Electra Real Estate, Gindi Holdings, Alony Hertz Properties and Meshulam Levinstein Contracting Ltd.

Many Israeli firms were hoping to repeat their past success in the east European real estate markets in India. Elbit, for instance, has significant presence in Hungary, Romania and Poland with a string of shopping malls and hotel assets. In recent decades, especially after the fall of the Communist regimes, Israeli investors have flocked east Europe in a bid to repeat their success in the US property market.

Even as Elbit is paring exposure to Indian real estate, it announced fresh plans in the US property market earlier this year. It formed a JV with Eastgate Property LLC to set up $400 million fund to invest fresh into US assets. Later, it announced picking up 48% interest and becoming the largest unit holder in $1.5 billion Macquarie DDR Trust,
which holds two US REIT portfolio with 78 retail properties and over 13 million sqft of leasable area.

Here’s what to look for if you want to purchase a house that’s environmentally friendly

By Sari Krieger of The Wall Street Journal

For homebuyers, green is fast becoming a priority — whether it's because they want to reduce their energy costs, minimize their carbon footprint or improve indoor air quality.

Here are 10 questions that prospective buyers or renters ought to ask to find out how green a house or apartment is.

1. How big is it?
The bigger the home, the more energy it uses. The U.S. Green Building Council considers a "neutral size" home — basically what most people need, without what might be considered luxury space — to be 900 square feet for a one-bedroom home, 1,400 square feet for two bedrooms and 1,900 square feet for three bedrooms. A 100% increase in the size of the home adds anywhere from 15% to 50% to energy use.

2. Where is it?
Can you walk to public transportation? Are there sidewalks or easy places to walk in the neighborhood, so you don't always have to drive? How close are shopping centers and other places you would frequent? The Web site walkscore.com rates the walkability of cities, neighborhoods and individual addresses and shows the distances to stores, restaurants, schools and amusements.

3. How is it oriented?
South-facing windows can trim heating costs in the winter. Shade from trees to the south and west can reduce cooling costs in the summer.

4. Is it well-insulated, and are doors and windows sealed tightly against air leaks?
The U.S. Energy Star Web site, energystar.gov, features a calculator to help determine how much insulation you need, based on your location. To guard against air leaks, windows and exterior doors ideally should have an Energy Star rating, which indicates they meet a certain standard of efficiency in preventing the loss of heat in the winter and cooling in the summer. You may be able to feel air leaks, or you can hire an energy auditor to conduct a "door blower test" — a big fan placed in a doorway sucks air out of the home, creating easily detectable drafts rushing in from outside wherever there's a leak.

5. Has the indoor air quality been tested?
Well-insulated, well-sealed homes not only hold in heat and cooling, but also can retain toxins such as formaldehyde, mold, asbestos and lead. A test will show whether any toxins are present in levels that exceed the safe maximums established by the Environmental Protection Agency. You might also ask whether the home was constructed or renovated with nontoxic building materials and furnishings, such as low- and zero-emission paints and sealants and materials such as strawboard for the subflooring.

6. If it's an older home, have insulation, heating and cooling systems and appliances been upgraded?
Newer products are far more efficient than those bought several years ago. Also, has higher-efficiency lighting been installed?

7. How efficient is the water usage?
Are the kitchen and bathrooms equipped with water-efficient plumbing fixtures? If it's a house, does it have a water-conserving irrigation system for the grounds, and landscaping that minimizes the use of water? It may also have a rainwater collection and storage system, particularly in drier areas where water is increasingly scarce and costly.

8. What's on the roof?
A lighter-colored roof reflects more heat than a dark-colored roof, which absorbs heat, putting more strain on the cooling system. Does it have skylights that let in natural light?

9. Where did the home's materials come from?
Recycled or salvaged building materials reduce the home's impact on the environment. Also preferable are materials that are locally available, can be processed with less energy and water, are reusable or recyclable, are durable and are abundant in the environment.

10. Has it been certified green?
The U.S. Green Building Council, the Environmental Protection Agency and others offer ratings on homes, based on inspections by trained third-party professionals.

Source: msn real estate