Hot property

The deal itself signals radical changes in the Indian real estate scene. 8216;8216;It brings in not just funds, but also technology and expertise,8217;8217; says Anuj Puri, MD, Chesterton Meghraj, a real estate consultant. 8216;8216;Now, construction would not be talked about in terms of a single building or complex, but townships,8217;8217; he adds.

Another consultant, Akshaya Kumar, CEO, Colliers Jardine, says, 8216;8216;Close to Rs 15,000 crore can flow into the real estate market in 12 months.8217;8217;

And Emaar may just be the harbinger of overseas developers breezing in. With a market capitalisation of 9.5 billion, it is among the largest real estate developers in the Gulf. It has been associated with large projects like the Burj Dubai Tower and the Dubai Mall.

8216;8216;The tie-up brings in foreign best practices into the industry. It also widens the sphere of activity 8212; something which MGF alone would have been unable to match,8217;8217; says T. Chakrabarti, Head, India Properties Research.

However, despite FDI improving the standards, its inherent problems 8212; lack of financial and regulatory reforms 8212; will ensure that foreign developers will opt for JVs to enter India. 8216;8216;Land acquisition is the most critical part. And for this, one needs a local player,8217;8217; said Puri.

Then there are other issues such as high stamp duty and rent control act. 8216;8216;Initially, I see more JVs being formed by the foreign partners interested in India since the Indian JV partner will have the local domain expertise,8217;8217; said Kumar.

But, analysts say, issues such as red tape, will not trouble the foreign players. 8220;The catch word here is profitability 8212; the Indian sector provides ample opportunities for that, despite the cautious nature of foreign funds,8221; Puri said.

IN THE SPOTLIGHT

And just as the sector, MGF too is in for some sweeping changes. Firstly, the group now finds its low-profile status fast shifting. Having ventured into real estate in 1997, the company is grappling to get used to the spotlight.

Analysts cast doubts on whether MGF would keep its side of the deal 8212; 333 million in investment 8212; primarily due to reports pegging MGF8217;s turnover at only Rs 500 crore. There were also reports that it would exit the JV at an 8216;8216;appropriate time8217;8217;.

Gupta brushed off these reports, but was cleared irked when he spoke to this newspaper. 8216;8216;We are low-profile by choice and have been focusing on real estate for the last few years.It is a reflection on our credibility that Emaar has chosen us,8217;8217; he said.

Though he wouldn8217;t divulge the company8217;s financials, Gupta said MGF would raise funds from internal accruals and debt on a 50:50 basis. 8216;8216;We have enough resources,8217;8217; he said, referring to MGF8217;s involvement in 10 malls and a few residential complexes in Delhi, Gurgaon, Jalandhar and Jaipur.

MGF itself thinks the tie-up would come in handy in the long-term. 8216;8216;MGF stands to benefit, as the industry is likely to consolidate in the next 2-3 years,8217;8217; Gupta said.

Till then, the company is focusing on the task at hand. It is conducting a survey to identify the areas to take up the planned projects, under the government-stipulated 25 acres or 50,000 sq ft of built-up area, Gupta said. Construction would begin in a year, he added.