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B U S I NE S S BRIEFING

REAL ESTATE MUTUAL FUNDS
AN INVESTMENT OPPORTUNITY
Research & Business Analytics Group
September 2008 | A C&W India Publication

CONTENTS
1 2 3 4 5 6 7 Executive Summary Introduction to REMFs Regulations Governing REMFs in India Factors Determining the Structure of the Instrument Real Estate Investment Trusts (REITs) The Future of RE Investment Global and Local Impact About Cushman & Wakefield India, Research & Business Analytics Group
For more information please contact: Sandeep Singh Cushman & Wakefield 14th Floor, Tower - C Building No. 8, DLF Cyber City, Gurgaon - 122 002 Tel: +91 124 469 5555 sandeep.singh@ap.cushwake.com

EXECUTIVE SUMMARY
Real estate investments in the past involved a direct ownership of the asset; however over the recent years we have seen the emergence of real estate mutual funds (REMFs), a scheme of a mutual fund which invests directly or indirectly in real estate or other related permissible assets. These have emerged not only as alternative investment avenues for retail investors who do not have the means to directly invest in the real estate sector; they have also paved the way for foreign funds to enter the local property market. The key points highlighted in the regulation such as requisite expertise, valuation of assets, scope of investment, taxation guidelines and foreign investment guidelines would help to structure the instrument and lead the investor decision. These also form the basis to gauge the risk profile and potential performance of the fund in the eyes of the investors. Highlighting the fundamental difference between REITs and REMFs – in terms of structure as well as returns, the paper delves into the global and local impact of these instruments on the real estate market, consumers, investors as well as the economy. With the introduction of REMFs/ REITs in India there will be a large shift of assets (commercial, retail, residential, etc.) from individuals to entities (i.e. REMFs and REITs) which will impact the current highly unorganized leasing markets. As these economic benefits increase, they further trickle down into the economy resulting in a stronger and more competitive business environment.

INTRODUCTION TO REMFs
A mutual fund is a trust that pools together money from a number of investors and invests in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The concept of mutual funds originated to enable retail investors to pool in capital to establish a corpus which would enable them to invest in assets that one could not afford in individual capacity. The first wave of nearmutual-funds was witnessed in Europe in the mid 1800s that then spread to the United States with the first pooled fund created in 1893 for the faculty and staff of Harvard University. In March 1924 the first mutual

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fund was created in Boston, called the Massachusetts Investors Trust, although these really captured the public's attention in the 1980s and 90s when mutual fund investments hit a record high and investors saw phenomenal returns. The mutual fund industry in India evolved with the formation of Unit Trust of India in the year 1963 and successfully grew over the years. However, real estate being a traditionally unorganised and complex sector adopted the concept only recently. So long, real estate investments involved a direct ownership of the asset; an REMF is a scheme of a mutual fund which invests directly or indirectly in real estate or other related permissible assets. REMFs have emerged not only as an alternative investment avenue for retail investors who do not have the means to directly invest in the real estate sector; they have also paved the way for foreign funds to enter the local property market. Like Mutual Funds, REMFs are expected to offer diversification, expert securities selection and low costs. This provides an opportunity for the retail investor to leverage the real estate sector's growth and enhance the scope of investment while minimising risk in the investment portfolio by seeking expert guidance. In case of REMF, the fund raises capital from investors by offering a NFO (New Fund Offering). A fund manger utilizes the capital to purchase real estate assets or securities for investment purposes from either the developer or from the owner in the secondary market. The fund then manages these investments and passes on the capital appreciation and rental income or securities dividend to the investor, less the operational and management fee, by way of higher NAV2 (Net Asset Value) or dividend payout. At the end of the tenure of the REMF, the properties held by it are sold and the gains arising distributed to the unit holders. This arises as a consequence of the guidelines that refrains the fund from transferring assets among various schemes floated by the fund house keeping in view the investor's interest. REMFs allow retail investors to participate in the real estate sector, avail benefit of professional management and also achieve diversification which can be a challenge with a small investment quantum.
WORKING OF A REAL ESTATE MUTUAL FUND
3 1

Investor capital via Fund Offering

Investment

Investors

REMF
Investor capital via Fund Offering

Real Estate/ Securities

Investment
Source: Cushman & Wakefield

Capital Appreciation and/or Dividend Payout less operational and management fees

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REGULATIONS GOVERNING REMFs IN INDIA
In April 2008, Securities and Exchange Board of India (SEBI) announced amendments to the SEBI (Mutual Funds) Regulations 1996 permitting the launch of REMFs with specific stipulations added keeping in mind the nascent stage of the real estate market in India. The regulations offer a wide definition of real estate to include immovable property in India located in certain specified cities or SEZs, which is fully constructed and usable, transferable and free from any encumbrances, litigation and with clear title documents. Agricultural land and vacant land however are excluded. REMFs are required to invest at least 35% of the net assets of the scheme directly in real estate (in ready to use property that assures rental income and capital appreciation) although there is no ceiling on the maximum limit. The balance can be invested indirectly through investment in mortgage backed securities and securities in companies dealing in or engaged in the development of real estate. REMFs are mandatorily required to be close ended and listed on stock exchange with NAV declared on a daily basis. Existing Mutual Funds are eligible to launch real estate mutual funds if they have adequate number of experienced key personnel/directors. Companies carrying on real estate business for at least five years can also apply to SEBI for launching REMFs if they satisfy certain criteria.
REMF cannot invest in:
= Projects

under construction

=land Vacant = Deserted

property = Land specific for agricultural use = which is reserved or attached Property to the government

SEBI has made the effort to ensure that high level of governance and controls are imbibed in the organisation and operations of REMFs so as to make it a safe investment for retail investors/ households. Some of these aspects include restrictions on investment in the properties developed by sponsors of the REMF except in the case of listed securities up to certain limits; restrictions on over-exposures to a single city, single project and to unlisted companies; restrictions on lending or undertaking housing finance kind of activities; valuation by independent valuers; and detail disclosures by the trustees and the asset management company.

FACTORS DETERMINING THE STRUCTURE OF THE INSTRUMENT
The key points highlighted in the regulation such as requisite expertise, valuation of assets, scope of investment, taxation guidelines and foreign investment guidelines would help to structure the instrument and lead the investor decision. These also form the basis to gauge the risk profile and potential performance of the fund in the eyes of the investors.

Expertise
The regulation stating minimum five years of experience in the real estate sector is a measure to ensure sufficient sectoral expertise that the entity should possess to float an REMF. Keeping in

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mind the regulatory eligibility condition, the entity that can propose an REMF can be a fund house, developer, an international property consultant or a combination of the above. This ensures excellent understanding and knowledge of the sector by the entity to instil confidence in the investors and raise money from the market.

Valuation and Disclosure Norms
Valuation guidelines In India, lack of defined valuation procedures in real estate has prompted the need to state guidelines for valuation of REMFs. The valuation disclosure norms for REMFs are aimed to represent realistic value to the investors so that they may take rational investment decisions. The valuation of the REMF consists of evaluating two separate asset classes: a) Real estate asset and b) Real estate related securities and other securities. The guidelines stating the valuation methodology are formed such that a fair value can be arrived at, since the instrument is close ended and traded on stock exchange. It was essential to evaluate both asset classes, as the valuation of securities takes into account the affect of government decisions and various policy announcements on the securities market (Stock exchange) whereas the periodic valuation of the hard assets by accredited appraisers reflects the true market value of the assets held by the fund. Disclosure norms Keeping in mind the fluctuating values of the securities on the stock exchanges, the regulations state that the NAV of the fund must be disclosed daily to represent the fair value of the portfolio. However, the sensitivity of the NAV to the value of the securities in the portfolio depends on the exposure to such asset class based on the experience and knowledge of the fund manager. In addition, the portfolio valuation of the real estate assets has to be carried out by two accredited real estate appraisers at an interval of 90 days from purchase of every asset, in which case the lower value would be taken into consideration. It is also stated that the transaction is required to be routed through and accounted for by financial institution as this would reduce the circulation of unaccounted money in the real estate sector.

Scope of Investment
The market regulator (SEBI) has suggested a list of 35 cities in million plus urban agglomerations and 27 cities under million plus category for investment. These include cities like New Delhi, Bangalore, Mumbai, Kolkata, Chennai, Pune, Hyderabad, Ahmedabad, Nagpur and Lucknow to name a few. Also, in order to promote diversification as well as growth across various cities, an investment cap has been levied on a single city (30% of net assets) and a single project (15% of net assets).
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Taxation guidelines
The tax implications of REMF are still unclear and SEBI needs to ensure more clarity on this issue. From the information made available, REMF would not qualify for equity oriented mutual funds, which have a minimum 65% equity exposure requirement, while the maximum equity exposure that an REMF can have is 65%. Based on this, taxation on unit holders for short term capital gains (one year or less) would be based on the individual investors' income slab while on long term capital gains (greater than one year) it is 20 percent (with indexation) or 10 percent (without indexation), whichever is less. However, dividends earned by individual investors who invest in REMFs is not considered as taxable income.

Foreign investment guidelines
The finance ministry has allowed NRIs and Foreign Institutional Investors (FIIs) to invest in REMFs as the investment decisions of the fund is purely dependent on the fund management company and in no circumstance can the investors steer the investment decision to any asset class. Furthermore, the investment norms of REMFs do not contradict the FDI norms. The pre-initial public offer by FIIs is treated as FDI that attract a three year lock in period. It is likely that once the REMFs are rolled out, they may receive a positive response from foreign investors.
REMF REGULATIONS DECODED

Regulations
=

Implication
=

REMF shall be close ended and listed on recognised stock exchange

REMFs can be traded on secondary market at a premium or discount depending on the performance of the fund. They cannot be redeemed before the tenure of the scheme

=

The fund shall invest at least 35% of Net Asset directly in real estate assets

=

REMFs must invest in completed property, which ensures a steady stream of income and reduces volatility of the fund

=

At least 75% of Net Asset shall be invested in real asset, mortgage backed securities, securities of companies engaged in developing properties

=

The regulation permits the investors to benefit from the development returns through lending to development entities

=

Balance of investment can be made in other securities

=

The fund manager, based on his expertise and knowledge, may invest in securities exclusive of the real estate sector to hedge against the uncertainty of the sector

=

Valuation of real estate asset has to be undertaken every 90th day from the purchase of the asset and the NAV shall be computed daily

=

The valuation guidelines attempt to reflect the fair value of the assets and measure performance of the fund on a regular basis

=

The guidelines state investment limit of 15% of Net Asset in a single project and 30% of Net Asset in a single city

=

This safeguards investor interest by limiting exposure and promoting diversification

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Real Estate Investment Trusts (REITs) – The future of real estate investments
Real Estate Investment Trusts (REITs) are listed entities, similar to mutual funds that raise funds for owning and managing investments in real estate projects i.e. these entities buy, develop, manage and sell income-generating real estate such as office buildings, apartments, shopping centres, warehouses and hotels. REITs have played a major role globally in the institutionalization of real estate sector and have provided more stable and higher returns than real estate assets and equities. They offer investments in a professionally managed portfolio of properties where the shares are publicly traded on major stock exchanges. Globally REITs are established alternate investment options that were conceptualized and rationalized in the US in 1960 to provide the average American an opportunity to invest in real estate, as was available to the elite. Tax incentives were offered in order to promote participation of investors in real estate as an asset class. As REITs gained popularity, other countries started to emulate a similar model. In India, SEBI so far put out draft rules for such trusts in December 2007 and these are likely to benefit not just the investors but also the real estate sector by bringing about liquidity, institutionalization and transparency within the market. Ascendas and Indiabulls are the two Indian companies which have listed their REITs in Singapore stock exchange (SGX) under the name a-iTrust and Indiabulls Properties Investment Trust respectively. Due to the country's investor-friendly regulations they have together raised SGD 762 million (USD 555.6 million) on SGX. Other leading developers, DLF Assets and Unitech Ltd were exploring opportunities to float REITs in the Singapore market to raise approximately SGD 3.7 billion (USD 2.7 billion). However, due to weak market sentiments these companies have indefinitely postponed their plans and now intend to raise funds through private equity placements. Even though REMFs and REITs share the broad investment objective of wealth maximization through real estate assets/securities, both these instruments can co-exist as there are differences in their operations and investor target group. REITs are a steady income generating instrument with dividend yield as high as 15%, depending upon the portfolio mix of the REIT and the investment style followed by it, attracting the more conservative investor. REMFs on the other hand would be more growth oriented , thus attracting more aggressive investors. Globally REITs have to distribute 90% of their income as dividends, whereas REMFs are not under any compulsion to distribute income. There has been no clarity on the taxation of dividends by SEBI, although universally due to the nature of the REIT i.e. it being a trust, there is a favourable tax impact for the investor. REMFs also have a broader investment scope as compared to a REIT, thus attracting investors who want a more diversified portfolio. The realm of operation for both the instruments is also different as REMFs can invest in real estate projects, mortgage-backed securities as well as equity/debt/debentures of real estate companies, while REITs will have regulated investment options in terms of commercial, retail, residential or a mix of these, which can derive a steady stream of income. REMFs may also invest in REITs within the prescribed limit, as these instruments invest in Real Estate assets. REITs can invest in properties that are developed with up to 20% invested in developing properties, but cannot invest in vacant land. REMFs would be promoted by AMC's (Asset Management Companies) with a possible tie up with developers, while REITs would be promoted by developers with a possible tie up with AMC's. That being the case, the developers are likely to prefer a REIT as compared to a REMF in order to capitalize on the steady income being derived from
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their projects. These differences, both from the promoter point of view i.e. developer or AMC as well as the investor perspective i.e. conservative or aggressive, will ensure that both these instruments fill the void for different avenues of investment in the Indian markets.
FUNDAMENTAL DIFFERENCE BETWEEN REMFs AND REITs

REIT
=

REMF
=

Invests primarily in income generating real estate assets.

Invests in real estate assets, mortgagebacked securities as well as equity/debt/debentures of real estate companies. Can invest in properties under development to the extent of 15% of its Net Assets, partnering with the developer and acquiring a stake in the established SPV (by the developer) Higher liquidity position as some investments are in securities as well.

=

May invest in under-development/ developing projects, projects that are in course of redevelopment and refurbishment to an extent of 20% of the total NAV at the time of acquisition.

=

=

Lower liquidity position as investments are in properties

=

=

Valuation of assets is done at lower frequencies, proposed annually

=

Valuation of assets is done quarterly Cannot borrow from financial institutions.

=

Can borrow from financial institutions but aggregate borrowings can not exceed one fifth of the total gross assets

=

=

Minimum 90% of income shall compulsorily be distributed as dividend Income-generation oriented

=

No compulsion on distribution of income More growth oriented in nature

= =

= =

Relatively higher dividend yield (can be as high as 15%)

Relatively lower dividend yield

GLOBAL AND LOCAL IMPACT
Globally, REITs are more prevalent as they have been operational for a longer duration when compared to REMF's although the latter are gaining popularity in the investor circle. India is one of the few countries to have launched exclusive REMF guidelines, without an existing operational REIT, thus paving the way for REMFs to operate before REITs within the country. Both these instruments have had a profound effect on the real estate market in their area of operation. The first and foremost effect is the additional capital and liquidity that REITs/ REMFs bring into the real estate market which has a ripple effect on the sector lowering the cost of capital. For the developer, lower cost of capital results in a lower hurdle rate, thus increasing the feasibility of more projects, achieving better margins which can together lead to improving the construction quality. Institutions are also able to diversify the risk profile of their investments leading to higher efficiency. The consumer benefits from better interest rates (i.e. lower spreads as seen in U.S.A and

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other developed countries, where PLR and Fed Fund rates have a marginal difference) as well as from lowering of other associated operational costs. They also allow foreign investments in the local property market helping investors & developers overcome the present rule that permits foreign entities to put money only for construction and development and not in ready properties. These Trusts/Funds are able to realize economies of scale and are thus able to pass the benefits of the cost savings to the unit holders, resulting from more efficient operation of the assets. These economies of scale can further be translated to better negotiation and favourable contractual terms resulting in reduced operational costs and more efficiently run properties thus offering better realization of value to the unit holder. Volatility is also reduced due to the increasing trading activity, higher competition and large influx of liquidity which contributes positively to the economy. Increased competition and higher trading activity can result in bidding wars for certain properties resulting in strengthening of property prices. Historically this strengthening of rates is short lived and in the long run the trusts/ funds tend to bring more stability into the market and eliminate mispricing. As the funds/ trusts are measured on performance and high acquisition prices would reduce the shareholder's financial returns, these bidding wars do not last long and markets return to more efficient pricing. Due to the higher levels of transactions, transparency within the sector is increased which further curtails mispricing, leading to highly efficient markets. Impact on real estate sector The entry of REMFs benefits the real estate sector as it results in cost efficient, well maintained and good quality supply of properties permitting higher operational efficiency. The government is benefited in higher tax realization, higher wealth creation and employment generation, (in the real estate sector and in the investment/ fund management industry). As these economic benefits increase, they further trickle down into the economy resulting in a stronger and more competitive business environment. Though the entry of REMFs in India is recent, similar benefits, as stated above, can be expected as they would help in the churning of inventory and ease the capital position (cash flow) of developers, increase operational efficiency enabling cost reduction, provide retail investors with an alternate investment option, increase transparency and accountability in the real estate sector, increase liquidity for the developers and the banks through mortgage backed securities creating a source of cheaper debt, reduce the incidence of unaccounted money as well as increase tax efficiency. With the introduction of REMFs/ REITs in India there will be a large shift of assets (commercial, retail, residential etc.) from individuals to entities (i.e. REMFs and REITs) which will impact the current highly unorganized leasing markets. As these markets develop, there would be improved labour mobility, housing quality, supply and higher tax realization. As currently, the

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property prices are at historical high, the mix of portfolio would depend upon the capital raised by the fund. The macro and micro factors would determine the risk-return profile and affect the returns of unit holders. As real estate is currently facing a slowdown in the Indian market it will be difficult for REMF's to raise interest in the instrument immediately. There is a direct correlation between a particular asset performance and number of NFOs in the market, thus making it hard for REMF's to witness heavy subscription. As these are new instruments there are no previous track records that can be tracked other than global performance indicators in which real estate as an asset class has been a top performer. REMF's have to ensure that investors are educated of the returns and risks associated with the product, while investors need to curtail their expectations as the current slowing market will not witness the robust growth of the previous 4 years. REMF's should be approached with a long term perspective of wealth creation and preservation.
REMF - ADVANTAGES AND CHALLENGES

Advantages
= =

Challenges
=

Increased transparency and accountability Would clean up the balance sheet of the developers Easy liquidation of properties

Lack of organized valuation system for real estate sector may lead to valuation discrepancy

=

= =

Market volatility & risk associated in short term horizon

Alternate investment opportunity for the retail investor Result in capital infusion, much needed by the industry Will lead to a more organized and efficient real estate market Greater retail and institutional investor participation

= =

Cannot invest overseas

=

Valuing real estate assets every quarter will add to fund costs

=

=

=

Professional management

Impact on investors With the introduction of professionally managed real estate portfolios, the retail investor would be in a position to weather real estate cycles. On the macro front, real estate cycles become smoother as the markets become more efficient thus leading to greater stability and wealth creation. For the investor, REITs/ REMFs allow a backdoor entry into the real estate asset class which would otherwise be diffucult as even direct investment in property would not be able to diversify and hedge risks. This also allows retail investors an extra avenue of investment or savings product while reducing the hassle of multiple stamp duty, processing fees, registration fees, brokerage etc. that are typical of direct realty investment. Real estate as a direct investment option is also highly illiquid and this challenge will be solved by the two aforementioned instruments.

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REMF - Facts for Investors
= = = =

Entry load for closed ended mutual fund: Nil, if application made directly to AMC.

Expense ratio8: Maximum 2.5% Issue Expense: None (i.e no longer initial amortizable)

Redemption: Has to be listed on a major stock exchange, so redemption would be easier than certain other closed ended funds but the NAV may be at a premium or discount depending upon the fund's performance

=

Exit Load: At the discretion of fund, usually based upon the time invested i.e. the longer the investment period, the lower the exit load

Identification of growth/ returns potential Typically the returns of mutual funds are influenced by economic factors such as the supplydemand equation, interest rates, economic growth, development - physical and social, political scenario as well as policies, etc. Investments done by REMFs in India can be broadly divided into two investment classes - hard assets and equities. The investment in equities can not exceed 65% of the total portfolio with a maximum of 40% in real estate equities. The BSE realty index, as seen in the graph below, provides higher returns when compared to the BSE Sensex which adds to the volatility thus increasing the risk associated with real estate equities. This is countered by limited exposure to equities and allowance of investment in hard assets to ensure a steady dividend payout to the investor with the steady stream of rentals from the investment in hard assets. The retail investor is able to diversify his portfolio to include real estate as an asset class, decrease volatility (risk), benefit from higher returns and get regular income by way of dividends. An investor can choose a fund based on his risk appetite and investment objective. Traditionally, retail as an asset class has the highest yield of approximately 12%-15%, followed by commercial with 9%-11% and the lowest yield of 4-6% in the residential sector. REITs and REMFs tend to

GROWTH RATE COMPARISON OF REALTY AND SENSEX 80% 60% 40% 20% 0% -20% -40%

Mar 06

May 06

Sep 06

Nov 06

May 07

Mar 07

Jul 06

Sep 07

Mar 08

Nov 07

Source: Bombay Stock Exchange

BSE Realty Index

BSE 30

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have a specific focus in their investment profile i.e. not only are some of these instruments concentrated within asset class such as residential, commercial, retail, etc. but are also geographically concentrated. For instance, peripheral regions tend to be more volatile in nature thus witnessing higher capital appreciation whereas CBD and off-CBD witness more steady growth. However, during a downturn the peripheral markets are most affected. Thus, following the law of generalisation, an investor with a low risk profile should make sure that the fund manager is following the investment strategy of investing in central and established markets with investments in retail and commercial developments to ensure steady appreciation and steady rentals. An investor with higher risk profile, on the other hand, should choose a fund that invests in the peripheral or emerging markets with a higher exposure to equity in order to attain greater capital appreciation. However, investments, risk appetites and objectives are subjective and a careful analysis of these can ensure expected returns.

Glossary: 1) 2) 3) 4) 5) 6) 7) 8) Retail Investor: An individual who purchases small amounts of securities for him/herself, as opposed to an institutional investor. Net assets: The value of an entity's assets less the value of its liabilities Diversification: Diversification strategy is adopted by investing in a wide array of securities and companies Million Plus cities: Cities or urban agglomerations with a population of one million or more Growth oriented: A growth and income fund is a mutual fund structured to provide both, growth in value and current income payments. The risk level of a growth and income fund is moderate and is therefore acceptable to investors who have a moderate risk tolerance. PLR: Prime Lending Rate. It is the reference interest rate used by banks Fed Fund Rates: The Federal Funds Rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions Expense Ratio: The expense ratio measures the percentage of a mutual fund's assets dedicated to running the fund. The expense ratio comprises administrative costs, money used for marketing, distributing, and advertising the fund; and the investment advisory fee, used to pay the manager(s) of the fund.

About Research & Business Analytics Group Cushman & Wakefield is committed to collation of high quality base data and assembling detailed statistics for the major India markets on a regular basis. This commitment to quality research provides a strong foundation for all of our services. Customized, analytical reports are also developed to meet the specific research needs of owners, occupiers, and investors. Through the delivery of timely, accurate, high quality research reports on the leading trends, markets and business issues of the day, we aim to assist our clients in making pertinent and competitive property decisions. In addition to producing regular reports such as global rankings and local quarterly updates available on a regular basis, Cushman & Wakefield also provides customized studies to meet specific information needs of owners, occupiers and investors. For more information: Tanuja Rai Pradhan Associate Director - India Research & Business Analytics Group +(91 124) 469 5555 tanuja.pradhan@ap.cushwake.com

Cushman & Wakefield is the world's largest privately held commercial real estate services firm. Founded in 1917, it has 221 offices in 58 countries and more than 15,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within four primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, valuation services, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners; and Consulting Services, including business and real estate consulting. A recognised leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at cushmanwakefield.com/knowledge.

For more information on Cushman & Wakefield, contact : Anurag Mathur Managing Director, India Tel: +91 80 4046 5555 E-mail: anurag.mathur@ap.cushwake.com

©2008 Cushman & Wakefield All Rights Reserved

Disclaimer This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not guarantee that the information is accurate or complete.

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