real estate india

FUTURE FORWARD 2020

In a decade’s time, Indian real estate landscape will be dotted with SEZs, international standard warehouses and specialized industrial spaces. Large integrated developments will find favour among the working population

The Indian real estate market is going through testing times. Rising interest rates have impacted the credit availability to the sector, global economic conditions seem to have subdued the demand from investors and occupier’s alike, Indian real estate stocks are down by more than 50 per cent from their year long high and the once soaring real estate values appear to be plunging. This, no doubt is the reality. Nonetheless, it is hoped that this is a transitory phase and the picture that would emerge once the churn is over will be an embodiment of permanence that is bound to happen as the sector continues to move along a high growth curve.

   The economic liberalization in the 1990s and the ensuing information technology revolution have been instrumeat in giving the Indian real estate market its present character. Multinationals-led demand for quality office space resulted in modern buildings springing up in new suburban locations. Increased job creation and rising disposable incomes coupled with lower interest on housing loans, had in turn fuelled demand and affordability for residential space. The change in attitude and the spending habits of the consumers led to an increase in consumption and demand for retail malls.

   Relaxing the Foreign Direct Investment regulations for the real estate sector opened the floodgates for foreign capital inflow into the sector. The much-required capital in the last few years has facilitated widespread development of residential, office, retail and hotel space in the country. It has also been instrumental in organizing the market to a large extent and bringing it closer to real estate markets in other developing countries around the world. We are excited about these developments as the growth that we witness today is a sign of the emerging far-reaching and long-term trends that will drive robust growth for the sector in the years to come.

 Foremost would be the institutionalization of the sector and the definite change in the ownership structure. Instead of individuals, private equity funds, hedge funds, REIT funds, insurance companies, pension funds, banks and other financial institutions would own, invest or manage real estate assets in office, residential, hotels, industrial, retail space etc. Public sector organizations like Life Insurance Corporation of India, UTI, Public Provident Fund, other pension funds of central and state would hopefully become active investors in the real estate arena.

  This will also lead to sophistication in the financial structuring of real estate investments. They will provide access to capital, both debt and equity capital from public and private sources. Apart from offering an exit route for the developers to revolve funds and improve their margins, REITs will also allow individuals investors to be a part of the real estate market.

  On the product side, there will be further advancement in construction management and project management techniques in order to optimize costs, meet construction timelines and achieve environmental and health and safety guidelines, intelligent, energy efficient green buildings will become the norm of the day. Property and facilities management services will also undergo a facelift. The provision of a good working and living environment as well as the enhancement of the asset lifespan will be key considerations and these services will be outsourced much more to firms specializing in these functions.

  Real estate activity will become more widespread and will take many smaller towns and cities in its fold. Improved infrastructure, the potential of untapped markets, increased access to capital together with the saturation and spiraling cost of metros will play a vital role in promoting new growth centers. Infrastructural projects including roads, airports, ports and inter-city connectivity will witness increased private sector participating and evolve as real estate play. This will significantly augment the availability as well as the quality of these services in the country.

In a decade’s time, the Indian real estate landscape will be dotted with SEZs. International standard warehouses, specialized industrial space, etc, elements that are still in the concept stage. Large integrated developments and providing a sophisticated lifestyle will find favour amongst the working population.

Rental housing as well as rented office space (as opposed to owned ) will become common as corporate entities will look at reducing their fixed asset liabilities, change in ownership structure will also bring in standardized, accepted practices for property valuations. Property transactions will become easier due to availability of research data, computerized land records and simpler processes for transfer of land titles and taxation. Hopefully, all these would be the prerequisites for evolving transparency and uniformity in the market. After witnessing periodic highs and lows, the interest rates and real estate process will undergo a rationalization and will finally be market driven. The above listed trends are some key real estate patterns that are most likely to take shape as India moves into the next decade. It is true that the current scenario gives some conflicting signals but we are certain that there is much to look forward to once the current market conditions settles down.

                                                                                         Courtesy:  HT Estates 26 July, 08

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The ultra-modern façade with its glossy glass and metal finish glistens amidst 16 sprawling acres that include tennis and squash courts, a swimming pool, a joggers’ park and a health and fitness centre. If this sounds like a five-star hotel, you are both right and wrong.

Wrong because there is no room service and new guests will not be arriving everyday. Right because this luxury residential project, called The Legend, the latest from the real estate developer Clarion Group, promises its residents every possible infrastructural facility and modern amenity possible. This then is a five-star world class residential complex which Manish Agarwal, MD of Clarion group, avers is all set to “set a new benchmark in real estate development in India“.

Situated in Sector 57, Sushant Lok III at Gurgaon, this suburban sanctuary consists of 250 ready-to-move-in apartments spread over a 2200-2600 sq. ft. area. The Rs 100 crores invested in the project has been put to good use. The 4-5 bedroom penthouses are designed strictly for those whom one call stylish with terrace gardens overlooking a tranquil water body. Having enjoyed the scenic surroundings – seventy percent of the land consists of open, pastoral greens – the lucky residents can return to apartments that are embellished with (according to specifications) Italian marble, granite or wooden flooring. Other benefits include wooden wardrobes, electrical fixtures and fittings as well as modular kitchens.

                                                                                                    Realty plus

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Parsvnath Developers Ltd conducted the “bhoomi puja” (earth-breaking ceremony) on February 23, 2007 for its five-star hotel and commercial mall project in Vejalpur in Ahmedabad. The Rs 250-crore enterprise will create landmark complex in the city. It is expected to be completed and become operational in two and half years.

Parsvnath bagged the 22,365 sq. metre plot from the Ahmedabad Urban Development Authority (AUDA). The company has already tied with Movie Times for the multiplexes. The total complex is to have a built-up area of five lakh sq.ft. Mohit Gujral, a prominent architect of New Delhi, has conceptualized the complex.

The company had signed a MoU with the government of Gujarat for developing various projects at an investment of Rs 1,600 crores. It will build townships, group housing, commercial complexes, and IT parks in Ahmedabad, Bhavnagar, Rajkot, Vadodara, Surat, Jamnagar and other districts of the state.

                                                                                             Realty plus

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The Commercial Face Of Chennai

If someone were to ask you in Chennai whether you have arrived, the person is surely not referring to your physical presence in the sprawling city. He’s speaking more metaphorically about your level of success. For, if you have truly arrived then there’s just one business address to have in the city— Nungambakkam.

Nungambakkam is at the heart of Chennai that connects Anna Nagar to the rest of the city. It is a high profile centre that houses almost every major MNC brand. The place is teeming with retailers and is one of the prime business locations in Chennai. Ispahani Centre here is the best-known landmarks in the City. In fact, any space that comes up for sale finds more buyers than it can handle. That’s because property on Nungambakkam rapidly multiplies in value.

Ebony, one of Chennai’s large format retail stores has approximately 28,000 sq. ft. at the Sathak Centre on Nungambakkam High Road. Some of the choice five star hotels like Taj Coromandel and The Park are located here. It also has famous hospitals like Sankara Nethralaya Eye Hospital, Child Trust Hospital and Gee Gee Hospital.

The area also boasts a well-equipped tennis stadium that seats 7,000 spectators, has six courts and is the venue of the Tata Tennis Tournaments. Valluvar Kotttam, yet another traditional landmark of Chennai is also part of Nungambakkam. The prestigious Loyola and Women’s Christian College are also situated here.

Says Jayant Hemdev, Head Corporate Services, NAI Hemdev’s International Realty Services, ” Nungambakkam is the most sought after and self contained locations in Chennai. Right from restaurants to shopping areas, colleges to hospitals everything is accessible.” But he says it is slowly saturating though there are several connected areas like the Khader Nawaz Khan Road that are evolving and catering to corporate needs. 

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As valuations crumble, PEs, FIIs ready for big realty plunge Real estate funds, PE players and foreign institutional investors are exploring options to buy equity stakes in listed realty companies, as valuations of their companies have fallen by over 65% during the past three months. The move has also come as a blessing in disguise for these realty companies who have been finding it difficult to source funds after the RBI tightened lending norms to property developers following a global liquidity meltdown. Sources said funds floated by majors such as HDFC, ICICI, Kotak and Anad Jain’s Urban Infrastructure Opportunities Fund as well as foreign funds are in talks with listed real estate developers to pick up minority stakes.                                                                                

                                                                                                                  Courtesy: - ET Realty  dt. 25 July 2008        

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The closing down of more than 20 textile mills and 15 manufacturing units in the country in the last 6-12 months has led to creation of a surplus supply of  real estate. With more than 20,000 workers in the textile sector now jobless, demand for space around industrial belts has slowed down, and more supply is taking prices further south.

The rentals are down by 20-25 % in the industrial belts. It is estimated that more than 15 lakh sq ft surplus area has been added in the market which is already depressed.

                                                                                                                  Courtesy: - ET Realty dt. 25 July 2008

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EMAAR MGF’S GULF PARENT RESCUES AFTER A FAILED IPO

In what would be the first major fund infusion into the Emaar MGF Group after a failed IPO, one of its promoters, Dubai-based Emaar is learnt to be investing $150 million (Rs 650 crore) to pick 20-25 %stake each in three real estate projects of Emaar MGF.

                                                                                                                  Courtesy: - ET Realty  dt. 25 July 2008

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City-based construction firm IVRCL infrastructure and projects has plans to sell its high priced pieces of land, including the 25-crore information technology special economic zone (SEZ) plot in NOIDA, and purchase low-cost property in the light of the downside in real estate business in the country.

“With the real estate being what it is now, our first priority is selling high-cost housing,” Chairman and Managing Director of the Rs.4, 200-crore company, E Sudhir Reddy said.

IVRCL currently has 120 acres in NOIDA, about 1, 000 acres in Pune and 200 acres in Panvel (Navi Mumbai), besides large extent of land in Hyderabad, Nagpur and Visakhapatnam. The market value of these plots was estimated at over Rs.4, 000 crore.

On a pre-qualification basis, IVRCL has been allotted 120 acres in NOIDA a year-and-a-half-ago. This includes 25 acres meant for setting up an IT SEZ. While the SEZ land was allotted at a rate of Rs.7.5 crore per acre, the remaining 95 acres were allotted at about Rs.12 crore per acre. As the rules do not allow sale of SEZ land IVRL proposes to raise unfinished structures and dispose off the property. “The cost of the shell construction will be Rs.2, 000 per sft. I will transfer this built-up area to the purchaser at the same cost. However, I will get a premium on the land cost,” Reddy said adding that while the company purchased SEZ land for about Rs.17, 000 per square metre, the minimum upset price fixed by the government for bidding in that area now stood at about Rs.25, 000 per square metre.

Though the disposal of the SEZ property essentially means sale of constructed area, land cost will be added in the transaction. In view increasing input costs, the company had also decided to go in for low-cost housing.

“We are currently building 9 million square feet of low-cost houses spread over 3, 000 acres in different cities. The highest price we are charging is Rs.2, 200 per sft,” he said.

                                                                                 Courtesy: - Business Standard dt.22 July 2008

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The growth of premier satellite towns around Delhi has not taken the sheen off the original best-sellers, south Delhi. That the glamour for a West End, Defence Colony or Golf Links address has only increased can be gauged from the fact that capital values here have increased 15-20% over the last six months, despite a slump in real estate all around.

A prominent South Delhi developer said the number of people putting their bungalows up for redevelopment has also increased manifold and he expects rates to go up even further in the coming months. Apartments this side of town is being sold in the range of Rs.4 crore to Rs.10 crore depending on the size and location. On the other hand, the charms of Mumbai’s posh southern localities like Cuffe Parade, Malabar Hills and Cambala Hills has waned over the last six months after an astounding three-fold jump in three years.

Homebay (a subsidiary of property consultancy JLLM) CEO Raminder Grover said supply in south Delhi has improved considerably over the last one year. From 50-60 apartments about a year ago, there are now around 200 apartments available or under construction in various areas of South Delhi such as Vasant Vihar, West End, Defence Colony, Gulmihar Park, Anand Niketan, Golf Links, Jor Bagh and Sunder Nagar.

A 1, 800-sq ft apartment in Vasant Vihar which was going for Rs.3-4 crore in 2006 costs Rs.7-8 crore today. An apartment of similar size in Maharani Bagh would cost Rs.5 crore today, up from Rs.2.5 crore a year ago. In the last two years, Me. Grover said there has been an appreciation of 70-100% in South Delhi apartment prices.

“People want a South Delhi address just because of the prestige associated with in,” explained Mr. Grover. Other reasons include proximity to major shopping areas, airport and better infrastructure. “A majority of the flats are sold to high net worth individuals who could be industrialists, businessman, professionals and senior executives of MNCs,” said Uppal Group general manager, luxury apartments, MK Minocha.

Developers such as Saluja Constructions, Uppal Housing and Thapar Homes either form a joint venture (JV) with bungalow owners in these areas or buy them out completely, in a JV, people usually keep a floor or two for their use and let the developer sell the rest. Saluja Constructions director Ankush Saluja said the company has about 25 such projects under construction at moment.

While South Delhi is on the rise, south Mumbai seems to have stopped in its tracks. After a 300% growth in the last three to four years, the last six months have seen capital values in south Mumbai remain flat, said Cushman & Wakefield director (residential) Aditi Vijayakar. Many potential buyers have been sitting on the fence, waiting for prices to correct in Mumbai, says Ms Vijayakar, the value of transactions might have been higher in the last six months but the number has come down considerably.

                                                                                             Courtesy: - ET dt.23 july2008

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Alpha G:Corp’s Mega Gift 

Delhi-based real estate developer and asset management company, Alpha G:Corp, major alliance partner in the pan-India conglomerate, G:Corp, has signed up a joint venture with landowners in Punjab to conceptualize, design and develop the prestigious AlphaOne mega project in Amritsar. It will be spread over 25 acres on G.T. Road. Alpha G:Corp was allotted the mega project status because it submitted the most advanced development plan. The initial investment will be Rs. 270 crores in the first phase and this is going to be a destination centre encompassing retail, entertainment, luxury hotel and stand-alone boutiques on a total space of two million sq. ft. The features in Phase 1 also include a 200-room luxury boutique hotel under the brand name ‘Ishta’ from the Ananda group of hotels, which alone will entail an investment of over Rs. 100 crores.

The major retail areas entailing up to 80% of the retail space have been leased out to brands such as Shoppers Stop, Time zone, The Home Store, Arvind Mills, Wills Lifestyle, Provogue, Metro Shoes and Landmark among other leading brands. While Shoppers’ Stop has modeled their hyper-city for Alpha One along the lines of their path-breaking, recently launched hyper-city project in Mumbai, Fun Republic has signed-up for a large multiplex to offer a heightened experience in good cinema. The construction will begin in August 2006 and the first phase will be operational by March 2008. All tenants will move in by September 2007 for carrying out internal fit-outs. Designed with a large, open atrium, this mega-project would consist of a shopping mall, supermarket, restaurants, recreational facilities, multiplex and space for cultural activities of global standards.

The planning of the entire project is being done keeping in mind the growing needs of the people of Amritsar and Jalandhar for their daily requirements for shopping, entertainment and cultural needs, which so far have been catered by out-station trips to Delhi, Ludhiana or Chandigarh.

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