Hyderabad Second Most Affordable Office Market in World

Bangalore: Indian cities are on the list of world’s most affordable office markets, according to a report published by DTZ, a property consultant. Indian cities like Hyderabad, Chennai and Pune are on this most affordable list and Hyderabad stood at second position on the list.

"Tier II cities in China and India continue to dominate the list of top 10 most affordable markets globally," DTZ said in its report.

The report mainly highlighted the occupancy costs for prime office space across 126 markets globally.

"The most affordable office market remains Surabaya ($ 1,610 per workstation per annum), followed by Hyderabad and Chongqing," the report said.

Indian cities like Pune and Chennai stood at fifth and sixth positions, respectively. But, London’s West End has come up as the least affordable office market worldwide, according to DTZ.

"At $ 23500, London West End has regained its position as the world's most expensive office location in 2012, overtaking Hong Kong which was the least affordable market in last year's report." the report said.

(With PTI inputs)

For the original post visit: http://www.siliconindia.com/realestate/news/Hyderabad-Second-Most-Affordable-Office-Market-in-World--nid-140190.html

UAE-based NRIs guide to property investment in India

Hyderabad, Bangalore, Chennai, Pune, Noida and Navi Mumbai are the top six cities for property investment, says JLL expert

The declining value of rupee may have augmented non-resident Indians (NRI) demand for properties back home. But a real estate expert advices investors to look at key market triggers before taking the realty plunge.

Om Ahuja, Chief Executive Officer – Residential Services, Jones Lang LaSalle India, says, “One has to look at the key market triggers to identify the right markets.”

And these critical triggers are: Existing infrastructure readiness; execution/implementation timelines for new infrastructure initiatives; demand for commercial space in the market (leading to job creation); social infrastructure and price trends.

So which cities should NRIs invest in?

After factoring all these five aspects and considering them against the current market environment, JLL expert’s top six cities for property investment are: 1. Hyderabad 2. Bangalore 3. Chennai 4. Pune 5. Noida, 6. Navi Mumbai

“To a large extent the aforementioned growth drivers are clearly visible to varying degrees in these cities,” Ahuja states.

For UAE-based NRIs, the three-day Indian Property Show, opening today (December 13) at Hall No 3, Dubai World Trade Centre, will have participation from major Indian developers having projects in the aforesaid cities. Properties worth Dh30 billion by more than 90 developers will showcased in the exhibition.

JLL experts believe the on-going trend in their commercial real estate space tends to reflect a serious growth and expansion of various corporate offices.

"There is certainly very healthy demand for Grade A commercial spaces in cities such as Hyderabad, Bangalore and Pune where demand for Grade A commercial real estate exceeds the supply scheduled for the near and long-term future."

In Noida and Navi Mumbai, there are market drivers over and above job creation at play - namely superior infrastructure and affordability.

“Navi Mumbai and Noida are absorbing investor demand from Mumbai and Delhi, where affordability plays important role for investors,” Ahuja mentions.

In the case of Navi Mumbai, one can further extrapolate the investment potential to Kharghar, Kalamboli and Ulwe. For Noida, the extended growth corridors are Noida Extension and Noida Expressway.

Individual employed by IT/ITES and banking, financial services and insurance (BFSI) industries are eventually buyers of a residential apartments.

The current absorption of residential apartments in Bangalore, Hyderabad, Pune and Chennai shows the lion’s share of demand coming from IT/ITES and BFSI employees.

"The average age of buyers range from 27 to 33 years, with the easy availability of mortgages and the desire for a self-owned home apartment before marriage being the key drivers. The highest demand is for apartments where price tags fall within the Dh266,666 to Dh666,666 (Rs4 million to Dh10m) range," Ahuja reveals.

For the original post visit: http://www.emirates247.com/news/emirates/uae-based-nris-guide-to-property-investment-in-india-2012-12-13-1.487006

Indian property market reaches $170bn in 'forgettable' year

INDIA – India's investment-grade real estate market has grown 8.6% to $173bn (€133bn) in the past 15 months following a 58% increase in 2011, according to Jones Lang LaSalle.

Mumbai-based senior research manager Hariharan Ganesan attributed the slowdown to a recent rise in input costs and "unenthused" macroeconomic investor sentiment.

The result has been fewer developments initiated.

Ganesan contrasted recent meagre supply with the steep increase in new developments from $101bn in 2010 to $160bn last year.

He said in a note: "The country's real estate market is traversed from a great deal of positivity [in 2010] to uncertainty.

"It is hard to deny that it has been a forgettable year."

Commercial developments have been particularly hit by both macro uncertainty and sector-specific factors.

Under-construction office assets account for 78% of India's commercial real estate market, currently valued at $41.6bn.

Mumbai, Delhi and Bangalore accounted for 67% of the market value of commercial office space under construction, with 17% accounted for by second-tier cities Chennai, Pune, Hyderabad and Kolkata.

Third-tier cities accounted for only slightly less (16%), up from 9% in 2010 largely as a result of lower real estate costs, said Ganesan.

Meanwhile, shopping centres decreased in number but increased in size in 2012, which kept the Q3 market value of retail assets at the same level as the previous quarter.

In contrast, investment-grade residential construction, valued at $132.2bn in Q3, has almost doubled since 2010.

Delhi dominates volumes, although Mumbai contributes greater market value.

Ganesan said residential had proved particularly resilient for developers and investors because of high demand for housing and the fact it was self-liquidating.

Author: Shayla Walmsley

For the original post visit: http://www.ipe.com/realestate/indian-property-market-reaches-170bn-in-forgettable-year_48769.php#.UL7t6yLQvIU

Chennai outshines Hyderabad, Bangalore in office space absorption

According to a Cushman & Wakefield report, among the three southern cities – Chennai, Bangalore and Hyderabad, Chennai witnessed the highest absorption of office space at 1.32 million sq. ft in the third quarter of 2012, followed by Bangalore which witnessed an absorption of 1.25 million sq. ft and Hyderabad which saw just about 0.50 million sq. ft. In terms of total absorption during the quarter, Chennai’s office market also saw an increase of 35 per cent over the previous quarter – the one that marginally surpassed Bangalore.

The report attributes this trend to global economic conditions, which has affected the uptake of office space in Bangalore. The global economic conditions appear to have cast a shadow on the city’s real estate, particularly the office space market which registered a drop by nearly 50 per cent, says the report.

As per the report, Hyderabad too registered a drop in the office space market by almost 50 per cent. The Cushman & Wakefield report described the absorption as ‘very meager’ in the 2012 third quarter.

Driven largely by the IT and the ITeS sectors, Bangalore and Hyderabad are feeling the impact of rationalisation of space, in addition to an overall cautious approach. These two factors have had emphatic impact this on segment.

The supply side too, in-keeping with the changing scenario, remained subdued as far as the total new supply for the third quarter is concerned.

The third quarter absorption in Hyderabad amounted to 6, 20,000 sq ft; a drop of 31 per cent in fresh supplies over the previous year. The impact of a restrained office market activity is witnessed in the vacancy levels too which remained mostly unchanged over the previous year. The rental values have by and large remained stable for the said period as well.

On similar lines, Bangalore too registered a drop in office space uptake in the first three quarters of this year, as compared to the same period last year. The total absorption recorded till date amounted to 3.95 million sq ft, which is a drop of 54 per cent over the same period last year.

Kanchana Dwarakanath, Magicbricks.com Bureau

Azure Capital to raise Rs 500 cr through a real estate fund

New Delhi: Azure Capital has said that it will raise up to Rs 500 crore through a real estate fund that focuses on commercial properties across top seven cities of India.

Azure Capital, an integrated investment company, will launch of India Realty Fund-II, a rental yield fund that focuses on commercial properties across top seven cities of India, the company said in a statement.

The size of the fund is Rs 250 crore with an additional Green shoe option of Rs 250 crore, aggregating to Rs 500 crore.

The India Realty Fund II would primarily focus on investment grade commercial properties with lease to reputed tenants in the top seven cities of the country such as Mumbai, Delhi-NCR, Bangalore, Chennai, Hyderabad, Pune and Ahmedabad.

"These projects will provide regular returns to investors with an upside of capital appreciation. The valuations presently are quite attractive as developers are increasingly looking at deleveraging their assets," Azure Capital Advisors CEO Shailesh Ghorpade said.

Ghorpade further noted that India Realty Fund-II targets such investors who have a low risk appetite. It will provide recurring yield income coupled with high and stable capital appreciation, diversified portfolio with superior risk - adjusted returns.

The deployment of the India Realty Fund II will be across 10-12 commercial properties with an average ticket size of Rs 25-30 crore.

The fund plans to raise the entire corpus within 9 months from the first close.

The India Realty Fund I had successfully invested in residential real estate projects in Bangalore and other parts of India, the company said.

PTI

Source: http://zeenews.india.com/business/realestate/upcoming-projects/azure-capital-to-raise-rs-500-cr-through-a-real-estate-fund_62546.html

18% of housing demand to come from top 8 cities: C&W report

The total new demand for residential dwellings during 2012–16 will be 11.8 million units across India, according to real estate consultancy Cushman & Wakefield.

Of this demand, top 8 cities will account for 18 per cent or 2.1 million units across categories.

The annual report "Evolving Paradigm – Future of Indian Real Estate" has been bought out in association with Global Real Estate Institute (GRI). The GRI is a global club of senior real estate investors, developers and lenders.

Of the demand in the top eight cities, the requirement in mid-segment is estimated to be highest at approximately 59 per cent or 1.3 million units, followed by demand in the high-end segment which is 4,51,000 units. The low-end housing demand is expected to be 3,62,000 over the next five years.

Sanjay Dutt, Executive Managing Director, C&W India, in a statement said, "The demand creation in leading 8 cities is reflective of the economic strength that these cities have. We see a higher demand in the mid-ranged segment in these cities."

The total demand for housing units is expected to increase at a compounded annual growth rate of 2.8 per cent across India, with Bengaluru expected to record the highest demand growth of 4.1 per cent followed by Pune and Hyderabad.

NCR is likely to see the highest demand of 381,000 units in mid and high-end segments during 2012 – 2016.

Southern cities of Bengaluru (338,546 units), Chennai (257,796 units) and Hyderabad (199,575 units) will account for approximately 45 per cent of the demand in mid and high-end segments.

Mumbai is expected to see demand of 188,708 for mid and high-end housing, Ahmedabad (173,394 units) and Pune (144,422 units) and Kolkata’s (77,000 units).

Source: http://www.thehindubusinessline.com/news/real-estate/article3964920.ece

Despite slowdown, housing prices bullish across cities

According to the residential real estate index prepared by the National Housing Bank (NHB), the housing prices in 16 cities including Delhi, Mumbai, Chennai, Bangalore, Pune, and Kolkata improved in the quarter ending June 2012, compared to the previous quarter ending March 2012.

In fact, in most of these cities, prices improved quarter after quarter since January-June 2009 quarters barring in a few exceptions like Bangalore, Hyderabad , Jaipur, and Indore, where prices have corrected in some quarters.

But when compared to prices in January-June 2009, when the index was first announced , the prices in the latest quarter have shown a significant jump.

It is also because January-March 2009 was the first quarter when the impact ofglobal bank crisis of 2008 was fully realized. In fact, the index of property prices in Delhi continued to fall till January - March 2010, when the index touched 106, from 121 in January-June 2009.

According to the NHB, the prices of residential properties in 16 cities have shown an increasing trend in the range of 1.1% in Kochi to 10.5% in Pune, in April-June 2012 quarter , against the previous quarter.

At the same time, it saw marginal decline in three cities - Jaipur, Hyderabad and Indore. Faridabad remained stagnant in this quarter.

According to the data prepared by the NHB, the maximum increase was observed in Pune, by 10.5%, followed by Bangalore (8.7%), Patna (8.6%), Ahmedabad (6.4%), Ludhiana (5.3%), Lucknow (4.1%), Mumbai (3.7%), Delhi (2.6%), Kolkata (2.6%), Bhubaneswar (1.7%), Bhopal (1.7%), Chennai (1.7%), Surat (1.2%), Guwahati (1.2%), Vijayawada (1.1%), and Kochi (1.1%).

Three cities have shown marginal decline in prices over the previous quarter, with a maximum decline of 2.6% observed in Jaipur, Indore (2.4%), and Hyderabad (1%).

The data has been prepared by NHB RESIDEX, which tracks the movement in prices of residential properties on a quarterly basis, an exercise it has been conducting since 2007.

However, according to the NHB Residential Index, the property prices in the NCR region increased by around 11% in the last one year, while a close look of different micro markets give a different picture.

The property prices in certain developing pockets like Dwarka Expressway in Gurgaon went up by almost 50-80 % in the last one year. Similarly, in other developing pockets like New Gurgaon and Golf Course Extension Road, property prices have gone up by 30-50 %.

In Noida, prices of property on the Noida-Greater Noida Expressway increased by almost 30% since June 2011. In Ghaziabad too, prices in Indirapuram and Vaishali went up by around 30%. In certain pockets like Crossings Republik, where possessions have been given to buyers, the prices have improved by almost 50% in the last one year.

However, prices in the matured markets of Delhi, Gurgaon , and Noida have not appreciated so sharply during the period, as they are already very high. As in the index, when prices of properties located in different areas are taken into account, it does not give a clear picture. But, the index has vastly improved and reveals the prevailing bullish trends in the property markets in the NCR.

QUICK BYTES

Compared to prices in January-June 2009, when the index was first announced , the prices in the latest quarter have shown a significant jump

Source: http://economictimes.indiatimes.com/features/et-realty/despite-slowdown-housing-prices-bullish-across-cities/articleshow/16042170.cms

Leela Palace Chennai readying for November opening

Chennai’s newest luxury hotel, situated on the southern end of the Marina beach, is being readied to welcome guests. Sea-facing, the Chettinad Palace-inspired opulent hotel from Hotel Leelaventure Ltd will open early November, just in time to cash in on the peak-season demand.

Rates at the 326-room property, as per a web booking engine, start at Rs 12,500 per night (deluxe sea-facing room), which is higher than the Rs 11,700 per night rate charged by by Taj at the Lands End, a prime sea-facing hotel in Mumbai.

Though delayed by over a year, the launch of the The Leela Palace Chennai (eighth in the company’s line-up) is one of the half-a-dozen turnaround initiatives planned by promoters to inject life back into the debt-laden company.

As of March 31, total debt on the company’s books stood at nearly Rs 4,300 crore, resulting in a near fourfold rise in net loss at Rs 101 crore in the first quarter this year.

Interest paid during the January-March quarter (Rs 89 crore), which doubled compared to the corresponding quarter last year, was 64 per cent of the revenue earned (Rs 138 crore) during the period. The company’s promoters, the Nair family, has thus put in place a series of measures to tide over the crisis, assuring stakeholders of a certain reduction in its debt.

The company will raise up to Rs 1,000 crore through one or more instruments to meet capital expenditure, expenditure for renovation, expansion, brand building and to pursue new growth opportunities.

Leela has also applied for debt-restructuring under the corporate debt restructuring (CDR) mechanism, to ease out the debt burden though its lenders have still not agreed to reduce the interest rate on outstanding loans. A flash report for restructuring of its debts was approved by the CDR EG (empowered group) in May with January 1, 2012 as the cut-off date. The final restructuring package is under discussions.

“The company is facing a liquidity mismatch as most of its debts are payable in next five years. The company expects to get moratorium on interest and principal repayments for two years and repayment over the next eight years. The company also expects to get reduction of interest rate, even though the lenders would have a right of recompense at the time of exit from CDR,” stated the annual report of Hotel Leela Ventures.

Further monetisation of three land assets and an office space are considered by the company, located in Pune, Hyderabad, Bangalore and Chennai. Valuation of these properties exceeds Rs 700 crore, as per market estimates. Commercial property in Chennai is the Leela Business Park, located next to the luxury hotel.

Four or five-star properties in tier II locations are also being explored by the company. In addition, management contracts for nine new properties are actively considered, including a project in Jaipur where the firm has already signed the contract and in the capitals of Bangladesh and Sri Lanka.

The company also owns land in Agra (facing Taj Mahal) and Ashthamudi, Kerala. At both centres, it has decided to build a luxury hotel and resort, respectively, in collaboration with an investor, though it is yet to finalise the deals.

Though the turnaround plan has been put into motion, market watchers are not excited just yet. A Delhi-based analyst tracking the hotel sector stated several of the recently announced plans by Leela were only a repetition of its earlier promises.

“The company’s debt in March last year stood at Rs 3,800 crore. Even then it had announced sell-off plans of non-core assets such as land and office space. Not only has the debt increased, but it has failed to get a single buyer for its assets. In the meantime, real estate valuations have further strained,” said the analyst.

However Leela’s management successfully sold its Kovalam resort last year for Rs 500 crore (actual gain is Rs 415 crore) to a Dubai-based non-resident Indian Ravi Pillai. Hotel Leelaventure continues to manage the formerly state-run ITDC resort, which overlooks the Arabian Sea.

But unlike the successful deal of Kovalam, the company has failed to execute announced plans of selling preferential shares to private equity companies, which would have fetched it Rs 600 crore. The company had been in negotiations with sovereign wealth funds but the deal has failed to materialise.

Further, a planned qualified institutional placement and foreign currency convertible bond (FCCB) of $200 million (Rs 895 crore) failed to take off due to a depressed equity market while its earlier FCCB of $100 million did not get converted into equity and remained as debt.

Presently, promoters hold 56.6 per cent in the company (though 85 per cent is pledged), while foreign institutional investors hold little more than one per cent. Kolkata-based ITC remains the single largest non-promoter shareholder in Hotel Leelaventure with a stake of 13.98 per cent.

“Leela has limited coverage compared to say ITC, Oberoi or Indian Hotels. They are unable to expand under ownership model because their balance sheet looks quite stressed and banks will thus be reluctant to lend to them. Management contracts can bring only fees and not profits,” said another analyst.

Source: http://www.business-standard.com/india/news/leela-palace-chennai-readying-for-november-opening/484569/

Migrants build city homes

BHUBANESWAR: People from neighbouring states dominate city realty market's workforce even as workers from Odisha continue to migrate to outside the state in search of work.

While masons from Jharkhand and Bihar rule the state capital's construction works, carpenters are mainly from West Bengal. Those from Andhra Pradesh have a substantial presence in all categories while plumbing work is the forte of local people.

C S Sharma, a labour contractor from Jharkhand who operates from the city, said construction workers from outside Odisha outnumber the locals in Bhubaneswar. "Outside state workers tend to work continuously for months without taking breaks while local people take too many leaves. That is why it is easier to meet deadline with outsiders," said Sharma who currently has around 500 workers under him here, mostly from Jharkhand. Similarly, when Odia workers go for work outside Odisha they work without leave for long, he added.

The industry knows who is good at what. In various components of the semi-skilled works, people from different areas have expertise. "Masons from Bihar and Jharkhand are good at finishing work while there is no match to local plumbers, mainly from Kendrapada and Jajpur districts. Workers from Bengal are good in painting work and carpentry," said Manoj Chandrabanshi, another labour contractor.

Real estate developers said big projects prefer mix of workers. "If one employs workers say only from Odisha, none will be left to work during a festival like Raja. Similarly, those from West Bengal prefer to go home during Durga puja. If the workforce is mixed, work will not suffer," said D S Tripathy, state president of confederation of real estate developers of India (Credai).

Besides hundreds of housing projects by private builders, big-ticket government projects such as All India Institute of Medical Sciences, National Institute of Science Education and Research, Indian Institute of Technology are under construction in city these days. Besides, work for around dozen flyovers and expansion of National Highways are under way here employing a huge workforce.

According to 2001 Census, 16 lakh Odia were listed as seasonal migrants to other states. The cities attracting maximum migration from the state included Kolkata, Surat, Hyderabad, Visakhapatnam, Raipur, Coimbatore, Delhi, Chennai and Bangalore. While thousands of people from Odisha migrate to Nalgonda, Guntur and Vizag, among other areas of Andhra Pradesh to work in brick kilns and as farm labourers, migration from Andhra is also substantial. The 2011 census report on migration is still awaited.

Source: http://timesofindia.indiatimes.com/city/bhubaneswar/Migrants-build-city-homes/articleshow/15111095.cms

Hindujas to foray into India's real estate sector

The Hinduja Group, with a global presence in core sectors like oil and gas, automotive, power, information technology (IT), banking and finance, on Sunday announced a major foray into the real estate sector in India, involving an investment of up to $15 billion.

Just back from a visit to India, Group Chairman S P Hinduja said here that the Indian economy "with its underlying strengths could become a beacon of hope in an otherwise bleak global environment."

The Group has acquired a landbank of over 3,500 acres in metros like Mumbai, Chennai, Hyderabad and Bangalore for development of integrated residential and commercial townships, SEZs, with hospitality, healthcare and related facilities, he said. These projects will involve an investment of $10 billion to $15 billion over the next five years, according to Hinduja.

The group was also looking at a portfolio of 10,000 Mw in the power sector in the medium-term, he said. Implementation of a 1000 Mw project is already under progress, Hinduja said.

Expressing optimism over the state of the Indian economy, Hinduja said its fundamentals remained strong and it had the potential to bounce back to high growth of eight to nine per cent a year. "The slowdown currently experienced by the economy is largely due to external conditions and not, as a section of the business community and media say, by coalition politics, lack of leadership, corruption etc," he said.

Hinduja said the ruling and opposition parties in India were united in their resolve to reverse the present deceleration of growth momentum and make India more competitive in the global economy.

He also noted that India continued to enjoy great credibility in international forums and among global leaders, "which is a major plus."

The leading UK-based industrialist said that non- resident Indians (NRIs) continue to repose confidence in the country with their remittances touching around $60 billion last year, the highest for the developing countries, including China.

He is also confident that India will go for more of economic reforms and liberalisation and will not revert to a state-led model.

Hinduja noted that India had plans for investment of $1 trillion in developing its infrastructure in the next five years.

"It is a win-win opportunity for India and the developed countries. The investment in infrastructure will help in poverty alleviation in India and acceleration of economic growth and jobs creation in the investor countries," he said.

He said India can leverage its rising international status to mobilise investments in the country by foreign investors and NRIs to meet the government's target.

He said the investment priorities should be rural, semi- rural/urban areas.

"This will create employment opportunities where they are needed, helping alleviate poverty without distribution of subsidies, gifts and donations. The consumer market will be enlarged, contributing to increased production and economic growth," he said.

At the same time, Hinduja underlined that one of the conditions for awarding mega projects should be building up of social infrastructure in education, healthcare, water supply etc in adjacent semi-urban or rural areas.

He also demanded that the government should reduce the large number of permissions required for starting up industries or infrastructure projects.

"The key in this regard would be to organise all central, state and local level clearances before the projects are awarded to investors. This would reduce corruption and ensure speedy and timely completion of projects," Hinduja said.

He also said the Indian bureaucracy should be "sufficiently galvanised" with accountability and rewards. "The concerned government departments should monitor the projects with a Project Implementation Review Chart having time-lines for completion of different phases of the projects. An incentive scheme should be in place for rewarding the government officials for timely completion of projects," he said.

Hinduja also highlighted the challenge faced by India from the menace of corruption and black money. "The main causes of generation of black money have been the requirement for funds to meet the expenses of political parties and to fight elections at local/state/national levels; the need for making illicit payments to secure government contracts and influence government policies etc," he said. "This is a cancer which must be addressed. Unstructured, non-institutional political funding is the root of corruption in India. Electoral reforms may be introduced to regularise and make political parties accountable for funds received," he said. He also said that state funding of political parties' election expenditure can be part of a large scheme of political, electoral and taxation reform to stop the flow of money into parallel economy. He pointed out that many developed countries have opted for 20-30 per cent tax to make black money stashed abroad accountable. "India could also consider entering into similar agreements with foreign countries so that the unaccounted wealth abroad can come to India and taxed. Such fhttp://www.business-standard.com/india/news/hindujas-to-foray-into-indias-real-estate-sector/481174/unds could help reduce India's burgeoning fiscal deficit," he said.

Source:

'Realty firms postpone shopping mall construction in 8 cities'

Realty firms have delayed the construction of shopping malls in eight major cities due to large vacant space in the existing complexes, according to property consultant Cushman & Wakefield.

"The retail real estate market recorded a deferment of more than 30 per cent of retail mall space against the projected supply for the first half of the year," C&W said in a statement.

The consultant, however, said the deferment was necessary considering the high vacancy rates in the shopping malls and cautious approach adopted by retailers on expansion.

The eight major cities (Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune) witnessed a fresh mall supply of 2.27 million sq ft during first half of 2012.

"Approximately one million sq ft of expected mall supply was deferred to second half of the year or next year. The overall vacancy rate for the major cities as of H1, 2012 stood at 19.6 per cent, marginally higher than the previous quarter.

NCR saw the highest mall supply deferment of over 80 per cent ensuring the city maintained 28 per cent vacancy levels. NCR saw only 1.2 lakh sq ft of mall supply in H1. Bangalore saw the highest mall supply of 1.5 million sq ft in H1 2012.

"This slowdown in mall construction need not be viewed as a negative growth indicator for the retail real estate segment. The current pace is, in fact, expected to help in maintaining a healthier supply to demand equation; especially for oversupplied micro-markets," C&W India Director Retail Agency Jaideep Wahi said.

"With high vacancy levels as well as cautious expansion plans of retailers, the deferment of supply is a necessary measure to bring stability in the retail market," he added.

According to report, the rental values across most mall destinations within these 8 cities remained largely stable, except for certain micro-markets in Bengaluru, NCR, Kolkata and Mumbai where mall rentals have seen a growth over the previous quarter in the range of 2-13 per cent.

Elgin Road in Kolkata recorded the highest growth in mall rents at 12.4 per cent over last quarter mostly owing to renewals of existing tenants at a higher value.

Some prominent high streets destination recorded higher increase in rental values as against malls, reflecting the bent of interest amongst retailers for high-street.

Select locations across Bengaluru (MG Road, Jayanagar, Koramangala, Vitthal Mallya Road) recorded increase in rental by 8-9 per cent over the previous quarter.

Camac Street in Kolkata saw the highest increase in high street rentals at 25 per cent followed by MG Road in Bengaluru at just over 9 per cent. Gurgaon and Pune also saw increase in high street rents by 7-8 per cent.

Source: http://www.deccanherald.com/content/263504/realty-firms-postpone-shopping-mall.html

Xander Gr to invest $600 mn to develop about 12 malls in India

New Delhi: Global investment firm Xander Group will pump in USD 600 million (about Rs 3,300 crore) to develop and operate about 12 luxury shopping malls across India by 2017.

Virtuous Retail, the group's retail venture, is at present constructing eight such centres at various places and will develop another 2-4 malls in the coming years.

"The scope and potential of organised retail in India is huge. We have committed USD 600 million for a pan-India retail presence. We think, the amount will be invested by 2017," Virtuous Retail Marketing Director Anupam Yog told PTI.

Virtuous Retail, which is sponsored by the Xander Group, was set up in 2007, and is gearing up to open its first project at Surat in Gujarat by the end of this year, he added.

"Surat is our flagship project, where we are investing around USD 50 million. The total size of the shopping complex will be 6,00,000 sq ft," Yog said.

The company has also adopted the 'Surat Boat Race' to promote it in the global platform, besides starting a three-day story-telling event -- Kahani Festival.

"From the Surat project, VR Surat, we are expecting a rental revenue of Rs 30-40 crore annually," Yog said.

The company will hire 300 people for operating the complex, besides indirectly creating about 3,000 jobs.

Talking about the other projects, Yog said: "At present, eight projects are under various stages of constructions in places like Pune, Mumbai, Bangalore, Kolkata and Chennai. The sizes of the malls will vary between 0.5 million sq ft and 1.5 million sq ft."

The company will launch 2-4 new sopping centres, targeting cities like Delhi, Ahmedabad, Hyderabad and Chandigarh, he added.

"Our concept is to provide a lifestyle. We plan to bring in various global brands into India and give consumers a premium retail experience," Yog said.

When asked about its model of operations, he said the company will own, develop and operate the properties.

"In some cases, we are developing the complexes under joint venture agreement with the property owner. The model will vary in different places, but we will never sell off the developed spaces," Yog said.

Some of the under-developed malls in Bangalore, Mumbai and Pune are mixed-use spaces, he added.

Xander Group has so far invested about USD 1 billion in India since 2005 in various sectors, including infrastructure, hospitality and entertainment.

PTI

First Published: Sunday, July 08, 2012, 15:17

Source: http://zeenews.india.com/business/realestate/latest-news/xander-gr-to-invest-600-mn-to-develop-about-12-malls-in-india_55369.html

Investors Clinic witnesses 20% demand rise for Indian properties

DUBAI — Investors Clinic Infratech, a leading real estate marketing and brokerage firm operating under the brand name of “Investors Clinic”, has successfully marked its footprint in the UAE within just six months of starting Dubai operations.

In a short span, the company has successfully served over 1,000 NRI families and have witnessed a strong 20 per cent increase in demand from Indian expats in the second quarter of 2012. The UAE-based NRIs are generally looking for investment property back home (rather than end use) within a price range of Rs7.5 million to Rs15 million with an assured return.

In the GCC alone, an estimated 5.5 million to six million NRIs are working today including semi-skilled and unskilled labourers. According to banks in the Gulf, the average home loan size is Rs3-7 million and the predominant demand revolves around apartments. The overall home loan business in Dubai alone ranges from Rs7.2-8 billion, according to an Economic Times report.

Honey Katiyal, CEO, Investors Clinic, said: “Rupee falling might be a bad news for India but real estate tends to gain from the development. It is the time when Non Resident Indians will benefit the most in Indian real estate market. The real estate market especially in Delhi NCR is vibrant with offerings for every segment. The NCR is the largest residential market in the country by sheer volume of residential units launched. Currently, it has more units than the combined tally of the other five metropolitan cities of Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.”

Source: http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/uaebusiness/2012/June/uaebusiness_June92.xml§ion=uaebusiness

Estate South 2012 reviews realty progress

Chennai

With improving transparency and visibility of the real estate markets in the South zone, cities such as Bangalore, Chennai and Hyderabad have attained a place on the global real estate map, a status that was limited just to Mumbai and Delhi in the past.

While South Indian cities constitute nearly 45% of the country’s office space, the stock of 140 million sq ft in these cities is projected to grow at a CAGR of 8% for the period 2012 – 2016, lower than the projected national growth of 11%, according to Jones Lang LaSalle. This implies that the southern cities, particularly Bangalore and Hyderabad, are relatively rationalised in terms of medium term supply of office space, and the cities have chosen a strategy of pursuing selective quality developments over rapid expansion. While this would keep their share in India’s office stock range bound at 37%-40%, the South Zone’s vacancy rate by end-2012 is expected to be 16%, considerably lower than the pan-India vacancy rate of over 20%.

Panelists cautioned that if the office space absorption does not expand in the coming years, there will be a concomitant effect on the residential development as well. This in turn necessitates the need to keep the cost control under constant check.

In a one day seminar titled Estate South 2012 and organised by CII recently at Hilton Hotel in Chennai, experts from the real estate sector have brought out that South India’s retail real estate market has gone through a makeover in the past decade when its retail stock grew from a mere 1.6 million sq ft in 2003 to 13.2 million sq ft in 1Q12. The share of South India’s retail stock to the pan-India stock is expected to record a notable increase from 20% at end-2011 to touch 36% by end-2016.

While demand remains healthy for organised retail spaces, it is polarised towards either successful malls or high streets, which have better footfalls and conversion ratio. As the mall stock in the southern cities sum up to breach the 40 million sq ft mark by end-2016, the vacancy by then is expected to witness a notable decline from the peak levels of 2014 to drop below the national average of 20.5%.

South India’s residential market has been an ardent follower of the ‘affordability’ mantra, with more than 80% of the new launches in the past two years being priced under Rs 4,000 per sq ft. As a result, the residential markets of South Indian cities have remained resilient in the past few quarters, relative to the significant decline recorded in the sales volume of Mumbai and NCR-Delhi. Having exhibited healthy resilience during times of uncertainty, it is imperative for the developers to ensure prudent pricing strategies in the coming quarters to remain competitive as well as sustain the momentum that they have gained during early 2012.

The focus of Indian real estate is shifting from Tier I to Tier II cities, and the southern region is also embracing the same, with secondary hubs developing in Kochi, Coimbatore, Vishakhapatnam and Mysore, that are persistently striving for higher milestones.

On the housing finance front, LIC Housing Finance claims to do 50 per cent of the business from the four southern states. “Chennai is one of the fast growing cities not only in real estate development but also in employment generation”, according to V K Sharma, CEO, LIC Housing Finance Ltd. With a growth rate of over 20 per cent, LICHF’s loan book has posted robust disbursement of over Rs10,000 crore in tier III cities in the south.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/estate-south-2012-reviews-realty-progress

Tamil Nadu govt to push for Chennai Mega Region

Chennai

With the city expanding at a fast pace, expectations for better infrastructure are running high.

The state government is mulling the CMDA’s proposal to declare Chennai Mega Region for better regional planning on the lines of Delhi, Mumbai, Bengaluru, Kolkata and Hyderabad, since the Chennai Metropolitan Area (CMA) extending to 1,189 sq km was declared four decades ago.

The second master plan has foreseen larger development outside the Chennai Metropolitan Area along the Rajiv Gandhi Salai (IT corridor), Grand Southern Trunk Road and Grand Western Trunk Road in areas around Sriperumbudur, Kelambakkam, Tiruvallur and Maraimalai Nagar. Sources said the CMA area will be extended up to 8,000 sq km. The CMDA has already submitted a preliminary report to the government in this regard.

Source: The Times of India, Chennai

Real estate sector optimistic about coming Budget

While the 2011-12 budget offered a mixed bag to the realty sector, developers believe that very little was extended to them and customers and not enough steps were taken to improve the significance of the housing sector. “Even today the Indian real estate sector has been facing its problems like slowing economy, delay in decision making process, and hike in interest rates,” says Dhaval Ajmera, Director of Ajmera Realty and Infra India.

However, the real estate industry remains optimistic and looks forward to some reforms in the coming budget. The real estate sector is primarily looking forward to the RBI’s intervention to control the inflation which has adversely affected the industry. A sheer relief could be by bringing in affordable housing. “The Government wants to increase more housing stock, but we expect tax exemption for rentals and on profits. For instance, if the flat is less than 1,500 sft, the returns from it should be exempted from income tax,” says G Yoganand, President, CREDAI, Hyderabad Chapter and Chairman, Manjeera Group.

Affordable housing should be considered important with priority lending given to banks who could in return offer concessional costs to keep the cost of tenements within the reach of common man. “The budget should look forward to extending the existing benefit of Section 80 IB (10) of the IT Act for developing affordable housing as the country is still in a huge shortage of tenement,” adds Ajmera.

Last year, one percent rebate was provided for affordable housing costing between Rs 10-15 lakh. Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India is of the opinion that the scope of this rebate should be amplified and broadened to include a wider price band of budget housing so as to boost the flagging sentiments in the housing sector.

Experts are of the opinion that the interest subvention of one percent on home loans could be raised from Rs 20 lakh to 30 lakh due to increase in cost of raw materials and various taxes incurred during home buying. Additionally, allocating more funds to the Rajiv Gandhi Avaas Yojana will do well to the real estate sector.

The real estate industry is also hoping to get an industry status as the sector is a major driver for economic growth and generates countless jobs across its various verticals. As the second largest employer in the country contributing five percent to India’s GDP, Indian Realty deserves a preferred treatment to give a further boost to our economy. Industry status would help the sector to access debt lending at more competitive interest rates and lower collateral values.

“The real estate sector should be granted industry status. It is a big employment generator in the country, and it gets no support from the financial sector. Getting the industry status will improve the sector. The government is moving in the right direction by passing stricter legislations. Also, the relief on income tax should be increased from one lakh, for people who have taken a home loan. Real estate suffers because it is not a priority sector and banks don’t finance real estate projects. However, this year seems better as the market is improving,” says Bimal Kedia, Managing Director, Theme Ambience Constructions.

There is a severe shortage of finance and whatever finance is available is coming in at a huge rate which is fuelling the realty prices and also many a times makes developers scrap the launch of new projects. The real estate industry also expects the Finance Ministry to relax the norms on FDI and ECB, especially for township projects which will give developers source funds at a much reasonable cost. “Relaxing norms for repatriation of FDI in real estate is the need of the hour. Currently, it is not possible for foreign investors to repatriate real estate investment proceeds for a period of three years, which is hampering investment flow into India. The market environment needs to be rendered more investment-friendly,” says Puri.

Meanwhile, an increase in infrastructure spending in urban areas with a view to unlock the value of neglected and hidden land assets in suburban and peripheral districts is expected. “With growing urbanisation in metros, the real estate sector is seeing huge opportunity for creating newer townships. It is vital that the government promotes townships alongside industrial belts and give developers fiscal benefits to township development to entice developers in this segment,” says Ajmera. Additionally, clear guidelines should be announced by government in order to avoid any kind of ambiguity on point of levying Service Tax on under construction projects.

Yoganand adds that considering the fact that nearly 35 percent of sale value of a home consists of various taxes such as excise, VAT, service tax, stamp duty among other things, “we hope that the Budget 2012-13 would bring about appropriate reductions in their tax rates, bring down registration charges to less than five percent to the delight of home buyers who are already burdened with high interest rates on housing loans”.

Source: Times Property, Times of India, Hyderabad

Housing prices projects mixed trend

At a time of slowdown in real estate development, housing prices have more than doubled in three cities of Chennai, Faridabad and Bhopal in four years.

A National Housing Bank report released on Monday said three other cities Jaipur, Hyderabad and Bengaluru recorded fall in prices residential properties.

The Citywise housing price index, NHB Residex, incorporated in 2007 with a base of 100 said June 2011 quarter showed index for Chennai residential property prices have gone up to 248 from base 100 in 2007, which means property prices of metropolitan city surged 148 per cent during the period.

This is followed by city of Bhopal that has witnessed 124 per cent growth; Faridabad comes third with a rise of 120 per cent.

However cities like Jaipur, Hyderabad and Bengaluru have registered a downward trend with 36 per cent, 9 per cent and 8 per cent drop respectively.

“In India land policies have created distortions that have led to inordinate high prices in many key metro cities. In places like Mumbai and Delhi and some large metros, land constitutes 90 per cent of the cost of the house, which signifies we have wrong faulty land policies and with those land policies you cannot have a solution for affordable housing,” said HDFC chairman Deepak Parekh.

The report also revealed that total outstanding housing loans have been growing at a steady pace. While the growth was 21.71 per cent in FY11, it was 20.79 per cent in FY10. Housing finance companies had witnessed a decent growth of 16.12 per cent in FY09.

Meanwhile Reserve Bank of India (RBI) is advocating for inclusion of low cost housing loans under the priority sector-lending category. “We are trying to put housing finance for weaker section as part of priority sector. A committee is looking into it. Hopefully, by the first week of February this report will come,” said RBI deputy governor HR Khan on the sidelines of the conference.

Union Bank of India chairman and managing director MV Nair is currently heading the committee, which was constituted by RBI to look into various issues, related to priority sector lending. Proper documentation and due diligence standards are also under consideration to ensure that loans extended by banks are for the target segment, which need special attention and treatment, the terms of the report said.

The panel will also review current allocation mechanism for Rural Infrastructure Development Fund (RIDF) and other such funds.

“The apex bank is also trying to coordinate with government and market regulator SEBI for developing and broadening the corporate bond market. As much as 40 per cent of the total bank lending is for priority sector including agriculture and small sector industry,” added Khan.

Source: http://www.mydigitalfc.com/news/housing-prices-projects-mixed-trend-448

Demand set to exceed supply in 7 cities by 2015

HYDERABAD: The demand for affordable housing in top seven cities, including Hyderabad, is likely to outstrip supply by 2015, according to Cushman & Wakefield (C&W). The real estate consulting firm in its annual report found that the estimated demand for residential property in cities namely National Capital Region, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata is expected to touch 2.3 million units over the next five years while the estimated supply will be approximately 1 million units, leaving a shortfall of 130 per cent i.e. over 1.3 million units.

* The residential property market is growing at a Compound Annual Growth Rate (CAGR) of 11 per cent and the estimated volume requirement across the country will be 3.94 million housing units, including 2.3 million units in the seven cities.

Interestingly, the gap between demand and supply is likely to be intense in the affordable housing segment, whose demand is growing approximately three times more than the supply.

* "The present economic situation may be viewed as a transitory point for the real estate dynamics in India.

Although, the market looks positive in the medium term with considerable demand, the industry seems to be affected by the rising interest rates, rise in construction costs and inflation.

However, the long-term perspective suggests that the sector will continue to witness demand in all areas,” said Anurag Mathur, MD of C&W.

* While NCR is expected to record the highest demand for over 700,000 units, Mumbai is likely to record the highest CARG of 14 per cent between 2011-15.

Similarly, Bangalore is expected to witness a demand for approximately 2,87,000 units.

"As a result of significant population migrating to tier I cities, these locations are likely to witness highest demand," Mathur explained.

* C&W also anticipates that the demand is likely to exert an upward pressure on property prices especially in markets like NCR, Mumbai and Bangalore where the gap between demand and supply is high.

* "The upcoming supply needs to be priced judiciously," said Akshay Kulkarni, executive director of C&W.

Source: http://ibnlive.in.com/news/demand-set-to-exceed-supply-in-7-cities-by-2015/190377-60-121.html