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

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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

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

'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

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

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

ORR to make a big contribution to Chennai realty growth

Chennai

Chennai was classified a Beta city in the 2010 global ranking index of Globalization and World Cities Research Network. This organization ranks the cities of the world based on various factors including their economics, connectivity, and cultural influence. Some other cities of the world classified as Beta include Cape Town, Manchester, Seattle and Riyadh.

The only other Indian cities ahead of Chennai are Mumbai (Alpha), New Delhi (Alpha -) and Bangalore (Beta +). One of the major criteria that determine growth and influence of a city is connectivity. It was with this view that the planning authorities of the city laid the foundations for a planned network of arterial ring roads in the second masterplan.

With the city’s second masterplan now in full force, the focus for Chennai is infrastructure and the creation of the blueprint that will sculpt the metropolitan region. This plan was originally slated for application in 2002 but finally received approval only in 2007. One of the most important projects is the creation of the Outer Ring Road.

The first masterplan resulted in the formation of the 100 ft Road (Jawaharlal Nehru Salai) which was to serve as the outer ring road fringing the city’s extremities at that point. While this ushered in significant growth in the western side of the city, the link from Taramani to St Thomas Mount was not completed. This was adopted to become the 35-km Inner Ring Road by the second masterplan and is a key connector between significant corridors of growth. Important highways arise from Chennai leading out radially towards Bangalore, Kolkata, Madurai and Cuddalore, with Chennai being a cardinal point in the nation’s Golden Quadrilateral project of highways.

But clearly, the icing on the cake for infrastructure is the creation of the Outer Ring

Road (ORR) in Chennai. “The ORR will be a multi-model transport corridor, 62km in length and it will connect the fringes of the city,” states one of the Chief Planners at CMDA (Chennai Metropolitan Development Authority), “We have set aside 400 ft for development and planned a six-lane highway with some land reserved in the middle for rail facilities. This will be one a firstof-its-kind corridor developed in the country. The main objective of this project is to decongest the city and throw open large urban areas of the metropolitan region to development. We have earmarked spaces for residential, commercial and non-polluting industries to come up along the ORR’s extent, and it closely follows the boundaries of the Greater Chennai Metropolitan Area. This is one of the major projects to regulate development in the second masterplan. Information about this growth is readily available in the website for easy access.”

It is expected that the ORR will open out at least 700 sq km for development. The Chennai Outer Ring Road will run to a length of 62 km connecting Vandalur on NH-45 (GST) in the South-Western edge with Minjur in Thiruvotriyur-Ponneri-Pancheti (TPP) Road in the northern fringe of the city and close to the Ennore Port and other industrial developments in the Northern areas. The road will run via Nazarathpet on NH-4 (Bangalore Highway), Nemellichery on NH-205 (Chennai-Tirupati-Anantpur Highway) and Padayanallur on NH-5 (Chennai-Calcutta). The Vandalur to Nemillichery stretch, a length of 29.65 km, is being implemented as Phase-1 of development. The Tamil Nadu Road Development Company Limited (TNRDC), Chennai has been appointed as Managing Associate for this project.

“Land of 400 ft has already been acquired. Here, a development of 25m+25m of road lanes on either direction is being built with a 22m set aside for future development of a public transit system,” says an official at the TNRDC. “Another 50m of land is being kept on the right side of the road for future development. Phase 1 of the project (Vandalur to Nemillichery) is underway now; the contract was awarded to the GMR group and the tender process is in progress for the construction of the second phase. We expect that at least three interchanges will be complete on this phase by early 2013. There is bound to be easy access and reduction of traffic within the city with the formation of the ORR. A slew of satellite towns is expected to come up too.”

“The ORR, which links four national highways, is expected to provide a significant thrust to the growth of various sectors. The development is planned so as to connect the industrial, manufacturing and IT corridors,” states N Hariharan, Office Director – Chennai, Cushman and Wakefield, major real estate consultants, “The locations along the Outer Ring Road, especially the intersections of the Outer Ring Road and national highways are expected to witness significant real estate growth. These peripheral markets provide the benefit of lower land rates as against the high land costs in the city. The provision for commercial development along the corridor is likely to draw investments; the earmarking of land for future Mass Rapid System or Light Rail Transit is expected to boost connectivity and thereby promote growth.”

He cites the example of Bengaluru and Hyderabad, both of which have witnessed significant growth of late. “Bengaluru and Hyderabad have witnessed similar infrastructure developments that have augmented growth along the connecting corridors. The Outer Ring Road in Bengaluru has fuelled the growth of one of the fastest growing IT corridors. The stretch from Sarjapur to Marathahalli has witnessed significant commercial and residential developments in addition to housing various SEZ developments. Hyderabad has also registered growth on similar lines with the Outer Ring Road becoming operational even as locations like Appa junction, Narsingiand Bandlaguda are seeing increased residential developments.”

The GMR group bagged the 1,100 crore tender for phase 1 of construction in Chennai by emerging as one of the lowest bidders. “The formation of the road is done on a Build-Operate-Transfer model over 20 years to be implemented by the bidders’ own funds,” says the official from TNRDC. “Two and a half years is earmarked for the building of the road and 17.5 years for maintenance during which there will be an initial concession ( 300 crores was the figure for phase 1 received by GMR) and an annuity will be paid every six months till the completion of the 20 years.”

Says N Singiraj, a resident of Selaiyur and a former contractor with the Military Engineering Services, “The Outer Ring Road will be very helpful with direct access. Not only will it foster development in remote areas, traffic and congestion will also be smoothed out. Take Tambaram for instance. After the construction of the overbridge and enhanced connectivity, the area has become less chaotic. Also, the value of the land goes up in places around the project. So, the ORR makes a lot of sense from the real estate and economic standpoints too.”

The city is already a hub for automobile manufacturing, IT, Petroleum refinery, shipping and more. With the Outer Ring Road that promises to transform the city’s landscape, Chennai is all set to metamorphose into a well-connected megapolis very soon.

Source: Times Property in The Times of India, Chennai

Chennai property measuring 1,400 square feet sold for Rs 1.27 crore

KOLKATA

A residential unit measuring 1,195 square feet and located in the upcoming location of Rajarhat was leased by a leading corporate for a monthly lease value of Rs 35,000. Rajarhat has seen growth in the commercial as well as residential sectors.

due to the increasing leasing activities over the last few years mainly due to factors such as proximity to the IT/ITeS hub as well as the quality of construction in that location. Many regional and national players have mid-ranged and high-end projects in the location. The lease market here has seen an increase of 11% over the last year but is being sensitive to extreme price rise.

CHENNAI

A second-generation residential property, measuring 1,400 square feet and situated in Nungambakkam was sold for a total value of Rs 1.27 crore at an average capital value of about Rs 9,000 per square foot. The average value in the location ranges from Rs 6,500 to Rs 11,000 per square foot.

The value has seen an increase of about 2% to 11% over the last six months due to an existing interest in the location as it is in the heart of the city and is also the commercial and retail hub. The location is expected to see the same kind of interest in good-quality residential units. However, since there are not too many new projects, the actual number of transactions will be limited.

PUNE

A high-end residential apartment, measuring 1,805 square feet and located in Kharadi, was sold for a total value of RS 82 lakh. The average capital value commanded by the property was about Rs 4,500 per square foot, well within the range for comparable properties of about Rs 4,000 to Rs 5,000 per square foot.

Capital values in the location have remained stable over the last quarter, but it has seen a 38% increase in values over the last year backed by buoyant demand and conducive economic conditions. Going forward, however, the values are expected to remain stable as Pune remains an end-user driven market and is, therefore, easily influenced by factors like high inflation and tightening home loan rates.

Source: Cushman & Wakefiel