Residential realty prices moving up

Residential real estate prices are going up. In the last three months, prices of affordable apartments have appreciated by around 10%
across the country.

“With improvement in the sentiment in the economy, transactions in the affordable range of residential real estate have gone up. This has made developers to increase prices by 5% to 10% in the last three months,” said Anshuman Magazine, MD of real estate consultancy firm CB Richard Ellis, South Asia.

The developers had cut prices by around 30% in first two quarters of calendar 2009 to revive the demand of residential units, which plummeted to a low due to the global financial crisis. Magazine said the price cut led to some recovery in demand. Enthused by the partial recovery, he said, the developers, who had sold a substantial portion of their projects at hugely discounted prices, decided to increase them marginally in the next phase.

According to an IIFL report, in Mumbai, prices are up 25%-40% from the bottom in early 2009, while in NCR, the corresponding figure is 15-20%. ‘‘Constrained supply and a revival in demand drove up prices in Mumbai, and NCR,” the report said.

In Mumbai, the prices of apartment in Metropolis, being developed by HDIL appreciated by 38% since March to Rs 10,500 per sq. ft. Similarly, the project, Planet Godrej, has become 20% costlier to Rs 25,000 per sq ft in the last six months. In NCR also, many developers like DLF, Unitech, Jaypee Greens, Mahagun and Amrapali among others, have increased prices by around 10% from the launch prices in March-June. In the premium segment also, there is revival in demand, said Vibhor Gupta, senior official of Jaypee Greens. However, the prices have not witnessed any escalation in the premium segment. Similar trend has been noticed in cities like Bangalore, Pune and Chennai.

“The current trend of price escalation can not be sustained as it will affect the demand,” said Aditi Vijayakar, ED of Cushman and Wakefiled, adding, as the demand has revived following interest rate cuts by banks, many developers have announced projects in the affordable range. This will increase the supply and will put pressure on the price rise.

At the same time, another consultant said the financial condition of the developers has not improved to a level that they can hold a project for long. They need cash flow to service the debt, which they have taken to buy lands. The source said the money from other sources like dilution of equity is still not easily available. This has forced developers to depend on the sales proceeds to service debt.

Source:http://timesofindia.indiatimes.com/business/india-business/Residential-realty-prices-moving-up/articleshow/5103968.cms

Despite Slowdown India to Add 40 mn sq ft Office Space This Year

With the economy regaining its momentum slowly, India will add up to 40 million sq ft of office space this year, which will be higher than many other advanced countries, but lesser than China. “Despite the slowdown, India will add highest ever office spaces this year. We will see 30-40 million sq ft of office space coming up in 2009,” global real estate consultant firm CB Richard Ellis Chairman and Managing Director (South Asia) Anshuman Magazine said.

The addition of office space will be more compared to many other advanced countries, except China, he added. Magazine, however, said demand has not picked up yet and the huge supply would lead to correction in rentals. “Prices can further fall in certain pockets depending on how much supply these places can absorb. In other places, prices have almost stagnated,” Magazine said, adding that some locations in Bangalore are likely to see decrease in rentals.

“After 2-3 years when supply will decrease and demand will increase, probably then we will reach at a stage of equilibrium,” replied Magazine when asked about the time by which office-space rentals could stabilise. Although office-space demand has increased in the first two quarters in 2009, Magazine said it would take time for “actual demand to pick up”.

“IT companies are responsible for 80 per cent of the total demand for office locations and these were the most impacted firms during the recession… But next year supply will dip by atleast 20 per cent,” he added. Of the total anticipated supply this year, Mumbai, Bangalore and the National Capital Region will house most of the spaces. “Chennai, Hyderabad, Kolkata and Ahmedabad will also see considerable addition of office spaces,” Magazine said.

Source : http://www.indianrealtynews.com/property-prices/despite-slowdown-india-to-add-40-mn-sq-ft-office-space-this-year.html

After a lull, land deals make a comeback

The slowdown in the property market, induced by the global meltdown and negative sentiments, had dealt a body blow to the mega land deals, in the country. But the gloom seems to be finally lifting. Coinciding with the return of buyer interest in select pockets of residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.

Consider this. DLF Ltd recently made headlines when it walked away with 350.7 acres in Gurgaon, for an estimated Rs 1,750 crore, marking one of the largest land deals in the country. The prime land, on the Gurgaon-Faridabad road, had been put on the block for re-bid after the only bidder in the first round (DLF) had drawn attention to certain difficulties in project implementation.

HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) re-invited bids in July this year with easier terms and conditions, including staggered payment plan spread over seven years. This time, DLF clinched the deal with its winning bid of Rs 12,000 per square metre — two other bidders did not qualify on technical grounds.

The land in the Delhi suburb would be used for development of commercial, residential, sports complexes, and an 18-hole golf course. DLF, however, remains tight-lipped about the project, but sources say that the land deal is “positive” for the company, given its proximity to South Delhi on one side and the existing golf course on the other.

DLF is not the only one going after such transactions. Earlier this year, Anant Raj Industries decided to set aside nearly Rs 400 crore from its cash reserves, to acquire land for upcoming residential projects.

So are the land deals back in reckoning, after a long dry spell? Industry experts believe that land acquisition will gather pace, but will remain largely need-based.

“The market definitely is improving, new projects are being launched and the cash flow, for builders, is getting back in shape on the back of QIP issues and some proposed public offers that are being lined-up,” says Mr Manish Aggarwal, Executive Director, Investment Services, Cushman & Wakefield (C&W) India.

Time to buy

While the conditions are turning positive, the biggest clincher clearly is land valuation. In many cases the land prices have corrected nearly 60-70 per cent, says an industry observer.

Agrees Mr Amit Sarin, Director and CEO, Anant Raj Industries. “It is the best time to buy land — the valuation is a fraction of the 2007-level. Everyone is announcing low cost and affordable housing projects and the main ingredient of low cost in real estate is the land cost, not construction cost,” Mr Sarin points out.

But Anant Raj Industries, itself a zero-debt company, expects land buying to remain selective for a while.

“It is not a trend in the industry. It will happen only in those cases where the land costs are extremely attractive and the builder has a comfortable liquidity position,” he adds.

The company has stayed away from aggressive land buying over the last 2-3 years.

No frenzy likely

Real estate consulting firm CBRE too does not foresee the return of land frenzy seen in 2007-2008. “Companies are not rushing into transactions. They are more cautious and evaluating deals carefully on parameters such as potential for development, location, margins and valuation,” says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd.

Source : http://www.thehindubusinessline.com/iw/2009/08/30/stories/2009083051041500.htm

New Delhi Retail Rentals continue to decline

Country’s capital New Delhi continued to witness a decline in retail rentals of 25 per cent and ranked 69th in rentals among the list of major cities across the world during the first quarter of 2009, according to global real estate consultancy CB Richard Ellis.

Prime retail rentals continued with their downward trajectory worldwide during the period which saw New York maintaining the top slot among cities with high rentals despite a 10 per cent annul decline. New Delhi ranks 69th globally with an average rental of $109 per sq ft each month.

“Demand for retail space has declined in most markets across the world as consumers cut back on spending and unemployment continues to rise in many countries. New Delhi in India saw a 25 per cent decline in a six month period,” CBRE said in its report ‘Global Retail Rents Market View Q1′.

The report said since the end of last year, most major economies barring India and China, have seen significant economic decline. “Rentals in Delhi NCR have corrected further when compared to the beginning of 2008. Retailers feel that rentals have corrected to sustainable levels and are using this period judiciously to take up positions on favourable terms,” CB Richard Ellis Chairman and MD Anshuman Magazine said.

Magazine said rentals are being renegotiated to make retail operations financially viable. “Another trend witnessed during this time is that of developers adopting a renewed stance towards revenue share agreements, as opposed to earlier, when the demand situation was more favourable,” he added.

Among other Asian cities to figure in the list are Hong Kong (ranked number 2 globally), Tokyo (5), Guangzhou (14), Singapore (18), Shanghai (29) and Beijing (35). Globally, New York retained its top slot among the most expensive retail destinations.

“Despite a 10 per cent year-on-year rental decline, New York remains the world’s most expensive retail destination, with rental values totaling USD 1,800 sq ft per annum,” the report said. Buenos Aires (Argentina) saw the largest annual decline in retail rents year-on-year with a drop of 37 per cent, followed by Warsaw (Poland) with a 33 per cent decline and Washington DC with a 26 per cent decline.

Source : http://www.indianrealtynews.com/real-estate-india/new-delhi-retail-rentals-continue-to-decline.html

Premium residential properties again on buyers’ list

There is good news — and it’s coming from above. Across the country, cities are reporting a revival of sales interest in premium residential Land as investment

properties. In many cases, this is happening, even though the values have remained mostly unchanged. A few cities, however, have attributed the revival to a marginal fall in prices.

In the premium segment, most of the interest revolves around main city areas and resale properties. “Yes there is a movement in the premium segment but it still stands lower than in the Rs 30-40 lakh segment. Part of the demand for premium buys is coming from the secondary market and partly from the under-construction properties,” says Anshuman Magazine, CMD of global real estate consultancy CB Richard Ellis.

In fact, this time round it is not speculators but end-users who are bargain hunting. An example is the COO of a leading multinational company in Delhi who had been looking for her dream home for three years within a budget of Rs 1.5 cr. But when she found the 3,000 sq ft apartment within her budget, she did not think twice about putting her money in.

Another buyer bought a property for Rs 18 cr in the upmarket Vasant Vihar area of the Capital for use by his family. This trend has kept realtor Ashok Kumar on his toes as he has done brisk sales in the Rs 3 crore per floor in premium South Delhi areas as well as the Rs 6 crore to Rs 30 crore sales in premium residential areas such as Vasant Vihar, Panchsheel Park, Greater Kailash and Defence Colony areas. In the suburban areas of Gurgaon, per sq ft rates of premium property is between Rs 3,000 and Rs 3,500 on Sohna Road to Rs 15,000 on the Golf Course Road.

The asking rates were about 10-15% higher during the boom. Realtor Ravi Pundir says in Noida, Sectors 93, 50 and 62 have apartments of 1000-9000 sq ft each by developers such as Jaypee, Unitech, Amrapali and Mahagun at Rs 4,400-8,000/ sq ft.

Harinder Dhillon, GM, marketing, Raheja Developers, also agrees that demand in this segment has picked up. “Our Atlantis project in Gurgaon is in the range of Rs 1.5-1.6 cr, which has been seeing a good response. The fact is that end-users have realised that the market has already bottomed out and the price movement from here will only be upwards.”

Brix Research, the research arm of magicbricks.com, has been conducting a series of multi-city surveys to assess the demand of premium housing in the country since December 2008. Multiple sources, including developers, realtors and consumers, have been contacted on a sustained basis to arrive at these conclusions. The survey has found that the premium luxury apartments and bungalow market of Rs 1.5 crore to Rs 3.5 crore and above, has witnessed a revival across India since May 2009.

In Mumbai sale of premium property in areas such as Cuffe Parade, Carter Road, Andheri East, Juhu, Film City Road, Bandra, Pali Hills, Four Bungalows and Juhu Road Versova side did take place, though at 10% rate of transactions at values upwards of Rs 25-30 crore each. Row houses in Bandra and Carter Road areas sold during the reported slump at Rs 2- 2.5 crore each and values are unchanged. A few villa projects in the Royal Challenge area by developers such as Oberois and Rahejas are finding takers at Rs 8-9 crore each. Less premium developers are finding buyers at Rs 6-7 crore each, according to Chandan Chowdhary, a leading city realtor.

In Bangalore, the slump in the market continues. Premium localities along the Ring Road such as Cox Town, Indirapuram and Koramangala, have witnessed sale at 10% lower prices. Transactions have risen from the near zero to about 30-40% of peak numbers at Rs 50 lakh to Rs 1.3 crore, according to city-based realtor Nadim Munjawar. However, in peripheral premium localities such as Whitefield, Electronic City and Sarjapur Road, prices have dipped by almost 30-40%.

In Chennai, in premium areas of Aryapuram, Besant Bagar, East Coast Road, Perungudi, Adyar, T Nagar, Ashok Nagar, KK Nagar and Boat Club prices Land as investment

range from Rs 50-60 lakh to Rs 5 crore and demand has dropped 95%. With values down by 10-15%, transactions have started picking up in luxury apartments, bungalows and individual houses. Local realtor Madhusudanan expects the situation to continue till 2010-11.
In Ahmedabad, luxury apartments of around 2,000 sq ft come at Rs 50 lakh to Rs 2 crore. The rate of transactions are rising. Premium localities include Prahlad Nagar, Science City Road, Vastrapur, Satellite, Mani Nagar, Shahi Bagh, in and around Lajpat Club and upcoming localities such as Sanathan. Major developers in this segment include Pacifica Builders, Goyal, Savvi Infrastructure, Bakeri and Saffal groups. Realtor Anand Varani maintains that premium buyers are not impacted by falling interest rates or dropping property values. Only those scouting in the main city areas are looking for bargains.

In Kolkata, premium properties that have been launched 3-4 months ago, are selling since May-June 2009. Transactions are at 75% of peak numbers, says realtor Sandeep Sen. Transactions in the Rs 70 lakh to Rs 3 crore for 2,000-2,500 sq ft, 3 BHK apartments are taking place. Premium projects are coming up in Ballyganj Circular Road, Guru Sadi Road and Maysir Road. The shine is back in the premium real estate market. So this may be just the right time for you to scout for a good deal!

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Property/Premium-residential-properties-again-on-buyers-list/articleshow/4794274.cms?curpg=2

Surge in demand for office space good for economy

The real estate market has shown a clear sign of revival following the formation of Congress-led UPA government with a clear majority at the Centre.
Apart from the affordable housing sector, which has witnessed a surge in demand, office space too has registered fresh demand, which was almost dormant for last one year, ever since the global economy went into a tailspin.

Commenting on the latest biometrics of the real estate sector in the country, Anshuman Magazine of CB Richard Ellis (South Asia) said, “In the 1st quarter of 2009, confidence and sentiment was low in the real estate market. The formation of a new government has improved market sentiment, while the global economic decline appears to be bottoming out. This has resulted in an improvement in the velocity of office space offtake, especially in the small to medium segments . This is further supported by a substantial decline in rentals in the past one year.”

Surge in demand for office space is a good sign for the economy, and also for the real estate sector. The opening of new offices means investment is likely to pick up, which will help revive the economy. At the same time, it also leads to creation of new jobs, which drives the demand for residential real estate. Normally, the demand for residential space increases by a factor of ten to that of office space.

Because of tough market conditions , coupled with a global slowdown, investments in the economy got badly hit. This resulted in a slowdown in demand for office space all of a sudden, in the last one year. But, the fresh supply of office space continued as buildings launched earlier to meet the expected strong demand for office space were completed during the period, even as the global economy was facing what may be billed as the second worst recession in the last hundred years.

This put pressure on rentals and capital value of office space in the country. In fact, this led to correction in rental rates and brought them down, closer to a more realistic level. CBRE report on office space said rentals in the secondary business district (SBD) of Nehru Place came down to more realistic levels with a correction of around 11% over the last quarter, to Rs 160 per sq ft per month.

Saket, another emerging market in the NCR, received minimal interest from the prospective office space occupiers. But as a huge supply of office space deluged markets in the last three months, the vacancy level in Saket rose to 35% and rental values corrected by around 22%, to Rs 140 per sq ft per month, over that in January-March 2009 quarter.

At Jasola, another promising SBD in the NCR, rental values fell by around 20%, to Rs 110 per sq ft per month due to a huge supply, 1.3 million sq ft during the period. Jasola is likely to benefit from a proposed fivestar hotel, multi-level parking facility and Metro-connectivity.

However, rentals in Gurgaon have not declined much in the last three months as they had already fallen substantially in the second half of 2008. In fact, corrections in the rentals have also helped in reviving demand for office space.

The report says Gurgaon witnessed an increase in the transaction activity, assisted by attractive leasing packages offered by most developers. Companies, the report says, which had postponed their expansion/relocation decisions due to negative sentiment are now ready to take advantage of the softened market and the options available for a phased take-up.

The report says Noida office market suffered heavily as rentals fell by 21%, to Rs 30 per sq ft per month, due to high vacancy levels at around 25-30 %. In fact, in the last one year, rentals in Noida dipped by almost 33%.

However, the positive aspect to all this is that leasing volume has increased by 3-4% in the NCR during the second quarter of 2009. The report says the increasing levels of corporate confidence should help this region and the momentum should be maintained in the second half of the year.

However, rentals in the commercial space market will continue to face challenges due to a large supply of new space, and till the time that the global economy gets back onto the path of recovery, opines Magazine. As rental values declined, the capital value of the property also suffered.

The fall in the capital values, however, has encouraged an increasing number of companies to explore and evaluate opportunities for an outright buy-out rather than leasing the required space. Though there is an improved level of activity in the sector, the markets are expected to remain soft in the short to medium term.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Surge-in-demand-for-office-space-good-for-economy/articleshow/4791799.cms

Office space transactions up as rentals dip

The post-election optimism has percolated to office real estate market too. With substantial decline in rentals over the past one year, transaction volumes have picked up in the commercial realty market.

According to a report by CB Richard Ellis, enquiry and transaction levels have on an average shown a marginal increase over the last three months. Transactions have picked up, for instance, in Bandra Kurla Complex (BKC) and the central Mumbai areas of Lower Parel and Worli. However, vacancy levels still continue to remain high which, the report predicts, will continue to stop rentals from increasing in the near future.

For instance, as compared to the first three months of 2009, in the months of April-June vacancy levels in Nariman Point increased to 17%-18% while the rentals dipped by 14%. This was mostly because existing occupants here chose to relocate to the central Mumbai to bring down their outgoings on rentals during the recession. Similarly, rentals in central Mumbai are expected to decline further with a slew of under-construction office projects expected to bring in a supply of 3.5 million sq ft by early 2010.

Rentals have declined the most in the Andheri-Jogeswari belt by 17% owing to traffic snarls caused by the construction work for the Metro. The most affected by the slump over the last three months are IT industry hubs. The slowdown in this sector has brought down office space transaction in the areas of Malad, Powai, Thane and Navi Mumbai.

“The Union Budget did not announce any incentives for the real estate sector which would have given an impetus to industry during these times. However, the focus in infrastructure in the budget will help the real estate sector in the long run,” said Anshuman Magazine, chairman and managing director, CB Richard Ellis. He added that while transactions have improved, the movement is mostly in smaller format offices with vacancy levels still high in larger spaces.

“Most developers have deferred plans for project launches, the focus being on using their scarce resources on completing the projects in hand,” said Magazine.

Source : http://www.indianexpress.com/news/office-space-transactions-up-as-rentals-dip/489212/2

Delhi and Mumbai Dominate Residential Market

The rest of India almost doesn’t matter – at least when it comes to realty. Think property and you think capital Delhi and financial capital Mumbai. These two metros, along with their suburbs, comprise the largest pie of real estate in the country. No surprise that they are undoubtedly the most sought after destinations for an investor looking at attractive residential locations. These markets are significant from the perspective of sheer administrative strength and as centres of business as well as growth. And numbers bear out this fact as well. According to Rajiv Sahni, partner, real estate practice, Ernst & Young, while in terms of office space absorption, NCR comes second after Bangalore, it commands nearly 35% share of the top 8-10 residential markets in India. Mumbai comes second, with a 15% share of residential market.

So which are the best places to invest in Delhi and Mumbai? Aditi Vijayakar, executive director, residential services India, Cushman & Wakefield, advises that investments should usually be targeted towards destinations that have a stronger prospect of appreciating in the future, offer leasing potential and have the inherent strength to sustain demand. “Locations such as central Mumbai (Parel, Mahalaxmi), Bandra (West & East), Kalina and JVLR in Mumbai and NOIDA-Greater NOIDA expressway, Indirapuram, Golf Course extension road, in Delhi offer such opportunities. They are ideally located from the perspective of accessibility and have growing commercial hubs in the vicinity. These are emerging as strong changing markets.” Aditi adds that as far as return on investment is concerned, these will vary depending on projects, acquisition cost, leasing potential, supply pressure, promoter’s brand equity and maintenance quality. “Average returns from rental may vary from 4% to 6% and capital values may appreciate at the rate of 8% to 10% per annum. Returns are dependent on the capital and rental value cycle and currently both values have dipped given the economic environment.”

What also makes these cities attractive for owning a residential space is the fact that they are buzzing with economic activity. According to Anshuman Magazine, CMD, CB Richard Ellis, a lot of improvement has taken place in these cities in terms of business opportunities and infrastructure which makes them extremely viable destinations. Developers also agree that Gurgaon and Indirapuram are attractive markets in Delhi NCR whereas it is Navi Mumbai, Vasai, Virar, and Kandivali in Mumbai which will see increased development.

Says Harinder Dhillon, GM, Marketing, Raheja Developers, “These two markets make up at least 30% of the entire market. Gurgaon is lucrative due to the upcoming developments in accordance with the new Gurgaon masterplan. The Indirapuram area and beyond will remain in demand because of the revised floor area ratio (FAR) and population density norms. In Delhi, the areas under new master plan which will open up under the new R zone such as Chattarpur, Nangloi, Alipur, Najafgarh blocks will see heightened activity. In Mumbai, it is Navi Mumbai, Vasai, Virar, Kandivali which are likely to witness hectic transactions in the near future.”

“If one is looking at the futuristic development of the place, then places in Ghaziabad are NH24 and NH58, and if you move further then Faridabad is also coming up well. Some of these places might look deserted but think of places like Dwarka some 10 years back. It is now in demand primarily because of infrastructural developments. In the financial capital, locations such as Navi Mumbai and Thane are attractive,” he says. Some are of the view that the genesis of Delhi and Mumbai is different altogether as one is a political centre and the other a business hub. Brijesh Bhanote, senior V-P, sales and marketing of The 3C Company, a Delhi-based real estate firm feels that as the cost of construction and land prices in Delhi are relatively lower than Mumbai, hence return on investment could be better in the capital.

A few things should, however, be kept in mind while seeing the investment potential of a given location. Various aspects such as infrastructural developments, connectivity, power, roads etc should be considered so that one can get maximum returns of the investment. “Neighbourhoods with a strong employment base, proximity to educational, health and shopping centres, ideal external connectivity through mass transportation system, closeness to golf course and natural garden are essential features of a property having appreciation potential. If such a property is backed by a developer having reputation for high quality construction, it is destined to give handsome return on a medium to long term basis,” says Rajeev Rai, vice-president, corporate, Assotech.

With developers coming up with many projects in and around new developments in Delhi NCR and Mumbai, you can expect a lot of supply in these cities in the near future. But do study the pricing basics and micro examine the investment potential of a given location in these two real estate markets. Make a good choice and be sure of a profitable bargain.

Source : http://www.indianrealtynews.com/real-estate-india/delhi/delhi-and-mumbai-dominate-residential-market.html

Delhi, Mumbai command 50% of top residential markets

The rest of India almost doesn’t matter – at least when it comes to realty. Think property and you think capital Delhi and financial capital Mumbai. Land as investment

These two metros, along with their suburbs, comprise the largest pie of real estate in the country. No surprise that they are undoubtedly the most sought after destinations for an investor looking at attractive residential locations.

And not without reason. These markets are significant from the perspective of sheer administrative strength and as centres of business as well as growth. And numbers bear out this fact as well. According to Rajiv Sahni, partner, real estate practice, Ernst & Young, while in terms of office space absorption, NCR comes second after Bangalore, it commands nearly 35% share of the top 8-10 residential markets in India. Mumbai comes second, with a 15% share of residential market.

So which are the best places to invest in Delhi and Mumbai? Aditi Vijayakar, executive director, residential services India, Cushman & Wakefield, advises that investments should usually be targeted towards destinations that have a stronger prospect of appreciating in the future, offer leasing potential and have the inherent strength to sustain demand.

“Locations such as central Mumbai (Parel, Mahalaxmi), Bandra (West & East), Kalina and JVLR in Mumbai and NOIDA-Greater NOIDA expressway, Indirapuram, Golf Course extension road, in Delhi offer such opportunities. They are ideally located from the perspective of accessibility and have growing commercial hubs in the vicinity. These are emerging as strong changing markets.”

Aditi adds that as far as return on investment is concerned, these will vary depending on projects, acquisition cost, leasing potential, supply pressure, promoter’s brand equity and maintenance quality. “Average returns from rental may vary from 4% to 6% and capital values may appreciate at the rate of 8% to 10% per annum. Returns are dependent on the capital and rental value cycle and currently both values have dipped given the economic environment.”

What also makes these cities attractive for owning a residential space is the fact that they are buzzing with economic activity. According to Anshuman Magazine, CMD, CB Richard Ellis, a lot of improvement has taken place in these cities in terms of business opportunities and infrastructure which makes them extremely viable destinations.

Developers also agree that Gurgaon and Indirapuram are attractive markets in Delhi NCR whereas it is Navi Mumbai, Vasai, Virar, and Kandivali in Mumbai which will see increased development.

Says Harinder Dhillon, GM, Marketing, Raheja Developers, “These two markets make up at least 30% of the entire market. Gurgaon is lucrative due to the upcoming developments in accordance with the new Gurgaon masterplan. The Indirapuram area and beyond will remain in demand because of the revised floor area ratio (FAR) and population density norms. In Delhi, the areas under new master plan which will open up under the new R zone such as Chattarpur, Nangloi, Alipur, Najafgarh blocks will see heightened activity. In Mumbai, it is Navi Mumbai, Vasai, Virar, Kandivali which are likely to witness hectic transactions in the near future.”

Agrees Vijay Jindal, CMD, SVP Group who says that some of the best places to invest are in Delhi NCR and the new developments in Mumbai. Land as investment

“If one is looking at the futuristic development of the place, then places in Ghaziabad are NH24 and NH58, and if you move further then Faridabad is also coming up well. Some of these places might look deserted but think of places like Dwarka some 10 years back. It is now in demand primarily because of infrastructural developments. In the financial capital, locations such as Navi Mumbai and Thane are attractive,” he says.

Some are of the view that the genesis of Delhi and Mumbai is different altogether as one is a political centre and the other a business hub. Brijesh Bhanote, senior V-P, sales and marketing of The 3C Company, a Delhi-based real estate firm feels that as the cost of construction and land prices in Delhi are relatively lower than Mumbai, hence return on investment could be better in the capital.

A few things should, however, be kept in mind while seeing the investment potential of a given location. Various aspects such as infrastructural developments, connectivity, power, roads etc should be considered so that one can get maximum returns of the investment.

“Neighbourhoods with a strong employment base, proximity to educational, health and shopping centres, ideal external connectivity through mass transportation system, closeness to golf course and natural garden are essential features of a property having appreciation potential. If such a property is backed by a developer having reputation for high quality construction, it is destined to give handsome return on a medium to long term basis,” says Rajeev Rai, vice-president, corporate, Assotech.

With developers coming up with many projects in and around new developments in Delhi NCR and Mumbai, you can expect a lot of supply in these cities in the near future. But do study the pricing basics and micro examine the investment potential of a given location in these two real estate markets. Make a good choice and be sure of a profitable bargain.

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Property/Delhi-Mumbai-command-50-of-top-residential-markets/articleshow/4739137.cms?curpg=2

‘Mumbai 6th most expensive office market in world’

With decline in rentals, Mumbai has become lesser expensive for office space, but remains at the sixth position among the world’s costliest office markets, a report has said.

According to a report on global trends of office spaces by real estate consultant CB Richard Ellis, Mumbai fell to 6th position from 5th in the list of the world’s most expensive office markets, which is topped by Tokyo.

“This ranking highlights the decrease in rentals we have witnessed in the last six months due to a reduction in demand. To reduce office occupancy costs further and facilitate more supply of office space, we need to urgently improve our infrastructure and amenities. This would bring our world rankings down further and make India more competitive,” CBRE Chairman and Managing Director (South Asia) Anshuman Magazine said.

However, the National Capital’s ranking rose to 12th place mainly due to shortage of prime office complexes in Delhi. It had occupied 13th position in the consultant’s last findings in November, 2008.

Magazine said Mumbai’s ranking among the top 10 expensive markets and Delhi being at the 12th place reflect the shortage of office space in India.

The average annual rentals of Mumbai and Delhi stood at $131.04 per sq ft and $86.94 per sq ft, respectively as on March 31, 2009.

The list, which has been compiled taking into consideration 50 important cities across the world, has been topped by Japanese capital Tokyo’s Inner Central locality with a rental of $183.62 a year in each sq ft.

The other places that found berths in the top of the list include London (West End), Moscow, Hong Kong (Central Business District) and Tokyo (Outer Circle).

Dubai, Paris, London (City), Dublin and Abu Dhabi also got their slots in 7th, 8th, 9th, 10th and 11th places, respectively, CBRE said.

Some of the prominent cities, which were expected to be in the top of the list, but did not, are Singapore (15th), New York (21st), Madrid (24th), Shanghai (25th), Munich (37th), Los Angeles (45th), Washington DC (47th) and Beijing (50th).

“In many cases, major global office markets have seen occupancy costs fall by 20 per cent or more over the last 12 months. Across the 170 cities as a whole, office occupancy costs fell 2.8 per cent over the 12 month period ending March 31, 2009, compared with an increase of 8 per cent in the 12 month period ending September 30, 2008,” the report said.

Singapore had the largest year-over-year decrease in occupancy costs with a drop of 34 per cent, the consultant pointed out.

Source : http://www.business-standard.com/india/news//mumbai-6th-most-expensive-office-market-in-world//63766/on

UPA’s Second Round Can Benefit Realtors

Formation of a stable government at the centre is good news for economy, and for real estate sector as well. On top of that, the mandate for continuation of the Manmohan Singh government without too many constraints, this time round, as opposed to the last term when it was hemmed in by the powerful Left allies, will provide further fillip to growth, say consultants, developers and economists. The relative freedom of the government to manoeuvre this time, visa-vis its small allies, will enable it to take pro-market measures, which it could not earlier because of the opposition from its Left allies and other parties on whose support it was dependent for its survival. But with a clear mandate now, CMD of Parsvnath Group Pradip Jain says the country will come out stronger from the present economic crisis. His hopes emanate from the expectation that the government will introduce favourable policies for all the industries and sectors , which would help the country forge ahead. He says a stable government will inspire positive sentiments among the masses, which in turn would help in the overall growth.

Anshuman Magazine, CMD of CB Richard Ellis South Asia Pvt Ltd, says the outcome of the elections means continuity, stability, and hopefully the government would take faster and more aggressive decisions to stimulate the economy for a higher growth. This obviously will have a direct impact on the real estate sector. “We have already seen some movement in the realty market since last month and with these election results the sentiment will improve significantly, giving confidence to corporates/industry, investors, occupiers and the public at large,” he says. Industry feels that the new government will take special measures to bring down the interest rates further to enable the common man to buy houses. Reduction in the interest rates by two percentage points now will bring down the EMI on a similar earlier loan for 20 years by 13%.

In a report , IDFC said that with a strong and stable government at the centre, the probability of recovery in the economy in the second half of 2009-10 has increased. With banks getting back to the aggressive lending and improved sentiment, pick up in the real estate should also pick up. Additionally, it further said, with developers focusing on affordable housing, demand momentum in the real estate sector would resume as growth in the economy returns. “In the initial phase though, we expect volumes to gather momentum primarily due to: 1) Reduction of prices by developers across properties to fit customers wallets, and 2) Restructuring of debt leading to a better capital structure.

However, to bring back the high growth in the sector, Rohtas Goel president of Naredco, who is also CMD of realty major Omaxe Ltd, said the government must accord infrastructure status to the residential units having an area of 900 sq ft or less. To get benefit on such units, the minimum number of units should be 100. At the same time, he said the government should reintroduce the concession under section 80IB(10) to promote affordable housing. Under this act, profit earned in a project to build small apartments is not taxed. The provision was withdrawn in 2007. To make the scheme a success, Goel also suggested that government should relax norms on the permissible area, which can be constructed on a given piece of land. It should also increase the number of flats that can be constructed on a given area.

Goel also demanded that tax deduction against the interest payment on home loan under Section 24 should be increased, from the current Rs 1.50 lakh to Rs 3 lakh, for a self-occupied house. He also suggested that tax benefit should be given from the year the loan is taken from banks rather than after taking the possession of the house. Calling for liberalization of the foreign direct investment norms in the real estate sector, he pointed out this would increase the supply side and help in bringing down prices for the benefit of endusers. Vijay Jindal, CMD of SVP, also welcomed the new government saying that a stable government was good news for the sector. The sector, he averred, needs a clear-cut policy and an industry status like other related sectors, like cement and steel. Luckily, as Jindal points out, the policy thrust of Manmohan Singh government is on infrastructure development as a tool to reverse the slowdown in the economy. This augurs well for the real estate sector as well. Added thrust to the development of infrastructure like roads, electricity, sewage disposal and water supply in the country would make more and more land available for housing development.

The main challenge today lies in providing housing solutions for all segments. To make this happen, he says, the government should move out of city centers and develop infrastructure in the countryside and Tier II & III cities. At present, because of lack of infrastructure, real estate projects can be developed only in existing townships, and these are already overcrowded. The emphasis should be on creation of new areas with infrastructure and civic amenities, rather than lumping all further development in existing urban centres. To expedite the activities in the infrastructure sector , the government should introduce single-window clearance facility and make every thing online so that processing becomes much easier. Jindal says this will also reduce the cost of development, which would ultimately benefit customers. Another important issue is the rationalization of stamp duty across all Indian states. S K Sayal, director & CEO of Alpha G: Corp Development Private Limited, hopes the new government will bring in clarity to the foreign direct investment (FDI) policy in retail sector. The real estate industry requires liberalization in the retail sector for the much needed fillip, especially now when the sector is reeling due to an unprecedented slump.

Source : http://www.indianrealtynews.com/real-estate-india/upa%e2%80%99s-second-round-can-benefit-realtors.html

Luxury Homes a Nightmare as Realty Undergoes Worst Phase

When the rich get less rich, lavish lifestyles turn into a bad dream. Wide-ranging influences, from shock at sudden economic strains to the rise of simpler living, have shrunk blue-ribbon realty consumption. Million-dollar realty transactions, which used to be routine in big cities such as Mumbai and Delhi, have all but disappeared. Property brokerage firms point out that the once-tony suburbs of the Capital have been hit the hardest. “Million dollar transactions or deals worth Rs 5 crore are seeing a dip of around 50% in Noida and Gurgaon due to very limited supply,” says Pankaj Jain, executive director of Realistic Realtors, a North Indian real estate consulting firm. But according to property brokers, swish locations such as Vasant Vihar, Shanti Niketan and Anand Niketan are still holding up due to the pent-up demand for independent floors. “Over the last two quarters million dollar transactions in these locations have seen a spurt of around 20%,” adds Jain.

He also points out that cash rich cities such as Chandigarh are seeing only a few such transactions in prime areas like Panchkula and Mohali. “The dynamics of the Chandigarh market are very different. The holding capacity of these areas is quite good. However, owing to the tight supply, only a few transactions are being witnessed in this value,” he mentions. Even Mumbai, which boasts some of the most costly addresses in the country, is not faring any better. Other than a slim demand in areas such as Cuffe Parade, Lower Parel, Bandra and Worli, million-dollar real estate transactions in the City of Dreams are now far and few. “The supply is always limited, with only a few choosing to go for this segment,” says Rajeev Talwar, executive director of DLF.

Agrees Niranjan Hiranandani, MD of Hiranandani Developers, who feels that the mid and lower rung segments are in the limelight now. “There are not too many such big ticket transactions happening in Mumbai as of now,” he reiterates. “It’s a high price zone and the market for that is limited in the current scenario.” And down South, demand for $1m houses is also rather low. Says Anshuman Magazine, CMD, CB Richard Ellis, South Asia: “Jubilee Hills and Banjara Hills in Hyderabad are seeing an overall decline in such transactions. Similar is the case with Chennai in areas such as Boat Club and Poes Garden.” According to Mr Magazine, it’s also the nervous sentiment that is persuading buyers to postpone their purchase. “Since a lot of the demand in Hyderabad comes from senior IT executives, they are holding back due to uncertainty in the job market,” he adds.

Also, in Chennai, for instance, many independent houses that would roughly cost Rs 5 cr and above are owned by people who have inherited either the land or the entire property. In Bangalore, demand for such luxury apartments is also low owing to the erosion of demand from the market. However, according to Cushman & Wakefield, Bangalore is more important than Chennai and Hyderabad in the South for investment or purchase of property tagged at million dollars due to stronger economic fundamentals. The trend in Kolkata too is no different. Brokers say the million transactions in the City of Joy are to the tune of 1-2% in areas like Ballygunge and Alipore with a buyer profile mainly consisting of businessmen. “Kolkata is no Delhi or Mumbai. The fastest selling price bracket in the city is in the range of Rs 25-40 lakh. Areas such as Alipore and Ballygunge are saturated now. Fresh development in these areas is impossible,” says Venugopal Sampath, Eastern India head of allCheckDeals.com, a realty brokerage firm.

So what all can a million dollars do for you? While it will offer an independent residence for you in posh locations in Chennai, Hyderabad and Bangalore, metros such as Mumbai and Delhi will mean living in upper class suburban locations if you don’t prefer build-up floors. As per C&W, while locations like Lower Parel, Mahalaxmi, Prabha Devi and even further north in areas such as Juhu and Bandra have the potential to offer residential units costing roughly $1mn. In NCR many ‘gated community’ projects in the peripheral locations of Gurgaon and Noida are available in this bracket. However in Chennai, residential units with a price tag of $1mn will help you snap up luxury residences such as free hold bungalows and high-end condominiums in sizes varying from 4,500 sq ft to 6,500 sq ft in locations such as R A Puram, East Coast Road and Poes Garden among others. In Bangalore, some new high-end residential projects would be available at this cost in areas such as Richmond Road, Lavalle Road and Sankey Road. These apartments would range from 3,700 sqft-6,000 sq ft, with 3-4 bedroom units. So now you know where to make the most out of your million dollars.

Source : http://feedproxy.google.com/~r/Indian-Realty-News/~3/Ey_JCou5_F4/luxury-homes-a-nightmare-as-realty-undergoes-worst-phase.html

Indian developers, retailers address new market realities

It’s no surprise that she shakeout in the real estate sector has hit India’s burgeoning retail segment as well. But even as the great shopping  experience in India hits a few road blocks, this could actually be a blessing in disguise. Retail formats are fast changing to suit market dynamics, even as profitable developer-retailer partnerships are being forged to meet aggressive sales targets. In fact, it is value retail that is emerging as the key buzzword in retail strategy and operations.

Shubhranshu Pani, MD, retail, of global real estate consultancy Jones Lang La-Salle Meghraj (JLLM) feels that retailers are now making their formats smaller, both to stay in tune with the modified demand and to factor in the elimination of certain product lines that have not been doing well.

“After the economic downturn, hypermarkets have tried to become more self-sufficient by stocking up on products that were previously sourced from FMCG suppliers. In apparel retailing, we have witnessed decreased selling costs and therefore margins in order to boost purchase. Sales have become far more popular than during the boom years, with hitherto unheard-of discounts of up to 60-70%. Promotional activities in malls have been stepped up, as has the presence of value retail brands such as Koutons and Liverpool,” Mr Pani says.

Probably it’s not a change in the profile of shoppers, or even a sharp drop in footfalls across markets and malls that is the big concern for retailers in the slowdown scenario. Says Prasenjit Roy, founder & CEO of In-store Consulting, a leading shopper research firm, “What is likely to be hit are conversions and average ticket size. Lesser shoppers will buy and those who buy may buy less or downgrade.

Even as the onslaught of summer will result in a drop in footfall in many cases this will also boost sales of some categories such as refrigerator and air-conditioners, which were hit last year due to a not-so-hot summer. In FMCG categories, liquid refreshing beverages such as soft drinks and water, will also sell more.” He also predicts that this slow-down will bring certain segments of shoppers alive such as those looking for bigger and better deals and more choices or new arrivals etc.

Of course, it’s not just retail formats and buyer profiles that are changing. Retailers and developers have drawn up effective strategies to meet the slowdown challenge. The trigger to this is the fact that nearly 25 million sq ft of retail space has been blocked (lying unconstructed) across the top seven cities. Most in the industry believe that the biggest problem is an oversupply of retail space.

The result is that many developers, who till sometime back were not ready to even negotiate prices, are now offering discounts and freebies to attract tenants. Majority of the developers across the country have lowered the common area maintenance charges that include facilities like air-conditioning, toilets and general space upkeep. This constitutes almost half of the rentals paid.

Today footfalls and revenues are as much a concern of the developer as of the retailer and mall management and promotion, is a bigger concern of developers who are taking a more active part in the planning and implementation of mall activities to garner footfalls. Many retailers faced with lower-than-expected footfalls in many malls, are looking to bring at least 20% to 30% of their total stores under revenue-sharing model with mall owners or real estate developers in two years’ time. The model, under which retailers share a percentage of their sales with real estate companies, is seen as a fair way of sharing risks between the two stakeholders.

“The best practices are coming out now. Revenue share model, zoning, clarity on super carpet, nature of contracts with both sides more in partnership as against a one sided contract are now gaining momentum.Its all getting rationalized with developers and retailers both commencing a partnership approach with each other,” feels Vikas Gupta, CEO and MD, Lacoste India.

According to a McKinsey report at present there are about 10% to 15% of the stores are under revenue sharing model in the organised retail industry,  which is only 5% to 7% of the country’s estimated retail market of $350 billion.

Says Yogi Arora, chairman Aarone Group and promoter of Select City Walk in Delhi: “We take minimum guarantee or between 1.5% to 25% of net sales from our tenants depending upon their format. Mobile retailers pay between 1-1.5% of their net sales where as fashion apparel, food and beverages retailers pay between 12 and 25% of their revenues.”

Even as the retailers and developers tweak their existing arrangements to try and cut losses, any dramatic change in the retail formats may not really be on the cards. Says Anshuman Magazine, chairman & MD, CB Richard Ellis, South Asia: “Mall formats from a real estate perspective have not seen any significant change. What we have seen is a change in the leasing models within these as well as new malls expected to open within this year. Given the current economic slowdown, retailers are looking for partnership relationships rather than a tenant landlord equation. Developers on their part are also making an extra effort to understand brands and further evaluating the survival potential of the brand that they are partnering with.”

Meanwhile, in certain micro-markets many retail spaces saw conversion into office space for quick revenue returns due to continued and increasing demand for office space in certain micro markets. This trend is expected to continue to the coming few quarters too.

Across the spectrum everyone believes that there is no better time than this to do a reality check and infuse more accountability into the system. Says Rajan Malhotra, president, Retail Strategy, Future Group: “We have in a way, rebooted to the year 2001 of doing simple things and conserving cash resources. It is just a mis-match of demand and supply in the retail real estate business. This is a good thing that has happened as we are now back to the basics again.” The Future group’s focus right now is on giving back to the consumer. High-ticket promotions have been halted for the time being and the whole effort is on making the back-end operations more efficient.

Others such as Vishal Retail are looking at resizing stores and reducing the number of stock keeping units (SKUs). “It’s more of an educational period right now where every aspect of retail is closely being looked at. Earlier, everyone was in expansion mode, but now everyone is more concentrated on making the best of what they have. The value retailers, clearly, are mainly the ones being able to sustain themselves at this time,” says Ambeek Khemka, group president, Vishal Retail.

Mr Pani adds that developers have now reduced their rents to values that businesses can afford. “Stores have been right-sized to streamline with the current scenario. The focus has now been taken off geographical expansion and instead been trained on the strengthening of market presence on established and familiar turfs.” Agrees Roy of In-store: “Retailers are now becoming more accountable beyond fancy interiors and air-conditioning to the real issues such as back-end services and shop-floor skills.”

Sunday ET and Cushman & Wakefield tracked more than 15 retail markets across the country where rentals have gone down in the last couple of quarters. The prominent ones that witnessed retail rental correction are Goregaon and Linking Road in Mumbai which recorded a correction of 42% Q-o-Q in Q1 2009 followed by Kankaria Lake in Ahmedabad which saw a correction of 36% over the previous quarter. NTR Gardens in Hyderabad also witnessed high rate of correction in rental values at 29% over the previous quarter. In the NCR market, Khan Market saw a dip of 10% and South Extension registered a dip of more than 20%.

Says Rajneesh Mahajan, ED, retail services Cushman & Wakefield: ”While most of the established retail micro markets had reached high price points by the beginning of 2008, majority of them witnessed substantial corrections by the fourth quarter of 2008. In the first quarter of 2009, there were further signs of softening and many markets are witnessing a major price correction. In 2008, there was a mall supply shortage of 54% from the anticipated supply essentially contributed by slow retail demand and lack of funds.”

Not every retailer, however, will root for ‘value retail’ even in the present context. B S Nagesh, customer care associate and MD, Shoppers’ Stop feels that India has gone a little too aggressive on the value notion for consumers. He advocates a positive environment and cheer instead. “The customer is also looking at cheer to get away from all the doom. The environment needs to be positive. For instance, we have makeovers in our cosmetic section. We are also having a desi festival in our ethnic wear section. The whole idea has to be of creating a shopping experience for the consumer. Our primary focus right now is to maintain our retail sales level and cut costs,” he says.

And while it’s time for all major players to start pulling up their socks, the retail sector still has enough reason to cheer. A CB Richard Ellis report, which maps the global footprint of 280 of the world’s top retailers across 67 countries, puts India at 39th position on a list of most preferred destinations to establish operations.

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Special-Report/Indian-developers-retailers-address-new-market-realities/articleshow/4477739.cms?curpg=2

Price negotiations begin as commercial rents tend southward

The move comes as demand for commercial space across India, and especially in central Mumbai has shrunk, resulting in a fall in prices

Bangalore / Mumbai: After two failed attempts to pre-sell its Hafeez Contractor House development in central Mumbai over the past two years, real estate developer Orbit Corp. Ltd has decided to build premium residences instead of corporate offices on the 250,000 sq. ft property.

Central business districts have been hit most, say property consultants. The move comes as demand for commercial space across India, and especially in central Mumbai has shrunk, resulting in a fall in prices.
“There would be no takers for expensive commercial property in Lower Parel in such a negative scenario, so we had to think of a different format. Also, we realized that demand in the residential segment is more than (in the) commercial space,” said Pujit Aggarwal, managing director of Orbit.

Property prices and rents for commercial space have dropped hard—between 25% and 35%—in the first quarter of 2009 across seven Indian cities, including the metros, primarily as financial and technology firms pare real estate expansion and give up excess space to curb expenses, realty services firm CB Richard Ellis says in its April report.

The fall in commercial property prices is also because of a fresh supply of 11.5 million sq ft. of space in the same period, outstripping absorption of 5.78 million sq ft., property advisory Cushman and Wakefield India says in its April report, based on a survey of eight major cities. “Liquidity for the real estate sector is not going to improve for the next two-three quarters and commercial properties will be battered the most,” said Sunil Rohokale, executive director of ASK Investment Holdings Pvt. Ltd, which is raising a Rs500 crore domestic real estate fund.
And central business districts have been hit the most, say property consultants.
Connaught Place in New Delhi, the city’s central business district, saw a rise in vacancies as tenants relocated to cheaper properties in the city. And in Mumbai, around 350,000 sq ft. of space is going abegging in premium buildings such as Free Press House and Maker Chamber VI in Nariman Point, the country’s oldest business district.
Other parts of Mumbai haven’t been spared either. Lower Parel, also the heartland of Mumbai’s defunct textile mills, has seen the sharpest quarter-on-quarter fall in rents for office space—37% in the first three months of this year —Cushman and Wakefield says in its report.
Office rentals in Worli and Bandra-Kurla Complex (BKC), two other business hubs in the city, fell by 37% and 29%, respectively, during the period, adds the report. And the National Capital Region that includes New Delhi recorded its highest fall of 17% in rentals in three years.
“As rents keep going southwards, in the coming quarter, we will see tough negotiations between tenants and developers to bring down rents further,” said Kaustuv Roy, an executive at the tenant strategies and solutions practice at Cushman and Wakefield. While rents in the commercial sector were declining since the last quarter of 2008, Roy forecasts a further 15-20% fall over the next six-eight months as more office space becomes available. The first quarter primarily saw companies renegotiating prices, deferring taking up space and re-evaluating their expansion plans, he added.
“Negotiations are on rental, property tax, maintenance cost and car parking,” said the head of a financial services firm, asking not to be named. As new tenants negotiate prices, existing tenants will want to renegotiate prices, said an expert.

Source : http://www.livemint.com/2009/04/23221339/Price-negotiations-begin-as-co.html

Real estate down but not out

NEW DELHI: If you go to a property broker as a buyer, he’ll quote high. But haven’t prices fallen? Nah, he’ll say, only marginally. Go to him as a  seller and he’ll tell you it’s a depressed market and quote a ridiculously low price. So, which is true?

A bit of both, actually. Property prices are down but haven’t really crashed. Not yet and not at least in metros such as Delhi and Mumbai. But new properties on a city’s periphery are going relatively cheap — often by as much as 25-30% than the asking rate three months ago.

Developers are throwing in sops other than lower prices to get buyers interested. Some are even offering the undertaking of another rebate if prices fall further. They say the fish is finally beginning to take the bait – buyers have started coming in the past couple of weeks.

So, can prices fall any further? Perhaps, by another 5-10%, but there’s no crash coming. At least, that’s what real estate consultants say.

Anshuman Magazine, managing director of CB Richard Ellis, South Asia, says, ‘‘Actually, the property market could be bottoming out, particularly for new apartment projects”. But how are developers able to cut prices? Partly by cutting the fat profit margins that the real estate industry had got accustomed in the last four years and partly by sleight of hand. Market trends in the last couple of weeks suggest there is demand if developers sell their apartments for 25%-30% less than the going rate in the area.

Source : http://timesofindia.indiatimes.com/Business/India-Business/Real-estate-down-but-not-out/articleshow/4419198.cms

Realty projects in NCR to be delayed due to sluggish rentals

NEW DELHI: A host of under-construction projects in the capital and the NCR are likely to get delayed by over an year or may be ceased completely  due to drop in rental demand, global real estate consultant CB Richard Ellis said on Sunday

“Several under construction projects are expected either to be delayed by over 12 months or halted for lack of leasing,” a CB Richard Ellis report said.

The year 2009 is expected to be challenging with credit turning tight, buyers disappearing, higher expectations in terms of ‘better deals’ and sluggish business models across sectors, the report said.

The Central Business District (CBD) of Connaught Place witnessed enhanced levels of second hand space as a result of tenants relocating to more cost- effective destinations, it added.

The average rental in CBD has declined to Rs 285 per square feet from December 2008 to Rs 245 per square feet in March 2009.

The report observed, with more malls becoming operational in the Saket District Centre, basic infrastructure, which was already undeveloped in the first place, is getting increasingly stretched due to enhanced traffic flow, poor access roads and insufficient parking space, all have added to the infrastructure woes. MORE

With the IT and financial sector facing the heat of the economic downturn, the real estate activity in Gurgaon continues to be slow. Gurgaon is a hub of IT companies.

Noida, another suburb of Delhi has been hit with low transaction activity.

The CBD of Nariman Point, Mumbai has witnessed a significant correction in rentals over the last 6-9 months, taking the vacancy rate to around 15 per cent, it said.

Further, the ongoing Mumbai Metro project and ensuing traffic congestion has further subdued client sentiments, thus lowering the attractiveness of this location for corporate occupiers.

The low demand levels in the Mumbai suburbs are expected to ensure that values in this micro market remain under substantial pressure.

With the general slump in demand and an increasing number of organisations exploring alternate locations, the vacancy levels (filling up of commercial space) are likely to increase in the medium term with further expected decline in rental values, the report added.

The report predicts a similar market outlook as Mumbai for the Bangalore city, “In line with the major cities across the country, demand levels are not expected to improve appreciably in the near term and a further drop in rental and capital values may be expected.”

The suburban and peripheral micro markets in Chennai are expected to witness further pressure on rentals in the coming quarter, the rental values are expected to undergo further correction, the report said.

The gap between demand and supply is expected to remain wide over the next few quarters and all relevant micro markets are expected to further correct in the short to medium term.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-Trends/Realty-projects-in-NCR-to-be-delayed-due-to-sluggish-rentals/articleshow/4421261.cms?curpg=2

Office rentals falling in Indian cities: Report

New Delhi, Jan 15 (IANS) Office space rentals in India’s metros and larger cities have been falling since the last financial year, according to a report released Thursday by global real estate consultancy CB Richard Ellis. The India Office Market View report on office spaces in major cities said vacancy levels have increased and rentals were corrected because of dampened demand.

While the office markets of Chennai recorded the least correction (6 percent) in the third and fourth quarters of 2007-08, the maximum (30 percent) was experienced in the Extended Business District of Mumbai.

In terms of rental values, the peripheral markets of Gurgaon and Noida witnessed a drop of approximately 12 percent and 16 percent respectively in the fourth quarter of 2007-08, as compared to the previous quarter.

The NCR Real Estate Market is fast changing from a “sellers’ market” to a “buyers’ market”, it said, adding that India’s technology hub Bangalore witnessed about 30 percent vacancy with IT firms slowing down fresh acquisition plans.

“The office space demand which moderated in the first two quarters, tapered off by the end of the year. Fresh commitments and pre-leasing of under-construction developments underwent a noticeable drop a fact stemming from the US financial crisis,” the report said.

Observed Anshuman Magazine, chairman and managing director of CB Richard Ellis (South Asia): “The real estate sector in India has mirrored the global economic conditions that are unfurling. The next few months are likely to be a time of subdued demand.”

Source : http://www.thaindian.com/newsportal/uncategorized/office-rentals-falling-in-indian-cities-report_100142883.html

Realty Market Ripe for NRIs

For the Gulf NRIs weighing his options diligently and with foresight, some attractive opportunities are on offer in the real estate sector. Consider these facts: Lenders are slashing home loan rates; Prices of real estate have slipped in tandem with the stock indices; Recession in the United States and Europe has forced many NRIs to rethink their property investment plans in India leaving thousands of plush homes in ‘NRI colonies’ without buyers. There has been a drop of 50-60 per cent bookings by the NRIs over the last three months owing to tight liquidity conditions in the international markets, top realty players told Sunday Economic Times. If 100 bookings were being made earlier, today that’s not more than 30. There have been atleast 15-20 percent cancellations over the last few months. Developers expect the situation to continue till the liquidity situation improves in foreign markets.

This one time at least, NRIs in the Gulf have an advantage over those in the West as the GCC economies have been much less affected by the meltdown. Apart from some layoffs, there has not been much adverse action such as slashing of earnings. Unlike those in the West, it is unavoidable for the Gulf NRIs to have a home of their own – not necessarily their ancestral home which they left behind, but a more modern and better-equipped place like the homes available in the many housing complexes developed exclusively for NRIs across the country.

NRIs, even those in the Gulf, get accustomed to certain amenities which they wouldn’t mind having back home as well. They need to have malls, multinational restaurants, high-end entertainment areas, good hospitals and schools and maybe even a golf course when they return to settle here permanently. And, that may be sooner than one had planned. At this point, with the US and UK biggies pulling out, such homes may be available at heavy discounts. Then, the second bit of good news. Home loan rates have begun their southward journey, following a fresh initiative from the Reserve Bank of India (RBI). HDFC (Housing Development Finance Coporation), India’s biggest home loan provider, has taken the lead and lowered the rate it charges for all loans and deposits by 50 basis points.

The Mumbai-based finance company will charge 10.25 percent for loans of up to Rs 2 m effective Dec. 22. The rate on loans of more than Rs 2 m was reduced to 11.25 percent. The lending rates have been cut as a result of a reduction in funding costs. State Bank of India and other banks have cut rates after the central bank lowered a key interest rate three times since October to 6.5 percent. Interest rates are headed down and the cost of borrowing bulk deposits has fallen by 200 basis points over the past two weeks.

India’s public sector banks said earlier this week that they plan to offer home loans of up to Rs500,000 at 8.5 percent. The rate will be limited to 9.25 percent for borrowers seeking loans of Rs500,000 to Rs2m for a five-year term. NRI home loans are loans available to Non-Resident Indians for the purposes buying houses that are under construction or for sale. They can also be availed to buy a plot of land or to renovate/improve an existing property. The home loan rate charged by an NRI does not differ much by the interest rate charged by an Indian for his home loan but the tenure for such loans differs to a great extend. NRI home loans are extended for much shorter period as compared to the normal home loan. The loans tenure for NRIs extends from 7years up to a maximum tenure of 15years where as the maximum tenure for a resident is from 25 to 30 years. Also an NRI cannot opt for a loan tenure that exceeds beyond his retirement age or 60years, which ever is earlier.

Besides an NRI can only get 85 per cent of the loan amount and the remaining 15 percent has to be brought himself by the borrower. The loan amount depends on the individual’s gross monthly earnings. This amount is normally up to 36 times of the gross monthly income but there is also a maximum limit on this amount.

The real estate market in India might be facing one of its worst slowdowns, but its position relative to markets in the rest of the Asia Pacific region remains promising. In terms of investment, Bangalore, Mumbai and New Delhi are all new entrants to the top 10 markets in the Asia Pacific at fourth, seventh and ninth place respectively by PricewaterhouseCoopers.

Yes, prices are low. So, it is wise to start planning a real estate investment now or wait for the market to bottom out. Quite obviously, the latter would seem logical. However, how can one tell where’s the bottom? “The problem is that everyone is trying to catch the bottom, and that is what needs to change,” says Anshuman Magazine, Managing Director of CB Richard Ellis in India, a global real estate consultant. Prices may or may not drop further. Unlike the United States or the United Kingdom, there is no 30 years old data that is available here for prediction purposes. Also, whatever data is available; it is difficult to verify its authenticity. Therefore, the consumer should not go by the expectation that prices will fall further, because there is no way to know for certain.

Source : http://www.indianrealtynews.com/nri/realty-market-ripe-for-nris.html

To kickstart demand, Govt fixes 9.25% rate for home loans below Rs 20 lakh

New Delhi | Mumbai: Public sector banks today said new home loans up to Rs 5 lakh will carry a much lower interest rate of 8.5 per cent. The interest rate on loans of Rs 5-20 lakh will be capped at 9.25 per cent. In India, almost 80 per cent of home loans are below Rs 20 lakh.

Under the scheme valid till June 30, 2009, public sector banks will forego processing fees and pre-payment charges and further provide free life cover. The interest rate will be unchanged for the next five years. Should there be a home loan product at a lesser rate, the bank will match it.

The interest rate will be reset after five years and the borrower will then have the option to go for a fixed rate or a floating rate. The EMI on a Rs 5 lakh loan over 20 years will drop by Rs 1,166 and on a Rs 20 lakh loan by Rs 3,704. At present, loans up to Rs 20 lakh carry a fixed interest rate of 12 per cent.

Experts said the package will work only in Tier II and Tier III cities where one can buy a house for less than Rs 20 lakh. “Fence sitters in such cities may buy to take advantage of the lower rate. But the real problem is people expect prices to drop further. Besides, the outlook for the sector and the economy as a whole remains bleak,” said Anshuman Magazine, CMD, South Asia, CB Richard Ellis.

Source : http://www.indianexpress.com/news/to-kickstart-demand-govt-fixes-9.25-ra…/399006/

Mumbai Still One of the Five Hottest Office Markets

Hit by the slowdown, Mumbai office market has dropped from the second to fifth place in the list of world’s most expensive office destinations, according to global realty consultancy CB Richard Ellis. London’s West End and Moscow remain the world’s two most expensive office markets, while Hong Kong’s CBD and Tokyo’s Inner Central District round out the top five. Mumbai was ranked the second most expensive market last year while New Delhi’s CBD, which last year ranked 12th, dropped to 13th place in the new report.

Source : indiaprwire.com

Property transactions to take a hit

Property transactions in Mumbai and across the country will be affected in the wake of the terrorist attacks on key places in India’s commercial capital, industry experts said.

The terror strikes, which started late Wednesday and had not been fully controlled nearly 48 hours later, left over 125 dead and injured more than 250.

“The attacks will have a ripple effect on the volumes across the Mumbai city and the country,” said Pranay Vakil, chairman, Knight Frank India.

Developers are saddled with large amount of unsold properties in the country as the current credit crisis roiled markets across the globe, squeezed availability of money and caused investors to lose money. Earlier, the Reserve Bank of India’s (RBI’s) move to raise benchmark interest rates to control inflation had already slowed down purchases of homes by individuals.

The terrorist attacks come amid weakened sentiments about the future outlook as India’s economic growth is expected to slow down to less than 7 per cent compared with a five-year average of over 8 per cent. Indian software makers, who have been on an expansion spree and account for a substantial proportion of property transactions, have had to curb their businesses as the US and Europe witnessed a downturn.

The attacks are “going to add fuel to fire and will keep the sentiments subdued for a longer time,” said Anshuman Magazine, chairman, CB Richard Ellis.

Property transactions in Mumbai have dropped to a tenth of the earlier level, said Vakil. If a builder was selling 40 flats a month some time ago, the same establishment is selling only 4 now, he added. Similarly transactions in Delhi and its neighbouring regions and other cities including Bangalore, Gujarat and Chennai have been severely hit as the country’s economic growth slowed and the global impact led to job losses.

“Home buyers look for stability and if they see uncertainty they will postpone their decisions,” said Vakil. Several migrants who were planning to buy a home in the city are brooding over their decision. Migrants comprise about 40 per cent of Mumbai’s 19 million people.

Transactions by multinational companies are likely to be the most hit after the latest terrorist attacks. Several of the hostages in the plush Taj Palace and Trident hotels were overseas visitors.

“In the short term, there will definitely be a decline in business visits to the financial capital,” said Anuj Puri, chairman and country head, Jone Lang LaSalle Meghraj.

Source : www.business-standard

Mumbai, Delhi office market costs slip further

Mumbai : While Mumbai’s Nariman Point dropped to 5th place ($170.85 per sq ft per annum), London’s West End ($248.66) and Moscow ($234.73) remain the world’s two most expensive office markets, respectively. Hong Kong’s CBD and Tokyo’s Inner Central District round out the top five, according to CB Richard Ellis Group Inc (CBRE) Research’s semi-annual Global MarketView/Office Occupancy Costs survey. Mumbai, which was second in November 2007, fell to fourth place in May 2008.

New Delhi’’s CBD — which was placed at number eight in May 2008 — dropped to 13th place ($122.18) in the report. The report tracks world markets with the highest as well as fastest-growing occupancy costs for the 12 months ended September 30, 2008. The average rate of growth for office occupancy costs among the 172 markets monitored in the survey was 8 per cent, almost double last year’s world Inflation rate.

Anshuman Magazine, chairman & MD, CB Richard Ellis South Asia, says, “India’s office market slowdown is reflective of the global economic slowdown as a majority of the occupiers of quality office space are multinational companies. Office supply too has seen a substantial increase in the past few years. In spite of this, Mumbai and New Delhi continue to be in the top 15 world’s most expensive office markets.”

“Our current perceptions are greatly affected by the current economic malaise and we tend to forget how fast rents and occupancy costs were rising over the last 12 months,” said Raymond Torto, CBRE’s global chief economist. “Clearly the rate of change is generally slowing, and in some markets the pricing direction is down. The turn in rent trajectory will provide some relief to occupiers and angst to owners. However, unlike previous downturns, which have occurred simultaneously with extensive overbuilding, the real estate market globally today is in a stronger position to weather the difficulties than in the past.”

Source : www.indianexpress.com

Real estate, hotels, best placed to offer discounts

The Finance Minister’s call to slash prices in a host of sectors is not an easy talk to walk for many industries, where profit margins are low — or in fact, in a zone of losses. Real estate and hotels seem to be the ones in a better position to follow Chidambaram’s appeal.

The finance minister said, “Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two-wheeler makers must cut prices.”

A look at the financial performance of various sectors suggests that real estate is best placed to take a hit on its margins. In the quarter ended September 2008, the top 14 real estate players clocked an average net profit margin of 50 per cent.

However experts feel that the price cut would depend on the land acquisition cost, construction cost and cost of money.

“Market forces determine the price, however if the developer is comfortable it would make sense to compromise on margin and
keep the working capital flow on,” said Anshuman Magazine, managing director, CB Richard Ellis.

Also, real estate is the only sector that has witnessed a rise in its profit margin over the same quarter previous year.

All other sectors have witnessed a fall in their profit margin over the previous year. Aviation is operating on a negative profit margin and the net margin of hotel industry is down from 19 per cent in September 2007 to 13.6 per cent in September 08. Auto companies too have taken a hit on their margins in the second quarter.

Source : Hindustantimes

Slowdown Affects The Demand For IT Space In India

Information technology space has resulted in reduced demand for office space in India in the second quarter of the current financial year. As per the report, many companies, especially in the IT/ITes sectors, have curtailed their expansion plans, which has hit office space sales in the last three-months. Another reason was the unavailability of funds for the sector, it says. The report also said that the current global conditions are likely to impact Mumbai the most as it is the financial capital of India, and the rentals and capital values across most micro-markets in the city will see a further correction. “The global economic slowdown has started to show early signs of impact on the office rental market. Going forward, this is expected to keep office rentals under check,” said Mr. Anshuman Magazine, Managing Director, CB Richard Ellis, South Asia.

Source : Realty Digest

Slowdown hits demand for prime office space in cities: CBRE

NEW DELHI: Office space absorption in the country has gone down by 41.11 per cent cumulatively in the three quarters ended September this year, as a fallout of the global economic slowdown, according to a study.

The total office space take up between January and September this year stood at 5.3 million sq ft as against 9 million sq ft in the corresponding period last year, according to global commercial real estate services firm CB Richard Ellis (CBRE).

“The global economic slowdown has started to show early signs of impact on the offices market. The third quarter of 2008 has seen some decline in the office space take up across the country. Going forward, this is expected to keep office rentals under ch eck,” CB Richard Ellis Chairman and Managing Director (South Asia) Mr Anshuman Magazine said.

In its quarterly ‘India Office Market View’ report, CBRE covered seven cities and found that the cities showed a marked slowdown in demand and office space leasing that had moderated in the first two quarters of the year.

“Many corporate occupiers, especially in the IT/ ITeS sectors have postponed or curtailed their expansion plans. Together with this, the fund availability for the sector which was already constrained due to the inflation control measures of RBI, will be further curtailed by the recent financial crisis in the US and its ripple effect on rest of the world,” it added.

According to the report, rentals in the National Capital Region are likely to remain stagnant for the next few quarters. – PTI

Thehindubusinessline.com

Real estate giants lure clients with free cars, LCD TVs

New Delhi: As the financial crisis grips world economies, the real estate sector is giving away freebies to lure customers.

Unitech is offering a free LCD TV on booking of property while one can get free Solitaire worth Rs 1.25 lakh on booking of property from Tulip. Another real estate giant, Jaypee Greens, is giving away a luxury car on purchase of property.

So it is raining discounts in the real estate market this festive season. But that is no the only thing luring customers.

Developers feel that this is the best time to invest in realty as the current financial crisis has take property prices down with it.
“For long term investment it is the right time to enter because market prices are low now,” says Moutani Goswami of the Jaypee Group.

“Real estate has a shortage of 24.71 million units in our country. So that market exists in not just metros but other areas too,” Sanjeev Srivastva, MD, Assotech Ltd, says.

Customers are also seeing value investment in these times. Taking advantage of these times are buyers like Devendra Singh, who works for an MNC and has been hunting for a house for some time.

“Economy is going down so obviously prices are coming down. So we thought that this is the good time to buy something,” Singh says.

According to property watchers, prices across the metros have come down in the past six months. In the north, Delhi and the NCR region has seen a fall by Rs 500 to Rs 1700 per sq ft while Mumbai has seen a decline of Rs 800-3000 per sq ft.

Bangalore has seen a drop of Rs 250-1000 per sq ft while in Kolkata there has seen a drop of Rs 900-1000 per sq ft.

But before you make that investment here’s a word of caution.

“Look at the long term and also you can never catch the bottom. So you never know when is right time to buy. Take an informed decision as to why should the prices increase in that area in the near future,” says Anshuman Magazine, MD of property consultancy firm, CB Richard Ellis.

In a downturn, real estate might be a good option to check out this Diwali.

Source : Ibnlive

Store rentals suffer 20% fall in 4 months

Store rentals have come down by 10 to 20 per cent in tier-II and tier-III cities in the last three to four months, said retailers at the India Retail Forum here. The rentals have dropped following the country’s property market cooling down after three years of high growth.

Many retailers, such as Aditya Birla Retail, could not expand their hypermarkets and large-format retail stores as they had planned due to high rentals and unavailability of space.

“With the downturn in the property market, the correction process has already started. With this, we hope roll­outs will be pretty faster,” said Thomas Varghese, the chief executive of Aditya Birla Retail, which has over 600 stores in the country, including two hypermarkets.

“We have seen rentals cooling off by 10 to 20 per cent in the last three to four months,” said Ashok Bhasin, managing director, Wadhawan Food Retail, which runs the Spinach brand of convenience stores.

According to property consultants, Kishore Biyani’s Future Group has been unable to strike deals for nearly 6 to 7 lakh sq ft of ready retail space in the last three to four months due to high rentals.

“We have looked at many locations and said no to many. But now, developers are demanding much more sensible rentals than before. We are closing three deals very soon,” said Mark Ashman, the chief executive of Marks and Spencer India.
Marks and Spencer, which has a joint venture with Reliance Industries, plans to open 50 stores in the country in the next five years.

Apart from the correction in rentals, analysts tracking the sector said 60 per cent of retailers were opting for revenue-sharing agreements with mall developers, wherein retailers pay a share of their sales to developers.

“Now retailers are demanding zero rentals and a full revenue-sharing agreement. Until and unless developers realise the need for reasonable rentals, many deals may break off,” said Bappaditya Basu of property consultancy Jones Lang LaSalle Meghraj.

Analysts also attribute the decline in rentals to over-supply of retail space in the next couple of years. According to property consultancy CB Richard Ellis, nearly 100 million sq ft of retail property development is in the pipeline.”Some developers were building malls at Rs 4,000 a sq ft. I wonder who will occupy those malls at such rates,” said Future Group Chief Executive Kishore Biyani.

“Developers were building malls not for retailers, but for investors. They did not figure out what would drive retailers to malls. But now, investors are backing out and funds are drying up for developers, which is leading to rationalisation of rentals,” said Sanjay Dutt, deputy managing director, Cushman & Wakefield.

Israeli realtor plans Us 15k-cr India spend

Elbit Imaging, an Israeli real estate developer, and its mall development arm Plaza Centers will invest nearly Rs 15,000 crore in a partnership with local developers to build malls, entertainment centres, hotels, houses and other properties in the country in the next five years. Plaza and Elbit will spend nearly Rs 10,000 crore out of the total investment mount, Plaza announced today.

Both companies have invested Rs 1,500 crore in Indian projects so far. Their projects are already under development in Pune, Bangalore, Kochi with a total built up space of 60 million sq ft. Plaza is expected to lease 10 shopping malls and leisure centres by 2010.

“We believe we could build as many as malls as possible in India over the next 10 to 15 years as there is enormous demand and the economy has substance despite some hiccups,” said Abraham Rami Goren, executive vice-chairman, Elbit Imaging. Goren said the group would bring in equity from Israel and leverage bank loans to fund projects.

Plaza also has plans to set up six to seven hotels as part of its plan in cities like Kochi, Pune, Bangalore and Chennai, among others, Goren said. “These hotels would be in the three-star to five-star category.” Elbit has a hotel management company called Park Plaza, which manages its hotels in Europe.

According to property consultancy CB Richard Ellis, nearly 100 million sq ft of retail property development is in the pipeline for India. Some of the biggest shopping centre developers and investors have started their operations in the country.

Prominent among them are South Africa’s Old Mutual Property Investments, UK’s Liberty International, Metro Junction and Future Group’s Kshitij that have announced plans so far. Recently, Mukesh Ambani’s Reliance Industries formed a $500-million joint venture with US-based Vornado Realty Trust to invest and develop RIL’s malls. Though the share of organised retail is miniscule at present, analysts are worried about the oversupply of retail space amid the slowdown in consumer spending due to inflation.

“The situation of oversupply and saturation resulting in subsequent correction of rentals may occur in certain pockets and micro-markets in the short to medium term,” the CB Richard Ellis report said.

Enticing Buyers with Freebies

Stung by the bearish realty market, which is reeling under a price correction, real estate developers are now unleashing discounts, freebies and innovative schemes to lure buyers into residential space. Consider these: TDI is offering a free international trip for its Kingsbury Luxury Apartment buyers; Ansal Buildwell has advertised an inaugural discount on its project Florence Abode; scores of players are offering an ‘EMI holiday’ till possession on specific projects; while yet others are willing to waive prime location and such other charges or throw-in complimentary club memberships for new homeowners.

“In various markets, despite a slowdown in demand, developers have refrained from reducing rates. Instead some of them have started offering incentives such as club membership, parking lot, and better amenities to attract buyers,” says Ms Shveta Jain, Associate Director (Residential), Cushman & Wakefield India.

Assotech Ltd is giving buyers the flexibility of taking loans on vanilla flats, which incidentally do not include the cost of modular kitchen, shower cubicle and other so-called ‘frills’.

According to the Assotech’s Managing Director, Mr Sanjeev Srivastva, the company allows customers to pay for the ‘frills’ at the time of possession. This means that the buyers’ loan is reduced substantially and they save that much between the time of booking and possession, and can make the balance payment at the end of the purchase cycle. This works out to about 15 per cent of the price of the house — the payment flexibility could be close to Rs 4.5 lakh on a Rs 30 lakh home.

Parsvnath Developers, Parkwood Developers, JMD, and BPTP offer ‘EMI holiday’ schemes, while Ashiana has announced an ‘EMI-sharing’ scheme for its Bhiwadi project. Others like Uppal Group are contemplating similar offerings for their upcoming projects. “Although none of our existing projects has such offers, we are considering introducing them in certain projects which are in the pipeline. In the prevailing market situation, buyers are looking at solutions that make purchases more affordable for them,” says Mr Harmit Chawla, Vice-President, Sales, Uppal Housing Ltd.

Analysts point out that the generous discounts and sops are reflective of the current sluggishness in the Indian property market. “When the market was hot, everything came at a premium — even an apartment facing a so-called park (small lawn) attracted an extra levy in the form of a PLC. In contrast, some real-estate developers are now bundling-in parking charges and club membership as a package deal to catch consumer interest,” they add.

Signs of correction in the residential market are already becoming evident, and residential prices in some pockets are down by 10-15 per cent, while in other parts it has stabilised, says an industry observer.

A report by Cushman & Wakefield points out that both capital and rental values in Bangalore’s residential sector would ‘continue to stabilise’ during the next quarter, across select micro-markets (Whitefield, Kanakpura Road, Outer Ring Road) with a large number of investment-based properties expected to see softening of rates over the next two quarters.

In Delhi, while prices are expected to remain firm in most parts, a correction is expected in the peripheral locations of Manesar and Greater Noida in the short to medium term — even suburban locations of Gurgaon and Noida are likely to see price movements that are project specific.

The report further points out that capital and rental values in Mumbai would continue to stabilise over the next 3-6 months on account of upcoming supply, increasing interest rates and inflationary pressures — all of which will impact purchasing decisions.

Buyers and investors are in a wait-and-watch mode leading to a slowdown situation. As the sales momentum dips, a section of the market could either resort to price reduction or adopt aggressive approach to close deals through sweeteners, at least for a part of their project, to get the cash flows in place, Mr Kumar Gera, Chairman of CREDAI says.

Mr Anshuman Magazine, Managing Director of CB Richard Ellis feels that while demand continues to be robust for premium and even low-end housing, realtors will primarily target the volume segment in the residential market with such sweeteners.

Recently, a Pune-based builder offered air-conditioners and other fixtures at a significant discount to its customers. This whole business of discounts and freebies had started off in the face of fierce competition in the industry, and the trend is likely to accelerate in case the market remains in the slowdown mode.

Ms Jain of Cushman & Wakefield India agrees that certain high-end projects or apartments in prime locations would continue to see strong demand. These projects would not need to join the freebies bandwagon.

So while the residential market braces for a cool-off, it may be a good idea for prospective homebuyers to negotiate that hot bargain!

Delhi NCR Rents may Stabilize Next Quarter: Report

Rentals in the National Capital region are expected to stabilize in the next quarter as supply is set to increase Gurgaon and Noida, says a report.

According to commercial real estate services firm CB Richard Ellis, rentals are expected to be stable in the next quarter as the supply is set to increase significantly in Gurgaon and Noida.

“However, no significant change in supply is expected in Delhi except in Jasola where an additional 500,000 sq ft is expected to be added in the second quarter,” the report stated.

Rentals rose steadily in the Central Business District Area of Connaught Place in the absence of any new supply in the first quarter of 2008. The report stated that an evident feature in the last quarter was that a number of the older buildings made a noticeable attempt to improve infrastructure in their premises in an attempt to cash in on the low available supply and high rentals.

However, CBRE forecast that there would be no respite in rentals in the near future in the absence of any upcoming supply in the Central Business District of Delhi. The average rent in Connaught Place (Grade A) rose to Rs 340 per sq feet per month in March this year from Rs 325 in December 2007.

While in the peripheral markets Gurgaon and Noida, the rentals are expected to stabilize in the next quarter. Rentals in Gurgaon showed no sign of a meltdown in the previous quarter. However, they are expected to remain stable in the next quarter with additional supply on the MG and Golf Course Road offsetting the corporate demand, the CBRE report said.

Besides, in Noida rentals were marginally higher in the last quarter but are expected to be steady with high supply available especially in the industrial/institutional sectors.

Noida continues to be an attractive destination for IT/ITeS companies primarily for their back office operations. The report said that absorption rates in Noida are expected to rise significantly this year with improved infrastructure and affordable rentals.

More and More Indians are looking to Buy Property Abroad

The rise in the number of Indian millionaires along with a fall in real estate prices in the UK and the US – economies that have been hit by the sub-prime crisis – have fuelled the demand for property abroad.

“We have seen a sharp rise in the percentage of Indian clients looking at real estate in London to 12 per cent from four per cent in the last few years,” Raine Countess Spencer, director of Harrods Estate Ltd, recently said on a visit to India.

“London is on top of the list followed by the US and then Malaysia and Thailand. Dubai is passé now,” says Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj, a real estate consultant.

The National Association of Realtors in the US recently reported a 2 per cent drop in the sales of single family homes in March this year compared with the previous month.

“Most high net worth Indians are taking up this opportunity to buy property abroad. Within the US, Houston, New Jersey and Texas are some of the prime locations,” said Pranay Vakil, chairman of realty firm Knight Frank India.

“It is very difficult to give the numbers at this point, but there has been a rise in interest. With the Reserve Bank of India allowing an individual to make an overseas investment of up to $200 million, more options have been opened up,” said Anshuman Magazine, chairman and managing director of CB Richard Ellis.

Analysts said London was a preferred location because of India’s historical relationship with the UK. Places in the US are also much sought after because many Indians have their children studying in the US, and they want a home near their children.

Indians are also taking a fancy to European properties. Eric Groux, general manager of French-Real-Estate.com, said, “We arrange for 90 per cent mortgage for our international clients. We already have a list of around 26 clients from India who have expressed interest in buying with us.”

And what’s the price for an apartment in northern France? “Close to Rs 3.6 crore,” Groux said.

Other European companies have also been luring Indians with their villas and apartments. “We have been looking at making our presence felt in India for the last six months,” said Phil Tobin, global manager of Spain-based MRI Overseas Property. The company helps people buy and sell properties in more than 18 countries. It has plans to set up offices in Mumbai and Delhi soon and has set a target of selling 12,000 units in the next three years.

“Real estate prices in Mumbai are so high. I can offer you a small cottage in Egypt with a private beach for around Rs 1 crore,” Tobin said.

“In the US and the UK, there has been a drop in the numbers of new homes being purchased. So, for realty companies there, it makes sense to look at virgin markets such as India,” a real estate analyst said.