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

Residential property prices rise 15%

AHMEDABAD: The upswing has begun. Not only have the sales picked up, but the prices of residential property too have increased 5-15 % in the last Greatest ceilings
Make maximum use of office space  couple of months. With a long festive season ahead, realty experts believe property markets could see heightened activity, provided developers desist from increasing prices of residential space any further.

“The festive season (September-December ) has historically been a buying period, with a large chunk of overall sales being converted during this auspicious time. Some developers see as much as 30-40 % of the yearly sales taking place during the festive season,” says Aditi Vijayakar, the executive director (Residential Services, India) of Cushman & Wakefield (C&W ), a global realestate consultant. “Residential prices have increased by 5-15 % from the bottom it made in the first half of the year. If the developers continue to raise the prices then the renewed demand and interest that is being witnessed will start to abate,” she cautioned while talking about the upcoming season which is also a source of attraction for the cash-rich NRIs.

“The previous year has been a taxing one for the real estate industry and the initial signs of recovery are evident in the market, and as most of the sales happen during the festive periods, developers have to be cautious not to hike prices in projects and new launches as this will drive out the end users and prolong the revival in the residential space,” Ms Vijayakar remarked.

According to the expert, almost all cities are registering a rise in sale as transactions had frozen up during the start of the year. But now as the economy has stabilised and is back on the growth trajectory, there is a revived interest in buying homes by end users and this increase in confidence, better economy, favourable borrowing conditions, rationalised capital values amongst others which is promoting rising sales across India..

However, developers and builders are eyeing the renewed demand in the residential space as a huge opportunity. “After almost a year-and-a-half, we see a renewed demand in the residential sector. During the last three months, sales have picked up by almost 100%, and with a long buying season ahead, the property prices will definitely move up the graph,” says Sameer Sinha of Savvy Infrastructures Ltd.

“In Ahmedabad, going by conservative estimates, the prices of residential property is expected to rise by another 25-30 % in the next one year”, Mr Sinha said adding that the prices in the city have already risen by about 15% since the markets bottomed out earlier this year. The fresh demand in the housing sector has boosted the confidence of developers as well. Earlier this month, the city-based body of developers, GIHED (Gujarat Institute of Housing and Estate Developers) displayed about 500 projects worth Rs 3,000 crore at property show in Ahmedabad.

“As the economy recovers and grows on a pan-India basis, residential demand is expected to grow along side. C&W Research estimated demand to be over 7.5 million units by 2013 across all categories such as Economically Weaker Section, affordable mid segment and luxury segment. The residential demand for NCR, Mumbai, Bangalore, Pune, Chennai, Hyderabad and Kolkata is estimated to be 4.5 million units by 2013”, Ms Aditi Vijayakar added.

http://economictimes.indiatimes.com/articleshow/5064201.cms

Oh max! Omaxe goes max and launches new projects

Omaxe Ltd, which claims to be one of the leading real estate players of the country, has launched about four to five projects in just two months in  different cities of the country. The recent news to share about the developer is the announcement of the launch of two projects in just a week’s time, one in Lucknow and the other in Bulandshahar. Both the projects would be executed in phases over a period of five to seven years.

Spread over approximately 2700 acres, the Lucknow township is expected to yield an estimated revenue of over Rs 2,800 crores and would cater to the growing demand of quality living space in the city. Garv Buildtech Private Ltd, a subsidiary of Omaxe, has entered into a Memorandum of Understanding to develop the said hi-tech township in Lucknow.

Whereas the other project will develop a hi-tech township in NCR adjoining Greater Noida in Bulandshahar, Uttar Pradesh. For this, Omaxe’s subsidiary M/s Rivaj Infratech Pvt Ltd has signed an MoU with Bulandshahar Development Authority. To be developed over an approx area of 3601.19 acres, this township would have estimated revenues of over Rs 7,5O0 Crores.

The Lucknow township will be located on the proposed Lucknow Ring Road in close proximity to Lucknow Airport and only half an hour drive from Hazratganj, center of Lucknow city. The township will provide residential options comprising of plotted and built up development with various options including affordable housing to suit everyone’s style and budget and meet the social commitments to the society.

Speaking on the announcement, Rohtas Goel, CMD, Omaxe Ltd said, “The hi-tech township is an attempt to recreate an entirely new living experience in the city of Nawabs. There is already substantial pressure on the existing infrastructure and this township will attempt to ease the demand by providing state of the art facilities in close quarters.”

The Bulandshahar project will be located in Delhi NCR Region adjoining Greater Noida approx 20 min drive from its proposed international airport and adjacent to proposed Eastern Peripheral Expressway and North-East Railway Freight Corridor.

Talking about the project Goel said: “The township at Bulandshahar will be a good alternative to the crowded Delhi Region and will create an attractive environment for high quality living, work and recreation. Apart from this, the township will be home to technology and knowledge based industries which will be attracting private investment and create employment.”

Earlier, Omaxe through its subsidiaries had signed MOU with Allahabad Development Authority in July 2009 for the development of Hi-Tech Township at Allahabad on approx 1535 acres. With the Allahabad, Lucknow and Bulandshahar projects, the developer intends to generate revenue of over Rs 12,500 crores over a period of five to seven years.

The top team at Omaxe has begun to stand larger than life in the real estate industry and has also begun to influence the trend of transactions too.

For one thing, this company has stuck to its core competence all the time and this strategy has begun to pay lately.

Hence the recession could not take these guys out.

When the going gets tough, the tough get going.

Source : http://economictimes.indiatimes.com/features/financial-times/Oh-max-Omaxe-goes-max-and-launches-new-projects/articleshow/5032537.cms

Affordability trap

Before the great economic doom caught up with the economy in general and the real estate sector in particular, life for developers was relatively cushy. High-priced houses were being hawked as if there was no tomorrow. But when tomorrow did come, there were many lessons to be learnt. The foremost among them being this: a residential project should appeal and target the majority to be successfully sold out. Real estate developers learnt this concept of ‘affordability’ only after a large number of their premium and luxurious residential projects failed to take off and many others had to be tweaked in order to cater to a wide spectrum of end-users.

Over the last one year, developers of all hues have announced residential projects in the affordable category. These projects, which were launched in different parts of NCR (national capital region) reported quick sales within days of their official announcement.

Consider this: DLF sold its phase-I of the Capital Greens project located in the heart of Dehi within two days of the launch, Jaypee sold its residential project Aman in Noida within a day of the official launch. BPTP reported brisk sales for its Park Floors project in Faridabad. Similar has been the case with residential projects launched by Omaxe.

The developers claim that the end users have finally come out of their hibernation. Sales figures provided ballast to their claims.

Yet doubts remains about the timely completion of projects. Many affordable projects which have been launched and successfully pre-sold, do not either have the mandatory environmental clearance or have not received orders for the change in land usage required for residential development.

“Many developers miscalculated the time lag between the soft launch, and actual delivery. Some of the projects monitored by us are already delayed by a year or so,” Ajay Dabas, director of Gurgaon-based consultancy Certes Realty, told FC Estate.

The developers do not wish to delve too much on these aspects. They concede, however, that mandatory clearances are a matter of concern for them. “A project’s delay does affect our reputation. But as these clearances are given by various governmental agencies, which take their own time, there is very little a developer can do to ensure speedy clearances,” admitted an NCR-based developer on conditions of anonymity.

However Tanuja Pradhan, national head of the global real estate consultancy Cushman & Wakefield, holds a divergent view. “The affordable projects have been launched by the same developers who have various stalled projects in their kitty. They are under pressure to complete them.” She added that it would be too early to say that the projects are being delayed: “Even if delay takes place, developers are willing to compensate with a penalty amount payable on per sq ft basis.”

In fact, a closer look reveals that similar factors lie at the roots of the present-day crisis in real estate.

Circa 2004: Project after project was being launched albeit in the premium category with a price tag of Rs 1 crore plus. ‘Income levels are increasing at a fast pace’, ‘the average age of the home buyer has come down drastically’, ‘NRIs will be our target customers’, were some of the rationales doled out while launching these projects.

This was also the time when Rs 1 crore became the base value while talking about the price of a house. Ironically this was also the time when real estate deals started happening only between reckless investors (read speculators).

These projects too did not have the mandatory clearances. People were lured to invest money in realty projects to make a fast buck. Prices were appreciating within a matter of weeks. But as this appreciation was bereft of any real buyers, be it resident or non-resident Indians, the developers soon felt the pinch. The weeks after collapse of the erstwhile Lehman Brothers saw developers of all hues being gripped by a severe financial crunch.

Intense analysis and introspection into what went wrong followed. Dwelling deeper into the causes the sector soon found the mantra of all ills, affordable housing!

Akin to the phoenix rising from ashes, developer after developer began announcing projects in the affordable category. So even as a couple of years earlier ‘premium’, ‘luxury’, ‘exclusive’ and ‘Rs 1 crore’ were the catch words, they have been replaced by ‘inclusive’, ‘affordable’ and ‘Rs 1 lakh. How times change!

The transformation and change of heart has been often been touted as a learning curve for the real estate sector. The sector has found its place and would emerge stronger in a short time, has been the argument. In fact, a recent Knight Frank survey points out that it is the average tenant households staying in their current residence for the last two-and-a-half years who are driving the demand for affordable houses. These buyers perceive Noida, Ghaziabad and Gurgaon as the most favoured destinations for living.

A large number of affordable projects have indeed been launched in these cities. Interestingly, with inevitable delays, the affordability of projects are also at risk. “Projects were launched with the popular tag of “affordable” but the hidden costs and delays would amount to over-runs for the end buyer in many cases. Coupled with the fact that many developers insisted on a lock-in period and no cancellation for 12-15 months, consumers are not very happy too,” argued Ajay Dabas.

The Knight Frank survey also revealed that the developers have to pay external and internal development charges to the government which ultimately, are passed on to the consumer thus increasing the overall cost of a house. “The EDC and IDC costs coupled with the high transaction cost and stamp duty can go as high as Rs 350-400 per sq ft which are transferred on to the end user by the developer,” says the report.

Counters Dabas: “Many developers who had priced their projects at high rates were forced to re-launch with a lower price tag. That signalled the increase in demand. ”

However, most are really not affordable owing to the many hidden costs and spiralling charges of external and internal development charges, parking etc, which constitutes nearly 25 per cent of the base price.” He further adds that there is hardly any project which has been launched in the recent past in the truly affordable gross cost of Rs 20-22 lakh.

Yet another concern which warrants attention is the diversion of funds which have been garnered from the investors for a specific project to other incomplete projects of the company. The developers remain tight-lipped over the issue of fund diversion towards completion of other projects and only say that their affordable housing projects will be completed on time.

However, a couple of years earlier, funds were diverted towards purchase of land and building land banks.

So if the developers divert the funds mopped from their ‘affordable housing’ projects towards completion of earlier projects and miss on the deadlines promised in their brochures, the sector would fall into a deeper mess than at present.

Industry body Assocham had recently mooted the idea of having an escrow account, which can ensure that payments received from the buyers is utilised towards the construction and development of the said project.

“Very few projects are funded through deposits into the escrow accounts. In its absence, the buyer would remain at the mercy of the developers, till the validity of the lock-in and payment commitments,” said Dabas. He added that payments made against project “A” can legally be used by the recipient for other purposes too, since it is legitimately accessed.

However, R Nagaraju, general manager corporate planning of Delhi-based developer Unitech, said that an escrow account for all projects will make it difficult to simultaneously manage various product portfolios of the company. He further reasoned that subsidising a low-profit project with that of high profit projects is a commonly accepted business practice.

Nitty-gritty aside, the end-user who puts in his hard-earned money into buying a house would want to move in it as promised by the developer.

Whether the delay happens due to governmental apathy or the lack of business acumen on the part of developer, the sufferer ultimately remains the end-user.

Source:http://www.mydigitalfc.com/real-estate/affordability-trap-171

Demand up for NCR budget houses

NEW DELHI: Even as the economic recession is running its course, there is one area where the shadow of gloom has not fallen. The demand for affordable houses in the NCR has, in fact, gone up as more and more people are coming forward to buy their dream house.

According to reports by leading property consultant agencies, there’s good news on the residential segment more and more people are coming forward to buy their dream house, albeit with minor adjustments. Affordable housing is the buzzword as the real estate market is limping back to normal.

Pramod Thakur, a broker in Gurgaon, said, “Its not that people have stopped wanting to buy a house. Prices were too high for most projects. However, in the past couple of months, a number of low or medium budget housing projects have been launched in the NCR, and the response has been good.”

It’s a trend that consulting agencies, too, have noticed. A recent report (for the second quarter of 2009) by Colliers International notes that residential projects launched 25-30% below prevailing market rates have received good response. A market report by Cushman & Wakefield added, “In the mid segment, Gurgaon and Noida witnessed noticeable correction (of prices) over the year due to competitive prices offered by the developers.”

A senior executive of a leading developer said, “Luxury housing, with world class amenities, is restricted to high end users who constitute only 5% of the population. It was time for the developers to look at the large middle class population which requires affordable housing.”

That developers have realized it is obvious from their behaviour in the past few months. Even as new projects were launched in Gurgaon and Noida in the low to mid range Rs 30-45 lakh other big projects that had already been launched saw addition of smaller flats in high-end projects. For instance, Tulip Orange, The Residences, Vatika Bellevue and IRIS-Emilia-Primrose apartments were launched by builders like Tulip, Unitech and the Vatika Group in the affordable segment some months ago even as reports of DLF changing its housing designs in Gurgaon to squeeze in more two-bedroom units, along with four-bedroom homes, makes the rounds of the real estate circle.

That there’s a world of difference between the high end projects and the affordable housing is obvious. For instance, most of these new projects have reduced floor areas, with some even having reduced floor heights to cut costs. However, the fact that the prices are within budget and there’s support from banks most have slashed rates with SBI offering housing loans
at 8% interest in the first year has prompted many to opt for buying a house in the prevailing downturn.

Incidentally, the affordable housing market in India that is increasingly being targeted by developers is worth at least Rs 3 trillion and will see demand for 2.06 million homes by 2011, said a survey conducted by property consultant Knight Frank India.

source:http://timesofindia.indiatimes.com/news/city/delhi/Demand-up-for-NCR-budget-houses/articleshow/4996638.cms

Omaxe`s arm to develop hi-tech township in UP

Omaxe`s  subsidiary – Rivaj Infratech has entered into memorandum of understanding (MoU) with Bulandshahar Development Authority for the development of hi-tech township in Bulandshahar, Uttar Pradesh on a proposed area of 3601.19 acres.

The proposed hi-tech township is well connected to Delhi, located in NCR Region adjoining Greater Noida adjacent to proposed Eastern Peripheral Expressway and North-East Railway Freight Corridor and will have estimated revenues of over Rs 75 billion and is to be executed in Phases over a period of 5 to 7 years.

Omaxe is a leading real estate development companies in India. Omaxe`s ventures in the real estate business include developing integrated townships, group housing, shopping malls, multiplexes, hotels, resorts, IT parks, biotech parks and SEZs.

Shares of the company gained Rs 5.1, or 4.34%, to trade at Rs 122.65. The total volume of shares traded was 415,172 at the BSE (2.25 p.m., Thursday).

Go and grab your dream home

A house for Mr Surinder Sharma  will now cost less with markets correcting approximately 10-30 per cent in Delhi NCR, Mumbai, Bangalore and Chennai. The next three months, say real estate watchers, are the best time to close a deal.

Where property buying goes, the buzz is that it’s no longer the worst of times. For instance, real estate worth Rs 50 lakh six months ago, will now cost 40 lakh. And with interest rates down to 8 per cent from 13-14 per cent, what the consumer shells out effectively is Rs 32 lakh. In other words, this is the best time to buy.

Indirapuram based finance  professional  Rakesh Mishra  started his search for a house four months ago.  He zeroed in on a project which was launched last month. It’s at a prime location, and comes for a good price. “With the Navratra discount, the house cost me Rs 26 lakh,” he says.

Deals like this are bringing realty back to life again. “This is the right time to do your research and consider buying a  house at the right and real price. Developers are more than willing to give in to the demands of a serious buyer,” Dr. Devender Gupta CMD, Century 21 India. Many who aren’t buying are window shopping. Average buyer interest over the last two months has risen to 30-40 per cent. Experts anticipate an upward trend in the market between May and July. With prices rationalising in many pockets across the country, the dream house is looking affordable for a significant corpus of aspiring buyers. Those who have identified a suitable property and have the financial means to take the plunge should do so now. A deferred decision, say experts, might mean passing over the best bargains.

Developers are wooing customers like never before. “The buyers, chiefly end users are back into the market. There are realistic bookings happening today,” said Alimuddin Rafi Ahmad, managing director of prestigious ILD group. PK Jain,Executive Vice President,PNB housing finance Ltd agrees. “Developers this season are seeing a lot of inquiries, the phones have started to ring again and that is very encouraging. With interest rates dropping enough to take a home loan and prices correcting by almost 10-30 per cent, it’s a good time to get back to the market.”

Even top developers DLF and Unitech who focus on luxury apartments are now coming up with affordable housing projects. Rajeev Rai,vice president, Assotech group, says that the prices have corrected by almost 30 per cent. Developers are tailoring products according to customer needs across all segments, instead of the earlier stress on high-end housing.

Moreover, as Sunil Jindal,director, SVP group points out, “Besides the interest rates and prices moving downwards, consumer fatigue has also set in. How long will a buyer wait? He may as well come forward and buy.” The market is seeing a new movement because of the pent-up demand from end users —  people who typically plan to buy a property for their children and see a future in real estate, says an executive of Cushman & Wakefield. Those with a budget of Rs 20-30 lakh should seal the deal as any further correction is unlikely, points out Jindal.

According to Chaitanya Manohar, director & COO, L.J. Hooker India, Bangalore, “We have seen increased level of activity (enquiries) across Bangalore specifically in projects that are close to completion (possession in 6-8 months). There has been tremendous interest especially in the Rs 20-45 lakh range from first-time homebuyers.” Buyers today have plenty of choice; there are properties under construction for which possession is due in the next three to nine months. “He can expect reasonable returns as the market would be up and moving when he finally gets his house,” says Anil Makhijani of Mak Realtors of South Delhi.

So does that make it a bad time to sell? Well, perhaps. Rizwan, a senior manager with a job portal, recently sold his apartment in Faridabad for the same price at which he had bought it. “I had to dispose of the Faridabad house to take possession of my house in Indirapuram. The house cost me Rs 1,690 per sq ft two years ago. I did incur a loss in terms of the EMI and the foreclosure charges I had to pay the bank,” he said.The market is not favouring the seller, but he can use it to his advantage. He may be able to sell his house to move to a better location or upgrade from a two-bedroom house to a three-bedroom at the same price. A person who bought property more than 3-4 years ago may make a profit if he sells now

http://www.mynews.in/fullstory.aspx?storyid=22058

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

‘Property brokers expect prices to increase’

Residential property builders have something to cheer if the result of a poll of property brokers conducted by Edelweiss Capital is any indication. The pan-India poll shows that property brokers expect prices of residential property, especially i n the Mumbai and NCR region, to increase around the Budget, Edelweiss said in a press release issued here.

“Throughout India, property brokers have turned positive on the Indian residential realty market, in the last three months,” the poll said. There has already been an increase in the number of transactions in the past one month against nil in the preceding five months, it said.

The poll was conducted amongst 100 odd property brokers in the first-half of June in the four cities of Mumbai, NCR, Bengaluru and Chennai and 20 micro-markets. A significant change in sentiment post-elections and preceded by strong stimulus measures have contributed to a strong recovery in volumes and prices, the release said.

According to the poll, nearly 87 per cent of the brokers surveyed endorsed that transactions had indeed increased in the last one month

Source : http://sify.com/finance/fullstory.php?a=jg2q31hcedf&title=’Property_brokers_expect_prices_to_increase’&scategory=real%20estate

Premium demand outstrips middle-class wants

The National Capital Region is witnessing frenzied activity again. This time round, it is across segments and in all categories including plots,  floors and apartments. The elections were a big driver. Affordable housing has caught the fancy of private developers in Delhi, and large developer groups from the NCR, such as DLF have launched affordable housing in Moti Nagar.

Values have gone up by 8-10 per cent across the board in established areas of Delhi and another 5-7 per cent hike is expected in capital values after the budget. The buyer profile includes end users, investors , builders and High Net Worth individuals .

In premium residential areas such as Defence Colony, Vasant Vihar and Greater Kailash there has been a significant number of transactions. As a result there is very little stock waiting to be sold in the market. Only those sellers who are asking for unreasonably high values are left with stock. According to a real estate consultant , “In a rising market the expectation of the owners rises faster than the market. In a falling market, on the other hand, their expectations fall slower than the rest of the market.”

In the less premium market such as Saket, Hauz Khas and Green Park the rate of transactions has been low with values falling 15-20 per cent from peak values. In middle class areas such as Moti Nagar and Vikas Puri values have registered a steep fall of almost 30 per cent.

Mayur Vihar and much of East Delhi is riding the crest of the Commonwealth Games and the advent of the Metro. Areas which had previously recorded very low capital and rental values have already witnessed a 100 per cent rise. The reason for shifting of population from expensive Noida to the more affordable Mayur Vihar has been the rental values and the steadily rising demand for rental housing. The advent of the Metro will enhance these values further.
The demand for builder floors saw a drop of 37-50 percent across Delhi in the last few weeks. With active trading in plots across South and West Delhi, the builder floors market is expected to rebound .

Rental values of builder flats and apartments did not undergo any major change in Q3-Q 4 2008-2009 . They are more or less stable with just a marginal change of 5-15 per cent in the prices depending on the location and deal. As per the local real estate agents in Delhi, people living on rent are the end users and hence there is always a demand for rental homes in Delhi.

Delhi retail market has been slow with a mere 10 per cent transactions happening in the last few months. Retail malls are fetching rental values of Rs 225-250 per sq ft on lower floors and Rs 100-125 per sq ft for the upper floors. On high streets rental values ranged between Rs 700-800 per sq ft, down from Rs 1100 per sq ft an year ago.

In neighbourhood markets, such as Lajpat Nagar and Sarojini Nagar small format units were available at Rs 350-400 per sq ft. However, these come without any power back-up or maintenance. Super to carpet area ratio in small format stores is a mere 10 per cent compared to the 40-50 per cent loading in large format store and malls.

Delhi market has been witnessing a weakening sentiment because of the global economic slow down and consequent job losses. Today the active buyer segments are traders and businessmen. According to experts there is money with potential buyers but they are holding back, either waiting for market to bottom-out or because they are waiting for the economic scenario to improve. For serious end user buyers this is probably the right time to buy. After this once the Metro advances from across Delhi to the NCR, values are bound to rise. Today it is possible to negotiate with sellers but after a few months this may not be possible.

The retail market will take more time to stabilise. Neighbourhood markets and Local Shopping Complexes have scored over shopping malls which have seen a drop in footfalls.

Source : http://economictimes.indiatimes.com/News-by-Industry/Premium-demand-outstrips-middle-class-wants/articleshow/4709403.cms

Affordable Housing Picks up Market in Delhi- NCR

After a bad year for the property market sales for affordable houses finally seem to be picking up in Delhi-NCR and right pricing and location seems to be doing the trick. Two housing projects in Delhi-NCR have been fully booked within days of launch. According to data available, 3300 flats in Jaypee Greens new project ‘Aman’ on Noida-Greater Noida expressway were booked on day 1. These flats were priced at Rs 2100 per square feet. Last year Jaypee had launched flats in the range of Rs 4500-6000 per square feet along the same expressway. Also, 1000 independent floors in BPTP’s project Park Elite in Faridabad were over subscribed. BPTP received 3700 bookings worth Rs 80 crore for the project. Analysts say that builders have finally come around to target middle class customers with more liquidity being made available and interest rates going down further.

Santosh Kumar, CEO of operations at JLLM, said, “Prices are realistic, which is basically the developer making a 25-40 per cent margin. Secondly the new government is focusing on infrastructure, so there’s also an indication that interest rates may go down again.” However, it’s not only end users who have started queuing up for affordable houses. Reports suggest atleast 30 per cent of these flats have been booked by investors and brokers. Anuj Sharma, a real estate analyst said, “Investors have made a lot of bookings and in future they will get a good premium out of it say 10-15 per cent.” Well, the apprehension that real estate prices have approached the bottom has finally seen demand picking up for affordable projects. But the big question is whether these projects will be completed on time.

Source : http://www.indianrealtynews.com/real-estate-india/affordable-housing-picks-up-market-in-delhi-ncr.html

Now, affordable housing in NCR

After a bad year for the property market sales for affordable houses finally seem to be picking up in Delhi-NCR and right pricing and location seems to be doing the trick.

Two housing projects in Delhi-NCR have been fully booked within days of launch.

According to data available, 3300 flats in Jaypee Greens new project ‘Aman’ on Noida-Greater Noida expressway were booked on day 1.

These flats were priced at Rs 2100 per square feet. Last year Jaypee had launched flats in the range of Rs 4500-6000 per square feet along the same expressway. Also, 1000 independent floors in BPTP’s project Park Elite in Faridabad were over subscribed. BPTP received 3700 bookings worth Rs 80 crore for the project.

Analysts say that builders have finally come around to target middle class customers with more liquidity being made available and interest rates going down further.

Santosh Kumar, CEO of operations at JLLM, said, “Prices are realistic, which is basically the developer making a 25-40 per cent margin. Secondly the new government is focusing on infrastructure, so there’s also an indication that interest rates may go down again.”

However, it’s not only end users who have started queuing up for affordable houses. Reports suggest atleast 30 per cent of these flats have been booked by investors and brokers.

Anuj Sharma, a real estate analyst said, “Investors have made a lot of bookings and in future they will get a good premium out of it say 10-15 per cent.”

Well, the apprehension that real estate prices have approached the bottom has finally seen demand picking up for affordable projects. But the big question is whether these projects will be completed on time.

Source : http://profit.ndtv.com/2009/06/03234043/Now-affordable-housing-in-NCR.html

NRI Community Comes in Support of the Realty Sector

Notwithstanding the impact of slowdown on realty sector and even after demand for flats up to Rs 30 lakh and 40 lakh and above really hit a new low, thre are still ready buyers for independent houses. These hardy customers don’t take much time to grab an independent house in any good locality and location. These deep-pocketed guys always look for such properties.

According to realty experts, though not many such properties come up for sale, but once they do come up, there are several buyers staking claim over them. And if the house is free from all kinds of disputes and the title is also clear, a seller need not worry he has to wait very long to meet a customer for his house, says Titu Sethi, a South Delhi-based realtor , who has played a key role in sealing many deals involving bungalows and kothies.

Who buy independent houses after paying such huge sums? And another relevant question — whether the new buyer uses the property for his own use? Apparently, the profile of such buyers is mixed.

They may be NRIs, builders, or it is also possible that two or more brothers buy one house in order to live together with their families. While the concept of joint families is disintegrating and disappearing faster from the urban landscape, this fact lends hope that all is not lost for the concept of joint families and there are still many brothers who prefer to live under one roof.

Realtor Pramod Chopra of East Delhi says that he has seen, at least in some cases, where brothers buy one house and then start living on separate floors of the house. Businessman Rajat Dhawan and his elder brother did the same thing. Says Dhawan, “When we sold our family house at Nizamuddin West, we were asked by many friends and relatives if we were separating. We said, no! After selling our house, we purchased a 500 sq feet plot in DLF. Both my brother and myself built a house there and started living with our families.”

Coming back to the brood of happy buyers of big bungalows and kothies, realtors say that small-time builders also don’t miss an opportunity to buy houses in posh areas. Eventually , they convert such properties into flats and floors and then sell them off.

It has been happening in Delhi for many years now. Even in bad times, so far as realty sector is concerned, the large NRI community is also buying independent houses in Delhi and in NCR towns.

A Noida-based realtor says that after attack on Indians in both Kenya and Uganda, some Indian families purchased big kothies in Noida . It may be recalled that the family of a wellknown known Sikh businessman of Uganda, Gurdayal Singh Dhillon, too purchased a big house in Noida and a part of his family settled down there. Dhillon also remained the High Commissioner of his country in the country of his forefathers as recently as a few years ago.

But not all NRIs are buying houses because they are being persecuted in their adopted countries. Thailand-based NRI Surinder S Chawla says the reason his family purchased an independent house in Delhi, in New Rajinder Nagar , was that he and his other family members visit India very often in relation to their business interests as well as for meeting relatives here. And they thought it a better idea to have a house here than spending a bomb on hotels.

As far as NRIs are concerned, they too are buying flats and floors in Delhi and the NCR, even though builders are feeling the pinch in selling their flats. Sunil Jindal, CEO of SVP groups, says that NRIs from the UK, the US, and Canada have played a stellar role in lifting the spirits of realty sector. They are buying up flats, plots, floors and independent houses.

A random survey of New Rajinder Nagar, Jor Bagh, Multan Nagar, Greater Kaliash-II and Har Gobind Enclave reveals that around 12 independent houses were sold in these areas during the last six months. They costed between Rs 4 crore and a mind-boggling Rs 40 crore.

Experts say that for those who have ready cash, this is an ideal time to strike gold. Currently , the property prices are hovering quite low – reason enough for some smart people to grab any possible opportunity in purchasing the a property free from all kind of disputes.

Source : http://www.indianrealtynews.com/real-estate-india/nri-community-raises-the-spirits-of-realty-sector.html

Over 100 malls to spring up in India by end-2010: Report

Mumbai (PTI): Keen on matching supply with demand, real estate developers may spring up more than a hundred malls spread over 30-million sq ft in the country by end-2010, a report says.

“Between now and 2010, an additional 31,846,504-square feet of mall space will be created across India through just over 100 new shopping centres,” findings from a report titled ‘Mall Realities India 2010′, said.

However, 54 per cent of expected mall supply in 2008 was deferred to 2009-10, the report compiled by real estate consultancy firms, Cushman & Wakefield and Jones Lang LaSalle Meghraj, said.

“As far as retail real estate in the top eight was concerned, as much as 11-million sq ft of expected mall supply in 2008 was deferred to 2009-10, which was a reduction of 54 per cent from the projections made at the beginning of 2008,” it said.

Of the over 30-million sq ft of malls to be added by end-2010, India’s north zone is leading with a total of 14,790,000 sq ft.

“That translates into 45 malls expected in the North Zone with 24 in the Delhi NCR (National Capital Region) itself,” it said.

West Zone is the second-most prolific region in terms of additional projected mall supply of 7,438,504 sq ft through 47 malls, it said.

South and East Zones total up a projected mall space at 5,865,000 sq ft (through 29 malls) and 3,753,000 sq ft (by way of 13 malls), respectively, it said.

“Interestingly, while most projects in North, West and South Zones are in and around Tier II cities, in the East, the majority of developments are to open in or around West Bengal’s capital Kolkata,” the findings said.

The list of properties scheduled to open in this period are located across metros, mini-metros and Tier II towns, including in Delhi, NCR, Mumbai, Pune, Aurangabad, Raipur, Bangalore and Siliguri, among others.

Source : http://www.hindu.com/thehindu/holnus/002200905311051.htm

Mumbai, Ahmedabad see steepest fall in mall rentals

AHMEDABAD: Once buzzing with a lot of business activity, shopping malls too are feeling the pinch of the slowdown. While mall rentals in retail  hotspots like Mumbai and Ahmedabad have seen a correction of 36-42%, other shopping destinations like Hyderabad, Pune, Kolkata and the NCR saw a drastic dip since January 2009.

The mall and main street rentals fell as much as 42% in Mumbai and 25% in the NCR in the January-March quarter, compared to preced-ing quarter, according to a report by real estate consultancy Cushman & Wakefield. Ahmedabad saw corrections in the range of 20-36% over the last quarter.

In the past one year, mall rentals in Ahmedabad alone have corrected by a whopping 33-55%. The correction in rental points to a waning retail sector in Ahmedabad. Be it stores of Indiabulls Retail, Spencer’s Retail or Subhiksha, the retail biggies have either shut shop (completely or partially) or have shrunk in size.

In Mumbai, main-street locations also saw rental correction with Colaba Causeway recording the highest correction of 38%.

Hyderabad recorded one of the highest mall rental corrections of 25-29% due to restrained demand from retailers. Main-street rentals also saw corrections in the range of 5-20%, largely due to renegotiations and restrictive demand.

In Kolkata, the Theatre Road and Elgin Road, two prominent street markets of the city, registered 10% correction on the account of exit of some prominent retailers. In Pune, the Bund Garden Road witnessed the steepest correction of 25%. MG Road remained stable on account of lack of supply.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Mumbai-Ahmedabad-see-steepest-fall-in-mall-rentals/articleshow/4488973.cms

Rentals tumble as retailer response dip: C&W

Retail real estate across the country continued to reel under the current economic pressure.

According to a report prepared by Cushman & Wakefield, the world’s largest real estate services firm, most retail micro markets, both mall as well as main streets have seen a further correction in rental values during the first quarter ended March 31, 2009.

Mumbai saw the sharpest decline in rental values for both malls and main street. Suburban Goregaon, witnessed a fall of 42 per cent, while rentals in places like Colaba Causeway corrected by 38 per cent.

In the national capital region (NCR), main street location of Greater Kailash, M Block witnessed a 25 per cent decline in rental values while mall rental values in Noida dropped by 17 per cent.

Ahmedabad saw a downturn in rental values in malls and main street rentals with corrections in the range of 20 per cent to 36 per cent over the last quarter.

Rajneesh Mahajan, executive director, retail services, Cushman & Wakefield India said: “Even while a correction in rental values is recognised as a potential catalyst for retailers to re-enter, receding end user demand has severely curtailed uptake of space across most micro markets.”

“Thus the trend of further correction is likely to continue in short to medium time frame leading to further correction in both mall rentals as well as high street rentals. Only established retail micro locations and successful malls are expected to hold steady largely on account of revenue potential and low vacancy,” he further added.

Furthermore, in the same period only 1.4 million sq.ft. of fresh mall supply was added across seven major cities concentrated only in Mumbai and NCR. The fresh supply was much below initial expectation largely due the slowdown in uptake of space by retailers, which led developers to reduce the speed of construction in already underway projects.

A few other developers, which are yet to start construction of previously announced projects, may be reconsidering their retail mall plans. The slowdown in mall construction is expected to keep the supply low over 2009 and may help in maintaining a healthier supply to demand equation going forward.

The estimated mall supply by end of 2009 is calculated to be 17.66 million sq.ft., about 11 million sq.ft. of the same has been carried forward from 2008.

Source : http://www.business-standard.com/india/news/rentals-tumble-as-retailer-response-dip-cushmanwakefield/60560/on

Real estate prices declined further due to slowdown

MUMBAI: The failure of retailers to exploit the fall in real estate prices triggered by the economic slowdown, has led to a further correction in  property prices across major metros of India, real estate consultant, Cushman & Wakefield (C&W), has said in a report.

“Most retail micro-markets, both malls as well as main streets saw a further correction in rental values. Mumbai saw the sharpest decline in rental values for both malls (Goregaon -42 per cent) and main streets (Colaba Causeway38 per cent),” C&W said.

Mumbai witnessed the second-highest mall supply with an addition of 3,05,000 sq ft in Q1 09. However, it also recorded the highest mall rental correction, the report said.

Receding user-demand has severely curtailed uptake of space across most micro-markets, the report said.

“The trend of further correction is likely to continue in short-to-medium-time frame leading to further correction in both mall rentals as well as high-street rentals,” C&W India Retail Services, Executive Director, Rajneesh Mahajan, said.

Delhi’s National Capital Region (NCR) witnessed an up to 25 per cent decline in rental values, the report said.

“Increase in malls has impacted main street rental values, which have seen a downward trend especially in areas around South Delhi like Greater Kailash I M-Block market recording a correction of 25 per cent,” C&W said.

While the main streets of Bangalore saw much wider corrections in the range of 6-28 per cent, Hyderabad recorded one of the highest mall rental corrections between 25 per cent to 29 per cent.

Kolkata saw mall rental values shrink by 12-25 per cent due to delays in mall projects, while those in central Chennai were pulled down by 8 per cent, C&W said.

It noted that only 1.4-million sq ft of fresh mall supply was added in the first quarter of 2009, mainly in Mumbai and NCR and five other major cities.

The fresh supply was much below initial expectation largely due to the slowdown in uptake of space by retailers, which led developers to reduce the speed of construction in already-underway projects, it said.

“Estimated mall supply by end-2009 is calculated to be 17.66-million sq ft, approximately 11-million sq ft of the same has been carried forward from 2008,” C&W said.

Other developers, who are yet to begin construction of previously announced projects, may be reconsidering their retail mall plans, the report said.

“Most retailers are now renegotiating their rental commitments as per the actual business potential in the mall, thereby exerting downward pressure on the rental values,” Mahajan said.

“Many developers have now begun to support retailers by reducing the fixed occupancy cost, as well as offering revenue-sharing opportunity with retailers to promote increase in occupancy,” he added.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/News-/Real-estate-prices-declined-further-due-to-slowdown/articleshow/4487028.cms

Oversupply to reduce office rents further: Knight Frank

Oversupply is expected to keep the rental market for office space in metro cities under check over the next three to four quarters.

In the next two years, 183.1 million sq ft of A-grade office space is estimated to be added in seven big cities, while the demand will be around 122.4 mn sq ft, said a report prepared by Knight Frank India.

A forecast by this international real estate consultancy suggests that “in Mumbai, rentals will fall for some more months and bottom out in the second half of next year, while in the national capital region (NCR), rents may bottom out in the second half of the current financial year in most areas.” In both metros, the correction in rents would be between 40 to 60 per cent by the first half of next year of their peaks in 2007-08.

Knight Frank has developed a model to forecast rents for office space, taking into account data of the past 15 years. These include GDP, industrial investment projections, behaviour patterns of consumers, supply-demand scenario and so on.

Knight Frank proposes to refine this model along the way and test it for its accuracy. Pranay Vakil, chairman of Knight Frank India, said he hoped the attempt works; if so, it could help clients take more informed decisions.

Knight Frank is the first agency to develop such a forecasting for rents and the model is based on past data and economic growth projections and other market variables. It also assumes that medium to long-term consumers continue to behave in the manner they did in the past.

According to the forecasts, average rentals in Gurgaon are Rs 51 a sq ft and expected to fall to Rs 44 in the second half of the current fiscal and may remain around that for a year. Rents were at their peak at Rs. 120 in 2007-08. For Noida, rents have fallen from Rs 90 in 2007-08 to Rs 44 now and will further fall to Rs 34 in the first half of the next fiscal.

In Mumbai, average peak rentals in most office areas have fallen by 40-60 per cent and are expected to come down by another 5-10 per cent in the second half of the current fiscal.

Source : http://www.business-standard.com/india/news/oversupply-to-reduce-office-rents-further-knight-frank/357017/

Buyers still wait for prices to dip

S. Shanker

Yet another property expo in Mumbai was organised by the 400-strong Maharashtra Chamber of Housing Industry in the second week of April.

An overwhelming response satiated the organisers, who said 77,752 visitors flocked to the exhibition this year as against 66,784 in October 2008. On the surface it did appear that many buyers preferred to merely touch base to know what the current offerings were rather than take a purchase call. However, MCHI president, Mr Pravin Doshi, felt it was thumbs up from home buyers, especially from the first time home-seeker who appeared convinced it was the right time to buy, after waiting it out for long.

However, experts and analysts appear a little less convinced, though they do agree that developers have seen some numbers on their sales charts in the last four months.

Researchers at Centrum feel prices in Mumbai still remain unaffordable. Compared to the NCR, Bangalore and Chennai markets which have seen prices drop 30-40 per cent, property prices in Mumbai had fallen only by 15-20 per cent, they contend, while pointing to concerns over completion of projects.

They say about 75 per cent of the projects on offer at the exhibition were the same that were showcased at the October 2008 Property Expo, which points to little or no off-take in residential volumes in Mumbai between October 2008 and March 2009.

With 57 per cent projects on display slotted for completion after March 2010, apprehensions on delivery hamper conversion of enquiries to actual transactions.

Buyer poll

A buyer poll conducted by Centrum indicates that a majority of buyers were for a further 20 per cent cut in prices and would take a call only after six months, keeping in mind fears of job losses and salary cuts.

Mr Kumar Gera, Chairman, Confederation of Real Estate Developers Association of India, says the term affordable is a misnomer and cannot be used merely to identify projects without frills. Projects that do not have swimming pools, landscaping and club houses should not be categorised as affordable on the price count alone.

Affordability is what a buyer can afford, which should be estimated at about 50 per cent of his combined family income. It varies from buyer to buyer and city to city. A Rs 20-lakh apartment in Mumbai and a Rs 20-lakh home in a tier III city are not the same, he says.

There are early signs of recovery though the going is slow. A full scale turnaround in real estate could happen only when the economy revives and there was little chance of prices going up till then. In the meanwhile, demand was expected to accumulate as supplies dwindle due to the lull in the market.

Mr Gera says prices have come down significantly and buyers could take the plunge now. A 5-10 per cent drop could happen in some pockets, but then real estate investment should be looked over a 10-year horizon, when considerable appreciation can be netted.

VISIBLE TRENDS

Motilal Oswal researchers too feel buyers are holding back, awaiting a further correction in prices, despite many developers across Mumbai reducing prices by 10-30 per cent and being open to price negotiations during the last 4-5 months.

The researchers say they expect most developers to increasingly focus on the affordable housing going forward.

Visible trends at the expo they felt were a huge pent-up demand for affordable housing as also a higher interest in city-centric properties.

Suburban Thane has seen several launches in the last three months, with developers such as Dosti, Hiranandani, Kalpataru, Lodha and Acme in the lead with a fair degree of success.

Source : http://www.thehindubusinessline.com/iw/2009/05/03/stories/2009050350681500.htm

Realtors making flats according to customer needs

NEW DELHI: After many weeks and months, the phone of P K Jain of PNB Housing Finance started ringing. He was praying for the day when the phone  started buzzing — the calls from home loan seekers had just begun. Jain is not at all upset that due to these incessant calls, he couldn’t read the newspaper. “Well, after a long hibernation, the serious buyers are coming back again. They are looking for a house of their choice and enquiring about the nitty-gritty of a home loan,” says Jain.

There is a definite buzz in the market, nowadays, with developers wooing customers for all their worth, and they are even ready to accept the ‘diktats’ of their would-be customers. “The serious buyers are back in the market. People are booking their flats,” says Alimuddin Rafi Ahmad, MD of of ILD group.

“Developers this season are seeing a lot of inquiries. There are enquires from endusers. With interest rates dropping enough to take a home loan and prices correcting by almost 20%, it’s a great time to get back to the market,” feels Sanjay Singh, vice president of Century 21 India.

Realty experts say that more than Delhi, NCR or big cities, Tier 2 and Tier 3 cities are seeing a flurry of activity. People are on buying spree in places like Gwalior, Mathura, Bhubaneswar, Meerut, and Bhopal. Rajeev Rai, vice-president of Assotech Group, says that their project in Bhubaneswar has seen excellent response in the last couple of months. “Things are far better than NCR.”

Jain says that with the correction in prices and the fall in home loan interest rates, the somber and sleepy realty market is seeing a revival. Moreover, developers are making flats according to customer needs, across all segments. They are not concentrating and targeting only the rich customers.

Sunil Jindal, director of SVP group, has an explanation for this sudden change in the market, “Apart from falling interest rates and prices moving downwards, the enduser can’t postpone his plans for forever. The enduser has to buy his house. He can’t live in a rented house indefinitely. Hence, the market is slowly but surely looking up.”

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-Trends/Realtors-making-flats-according-to-customer-needs/articleshow/4474849.cms

Decline in Office Rentals continues

Office markets across the country continued to show a downward trend as most markets recorded negative growth in rental values after supply across eight major cities in India outstripped absorption by 45 per cent.

Mumbai, the financial capital of India, witnessed the sharpest decline in rental values in the first quarter of 2009 while the National Capital Region witnessed significant decline in rental values in central business district in the first quarter of 2009, according to Cushman & Wakefield’s latest office market report.

Micro markets of Mumbai including those of Lower Parel and Worli recorded drops of 37 per cent and 29 per cent respectively from a three per cent and 13 per cent drop respectively in the preceding three months. Rentals in central business district of Nariman Point fell by 13 per cent in the first quarter of this year compared to 20 per cent in the previous quarter.

Rentals in NCR’s CBD, mainly Connaught Place dropped by 17 per cent, the highest in the last 3 years, the property consultant said in the report. The drop comes after a 14 per cent decline in the previous quarter. Bangalore rentals fell in the manageable range of three to seven per cent in key markets.

“The first quarter of the year can be termed as the weakest so far in terms of commercial office take up across major cities in India as compared to a similar period for the last 2/3 years,’’ said Kaustuv Roy, Executive Director, Cushman & Wakefield.

Bangalore witnessed the highest new office space supply of approximately 2.81 million square feet and also the highest demand of 1.29 million square feet. NCR and Mumbai witnessed fresh office space supply of 2.6 million square feet and 2.47 million square feet respectively and absorption of 0.8 square feet and 0.9 square feet respectively. Chennai, which had been reeling under over supply pressures saw moderate supply 0.98 square feet and absorption of 0.9 square feet. Hyderabad and Ahmedabad saw no addition to the current stock.

Vacancy levels had remained largely consistent to last quarter with most IT/ITeS destinations witnessing high vacancy levels. Chennai’s peripheral location (Rajiv Gandhi Salai) recorded the highest vacancy of approximately 42% while the city average was at approximately 18%. The lowest vacancy was recorded in Ahmedabad at five to six percent due to limited leasing activities and no new supply in the market.

Mumbai recorded a vacancy of approximately 11-12 per cent while vacancy levels in NCR stayed at a manageable 8 -10 per cent. Bangalore, Pune and Kolkata remained at an average of 16 -18 per cent. Hyderabad saw some slackness in activities and therefore recorded a reasonably high vacancy of 23% of which prime suburban region comprising of Banjara Hills and Jubilee Hills recorded a higher 35% vacancy.

‘’Re- negotiations and migration to more cost effective locations has been the norm for the cautiously advancing corporate sector. However going forward we are likely to see supply contraction,’’ said Roy.

‘’Acutely affected areas like IT/ITES and certain corporate office destinations will see deferment of projects to bridge the gap between supply and demand. While rental values are expected to be under pressure in short to medium term, going forward lower rentals are likely to have a more positive impact on the absorption numbers,’’ he added.

Source : http://www.indianrealtynews.com/real-estate-india/decline-in-office-rentals-continues.html

Falcon Announces Opening of Booking for “Gulmohar Woods”

Offers Best-in-Class Apartments at 5.5 lakhs

Falcon Realty Services Private Limited (FRSPL), a company actively involved in Land acquisition and Land consolidation in India for over two decades and a premier in green building thought process, today announced official opening of booking for Gulmohar Woods, its affordable housing project with apartments available for as little as Rs 5.5 lakh. Gulmohar Woods is first project to be developed as a part of company’s real estate project- Global Eco-City on Expressway (NH-8) in Delhi – NCR.

The company has announced a flexible and convenient payment scheme that allows buyers to pay only Rs 51, 000/- at the time of booking.

Talking about Gulmohar Woods, Mr. Bhim Yadav said, “Gulmohar Woods will offer best of both worlds – Affordable and Eco-friendly house with world class amenities at just Rs 5.5 lakh only. It is envisaged to set benchmarks for future developments to follow. We are extremely delighted to offer a housing solution which is at par in quality and amenities with premium apartments but still is within the reach of the common man with its affordable pricing. With the home loan monthly installment as low as Rs. 4,000/-, the dream of every man to own a house in NCR is now going to come true. We are quite upbeat about customer response also, because ever since we announced the launch of our project in September last year, we have been receiving inquiries from customers regarding booking of apartments.”

Spread over 35 acres, Global Eco City encompassing a judicious mix of executive homes, weekend homes, home for all & premium villas, the project promises to be India’s best ever green real estate project till date. attaining eco-friendly, real estate development through natural resources like green building, solar energy, organic farming, water recycling, harvesting and plantation of trees, FRSPL aims to provide quality housing, retail and smart work space on affordable price with its GEC project.

The apartments are being oriented to give beautiful views of the lush green landscape, making you feel one with nature, all the time. The well planned and uniquely designed apartments at Gulmohar Woods are sure to instil pride in their owners and should set benchmarks for all future residential projects to follow.

Inspired by the different aspects of mother nature and blending them perfectly in the luxuries of modern living, Global Eco City promises to be the most practical place to live in for people who are nature lovers, health conscious and smart investors. GEC is an eco-friendly master planned community offering serene, green, clean, heavenly, pollution and garbage free zones.

About Falcon Realty Services Pvt. Ltd.

FRSPL plans to bring the best in class eco-friendly real estate projects, create strong infrastructure and support varied developments in and around industrial hubs. FRSPL and its group companies specializes in conceptualizing, formulating designing and executing various real estate projects including townships, group housing, corporate buildings, IT parks, biotech parks, knowledge parks, medi city, sports city, hotels and cultural parks.

For More Details Contact:
T.Anand Mahesh / Swati Gupta
Mavcomm Consulting Pvt. Ltd.
Email: anand@mavcommconsulting.com / swati@mavcommconsulting.com

http://news.prnewswire.com/ViewContent.aspx?ACCT=109&STORY=/www/story/04-08-2009/0005002958&EDATE=

Shopping malls; adding to woes in Delhi and NCR

FOR THE past few years, Mall culture has rapidly increased in major cities of India. Likewise, in national capital Delhi and its neighbouring cities Noida, Faridabad, Gurgaon and Ghaziabad, shopping malls are rapidly mushrooming. In fact, in almost every nook and corner of Delhi and NCR (National Capital Region), you can see huge shopping malls, selling everything from A to Z. But at the same time, construction of shopping malls is adding to the woes of the common people.

Hardly five to six years back, in Delhi the only shopping mall was perhaps the Ansal Plaza at Khel Gaon Road. Constructed by the renowned Ansal brothers, Ansal Plaza was a favourite shopping mall and entertainment zone for Delhiites and tourists alike. Several famous international brands like Adidas, Nike, Levis, etc had their showroom at Ansal Plaza. Besides these, there were several eating joints, offering delicious food to visitors.

But the fact is that more number of people used to visit Ansal Plaza for ‘window shopping’ and relaxing on the stairs outside the mall. You can say Ansal Plaza became a hangout zone for upper middle class people and shopping was a dream for lower middle class people, due to high cost of the things on sale

Later on, real estate developers on the pattern of Ansal Plaza developed a few more malls in Delhi and adjoining areas. But the concept of new malls were different and more friendly for both lower middle class and higher classes. Besides shopping and eating joints, most of the malls had multiplexes. So, people welcomed the mall culture and more and more shopping malls came into existence.

Now coming to the point, everything has its pros and cons and it applies for mall culture as well. Today a cut throat competition is going on among the shopping mall developers. For popularity and acceptance among the shoppers, developers are eyeing the residential areas and offering a high amount to government for getting approval.

The grim fact is that several areas in Delhi that earlier used to be a park or playing ground have now been converted into shopping malls. The most appropriate example is the Select City Walk at Saket, which was earlier an open area and used by the locals for leisurely walks and as play ground for children. Of course, the mall is beautiful in its appearance and has several huge showrooms but it is not beneficial for common people, especially residents of nearby areas.

If you have been in Saket area a few years back and visit the locality now, you will observe a sea change. It seems someone has enveloped the open environs and stopped the people from moving freely. At the same time, huge traffic jams are reported from the area, which again affects the common people.

Similarly, DLF has developed a mall on Nelson Mandela Marg, close to Vasant Kunj as well as JNU. The DLF Mall is a huge mall, having a number of internationally acclaimed showrooms but it will again spoil the serenity of the area.

According to reports within two years, more than 200 shopping malls are supposed to be developed in Delhi and NCR. Most importantly, developers are mostly eyeing the open areas close to residential colonies, which would badly affect the locals.

At the same time, existence of such malls will lead to more traffic jams on the roads.

On the whole, mall culture is not really feasible for Delhi and NCR because it is not friendly for the lower class of people. Next, it is also a threat to Delhi’s unique shopping culture found in areas like Chandani Chowk, Sarojini Nagar Market, Lajpat Nagar, Connaught Place, Karol Bagh and many other markets.

The need of the hour is that government should not allow construction of shopping malls in residential areas or markets existing since a long time in the city. In the future it will be very tough for people of Delhi to find open places to take a leisurely stroll or shop in the open environment. In addition, the ongoing traffic jam issue can be worsen due to construction of shopping malls.

Source : http://www.merinews.com/catFull.jsp?articleID=15712502

Languishing Projects

Kundli is another upcoming locality just beyond the National Capital Region (NCR), strategically situated on NH 1 as one exits Delhi to go to Sonepat in Haryana. Easily accessible from Rohini in West Delhi, Kundli promises to be another Gurgaon within the next 2-3 years, hopefully with better roads. However, the market is facing a slowdown much like the rest of the NCR region in these difficult times for the real estate sector.

Homes in this area have been developed to primarily cater to the middle class segment. TDI City, a project of Taneja Developers and Infrastructure, contains plots of area 250 square yards, 350 square yards, 500 square yards and 700 square yards. Secondary market rate of plots is Rs. 9000 to Rs. 12000 per square yard and flats are priced at Rs 1350 to Rs. 1400 per square foot. Kingsbury Apartments is an instance of an apartment complex in TDI city with impressive designing and architecture. A 2-BHK apartment of area 1110 square feet within this complex costs Rs. 2050 per square foot. A 3-BHK home of area 1625 square feet is priced at Rs. 2000 per square foot while a 4-BHK flat of area 1930 square feet costs Rs. 1950 per square foot.

Located just 4.5 kilometres from the Delhi border on NH 1, Sushant City has been developed by the Ansals, over an area of approximately 250 acres. Plots of area 194 square yards, 215 square yards, 431 square yards up to 718 square yards are available. Homes with built up area of 1180 square feet, 1533 square feet and 2198 square feet are available. Sunshine County is another residential complex offering 17 towers with 12 flats in each tower. 2 and 3 BHK flats of area 1141 square feet and 1615 square feet respectively can be bought here at a rate of Rs 1450 per square foot.

The Kundli-Manesar-Palwal Expressway, the country’s largest expressway project covering 135.6 kilometres, is scheduled for completion by July 2009. This would make Kundli all the more accessible. The expressway will provide high-speed link between northern Haryana and southern districts such as Jhajjar, Gurgaon and Faridabad. The Expressway is to be built on build-operation-transfer basis (BOT) and takes off from NH-1 in Kundli (Haryana). At present it takes at least two-and-a-half hours to travel from Kundli to Gurgaon. Once the Expressway is complete the stretch can be covered in an hour. Kundli might also become a major education with the development of Rajiv Gandhi Education City. “The last 2-3 years saw a good increase in demand for homes in Kundli. However, the market has stagnated now in spite of upcoming projects that would increase Kundli’s self-sufficiency and accessibility,” said Nitin Bhutani, marketing executive with Ansal Properties. “Prices have seen a correction of approximately 15 per cent,” he added

Source : http://www.expressestates.in/full_story.php?content_id=93711

Realtors betting big on NCR to beat slowdown blues

It’s tipped to become the biggest residential real estate market in India in 2009-10. A Knight Frank review of the Indian residential market in Home loan rates may drop shortly |

2007, pegged the residential space marketshare of the Delhi National Capital Region (NCR) at 35% among the top seven property markets in the country by 2009-10. The closest other market in terms of volume was Mumbai with a share of 16%, which is less than half.

While the realty market in India’s financial capital Mumbai has conventionally been very attractive, the Delhi NCR market has now emerged bigger because of a variety of reasons, feel experts.

Even as this region attracts foreign investments, it has become the first choice for many MNCs to set up their headquarters. It always had a huge consumer market, quality workforce and is high on infrastructure growth. Besides, this area is an industrial hub and now there’s growing urbanisation which is fuelling the demand for housing.

Experts feel that the NCR market is, in fact, strong and robust enough to withstand the heat of the slowdown that the sector is feeling. Now, beleaguered developers such as DLF, Omaxe, TDI and Ambience Group are betting big on the NCR region to bail them out.

This market had made big gains during the real estate boom over the last couple of years and has emerged a very significant market for end-users as well as investors, besides the developers. “Delhi NCR is one of the most urbanised regions in the country. It has also traditionally been a sweet spot for investors, both resident and non-resident Indians. While Delhi and the suburban regions such as Noida, Gurgaon and Ghaziabad have a large end-user base, the region’s continuing pace of growth has propelled significant investor-led activity in the other upcoming suburbs,” says Mona Chabbra, associate director, real estate practice, Ernst & Young.

The buyer profile in the NCR region had seen a shift over the last couple of years from investors to end-users. With major global business houses setting up base in Gurgaon and Noida, young executives were getting attracted to innovative offers and freebies on various upcoming projects in this area. Of course, it’s not as if demand has not been affected in these markets.

While Gurgaon and Noida had seen significant investment activity in the past, the current slowdown has left investors shying away. Says Chabbra: “Primary suburbs of NCR are witnessing a significant fall in demand from investors but end-user demand should sustain growth in the medium term. Secondary suburbs of the NCR could face some demand rationalisation until an over-all market upturn.”

Traditionally the NCR region primarily denoted Delhi, Gurgaon, Noida, Ghaziabad, Faridabad and Greater Noida. However, owing to proximity and Home loan rates may drop shortly

improved connectivity, real estate development in NCR has now spread to wider areas such as Sonepat, Kundli, Panipat, Rohtak, Meerut, Bulandshahar, Manesar, Alwar, Dharuhera and Bhiwadi.

Vijay Jindal, CMD, SVP Group feels that areas such as Noida, Greater Noida and Gurgaon offer a lot of facilities because of which their prices shot up. “Ghaziabad, Meerut, Bhiwadi and Sonepat are rapidly becoming the hotbeds of massive development. Most of these areas are also well connected to the NCR thereby being lucrative options.”

Source : http://economictimes.indiatimes.com/Features/The-Sunday-ET/Property/Realtors-betting-big-on-NCR-to-beat-slowdown-blues/articleshow/4167794.cms?curpg=2

Developers Unable to Fulfill Retail Space Target

DLF, Parsvnath and other real estate developers have lagged behind by 54 per cent in their target to open retail space even as retailers’ vacancy climbed to 16 per cent in 2008, according to a study. Cash-strapped real estate developers failed to deliver 11 million sq ft of retail space in 2008, according to a study released by Cushman & Wakefield. Out of the proposed 74 malls in key eight cities at the beginning of 2008, only 34 were delivered through the year, the study showed. Developers in the National Capital Region (NCR) lagged the most with a supply of 4.7 million sq ft compared with the earlier target of 7.1 million sq ft. Developers may continue to restrict their supply, or go slow on retail space by a similar amount in 2009 across key major cities, the study showed.

“For any developer, the vacancy level should not cross over 5 per cent. The vacancy level of 16 per cent suggests that most of the malls across India are finding it difficult to manage their operational cost,” said Rajneesh Mahajan, director of retail services at Cushman & Wakefield. The reason for the shortfall was the mismatch between the potential and actual occupancy. The Indian organised retail sector grew at 25 per cent in 2007. Anticipating the growth of retail sector at above 35 per cent in the coming years, developers had announced big retail projects. However, owing to economic slowdown, the growth of the retail sector has come down to 15 per cent in 2008, resulting in developers deferring their projects for 12-24 months. “From the projected supply of 20.8 million sq ft space in the first quarter of 2008, we will see a spill over of about ten million sq ft development in 2009-10. Lack of funds leading to construction delays and cautious expansion by retailers have resulted in slow absorption of retail space in malls,” said Mahajan.

Owing to high vacancy rates, rentals for retail space have come down between 20 and 40 per cent and a further cut of 10-15 per cent is expected, according to Mahajan. “It is noteworthy that the high streets of Colaba Causeway, Linking Road in Mumbai and South Extension and Greater Kailash in Delhi, which had seen a 100-156 per cent rental appreciation in the first quarter of 2008, witnessed rental drops of almost 40 per cent over the last six months,” said Mahajan. The correction in 2009 would be mainly in non-metros as the ripple effect of the rental correction will reach the tier-II and III cities, said Mahajan.

Interestingly, developers were forced to convert their retail space into office space due to high vacancy. Delhi-based Parsvnath Developers has recently converted one of its metro malls in Shahadra into office space. As the operational cost of the retailers became unviable due to high rentals and lower sales, they began to work on sustaining business through innovative revenue models and retail formats. “A growing trend has seen the consolidation by large retail players of their multiple retail formats under a single roof,” said Mahanjan. According to Cushman & Wakefield, minimum guarantee and revenue sharing models will make for at least a third of all retail deals in the long term. According to Mahajan, most of the deferred projects are under construction and the developers will have to face increased cost overruns for completing these projects.

Source : http://www.indianrealtynews.com/retail-market/developers-unable-to-fulfill-retail-space-target.html

Three new schemes for Indian property investment developer

An Indian developer is starting 2009 on a positive note as it pushes ahead with three major new projects.

Unitech Group issued a statement declaring it had now become India’s leading real estate builder with 22 huge residential schemes across the country. Its latest projects include Iconic Towers in the National Capital Region, Harmony at Uniworld City in Kolkata and Uniworld City in Mohali.

The latter is a particularly ambitious residential plan and covers a huge space of three city sectors including landscaping and a shopping mall.

The company said:

“Unitech today has a market capitalization of around US$10 billion and possess a large land bank of 14,500 acres that spreads across some of the fastest growing cities in the country like Delhi, NCR, Kolkata, Chennai, Hyderabad, Bangalore and Kochi.”

Last month the company said it had been given approval to start work in four more designated service areas – taking its approvals to 20 in 22 Indian service areas.

Founded in 1972, the company also specialises in the likes of retail, construction and wireless services.

The firm is credited with developing the first ‘ultra-luxury’ residential property project in India – Unitech Grande, built in Noida and covering 347 acres.

Source : http://www.offplanpropertyexchange.com/news/2009/01/three-new-schemes-for-indian-property-investment-developer/612

Haryana mulls new package to shore up realty market

CHANDIGARH: Housing activity in Haryana, especially in national capital region (NCR), may soon return to days of glory with the government  contemplating relaxing of financial and procedural norms. The government is engaged in hectic parleys with builders, especially big, amid threats to quit.

With cash reserves dipping in these days of economic slowdown, two leading colonizers had recently applied for refund of licence fee, amounting to over Rs 220 crore, paid for carving out residential colonies in Gurgaon. The move had come after their November meeting with chief minister Bhupinder Singh Hooda failed to get desired results.

Another meeting was held on Friday between town and country planning department officials and colonizers. Though the details are not known, sources claimed realtors stand to gain big-time once the policy-package is finalised. Once in place, it would bring down prices of houses and flats in NCR by 20-30%. Sonepat, Gurgoan, Faridabad and Bahadurgarh are some areas where private colonizers engaged in mega housing and commercial projects are feeling the squeeze.

“There are various things we are working on to provide relief to real estate sector. The idea is to ensure an affordable housing for masses. We have heard their (colonizers) viewpoint and will consider their demands while finalizing the package,” S S Dhillon, special secretary and director, town and country planning department, Haryana, told TOI.

The government is also considering to lower the interest rate and extend the period of external development charges (EDC) payment.

“The EDC and licence fee form at least 50% of the total cost of a flat/residential plot carved out by developers. Hence, any relief here means cutting down on the cost of the project,” a leading colonizer said. “Even after banks have slashed interest rates, the market is yet to look up … any package offered by government will certainly bring down the cost index of flats as well as plotted colonies,” he added.

Source : http://timesofindia.indiatimes.com/India/Haryana_mulls_new_package_to_shore_up_realty_market/articleshow/3929282.cms

Firms may expand into NCR on low rentals: Study

Delhi : Companies, which had deferred expansion plans in the National Capital Region (NCR) due to high property prices, can now think of going ahead as rentals for office space in IT and SEZ segments have declined by up to 13 per cent during the second quarter of 2008.

“The rentals of IT/SEZ segment in Gurgaon and Noida witnessed correction with values declining by 3 per cent and 13 per cent over the quarter respectively,” global real estate consultant Cushman & Wakefield (C&W) said in its report on the office market for second quarter of 2008.

The anticipated supply and deferred expansion plans of the companies resulted in the decline of rents, the consultant pointed out. However, the office rentals in Delhi have risen, though the pace of growth has slowed down. In the Central Business District (Prime) and other micro markets, rentals rose by up to 4 per cent only. Limited supply and robust demand due to convenience of the location pushed the rentals in these areas.

Giving the outlook, C&W said office market is expected to remain firm with rental values rising except for the IT and SEZ segments of Gurgaon and Noida, which are likely to see an estimated supply of 3.3 million sq ft during the third quarter.

Office rentals rise in pockets of Bangalore, Ahmedabad, Kolkata

AHMEDABAD: At a time when global property markets are literally on their knees, small pockets in cities like Ahmedabad, Bangalore and Kolkata have bucked the trend and registered 3-18% rise in office space rentals in the third quarter of 2008. Apart from robust demand for corporate office space, the rise in rentals has largely been driven by lack of quality corporate space in these cities, states a report by global real estate solutions provider Cushman & Wakefield (C&W).

The trend of rising office rentals has been a deviation from the country’s office markets which have largely remained stable despite the addition of 18.41 million square feet (sq ft) of office space in Q3 of this year. Of the new space, a total of 9.21 million sq ft got absorbed during the quarter, while marginal corrections in values (ranging between 1% and 14%) were recorded in peripheral locations of cities like Chennai, and NCR.

Prominent gainers during the third quarter were micro-markets located in Bangalore, Kolkata and Ahmedabad. In Kolkata, office rentals in Dalhousie witnessed an increase of 18%, while CBD and Rash Behari Connector areas recorded an increase of 9% and 8%, respectively. “This is largely because of a robust demand for corporate office space in these locations which has led to the increase in rental values in these locations of Kolkata,” states the report.

Similarly, three out of four major micro-markets in Ahmedabad recorded increase in rental values over the last quarter which include, CG Road (3%), Ashram Road (3%) and Satellite Road (6%) largely due to severe lack of quality Grade-A corporate property in Ahmedabad, while the demand for space in the city has remained buoyant from corporates across sectors.

Some of the micro-markets which registered marginal correction in office rentals during the same period include, NCR (where correction ranged from 1% in Gurgaon to 14% in Nodia IT/SEZ), Chennai (4-13%) and certain pockets of Kolkata (9-10%). Cities like Mumbai maintained its rental values as in the last quarter. However, prime commercial office locations such as CBD, Worli, Lower Parel, Andheri and Powai are likely to weaken. Rental values in Pune also remained unchanged since the last quarter, but most micro-markets in the city have shown signs of weakening or at best stagnancy.

Kaustuv Roy, director, tenant strategies and solutions, said: “This quarter continued to show signs of the cautious approach from developers who focused on completion of existing projects within defined time limits. On the other hand, a wait-and-watch policy adopted by the corporate sector has brought the quantum of transactions low. We will continue to see this trend well into the last quarter of the year as well as into the early 2009.”

In the third quarter, NCR witnessed the highest supply of new office space of around 5.04 million sq ft, followed by Pune, Bangalore and Chennai with 3.55 million sq ft, 3.41 million sq ft and 3.36 million sq ft of supply, respectively. Mumbai witnessed an addition of 1.88 million sq ft of supply, while Hyderabad and Kolkata recorded 930,000 sq ft and 242,000 sq ft of supply, respectively in Q3 of 2008.

Absorption of office space was recorded at 9.21 million sq ft which is a 44% increase from the previous quarter’s 6.36 million sq ft. All cities showed a considerable increase in absorption over Q2 with the exception of Bangalore that showed a minor dip and Ahmedabad that showed no change.

Source : Economictimes

Saviour Builders to Invest Rs 200 Crore in Luxury Housing Project

Real estate developer Saviour Builders plans to invest up to Rs200 crore to construct a luxury housing complex in Ghaziabad, spread over an area of six acres.

“We will invest about Rs200 crore in developing this luxury housing complex in NCR and this will be built keeping in mind the global standards,” Saviour Group Director Sanjay Rastogi said. “The company would fund the project through a mix of debt and equity,” he said, adding: “The source of funds for the project is banks and other financial institutions”.

The project, Greenisle, would comprise about 1,000 housing units and the sizes would vary between 1,250 sq ft and 1,800 sq ft. The complex would be developed over an area of 12 lakh sq ft and would be completed within one year.

‘Greenisle’ would consist of features like swimming pool, health club, golf course, fountain parks, jogging track and spa. Asked whether the ongoing slowdown in the real estate sector would dampen the company’s future investments, Group Chairman Iqbal Singh Sodhi said: “Everyone wants a piece of land. It is the only sure investment. It can never depreciate like a car or a washing machine. Land will double its value in a fraction of time. Land prices are going up every day.”

The group has so far executed over 10 commercial and residential projects at various locations in the country.

Source: http://www.indiaprwire.com

Realty demand to remain robust in long-term

A recent paper by Cushman& Wakefield Research, titled ‘The Metamorphosis – Changing Dynamics of the Indian Realty Sector,’ points out that real estate demand in India, has moderated with the sharp increase in real estate prices, coupled with rising interest rates.

But despite all such apparent similarities, it would be unfair to liken the economy’s performance in 2008 with that in 1995.

The economy continues to remain strong in comparison to that in the mid-nineties. Consumption demand too has remained strong despite dire predictions. With the services segment comprising sub-segments like trade, hotels and restaurants, real estate, banking and insurance, etc., the growth of the segment clearly indicates a space demand for commercial office, retail and hospitality verticals.

It is important to reiterate that with a moderate growth rate predicted for the time being, the real estate sector will revert to its strong uptrend over the long term, performing in line with the overall economy.

The long-term robustness of demand for real estate in India will remain intact and we will probably see resurgence once the market finds its own level by responding to these short to mid-term global and domestic factors.

The BRIC report citing Indian economy’s potential with the view of surpassing the richest countries by 2050 is indicative of it being among the fastest growing markets.

According to Cushman & Wakefield Research, the pan-India demand projection across office, residential, retail and hospitality segments is expected to be approximately 1,098 million sq. ft. in the coming five years.

The residential segment continues to drive real estate demand with 687 million sq. ft., contributing 63 per cent throughout the term under consideration.

Despite the expected slowdown in the office market, the demand for commercial office space is projected to be 243 million sq. ft, which is around 22 per cent of the total demand projections for the next five years. The retail and hospitality segments are expected to constitute 95 million sq. ft. (9 per cent) and 73 million sq. ft. (6 per cent) of this total demand, respectively, driven by an increase in income levels as well as by accelerated travel in the domestic and international sectors.

The top seven cities in India account for nearly 80 per cent of this pan-India demand with around 877 million sq. ft. The residential sector still remains the largest segment for the top cities with 60 per cent share, the commercial office segment coming up to 23 per cent, followed by the retail (9 per cent) and hospitality (8 per cent) segments. The residential segment is expected to be the major demand contributor over the next five years with a total space requirement of 529 million sq. ft., followed by office space at 203 million sq. ft., retail at 79 million sq. ft. and hospitality at 66 million sq. ft.

The real estate demand is expected to increase marginally over the period with the Tier I cities expected to generate majority of the demand during 2008-2012. The Indian economy is expected to perform well with growth driven by domestic factors, which will add momentum to the real estate sector in addition to expected improved global economic situation with reinforced investor confidence in the coming years.

The high residential demand witnessed in NCR is most likely because of the buoyant corporate sector in the region, which requires a huge migrant working population with residential needs, in addition to working professionals in the city aspiring for a second home.

However, the highest growth rate is depicted by Chennai (9 per cent), which is attributed to the increasing migrant population driven by the buoyant manufacturing as well as the IT/ ITeS sector; the latter having envisioned the need for multi-storeyed residential developments.

Bangalore (6 per cent), Pune (4 per cent) and Mumbai (3.7 per cent) are most likely to be second in line with regards to growth in residential demand forecasts.

Other cities that are expected to witness an increase in residential demand through 2008-2012 are Mumbai, Pune, and Hyderabad accounting for 6 per cent, 10 per cent and 9 per cent respectively, of the total residential demand projected across India.

Rising property prices and increased interest rates, coupled with a demand-supply mismatch has brought down the overall affordability of residential properties in the country today. Developers have come up with innovative schemes like ‘Book now and pay later on possession’, as well as home loan installment payment for the initial one to two years. However, established developers with substantial cash reserves have up till now remained insulated from this trend.

Middle-income housing projects as envisaged by industry experts is gaining visibility. In order to meet the demand for affordable housing, the Confederation of Real Estate Developers Association of India (CREDAI) has even proposed a concept of Special Residential Zones (SRZ) as a solution. An SRZ is a notified geographical region that is free of domestic taxes, levies and duties, with special development rules to promote large-scale, Greenfield affordable housing projects.

Finally, a 10-15 per cent fall in price or a decline in mortgage rates is most sought after in the current scenario to improve affordability and for end-users/home buyers to come back into the market. If this happens, demand is likely to pick up again with rising income levels.

Source : sify.com

Office rentals fall up to 14 pc in Q3

NEW DELHI: Office rentals in key markets of the country witnessed a decline of up to 14 per cent during July-September period in the current year owi
ng to supply outpassing demand by almost double, say a latest report.

“Third quarter saw a total supply of 18.41 million sq ft across major cities in India while the total absorption was registered at 9.21 million sq ft.

However, marginal corrections in values were recorded in peripheral locations with high concentration of IT and ITeS office space,” global real estate consultant Cushman & Wakefield (C&W) said in its quarterly report on Indian office space.

The rentals, primarily IT spaces, in Noida in National Capital Region (NCR) during Q3 dipped by 14 per cent compared to the previous quarter, it said.

“… a wait- and-watch policy adopted by the corporate sector has brought the quantum of transactions low. We will continue to see this trend well into the last quarter of the year as well as into the early 2009,” C&W Director (Tenant Strategies & Solutions) Kaustuv Roy said.

While peripheral locations with higher concentration of IT/ITeS companies would continue to face lower than expected transactions, corporate office spaces (non IT) in high demand markets were likely to remain stable with a strengthening bias, he added.

Some locations in Chennai (suburban – Ambattur), Kolkata (Rajarhat) and Delhi (Gurgaon and south micromarkets) have seen depreciation of office renatals by 13 per cent, 10 per cent and seven per cent respectively.

“This quarter continued to show signs of the cautious approach from developers who focused on completion of existing projects within defined time limits,” Roy said.

However, few locations in Kolkata, NCR, Bangalore and Ahmedabad have witnessed increases in rentals.

Source : Economictimes

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

NCR sees fall in real estate projects

NEW DELHI: New housing project launches in the national capital region (NCR) slumped by 20% during January-June 2008. This is explained by the slowdown in demand due to appreciation in real estate prices and rising interest rates for borrowers.

The first half of this year also saw a marked shift in developers strategy towards mid-income houses, as the high-end segment witnessed increased resistance from buyers.

Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37.

As per a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high end houses are selling at a slower pace than the mid income segment. The report says that the share of mid-income housing in the overall residential supply is expected to rise to 62% in three years, compared to 22% currently.

This translates into a CAGR of 131% for mid income housing units.

“Affordability is the single biggest factor that influences a home buyer’s decision,” says DTZ director (consulting and research) Abhilash Lal, adding that a series of interest rate hikes has almost doubled the equated monthly instalment (EMI) outflow for a home buyer in the past few years. “Buyers are increasingly shifting to mid-income homes as they can’t afford a higher EMI.”

Lately, several developers, including India’s largest real estate firm DLF, Ansals, Parsvnath, Omaxe, BPTP, Raheja and Gaursons have been actively building mid-income homes.

At present, Ghaziabad is the most favoured destination for mid-income housing, accounting for 68% of the total mid-income homes in NCR. Its contribution is likely to fall to 40% by 2011 with fresh supplies coming up in other suburbs.

Mid-income homes account for 71% of all homes in Ghaziabad and only 6% in Gurgaon. Ghaziabad is followed by Faridabad (64%) and Greater Noida (53%).

The report says a shift towards mid-income was prompted by developers’ need to keep their profit growing as high-end market stagnated after property prices went up almost three times in several NCR micro markets.

The ability to procure cheap land has been critical in launching mid-income projects. Most of the mid income projects are located far away from developed areas or in places where land parcels were procured cheaply by developers long back.

Interestingly, the report also highlights high investor interest in mid-income projects. It says 90% of the investors surveyed wanted to put their money in two mid-income flats rather than one high end flat when both attracted the same investment.

Amid grim outlook, realtors plan raft of launches during Diwali

Analysts estimate home sales in the NCR alone have slumped in the last six months by at least 30-40% and launches have been few

Bangalore: Beset by falling sales, delivery delays and whittled liquidity this year, realtors are readying to launch a slew of projects in the festive season starting October, hoping that sentiment would turn buoyant and boost demand for homes.

“Despite low sentiments, we are hoping that people will be in a mood to buy,” said Pujit Agarwal, managing director of Mumbai-based Orbit Corp Ltd. “Developers have been trying hard to offload existing stock in the past few months, postponing all launches till Diwali.”

Orbit is gearing up for an October launch of a gated beachfront property in Alibaug, a holiday destination on the coast close to Mumbai. The luxury project, which has US-based Turner Construction Co. as consultant, will cost between Rs2.5 crore and Rs20 crore for a villa.

Many developers—who have not offered new projects due to the real estate downturn that started this year—have lined up residential projects for launch in the next one month.

Analysts estimate home sales in the National Capital Region alone have slumped in the last six months by at least 30-40% and launches have been few.

Although bigger firms such as Unitech Ltd, India’s second biggest real estate developer, have been launching projects at regular intervals, mid-sized companies have burnt their fingers whenever they have launched projects this year.

Mayfair Housing Pvt. Ltd, a Mumbai-based developer that generally sells economically priced apartments in the city, managed to sell only one of the six apartments in a premium project in Juhu, launched in April. The company is now launching projects in the mid-price segment, hoping it will attract more sales this time round.

In Mumbai and Thane, most developers are launching projects in the suburbs and have priced homes starting at Rs4,500 per sq. ft—nearly the same price at which such homes were offered a year ago.

Smaller developers in metro cities have also played safe this year, keeping away from any launch fearing low conversion rates—the actual translation from enquiries to sales. For instance, Lodha Group is launching five housing projects in Mumbai after its last launch in March.

Prajapati Constructions Ltd, a Navi Mumbai-based developer, launched its last project in 2007 and now has a launch coming up in Hyderabad.

“We sold only five flats in Mumbai in September and are trying to sell off what we have built before launching any more,” said managing director Rajesh Prajapati.

Developers also say the focus of all these new projects—after a long time—will be the homebuyer. “There are no investors in the market, builders are not in a state to buy land or announce IPOs (initial public offerings),” said Nainesh Shah, executive director of Everest Developers Ltd, which is launching the fourth phase of Everest World, a residential complex in Mumbai. “Only homebuyers can bail them out in such a situation, which is why every builder will concentrate on product positioning, and those with serious funds crunch will offer more discounts.”

Unmesh Sharma, an analyst with advisory Macquarie Research said pricing will play a key role in how these new projects fare in the upcoming festive season. “With a lot of supply coming in at one go, builders would be careful about how they price their product and many of them would try giving out more freebies and maybe, discounts to attract buyers,” he said. “Ideally, they should launch projects in the mid-segment, at lower prices.”

Orbit’s Agarwal also said some developers, particularly those who bought land at astronomical rates, would be forced to launch projects because “holding on to land would only mean piling up interest costs.”

Developers expecting high sector growth

A report by Ernst & Young suggests that real estate developers expect the sector to grow. The report is based on a survey conducted across six prominent cities, comprising NCR, Mumbai, Pune, Hyderabad, Chennai, Kolkata and Bangalore. The survey highlights a vast section of respondents who demonstrated their keenness in foraying into affordable housing, subject to certain enabling factors like government support, basic infrastructure support and low cost of land.

Almost 35% of developers define capital value of affordable housing in the range of INR 1-1.5 million, followed by another 35% developers defining value in the range of INR1.5-2.5 million. 70% respondents indicated an inclination to expand beyond the ‘obvious eight’ cities (Delhi, Mumbai, Chennai, Hyderabad, Bangalore, Kolkata, Pune and Ahmedabad). The report, released at FICCI’s International Real Estate Summit in Mumbai on September 10, 2008, underlines survey respondents’ belief that genuine end-users have ‘taken over’ from the investors and account for 80-90% of sales in their current projects.

Respondents expressed mixed reactions with regards to land valuations. Most of them seem to be reaching a consensus that land values are likely to see stability over the short to mid-term and may not witness any appreciation over next 12 months. In fact, in some of the cities, further price correction is expected due the changing economics. The present asset class focus for developers continues to be residential as stated by 70%-80% respondents, followed by commercial and retail.

Realty rocks in Micro Markets

Not everyone is unhappy about the way real estate prices are moving up in the country. In fact, there’s reason for cheer for some who live in the periphery! Would you have thought five years back that your property in Indirapuram in NCR, Lower Parel in Mumbai, Old Madras Road (OMR) in Chennai or Bellary Road in Bangalore would fetch you such high returns? Maybe not. These locations may not have been commanding a premium then, but today the rates here have jumped manifold.

Figure this out: A phenomenal level of growth, with residential capital values in certain areas recording a 400-500% increase, has been wit-nessed in the last five years. Locations such as Noida in NCR, Lower Parel and Parel in Mumbai and many areas in North East Bangalore such as Hebbal, R T Nagar, Bellary Road, Yelahanka and Cox Town have seen a rise of over 400% in the last six years.

SundayET com-missioned a survey to global real estate consultancy Cushman & Wakefield(C&W) to find out why certain locations have seen such a massive and unexpected rise in values.

The study attributes to a mix of different factors for the phenomenal surge in values. While the Noida-Greater Noida Expressway has largely helped to improve infrastructure facilities, a developer’s focus on middle-class housing in Indirapuram has led to a scaling up of prices.

Release of mill land in Central Mumbai locations such as Parel, Lower Parel and 7 Rasta and announcement of the 6-lane IT corridor in OMR in Chennai led to a dramatic rise in values. Areas such as Hebbal, R T Nagar, Bellary Road, Yelahanka, Dodballapur Road,Cox Town and Frazer Town in North East Bangalore have largely benefited from proximity to IT offices that fuelled demand.

Industry experts don’t discount the fact that steep growth has been witnessed in certain micro-markets. Vipin Agarwal, executive director, Omaxe feels that the high realty rates in prime areas led to a springing up of other locations.

“When core areas became non-affordable, alternative locations began to be seen as more feasible options. Now with locations such as Noida and Lower Parel also witnessing high demand and prices, people will shift to other peripheral areas in the near future. Greater Noida, Sonepat, Karjat, Navi Mumbai etc will soon emerge as the next best investment options.”

Moving to peripheral locations might make sense, especially if one sees the Delhi-NCR market where locations such as Noida and Gur-gaon have seen an astronomical rise in values. Although the real estate market in Delhi NCR has in itself seen a major growth in terms of sales values and number of transactions, it is certain micro-markets in the NCR region that have steadily climbed up in capital values. The Noida-Greater Noida Expressway has seen excellent growth in the past six years.

Average capital values that stood at Rs 1200 to Rs 1500/sq ft in 2002 have gone up to Rs 4,000-Rs 6,000/sq ft, a percentage growth of nearly 430%! In case of a plotted development, the values have gone up from Rs 8000/sqm to Rs 45,000/sqm during the same period.

The construction of the Noida Expressway has had a major influence on the swing in values. Its connectivity with South Delhi, Central Delhi, and Fakirabad & Greater Noida is another reason which won it favor. Indirapuram, that has seen a percentage growth of 230%, is another example.

The biggest reason that has contributed towards its growth has been the excellent connectivity it has with Delhi & Ghaziabad. In fact, even after the recent slowdown of the market, this area has seen a steady demand by the end-users and the prices are appreciating gradually.

Says Rajeev Talwar, group executive director, DLF, “No new supply is coming up in locations such as Nariman Point, Marine Drive or Con-naught Place. That has led to shifting of attention to other locations which are close to the heart of the city. Hence locations such as lower Parel, OMR and Noida are now thought to be much more commer-cially viable than say a few years back. Even in terms of residential options, these areas are seen as being rather lucrative.”

In Chennai, it is locations such as OMR, GST and Sriperumbudur that have witnessed a big boom. While OMR has seen average residential capital values rise from Rs 1300/sq ft in 2003 to Rs 3,500/sq ft in 2008, GST has also been witness to an almost similar rise.

In fact, a major reason for OMR springing up has been the announcement of the 6-lane IT corridor as land prices increased significantly soon after. In Bangalore, areas such as Hebbal, R. T. Nagar, Bellary Road, Yelahanka, Dollars Colony in North East Bangalore have seen a high percentage growth of 350% over the last six years.

Central Mumbai locations such as Lower Parel and Parel have re-corded a 400% increase in residential capital values over the last 5 years. Values have risen dramatically based on the latent demand for housing met by the release of mill land in central Mumbai and the launch of good quality residential developments. The destination has also attracted numerous office and retail developments thus trans-forming dead mills, little shops, slums, etc. into stunning high-rises, malls and intelligent office buildings.