India Real Estate Thread

[cncity]

Mumbai registered abysmal sales in the June quarter, while deals in Pune surged. Pankaj Kapoor, managing director, Liases Foras, says prices have skyrocketed when they should have corrected over the past few months, and this is not sustainable

Mumbai lags way behind other realty hotspots in terms of residential sales. According to Pankaj Kapoor, managing director of realty research firm Liases Foras, only 8.17 million square feet was sold in the city in the April-June quarter this year, against an inventory of 116 million sq ft. But cities like Pune and Hyderabad fared much better.

"Pune recorded sales of 9.47 million sq ft from an inventory of a mere 48 million sq ft, whereas the Mumbai Metropolitan Region (MMR) recorded sales of 8.17 million sq ft against an inventory of 116 million sq ft, which indicates that Pune is a better market than the MMR," Mr Kapoor said.

Mr Kapoor was addressing a well-attended workshop on 'Will real estate prices fall further?' hosted by Moneylife Foundation on Saturday.

In the National Capital Region (NCR) 22.04 million sq ft was sold against an inventory of 224 million sq ft. Mumbai has seen a continuous increase in inventory over the past two years with sales dipping by 10% q-o-q. Average monthly sales between April and June were 2.7 million sq ft.

On the other hand, Mumbai's velocity rate—the pace of property off-take—is the lowest among the metros. The current velocity rate in Mumbai is 1.39%, while for NCR it is 1.76%. Pune is best at 3.01%. "This means that while in Pune it will take only 12 months to offload the inventory, Mumbai will need 40 months," Mr Kapoor said.

Mumbai is also the costliest city to live in. The average price per square feet is Rs9,716, while for Pune and NCR it is Rs3,587 and Rs3,131 respectively. On average a Mumbai flat costs almost Rs98 lakh, way above the price for all other metros, though the area is much smaller.

Sales velocity, Mr Kapoor demonstrated, peaked in June 2009, when the recession resulted in prices going down. However, after that, velocity steadily decreased as prices went up.

In terms of value, Mumbai sales saw a receipt of Rs2,802 crore, while the value of sales was Rs5,046 crore. Delhi NCR's receipts were Rs1,680 crore against a sales value of Rs6,850 crore. Pune, however, beat Delhi with Rs1,798 crore in receipts against sales value of Rs3,381 crore. "We have seen that inventory keeps on piling up. In Mumbai, it has increased 22% year-on-year," Mr Kapoor said. "However, the amount in receipts has steadily gone down. March quarter receipts amounted to Rs3,117 crore."

"This indicates that at current prices, there is no off-take," said Mr Kapoor. "The correction should have come, but prices have skyrocketed instead. The market is becoming more lopsided, and it is hardly a sustainable model."

http://www.moneylife.in/article/mumb...dia/19850.html

[engineer.akash]

Soaring Real Estate Market in India

With rise in population and industrialization at its peak, real estate in India is at an all time rise. It is not concentrated in few pockets, but is widespread across most cities in India.

With recession hitting the world, it is a wonder how Indian economy is unscathed? But fact remains that India is predicted t soar even further and become the third largest economy by 2020! This means that disposable income will rise, slay structure will increase, per capita income will rise; giving way to the fact that demand overall will zoom. Investments in real estate will there be in tune with the stupendous growth.

When we talk about so much growth, how housing and real estate can be left behind India already has nearly 100 billion dollars worth of investment in real estate market and construction is surging forward in every city in India. Real estate in India is very closely related to other industries – IT, education, hotels, hospitals etc. as and when these sectors grow, automatically real estate also grows! India has an ever growing IT sector which contributes to real estate investment to the tune of nearly 67 billion dollars and it is expected to increase manifold by 2020. Other industries like electronics have contributed tremendously too. Retail and hospitality are one of the bugger real estate investors. Both the sectors are growing manifold in India which gives impetus to commercial real estate expansion. Retail alone has contributed nearly 25billion dollars and is said to increase to nearly 250 billion dollars by 2020.

Well, it is not just the rise in commercial properties in real estate. When we talk of industrial growth, employment rises and population growth takes place. When population grows, real estate, especially residences will grow. It is every Indian`s dream to have a great house – both as an investment and to take pride in ownership! So with the rise in various industries and an ever rising Indian population, real estate in India will be on a rise for a very long time.

Real estate in India is also seeing a change of scenario. Traditionally metro cities like Mumbai, Delhi etc have grown over a period of time and are now facing stagnation. Hence, even the tier two cities like Pune, Noida, Mangalore, Ahmedabad etc are fast growing and are becoming the next best destination to invest in India. So housing and real estate growth in India is wide spread across all cities and towns. Certain pockets are more lucrative in terms of investment than others but growth is stupendous and future is bright!

http://www.addpr.com/articles/real_estate/94826.html

Originally Posted by engineer.akash

Homing in on tier-II cities





HT

Mangalore is way ahead of Ahmedabad.

[cncity]

Pune has scored high in special township projects — spread over 100 acres — in the state, with as many as eight projects cleared for the district after the government resolution on township projects on November 16, 2005. Two more such projects are in the pipeline.

“Pune with its IT and education tag is attracting investments and builders are willing in to invest in such townships as against any other district in the state. Other than Nagpur, there is no other district which has seen so many special townships,” a senior officer at the mantralaya said.



Special townships proposed for the city are residential in nature while such projects fall in two categories — agricultural and residential. The conditions for these townships include 100 acres in one stretch, an 18-metre-wide road in the existing land as well as getting it dereserved under section 18 (B) of the Maharashtra Regional Town Planning Act 1966 and a letter of intent from the collector in 45 days.

Officials with the Town Planning department said the special township projects needed clearances from the Ministry of Environment and Forests, Maharashtra Pollution Control Board as well as the Maharashtra Industrial Development Corporation. “A 15 per cent bank guarantee on the master plan layout too needs to be given to the government and they are supposed to operate the project for 25 years,’’ one of them said.



The entire process takes at least six months. The cleared projects for Pune are Amanora Township at Hadapsar by City Corporation Ltd, Blueridge township in Hinjewadi by Flagship Developers, Nanded City at Nanded gaon on Sinhagad road by Satish Magar, I-ven township at Jambe Marunje by Kolte Patil, Kumar Igloos at Mhalunge by Kumar Builders, Gurblakshmi Realty Township at Bhugaon by Gulbakshmi Realtors, Eiffel Township at Mulshi by Eiffel developers and Oxford Knowledge city at Lavle by Oxford Pvt Ltd.

The two projects in the pipeline are Forest Trail township at Bhugaon by Matrix Development Pvt Ltd and LK Developers at Manjari Khurd. Town Planning department officials said these proposals were pending owing to lack of clearance.

http://www.indianexpress.com/news/8-...ojects/873738/

[cncity]

New Delhi: Prices of residential properties shot up significantly in six cities, including Pune, Chennai and Mumbai, while there was a decline in nine during the second quarter 2011-12 year-on-year, the National Housing Bank said.

As per the NHB's Residex index for the July-September quarter, residential housing prices in Pune went up by 13 per cent year-on-year, followed by an increase of 9 per cent in Chennai and 7 per cent in Mumbai.

NHB is the housing finance regulator.

Among other cities where prices of residential properties appreciated during the period were Delhi (5 per cent), Jaipur (2 per cent) and Bangalore (1 per cent).

On the other hand, there are nine cities which have shown decline in prices year-on-year with Kochi recording the maximum drop.

As per the Residex, which tracks property prices movement in 15 cities, residential property rates in Kochi fell by 9 per cent, followed by Hyderabad (8 per cent), Bhopal (7 per cent), Surat (7 per cent) and Faridabad (6 per cent).

Prices in Ahmedabad and Lucknow dropped by 4 per cent in the second quarter, while Patna and Kolkata saw a decline of 3 and 2 per cent, respectively.

The index has taken into account the price trends for residential properties in different locations and zones in each city as per classification devised for the purpose, NHB said in a statement.

The index seeks to provide a "better understanding" of the trends in the residential property market and is helpful for consumers, property dealers and other stakeholders.

As the Residex evolves, it is expected to bring greater uniformity and standardisation in the valuation of properties across the industry, NHB said. ...

http://www.financialexpress.com/news...-pune/879199/2

[cncity]

When it comes to residential project construction activities in major metropolis, Pune is a clear winner. As per a report brought out by Liases and Foras — a real estate research firm — construction activity for residential housing in the last two years has witnessed a sustained growth in Pune, while signs of a significant slowdown have been observed in Mumbai, Delhi, Chennai and Bangalore. Reasons: exorbitant property prices, less demand and stringent government approval procedure.

In fact, the residential projects construction activities are directly linked to and indicative of property sale. According to Pankaj Kapoor, managing director of Liases and Foras, “Developers are not launching and constructing as many projects as they used to earlier. For, most of them have sold out their present under-construction stock to investors after taking the token amount. But the projects could not be completed on time due to many reasons, including limited demand owing to exorbitant property rates, inflation, high EMI, etc,” he said.

In the past two years, when the market has been routinely flooded with investors, the Pune property market has witnessed significant growth. “The primary reasons for this sustained growth is that the Pune market is purely consumer-driven, and not investor-driven. It is not a highly inflated market as the other metros and even the appreciation ratio is low. This does not hike up property rates immediately and frequently and is a good sign which needs to be maintained,” Kapoor added.

Further, nearly 1,147 residential projects have been delayed in six metros - Delhi, Mumbai, Pune, Hyderabad, Chennai and Bangalore, added Kapoor.

Others like Manohar Shroff, general secretary of the Maharashtra Chamber of Housing Industry (Navi Mumbai), are putting the onus of spurning construction of residential properties on the state government. According to Shroff, the snail pace of construction activities exists despite builders evincing keen interest.

“We’ve been regularly submitting the proposals, but the local coporations are not approving them on time, with several proposals struck down without any valid reasons. As a result, the construction activities has come to a grinding halt,” he said. Demanding that the government should resolve the issue and start approving the projects immediately, he added, “Or else the slow construction pace will result in lesser housing stock being available in future, thereby causing a price rise.”

http://www.dnaindia.com/mumbai/repor...y-race_1625997

[Raji7373]

SANTA CLARA: The impact of economic slowdown has been increasingly felt on the overall demand pattern among US NRIs while investing in real estate back home. However, Bangalore continues to remain the favoured destination for investment in housing. But the quantum of demand has dipped over the years. An estimated 45 per cent of the US NRIs wish to seek home loans while investing in residential property across the country.

In a survey conducted during the 2-day property show organised by Priya Publications and REBI and held in [B]Edison and Santa Clara during November 12-20 , southern cities drew more demand for investment in real estate. In bay area alone, Bangalore continues to remain as the favoured destination for techies as chances of re-employment are better in the city for returning NRIs. Whereas in Edison area, Chennai topped the list of cities for realty investment.[/B]
Other cities that evinced keen interest among NRIs include Ahmedabad, Pune, Delhi, Gurgaon , Mumbai, Hyderabad and Kochi. Among tier III cities that are driving demand specific mention must be made about Mysore, Mangalore, Vishakhapattinam and Coimbatore in south. Incidentally the level of interest for investment in Ahmedabad is up especially with the state receiving more foreign investment for infrastructure projects leading to better yield for investors.

Unlike earlier, demand for villas has surged with a significant number of visitors evincing keen interest to invest in villa projects in southern cities. Other categories of properties for which demand continues include office space, developed plot and retail units. A majority of the US NRIs are looking for professionally managed property management companies to manage their properties during their absence in India. The setting up of shops by MNCs like L J Hooker, Red Sky and Remax has encouraged them to look at additional investment in real estate.

The availability of guaranteed rental income properties has generated much interest due to minimal financial outgo and the flexibility to offset EMI payment against rental income every month. As developers are keen to manage such properties for the initial years, NRIs evinced keen interest to invest in such properties.

According to market sources, the overall situation is yet to improve though a majority of the techies are able to hold on to the jobs as there continues to be a demand for skilled jobs across US. However, those companies which are depending on the federal government for a chunk of its business are finding the going tough. For instance Cisco has laid off 10% of its employees all over the world because 20% of the revenue comes from the federal government spending.

Industry sources point out that 3-5 % of employees getting laid off is common in every company. Asset prices collapsed and three-fifths of households in the US saw their wealth decline between 2007 and 2009. More than a quarter lost over half of their wealth. America's average annual unemployment rate zoomed upwards too when it went from 5.8% in 2008 to 9.3% in 2009 and 9.6% in 2010.

Though a full scale recovery is still a long way to go across US, corporates are increasing their spending as is evident from the spurt in demand by techies for rental accommodation in areas like Edison, said a senior official at a consultancy firm in New York. There is a spurt in the number of IT projects' spending in the tristate area with the number of expatriates in particular from India visiting for project related assignments, it is said. During 2008, apartments were available just for the asking in Edison area due to frequent layoff and expatriates eventually returning home. But today, several apartment complexes are getting filled up, There is another reason for the shift in trend towards investment in India. NRIs had lost capital values considerably while investing in real estate across US. For instance, an NRI who had invested in housing in Anaheim during 2006 at US$950,000 saw his investment declining to US$625,000 in a matter of just six months. Another NRI who had put his investment in housing in Orlando saw his investment nose-diving from US$400,000 to US$125,000, according to market sources.

http://articles.economictimes.indiat...ign-investment

[Raji7373]

DUBAI — The weakness of the rupee and a slight slowdown in demand for properties in the wake of record high interest rates are making Indian property market a hot investment option for non-resident Indians, a leading developer said on Thursday.

“Although the current high interest rates have impacted the property market in Mumbai and New Delhi with slow demand, Indian property sector remains one of the most attractive investment sectors offering more than 20 per cent annual growth rate in prices. For NRIs, who enjoy the added benefit of attractive currency exchange rate along with relatively low interest rates, this is the right time to invest,” said Prashant Mirkar, general manager of House of Hiranandani, or HOH, a leading business conglomerate and one of the pioneers of destinations projects in India.

He said Chennai and Bangalore markets remain vibrant thanks to a spurt in investments by NRIs from the Gulf. HOH, which is showcasing its range of projects at the Indian Property Show, offers affordable premium housing solutions to upscale luxury and signature residential destinations and commercial project for purely investment and self-use purposes.

“The UAE contributes seven percent to our international sales and is one of the most attractive markets for us. In 2010, our portfolio of UAE based clients has grown by 10 per cent. With the conversion rate as favorable to invest as it is now, we expect a good response to our participation in this edition of the show,” said Neha Hiranandani, Director of HOH. “We have a diverse portfolio of bedroom apartments, villas, cottages and commercial properties. HOH properties are a safe investment, known to fetch greater return-on-investment and better rental yields- factors that figure high on the priority list of NRI investors.”

HOH is showcasing Chennai’s first integrated, large-scale community, a 110-acre mixed-use development at OMR Chennai. In Bangalore, it offers apartments in Bannerghatta, an integrated community of villas, cottages and apartments in Devanhalli and commercial spaces in Electronic City. HOH plans to unveil its signature developments — villas and apartments in Bengaluru as well as in Chennai. “We have roped in the world’s best designers like Philippe Starck from Yoo and Patty Mak from Suying Designs to conceptualize exclusive interiors for these developments,” she said.

http://www.khaleejtimes.com/DisplayA...=business&col=

[engineer.akash]

Mangalore's realty boom continues

A. J. Vinayak


Sales of residential projects in the city have been good this calendar year.

2011 was a good year for the real estate sector as many projects were launched and the forecast for 2012 is said to be favourable.

In spite of an increase in the cost of raw materials for construction, the boom in the real estate sector in Mangalore continued for a significant period in 2011.

Though the builders are putting up a brave front, stating that the boom continued throughout the year, some people in the real estate sector say that the increases in bank interest rates and inflation made an impact on the real estate sector here as well.

Mr P. M. A. Razak, President of the Mangalore branch of CREDAI (Confederation of Real Estate Developers' Associations of India), told Business Line that there was tremendous growth in the residential segment during 2011. However, growth remained stagnant in the commercial segment.
GOOD YEAR

Terming 2011 as a good year for the real estate sector in Mangalore, Mr Razak said the region didn't face the impact of the slowdown till mid-December.

Allaying apprehensions regarding over-supply in the residential segment, he said the demand and supply situation was fairly balanced in the region during the year. Sales of residential projects have been continuing.

He said that around 5,000 apartments are in various stages of planning and implementation.

The NRI segment, which is one of the major growth factors of the residential segment in the region, is contributing a major share to bookings for residential projects.

Admitting the fact that commercial space development hasn't grown in the region, he said it has remained stagnant.

Mr K. Narasimha Prabhu, former President of Kanara Chamber of Commerce and Industry, said that there was a boom in the real estate sector in Mangalore in the early half of 2011.

Taking advantage of this boom, many projects were launched during that period.
IMPACT OF RECESSION

He noted that the boom started to taper off from August onwards. He attributed this to a slowdown in the economy, increase in interest rates by banks from July onwards, and inflation. However, the cascading effect was felt on real estate only from August. Till June, it was a healthy market, Mr Prabhu said.

In spite of this, builders are putting up a brave front, he said, and added that there could be a slight correction in the days to come.

However, he was quick to add that the big builders mostly aren't affected. It's only the small builders who are feeling the pinch. On being asked the reason for this, he said big builders are able to sell their projects because of the name and locations.

It may be mentioned here that the coastal corridor of Mangalore and Udupi-Manipal witnessed many project launches in 2011. While most of the developers focussed on Mangalore city and Udupi-Manipal for launching their projects, some of the areas on the outskirts of these towns also saw foundation stones for a significant number of projects. The outskirts of Mangalore, such as Kavoor, Kuttar, Farangipet and Deralakatte, saw new project launches during the year.
PROJECT LAUNCHES

Some other towns along the coastal corridor, such as Moodbidri, Padubidri and Karkala, also witnessed some new project launches. Developers preferred to go in for residential-cum-commercial project models in such centres.

The national highway widening from Kundapur in Udupi district to Talapady in Dakshina Kannada district, which gained momentum during the year, served as an incentive for developers to focus on this stretch for real estate development.

Mr Vijay Vishnu Mayya, Chairman of the Mangalore Centre of Association of Consulting Civil Engineers, said that though 2011 was a boom time for the real estate sector in the region, it was a difficult time for construction, as the input costs went up significantly during the year.

Stating that the rates of apartments went up by nearly 30 per cent during 2011, he attributed this to the increase in the rate of construction and to the labour shortage. The costs of cement, steel, sand and land went up, he said, adding that it was a difficult time for the construction industry due to want of skilled people.
2012 OUTLOOK

Stressing the need for the Government to look into this sector, Mr Mayya said as of now there is no proper rule governing the construction industry. In such a situation, it is essential for the Government to regulate the construction sector, he said.

He looked forward to the stabilisation of prices for inputs, especially cement and steel, in 2012.

Mr Prabhu hoped that the demand for the real estate sector would pick up after April 2012. By then, inflation is expected to come down, and a favourable budget might help boost demand for the real estate sector, he added.

http://www.thehindubusinessline.com/...ref=wl_opinion

[Vicky007]

Anybody has any experience of dealing with Discounted Flats? They claim to be a Pan india group booking channel which clubs together buyers for making group bookings with Builders to get a better rate.This what i got from the net about it:

About Discounted Flats:
Discountedflats (India Properties) is a Pan-India group booking channel, which groups individual residential buyers based across India to avail discounts of up to 35%. DF has consolidated all residential projects of metros and sub-metros (including even the smallest residential project) for sales purpose. DF does not charge their customers anything but instead charges brokerage from the builders. DFs USP is “customer empowerment” including tangible discounts, state-of-the-art services, single source for the residential primary market of the country, and advanced analytics.

[ChennaiIndian]

Cross-posting from TN thread. Courtesy: bonoslack7

Originally Posted by bonoslack7

[elisonduncan]

In Indian real estate as different job descriptions as work or estate dependent.There are as many descriptions in transaction like purchaser, sealer, real estate agent, government. All are different work his job.It developing country so his market not much more flexible.

[elisonduncan]

a i

[johnsmith20054]

Thanks for the information. Nice forum about Real Estate

real estate india

[Gudavalli]

Booming Housing Sector in India

India is one of the fastest growing real-estate markets in the world, which is not only attracting domestic real-estate developers, but also the foreign investors. Moreover, real-estate industry in India is addressing the demand for built-up space, from a variety of property segments, such as offices, housing units, shopping malls, hospitality industry, manufacturing sector and logistics parks, in which housing sector is undergoing a significant growth.

Our new report, "Booming Housing Sector in India", observed that the housing segment of the Indian real-estate industry has shown strong growth despite global economic gloom. Moreover, with continuously rising population, growing aspirations, increasing nuclear families and rapid urbanization, the housing sector in India is anticipated to register a strong growth in the coming years.

Further, the report facilitates detailed information on housing market structure comprising of number of housing units, rooms, and ownership of flats by type. A comprehensive study on housing demand analysis segmented into Affordable, HIG, and Luxury housing has also been included in our report in which it has been found that affordable housing segment is expected to witness a strong demand of around 40% during 2012-2014.

In this report, we have also included forecast on faucets, tiles, switch, cement and steel, paint, bathroom fittings, furniture, floorings and modular kitchen industries which will help industry and its related players to get the complete 360 degree view of the industry. Besides, the report also includes city-level analysis (Mumbai, Delhi/NCR, Chennai and Kolkata) to help the industry players to monitor the estimated housing supply in these cities.

Additionally, it sheds light on technological developments which will help developers in tracking new and emerging technological innovations, as cutting prices is not always the right move to compete in the market.

Besides, based on our primary research which includes a survey of around 900 respondents, we identified and rated various factors influencing the customers in selecting a housing project. On the similar lines, we also conducted a primary survey on various developers to study the factors considered by them before choosing raw materials for construction. This will help the industry players in understanding the market behavior from both ends (consumer and developer).

The report also discusses the challenges hindering the exponential growth route of the industry for future. Furthermore, the report provides profiling of the major players including DLF, Unitech, Omaxe, Tata Housing, Puravankara, EMAAR MGF, Ansal Housing and Sobha Developers which will help clients to gain insights on their overall business, recent activities and their strengths and weaknesses. Overall, the report presents optimum information and balanced research outlook on the potentials of the Indian housing sector.

[Gudavalli]

CREDAI to set up training centre in Ahmedabad

AHMEDABAD: With the increasing demand for professionals in real estate sector, Confederation of Real Estate Developers' Associations of India (CREDAI) plans to set up a research and training institute in the city. The institute will churn out trained professionals for the real estate sector and will be set up near the International Centre for Entrepreneurship and Technology (iCreate) on the outskirts of Ahmedabad.

"Real estate sector is the largest employer after agriculture. With time, it has become important for those in the sector to have a global perspective," said Lalit Jain, national president of CREDAI.

He added that the land for setting up the institute has been given by Ahmedabad-based developer Jaxay Shah, who is vice-president of CREDAI. He has also committed Rs 1 crore for the centre.

CREDAI plans tie-ups and affiliations with international institutes for the centre which will be operational from June 2014. CREDAI has also announced an Educational Scholarship Scheme (ESS) for promoting higher education in the real estate sector among underprivileged students. CREDAI will offer scholarships to pursue full-time degree/post-graduate degree courses in civil engineering, management and other courses related to the sector at any of the All India Council of Technical Education (AICTE) colleges. "Real estate and construction sectors contribute 11% to the GDP and with changing scenario, skilled professional have become need of the hour," said Shah.

[Gudavalli]

Real estate: in need of a regulator

The panellists at Mint’s annual real estate conclave agreed that a complex Indian real estate sector needed a watchdog, especially to regulate the biggest stakeholder—the Indian government. They also pointed the mismatch between demand and supply as being an inherent part of the realty puzzle. The participants were Maneesh Srivastava, CEO, Muthoot Housing Finance Co. Ltd; Anuj Puri, chairman and country head, Jones Lang LaSalle India; Vikhyat Srivastava, co-founder, Groffr.com; Akash Deep Jyoti, director, real estate ratings, Crisil; Gaurav Gupta, director, Omkar Realtors and Developers Pvt. Ltd.

The 27 July panel discussion on Reviving Residential Markets: are innovative financing options driving growth? was moderated by Mint’s Lisa Pallavi Barbora. The discussion covered the dynamics of the real estate sector and what the future holds. Edited excerpts:

Lisa Pallavi Barbora: What does the fall in absorption rates mean, are genuine buyers and investors not buying?

Anuj Puri: A lot of government data say demand is infinite and, as of 31 March 2012, there is a shortage of over 26.3 million dwelling units. When you look at the demand and the shortage, it really is infinite. I think what has happened here is that the demand is in one category and the product is being placed in another category. This has been seen largely in the three cities of Delhi, Mumbai and Bangalore. Outside of these three cities, the pricing, demand and supply is stacking up well. In Mumbai, 80% of the cost is the land cost, and unless we bring in better infrastructure land prices will continue to remain high. The builders are left with the balance 20%, making it very difficult for them to bring the price down.

Barbora: Muthoot looks at affordable housing, loans for up to Rs.10-15 lakh—is there demand in that segment?

Maneesh Srivastava: There is a lot of demand in the affordable housing space. As Anuj said, the demand exists in a certain space but there is a larger opportunity with the number of houses coming up in urban cities. The urban population in the cities is going to be 600 million in the next 15 years. That is the creation of at least another 20 Mumbais. Clearly, a city like Mumbai or a city like Delhi is not going to take such a load, and whether you like it or not, it is going to happen. Decongestion needs to happen from some of the larger cities and a larger plan needs to be taken up to allow planned development in some of the upcoming urban centres across the country. Unless and until we do that, we are looking at a situation which is likely to turn into a crisis. The whole question of whether the supply matches the kind of demand that is there, nothing can be done unless there is the right kind of supply to match the demand.

Jyoti: First of all, we cannot have an overall demand and overall supply in context of the Indian real estate sector as the sector is very complex altogether, and cannot be compared to the real estate sector of any other country.

There is no concept of overall demand and supply as far as the sector is concerned and it is all about offering the right kind of product to the market. So, while there could be humongous demand and humongous supply, the matching has to be product-specific and cannot be in terms of numbers. I think it is about time we moved beyond demand and supply and looked at other dimensions. In terms of city specific demand, there is demand in some cities that has really not dried out. In others, like Mumbai, there is demand and the pricing is really never going to come down. Then there are cities where we see demand coming down. The kind of diversities that exist from the various cities is very different. For example, NRI (non-resident Indian) wealth could be driving the real estate demand in Kerala. While cities like Bangalore and Gurgaon are getting driven by IT (information technology), and Mumbai has some other aspects.

Vikhyat Srivastava: When you look at it fundamentally, 50% of India is still below 25 years of age and when these guys grow up, they will need houses. So the demand will always be there but what we need to focus on is at what price. As Akash pointed out, there is a product perspective to it and there is a pricing perspective to demand. I would say that demand is definitely there and supply is slowly coming up, especially in places like Mumbai and Gurgaon.

Barbora: The other side of demand is supply, so is inventory a burden?

Gaurav Gupta: I think India is the only country where we pay real estate prices upfront. If you go world over, people buy real estate and hope for the prices to increase. That is how the world phenomenon is. Coming to Mumbai, as Anuj mentioned, 80% of the price of real estate is land cost and that the developer has to pay upfront. So, to say that a very small scale of stock is enough to complete the project is not the case. First, we should look at the financial costs in terms of debt, in terms of equity and in terms of NBFCs (non-banking finance companies). So, after taking all these factors into consideration, the debt is so high, the pricing is so high, that the product has to be priced accordingly. In Mumbai real estate, the regulations have changed and have again added to the cost.

Barbora:Are we at a stage where we need a common regulatory authority for the Indian real estate, considering the fact that it is such a complex affair and transparency has been a problem with this sector?

Maneesh Srivastava: Yes, absolutely, we need regulation because it becomes more relevant as we go down the social ladder. This whole debate of what type of housing is in what part of the country—I think India is a large country. To start looking at the big numbers downwards, you will have to dissect that demand. The fact of the matter is that there is enough entrepreneurism to be able to construct according to demand as per the geographies. But what is obstructing is that the people who want to actually construct in those space are finding themselves constrained by the amount of time it takes to get approvals.

Barbora: Is transparency a problem?

Vikhyat Srivastava: Yes, like what is happening in Noida all these years. There has been lack of structured financing, because of which a lot of developments are stuck there.

Barbora: What does a regulator mean for the developers?

Gupta: The regulator is always welcome but again you cannot regulate demand and you cannot regulate supply. And the provision of the regulator should be such that we should equally benefit from them. Historically, the sector used to be very fragmented with small developers; with FDI (foreign direct investment) coming in, many corporates have entered, thus improving corporate governance and transparency.

Jyoti: When we talk of regulators, immediately the stock market or capital market comes to mind; here there is a regulator in place and we are seeing that the regulator really does not determine the prices but facilitation in terms of price discovery and I think that component is completely missing in real estate. Transparency is also missing in this sector. When I think of regulation, it is not in terms of the regulator alone. No sector can only work under the regulator alone, I think it should be self-regulation to begin with, second component is market regulation. The market should be made more powerful and institutions that facilitate flow of information should be brought into this sector and lastly the regulator’s regulation. And each one should have their own role to play. This country needs more enforcement than regulation.

Barbora: Is it possible to regulate such a complex sector?

Puri: Our transparency index has improved, as eight years ago India was 72 on the index of nations in terms of transparency and corporate governance and we have moved up to 44, and at 44 we have actually beat China. The regulator needs to cover the entire sector, geographies and stakeholders. At the moment you are regulating the various stakeholders and not the government, the biggest stakeholder. Secondly, if regulation wants to come in its true sense, bureaucracy needs to come in. Some of your best corporates are already in, be it Mahindra, Godrej, Tata and in the process will bring more efficiency.

Barbora:Old projects are not getting sold and even then new projects are coming up. It is a well-oiled machinery, there is enough funding through private equity funds, NBFCs and non-convertible debentures (NCDs) available for HNIs (high net-worth individuals). On the other hand, conversions are not happening and sales are slowing down. So, is this kind of supply and pricing creating an asset bubble?

Puri: I think in real estate, money can’t be enough, so I am not sure what is enough money. There may be enough money but it is not sufficient money. Out of the three, this is the most important topic of discussion as it is one of the biggest challenges at this point of time given the liquidity situation in the country. I see this challenge coming from scheduled banks, dried up private equity, NBFCs running out of money, sales going down and combining all that the Reserve Bank of India coming heavy on interest costs. Would that lead to prices coming down? As Gaurav mentioned, this depends on demand and supply and they cannot be regulated. Not many know that post Lehman, from January 2009 to March 2009, the prices of real estate have gone down 20 to 25%, so it is not true that real estate prices only go up. But they are back up, because the demand came, the money came in and the liquidity got pumped in.

Vikhyat Srivastava: I totally agree with his last point. You look at the economy in the bull market, it is the strongest player that leads the prices and in a bear market it is the weakest player that pulls the market down. In this bear market, transactions have slowed down a little, either due to external factors like in Noida or lack of approvals in Mumbai Private equity financing is replaced in a big way by NCDs. If transactions do not pick up and approvals do not come in and other factors do not loosen up, this sector is going to face some heat.

Maneesh Srivastava: We had a project or we worked on a project in Ahmadabad that got sold out quickly. And these people financed the developer as the developer constructed. The question here comes in whether I am constructing for the right type of audience? I don’t think the debate is whether financing is available, as there is a lot of money available for the real home buyer who is restacking it in one way or the other waiting for the prices to come down.

Gupta: What happens is that every developer has his own business plan and redevelopment is a very different industry. Take Mumbai and Gurgaon where land acquisition is very difficult, so they have their own set of business plans. Some say they want to do two projects in three years or say 20 projects in three years so the demand, pricing and product all depend on his business plan. Real estate is an industry and in the micro market the price range of the product can range between 15 and 20%. Financing from a private equity player is important as they should be confident putting their money and should have studied the market.

Barbora: Does financing need to be more broad-based?

Jyoti: Maneesh made a relevant point about the product. If in the residential market the product is right, we do not need any other form of financing. The customer finance available to incur all the financial costs puts you in a very good situation. Having said that, the private equity funds, banks or NBFCs—they really have to make sure that the value addition is not restricted to the funding alone. If that happens and say if the product is not right, to begin with you will need alternative financing as the customer funds are not coming in.

[Gudavalli]

India's Real Estate Outlook Negative for H212

CHENNAI/SINGAPORE, August 06 (Fitch) Fitch Ratings says in a new report that the Rating Outlook for the Indian real estate sector continues to be Negative for H212, due to persistent sluggish demand, high construction costs and liquidity pressures.

Given Reserve Bank of India's caution on interest rate cuts, high equated monthly instalments (EMIs) will continue to be a deterrent for potential home buyers. This, together with high property prices and elevated inflation will keep demand sluggish. However, y-o-y growth of home loans by banks - which had been slowing for the 12 months to April 2012 - picked up markedly in May and June 2012, and if continued may help spur the sector.

Slowdown in the economy and subdued job growth in the IT sector, which was at its lowest quarterly level in Q212, will hold back demand for commercial and retail properties.

Real estate companies will continue to face margin compression from high construction costs for both building materials and labour. From December 2011 to April 2012 the price of steel increased 13% and that of cement by 12%. Notwithstanding the trend of deleveraging since Q311, slowing demand, high costs and thus declining profits will keep leverage high for most real estate companies.

Reliance of real estate companies on operating cash flow will assume significance in the near term as available funding options remain limited. Growth of bank lending to the commercial real estate sector was low at 1.5% y-o-y in June 2012. Except for some pick-up in private equity, other funding options are restricted. As a result, companies that derive significant revenue from lease rentals will have a more stable credit profile compared with their counterparts whose business model is based on outright sale.

[Gudavalli]

When the realty bug bites …

… it’s entirely possible to be upwardly mobile and retain the local flavour.

There was a time, not so long ago, when our homes were places where we were ourselves. If we spoke English outside, we spoke our mother tongues at home. If we used spoons and forks outside, we ate with our hands at home. If we used fine china for guests, we used steel plates at home. It was a place where we had puja rooms or our own alcoves, where we had mismatched curtains and bedspreads, where comfort was more important than design.

The names of the homes or buildings were Ashiana, Gauri Sadan, Upasana, Diwan Shree, Kanchenjunga, Jal Darshan, Sah Jeevan and the like. From the Nineties onwards came the influx of the Silver Oak, Garden Estate, Palm Meadows, Oceana Towers and Grande Vistas. More lyrical and whimsical names also found their way: Windmills of the Mind and Whispering Meadows became a part of the landscape. Specific locations were evocative, with Mantri Espana and Lodha Bellissimo emerging. Promising international lives, developments have come up in smaller towns as well with Balinese villas being promised in Baroda and Spanish haciendas in Chandigarh.

In less than a generation, we are living lives international. Our homes are no longer the places we celebrate our traditional lifestyles, the one refuge where we can be ourselves. They are places where we flaunt our international tastes and aspirations, where no mismatched décor exists and our interiors are as much statements of style as our clothing is.

We, however, remain proud Indians. We celebrate our cinema, enjoy our music, dance to the bhangra and follow our rituals. So how does this dichotomy exist? How do we explain this exuberant chasing of Western lives with such Indian hearts?

For one, we are fed up of the squalor around us. We are fed up of things that don't work and systems that break down. We long for the escape to international destinations but we no longer want to run away there. There is enough and more in the fabric of Indian culture and the robustness of the Indian economy to moor us here. We simply want to bring the experience here. On our turf, on our terms. And live in bubbles constructed to keep the chaos of India out of carefully crafted realities.

The rise and rise of the new gated communities is the success of this bubble that allows for an escape from the squalor of India.

While the real estate developers have got that right, they all seem to be doing the same thing.

The images appear empty and perhaps they work as the Indian consumer is looking to escape from the jostling crowds outside.

The escape in the gated bubble has become a category promise and real estate brands will have to go beyond that to differentiate. Perhaps they need to channel learnings from other categories, such as the hotels and hospitality business.

Hotels have stood as symbols of luxury long before real estate made the claim. Taj, Oberoi or even the State-owned Ashoka offered islands of luxury. And cloistered spaces that kept the world out. They borrowed heavily from local influences and yet kept a global language. Chettinad, Kerala or Rajasthani, local architecture, art and names dominate the hotel industry.

Other countries see successful elements of local art and architecture incorporated. We are proud Indians. We value our heritage and customs. Real estate brands that leverage that insight would be able create robust, differentiated brands.

The Abu Dhabi airport borrows from the sand dunes of Arabia to create a unique structure. The interiors are also inspired by local motifs, and create a perfect juxtaposition of the modern with the local.

When we had worked on a property being developed by Tata Realty and Infrastructure Ltd (TRIL), located on the Kochi Marine Drive, we found a local culture that took great pride in its roots.

The language was rich and spoken, there was a thriving cultural and literary tradition, Kerala locks and roofs were distinctive elements of local architecture and yet the names of local real estate developments were Sahara Grace, Jairaj Spectrum, Jairaj Starling, Trump Marvel, Eminence, Imperial Gardens, Triton, Link Horizon, Prestige Neptune’s Courtyard, Sunshine Court, Ivy League, Palm Top, Marigold, Solitaire, Good Earth Reflections – to name just a few.

We convinced TRIL that they should celebrate the local culture, and the property, located at the confluence of the sea, land and sky was called Tritvam.

There is a huge opportunity for real estate developers to maximise the appeal of their properties by keeping the codes of luxury spaces that are gated communities, but also by borrowing from local sensibilities.

[Gudavalli]

Yamuna Expressway to stoke real estate boom

LUCKNOW: The Yamuna Expressway, which was finally thrown open to public recently may turn out to be a magnet for real estate growth in the region. The signal-free 165km expressway will reduce the distance between Agra and Delhi to around 211km, reducing the travel time between the Capital and the tourist hot spot to 150 minutes, and a mere 90 minutes from Greater Noida.

The expressway, in fact, has brought cheer to the area's developers with the property prices in its neighbourhood touching a mark of Rs 30,000 per square yard. Real estate experts claims that the proximity to the F1 track and world-class infrastructure are the major draws for the home buyers. The coming of an expressway would certain stoke the real estate growth further.

Significantly, the Jaypee Group, which has developed the expressway, is coming up with five integrated townships sprawling across 500 hectares at five locations along the expressway. The state government has already acquired land and allotted 21,000 plots off the expressway to individuals.

Various real estate players of the region are coming up with over 100,000 flats in the area. The Yamuna Expressway project was planned in 2003, but it was delayed because of changes in the government in Lucknow and three major farmers' agitations at Tappal (Aligarh), Ghodi Bachheda and Bhatta-Parsaul (both in Greater Noida).

[Gudavalli]

India's HDFC to raise min 2.5 bln rupees via bonds

Aug 17 (Reuters) - India's Housing Development Finance Corp is planning to raise at least 2.5 billion rupees ($44.7 million) through 18-month bonds at a coupon of 9.53 percent compounded annually and payable on maturity, a source with direct knowledge of the matter said on Friday.