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The highs and lows of Indian real estate in 2018

Posted on by Track2Realty

Bottom Line: New housing supply estimated at 1,93,600 units by 2018 end; annual increase of 32%. Housing sales in 2018 estimated at 2,45,500 units; annual increase of 16%. NBFC crisis holds sector at gun-point as 2019 begins.

2018, Yearly review, New year in real estate, Yearly  review of Indian real estate, Pains & gains of 2018, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in property, ANAROCK Property Consultants, Anuj Puri, Track2RealtyYear 2018 was a veritable roller-coaster ride for the Indian real estate. Despite signs of recovery across segments, the liquidity crunch – further exacerbated by the NBFC crisis – put all industry stakeholders on tenterhooks.

Consolidation via mergers and acquisitions was rife in all sectors, completely redefining the concept of ‘financial health’ among players and drawing clear lines on who will survive the heat. This process will continue throughout 2019, as well.

Despite all odds, economic indicators remained positive with India’s GDP growth rate pegged at 7.3% in 2018. CPI inflation, a major concern in the past, remained reined in at a manageable 4.8%. GDP growth and contained inflation are generally considered panacea for most real estate woes.

However, it took a lot more than that for real estate to retain even a semblance of an even keel in 2018.

The initial agony of policy overhauls like RERA and GST faded, leaving in its wake a reluctantly more transparent and efficient real estate market environment. While affordable housing took centre-stage in residential, co-working emerged as the new poster boy of commercial real estate.

Logistics and warehousing saw significant growth. Despite minimal new supply in 2018, the retail real estate sector held its own on the back of conducive FDI norms.

Coming as it did almost at the end of the year, the NBFC crisis put an entirely new spin to India’s ‘cautiously optimistic outlook’ and as of now, it shows no signs of relenting. The Indian real estate sector enters 2019 with a gun to its head. Strong intervention from the Government and RBI is definitely called for.

Commercial real estate: steady growth

In terms of market traction, commercial real estate retained its status as the most buoyant sector in 2018 across major cities. Demand for Grade A office space saw new highs and vacancy levels declined in prime locales.

India’s first REIT listings, now expected to happen in early 2019, will result in massive liquidity infusions into commercial office spaces. This, in turn, will prompt commercial property developers to focus more on this segment to fulfil demand from occupiers across the IT/ITeS, BFSI, manufacturing and co-working sectors.

Big-bang boosters like the start-up revolution and Smart Cities scheme helped create a lucrative environment for businesses to work and expand, inevitably increasing demand for office spaces. Proactive Government policies further increased the ease of doing business in India, revving up the confidence of global entities.

Concurrently, office real estate in most Tier I cities emerged as strong investment options for producing higher yields than the other segments of real estate. The increasing presence of institutional investors in India’s commercial real estate space helped improve governance, making it more structured and transparent.

Office Absorption - As per ANAROCK data, total office absorption across the top 7 cities is geared to cross 39 mn. sq. ft. in 2018, given that 28.2 mn sq. ft. were absorbed until the third quarter. This denotes an annual increase of 19% in absorption. 

Office Supply - The top 7 cities are expected to see over 32 mn. sq. ft. of fresh office supply, basis 26.1 mn. sq. ft. absorption till Q3 2018. 

Bengaluru retained its top position in 2018, with more than 8 mn. sq. ft. of new supply in 2018. Office absorption in Bengaluru is expected to cross 11 mn. sq. ft. by the end of Q4 2018, denoting a massive annual increase of 37%.

The city’s large talent pool, its vibrant start-up culture, ample Grade A office stock, relatively affordable rents and steady demand from the IT/ITeS sectors, BFSI and co-working spaces prompted this growth.

Retail real estate: quality malls push growth

2018 saw further liberalization of FDI policies, repositioning Indian retail on the global investment map and attracting a large number of global retailers into the country. In H1 2018, private equity investments into Indian retail swelled to over $300 million, denoting a bracing growth of 54% over the previous year.

Worryingly or encouragingly (depending on one’s viewpoint) online retail also witnessed exponential growth in 2018. In fact, online retailing is now expected to be at par with physical retail over the next 5 years.

With India positioned to become the world’s fastest-growing e-commerce market, online retail in the country is driven by robust investments and deepening internet penetration in the country.

As per ANAROCK data, the top cities with significant retail growth in 2018 included MMR, NCR, Bengaluru and Hyderabad 

New retail supply in 2018 was limited to 5.1 mn. sq. ft. 

Interestingly, apart from the top metros tier 2 & 3 cities played a significant role in India’s retail growth story in 2018  

Saturation of the metros due to limited space availability, mounting rental values and escalating infrastructure issues fuelled retail growth in smaller cities like Ahmedabad, Bhubaneshwar, Jaipur, Lucknow, Thiruvananthapuram, etc

New malls that became operational in the smaller cities in 2018 range from anything between 200,000 to 18,00,000 sq. ft. in size, amply vouchsafing the increasing appetite for organized retail in the hitherto underserved cities.

In response to the huge potential in these markets, both domestic and international brands made deep forays into them via the online route, followed by more gradual offline presence. This disparity is hard to ignore and sends out a clear signal to investors and mall developers – physical retail deployment must pick up considerable pace in these smaller markets in the coming years.

Residential real estate: affordable housing plays pied piper

The fallout of RERA and GST was still very visible in 2018, but the dust began to settle. With developers and brokers accepting the new market realities and beginning to fall in line, the residential sector began to regain visibility and viability.

Transparency and accountability – never the defining characteristics of Indian real estate – became the ‘new normal’ this year, and the market reacted positively. 81% respondents in ANAROCK’s Consumer Survey, which covers both resident and non-resident Indians (NRIs), believe that Indian real estate has become more credible and efficient.

Even though sales and new supply picked up q-o-q across the top cities, the issue of stalled projects showed few signs of resolution in 2018. However, a number of landmark court judgments strongly indicated that the Indian legal system is awake and aware of the problem.

2018 was a year where consumers, previously held hostage by lack of efficient regulation, finally felt that they are being heard and represented. As is always the case, the process of resolving a problem starts with acknowledging that a problem exists.

Average property prices remained largely static across the top 7 cities in 2018. In fact, average property prices at the pan-India level saw only 1% increase in 2018 as against the previous year, from INR 5,491 per sq. ft. in 2017 to INR 5,545 per sq. ft. in 2018.

At a city-level too, average property prices hovered mostly around the same levels in 2018 versus last year. Q-o-q trends also suggest that there was no headwind change across cities – remaining well within 3%.

City Q1 2018 Q2 2018 Q3 2018 Q4 2018*
NCR 4,520 4,550 4,550 4,550
Kolkata 4,430 4,450 4,405 4,410
MMR 10,410 10,514 10,514 10,750
Pune 5,410 5,465 5,465 5,500
Hyderabad 4,100 4,130 4,130 4,150
Chennai 4,910 4,935 4,935 4,935
Bangalore 4,850 4,900 4,900 4,930

Source: ANAROCK Research

Affordable housing, backed by a series of government sops during 2018, kept the residential supply momentum ticking. In sharp contrast to earlier years where the ‘affordable’ tag was considered down-market and avoidable, 2018 saw almost every real estate developer – regardless of market footprint and previous category orientations – eager to take a bite out of the affordable housing pie.

As per ANAROCK data, the new launch supply across top 7 cities is estimated to be 1,93,600 units by the end of 2018 – at 1,46,850 units in 2017, this is an increase of 32% over the previous year despite all headwinds.  

Affordable housing accounted for the lion’s share of this supply with over 41% of the new supply coming into this category. 

Housing sales in 2018 are estimated to be 2,45,500 units if we consider Q4 sales to match those of the preceding quarter – at 2,11,140 units in 2017, this is an annual increase of 16%. 

Unsold housing stock stood at 6.87 lakh units in Q3 2018. Considering that unsold housing stood at 7,44,000 units in Q3 2017, the decline is a modest 8% over the previous year. 

Ready-to-move-in properties garnered maximum buyer interest, with ANAROCK’s Consumer Survey indicating that 49% property seekers are intent on buying RTM homes.  

Hospitality real estate:  28% GST on luxury hotels a dampener 

India’s ever-growing middle-class, rapid infrastructure development, rise in foreign tourists and the provision of the e-Tourist visa facility to nearly 164 countries gave a major boost to the hospitality industry in 2018.  

Technology played a vital role, with 2018 seeing a significant rise in the number of online bookings via mobile devices and apps. Social media platforms also drove significant footfalls.

Branded budget hotels emerged as the flavour of the year for Indian hospitality. Demand for hotel rooms continued to be driven by the meetings, incentives, conferencing and exhibitions (MICE) segment, further underscoring the benefits of India’s improved ease of doing business rankings.

Nevertheless, 2018 saw at least one major setback for the hotels industry – the 28% GST on luxury hotels gave India the dubious distinction of being one of the world’s most taxed hospitality markets.

Innovation was the key word for the hospitality sector in 2018, with most player re-inventing their strategies and designing customized products to attract tourists.

The retention and acquisition of key assets made for a lot of headline reportage, but the stronger, though subtler ‘vibe’ emanating from the hospitality industry was the struggle against becoming obsolete and irrelevant.

Other sunshine sectors

The logistics & warehousing sector transformed rapidly in 2018 after the Government granted the coveted infrastructure status to logistics in November 2017.

In fact, warehouse stock supply is expected to see substantial increase over the next two years owing to implementation of GST, the Government’s determined infrastructure push and increased interest from national and international investors. Overall, strong economic fundamentals, proactive reforms and increasing use of technology will continue to boost the sector.

Besides conventional sectors, 2018 also saw the emergence of alternate asset beyond senior living. Student housing and co-living, barely mentioned or considered in previous years, drew considerable interest not only from industry watchdogs but also institutional funds.

All in all, 2018 was a mixed bag of hits and misses.

Fast forward: trends that will shape 2019 

Liquidity crunch to continue until H1 2019 

Muted new housing project launches 

More interest for affordable housing by leading developers 

Consolidation to gain momentum 

The rental and managed living model (such as Co-Living) will gain traction 

Ready-to-move-in housing to remain centre-stage 

Housing prices will remain flat 

Alternate asset classes like Co-Working, Student Housing, Senior Living, Warehousing and Retail in Tier II &III cities to gain traction. 

Private equity players will continue to make select investment forays

By: Anuj Puri, Chairman, ANAROCK Property Consultants

Is there any hope for Dharavi?

Posted on by Track2Realty

Bottom Line: So far, there have been no answers and only more questions about the future of Dharavi.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajMumbai’s Dharavi, one of the largest slums in Asia, has been an area of contention for almost two decades now. For all its revelations, the recent blockbuster film ‘Kaala’ only underscored what Mumbaikars, human rights activists, urban planners and real estate developers have known for decades – there is no simple formula for unravelling the complex Dharavi equation.

Occupying 535 acres of prime land in the very heart of India’s financial capital, Dharavi could be a motherlode of pure gold for developers who could get a piece of it. Formal housing developments there would also give innumerable Mumbaikars exactly what they need – homes in the heart of the city and within a short commute to some of Mumbai’s most important workplace hubs.

Not surprisingly, the Maharashtra State Government has been eager to redevelop Dharavi. Building affordable to mid-range housing projects here would completely reinvent the residential real estate equation of Central Mumbai and also make a major contribution to the Central Government’s Housing for All by 2022 target.

However, barring a few buildings constructed by MHADA in sector V, things have not progressed much on the Dharavi redevelopment front. Earlier, there was a lot of speculation that the Mumbai Development Plan (DP) would provide more clarity on this, but the ambiguity continued.

The Plan

The plan was to divide Dharavi into five sectors for easier redevelopment. In October of this year, the state cabinet gave the green signal for redeveloping the entire 535 acres by setting up a special purpose vehicle (SPV) and floating just one global tender for the entire project (with 80% private sector and 20% government stakes).

Interestingly, the State Government also quashed its earlier plan of redeveloping Dharavi as only a residential cluster. Instead, it is now looking to transform the region into a hub for business and commercial activity as well. The Government has also extended fiscal sops and indirect subsidies to the project, including waiver of stamp duty on the development rights agreement and the first sale of the saleable area.

What it boils down to is that the INR 26,000 crore-worth Dharavi redevelopment project is repeatedly taking U-turns to attract developers into a highly complex, though potentially lucrative and definitely a game-changing undertaking. However, given the cash-crunch that developers are experiencing now, it seems unlikely that even large players will come forward and take up the challenge to build this highly cost-intensive mega project. 

However, Dharavi is not an area of contention and confusion on the basis of costs alone. The biggest question is of land ownership and relocation of its existing inhabitants. In terms of land ownership, almost one-fifth of the land here is privately-owned. In terms of rehabilitating the existing occupants, one needs to keep in mind that as many as 60,000 families currently live in Dharavi.

As per the redevelopment policy, a developer can get the slum land only after obtaining permission to do so from at least 70% of the slum dwellers. Thereafter, he has to rehouse the slum dwellers free of cost in multi-storey tenements of at least 270 sq. ft. carpet area per household.

Earlier, only slum dwellers who had documents to prove that they had been living in Dharavi prior to January 1, 2000, were eligible for this scheme. However, the current State Government has now decided that even those who live in dwellings constructed after this cut-off date need to be rehabilitated. To this effect, the housing department proposed modifications to the Maharashtra Slum Act, 1971 in 2017-end.

The Opportunity

The Dharavi redevelopment project, when completed, can change the entire real estate scenario here. Dharavi rubs shoulders will upmarket Bandra and is right next to the avant-garde Bandra-Kurla Complex. This makes Dharavi an incredibly attractive proposition for homebuyers, investors and developers alike.

If it were to take place as intended, Dharavi’s redevelopment will also in ease the residential pressure on South Mumbai localities and open new avenues for further real estate development. Besides being a residential cluster, Dharavi is also a major economic hub where people produce a wide array of goods and services including leather bags, pottery, snacks and many other commodities.

In fact, the previously failed attempts by the State Government to rebuild Dharavi have now prompted a new angle – the area is now being promoted as Mumbai’s new business district. Redeveloping such a prominent residential-cum-commercial zone would be a major political and economic triumph for an incumbent Government.

However, as of now, we are nowhere near to being close to such a fortuitous culmination of the Dharavi story. For all we know, a particularly insightful film which does not play as much on plight and sordidness but rather focuses on real-time solutions could eventually provide an answer. Certainly, urban planners and Governments have not been able to do this.

Real estate investment cloudy with hints of sunshine

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View Point: It’s not exactly raining investments in the Indian real estate sector right now, but the increasing number of large-size investments give a ray of hope.  

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajDeals worth over $1.5 billion in H1 2018

‘Housing for All by 2022’ will attract US$ 1.3 trillion into residential by 2025

First REIT listings a sure-fire draw for liquidity infusions into office assets

 The ancient Chinese curse ‘may you live in interesting times’ certainly has a lot of pertinence to Indian real estate today. These are doubtlessly ‘interesting’ times for the sector, which has transformed significantly over the last decade. The pace of transformation has been accelerated further by the Central Government’s reformative steps aimed at ushering in ‘Acche Din’ to the realty sector.

Whether or not that has happened to the expected extent is debatable – but certainly, a new regulatory environment is being created with the implementation of several disruptive policies. The Real Estate (Regulation and Development) Act, 2016 (RERA), Goods and Services Tax (GST), Real Estate Investment Trusts (REITs), the Benami Transactions (Prohibition) Amendment Act, 2016 and the Pradhan Mantri Awas Yojana (PMAY), among others, have all happened over the last four years.

These policies are bringing in higher levels of transparency and accountability, financial discipline, focus and efficiency into the industry which could only be dreamed of in the past. Moreover, these reforms have opened new avenues for growth. Today, these are more than sufficient indicators to vouchsafe the country’s growth story and its positive repercussions on the Indian real estate sector.

The market size of the Indian real estate sector is expected to touch US$ 180 billion by 2020 and is poised to grow at the rate of 30% over the next decade. According to the Indian Brand Equity Foundation (IBEF), the number of Indians living in urban areas is slated to increase from 434 million in 2015 to 600 million by 2031. The housing sector alone is expected to contribute around 11% to India’s GDP by 2020.

 Private Equity investments rise by 15-17% over 2018

The increasing share of real estate in the country’s GDP will be supported by increased industrial activities, improving income levels and rapid urbanization across cities. In terms of FDI equity inflows, real estate is the fourth-largest sector in the country.

The total FDI inflows in the sector were US$ 24.67 billion from April 2000 to December 2017 – which is 7% of the total FDI equity coming into the country during this period.

As for PE investments in Indian real estate, the first quarter numbers of 2018 looked positive with the overall PE funding increasing by 15-17% since a year ago.  However, the steady fall in appreciation and persistent gloom in the residential property market caused PE investors to shift their focus towards other asset classes.

The sector which is seeing most institutional investments right now is the commercial office real estate. Driven by rapid employment generation and the near possibility of the first REIT listings, Grade A office projects, IT parks and even logistics centres are currently yielding the levels of returns on investment that previously made the residential asset class so attractive to investors.

Data suggests that the average investment per deal, particularly in commercial real estate, has increased by almost 3-4 times to nearly the average investment per deal 6-7 years back. Also, the appetite of institutional investors – including private equity, sovereign wealth and pension funds – is visibly increasing for matured, yield-producing commercial assets with established rentals and occupiers.

Needless to say, the rise of institutional investors in Indian real estate space will significantly improve levels of governance in the real estate sector and make it far more structured and transparent.

Consolidations Galore 

 Major consolidation by way of mergers, acquisitions and JDs has also become a prominent trend in the Indian real estate sector. Some of the top deals in H1 2018 alone are worth over $1.5 billion comprising of investors like Blackstone, Canada Pension Plan, Ascendas, GIC and India-based HDFC venture.

Private Equity forecast

Office real estate attracted considerable private equity investments in 2017 and this trend continues in 2018. The promise of India’s first REIT listings is a sure-fire draw for liquidity infusions into the office real estate sector. In fact, this will cause commercial property players to deploy more bandwidth and resources into the commercial property asset class.

The ongoing sluggishness in residential real estate continues to work against it, with private equity players wary of the re-investment cycle risks associated with it. However, while this means that commercial real estate will elicit the bulk of institutional investment interest over the mid-term, the Government is also working hard at making the residential asset class more attractive for large investors.

Overall, India needs investments to the tune of US$ 4 trillion over the next 5-6 years to fulfil the Government’s various schemes. The ‘Housing for All by 2022’ initiative alone is likely to bring US$ 1.3 trillion investments into the residential sector by 2025. In this environment, institutional financing is gaining prominence.

Banks’ caution on real estate a major PE draw

The rapid increase of non-performing assets (NPAs), significantly reduced profit margins in the real estate sector and the RBI identifying the real estate sector as a ‘high-risk’ business have made banks leery of too much exposure to this sector.

Ultimately, funding sources like private equity, financial institutions, pension funds and sovereign wealth funds have to step in and these are now the predominant funding avenues for the real estate sector. PEs and other institutions have contributed nearly 75% of the total funding coming into the sector in recent times.

However, private equity players are now conducting thorough due diligence and investing only in ‘clean’ and viable projects by established developers with strong track records for compliance and completion. Government interventions like RERA and GST have served as weeding-out mechanisms which will ultimately leave only strong, credible developers with the clout required to attract institutional funding in the fray.

Overall, it has been a rather messy maturing process for the Indian real estate, but it is largely so because there are decades of incredibly messy business practices to be cleaned. Judging by the levels of pain and consolidation the process has induced in the sector, it is doubtlessly effective – and we may yet see ‘Acche Din’ in the Indian real estate sector.

By: Anuj Puri, Chairman – ANAROCK Property Consultants

India 2nd after US in sustainable real estate projects

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Bottom Line: But it is not enough, says Anuj Puri, Chairman – ANAROCK Property Consultants as ANAROCK’S latest real estate research report provides critical data and insights

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajAlthough sustainable real estate is still in a nascent stage in the country, India is actually one of the leading counties when it comes to green buildings development. In fact, India ranks only second after the U.S. in terms of the number of green technology projects and built-up area.

As of September 2017, more than 4,300 projects utilizing green technology, accounting for approximately 4.7 billion sq.ft. of built-up area, are registered in India as per data shared by IGBC.

True, this is only 5% of the total buildings in India. However, the country’s market for green buildings is expected to double in the next few years and may reach up to 10 billion sq.ft. by as early as 2022 – at a valuation of between US$ 35 billion to US$ 50 billion.

Why India needs green buildings

ANAROCK’s latest real estate research report “Go Green – The Mantra for Sustainable Living”explores the price we have paid for the rampant urbanization and massive population increase in the quest for faster economic growth. These dynamics have caused changes in our overall lifestyle and indeed our quality of life – but that is, arguably, not the worst of the fallout. It has also led to a significant depletion of our natural resources.

The rapid rate of depletion and concurrent steep rise in greenhouse gases emission and waste generation have resulted in continuous environmental degradation. This is the primary cause of climate change, the rise in average temperatures and deteriorating air quality in our cities.

In recent years, this alarming ecological dynamic has drawn the concerted attention of many countries and kick-started massive efforts to find ways and means to mitigate the rate of deterioration and ensure efficient use of natural resources.

Real estate development – a prime culprit

Real estate development is one of the biggest consumers of natural resources (water, energy, raw materials) and generates gargantuan amounts of wastes and pollutants. This sector alone ingests about 40% of natural raw materials, 25% of water and 35% energy resources. In addition, it emits 40% of wastes and 35% of greenhouse gases.

By adopting green building practices, the real estate sector can reduce its negative ecological footprint and simultaneously help create a more sustainable environment over the long haul.

Efforts towards sustainable real estate development involve the optimal use of natural resources, reduction and recycling of wastes, and significantly reduced pollutant emissions. A sustainable environment is the most precious legacy humankind can leave for the future generations.

What constitutes a green building?

The UEPA (US Environment Protection Agency) defines green building construction as the practice of using processes and technologies which are environmentally responsible and energy efficient throughout the building’s lifecycle.

This includes aptness of the site, design, construction, operations, maintenance, renovation and deconstruction. Green building construction technologies can reduce a building’s energy consumption by 20-30% and water consumption and 30-50%.

Benefits of Green Buildings:

Better air quality

Enhanced daylight 

Optimal use of water and electricity

Better health and wellbeing of occupants

Enhanced productivity

Protection of ecosystem 

LEED (USA), BREEAM (UK), DGNB (Germany) and CASBEF (Japan) are a few of the key global entities that define, categorize and certify green buildings across different countries. In India, IGBC and GRIHA are the torchbearers that define the green buildings’ norms.

Although the initial cost of constructing a green building can be relatively higher than in conventional ones, the enduring benefits such as low operating cost, better health and enhanced productivity makes sustainable real estate an extremely viable long-term investment decision for both developers and consumers.

A green building’s efficiency can be amplified by the adoption of innovative construction materials and better technologies.

There are many green building construction technologies being used across the world, including:


Green Roofs

Vertical Gardens and Rain Gardens

Glass Fibre Reinforced Gypsum (GFRG) Panels

Cradle-to-cradle building design, and

Use of ‘smart’ glass panes  

Over the past few years, the Government (and various organizations and agencies focused on environmental protection) have been working hard to raise awareness about and inclination for green buildings.

The thrust is towards emphasizing that green buildings create a more sustainable environment through efficient use of energy and conservation of resources – and that these are issues for which everyone, from developers to consumers, must assume responsibility.

Challenges and Barriers

While green building practices are increasingly being adopted in India, there are few challenges and barriers too:

Limited awareness about green buildings practices and its long-term benefits: Even today, a large section of Indian users is unaware of green buildings’ enduring benefits and perceive them to be expensive and financially unfeasible options.

Inadequate government’s rules and policies:The lack and/or inadequacy of mandatory laws to enforce large-scale implementation of green buildings norms is not helpful.

Additional clearances and approvals: Developers already go through a tedious process of a multitude of approvals and are apprehensive of the additional burden of green compliances in the list of approvals, which can potentially cause more delays.

Insufficient incentives to encourage adoption:There are very few incentive plans, and those that exist vary across states and even cities, depending on different governing bodies. In the majority of cases, incentives are in the form of additional FAR, followed by a rebate on property tax and other schemes. However, these incentives have not been significant enough to encourage large-scale adoption of green buildings practices.

The high cost of equipment and products:The equipment and products used in green building construction definitely involve a higher cost than the conventional ones; though the added cost is marginal, many small contractors and developers cannot afford it.

Lack of skilled manpower and subject matter experts:In India, a majority of real estate industry stakeholders from policymakers to architects, engineers, contractors and workers simply don’t possess adequate skills and the knowledge required for green buildings construction.

In India, the growth of green buildings can be accelerated through standardization of norms, better incentive schemes, robust financial support system – and, most importantly, creating awareness among all stakeholders. Increased awareness about green buildings and their long-term benefits will surely boost the green buildings sector and lead to the faster expansion of this very vital market segment.

Housing.com co-founder Rahul Yadav back in real estate

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News Point: Rahul Yadav joins ANAROCK as Chief Product & Technology Officer.

Rahul Yadav, Housing.com, ANAROCK, Technology in Indian real estate, Technological innovation in Indian real estate, India real estate news, Indian property news, Track2Realty, Track2Media ResearchANAROCK Property Consultants, which former JLL Country Head Anuj Puri launched last month, has appointed Housing.com’s co-founder and ex-CEO Rahul Yadav as Chief Product & Technology Officer.

“This appointment is in line with ANAROCK’s highly technology-driven orientation and business model for its residential advisory services,” says Anuj Puri, Chairman – ANAROCK Property Consultants.

“The online real estate business is still in its fledgling stage in India, and we are taking the lead on boosting it into maturity. So far, the real estate sector has not been able to emulate the success of ecommerce for consumer durables and services. We intend to change that, and Rahul Yadav’s experience in harnessing the consumer housing market at via technology will add the key element. The cutting-edge and highly consumer-focused technology platform and support infrastructure we will build here will bring in a complete transformation of the residential property business,” he adds.

Indeed, real estate in India continues to see most of its success as an offline business, with very little technological innovation happening to speed up its adoption as a viable online business model.

Real estate advisories, online property listing aggregators and even developers have made some headway, but this field nevertheless remains underserved because of lack of integration with credible expert offline advisory and transaction support. In short, the continued challenge lies in successful sales conversion in a manner which also places the customer’s interests first.

“Indian residential buyers and investors will not embrace an ecommerce model of property purchase unless they get a seamless experience from online selection to offline advisory and transaction closure,” says Puri.

“We have already pioneered this model in the Indian real estate space and will now back it with a robust technology infrastructure, in the building of which Rahul Yadav will now be instrumental. Backed by our firm business philosophy of ethics, integrity and values over value, we are now taking the online real estate business in India to the final level.”

Rahul Yadav has demonstrated outstanding success in setting up of a real estate search portal wherein prospective buyers can conduct housing searches based on geography, unit size and various other key factors. He has pioneered the verified listings and data approach to the online real estate business in India. As the brain behind a highly successful, technology-intensive platform, Rahul Yadav’s credentials are well-established. Before joining ANAROCK, Rahul also advised Lodha Group for a brief period.

Rahul Yadav says, “I consider my appointment as Chief Product & Technology Officer at ANAROCK Property Consultants the logical next step in my career, and it is of course a complete privilege to work with an outstanding industry leader like Anuj Puri. Given my product and technology background, I am fascinated by the highly tech-driven approach that ANAROCK is adopting for its residential real estate business, and I already feel very much at home here. I am extremely excited as I look at the immediate and long-term future of this company as a result of these innovations.”

Rahul, who will be based out of ANAROCK’s Mumbai offices in Bandra-Kurla Complex, assumes his new role from today and is already building his team of product and technology experts.

The BREXIT effect

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News Point: Post BREXIT investors will now be in a risk-off mode, meaning more number of investors would either pull out investments or stay put without investing further until clarity emerges. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajUntil today, year 2016 was looking seemingly positive for real estate sector in terms of investment inflows (read PE or FDI inflows), but now that is somewhat at risk.

The real estate sector in India will continue recovering on the back of a resilient Indian economy and strong capital inflows. BREXIT will not disturb that recovery much, since India’s office market leasing is dependent only by 5-7% on UK-headquartered companies, and investments and activity of PE Funds from EU countries is more in India than in the UK.

Investors in the UK looking to invest in residential properties outside UK will have to study and compare returns and risk assessments for real estate in India versus real estate in the EU. After exiting EU, locations like Greece, Spain and Portugal may not remain as attractive to UK investors, and India may benefit from that.

However, investors will refrain from making plays for some time as they will want to develop a good understanding of the comparative risks- returns scenario.

The first reaction of investors to a situation like this is to exit from sectors that are perceived risky. Given the Indian stock markets’ recent performance, real estate was considered risky until recently; it had only begun to emerge out on the back of policy reforms like RERA and other factors providing a positive market momentum.

Given a risk-off sentiment, realty stocks could witness selling pressure as investors scramble for safe-haven sectors such as FMCG or pharmaceuticals.

Several major IT firms such as Infosys, TCS and HCL Tech earn a third of their revenues from the EU. A possibility of EU slowing down will have an adverse impact on their revenues. The IT sector is a leading occupier of office space in India every year.

Year 2015 saw many European retailers entering India as part of their expansion strategy to new markets. We had anticipated this trend to continue in 2016. However, if the EU economic outlook weakens, their expansion strategies may be reconsidered.

India could be an anchor of stability, given that a proactive government has carried out reforms at a satisfactory pace and that its inflation has remained controlled over the last one year or so. Also, given a normal monsoon forecast for this year, even food inflation could be kept in control in the near-to-medium term while triggering a healthy growth of agriculture and rural economy.

Given that BREXIT has happened, we foresee US Federal Reserve to defer their decision to hike interest rates, which is positive for the emerging world, including India.

India’s bi-lateral trade with Great Britain is export surplus, which is good for India. However, compliance cost for India’s exports will rise. At the same time, India can negotiate more favourable trade terms with Britain. After losing out to free trade with the EU, Britain will be under pressure to look for balanced trade with big emerging economies like India, which is the fastest-growing economy.

When economic recession hit the US, Indians took up a leading position among investors keen to take advantage of the falling property prices there. The British Pound is currently at a 31-year low, which itself provides an attractive rationale for foreign investors with an appetite to do so to acquire properties in the UK.

There is no doubt that the UK – particularly cities like London – has always held a special attraction for Indians, particularly HNIs, with business interests or families there. Such individuals will certainly keep a close watch on the effect of Brexit on UK’s property prices, and it is very likely that many more Indians will seek to invest there.

By: , Chairman & Country Head, JLL India

A checklist to remove affordable housing bottlenecks

Posted on by Track2Realty

Bottom Line: Large-scale affordable housing in cities is the greatest necessity of urban India today.

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Large-scale urban developments – the only way to create affordable housing in the required magnitude in our major cities – are becoming increasingly difficult due to lack of land parcels, congested transit routes, lack of finance, rising input costs and regulatory hurdles.

If we take a birds-eye view of the problems plaguing this sector, the vision of Housing for All by 2022 becomes a hazy one at best. It is vital that these issues are addressed on a priority basis urgently so that a comprehensive framework can be established for ensuring the development of affordable housing.

On analysing the bottlenecks that currently hold affordable housing in India to ransom, it emerges that any approach towards a workable solution will have to encompass at least seven important functions. These are:

1.    Formulate guidelines for identifying right beneficiaries:

It is important to formulate guidelines that will identify the appropriate beneficiaries for affordable housing projects. This is critical, as the involvement of speculative investors in such projects defeats to whole purpose. The National Population Register and issuance of unique identities via the Unique Identification Authority of India will become crucial elements in identifying the right beneficiaries if they are linked with income levels.

2.    Innovate on micro-mortgage financing mechanisms to ensure a larger reach:

Effective financing through micro-mortgages by utilising the reach of self-help groups (SHGs) and other innovative financing mechanisms can ensure that housing finance is available to large sections of lower income groups (LIG) and economically weaker sections (EWS). Flexible payment mechanisms should be put into place, as households in low-income groups typically have variable income flows.

3.    Incentivise developers to enter affordable housing segment:

Urban local bodies can develop guidelines by giving free sale areas, extra floor space index (FSI) and other policy-level incentives to real estate developers, thereby attracting them to develop affordable housing. Schemes for redevelopment and slum rehabilitation should be developed with incentives that generate sufficient returns for the developers, while simultaneously controlling the development density. A cost-benefit analysis of regulations should be carried out from a development perspective to ensure that schemes to facilitate affordable housing development are actually realistic and feasible.

4.    Streamline land records to improve planning and utilisation of land:

Adequate availability of land for housing and infrastructure can be ensured by computerisation of land records, use of geographical information systems, efficient dispute redressal mechanisms and implementation of master plans. The central government and some state governments have already begun work on this front, but there is still a lack of required pace.

5.    Include mass housing zones in city master plans:

Additionally, ensure that these zones are developed within a pre-determined schedule, accounting for the future requirement of affordable housing. Some cities have already dedicated zones for development of affordable housing in their master plans. This needs to be replicated in other cities and towns – with a sharp focus on development timelines.

6.    Deploy well-researched rental housing schemes in urban areas:

Authorities like the Mumbai Metropolitan Region Development Authority (MMRDA) have experimented with rental housing schemes in the past. However, these have not been very successful as a proper framework for such schemes was missing. The most visible limitations were that development of rental housing took place in far-flung areas which are not suitable for affordable housing, and the lack viable means to identify the right end-users.

7.    Formulate policies for greater participation from private sector:

The private sector can play a big role in affordable housing, most notably in terms of providing technological solutions, project financing and delivery. Disruptive innovations on these fronts, with a specific focus on affordable housing, are the need of the hour. We need imaginative, workable solutions to reduce the costs of construction in the face of rising input costs. As construction costs account for a significant portion of the selling price of affordable housing units, savings accrued on the back of such innovations can immensely benefit the occupier.

It bears mentioning that none of these solutions will work well in isolation. Given the complexity of the affordable housing conundrum in India, only a multi-pronged approach with equal weightage given to each element can hope to break the deadlock.

The Housing for All by 2022 is indeed a workable vision if a determined and focused effort based on these solutions is employed – and it will definitely yield the desired results.

By: Anuj Puri, Chairman & Country Head, JLL India

Impact of 100% FDI in e-commerce on Indian real estate

Posted on by Track2Realty

Bottom Line: 100% FDI in Indian e-commerce will open the floodgates to a host of other players in this segment.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajIndia is already host to some of the largest global e-commerce players. The announcement that 100% FDI will now be allowed in e-commerce is going to open the floodgates to a host of other players in this segment. The impact that this development will have on Indian real estate will be significant. In the first place, the new players – like their predecessors – will require large office spaces to house their back-end teams. They will naturally direct this requirement to the country’s top 7 cities.

The second impact will be on the demand for warehousing and logistics real estate. Unlike the demand for office spaces, this additional requirement will be spread fairly evenly across Indian cities. E-commerce players need to be able to deliver quickly to their customers, and one of the most important clientele segments for them are in the tier 2 and tier 3 cities. We will therefore see a significant step-up in demand for warehousing spaces in and around these cities.

On the flip side, there has been a rider clause attached to the FDI liberalisation on e-commerce. This is that e-commerce players now will be unable to sell below market prices and not more than 25% of sales will happen via one vendor (this proviso does raise a question about the term ‘market price’, given that there is fairly broad accepted range for most products). In any case, this announcement brings brick-and-mortal retailers on a more level playing field, and would help to still the outcry over unfair trade practices to an extent.

Overall, this is positive for the retail industry; more rational behaviour will now prevail in terms of market trade practices, and mounting of losses by most e-commerce companies will be curtailed. Online sales may reduce as deep discounts disappear, although losses will also be capped.

If we look at the West, e-commerce and brick-and-mortar players coexist happily, and this dynamic can definitely reflect on the Indian terrain as well. With e-commerce in India still at the nascent stage, the base being low even now and the growth rate very high, there is enough scope for both e-commerce and brick-and-mortar retail to flourish.

By: Anuj Puri, Chairman & Country Head, JLL India

Government easing approvals process for realty projects

Posted on by Track2Realty

To improve ‘ease of doing business’ in urban areas, the Government has been streamlining many procedures. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajDevelopers have something to cheer about this Budget season. After years of demanding quick approvals for their projects and removal of red tape from government departments, the central government has been taking steps in the right direction to address these concerns.

A decision to streamline approvals and enable time-bound clearances for construction projects in urban areas by empowering urban local bodies to settle a wide range of approvals and adopting appropriate technology was taken in November. The central government aims to reduce movement of files between central government ministries and local government bodies, which prolongs the time to give approvals.

According to a report by the Confederation of Real Estate Developer’s Association, it takes up to three years to start a project after land is acquired, on an average. By this time, the cost of land rises by 24-30% due to hefty interest payments as bank loans are not available for procuring important raw material in this sector. This cost ultimately gets passed on to the customer. A simpler and uniform process will help bring down the cost of each unit in a project by 20-30%.

Progress achieved so far:

  • In association with ISRO, The Ministry of Culture is developing colour-coded maps for 281 monuments that account for most of the construction-related approvals, using which municipal bodies can accord approvals in quick time.
  • The Ministry of Environment, Forests & Climate Change has come out with revised and simplified environmental norms, and these will be notified at the earliest after consultations with the Ministry of Urban Development. Urban local bodies and state governments will be empowered to accord approvals at their level, based on their willingness and ability.
  • The Ministry of Urban Development will soon issue Model Building Byelaws incorporating all revised and simplified norms and processes enabling urban local bodies to approve building plans in quick time.
  • The Ministry of Civil Aviation has reported that applications received by the Airports Authority of India for height clearances in airport zones have come down by over 200 per month further to development of Colour Coded Zonal Maps (CCZMs) for 12 airports that account for 58% of total such applications and making them available to respective urban local bodies.
  • CCZMs to be developed for another 28 defence airports that are used for civilian purposes also, to bring them in line with what is being done for civilian airports.
  • The Ministry of Civil Aviation also commissioned improved version of online NOCAS – No Objection Certificate Application System – eliminating human interface and enabling faster issue of NOC through automatic calculations of permissible heights in airport zones with applicants being able to track the status.
  • The Ministry of Culture has come out with a mobile-based app that enables online approvals for construction in the vicinity of monuments in just 72 hours through integration of websites of National Monument Authority and those of respective urban local bodies. The time taken at present is about 90 days.

It will be interesting to see to what extent these new steps can cut down the overall approval process. In any case, the Union Government will have shown the way to State governments and urban local bodies to follow in its footsteps and simplify processes to further improve the ease of doing business in urban areas.

By: Anuj Puri, Chairman and Country Head, JLL India

Will the real estate bill finally become a reality?

Posted on by Track2Realty

By: Anuj Puri, Chairman and Country Head, JLL India

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Anuj Puri, JLLM, Jones Lang LaSalle MeghrajSeveral amendments to the Real Estate (Regulation and Development) Bill, 2015, suggested by the select committee of Rajya Sabha, have now been accepted by the Union Cabinet. This is a major step towards introducing the amended bill in the Rajya Sabha. The bill will bring in much-needed transparency and accountability in the real estate sector.

It will create a much-needed consumer right protection umbrella for buyers of real estate, thereby increasing consumer confidence as well as creating lasting developer brands strong on quality and timely delivery of their projects.

Although there will be strict punishment for developers under this bill, the relevant government agencies and approval processes have not been brought under its ambit. Without achieving single-window clearance, there may be cases where bona-fide delays by developers may still result in an unfavourable penalty on the developer community.

Without ensuring that the approval process is not delayed by civic agencies’ inaction or bringing in single-window clearance, the regulator may inadvertently add another layer to the longer processes already delaying projects.

The government has indicated that it will streamline the approvals’ process and finally move towards a ‘single-window clearance’ system. This, in conjunction with the regulator, will provide a positive impetus towards achieving the housing dream while ensuring a level-playing field for developers and buyers.

However, given the quantum of projects that the state regulator will have to cover now – due to norms on size of projects having been relaxed further from 1,000 sqm to 500 sqm – the onus on the state regulator will be huge, particularly for realty-heavy states like Maharashtra, Karnataka, etc. In such a scenario, the regulator could operate through a hub-and-spoke model, with separate districts having a dedicated branch.

The major amendments okayed by the Union Cabinet now include:

  •        The money collected from buyers is to be deposited within 15 days. It is to be maintained in an escrow amount, which will be 70% of the construction cost, and is meant to be used only for the specific project.
  •         The term of imprisonment of three years recommended by the government has been upheld for all contraventions and even in cases where the developer does not abide by the decision of the appellate tribunal imprisonment has been recommended.
  •          The bill will be applicable on commercial or residential properties which are more than 500 sqm in size or have eight flats or more.
  •         Carpet area has now been defined as the net usable area
  •         All financial statements have to be audited within six months of financial year closure by a practicing chartered accountant.
  •         The interest payable by defaulting parties (developer or buyer) has been brought at par for both in case of default by either. 

The bill will have far-reaching positive consequences for the sector in terms of its operating procedures as also create a comprehensive consumer redressal mechanism. Overall though, the real estate industry is waiting with bated breath for the Rajya Sabha to finally pass this bill. It will prove to be a year-end bonus by the government to the struggling sector.

Reputed developers who have been following financial best practices and corporate governance have welcomed the move. At best, they may have differences of opinion as far as certain nuances are concerned.

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