Tag Archives: Bangalore Real Estate

Can Bengaluru’s infrastructure support vast real estate development?

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Bottom Line: Faster implementation and collective effort is the key to success in Bengaluru’s infrastructure supporting real estate development, says a Colliers Research. 

Bangalore, Bengaluru, Bangalore real estate, Bangalore property market launches, Infrastructure in Bengaluru, Investment in Bangalore infrastructure, India real estate news, Indian realty news, Real estate news India, Indiaproperty market, NRIs in Bangalore, Track2Realty Bengaluru absorbs about 13-14 million sq ft of commercial office space every year, which is approximately one third of the total space leased in India. As per Colliers Research, the trend is likely to continue in the coming years.

The data analysis reveals that about 26 million sq ft of Grade A office buildings are under various stages of construction in the city which will completed by 2020. Most of this upcoming supply is concentrated in Outer Ring Road (ORR), which is a major commercial hub in Bengaluru.

“As on today, within ORR and Whitefield, the commercial office space stock accounts for approximately 78% of Grade A stock in Bengaluru. With infrastructure projects like the ORR metro line, and planned road improvement projects in and around these areas; the market is likely to remain bullish with respect to overall office space absorption in next 2-3 years, driven by IT-ITeS, followed by Engineering & Manufacturing and BFSI sectors. However, with more office supply coming in these markets, the pressure on infrastructure and support sectors is to increase multi-fold,” says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India.

Bengaluru being a host to the largest share of technology start-ups (26%) in India, is the testing ground for co-working spaces and has always invited new occupiers, such as Capiot, InnerChef, Knowlarity, Monkey Box, Artifact Design, and many others. Moreover, the residential market is also developing to support the vast commercial development.

The story is good as far as the real estate development of the city is concerned, however, the unwelcome news is that the city’s infrastructure is unable to keep pace with the vast real estate development.

Bengaluru has seen an increase of 47% in population during the last decade (2001-2011) and the vehicle population growth rate is even higher than the population growth rate. The state government has started various initiatives and is going in the right direction to solve the infrastructure issues; Namma Metro being one of the initiatives. Phase 1 of the project connecting Nagasandra to Puttenahalli (Green line i.e North-South) and Mysore Road to Bayapanahalli (Purple line i.e East- West) corridors have been completed. Phase 2A, connecting Mysore Road to Challegatta near Kengeri and Yelachenahalli to Anjanapura is set to be completed by December 2018. This will push the demand in micromarkets such as Mysore Road and Bannerghatta Road.

Further extension of Phase 2 includes stretch between Silk Board and K.R Puram which is set to be completed by 2020. This will further boost demand in ORR accounting for 75% of the total leasing activity in Q3 2017.

Construction of underpass and widening of flyover along ORR at Hebbal Junction will improve commute time within the city’s major employment hubs. The National Highway Authority has also notified land for widening of NH 209 (948) till Kanakapura. With good accessibility to other parts of the city, these micromarkets are expected to improve further.

Although the government has started taking initiatives, the pace of development is slow. In our opinion, the government should also look at making the city sustainable to natural calamities. The time and again flooding of the city, brings the city to its knees. Along with the introduction of new infrastructure projects, the government should also focus on retrofitting the existing infrastructure.

According to Colliers Research following initiatives can be undertaken at three levels: 

One, at the citizen’s level, where they are imparted civic sense to follow the set rules of transportation like following the signals, crossing at footpaths, etc. This will ease the flow of traffic to a certain extent. 

The second initiative should be in identifying and implementing key infrastructure projects at a faster pace to improve the quality of living, to make Bengaluru a world class city. We believe that occupiers, investors along with the developers should make an effort to pressurise the government for the same. 

Bengaluru requires a comprehensive integrated sustainable public transport system like London and Singapore. Widening the road itself might not be the optimum solution for the problem. Efforts by all involved stakeholders, from citizens to governing bodies should work towards achieving a common goal, that is making Bengaluru uphold its name of Silicon Valley. 

Colliers Research says the infrastructure planned along commercial hubs such as ORR is likely to provide impetus to the real estate sector in ORR and nearby micromarkets, such as K.R. Puram and Hebbal. However, development of office assets without timely completion of infrastructure will leave the city in a chaotic state and may impact the office market adversely.

LOGOS India launches logistics venture

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News Point: LOGOS India is increasing its Asian footprint by launching a new logistics venture with commitments from Ivanhoé Cambridge and QuadReal Property Group (QuadReal).

Logos India, Assetz Property Group, India real estate news, Real estate news India, Indian property market, MNCs in Indian real estate, JVs in Indian real estate, Indian real estate joint ventures, Foreign funds in Indian real estate, Track2Media Research, Track2RealtyThe strategy of the venture, to be known as the LOGOS India Logistics Venture (the Venture), is focused on developing and owning high-quality, modern logistics facilities in targeted cities across India and will have up to US$800 million in investment capacity. Final closing of the Venture is subject to certain regulatory approvals.

LOGOS India, a partnership between LOGOS Group and Assetz Property Group announced in August 2017, has identified a strong pipeline of opportunities across the key logistics hubs of Mumbai, Pune, Chennai, the National Capital Region (NCR), Bangalore, Hyderabad and Ahmedabad to meet the increasing demand for modern facilities.

Supported by India’s compelling macroeconomic fundamentals, rapidly urbanising population, progressive government initiatives and growing e-commerce sector, these markets are in a prime position to capitalize on India’s emerging consumer base.

Commenting on the Venture, Trent Iliffe, Joint Managing Director, LOGOS Group, said, “We’re pleased to be expanding our relationship with Ivanhoé Cambridge to India and welcoming QuadReal as a new partner. India is the next step in our Pan-Asian real estate strategy. We are focused on meeting the strong demand from our customers and ensuring we can help them grow to address the challenges of the India supply-chain market.”

John Marsh, Joint Managing Director, LOGOS Group, added, “Our expansion into India will see us leverage our significant regional experience and our global development and design standards to deliver the highest-quality logistics facilities in the market.”

Ben Salmon, Chairman, LOGOS India and CEO, Assetz Property Group, said, “India is one of the fastest-growing economies in the world and the combination of LOGOS India’s local expertise and Pan- Asian management and development capability means we are well-placed to capitalise on the many opportunities we are seeing in this market.”

Rita Rose Gagné, President, Growth Markets, Ivanhoé Cambridge, said, “We are pleased to invest in the logistics space in India, a promising high-growth real estate sector. India is a strategic market for Ivanhoé Cambridge and we are continuing to grow our presence and our footprint there. We fully support the LOGOS India team that has deep market experience and we are delighted to be partnering with QuadReal, a leading global real estate investor.”

Jonathan Dubois Phillips, President, International Real Estate, QuadReal, noted, “After extensive due diligence to understand the economic, demographic and government forces driving growth in India, we are delighted to be partnering with Ivanhoé Cambridge and LOGOS India to invest in the logistics sector in strategic Indian markets.”

Macquarie Capital (Australia) Limited (together and through its affiliate, Macquarie Capital) acted as exclusive financial adviser to LOGOS India for the transaction and as sole lead manager and arranger for the Venture’s capital-raising.

Property market potential of top 5 cities

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Bottom Line: The realty markets of Mumbai, Pune, Chennai, Bengaluru and Hyderabad are proving to be magnets that attract potential home buyers from all over due to their massive infrastructure development, affordable rates and good job catchment opportunities.

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However, a closer look at some of the leading property markets of the country, like Mumbai, Pune, Chennai, Hyderabad and Bangalore, clearly suggest that the market is poised for an upswing in the next few years. More importantly, it is not just the analysts but also the home-buyers who are today; ready to bet high on the long term growth story of the property market in these leading cities.

City realities

Home-buyers are bullish over the medium-to-long-term growth story of the property market

Cities that are mostly being preferred are Mumbai, Pune, Bangalore, Chennai and Hyderabad

Infrastructure developments and job catchment are the investment magnets in these cities

Mumbai

“I don’t really subscribe to the view that Mumbai is saturated and hence, is facing a slowdown. The same was opined before the emergence of BKC (Bandra Kurla Complex) as well but the new destinations for both, residential and commercial spaces changed this outlook,” says Jessy Kutty, an NRI, who is soon planning to invest in the city’s property market.

After all, the kind of infrastructure upgrading, like the Eastern Freeway and Western Expressway, the metro rail, Jogeshwari – Vikhroli Link Road (JVLR), Andheri Kurla Link Road, etc, have had, they have changed the outlook of the city.

Add to it, the upcoming infrastructure projects like the Mumbai Trans Harbour Link and an international airport in Navi Mumbai, has suddenly given birth to a twin city that is ready for investment. Needless to add, these developments are on the stretches of high business corridors and hence, are all set to fuel the housing demand in the city.

Advantage Mumbai

Mumbai 7th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Impressive investment along the new growth corridors of upcoming MTHL and Navi Mumbai International Airport

New corridors of development emerging as the government pushes for Rs 46,000-crore expressway to connect Mumbai-Nagpur with Samruddhi Expressway

Pune

The story is no different in the neighbouring city of Pune as well where the Pune Municipal Corporation (PMC) has set up five special funds for urban projects. The PMC has set a target of raising:

INR 55 crore for the Pune Infrastructure Fund;

INR 23 crore for Critical Infrastructure Funds for Information Technology and Enabled Services (ITES);

INR 2 crore for Heritage Conservation Funds;

INR 20 crore for Urban Transport Land Development Charges and;

INR 40 crore for Urban Transport Building Development Charges.

“Pune is no more just a hot destination but the best market for investment today. Even in the wake of a slowdown, the performance of the IT industry in the city has been phenomenal. Even Cushman & Wakefield has placed Pune among the top 10 markets across the Asia Pacific region. For me, this is the market to bet on for a long-term growth story,” says Gaurav Gupta, an IT professional.

Advantage Pune

Pune 8th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Pune sells India’s first municipal bond since 2007 worth $31 million for 10 years for smart city project and aims to modernize the city

A detailed project report (DPR) for the ring road proposed by the PMRDA will be ready by September and civil work will start by October-November. This eight-lane 128km ring road will connect places on the periphery of Pune and Pimpri Chinchwad

Bengaluru

Bengaluru has always been an aspirational city for the average home-buyers. Now, with the boost of infrastructure projects, like the metro rail and Periheral Ring Road, this job magnet destination appears to be even more desirable.

The influx of global corporate occupiers, infrastructure deployment in the peripheral areas, rapidly improving connectivity and unleashing of large land parcels by the government for commercial and industrial growth, promises the emergence of newer nodes in the peripheral districts of Bengaluru.

Since land in these areas comes at a lower cost; the expat workforce that is employed in the numerous automotive, engineering and other industries located on the outskirts of Bengaluru, would continue to drive the property market.

Ashish Puravankara, managing director of Puravankara Ltd, finds reasons to suggest why Bengaluru is a huge investment magnet. The companies are also realising the cost of doing business here; the average rental cost of office space per sq feet in Bengaluru is about INR 45 and that works well for companies. Then look at the customers’ point of view. The average cost of housing in Bangalore is INR 5,500 and that works well for their workforce too.

“So, it is all supporting each other and it is not that only one factor alone is driving the market. If the prices have become unaffordable due to the high demand in the city, people would have started looking at other cities but Bengaluru continues to drive the major share of investment in the property market,” says Puravankara.

Advantage Bangalore

Bangalore 6th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

A Colliers report suggests Bangalore market maintained its top position across nine cities despite low vacancy and recorded an overwhelming share of 37% of total absorption

Bangalore is the only Indian city that has now scaled up to global level of consumption of office space per household, an impressive 65 sq feet as against the national average of 25 sq feet 

Chennai

Chennai seems to have moved ahead from its flood disaster of 2015. Today, it is the biggest manufacturing hub in India. The city has more industries coming up and it is termed as the Detroit of Asia. Almost every manufacturer has a facility there. It has attracted more investments and has more industrial corridors in almost every nook and corner of the city.

The IT sector here is also booming and growing at a rapid pace. Top Indian IT majors have a considerable chunk of employees operating out of Chennai.

“The best part about Chennai is the price point that hovers in the range of Rs 2500-5500. Premium projects are located in Nungambakkam, Egmore, Anna Nagar, Nandanam, Mandaveli, RA Puram and locations in ECR such as Muttukadu, Uthandi and Injambakkam. Low and mid-segment projects are coming up at Perumbakkam, Ottiyambakkam, Thalambur, Mevalurkuppam, Avadi, Padappai, Mogappair, Thirumazhisai, Navalur, Manapakkam, Padur, Kelambakkam, Thaiyur and Velappanchavadi,” explains Ravikiran Donthamsetty, a local broker.

Advantage Chennai

Chennai 9th most promising city in the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

Vision 2023 of State Government aims to boost infrastructure and industrial growth in the city

Expansion of Chennai airport, laying of Chennai peripheral ring road, widening of East Coast Road, and setting up of Chennai-Bangalore Industrial Corridor promises to alter the investment climate of the city

Hyderabad

Parth Mehta, managing director, Paradigm Realty agrees that markets like Hyderabad have been outperforming their peers in larger metro cities. The city is improving currently with respect to the infrastructure and government policies for doing business.

“Also, due to the IT and e-commerce boom, there would be a lot of start-ups that would prefer to operate from low cost office spaces at these locations,” says Mehta.

Probably, no other city looks as promising as Hyderabad from a medium-to-long-term perspective. The continuous growth of the IT sector in the city has had a cascading effect on the housing market in corresponding hubs as well. The residential activity in north Hyderabad is now driven by the presence of industries such as pharmaceutical, bio-tech, electronics, etc.

“In 2016, Hyderabad witnessed strong office leasing, registering a 109 per cent y-o-y growth during the year. In the January to March 2017 quarter, the city witnessed an uptake of more than 1.3 mn sq ft of office space. This growth in office leasing activity, coupled with robust infrastructure development and competitive pricing, positions Hyderabad as one of the most affordable residential markets for buyers in the region,” says Rami Shetty, a local property agent.

Most of the homebuyers in the city also agree that the metro connectivity and transit hubs will fuel further demand in the housing segment in the near future. Due to the lowest office rentals across top markets in southern India, corporates are increasingly looking at Hyderabad while planning their expansion strategies in the region. With the demand going up for office space, the city is experiencing a demand-supply gap at present and its organic effect on the housing market is a logical conclusion.

Advantage Hyderabad

Hyderabad tops the list of target cities in APAC due to growth prospects in commercial office activity-Cushman & Wakefield

With political stability the city is high on the wish list of corporates due to low cost of doing business

The upcoming metro connectivity & transit hubs fuelling investment climate in the city

In Conclusion

In a slow moving housing market at present, these cities are displaying exemplary resilience to suggest that the medium-to-long-term outlook is pretty bright. The best part is that the home-buyers and other investors are ready to believe the long term growth stories of these cities.

Why Bangalore commands highest rental yields?

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Bottom Lines: The fundamentals that make Bangalore command the highest rental yields in India are sustainable and realistic.

BangaloreMayur Shah, an NRI from Boston wanted to invest back home on the residential space. His first choice naturally has been the hometown Ahmedabad. However, he was advised by the local agents to instead go for a Bangalore property.

His first impression has been that he was being taken for a ride as the property prices in India’s Silicon Valley has been a bit higher than the Ahmedabad market. However, a closer look at the Indian property market made him realize the rationale and prudence of investment in income producing city like Bangalore.

“Purely from the standpoint of ROI (Return on Investment) Ahmedabad or many other cities of India do not make any sense when compared with Bangalore. The rental yields in these cities are hovering around a meager 1-1.5 per cent, depending upon the location. However, Bangalore property promises to give almost three times higher,” says Shah.

Facts speak for themselves. As per the data available with Track2Realty, the real estate think-tank group, Bangalore rental yields are highest in the country. It is range bound between 3-4 per cent, depending upon the location. The property prices are still much lower than many other cities, including the financial capital of India, Mumbai, or the Delhi-NCR market.

Another report by Global Property Guide suggests the rental yields in Bangalore are anywhere between 3.7 to 4.4 per cent. The report adds that this seemingly higher rental yields are nevertheless long way below the 2007 level where the yields had been in the range of 7.16 per cent to 9.92 per cent.

What sustains highest rental yields?

While rental yields in other Indian cities are in the range of 1-1.5%, Bangalore rental yields are around 3-4%

The 2007 level indicates the yields had been in the range of 7.16 per cent to 9.92 per cent, as per Global Property Guide

Reason of highest rental yields is consumption of office space per household that is competitive in Bangalore with global cities like London, Singapore, New York, Tokyo

In major global cities the consumption of office space is around 60-65 square feet per household and in Bangalore absorption is 50 square feet 

Analysts believe the credit for highest rental yields in Bangalore goes to its robust economic activity. Consumption of office space per household in the city is a testimony of the fact. Data available with Track2Realty shows consumption of office space per household in Bangalore is competitive not only in India but also internationally in London, Singapore, New York, Tokyo etc.

In major global cities the consumption of office space is around 60-65 square feet per household. In India the ratio per household even in a city like Mumbai is 25 sq feet. Kolkata has a dismal only 14-15 square feet office space per household. In Delhi-NCR it is again 20-25 square feet per household. However, Bangalore has the impressive absorption is 50 square feet office space per household which means the volume of office space and houses being supplied have been in equilibrium.

In London despite of so much population pressure it still has 50-55 sq feet per household. Singapore has 60-65 sq feet per household; New York has 160 sq feet per household. Now since Bangalore maintains that global demand trend it is attracting the expat professionals who are always on the look out for rented property.  

Ramesh Nair, CEO & Country Head, JLL India seems to agree with the theory when he says that among the seven major office markets in India, Bengaluru continues to have the lowest vacancy levels at slightly less than 4 per cent. At a pan-India level, the average vacancy in commercial real estate stands at 15 per cent, as of 4Q16.

“From these figures, it is clear that IT hubs continue to see a good supply-demand equilibrium compared to other markets in the country. Developers in these IT hubs, especially Bengaluru and Pune, need to look into addressing the existing space crunch before the situation forces occupiers to consider some other cities,” says Nair. 

JC Sharma, VC & MD of Sobha Ltd sums up the debate when he says that the rental values of Bangalore also appear to be high because the capital values are realistic.

“Bangalore is the only city that is truly demand driven and the increasing exodus of corporate sector in the city only indicate the trend of high rental yield will further gain momentum. As of now, we are looking up to Bangalore rental yields on an international benchmark and not national average,” says Sharma.

The big question is whether Bangalore rental yields can actually touch the major cities of the world where 7-8 per cent rental yields are the norm. Well, it has already breached that mark in the past and once the macro economy improves indications are that Bangalore rental yields will yet again be at par with the major cities of the world. 

By: Ravi Sinha

Nitesh Estates to grow commercial and rental portfolio

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News Point: Bangalore-based real estate developer plans to pan out over 5 million square feet in the next 3 years.

Nitesh Mall, Indiaranagar, Bangalore, Nitesh Estates, Nitesh Developers, Delhi NCR real estate, Bangalore Real Estate, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyBangalore-based Nitesh Estates plans to grow its commercial & rental assets to more than 5 million sq. ft. of space in the near future. This includes locations in the central business districts and significant micro markets of Bengaluru. Nitesh Estates will develop and acquire A-Grade commercial & rental assets with an investment of around Rs. 1500- crore across multiple projects.

To spearhead the vertical Nitesh Estates has appointed Mahesh Laxman as its Chief Executive Officer of Commercial and Rental Business.

Mahesh Laxman says, “Nitesh Estates will diversify the portfolio mix with a well balanced commercial & rental asset class. Our plans in Bangalore to build 5 million sq ft of A grade office space will also set the pace to establish a footprint in a number of cities within the next 3 to 5 years.”

Nitesh Estates has forged a strong partnership with Goldman Sachs to acquire ready-made commercial assets on a pan India footprint. In this endeavor cities like Pune, Chennai, Hyderabad and Mumbai have been identified for such acquisitions.

Its first buy under this partnership was an impressive purchase of 1-million sq.ft. shopping mall – Nitesh HUB in Koregaon Park, Pune. Nitesh Estates aims to deliver upscale projects in both, the commercial and retail asset classes.

Affordable homebuyers must know their wants & needs

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Bottom Line: Affordable homebuyers must understand their wants and needs to not get duped by the fancy marketing jargon of builders.

- 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, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha“Let’s face it! We all have unrealistic expectations when buying a house. We often forget about our budget and end up stretching it to fall into debt trap. It happens because we want the best of everything even though we are in the property market to buy a budget home or affordable home. I am not sure to what extent it is human tendency or to what extent we fall into the fancy trap of developers. But today when I look back I think I should have been more realistic when buying my house. There is no point paying almost all the salary in the EMI now,” says a repentant homebuyer in Mumbai.

Well, not many would like to admit it as openly as this homebuyer but the fact remains that the buyers of affordable homes often forget their wants and needs when they enter the property market. The temptation to have one’s home is palpable and many of the first time homebuyers make the mistake of stretching beyond the financial limits.

How many affordable homebuyers who leave to work early morning and come back late night actually need amenities like free Wi-Fi, amphitheatre, club, tennis court, swimming pool etc? Are many buyers in the average salaried class in a position to avail these facilities even though the developer has created e everything within the project? How long such fancy amenities are maintained once the project is over and the monthly maintenance charges are a huge issue?

The critics of this theory might question as to why not the buyers of affordable property be given these amenities. The reasons are many – ranging from the increase in loading percentage vis-à-vis the usable carpet area to cost of maintenance of these amenities every month. In a housing market like Mumbai where the majority of the homebuyers in the affordable segment are expat professionals having both time and budget constraints it simply defies logic to expect fancy amenities.

With the reasonable expectation of a roof over the head not very long ago, the real estate boom in this part of the world has scaled up the liberty of choice for the average homebuyers. While the aspirations of even the middle and lower middle income with moderate budget have gone up, there are very many residential projects launched in recent times that seem to fill the gap with the promise of hi-tech amenities, luxurious lifestyle, lush green surroundings.

Analysts therefore recommend that the average homebuyers must know their budget and needs to avoid the additional financial load. What you may want does not necessarily fit into your budget segment and the quest to have something more is endless. The smart builders do understand this temptation of gullible homebuyers and in the absence of homebuyers’ education in this part of the world their temptation is what sells the fancy marketing offerings of the developers.

Developers, on their part are conscious of this homebuyers’ temptation. The point out that the developers are just catering to what the market is looking for. Harjith.D.Bubber, M.D & C.E.O, Rivali Park agrees that nowadays a homebuyer expects gated community as a part of affordable housing. “External amenities like club house, swimming pool, open areas for children to play, minimum one car parking is the basic expectation of the homebuyer today even in budget housing.”

Parth Mehta, Managing Director, Paradigm Realty, on the other hand, suggests caution when he says that when a person is buying an affordable housing with budget constraints one should keep in mind some basic things. His suggested checklist is more about basic sanctions and clearances than amenities to ensure the timely delivery of the project.

“To invest in a property where developer has complete approval like IOD, CC is more important for someone who is spending his lifetime savings. The title of the property should be clear and marketable. One must also check the credentials and standing of the developer in the market,” says Mehta.

Some of the developers try to find a method in the expectations of affordable homebuyers. They feel it is more to do with how the developers define the demand of affordable housing. Affordable homebuyers too should be given liberty of choice as far as upgrading the lifestyle is concerned.

Nikhil Hawelia, Managing Director of Hawelia Group says there is nothing wrong for a low-ticket buyer to expect the quality experience. According to him, instead of compromising on the quality of amenities that the modern homebuyers want (and often also need) the budget segment should be determined by the distance from the main city and the work place. If one is ready to travel an hour or so for getting a luxurious feel at home, the market should be ready to respond to this set of buyers as well.

“I believe in today’s market place where most of the young buyers are aspirational, even when they have budget constraints, their budget should be a criterion only for location and the size of the apartment. They should not be devoid of modern amenities and that is how a new emerging segment of affordable luxury can meet the market expectations as well during the slowdown. This is how urbanization has evolved the across the world,” says Hawelia.

Analysts for quite sometime are pointing out to mismatch between homebuyers’ preference and the ground realities. While value addition is something that drives homebuyers across the segment of housing, in affordable housing this value addition has an altogether different connotation. More usable spaces, since most of the affordable housing units are smaller in size, is a better value addition than lowering the usable carpet area for the sake of badminton court or amphitheatre kind of fancy offerings. 

As a thumb rule, if the budget is just for the affordable home and the homebuyer is moving from a rented flat to his own, one should first of all look at the location and distance from the work place. Since most of such projects are on the periphery of the city, one must also look for the infrastructure within the project. Usable carpet area is next and the fancy offerings & amenities are definitely the last in the checklist of affordable housing. 

By: Ravi Sinha

Rate quo status bad news for housing

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News Point: The RBI Governor’s concern with rising crude prices, inflation, bad monsoon and downward inflationary pressure post 7th Pay Commission is bad news for housing market.

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, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2RealtyMohini Ahlawat, a prospective home buyer has been waiting for the last six months in anticipation of interest rate cuts. The media reports that had by and large anticipated the drastic rate cut in the last fiscal of the previous fiscal year did not happen. She was yet again disappointed in the first quarter of this fiscal year but everyone told her that growing GDP, lower crude prices compared to last few years and negative inflation indicate that in the second monetary policy by the Reserve bank of India (RBI) rate cut is on the cards. She is yet again disappointed.

“See, I am not an economist; nor do I understand the financial jargon. But what I fail to understand is that if the GDP is indeed growing, oil prices are low in the global market and over an above that the inflation is low, then why the interest rates are not coming in the range of 7 to 7.5 percent. This is the level at which an average home aspirant can think of buying a house,” Mohini shares her concerns.

However, the concerns of the RBI Governor Raghuram Rajan are more at macro level picture of the Indian economy, ranging from slight rise in retail inflation to anticipated more rise in crude prices, and not so positive monsoon to overall upside risk to inflation after the implementation of 7th pay commission recommendation.

And hence, the RBI Governor kept repo rate unchanged at 6.5 per cent, reverse repo rate stays at 6.00 per cent. Cash Reserve Ratio (CRR) also remains unchanged at 4 per cent. The RBI said April inflation reading makes its future trajectory somewhat more uncertain. The central bank has also retained growth projection at 7.6 per cent for 2016-17 citing corporate profits and surge in consumption. RBI said it will soon review implementation of marginal cost lending rate framework by banks.

Quick bytes

  • The RBI Governor concerned with rising retail inflation, anticipated more rise in crude prices, not so positive monsoon and upside risk to inflation after the implementation of 7th pay commission recommendation   
  • Repo rate unchanged at 6.5 per cent, reverse repo rate stays at 6.00 per cent. Cash Reserve Ratio (CRR) also remains unchanged at 4 per cent
  • The RBI retains growth projection at 7.6 per cent for 2016-17 citing corporate profits and surge in consumption
  • RBI will soon review implementation of marginal cost lending rate framework by banks 

The industry is therefore as disappointed as the home buyers. Shishir Baijal, CMD, Knight Frank India says the sector is disappointed with no change in policy rates and it will take the real estate sector much longer time to come back on the rails. The residential property market has not been doing well and there was expectation that RBI would reduce the policy rates that would have given a boost to the residential property market.

“On a broader note the RBI’s stance of not reducing the policy rates could have emanated from the banking regulator’s move to reduce inflation to below 5 per cent by March 2017. The fact that CPI moving up to 5.39 per cent and wholesale inflation turning positive could be the factors that may have prompted the banking regulator to leave the policy rates unchanged. Crude prices moving up exponentially is expected to further add to inflationary pressures,” says Baijal.

Ashwin Sheth, CMD, Sheth Corp feels the RBI has played it safe and has been more cautious about the monsoon and its impact on inflation. Although, a rate cut at this stage would have helped in lowering the home loan interest rates making home buying a reality for most buyers who have been eagerly waiting for the rates to cut down.

“The Government has taken the lead in trying to implement policies that will boost growth of the real estate sector. In the same vein, RBI too should have looked at the real estate sector with new optimism. The central bank has reduced its policy rate by 150 basis points until now since January 2015. But banks have cut their rates only about 70 bps. In short, economy is yet to get the full benefit of the rate cut. The banks should pass on the benefit to the home buyers as this will encourage the buyers to buy their dream home,” says Sheth.

Vineet Relia, Managing Director of SARE Homes also feels that the RBI Governor Raghuram Rajan’s decision to keep the repo rate unchanged at 6.5 per cent is disappointing, though not unexpected. As the RBI had already announced a 25 basis point repo rate cut in its April policy review, and with retail inflation rising to 5.39 per cent in April from 4.83 per cent in March, expectations of a rate cut were extremely muted.

“Since retail inflation is expected to rise due to the rally in crude oil and other commodities prices and implementation of the 7th Pay Commission recommendations, it is clear the RBI is focussed on lowering retail inflation to 5 per cent by March 2017. Nonetheless, since demand in real estate and allied industries remains sluggish, a rate cut could have improved liquidity and created renewed interest in property purchase. But with the RBI stating its monetary policy stance is ‘accommodative’, one is hopeful a rate cut may be in the offing in the latter half of 2016,” says Relia.

Manju Yagnik, Vice Chairperson, Nahar Group, on the contrary, welcomes the RBI Governor Raghuram Rajan’s announcement to keep the repo rate unchanged at 6.50 per cent. She asserts that the last RBI bi-monthly announcement had reduced interest rate which were not passed on to customers by the banks. Now banks should pass on the benefits to the customers by lowering interest rates which will result in home buyers coming forth and buying property.  This has the potential to spur property sales and inject fresh capital into the market.

“The Indian economy grew by 7.9 per cent in the March quarter and ranked as the world’s fastest growing economy. This move will create jobs and create positive sentiments within the country. Also, keeping rates unchanged will help control inflation which presently is at 5% with an upward bias,” says Yagnik.

The home buyers and the developers have their own reasons to criticize the quo status. The RBI too has its own reasons not to lower the rates this time. However, what can definitely be vouchsafed is the fact that the this is definitely not a good news for the overall health of the housing market; something that contributes substantially to the Indian GDP.

By: Ravi Sinha

NB Group and BridgeStreet Global Hospitality partners with three developers

Posted on by Track2Realty

News Point: Global hospitality major enters Indian market for serviced residences; developers sense big business. 

Real Estate Fund, Delhi NCR real estate, Bangalore Real Estate, JLLI, Jones Lang LaSalle India, Track2Media, Track2Realty, 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, indianrealtynews.com, indianrealestateforum.com, Property, Track2Media, Track2Realty, 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, indianrealtynews.com, indianrealestateforum.com, Mumbai Real Estate, India PropertyJNB Group and BridgeStreet Global Hospitality have forged partnerships with three Indian real estate developers; IDI, AIPL and CHD.  This collaboration will provide quality assurance, marketing and global sales benefits for guests, developers and investors.

With these new partnerships, JNB and BridgeStreet will be co-branding 183 units of IDI in Noida, 100 units of AIPL in Sector 66A, Gurgaon and 364 BHK units of CHD in Sector 106,Gurgaon.

BridgeStreet has already signed with developers like Silverglades, V Square, Homestead and Logix for 1600 units in Delhi and the National Capital Region of India and will have 500 functional units by the end of 2016.

“We plan to have 5000 fully operational units within five years in pan India, adding to the 50,000 BridgeStreet units worldwide,” said Sean Worker, president and CEO of BridgeStreet Global Hospitality.

JNB and BridgeStreet have been working together in India since 2012.  “This collaboration is key to BridgeStreet’s development of franchise and management opportunities, “ said Sean. “We are working together with JNB to build further investment and development projects in India.”

Elaborating about BridgeStreet’s brands, Worker explained, “Our family of brands includes six-star Exclusive, five-star Residences, four-star Mode Aparthotels and Living, three-star Places and two-star Studyo—offering the convenience of apartment living with a variety of service packages to match guest needs based on location, price point and individual preferences. We are looking to replicate the same experience here in India.”

“We feel that the Indian real estate market is one of huge promise as there is little in terms of supply of serviced apartments.  Increasing demand from IT, consulting, banking, financial and automobile sectors will only create more opportunities. What is required is the right branding, quality assurance and on-time delivery. This will not only lead to price appreciation, but will also ensure growth,” says TJ Barring, President, JNB Group.

“Pure commercial and residential projects won’t do well in the coming years, a hybrid version which supports serviced apartments would have a much higher demand,” says Taran Kaur, Director JNB Group. “The benefits of JNB Group and BridgeStreet are regular rental income,  high occupancy,  fully-furnished apartments with contemporary décor, well-equipped kitchens to prepare your own meals, personal service  with 24/7 emergency support, convenient monthly invoice that includes utilities and housekeeping, Internet access and concierge service.”

Rate cut multiplier effect on homebuyers’ psychology

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: After regulator, rate cut is another confidence booster for homebuyers. 

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, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinhaIt may have been a very marginal rate cut by the Reserve Bank of India (RBI) and definitely not anywhere close to what the RBI has done in the past, but yet this rate cut promises to have substantive impact than mere symbolic discussion for both the homebuyers as well as the real estate sector. As a matter of fact, this rate cut promises to have multiplier effect on the fortunes of the sector, along with the goodwill generated with the decks being cleared now for a real estate regulator in the sector.

For the records, the RBI Governor Raghuram Rajan in his bi-monthly monetary policy review has cut the repo rate by 25 basis points to 6.5 per cent; thus clearing the decks for home and auto loans, among other loans, to become cheaper. The policy interest rate has been now lowered to more than five-year low, while indicating the prospect of another cut later this year if inflation trends stay benign.

From the standpoint of homebuyers, this definitely has a multiplier effect on the psychology which had been subdued for quite some time due to high interest rates and trust deficit with the sector. The industry has hence given its thumbs up to the RBI’s gesture.

Anshuman Magazine, CMD, CBRE South Asia feels that on the back of moderating inflation levels, controlled fiscal deficit and cautious economic sentiments, the RBI’s decision to pare key interest rates in its latest monetary policy review was largely expected by the industry.

“The rate cut is likely to help lower borrowing costs and support growth further in 2016. For the real estate sector this is particularly critical. It is expected that this benefit will be completely transferred to the borrowers, which will result in lower lending rates, thus helping to revive housing sales,” says Magazine.

Ashish Raheja, MD, Raheja Universal calls it a welcome step. He believes the move will surely have a positive impact on the economy as well as across sectors at large. “More specifically from the real estate sector perspective, we believe that there will be some renewed interest from prospective homebuyers who were hit recently by the ready reckoner rate hike across Maharashtra. While this move is positive it is left to be seen whether banks will pass on these benefits to their customers.”

Deepak Joshi, President and Chief Business Officer, Religare Housing Development Finance Corporation says this coupled with Marginal Cost of funds based Lending Rate – (MCLR) on which SBI has already taken a lead, will further reduce the lending rates in the market and increase credit off take. “Also, EMIs on retail consumer loans will further soften which will increase demand for auto and home loans.”

However, it would be pertinent here to note that though the RBI Governor sounds optimistic with the direction of the economy and signals more rate cuts in near future, the move will only have its affect when the banks pass on the benefits to the consumers. Failing this, it would be another symbolic gesture on part of the policy makers that will have no impact on the fortunes of the sector or the pocket of the homebuyer.

A large section of economic analysts are hence giving a word of caution on this. They are conscious of the fact that now is the right time to revive the fortunes of the sector. While the confidence on the part of the fence sitting homebuyers is somewhat back to the market with seriousness of the policy makers to clean the functioning of the sector and assure the delivery process, this rate cut can have a multiplier effect if the benefits are immediately passed on to the buyers.

Selling on carpet area case study in best practices

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Carpet area in proportion to the super built-up area or saleable area is something that has been a bone of contention between the builder and the homebuyer.

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, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2RealtyIn the entire short history of real estate in India in general, and Mumbai in particular due to space constraints, apprehensions of builders providing lesser carpet area has been on top of the mind of homebuyers when they decide to buy a flat. In terms of the consumer complaints this is way higher than any other reason why a homebuyer locks horns with the builder in the court of law.

After all, carpet area is the space that a homeowner is going to use. In a market where the homebuyer education is not much in public discourse, the understanding about carpet area, covered area including internal walls, built up area and super built up area is pretty confusing, if not outright poor.

All that most of the homebuyers understand is the carpet area that one is going to use and call it their home. And hence, there is always acrimony with the builder about what percentage of carpet area vis-à-vis the saleable super area, irrespective of the percentage of loading.

Now, speaking from the real estate standpoint there cannot be standard definition of the percentage of loading in the name of super built up area. This is because super built up area is subject to many variables, including the FSI norms, amenities on offer and others. Most of the analysts therefore are struggling worldwide to suggest an industry-accepted method of property calculation.

 As Manju Yagnik, Vice Chairperson of Nahar Group says that there cannot be standardisation on loading unless all the structures are planned in the same way and of the same design. She also makes it clear that loading depends on numerous factors and features of a building, may it be residential or commercial. As long as these features vary, loading will also differ. Percentage of loading depends on the type and size of the project and differs from project to project. A lot depends on the plans of the building and the extent of amenities provided in it. Loading also depends on typical circulation core and the wall areas in an apartment.

“Lack of clarity on loading percentage does play a role in creating a bad reputation to the sector. The customer has the right to understand the loading factor from the developers and developer will explain the same. Customer should buy only if they are convinced. The real estate sector has undergone sea change over a period of time in terms of modernisation and amenities and space provided by the developers. Also, the consumer today is better informed and well aware on the aspects of development and what he wants. He can evaluate better now than ever before the value for the money while buying a home,” says Yagnik.

What is the way out to bring the builder and the buyer on the same level of understanding? Well, developers in Mumbai striving to come out of slowdown have taken the challenge upfront as far as consumer complaints and perception management is concerned.

As a result, they are now selling on the carpet area. A homebuyer can actually measure his carpet area that the developer is promising. This may not reduce the loading share per se but at least puts to rest other apprehensions like what actually the buyer will get in terms of usable space.

Shailesh Puranik, Managing Director, Puranik Builders accepts that it is a new trend that has emerged where the developers are selling as per the carpet area in Mumbai. He nevertheless adds that it is to follow the guidelines of the government which has advised real estate developers to sell as per the carpet area.

“The loading factor is not completely absolved by this. Developers are taking into consideration the total cost before finalising per sq ft pricing of the apartment prior to initiating sales under carpet area. Defining carpet area and selling real estate as per the carpet area makes a great difference to the customer as well as the real estate developer. Selling carpet by all or a majority of developers has strengthened the trust and confidence levels between the real estate developer and his customers,” says Puranik.

Dhaval Ajmera, Director, Ajmera Realty says the developers are selling only on carpet areas today due to the rules and regulations. For carpet area, it is completely transparent because the charges are only for the carpet area received by the customer. Hence, the trust and transparency is at the forefront.

“The trend of selling is now being accepted by the buyer also because they understand that the charges are applied on the area being used. Yes, the selling rates go higher in terms of carpet area but ultimately the ticket size remains the same,” says Ajmera.

Adhering to the carpet area also enhances transparency in real estate deals. Selling as per the carpet does not make any difference in the ticket size of the apartment. But it does a world of good for the homebuyers’ understanding and hence they are quite happy with this emerging trend.

Mohan Tharwani, Managing Director, Tharwani Infrastructure also admits that selling on carpet does not in any way absolve the loading factor. But he adds that defining carpet area and ticket size makes much of a difference as far as trust factor on the developer is concerned.

“Yes, it is always good to declare the carpet area at the very first go, so that the client (buyer) is aware about the value against the actual size of the flat,” says Tharwani.

The selling on carpet area may not make any difference on the loading over and above the usable area, it nevertheless would be seen as one of the emerging best practices. There are many reasons to believe that selling on carpet helps the sector in its quest for image makeover.

It kills the possibility of mismatch between expectations and delivery; buyer knows before hand the amount that one is paying and the actual size that one is getting; it reduces the chances of litigations; and the practice overall helps in the perception management of the sector.

The Mumbai-based developers would like to admit that ever since they have adopted the practice of selling on the carpet area, it has activated the sales channel and at the same time reduced the number of dissatisfied customers in a significant manner.

It might give the impression that the practice of selling on carpet area would be more welcome in the affordable housing but that is just an outside view in Mumbai property market today. As a matter of fact, the practice has been well received across the housing segment, whether it is affordable or mid segment or even luxury housing projects. Analysts therefore are evaluating it as a case study in best practices adopted by Mumbai real estate.

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