Tag Archives: Investment in Indian real estate

Professional compliances defining brand leadership of real estate

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Track2Realty BrandXReport 2017-18 released

News Point: In the sixth edition of Rating & Ranking the Brand Performance of Indian real estate companies, it is quite evident that the resilient brands with certain degree of professionalism have weathered the market slowdown and regulatory changes better. 

Track2Realty BrandXReport 2017-18, Brand X Report, Brand rating of Indian real estate, Brand performance of Indian real estate developers, Best builders in India, Best brands of Indian real estate, Brand Trust of Indian real estate, Bangalore developers top brand leadership, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in Indian property, Track2Realty, Realty Fact, Realty Plus, Realty Myths, Realty Nxt Amidst the market uncertainties, Track2Realty BrandXReport 2017-18finds that the developers like Sobha Limited, Prestige Group, Puravankara and Embassy Group have adapted to regulatory compliances and changing market dynamics better than the sector at large.

These are the brands that have further consolidated their reputation as the Trustworthy Brand. The testimony of the fact is quite obvious with their Brand Rank as well as Brand Score. Most of the Brand Leaders have improved their Brand Score, compared to the last fiscal year. K Raheja Corp is the only developer to make an entry into the Top 10 National Brands after a gap of two years.

What has been an interesting finding during this fiscal year is the fact that a number of relatively smaller developers but with  impeccable track record of delivery and consumer satisfaction are breaking the myth that it is the sheer volume and premium that elevates a company at the Brand Leadership Chart.

On the contrary, some of the fastest selling developers with larger market share but mounting consumer grievances are losing out as the Desirable Brands. In the first round of scrutiny, this time the study rated pretty low to the developers where the share of aggrieved homebuyers has been more than 50%. What it has actually led to is the exit of a few leading names by the market share on the Brand Leadership Chart.

The fiscal year has been witness to the seasoned and responsible brands consolidating amidst the market uncertainties borne out of overall slowdown and a number of regulatory changes. Those who have adapted to the emerging market realities and have realised that it is the buyer who is the demand driver and not the investors have strengthened their market positioning. It is hence no surprise that most of the brand leaders are emerging out of the best performing markets.

On the contrary, the notoriety of the North Indian markets in general and Delhi-NCR is particular has led to many large players by market size either exiting the Brand Leadership Chart or are at the bottom of the pyramid. DLF is the only real estate company from North India to have its presence among the Top 10 National Brands, even though the company is nowhere near to its past glory.

Five of the Top 10 Brands are yet again from the South Indian markets, and developers like Sobha Limited, Prestige Group, Puravankara Limited, Embassy Group and Brigade Group are among the Top 10 Brands at the national level. As a matter of fact, Sobha, Prestige, Puravankara and Embassy are among the Top 5 National Brands in this year’s study.

Godrej Properties once again is the only corporate conglomerate to be among the Top National Brands and a brand that is at the top of the Leadership Chart in all the four regions. However, at the national level the brand has slipped one place to be 3rdNational Brand, as against the 2ndposition last fiscal year.

After the South Indian market, it is the West Zone where the Mumbai-based developers have pretty impressive presence at the Brand Leadership Chart. Other than the Mumbai-headquartered Godrej Properties, it is Oberoi Realty, K Raheja Corp and Lodha Group that is in the elite list of Top 10 National Brand.

In North India, the exit of one of the largest by market size, Supertech, in the wake of mounting consumer backlash is a testimony of the fact that size alone can no longer define the Brand Leadership. The story of another large developer by market size, Gaursons, is no different.

On the contrary, a relatively smaller developer with limited footprint, Gulshan Homz is strengthening its Brand Positioning. Similarly, two of the smaller brands by market size, Central Park and ABA Corp make their entry into the elite list of Top 10 Brands in the region. M3M India makes a comeback into the Top 10 Brands and its Trump association seems to be working in favour of the developer. 

The trend of top developers consolidating their brand leadership is quite evident in West Zone as well where the top three names, Godrej Properties, Oberoi Realty and K Raheja Corp has improved their performances this fiscal year. Kalpataru makes a comeback into the elite list of Top Brands in the region after a gap of one year, while Indiabulls Real Estate also makes space into the list of Top Brands.

In the best performing and fiercely competitive South India, most of the Leading Brands like Sobha, Prestige, Embassy, Puravankara and Brigade have improved their Brand Score.

These brands have also consolidated their National Ranking and Sobha Limited continues to outperform the market. Embassy Group has remarkably improved its Brand Performance to be 3rdBest Brand in the region, while Salarpuria Sattva has also improved its Brand Ranking this year.

East Zone continues to be the least brand conscious part of Indian real estate. This is the only region where most of the leading names have lost their Brand Score this fiscal year. Ambuja Neotia continues to be the Brand Leader and the brand that has remarkably improved its ranking is South City Projects that makes a giant leap from 8thposition to now become 2ndBest Brand in the region. 

Forum Group is another significant Brand Performer that makes a giant leap from 9thspot to be at 4th position at Brand Leadership in the region. Shrachi Group and Hiland enters into the big league of Brand Leaders.

In residential segment the exit of Tata Housing in the wake of controversies is no surprise. The top names like Sobha, Prestige, Godrej and Puravankara have strengthened their Brand Leadership. Sobha continues to be the Brand Performer in a segment that touches & shapes the Public Perception about the sector.

Unlike other segments where the leading names have consolidated their Brand Score, the trend has not been visible in Office Space segment. Embassy Group continues to be the Brand Leader for second consecutive year in this segment; improving its Brand Score as  well.

Other than Embassy, K Raheja Corp at Number 2 could also improve its Brand Score this fiscal year. DLF could consolidate its brand reputation this year and after having dropped to 5thspot it now jumps at Number 3 in Office Space segment.

India’s 2ndlargest mall, Lulu Mall at Kochi enters into the Top Leadership position in the Retail Segment for the 1sttime and makes an impressive debut at Number 9 as news of developer’s 2ndmall in India brings it to the centerstage. Phoenix Market City is increasingly scaling up on Brand Index and promises to up the ante with uniform performance across the cities.

Embassy Group is by all means the Brand Performer in the Hospitality Segment that has improved its Brand Score and elevated itself to Number 1 in the segment. Brigade Group loses its Brand Leadership in the segment to fellow Bangalore-based developer; also loses its Brand Score this year.

Sobha continues to be Brand Leader in the Luxury Segment for 3rdconsecutive year; improves its Brand Score to further consolidate its Brand Leadership in the segment. But it is the Embassy Group that is the Brand Performer and Market Disruptor in the segment; enters the elite list of Top 10 Brands impressively at 4thspot. Another new entrant into the elite list of Luxury Brand Leaders is Mumbai-based Kalpataru that debuts at 10thspot. 

The leading developer and once undisputed market leader in Redevelopment Segment, Omkar Realtors & Developers, has lost its Brand Score this fiscal year and yet maintains its Leadership Position. Brand Performer in Redevelopment Segment is Rohan Lifescapes this fiscal year that has jumped from 10thLeadership Position last fiscal year to be 8thCredible Brand this year; also improves its Brand Score. Other developers to improve their Brand Rank and Brand Score are Kalpataru Group.

Ashiana Housing continues to be Brand Leader in Senior Housing Segment but it is Antara Senior Living that is the Brand Performer in Senior Housing; makes a giant leap from 10thspot last year to be the 2ndMost Desirable Brand this fiscal year.

In the CSR, Sobha continues to be the Brand Leader and clear ahead of the competition curve. The Brand Leadership in the segment is followed by Embassy Group at 2ndspot and Rustomjee at 3rdrank.

Overall, the Brand Leader of Indian real estate for the 4thconsecutive year, Sobha Limited, has also been voted Top Choice by the consumers. It is followed by Prestige Group, Godrej Properties, Puravankara Limited and Embassy Group. Even the NRIs have voted Sobha as the Top Choice, followed by Prestige Group, Embassy Group, Puravankara Limited and Godrej Properties. 

In terms of the media perception Sobha Limited is the only brand to have more than half coverage as positive news in its tonality (52% share) and least news with negative tonality (10%).

Only segment where Sobha fails to register itself as the Top Brand is the Employment Chart of the sector where Embassy Group is at the top of the Leadership Chart. It is followed by Oberoi Realty and Godrej Properties.

 

SOBHA organises dowry-less social weddings in Kerala

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CSR Initiative

News Point: Continuing with its efforts to uplift the lives of the underprivileged, Sri Kurumba Educational and Charitable Trust, the Corporate Social Responsibility (CSR) wing of SOBHA organised the first edition of this year’s dowry-less social wedding ceremony at Palakkad in Kerala on 18th May. 

Sobha CSR, Sri Kurumba Charitable Trust, PNC Menon, JC Sharma, Top CSR in India, Best CSR in real estate, Real estate CSR, Corporate Social Responsibility, India real estate news, Indian realty news, Real estate news India, Indian property market news, Realty Plus, Investment in property market, Track2RealtyThe wedding, which is conducted twice a year, saw 20 couples tie the knot during the ceremony.As part of SOBHA’s CSR drive, the girls are selected from 7149 Below the Poverty Line (BPL) families in Vadakkenchery, Kizhakkenchery and Kannambra panchayats in Palakkad district.

This extraordinary initiative by the company witnesses an average of about 40 girls getting married every year with the help of the Trust.

Speaking on the occasion,JC Sharma, Vice Chairman and Managing Director, SOBHA Limited said, “Making a meaningful contribution to the society is our constant endeavour and social wedding is one of our key initiatives towards that effort. Till date, we have been able to help and support about 590 girls from the economically weaker sections of the society through our initiative. More than 1000 people witnessed this ceremony. It is very transformative and brings a change in the mindset of the society at large.”

As part of the initiative, the Trust takes complete responsibility of the ceremony and provides pre-marriage counselling to the families of the brides and bridegrooms. Additionally, the Trust monitors their married life at regular intervals and offers necessary guidance, if required.  

The ceremony was held at Sri Kurumba Kalyana Mandapam in Moolamcode, Palakkad and was graced by Chairman Emeritus, Mr. PNC Menon, his family members, relatives of brides and grooms along with other dignitaries.

Why real estate companies don’t get listed?

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There is a general perception that listed companies command more respect in the market, yet prima facie it appears that real estate developers shy away from getting listed in the stock market. Does the fear of reporting debt and other financials prohibit the psyche of getting listed? Ravi Sinha investigates.

Market Depth, Stock Market, Due Diligence in real estate, Defining demand in real estate, Research in property market, Data analytics in real estate, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in property market, Track2RealtyTill a decade back such was the mad rush for raising money in the capital market that even the real estate companies with limited presence in select micro markets started launching projects across the country to showcase a pan-India presence. Significant increase in housing demand, organized retailing and liquidity boom from 2003 to 2008, led to huge increase in land prices and real estate values and most real estate companies had a great run.

Banks increased their lending limits to the sector. Private equity investors and other institutional investors also rode on the boom with huge investment in real estate IPOs. Retail investors joined the bandwagon expecting similar returns. Valuations were done purely on land bank valuations, a measure hugely prone to speculations.

The market slowdown, however, played spoilsport with this happy hunting ground and the real estate sector by 2011 woke up to the reality that raising money through IPOs was not conducive as the investors were increasingly exiting with all the listed realty companies trading way below their listed price by 2011.

As a result, six big ticket realty IPOs at that point of time either deferred or cancelled their plans of what could have been collective fund raising of INR 13,000 crore ($2.9 billion) in the Indian market. It looked like raising money in the capital market was no longer a smart strategy.

Listing or independence? 

Listing of real estate companies could bring in some degree of transparency in the industry 

Land records and transactions should be digitized and values should be made publicly available

Most of the realty stocks were overvalued at the peak cycle of stock market but the valuations have corrected quite sharply 

There may be a bounce back from low levels of stock valuation, but the prospects are based on various ‘ifs’ and ‘buts’.  

Time for cost & benefit

A real estate company primarily commands respect on the back of factors like quality of construction, structural design & amenities, percentage of loading, pricing, delivery time of the project and transparency and service to the buyer.

Listing, however, does have its benefits for a real estate player like it does for companies in any other sector since; listing improves the awareness about the real estate player, improves its brand equity and provides an avenue for fund raising and an exit route to the promoters and/or private investors.

Within the built environment of Indian real estate some analysts maintain that the nature of real estate business is not conducive for stock market since focus on quarterly results takes precedence over long term execution. There are others who maintain that the developers made the mistake of over exposing land bank and every possible asset in the first wave of IPOs. Today, most of the listed realty companies are trading way below the listing price.

There are some others who recommend that the nature of the real estate business is such that developers should ideally not get listed, unless it is necessary to attract foreign capital. Requesting anonymity, the CFO (Chief Financial Officer) of a listed realty company admits that the falling stock prices do affect the sentiments of the investors and dilute the brand equity in the process. The investors think twice before investing in the company or the project, assuming that the company is not looked at very respectable in the eyes of the retail investors.

“The moment you get listed, your focus is on the quarterly results, since the media runs after you with negative reports if the quarterly profits are not going up each quarter. Now, the problem with the real estate is that it is a capital and time intensive business where nothing moves forward in a short span of one or two given quarters. At times, a new launched project may show you in red for six to eight quarters, before it shows a healthy profit. It affects the brand positioning as it is a sentiment driven market,” says this CFO.

Financial analysts do not believe that the nature of real estate business is not conducive for stock market listing. According to them, there are many companies that are at project stage, or whose businesses are seasonal or cyclical in nature that are listed on the stock exchanges both in India and internationally.

Analysts and informed investors covering and investing in these real estate companies do understand the dynamics of the real estate business and make their decision based on fundamental factors such as the land assets, project status and management quality not only on the quarterly results which may be lumpy in nature and not necessarily comparable on Q-o-Q or Y-o-Y basis.

It is more the information content in the quarterly earnings’ announcements, which help analysts & investors in understanding the status of the projects and investments that make an impact on the investment decisions and thereby the valuations. Hence, any real estate company irrespective of its listing status should focus primarily on the actual execution and disclosures, since quarterly results are not a barometer for stock prices of real estate companies as the market largely understands that they could be lumpy in nature.

Crisis of credibility

Rattan Hawelia, Chairman of Hawelia Group asserts that the liquidity concerns of the serious players were always being addressed, whether with the stock market or with other investment vehicles. With overall Sensex fluctuating, the stock market was not seen as a viable option as realty index was following the overall pattern. But with some of the sectors improving due to improvement in macro economic scenario, real estate too is bound to show northward movement once the enabling issues are addressed.

“I have a strong feeling that the sector has been a victim on the capital market due to its negative projection. Despite the fact that nearly all the developers who filed the DRHP were having real estate as the main business and hence they gave full disclosure on debt-equity and land bank, they were projected as companies in crisis. On the other hand, some other sectors with absolutely no land bank or any other physical asset got away successfully on the stock market with projected revenue, since the industry at large was projected as growth driver of economy,” says Hawelia.

The Indian real estate industry is highly fragmented with large number of small developers. Given that the funding for these real estate players generally happens at project level, there is little requirement for these real estate companies to be listed on the stock exchanges. Listing requires real estate companies to have higher disclosures and transparency in their operations.

Given that there is little transparency in land value and other costs of these companies and on account of the current weak economic scenario and lower market valuations currently being assigned to these companies, there is little incentive for these companies to get listed on the stock exchanges.

 

Motilal Oswal Real Estate aims to raise 1,500 crore realty fund

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News Point: Motilal Oswal Real Estate (MORE) is looking to raise up to raise INR 1,500 crore through its recently launched fourth real estate fund India Realty Excellence Fund IV (IREF IV). 

Track2Realty, Track2Media, India Real Estate, Valuations of Real Estate, Realty News, Property News,MORE is part of Motilal Oswal Private Equity (MOPE), which is the alternative investments platform of Motilal Oswal Group. The total AUM under MOPE is more than INR 5,000 crore.

Vishal Tulsyan, CEO of MOPE said “Our real estate fund business under the leadership of Sharad Mittal has scaled up over the past years and our cumulative AUM now stands over INR 2,100 crore. Our real estate fund business continues to be a critical piece of our private equity fund management business. We are bullish on the Indian story and see abundant opportunities in the sector to scale up as we seek to achieve an AUM of more than $ 1 Billion over the next 3 years.”

MORE till date has invested capital in the real estate sector through three real estate funds and PMS/ Prop investments. Today, cumulative AUM under MORE stands at more than INR 2,100 crore spread across IREF (INR 200 crore), IREF II (INR 500 crore), IREF III (INR 1030 crore) and balance under PMS / Prop Investments.

The Fund has been set up as an alternate investment fund (AIF Category II) registered with SEBI. MORE expects to achieve first close by August 2018 and conclude fundraising in the next 9-12 months.

IREF IV’s strategy would be an extension of the investment strategy of MORE’s earlier 2 funds (IREF II and IREF III). The Fund plans to deploy the capital in mid-income/ affordable residential projects across the top 6 cities in India while selectively investing in commercial projects. IREF IV would focus on early stage structured equity/ structured debt investments with established developers and undertake 12-15 transactions of INR 80 – 150 crore each.

Sharad Mittal, Director & CEO of MORE said “The last 5 years had been challenging for the industry with developers battling low sales velocity and low consumer confidence. However, in the last 18 months, we have seen a slew of reforms by the Government that has compelled the developers to bring about a radical change in the way they go about their business. We believe that the sector will go through a recovery cycle over the next 5 years.”

“Five years back, we had decided to focus on affordable/ mid-income housing (prices ranging between 4000 – 6500 per sq ft) as we believed that this segment would stay resilient to the tough market conditions. This decision has played out well for us as the Government has in the past years committed to boost affordable housing in India through policies/ initiatives like PMAY, Infrastructure Status, Interest subsidy etc.”

MORE believes that government will have to continue to focus on real estate and construction sector for India to achieve its targeted GDP growth of 8% for the next few years.

“Consolidation has emerged as the dominant theme with large and organized players becoming clear beneficiaries of the RERA regime. Under this strict regime, the small sized developers have found the task of completing their stalled projects very daunting. This has presented the large and organized players a huge opportunity as these small developers will eventually sell their projects to them. These are the opportunities where we believe our kind of capital will be required by the established players going forward.”

MORE has built strong relationships with established developers in each micro-market by providing them capital at the right time (early stage investments). This is reflected through the multiple transactions that it has executed with these developers across its three funds in the past 4 years. Eg) Casagrand Group – 6 investments (Chennai), ATS Infrastructure – 5 investments (Delhi-NCR), Rajesh Lifespaces – 3 investments (Mumbai), Shriram Properties – 2 investments (Bangalore).

“We see a transition of investor interest from physical assets to financial assets in real estate and we believe that our latest fund IREF IV shall be a preferred platform for these kinds of investors.”

MORE’s second fund, IREF II, which achieved its final close in 2015, has till date made 14 investments and secured 7 complete exits at an investment level IRR of 22.1%. The Fund has returned ~81% of the money back to its investors.

MORE’s third fund, IREF III, which achieved its final close last year, has till date made 13 investments and secured 2 complete exits at an investment level IRR of 22.3%. The Fund has returned ~29% of the money back to its investors.

SOBHA bags Iconic Real Estate Brand award at India Best Brand Series and Awards 2018

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News Point: Sobha bags another brand leadership award, declared Iconic Real Estate Brand. 

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Speaking on the occasion, JC Sharma, Vice Chairman and Managing Director, SOBHA Limited said, “SOBHA as a brand invests in minute detailing, which is a hallmark of our world-class products.  We have always strived to create value through all-round performance, leveraging our core strengths. Our dedication and determination to constantly push ourselves drives us to be the best in the country. The IBB award is an affirmation of our efforts over the years. I thank the entire jury for honouring and acknowledging our efforts. We are focused on maximising every opportunity to build, grow and sustain. ”

India Best Brand Series & Awards aims to promote and recognize the most impactful brands, share their success stories, and celebrate their potential. The award nominees included some of the top names across sectors such as banking, retail, real estate, technology, entertainment, media, NGO, and hospitality among others. 

The award ceremony was inaugurated by the chief guest, Vijay Goel, Honourable Minister of State (Ministry of Parliamentary Affairs and Ministry of Statistics and Programme Implementation) along with other dignitaries including Dr. Satish Chandra Dewedi (MLA, ITWA UP), Ritu Goel (Poetess and Social Activist), Guru Dev Vaishist (Founder Astroarmy), Saurav Gupta (Secretary Delhi Pradesh BJYM), Bollywood actor and producer Sanjay Suri and Shahnaz Husain.

NestAway raises $51 million from Goldman Sachs and others

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News Point: NestAway Technologies Pvt. Ltd. (“NestAway”), a home rental start-up network has raised US$ 51 million (INR 330 Crores) in series D financing from Goldman Sachs.

Rental House, Rental housing in India, Rental housing policy, Failure of rental housing, Tenancy rights, Rental laws in India, India real estate news, Indian property market, Track2RealtyFounded in 2015, NestAway is specialised in the “furnished shared rental,” a rental solution it pioneered that caters to individuals looking for affordable rental housing in the top 10 cities in India. T

The company, through the acquisition of Zenify in May 2017,  has also recently entered the family rental solution business. This round of funding also saw participation from its existing investor IDG India and Tiger Global.

 Under its business model, NestAway is a one-stop service provider for tenants and house owners where neither has to pay any brokerage fee.  The company serves as a broker and property manager for home owners by helping to find tenants, collect rent and manage the property over its lifetime in exchange for a percentage share of the rental stream.

With its technology enabled platform and sophisticated data analytics capability, NestAway today caters to over 35,000 tenants and 16,000 owners, including over 7,000 family owners in Bangalore, Delhi, Faridabad, Ghaziabad, Greater Noida, Gurgaon, Hyderabad, Noida, Mumbai and Pune. 

Amarendra Sahu, Co-Founder & CEO, NestAway Technologies, said, “ Our vision is to create accessible living using imagination and empathy & we have been humbled by the market acceptance of our shared as well as family rental solution. With this funding, we shall strive harder to impact not only where people live but also how they live and shall work on community housing and student housing in addition to our existing categories. We are glad that our new partners in this journey share our vision and passion to create unique living infrastructure in this country using design and technology.”

Niladri Mukhopadhyay, Managing Director at Goldman Sachs, said, “NestAway is at the forefront of using technology and a hands-on, customer-centric approach to solving complex housing market in India’s largest cities. We look forward to partnering with them to bring greater levels of convenience, transparency and service to both home-owners and home-renters throughout India.”

Unlike western markets, managed lease service (popularly referred to as MLS) is absent in India, which causes challenges for owners, especially for non-resident Indians (NRIs) to remotely manage their rental properties.

According to the latest Census, around a million homes remained locked as owners could not find an easy and seamless way to rent their homes. While listing sites, provide listings and lead generation services to owners, there is no organised service provider who also provides lead generation, closure and property management services. NestAway provides all three together under a single brand.

As part of its rental solution, NestAway offers structure and content insurance of up to Rs 1 crore to every owner which protects them against tenancy linked damages to the property.  Nestaway also provides legal assistance to owners and tenants by adopting a standard rental contract and attention to disputes during the course of   rental, a tailored service which is differentiated from what is available in developed markets.

The company has recently introduced “One by NestAway,” a community housing rental solution aimed at catering to a group of like-minded people wanting to stay together. From this academic year onwards, it also plans to foray into student housing starting from Delhi north campus and Pune.

Sumitomo Corp, Krishna Group announce first Indo-Japan real estate JV

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News Point: The Joint Venture with Krishna Group to be called Krisumi Corporation Pvt Ltd will develop mega real estate projects across India.

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The joint venture, Krisumi Corporation Pvt Ltd, will develop large scale real estate projects across India beginning with ‘Krisumi City’, an 18-million sq ft development which will be developed with a cost in excess of US$2 billion. Both partners will hold 50:50 stake in this JV company.

Announcing the foray, Masahiro Narikiyo, CMD, Sumitomo Corporation India said, “India’s real estate sector is going through an interesting phase. While consumer’s expectations have evolved manifold, most of the traditional developers are finding it extremely difficult to effectively cater to all their requirements. In this backdrop, we believe that there is a huge vacuum for quality housing backed by a name that the buyers can trust. Which is why, we are extremely excited about this new venture with our partner, Krishna Group, which we believe embodies all the qualities that are required to succeed in today’s environment.” 

Located in Sector 36 A, Gurugram, abutting the Delhi – Mumbai Industrial Corridor’s Global City and right at the confluence of southern peripheral road, NH-8, Central peripheral road and the Dwarka expressway, Krisumi City will be designed with the highest standards of Japanese quality and aesthetics.

The master plan and architectural design of Krisumi City has been developed by world renowned Japanese design firm NIKKEN SEKKEI, the name behind the famed Tokyo Sky Tree. The project has been designed based on the lifestyle aspirations of the potential buyers and would offer quality high-rise residential options across various sizes and budget segments, along with synergetic support from a high-end retail mall, a super premium hotel (5 star+ rating), education institutions, and premium office spaces.

Elaborating on the development, Ashok Kapur, Chairman – Krishna Group, said, “The biggest challenge facing the Indian real estate industry today is with regard to Quality, Efficiency and Commitment to Timelines, all of which is exactly what Japan is known for – Japan is already beyond RERA. We are certain that our partner, Sumitomo Corporation, part of the 400 year old Sumitomo Group, with their extensive Global experience in real estate development shall contribute tremendously in creating projects with endearing value for our clients as well as the local communities around it.”

Both the partners stressed that the partnership is another successful milestone in the Indo-Japanese collaboration story, which has gained impetus with the confidence and support shown by the political leadership in both the countries.

Further, it is a testament of the Indian economic growth potential backed by the fundamental strength of the growing middle-class income population which makes this sector very attractive for Foreign Investment. The basic premise is that there will always be good demand for quality spaces produced by credible developers.

Noida Sector 70-79 ahead of affordability curve

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Bottom Line: Noida sector 70-79 is ahead of the affordability curve with prices above INR 1 crore and above not an exception.

Noida property market, Noida real estate, BKC property, Bandra Kurla Complex, Mumbai real estate, Delhi-NCR property, Track2RealtyBacked by the media reports that suggested Noida is by far the most affordable location in and around Delhi-NCR, Ramesh Vats was on a house hunt in the market. His perception about the Noida market was by and large true till the local agent took him to the stretch of Sector 70 to 79.

Vats was surprised as many of the properties in this market were in the price range of above INR 1 crore. Moreover, there were less affordable properties, compared to premium and high-end projects.

“It looked like New Gurgaon kind of a market in terms of the price point. But where the Noida Sectors from 70 to 79 are different from Gurgaon or New Gurgaon is the rate of transactions which is way higher in this part. Even the secondary market transactions are quite healthy over here. More importantly, the prices in this stretch have been firm even in the wake of overall slowdown in economy and some correction in other neighbouring markets,” says Vats.

The fact of the matter is that any prospective buyer in Noida who does not have budget constraints would be tempted to buy an apartment along this stretch. Most of the projects that have come up in the last six to seven years are premium category projects with ultra modern amenities and facilities. Among the newly developed locations, the habitation has hence been faster in this region.

This raises a fundamental question as to what is driving the markets of these sectors. Why are most of the new launches in the premium category? Is there any method in this madness or the sectors are going to add on to the inventory only?

Developers, on their part, justify the high-priced properties in the stretch due to higher land prices. Analysts feel due to its strategic location-advantage and the resultant faster absorption of premium homes, the developers have been encouraged to launch more and more upscale projects. They nevertheless agree to the fact that the stretch will have higher demand of infrastructure once all the projects are delivered.

Nikhil Hawelia, Managing Director of Hawelia Group has a caveat here when he says that currently the real estate sector is witnessing slowdown but major demand in affordable category is still alive. Land component for sector 70 to 79 of Noida is highly priced which in turn makes these sectors costlier/premium to the end user. Flats in this region are ranging from INR 60 lakh to 1.50 crore, which is hardly a part of the current demand.

“Supply surplus in these sectors will be consumed when the confidence of upper middle class buyers in the economy will get a boost. As far as infrastructure is concerned, Noida Authority has taken many initiatives and already put in place the infrastructure for power, water, roads, sewerage, etc in the said region. But still when this supply surplus will meet the demand, solution for certain infrastructure bottlenecks would be immediately required,” says Hawelia.

Vineet Relia, Managing Director of SARE Homes feels Noida Sectors 70-79 are not the only markets to witness supply surplus. According to him, as multiple projects were launched in earlier years, and off-take of flats was slow due to the nationwide real estate slowdown, a surplus supply of housing units was but natural. “With connectivity and infrastructure issues also in the picture, it may take some time before these issues are addressed to the satisfaction of buyers.”

These challenges apart, the buyers in the premium segment of housing are betting big on the stretch. The investors also endorse these sectors for long-term growth and appreciation. And hence, most of the new launches in the premium category over here are in the price range of above INR 6000 per square feet, which is quite attractive form the standpoint of average property prices in Noida.

Even though the area is yet to be fully habitable and most of the projects are under construction, its rental value of average INR 12 per square feet is among the best in Delhi-NCR and not just Noida.

A struggling but turnaround year ahead: Rattan Hawelia

Posted on by Track2Realty

View Point: Rattan Hawelia, Chairman, Hawelia Group feels the year 2018 could be a struggling year for the developers due to their own fiscal mismanagement. He neverhteless feels it would be a turnaround year with the intent to streamline and professioanlise the business.  

Rattan Hawelia, Hawelia Group, Best builder of Noida Extension, Greater Noida West builder, India real estate news, Indian realty news, Indian property market news, Track2Realty, Investment in Greater Noida West property Implication of Real Estate (Regulations & Development) Act, 2016 on ground in the entire Nation has been major impacting factor to the Indian real estate sector thereby increasing transparency with improvements in structural reforms & regulatory framework.

The more liberalized FDI regime now further attracting global capital flow to Indian real estate sector. The Goods and Services Tax (GST) system will also have a major impact especially in sell to build model in Real Estate. And the Benami Property Act will surely curb the parking of black money in real estate.

Affordable housing getting the Infrastructure status was also one of the much needed changes and will result in increased participation from private players by paving ways for cheaper construction finance and significantly boost the government’s target of ‘Housing for All’.

Year 2017 was the year for redefining the Indian real estate as the government has introduced many reforms for regulation of this sector.

The year 2017 had begun with the after effects of demonetization because of which the sector also started in a struggling mode. Implication of RERA & then GST system also affected the sector as compliance to all the rules was a challenge to most of the developers but certainly many of them had met the compliances who were all prepared on time for the necessary change. 

Many of the developers had undergone the tough period in 2017 as is cleared from the news highlights of the year, particularly due to over scaling their scope of work without proper planning. 

Today, because of the government initiatives the real estate buyers had better knowledge and are well informed of their rights. They have better medium to choose the right property fulfilling their requirements as all the private developers are on a single platform of their offerings.

Developer fraternity are streamlining their professional intent and adopting transparent & clear mode of dealing with their customers. They had understood that instead of being only the product & promise based industry; Real estate is more about services and addressing the concerns and issues of consumer on realistic ground. Today one should prioritize the customer needs and focus on their actual problems.

2018 would surely be a struggling year for the private developers due to poor fiscal management in 2017. This new year will be totally a turnaround year for the entire real estate fraternity of the Nation and the actual state of every developer will come out; thereby freeing the sector from many fly-by-night operators.

With the beginning of 2018 the developer should focus on their ongoing projects and should streamline their financial planning so that the delayed projects could come on track to deliver their promises to the end user.

The residential property market is all set to dominate by the end-users. Corporate developers will acquire more projects and new corporate houses are gearing up for their debut as well in real estate development.

All policy reforms and positive moves will significantly impact the revival & growth of the market. Sincere real estate players could gain the momentum and the sector will get a boost and confidence of the home buyer. This will surely help genuine developers to come in front and take the real estate market way forward.

The demand of affordable housing is more than the supply and affordable housing will definitely going to play the major key role in 2018. We hope that the coming year will be the view changer year of real estate industry.

85% growth in property investments in the first nine months of 2017

Posted on by Track2Realty

News Point: Deal volume recorded at USD2.6bn in the first nine months of 2017, compared to 1.4bn in 2016

Track2Realty, Track2Media, India Real Estate, Valuations of Real Estate, Realty News, Property News,India witnessed a growth of 85% in property investments in the first nine months of 2017, compared to the same period last year, says Colliers International’s recently released report titled ‘Of High Growth, Low Real Rates and Black Swans’.

The deal volume is recorded at USD2.6 billion in the first nine months of 2017 as compared to 1.4billion last year. Although property investment in India remains modest in relation to the country’s size and importance, this growth in activity may be a sign that India is starting to mature as an investment market.

“The increase in deal volume is a testimony of the fact that India is a maturing market, with high value creation potential for its investors. Also, it endorses that there is immense growth potential in commercial, industrial and warehousing industry as most of this capital has been employed in these sectors”, says Suresh Castellino, Executive National Director, Capital Markets and Investment Services, Colliers International India.

Looking at the investment markets on country-basis, Japan retained its position at the top of the table of investment in income-producing properties as on YTD September 2017. However, total transactions in Japan fell by 12% YoY to USD23.3 billion, and ranked just above China that registered transactions of USD22.3 billion (down 2% YoY).

Australia was ranked 3rd in the list with total transactions dropped by 19% to USD15.2 billion. In contrast to the lackluster performance, in the top three markets, fourth-placed Hong Kong saw a 38% increase in transactions of USD14.7 billion. South Korea, recorded a 33% increase in transactions, while deal volumes in Singapore surged by 83%, to USD8.7 billion.

As per Colliers Research, the economic performance of India has been slightly disappointing compared to the rest of Asia. However, in Q3 2017, India recorded a growth of 515% in deal volume, to USD1.2 billion, albeit with a very low base for comparison. The report further highlights that India has higher benchmark interest rates as compared to other countries. Following the cut to the repo rate by Reserve Bank of India, benchmark interest rates have fallen to 6.4%. Most economic forecasters, expect the Reserve Bank of India to keep interest rates unchanged in the coming months, although, few expect further rate cuts. CPI inflation has been under control, reaching 3.3% YoY in September, however, certain core measures of inflation are significantly higher.

“Various economic forecasts expect CPI inflation to move back above 5% in H1 2018, and remain constant. If so, then real interest rates should stay below about 1.6% over next years, compared to a range of about 3.0-4.3%, over the first three quarters of 2017. This loosening of real monetary conditions ought to support capital values in our maturing investment property market”, says Surabhi Arora, Senior Associate Director, Research, Colliers International India.

Looking forward, Oxford Economics, expects average real GDP growth in India to slow from 6.9% over the period 2017-2021 to 6.3% over the period 2022-2024. This growth outlook reflects the following factors: 

Leading position in service sectors: The middle class is set to expand with the number of households with income greater than USD 30,000, likely at least to double over the next decade

Competitiveness: India’s competitiveness in international markets with unit labour costs among the lowest of the BRIC economies

Slow improvement in infrastructure: The inadequate infrastructure has prevented supply from increasing in line with the demand

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