Tag Archives: Investment in Indian real estate

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. 

Sobha Limited, Iconic Real Estate Brand, Brand Leadership in Indian Real Estate, Best brand of Indian real estate, Brand ranking of Indian real estate, Sobha as brand leader of Indian realty, Indian real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in Indian real estate, Brand value of Indian developers, Track2RealtyIndia’s most admired and trusted real estate brand has won the “Iconic Real Estate Brand Award” at the India Best Brand Series and Awards (IBBA) 2018 held recently in Delhi NCRThese awards recognise the brand strength and success stories of corporates, SME’s, entrepreneurs and start-ups. The winners were selected on the basis of brand audit, consumer mapping, and jury ratings.

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

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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

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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

Property market yet not transparent

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Bottom Line: Some reports suggest India has improved in global rankings in terms of transparency in real estate sector in Asia Pacific. The homebuyers on the ground maintain that their experience has been no better. Track2Realty takes a look at the paradox.

Transparency in real estate, Disclosures in real estate, Best practices in property market, Cheating in property market, Frauds in real estate, Builder Buyer Agreements in real estate, Transparent deals in property market, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2RealtyA study titled ‘Global Real Estate Transparency Index (GRETI) 2016’, by property consultant Jones Lang LaSalle suggests India has improved in overall transparency scores across all markets and has achieved higher ranks for its Tier-I and Tier-II cities. Tier-I cities in India ranked 36th, vis-à-vis transparency levels, followed by Tier-II and Tier-III cities at 39th and 52nd positions, respectively. The index measures transparency by looking at factors including data availability, governance, transaction processes and the regulatory and legal environment.

According to JLL, the country’s rankings is likely to improve further in the GRETI 2018 index, owing to the implementation of the Real Estate (Regulation and Development) Act, 2016, which is likely to be fully functional in all states by then.

However, this overt optimism does not go well with the homebuyers on the ground. The buyers in the market maintain that it is the developer’s obligation to disclose all relevant issues, approvals etc, which they more often than not deny.

Transparency challenges in Indian real estate 

Reports suggest Indian realty catching up on transparency index; ground realities challenge

Disclosure norms missing in the property market and builders even don’t show Builder-Buyers Agreements before booking amount is paid

Courts have questioned the legality of Builder-Buyer Agreements, calling it not sacrosanct

Majority of developers don’t carry Builder-Buyer Agreements on their website

Developers continue to use misleading terms in marketing brochures

Subvention scheme invites speculators; buyers caught in lurch if the project is delayed

Selling on carpet area has the potential to reduce litigations to a greater extent

Buyers expect straight marketing discounts and not discounts & freebies

Disclosure missing

Disclosure statements, which can come in a variety of forms, are the buyer’s opportunity to learn as much as they can about the property and the builder’s experience, approvals & risk factors in it. Potential seller disclosures range from knowledge of not only the property but also infrastructure issues in the vicinity. Not only do disclosure documents serve to inform buyers, they can protect the sellers from future legal action. It is the developer’s chance to lay out anything that can negatively affect the value, usefulness or enjoyment of the property. 

It is the lack of proper disclosure that often results in litigations. Across the world, disclosure laws vary from state to state, even down to the city and local governance level. Though disclosure norms are very poor in India, the developers who conceal relevant information about the housing project can still be taken to courts for failure to disclose.

In some other matured markets the seller (both developer as well as reseller) can be sentenced for for up to ten years. In India the BBAs (Builder Buyer Agreements) are so one-sided in favour of the builders that, forget disclosure statements, even the legal validity of the BBAs have been challenged by the buyers and the developers could not defend their documents.

Some common disclosures that should ideally be there include the legal titles, approvals, delivery timelines, risk elements, financial liability of the developer with regard to the property, whether property already mortgaged, neighborhood nuisances, carpet area, loading percentage, any history of property line disputes, and amenities that would be part of the housing project.

A disclosure is something given to the buyer by the seller documenting their knowledge of the property. In most of the global markets, disclosure documents are provided to buyers once the developer has accepted their offer. In addition to their inspections or loan contingency, the buyer has an opportunity to review the seller’s disclosures.

If the buyer discovers something negative about the property through disclosure, he can usually back out of the offer without losing his deposit. In some matured markets, developers provide these disclosures to the buyers even before they receive an offer. Buyers are then required to sign off on disclosure documents and reports.

In some ways, providing full disclosure is not just a step towards best practices but also can actually help the developer. It shows that the developer is thoroughly transparent and upfront.

Even the National Consumer Disputes Redressal Commission (NCDRC) has rejected the arguments of a real estate company that provisions mutually agreed upon in a BBA are sacrosanct.

Developers continue to mislead

The developers continue to mislead the buyers with fancy jargons like project to be strategically located with 10 minutes distance to airport or 20 minutes distance to railway station. However, what the brochure does not tell you is that this distance is subject to your over-speeding drive with no traffic at all on the road. In the absence of this luxury, the distance of 20 minutes can also be one hour and 20 minutes.

Social infra is another area where the gullible buyers are duped with the promise of having very many good quality schools, hospitals and restaurants coming up near the project.

Façade of area that promises green zone around the project, that looks so very beautiful in the brochure, can also be drainage area with green bushes around. The artistically create project elevation or the sample flat pictures on the brochure are more often than not misleading to the homebuyers.

80 per cent green area with landscaping is what is an ideal answer to urban living. However, even with the permissible FAR of 2 that is allowed in most of the cities, this seems highly improbable. Moreover, the marketing brochure simultaneously also says that the developer will apply for more structures subject to permission. There have been cases of the developer later converting the green zone to raise another tower.

State-of-the-art amenities are probably the most over-used and abused claim in the marketing brochure of respective developers. Yes, there would be a gym, a swimming pool and a tennis court etc. But the question that is not answered is that will it be sufficient to serve the entire housing project. In most cases it is not.

Amidst all the misleading claims and marketing exaggerations, location mapping is the most glaring one. Generally maps are not to scale and give the wrong perception of the location of the project. For example, the brochure will say 10 minutes from the airport or commercial district; it does not state distance in kilometers.

Straight marketing package needed

When Archana Dalmiya bought her first apartment in the year 2011 she was quite tempted with the various marketing offers that were available in the market. She had then booked her apartment that was packaged with loads of discounts & freebies, though the developer had refused to give any straight discount. A novice in the housing market she was also rather looking for the maximum freebies. As a matter of fact, the freebies became one of the major differentiator in making her a final decision between the identical projects.

Not anymore! This year when she is planning to buy her second apartment it seems she has matured a lot. She understands the dynamics of housing market and difference between freebies and straight discounts. As a result, her negotiation is more on the lines of price point and straight jacket marketing offers that could lower the price burden.

“I think I have learnt some valuable lessons with my first home purchase. There is absolutely no gain in getting tempted for free air conditioners or free holidays. What I am interested in is the price point and to what extent the developer can offer me the price discount. It works much better for a home buyer than fancy symbolic offerings,” says Archana.

Requesting anonymity, the marketing head of a leading Mumbai-based developer admits that their research has made them understand that today’s buyer is very value conscious across the segment. Moreover, he can evaluate the cost & benefit of any marketing offer. He is not the one who would be tempted with the freebies anymore.

“It is no more home furnishing, holidays or gold coins that can translate a prospective client to book the deal. It used to be popular marketing tool for good number of years. Today, most of the developers also understand this change in buyers’ outlook and hence housing market is now very realistic in terms of its marketing offerings. Price cut is what seals the deal in most of the cases,” says the person above mentioned.

The housing market of major Indian cities have also changed over the years. No one is interested in offers like free air conditioner, holidays or other fancy attractions. Price point and usable carpet area is the focus of all the buyers today.

The game in the housing market has turned out to be on the price point and hence most of the developers and home buyers are evaluating what could be termed as substantive negotiation on price point than symbolic gesture of freebies.

Embassy wins British Safety Council’s Sword of Honour

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News Point: Three of Embassy’s Office Parks receive this prestigious honour in 2017 for the highest award for excellence in Health and Safety management standards

Embassy Sword of Honour Award, British Safety Council, Best practices in real estate, Best practices in health & safety, Embassy Group, Jitu Virwani, India real estate news, Indian realty news, Real estate news India, Indian property market, Investment in real estate, Track2RealtyEmbassy Group has been conferred the prestigious ‘Sword of Honour’ by the British Safety Council for three of its business parks – Embassy Manyata Business Park, Embassy TechVillage in Bangalore and Embassy TechZone in Pune.

Embassy is the only Real estate developer in India to receive this prestigious honour this year.  The award was presented to the company at the Drapers’ Hall, London on 24th November 2017.

The ‘Sword of Honour Award’ is widely recognized as the pinnacle of achievement in safety across the world, and is instituted to reward best practices in this field.

To achieve the Sword of Honour Award, organizations should be fully committed to both excellent standards and continuous improvement. Earlier this year, the above-mentioned Embassy Office Parks received the 5-star rating from the British Safety Council for Occupational Health and Safety, which was a prerequisite for receiving the Sword of Honour accolade.

An external adjudication panel of chartered professionals awarded 57 Swords, to commendable organizations from across the globe. Among the other companies from India that received this prestigious award were Mumbai International Airport Pvt Ltd, Reliance Industries Ltd, Larsen & Tubro Ltd, raising the bar for Health & Safety management standards in the country.

On receiving the Sword of Honour Award at the Awards ceremony in London, Jitu Virwani, Chairman and Managing Director, Embassy expressed “It was a wonderful experience participating in the Awards ceremony and receiving this prestigious Award. The certifications are a validation of our unwavering commitment to our clients, ensuring that our workplaces are not only the most efficient, but also the greenest and safest anywhere in the country. Embassy is committed towards creating world class Grade A real estate projects, for the rising India. We are honored that our dedication and commitment across all our spheres of operation is being recognized”

Mike Robinson, Chief Executive of the British Safety Council, said: “On behalf of the trustees and staff of the British Safety Council, I would like to congratulate Embassy Office Parks for their huge commitment to keeping their workplaces safe and healthy and minimising risks to the environment from their organisations’ day-to-day activities. All of the Sword winning organisations share a commitment and resolve to achieve the highest standards of health and safety management. We are delighted that they are partners in helping achieve our vision that no one should be injured or made ill at work.”

The 2017 awards mark the 38th consecutive year that the British Safety Council has awarded the Sword of Honour for health and safety management excellence and the seventh year of awarding the Gobe of Honour for excellence in environmental management. The winners achieved the maximum five stars in the British Safety Council’s independent Five Star helth and safety and/or environmental management audits in the period 1 August 2016 – 31 July 2017.

They also demonstrated to an independent adjudication panel that they had a proven track record and culture of best practice for excellence in health and safety or environmental management that runs throughout the business, from the shopfloor to the boardroom.

Demonetization dust yet to settle over real estate

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Bottom Line: It has been one year that the Indian real estate has been reeling under the after-effects of demonetization. The debate on the eve of 8th November is hence centered on whether the demonetization has helped or hurt the sector.

Rupee, Rupees, Indian currency, Indian money, Cash, Indian real estate news, Indian realty news, India property market, Finance, Track2Realty, Track2Media ResearchThe answer to whether demonetization led to cashless real estate deals or less cash in the sector is not that easy as the response of the sector post the demonetization is as much economic as political. In its cost & benefit analysis, the stakeholders are confused over glass half full or half empty.

To understand the after-effects of demonetization one has to first look at the following queries: 

Q. Has demonetization restored the faith of the consumers in the property market?

Q. Has demonetization pushed the sales velocity or led to lower absorption of real estate?

Q. Can the business of Indian real estate survive without the cash component when the financial modeling itself demands cash?

Q. Can legal channels of banks & financial institutions drive the housing market? 

Grim statistics

Beyond views & counter-views some statistics indicate what the stakeholders would be careful to spell out. As per a PropEquity report, the new home launches dipped 83% across top 8 cities in the third quarter of 2017 from 24,900 units to 4,313 units.

There is certainly cash crunch in the market, more so with the developers in launching new projects. And despite the fact that there are fewer new launches, the unsold inventory dipped by just 4% to 4,46,730 units from 4,65,116 units. 

The PropEquity report says, “Housing demand (absorption) across key cities dropped by 35% to 22,699 units from 34,809 units due to fewer new projects in the market and the lag effect in the revival of the end user driven demand, which is expected to pick up from the Q4, which is seasonally the best time to launch new projects.”

Stakeholders’ caveat

Surendra Hiranandani, CMD of House of Hiranandani has a caveat here when he says that the primary residential market and projects undertaken by credible and reputed builders were not affected significantly by demonetization. “Transactions in these markets are broadly financed through legal channels of banks and housing finance institutions providing home loans to buyers. Only in projects where cash component was involved and those in the secondary market have been affected.” 

Admitting that the economy experienced a tiny speed breaker with the demonetization, Ashish R Puravankara, Managing Director Puravankara Limited maintains the after effect of the same was felt in the real estate sector as well. In its opening phase, demonetization disrupted the overall real estate business across the country impacting (new) launches, sales, and enquiries.  

“Post the initial jolt, the southern real estate sector and especially the Bengaluru market observed a steady rise in customer enquiries out of which many turned out to be positive leads,” says Ashish. 

A number of property consultants have also pointed out that the market is back on course after the immediate after-effects of demonetization. For example, a Colliers Research suggests the demonetization wave seems to have settled down and the prospect for the real estate sector looks promising.

Demonetization hurt

The statistics nevertheless tells a different story altogether. For instance, a recent report by PropTiger confirms that the home launches across the top nine cities in India tanked 53% to 22,115 units in the July to September period this year, against 47,032 units launched in the same period last year.

Of course, it is not just demonetization but the market slowdown has also been due to the implementation of the Goods and Services Tax (GST) and delay in implementation of the Real Estate Regulatory Act (RERA).

No one would like to admit or put on record but privately most of the developers maintain that their major investors have pulled out of market, both for land finance as well as for investment in the under-construction inventory.

Requesting anonymity a leading Bangalore-based developer shares his experience as to how one of his trusted investors after having paid INR 100 crore cheque a week before demonetization has requested to hold on to his commitment for the luxury villa. “He had promised another INR 100 crore in cash to have the transaction for four luxury villas near the airport,” shares the developer.

Secondary market hit

Moreover, the analysts are evaluating just the statistics of the primary market transactions which are reported. The demonetization has hurt the secondary market even more. A conservative estimate suggests that the transactions in the secondary market are nearly close to 50% down.

Does lower transaction in the secondary market have any co-relation with the fortune of the primary residential market? “Yes, it has,” says Gaurav Bhargava, a real estate analyst. “Secondary market transactions also reflect someone selling his smaller house to buy a large house in the secondary or primary market. It is about incremental housing purchase and lower transactions in the secondary market will have its bearing over the primary residential market.”

It would always be debatable whether demonetization could achieve its objectives of curbing black money, but what could be vouchsafed is the fact that the cash crunch it caused contributed significantly to the slowdown of real estate where the default financial modeling of the business demands cash transactions. One year is just too short time for the cash driven business of real estate to recover from an unexpected financial surgical strike.    

By: Ravi Sinha

End-user property markets not struggling: Ashish R Puravankara

Posted on by Track2Realty
Track2Realty Exclusive

View Point: Ashish R Puravankara, Managing Director of Puravankara Limited feels the new regulatory changes and the changing market dynamics are not that challenging for the end user driven markets. 

Ashish R Puravankara, Puravankara Ltd, Puravankara Projects, Bangalore real estate market, Provident Housing, India real estate news, Indian realty news, Indian property market news, Real estate news India, Track2RealtyVisualising an industry consolidation soon, Ashish Puravankara feels it is time to invest in technology and make affordable housing the growth driver. Excerpts of an exclusive interview with Ravi Sinha: 

Ravi Sinha: How are you coping up with the challenges of market slowdown?

Ashish Puravankara: Beginning with demonetization to Real Estate Regulation Act (RERA) and Goods and Services Tax (GST), all come with their own implications to the real estate industry. The announcement of demonetisation created a sort of disruption in the market that largely impacted buyers’ sentiments. In preceding months, the rollout of RERA and GST followed, which made the buyers tread cautiously with their investments and spending. We believe these initiatives from the government will pave the way in transparency, accountability and efficiency in the ecosystem.

Ravi Sinha: To what extent has it affected your top line and bottom line?

Ashish Puravankara: The same has not impacted us much. Though in the initial phase there was a slight stagnation in the sales due to the overall slowdown and uncertainty among the buyers. But once things started settling down, there was a spike in the customers’ enquiries for our projects. Out of these queries, many were converted to sales deals. A large credit for this performance goes to our focused fiscal planning and preparedness for the structural economic reforms.

Ravi Sinha: What has been the learning of the last 5 years of market uncertainties?

Ashish Puravankara: The transition of the real estate market has changed the dynamics of the sector completely. After the advent, multiple policies and regulation of the real estate industry has seen a paradigm shift with systemic checks and streamlined process.

Post the IT and its revolution, there is a significant rise in the job opportunities which is further fuelled by the emergence of e-commerce and start up culture. This has led to a significant increase in the white-collar migratory population especially in the metros. These demographic transitions have also pushed demand for homes in these cities. But post the initial rush the residential sector witnessed a slight stagnation in the last two years.  Realising the undercurrent, several developers have seen the value in   diversification of their offerings by venturing into affordable housing segments.

Ravi Sinha: What has been your experience in the affordable housing?

Ashish Puravankara: Realizing the burgeoning need of high-quality, affordable homes in the country, we launched Provident Housing Ltd., (a wholly-owned subsidiary of Puravankara) in 2008 to meet the aspirations of mid-income and first-time homeowners. We have the distinct advantage of being the first organized player to move into the affordable housing sector. Till date over 16.28 million sq. ft. of projects have been launched across 4 Southern cities with over 5000 happy and satisfied homeowners. Additionally, about 6000 units have been planned for new launches.

Ravi Sinha: Has the after effects of demonetization been a real challenge for the sector?

Ashish Puravankara: Demonetization has an impact on the residential market sentiment, especially regarding new launches, sales and enquiries, which dipped a little during the initial phase (of demonetization). The impact was a little hard in those markets which were dominated by investors.

But in the South, specifically the Bangalore market which is primarily driven by end-users, coupled with steady economic activity and powered by a high percentage of the white collar migratory population, remains stable in comparison to other key markets. In fact, post the initial lull, Bengaluru’s real estate market, witnessed renewed consumer confidence in the quarter of January –March 2017. 

Ravi Sinha: How about RERA and GST affecting the business cycle?

Ashish Puravankara: As with the implementation of any new policy there will be some teething issues but the long-term views will be positive. Market buoyancy can be envisaged post RERA implementation. The same will not only bring back confidence in the end users but will give the customers better clarity to make an educated decision to buy a home they desire. For the developers in the initial phases, we adapt to the new environment. I believe that RERA will be a game changer for the overall industry which eventually will transform into growing customer and investor confidence.

The role of GST for the Indian real estate sector will be of an enabler as it will create a level playing field for all organised developers in the country. There are multiple benefits for both developers and homebuyers with the GST implementation. A single consolidated tax system brings more clarity, transparency and avoids double taxation which is relevant in the sector where developers and end users end up paying multiple taxes and duties.

Ravi Sinha: How is GST affecting the supply chain of real estate?

Ashish Puravankara: Inefficiencies in the supply chain will slowly decline, resulting in prudent working capital management and better pricing power for all stakeholders in the value chain. Specifically, the impact of taxes on construction materials, cement and steel will come down considerably for developers which ranges between 12-18%. With the rates in place now, the implementation of GST to our business is expected to bring down the project cost for developers, thereby leading to lower acquisition cost for under-constructed apartments.

Ravi Sinha: What has been your understanding about consumer psychograph with these policy changes? 

Ashish Puravankara: RERA has now put the buyer in the driver’s seat as exhaustive data is available at the click of a button and is ratified by the regulatory body. The confusion and any allied fears that a potential customer could have are now abated and there is certainty of project completion and most importantly peace of mind. With enhanced transparency the customer confidence will only see an upward trend. 

Ravi Sinha: To what extent the slow moving market in the metro cities is tempting you to go for Tier II and III cities? 

Ashish Puravankara: While there are immense opportunities in Tier II and III markets, we are not planning to enter any new markets in the immediate future. Currently, our core focus is to strengthen our operations in markets where we exist. The appetite is big in markets like Pune, Hyderabad, Kochi and Coimbatore where we already exist. We are identifying land parcels in these locations to scale up our presence. Having said that, we are also keeping our options open. We regularly conduct feasibility studies, research and identify demographic trends in the secondary market. If we come across any feasible business potential, we intend to pursue the same.

Ravi Sinha: Which are the segments that you find safe bet today?

Ashish Puravankara: Affordable Housing is a segment that will gain momentum in time to come. We are investing significantly in our premium affordable housing arm – Provident. In the next couple of quarters, you will witness Provident launching new properties in existing markets. With the government giving ‘infrastructure’ status to affordable housing projects, this has given the needed impetus to the real estate industry. 

Ravi Sinha: What would be the next growth driver in real estate?

Ashish Puravankara: With the RERA-rollout, the real estate market will witness consolidation in the next two to three years. Only serious and focused real estate players will survive. With new launches slowing down, this is a great opportunity for us to invest in technology which will be the next growth driver in real estate.

Ravi Sinha: Moving forward, what is your outlook of the business in the medium to long-term perspective?

Ashish Puravankara: We aspire to evolve into a lean and strong organization, by leveraging on our expertise in the areas of land acquisition, design and innovation, sanctions and marketing.  We have set aggressive growth targets for the next five years which we are confident of achieving by implementing concrete measures focused on human capital management, project management and advances in construction technology.

Our vision for the next few quarters is 8-10 million sq. ft. of launches between both our brands, Provident Housing and Puravankara Ltd., with Provident having a larger share of the pie in terms of volume. We could leverage our existing land bank or sign up new deals especially JDs & JVs in the upcoming years.

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