Tag Archives: JLL India

The upside of high residential inventory

Posted on by Track2Realty

News Point: Supply/demand mismatch in terms of price and configurations has been the main reason for the rise in inventory levels.

realty news , india real estate , india realty news ,property news, JLL India, IPC in India, Track2RealtyFor the last 3-4 years, residential real estate market has seen sluggish demand, which has caused the unsold inventory levels to go up in some of the key Indian geographies.

From developers’ point of view, this has eventually resulted in:

1. Correction of prices in many markets in order to improve sales velocity of unsold products

2. Increased project launches with the right configurations to cater to existing demand

Interestingly, 2016 had started on a sunny note. The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter.

There was a six-fold increase in launches of the affordable housing projects, as developers predicted greater demand in this highly price-sensitive segment.

One way or the other, factors have now transpired to make residential real estate a buyer’s market that gives buyers the upper hand. They have a lot of options to choose from, with the added benefit of flexible rates and attractive payment plans.

The advantages of a buyer’s market

Real estate prices usually drop as inventory increases – but even if they don’t, negotiation power goes up. Some realtors and refuse to understand the realities of a slow market and will not accept any offers less than what they feel they should get.

If a buyer feels that he is not getting the best possible deal, he should be confident enough to walk away and look at the next option on the list. Remember that in a buyers’ market, it is the buyer who has the power.

It pays to be aware of and confident about one’s bargaining power. If the home has been on the market for several weeks or months, has perhaps already undergone some price reductions and is still unsold, it strongly suggests that the seller is hoping to sell it as soon as possible.

In such a situation, it makes sense to ask the seller for add-ons such additional furniture or fixtures, apart from a heavy discount on the listed price.

Also, some real estate brokers may be more inclined to knock a percentage point off their commissions and pass on the benefit to the buyer to get deals done. However, the best advantage for a buyer will lie with property consultancies that do not charge any brokerage from buyers at all, but only from the sellers.

Avoiding confusion in a market saddled with heavy unsold supply

Another inevitable result of heavy housing inventory on the market is that prospective buyers are confused about which options to focus on. This ‘problem of plenty’ can be resolved by looking only at select projects by reputed developers – it is surprising how quickly the range can narrow down if one eliminates anonymous smaller players from the field of vision.

The lure of discounts and flexible payment plans that currently define the market should not obscure a developer’s track-record, on-ground construction activity on projects and the market’s response to these and previous projects. The initial choice should be made based on developer’s reputation, track record, project construction activity at site and locational advantages of the project.

Further guidelines for buyers

In the case of under-construction projects, buyers should only consider those which are likely to be completed over the next 12-18 months

Again, going with developers who have a healthy track record of delivery will mitigate the risks related to timely delivery

It is also essential to undertake good diligence in terms of the project’s market response and inventory sold, which will ensure that project is delivered

One should look only at established housing corridors where social and physical infrastructure are in place or visibly under development

Expected resurgence to benefit both developers and buyers

Both the RBI and the Central Government have taken certain key steps to revive the real estate market. Firstly, the implementation of Real Estate Regulatory Act will ensure transparency in the real estate transactions, which will help safeguard the interests of buyers.

RERA will not only help in expediting the completion of the ongoing projects but also immunize buyers from any fraudulent practices. The RBI has reduced interest rates, which will allow prospective home buyers to avail of cheaper home loans from banks.

These factors have infused renewed positive sentiment in the market, and will ultimately result in boosting demand for residential properties. An increase in demand will ultimately help developers improve sales velocity for their products, help improve cash flows to complete their ongoing projects and pay-off debts.

By: Santhosh Kumar, CEO, Operations & International Director,

JLL update on Mumbai real estate

Posted on by Track2Realty

Delhi NCR real estate, Bangalore Real Estate, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyMumbai: Grade A Office
Demand
After recording significant leasing in 4Q10, Mumbai city witnessed moderate transaction activity in 1Q11 as the major office occupiers of India Inc awaited the impact of budget on their corporate real estate strategy for the next fiscal year. However, the city’s office market witnessed transactions totalling 827,105 sq ft (76,841 sqm) in 1Q11. In addition to the banking, financial services and insurance (BFSI) sectors, demand for office space in the prime micro-markets of Mumbai came from the consulting, aviation, IT/ITES and other industries. The IT sector’s recovery from the financial meltdown has shifted activity towards the suburban precincts of the city where significant IT supply is in the pipeline.

Key transactions in Mumbai in 1Q11 include the following:

  • Viacom leasing 125,000 sq ft (11,163 sqm) in Zion Business Park, SBD North;
  • Milestone Group purchasing 66,000 sq ft (6,132 sqm) in Patel Corporate Park, SBD North;
  • TPG Group leasing 12,000 sq ft (1,115 sqm) in Platina, SBD BKC;
  • Black Gold Holdings purchasing 25,000 sq ft (2,323 sqm) in Lodha Supremus (Worli Naka), SBD Central;
  • Geoffreys Fund leasing 11,000 sq ft (1,022 sqm) at Maker Maxity, SBD BKC

Supply
Five buildings in Mumbai’s prime micro-markets completed in 1Q11, adding 795,562 sq ft (73,910 sqm) of office space and bringing total operational stock in Mumbai’s prime micro-markets to 29.4 million sq ft (2.81 million sqm), with an overall vacancy level of 13.2%.

The major completions in Mumbai in 1Q11 included Urmi Estate (lower floors), which has a built-up area of 300,000 sq ft (27,871 sqm), located in Lower Parel; Supreme Chambers, which has a built-up area of 250,000 sq ft (23,226 sqm), located in Andheri (W); and Pranik Chambers, which has a built-up area of 120,000 sq ft (11,148 sqm), located in Andheri (E).

Asset Performance
As seen in 2H10, rental values in the premium micro-markets of the CBD and SBD BKC showed a marginal increase in 1Q11 due to the latent demand for office space in this micro-market. However, recent completions recorded in Mumbai’s SBD have only moderate pre-commitments, keeping rents range bound in select secondary districts of Mumbai.

12-Month Outlook
With rental values showing signs of improvement over the past three quarters, rents are expected to continue to rise in the near term. Improving confidence among office occupiers and investors on the back of India’s economic resurgence is expected to drive transaction volumes in 2011. However, with diverse supply conditions prevailing across different sub-markets in Mumbai, the rises in rentals and capital values are expected to vary according to location.

Mumbai: Prime Retail
Demand
Mumbai’s retail market continued to grow in terms of leasing and pre-leasing activities in 1Q11. Overall improvements in retail sentiment and better employment scenarios have caused demand for retail space in the city to rise steadily over the past few quarters. Total net absorption of 387,427 sq ft (35,993 sqm) was recorded in 1Q11 compared to 375,461 sq ft (34,882 sqm) in the previous quarter. Similar to 4Q10, the majority of the net absorption in 1Q11 came from the suburban micro-market. Most of the malls that completed in 2009 and 2010, and had higher vacancy rates witnessed leasing in 1Q11, contributing significantly to the net absorption in the quarter.

Major leasing transactions during 1Q11 included the following:

  • Reliance Hyper Market leasing 78,000 sq ft (7,246 sqm) in Market City Mall, Kurla, Suburbs;
  • KidZania leasing 75,000 sq ft (6,968 sqm) in R-City Mall Phase-II, Ghatkopar, Suburbs; and
  • Marks & Spencer leasing 22,000 sq ft (2,044 sqm) in Viva City Mall, Thane, Suburbs;

Supply
In 1Q11, the Dattani Square mall commenced operations in the Suburban micro-market of Mumbai City, adding 700,000 sq ft (65,032 sqm) and bringing the total operational mall space of the city to 14.33 million sq ft. With moderate net absorption and no new completions, the Prime South and Prime North micro-markets witnessed a marginal reduction in vacancy rates in 1Q11. Vacancy rates in the Prime South and Prime North micro-markets fell to 6.5% and 17.0%, respectively, in 1Q11, down from 6.6% and 17.3%, respectively, in the previous quarter. Due to the additional 700,000 sq ft of mall space, the vacancy rate in the Suburbs micro-market was 28.0% in 1Q11, up from 26.8% in 4Q10.

Asset Performance
Rental values across the micro-markets of Mumbai remained stable in 1Q11. However, capital values in the Prime South micro-market grew marginally during the quarter in line with rising interest in prime retail properties in the city. The Prime South and Prime North micro-markets recorded an average rent of INR 225 and INR 135 per sq ft per month, respectively; the Suburbs micro-market saw an average rent of INR 85 per sq ft per month in 1Q11.

12-Month Outlook
Mumbai is expected to witness about 4.8 million sq ft (448,258 sqm) of new operational mall space by end-2011 and 6.9 million sq ft (643, 354 sqm) by 2013. Major completions are expected to be Infiniti Mall at Malad, Suburbs; Viva City Mall at Thane, Suburbs; R-City Mall Phase II at Ghatkopar, Suburbs; and Magnet Mall at Bhandup, Suburbs.

With the limited future supply in the Prime micro-markets, rents are expected to rise in the near term. The Suburban micro-market is also expected to see an appreciation in rental values over the coming quarters limited to certain quality assets.

The author, Abhishek Kiran Gupta is Head – Research & REIS, Jones Lang LaSalle India

JLL update on Delhi real estate

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Delhi NCR real estate, Bangalore Real Estate, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyDelhi NCR: Grade A Office
Demand
The period ending 1Q11 witnessed moderate activity in the office market in the city. With CBD vacancy rates continuing to hover at around 1%, office transactions were limited to either small office queries or larger office spaces that were inevitably a churn in the existing stock. The SBD continued to corner demand for larger corporate office space thanks to its significantly higher stock and availability of such space. With good-quality office space fully occupied in the CBD, the scarcity coupled with the SBD maintaining its affordability in comparison to the CBD, office demand continued to be diverted to the SBD, particularly the Saket and Jasola Business Districts, both of which have considerable, good-quality vacant space and continue to be preferred by occupiers. The suburban micro-markets of Gurgaon and Noida were at the forefront of the leasing activity seen in Delhi NCR and continued to witness a strong and consistent level of demand for office space in 1Q11.

Overall Delhi NCR witnessed a net absorption of 1.63 million sq ft (151,755 sqm) in 1Q11.The CBD again witnessed negligible leasing activity in 1Q11, and the net absorption was nil. Vacancy remained stagnant at 1.1% in 1Q11. The SBD witnessed moderate leasing activity, with net absorption recorded at 90,000 sq ft (8,362 sqm). As a result, vacancy levels dropped to 14.6% in 1Q11, down from 16.0% in 4Q10. Overall, vacancy in Delhi’s CBD and SBD together fell to 10.1% in 1Q11 from the 11.4% recorded in 4Q10, with the SBD contributing all absorption recorded in the quarter.

Key transactions in the prime city recorded in 1Q11 included:

  • Science and Engineering Research Board, leasing 26,584 sq ft (2,469 sqm) at Vasant Square in the Vasant Kunj precinct in the SBD; and
  • Ricoh, leasing 26,000 sq ft (2,415.5 sqm) at Salcon Aurum in Jasola Business District in the SBD.

Supply
No new supply addition was recorded in either the CBD or the SBD in 1Q11. Commercial stock numbers remained unchanged at 2.13 million sq ft for the CBD, while SBD stock remained at 4.8 million sq ft.

Asset Performance
A buoyant and positive business sentiment pervades the city, with most companies firming up expansion plans or executing real estate growth plans as the economy is on an upswing with good performances seen across industry sectors. The lack of vacancy in the CBD led to negligible leasing activity, with transactions limited to only churn in existing stock. However, rents rose slightly to Rs.230 per sq ft per month at the end of 1Q11 on the back of low availability and higher demand. Grade A office rents rose to Rs.230-275 per sq ft per month. The SBD witnessed stagnant rents this quarter as the double-digit vacancy levels ensured that occupiers had more choices and, consequently, more negotiating space. Rents remained stable at Rs.145 per sq ft per month in line with the trend towards rent stabilisation and firming up seen in the previous two quarters.

12-Month Outlook
With rents moving up slowly in the CBD and remaining stable in the SBD in 1Q11, both these markets are slowly but surely on the rise, leaving the market trough behind them. Landlords have started to take advantage of low availability in the CBD to increase rents as the CBD is witnessing an active churn to the stock, while the SBD leasing market will continue to remain robust and witness moderate to good absorption. Occupiers will look to lock in spaces as rents are all set to see an incremental growth in 2011, with vacancy rates expected to drop over the year.

Delhi: Prime Retail
Demand
Buoyed by good economic growth and a revival in business confidence, both large and small segment retailers have begun executing their strategies with a renewed vigour after a prolonged spell of low footfalls and reduced retail sales. Caution is, however, still the buzzword as retailers have strategically restricted their expansion to only key popular retail projects or new ones, limited to those that offer good design, branding and the potential for a higher footfall to sales conversion ratio.

The vacancy rate across all micro-markets rose to 29.1% in 1Q11, up from 26.1% in 4Q10. Net absorption recorded in the NCR retail market was 622,001 sq ft (57,786 sqm) compared to 201,576 sq ft (18,727 sqm) observed in the previous quarter. The level of absorption rose appreciably as one of a total of six completions recorded this quarter became operational with a nearly 90% occupancy level. This was in line with the pre-leasing activity observed in upcoming retail projects in previous quarters, when retailers were looking to lock in rents at lower levels while the project was still under construction.

Supply
The Delhi NCR retail market witnessed six mall completions in 1Q11, with three in the suburbs, two in Prime Others and one in the Prime South sub-market. The operational malls in the suburbs include Ninex City Mart, a 350,000 sq ft (32,516 sqm) development on Sohna Road by the Ninex Group; DLF South Point Mall, a 300,000 sq ft (27,871 sqm) development on Golf Course Road; and R Mall by the Raheja Group, a 152,500 sq ft (14,168 sqm) development on Sohna Road. Pacific Mall, a 450,000 sq ft (41,806 sqm) development, and DLF Galleria, covering 150,000 sq ft (13,936 sqm), became operational in the Prime Others micro-market. Prime South saw the completion of the delayed DLF South Court, which is a 250,000 sq ft (23,226 sqm) development. Most of these malls became operational with occupancy levels in the range of 7-10%; Pacific Mall was the highlight, which commenced operations with occupancy of nearly 90%.

Asset Performance
Overall rents rose slightly to reach Rs.128 per sq ft per month in 1Q11 from Rs.127 per sq ft per month in 4Q10. The Prime South micro-market witnessed rise in rental values this quarter mainly due to high occupancy in good quality assets where landlords have started to test the price elasticity. The remaining micro-markets continued to be stable, although leasing activity was limited to only Prime South and one retail project in Prime Others. This resulted in a slightly better absorption figure that does not, however, translate into an overall market increment, but only retains stability in the retail segment. Prime Delhi rents moved up and ranged between Rs.210 and Rs.260 per sq ft per month.

12-Month Outlook
The next 12-month period is expected to continue the trend observed over the past 2-3 quarters, namely an increase in tenant queries and lease transactions by retailers. However, only projects boasting a good location coupled with an experienced developer profile, a professional mall management team following a lease-only model and active tenant mix management will attract retailers. Retailers will continue to engage developers/landlords in active negotiating tactics, with each aiming to achieve favourable lease terms. Prime South will continue on its upward surge in rents, while the Prime Others and the Suburbs markets are expected to witness two-directional (increase and downturn) price movements at an asset level.

The author, Abhishek Kiran Gupta, is Head – Research & REIS, Jones Lang LaSalle India