Tag Archives: NRI investment in India

NRI investment pattern changing in real estate

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Bottom Line: NRI homebuyers are getting more and more realistic in the housing market of India.

NRI, Non Resident Indians, Indian Diaspora, PIO,  Persons of Indian Origin, NRI investment in India, NRI investment in real estate, NRI investment in property market, NRI investment pattern, Where are NRIs investing, India real estate news, Real estate news India, Indian realty news, Indian property market, Track2Realty, Track2Media Research When Alka Rajpurohit, an NRI from Dubai told the local property agent in Delhi-NCR that she would like to sell their luxury apartment in Gurgaon and instead wants to buy a premium apartment in Noida, the broker was surprised. However, this has not been first such request and the broker soon realized that the market dynamics of NRI investment into the Indian property is changing.

From NRI investors and speculators to future end user buyers, the NRI investment pattern has taken a tectonic shift. Moreover, no one is nowadays investing into ultra luxury property or saturated locations. Mid-segment apartment in relatively affordable markets are very much in demand.

Take the case of Arjun Parihar, an NRI from Boston who is now returning to India and has already invested in a mid-segment apartment in Ghaziabad. Though a native of Ghaziabad, his choice is governed by the economic fundamentals than nostalgia of home city.

“People think we make lots of disposable money, but life is not that easy for us in foreign countries. And if I invest in a plush luxurious apartment, then my finances will not allow me to start my business here. What will I do with luxury apartment but no source of livelihood,” says Parihar.

NRI realities

95% NRIs are employees & wage earners and can’t afford luxury property in India

Rich NRIs have burnt their fingers or learnt with experience of peer group to avoid luxury

Small ticket investment gives better exit option & rental returns

Job insecurity globally forcing NRIs to be realistic in housing investment back home

As per the data available with Track2Realty, the Malayalese and other South Indian NRIs are nowadays investing into Kochi and Coimbatore than Bangalore or Chennai. Gujarati NRIs are investing into Ahmedabad and Vadodara than Mumbai. Mumbai-born NRIs are investing into Pune and Nashik than Mumbai. North Indian NRIs are investing into Noida and Ghaziabad than Gurgaon. One common thread into all these investments is scaling down of property segment – from ultra luxury to mid-segment and premium housing.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group agrees that nowadays in majority of the cases the clients who buy luxury and super luxury properties are end users. Every end user does not have budget to invest in luxury or super luxury property developments.

“Self employed segment of NRIs are more focused to have investment portfolio of different projects instead of putting money in large size developments. They plan to divide their money among various small ticket size projects where they can sell easily if they want to or they can fetch good amount of rentals from various investments done,” says Hateria.

Manju Yagnik, Vice Chairperson, Nahar Group points out that there has been a trend among the NRI community to invest in the Rs. 60 lakh to Rs. 2 crore in properties depending on their social strata, as this looks to be an attractive and safer option to invest. Most of the affordable luxury housing projects are found in this price bracket in metro cities like Mumbai with high appreciation in long run. Currently the NRIs prefer not to take a risk by investing in super high-ticket size projects, as market is not as buoyant in this segment.

“NRIs also like to keep the option of exiting open based on the movement of the global economy. A project with large ticket size comparatively takes longer time to liquidate, if required in future. NRIs over the years have been investing in property, but mainly across metro cities of the country as it ensure them the lifestyle they are used to and appreciation value and healthy returns,” says Yagnik.

Does it mean that the luxury and ultra luxury properties will no longer attract the NRIs? The opinion is divided among the analysts but everyone would like to agree that the days of speculation driven investment is over. Many of the NRIs who had invested into some of the most luxurious properties in Gurgaon, Mumbai or Bangalore are today stuck up.

Contrary to the myth, all the NRIs are not necessarily rolling into big money. The fact of the matter is that 95 per cent of the NRIs are employees and wage earners.

A survey conducted by Pravasi Bandhu Welfare Trust, a Dubai-based non-governmental organisation working for bettering the lives of Indian workers in GCC countries, finds that a whopping 95 per cent of NRIs in the Gulf do not save anything and return empty handed to India even after working for a decade. Only 5 per cent of the Indian labour force including the white collared manages to have some decent saving.

The study finds that only 10 per cent of Indian workers in GCC nations live with families, a majority of them fail to save sufficient money due to low wages and high cost of living.

Obviously, all NRIs are not super rich, and those who are have either burnt their fingers with ultra luxury or have learnt from the mistakes of their peer group. And hence, the NRI housing demand nowadays reflect the grounded realism; something that augurs well for the housing market as well since the speculative NRI buying is over and end-user market is fast evolving. 

By: Ravi Sinha

NRI professionals still bullish on Bangalore

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Bottom Line: There are certain inherent magnetic forces that attract NRI professionals to Bangalore property market.

Bangalore City, Bangalore real estate market, India real estate news, Indian property market, NRI investment in Bangalore, Housing demand in silicon valley, Track2RealtyStatistics only tell half the truth when not corroborated with the overall reality. This is all the more true with the investment trends of the property market. Some of the recent NRI investment into the Indian property market justifies this theory. For example:

  • NRIs investment is shifting to Coimbatore and Kochi from Bangalore
  • Lower ticket size of Coimbatore and Kochi makes it more attractive destination than Bangalore 

However, this trend neither is just Bangalore specific; nor does it tell the comprehensive story. For example, in Delhi-NCR also, the NRI investment is shifting from luxury destination of Gurgaon to Noida. In the West, the NRI investment is shifting from Mumbai to Pune.

Does it mean that the leading cities like Bangalore are losing out to the emerging destination like Coimbatore and Kochi? “Not really,” maintains Nikhil Hawelia, Managing Director of Hawelia Group. According to him, this is not a Bangalore-specific trend but needs to be looked at the pan-India level which could answer as to why Bangalore is giving the impression of losing out in public perception.

“Among the NRIs we need to classify the difference between the retiring NRIs coming back to India and the professional NRIs who are shifting their bases back to the country of origin. Majority of the NRIs home-buyers today are professionals and they are still bullish on the traditional business destinations like Bangalore, Gurgaon or Mumbai. But the retiring NRIs are opting for Coimbatore, Noida or Pune for lower ticket size, cost of living, better climatic conditions or nostalgia of home towns,” explains Hawelia.

Manju Yagnik, Vice Chairperson, Nahar Group agrees that Bangalore is still top choice for the NRIs despite infrastructure bottlenecks. The major factor that attracts NRIs to invest in Bangalore is the booming IT sector, which is considered to be having the largest concentration of leading IT and ITeS companies.

“The infrastructure development in Karnataka including Bengaluru and other cities has 44 new projects in urban development worth Rs. 90,000 crores. Flyover and underpass projects including elevated roadways for Bengaluru will be worth Rs. 20,000 crores. The growing number of such IT/ITeS companies in Bangalore provide good job opportunities to NRIs who plan to settle down in India. Moreover, exponential growth in infrastructure and real estate sector also contributes positively towards influencing NRIs to invest in the property market,” says Yagnik.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group maintains that Bangalore has been the fastest-growing city of India since the past few decades. IT has been the major growth driver and is responsible for aggressive real estate development in the city. Being the IT hub of India, Bangalore has a multi-cultural population with good social infrastructure, excellent educational institutes and constantly upgrading physical infrastructure.

Bangalore has become a hub for NRIs & HNIs. Bangalore has a large base of expatriates who live in the city and working abroad, families of these residents are well travelled, cultured and have sophisticated tastes. Growth in the IT Industry and a rapidly increasing number of High Net-Worth Individuals and movement of expatriates has brought Bangalore real estate in to prime focus for NRIs,” says Hateria. 

Advantage Bangalore

Bangalore Number One choice of NRIs

NRI professionals still bullish over Bangalore for shifting into India

IT/ITeS professionals major chunk of NRIs settling in Bangalore

Only retiring NRIs opting for alternate locations

It is true that the majority of the NRIs are IT professionals who want the kind of professionalism and transparency that they are used to in the developed countries. That is also the reason why the demand for office space is in Bangalore for exceeds the national average.

Another critical factor in favour of Bangalore attracting the NRI buyers is the cost of housing. Decent houses in the Bangalore property market is today selling at 6,000 rupees per square feet, which would cost no less than 17,000 to 18,000 thousand rupees per square feet in other traditional business destinations for NRIs, like Mumbai or Gurgaon.

A high number of NRIs techies who are abroad currently are attracted to Bangalore, as they are sure to find a job on their return to India. Of late, State Cabinet has cleared 7300 crores action plan to be implemented over the next two years. The Karnataka Government has proposed infrastructure improvements at various locations like Peripheral Ring Road, Metro Rail, Signal Free ORR, High Speed Rail Link, Mono Rail, and Elevated Expressway.

Thus, while the retiring NRIs might be buying properties in Coimbatore or Kochi for lower ticket size, cost of living, better climatic conditions or simple by merit of the city being the home town, it does not reflect the large-scale trend. As a matter of fact, for the majority of the NRIs in general and the NRI techies in particular, Bangalore still stands as the Number One choice to buy a property and settle in the city.

By: Ravi Sinha

Sobha launches luxurious Sobha City in Delhi-NCR

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News Point: will launch its first luxury apartment project, Sobha City in Delhi-NCR tomorrow, Wednesday, June 29th, 2016.

Sobha City Delhi-NCR, Sobha Limited, JC Sharma, PNC Menon, Ravi Menon, Luxury real estate in Delhi-NCR, India real estate news, Indian property market news, NRI investment in India, Track2Realty, Home search  Sobha City is one of the largest group housing projects in Gurgaon which will offer best-in-class living experience to the customers. Located in sector 108 of Gurgaon, the project is much sought-after due to its close proximity to Delhi and Indira Gandhi International Airport.

Sprawled over 39 acres, Sobha City comprises of 1700 apartments across 22 towers with four units on each floor. The project offers 2BHK and 3BHK apartments that range from 1380 sq. ft. to 2342 sq. ft. Each unit is functionally planned with well-designed layouts and optimally-sized living spaces. With 85 percent open spaces, it offers an abundance of amenities along with magnificent view of the surroundings.

Speaking on the eve of the occasion, , VC & MD, Sobha Limited, said: “Over the years, Gurgaon has developed and transformed into a leading financial and industrial hub in India. It not only boasts a presence of over 250 Fortune 500 companies, but also caters to a population having third highest per capita income in the country. This has augmented the demand for luxury homes that meets the aspirations of people in the Delhi-NCR region. Additionally, Gurgaon being one of the fastest growing realty markets, offers high capital appreciation, making it a lucrative investment option. Sobha City, aims to fulfil the desires of quality conscious and value discerning customers. More importantly, the project underscores promise of international quality luxury, style and comfortable living.”

Jagadish Nangineni, Regional Head – NCR, Sobha Limited said, “Sobha City, Gurgaon is the first luxury apartment project from the house of Sobha. With this launch, we will have a product mix that will offer homes of all sizes in NCR region – 2 & 3 BHK apartments in Sobha City and villas at International City. Sobha City has been meticulously planned keeping customer’s core requirements in mind for a luxurious community living – both in terms of the apartment and amenities. These apartments are designed with a good balance of functionality, aesthetics and luxury. The amenities are the best in class – open grounds, parks, large water bodies and two clubhouses. Sobha City is going to be a landmark community development owing to its scale of development, shape of the land and location which is on the edge of Delhi.”

The common amenities at Sobha City include a large cricket ground having 45m radius, a lakelet, two oval club houses measuring 40,000 sq.ft with multipurpose halls, cafe, entertainment room, children’s play area, library and cards room.

In addition, it also offers multiple lawns and parks, specially designed camping grounds, paved pathways, swimming pool, cricket stadium, green landscaped outfield with more than a kilometre long walking and biking trail, designer landscaped greens and other amenities that match the pace and standard of living of today’s smart customers.

43-54 billion REIT eligible commercial property in India

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News Point: With 315 MSF office and 39 MSF mall stocks, value of REIT-eligible stock seen to be highest in Bengaluru, followed by Mumbai. Bengaluru, Mumbai and Delhi-NCR cumulatively account for over 67% of total REIT-eligible stock

Office space in India, Office space absorption, Commercial real estate in India, Commercial property trends, Indian real estate market, Indian property market, India office market report, Real estate news magazine, Real estate news portal, Real estate website, Track2Media Research Pvt Ltd, Track2Realty, NRI investment in IndiaIndian commercial real estate offers investment opportunity worth USD 43 – 54 billion (Rs. 2,88,758 crore-Rs. 3,60,948 crore) across the top 8 cities via REIT-eligible ready stocks as per and report entitled “Commercial Real Estate: Steering Growth in Indian Cities”.

The report was released at RICS Real Estate Conference 2016 – “Commercial Real Estate: Corporate Catalyst” with Cushman & Wakefield as research partners for the conference. A key focus of the conference discussions was evolving occupier demand, REITs and international standards.

The report estimates that the value of REIT-eligible stock is seen to be the highest in Bengaluru (USD 15.8 billion)/Rs. 1,05,213 crore) primarily due to the high volume of investible Grade developments. Mumbai (USD 14.5 billion/Rs. 96,461 crore) comes a close second due to higher capital values of commercial properties, despite having roughly half of Bengaluru’s REIT-able stock.

The estimated value of REIT –eligible stock in NCR is USD 11.04 billion / Rs. 73,423 crores which is the third highest. Further, it is estimated that approximately 315 million square feet (msf) of office inventory is eligible for REIT across the cities. The REIT-eligible inventory includes existing non-strata sold Grade A inventory, wherein Bengaluru, Mumbai and Delhi-NCR cumulatively account for over 67%. 

Delivering the keynote address, Barnali Mukherjee, Chief General Manager, Securities and Exchange Board of India (SEBI), said, “We have come out with the IPO guidelines for the issuance of units of INVits. On same lines, we are working on the IPO guidelines for units of REITs. Since there are no accounting standards for REITs and INVits, we have set up sub-committees looking at the financials to be brought out with the offer documents as also the continuous disclosure to be made; also set up a sub-committee for issuance of valuations, who will come out with their report. On the valuations side, a separate chapter has been included in REIT regulations where lots of rights and responsibilities have been given to the valuer who has to comply with International Valuation Standards.”

“We have already received 4 applications for infrastructure investment trusts (INVits), where two applications have been processed and two are registered. We have come out with amendments on REIT regulations to bring more clarity and make it more acceptable but as of now, we haven’t received any applications for REITs. Whatever SEBI could do has already been done, in terms of removing key roadblocks such as capital gains tax and DDT and now we are looking forward to applications for REITs so that the REIT market can take off,” she added.

Sachin Sandhir, Global Managing Director – Emerging Business, RICS said “Commercial real estate is expected to see continued demand, fueled by positive business sentiment (especially in IT/ITES and new age digital businesses) based on major policy reforms undertaken by the Government. There is also likely to be considerable international investor interest in income yielding assets and the first REITs and INVits are not far away. REITs will drive the need for Indian commercial real estate to speak the language of international investors which, in turn will create demand international standards and corporate governance; professionalism and skills – which are all the things that the RICS Stands for.”

Sanjay Dutt, Managing Director, India, Cushman & Wakefield said, “REITs can provide a huge opportunity for developers and investors in India given the potential in the . REITs would help developers resolve their fund-raising issues and allow them to focus on completing their projects in a timely manner. Apart from the top 3 cities, Chennai and Pune have immense scope for REITs with approximately 34 MSF each of REITS-eligible stock. Going forward, by the end of 2017, Hyderabad’s REIT-able stock is expected to reach approximately 41 MSF. This would place Hyderabad’s REIT-able stock at 4th place, surpassing that of Chennai and Pune. With investor and occupier interests rising in Hyderabad, a high number of Grade A projects are likely to be completed enabling high REIT-able stock.”

Apart from the office sector, the retail sector too has high potential to generate rental income for investors. Since last year, private-equity firms have shown interest in investing in malls in India, indicating that there is acertain attractiveness in the retail shopping centre space owing to future prospects.

Sachin Sandhir further added, “RICS will continue to work to promote International Property Measurement Standards (IPMS) a global collaborative initiative with 70 global professional bodies, which will bring in a common basis of measuring assets. RICS is also advocating International valuation standards (IVS) and the RICS red book as a basis for valuations of these REIT-able assets. With a common basis of measurement and a common basis of valuations and skilled professionals to undertake delivery of grade A office space coupled with ease of doing business initiatives of the Government, Indian commercial real estate will surely realize its true potential.”

Devina Ghildial, Managing Director – South Asia, RICS said – “2016 looks to be a bright spark for commercial real estate. The asset class looks to be on solid footing with all the policy reforms and initiatives from the Government. The industry will see the emergence of not only REIT’s and INVits but new asset classes including new suburban business districts which will propel commercial real estate to produce a lot more grade A office space in the times to come. In fact, in Q1 2016 alone, the market has seen absorption to the tune of approximately 5 MSF.

“Going forward, we will also see corporate occupiers and investors starting to demand international standards and focus on creating sustainable assets, which will create long term value for international investors in the form of higher yields. This would be a key expectation from the development community. Now more than ever, the potential of commercial real estate is apparent, and this makes it an opportune time for REITs to find their way into the market,” she added.

Of the REIT-eligible stock across the 8 cities, Bengaluru has over 100 MSF of REIT-eligible stock (33% of total REIT-able stock), more than double of that of Mumbai. Approximately 75% of the total (all grades) office stock in Bengaluru is eligible for REIT investments. Delhi-NCR (56 MSF) and Mumbai (51 MSF) are expected to follow Bengaluru in terms of REIT-able stock as of Q1 2016.

REITs once implemented in India would enable investors to generate a stable source of income and also earn profits by trading the units of REITs, thereby increasing the attractiveness of REITs as investing medium. With the government exempting Dividend Distribution Tax (DDT) for Special Purpose Vehicle (SPV) of REITS in the Union Budget, the investment vehicle is likely to be more attractive for investors.

Mall stock of 39 MSF eligible for REIT investment in India

The top 8 cities have REIT-eligible mall supply of approximately 39 MSF, with Bengaluru, Delhi-NCR and Mumbai together accounting for about 64% of the retail inventory. Owing to the presence of large mall developers in Delhi-NCR, Mumbai and Bengaluru that operate some of the best malls in India, investors are likely to concentrate their investments in these cities. Mumbai (11 MSF) has the highest stock of REIT-able malls i.e. non-strata sold grade A malls followed by Delhi NCR (7.4 MSF) and Bengaluru (6.5 MSF).

Homebuyer in an age of GST

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Impact of GST on real estate in general and homebuyers in particular is not clear yet.

GST, Goods & Services Tax, Impact of GST on homebuyers, Track2Realty, India real estate news, Indian property market, NRI investment in India“GST might be helping the builders to avoid double or triple taxation and their cost of construction & operation might come down, but how will it help me when buying a house,” questions an inquisitive homebuyer in one of the financial planning seminars at Delhi. “Even though I assume that today I am paying for the builders’ 5 per cent payment of VAT over construction material and 3.5 per cent Service tax, my tax structure is still lower than what is being proposed in the GST – a minimum of 18 per cent tax.”

This homebuyer is not alone in carrying this confusion with the proposed GST (Goods and Services tax). The real estate industry is indeed plagued by the uncertainty as far as the impact of GST over the sector is concerned. As a matter of fact, many within the built environment are even asking as to how it will simplify or reduce the tax burden if the dual model of GST, as proposed by the empowered committee, is implemented.

In the dual model of GST there will be Central GST, levied by the Centre with Excise Duty, Surcharge and Cess, Service Tax etc, and State GST, levied by the states with VAT, Entertainment Tax, Luxury Tax, Tax on Lottery, Entry Tax, Cess and Surcharge etc.

The nature of real estate business is such that both the Central GST and State GST will fall into its ambit. There is hence apprehension within the built environment that whether GST is indeed the solution to a business that has complex structures and issues.

For example, there is no clarity over the key issues like transfer of development rights in land, taxability of joint development agreements, taxable value for goods and services, etc. It is hence questioned as to how the GST will simplify the indirect taxation with real estate sector.

While it is expected that immovable property transaction, which means transfer by way of sale of immovable property after completion, would continue to be outside the purview of GST and be liable only to applicable stamp duties, the proposed shift to the GST regime does not seem to be as clear of uncertainties as it is being suggested.

As things stand, in real estate there are two primary levies today – Service tax and VAT. There, of course, is overlap of tax base and constant disputes on the rate of tax, given the multiple options available for discharge of taxes across States. This has resulted in diverse practices being followed by developers, across the states and even within the same micro markets.

If the GST regime proposes to put to rest these uncertainties and ambiguities then the taxes paid by the homebuyers across the country should be more or less be the same.

Rikki Sahni, tax consultant, agrees that the GST impact on real estate market is somewhat uncertain right now. However, the chances are that if any rate over 15 per cent applies for material & services, the prices may increase marginally. This must be viewed with a long-term impact, as GST shall be beneficial overall for the real estate industry.

“An industry which contributes massive numbers to the Indian GDP will benefit from the GST because it will help create homogeneity as well as standardisation. There are two different parts which impact developers. A major issue is how land is valued. A lot will depend on land deductibility in GST. Moreover, if CENVAT credit of construction is set-off, it may benefit commercial developers. So, a lot of clarity is still needed,” says Sahni.

A candid Nikhil Hawelia, Managing Director of Hawelia Group says there are two aspects of GST impact on the real estate – the developers and the homebuyers. According to him, the GST regime will definitely be a great help to the sector in the long term but its immediate impact on the homebuyers is still not clear.

“For the developers the total quantum of tax may or may not increase, depending on the land purchase being measured as a major source of input cost. Even if it increases a bit, the same will at least bring clarity against the multiple layers of taxation. The homebuyers nevertheless may end up paying more in terms of taxation as one is so far exempted from the overall tax burden being passed on by the developers,” says Hawelia.

Most of the financial analysts agree that the GST is all set to increase the home prices, even if the GST is not directly charged from the homebuyers. The reason being that any additional tax burden to the developers, which is highly likely if land as input cost is not deductible, will be passed on to the homebuyers in the form of sale price. The common grouse of the developers would be increase in the input cost that includes taxation part.


The changing phase of workplace utilization in India

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Office space in India, Office space absorption, Commercial real estate in India, Commercial property trends, Indian real estate market, Indian property market, India office market report, Real estate news magazine, Real estate news portal, Real estate website, Track2Media Research Pvt Ltd, Track2Realty, NRI investment in IndiaThe IT/ITeS sector has clearly been driving corporate real estate in the country; and consequently, much of the development in this space is being propelled by IT and back-office demand for workspaces, as per CBRE’s India report – Real Estate & Workplace Strategies of Shared Services Occupiers.

The report focuses on the remarkable growth of the outsourcing and technology industry over the last two decades; and how the sector has been implementing strategies for managing their real estate portfolios.

India’s status as a global outsourcing hub is also reflected by the fact that approximately 90% of total office space occupied in 2014 and during the first nine months of 2015 was for either back-offices or a combination of back and front-office operations of companies.

As shared services occupiers respond to the forces of globalization amid a backdrop of economic uncertainty and focus on cost optimization, their real estate portfolio strategies have varied.

Anshuman Magazine, Chairman & MD, CBRE South Asia said, “For most global corporate office occupiers setting up a shared services platform in the country, space take up strategies are tied with their overall corporate strategies. As such, parameters like space utilization, efficiency and productivity play a large role in revising real estate strategies. Going forward I believe that these larger aspects will dictate how global corporates expand their offices across key cities in the country.”

“While India remains the preferred destination for outsourcing, corporate occupiers have been growing in suburban and peripheral locations in the major Tier I cities. The emphasis on quality infrastructure, mass transit and rentals continues to play a key role in decision making,” said Ram Chandnani, Managing Director, Transaction Services, CBRE South Asia Pvt. Ltd.

Organizations are now under enormous pressure to drive down costs by increasing their workplace ‘static density’—the space per sq. ft. per workstation. Benchmarking metrics such as workplace density and space utilization are becoming more critical in helping corporate occupiers make informed workplace and real estate decisions, and manage their real estate as a strategic asset; however, this needs to be approached in the right way.

Focus on workspace density

Workspace density can be broadly classified into ‘static’ or ‘dynamic’ types. In a static density model, employees are assigned a fixed workspace as a primary work station. The dynamic density model allows staff to work flexibly by choosing different places to work around the office.

Static density across companies is based on factors such as the location of the office (e.g., whether an office is in a core or suburban area), size of operations, the use of space as reward (e.g., senior staff are often allocated larger spaces), whether it is a private or public sector company, and the nature of work (e.g., employees in the financial sector often have specialized spaces and work desks).

Space and Technology: Workspaces are getting smaller, and documentation is increasingly moving online, limiting storage needs. While the increased focus on effective space utilization has given birth to the concept of workplace strategy, technology is playing a pivotal role in successful implementation.

Space Utilization: Workplace strategy involves creating a healthy relationship between technology, space and people. However, space utilization has the most significant impact on commercial real estate dynamics. Firms have to accommodate growing headcounts amid a steady increase in real estate costs, which is a challenge in the cost-sensitive and high-headcount outsourcing industry.

Emerging workplace trends in India

Office space design has gradually moved from a rigid floor plan to one facilitating an open plan seating arrangement. Over the past decade or so, the share of cubicle spaces in the overall floor plan of a typical office has fallen from 23–25% to just 5% today. On the other hand, open plan seating, which comprised around 25% of the floor plan in the past, has increased to 45–50% today.

The share of open floor seating arrangements often varies across different floor plate sizes. For larger office spaces, companies have the flexibility to further increase the size of the area allocated to open plan seating while doing away with corner offices and limiting the space allocated for meeting rooms and circulation

“Corporate occupiers must develop a complete understanding of how their people work, and what their organizational objectives and imperatives are. It is only by aligning these two fundamental perspectives that companies can implement a workplace strategy capable of achieving cost effective business transformation,” Magazine added.

Justice delayed and denied

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Track2Realty Exclusive

Project delay, construction delay, Homebuyers' grievances, Builders' negligence, Housing delay & default, Consumer activism in India, NRI investment in India, Track2Media Research, Track2RealtyOne-sided builder-buyer contract, late delivery of the possession and poor quality of construction is an accepted reality in the Indian real estate. A prominent developer in Noida Extension is reportedly forcing its buyers to sign the modified apartment buyer contracts with extended possession date and reduced penalty for delay in handing over the apartments. “Otherwise, we are ready and willing to refund the entire booking amount along with 11 per cent interest, without any deductions,” says the forwarding of the letter sent to the buyers.

Builders often force homebuyers to sign standard contracts with clauses that stipulate them to pay 15-18 per cent (per annum) as penalty for late payment. The builders themselves agree to pay only Rs 5-10 per month per sq ft for late delivery, irrespective of the price of the apartments. The fiscal implications of the delay and the opportunity cost los by the buyers go unnoticed in this financial juggler of the developers.

Buyers are asked to sign the contracts when the builders have already received 10-20 per cent of the price of the apartment. The agreement typically says that the “booking is provisional and in case of cancellation, the builder will retain the earnest money i.e. 10 per cent of the basic price and refund the balance with nominal interest.”

By that time, builders artificially hike the apartment price by 5-10 per cent in connivance with brokers to jack up the notional loss to the buyers who (not satisfied with the terms of the agreement) may think of cancelling the booking. Obviously, no buyers dare to question for fear of losing the earnest money and capital gain. These horrifying stories are just the tip of the iceberg. The ground reality of real estate sector in India, from a consumer perspective is harsh. And that is a gross understatement.

When one of our readers, Rakesh Dhall wrote in to us complaining that his builder is asking for a ridiculous price for parking space even after having a deal of super built up area or saleable area, we decided to dig into the issue. What our research revealed that this illegal practice has been struck down by the Supreme Court in a 2010 verdict where it was clearly held that any open spaces usable as parking cannot be sold separately as they are common areas. Ironically, despite the verdict, as Dhall’s experience clearly shows, this practice has not subsided at all, with harrowed consumers across the country forced to pay exorbitantly for what is rightfully theirs.

One of the most commonly reported issues, with innumerable consumer forum verdicts against it—delay in handing over the possession of the houses continues to be the proverbial thorn in real estate consumers’ lives. The wait for the consumer can sometimes be as long as 7-10 years. It is illegal and the consumer forums across country have been relentlessly taking a stance against such delays, the most recent one being a verdict by a Mumbai consumer forum where it penalised builder for delay in handover of flats. But the vicious cycle refuses to break, being repeated by some other builder, in some other place.

A Track2Realty Survey earlier says that eight out of every ten home buyers in India are sulking. And no big guessing game here to understand the wide chasm between the promised and the delivered. Consumers across the country are cribbing about the layout and designs being different from what was promised or shown in the catalogue. What is worst is when this habit of denying the promised extends to denial of basic amenities, leaving a bunch of frustrated consumers in its wake- with houses that leak, doors that creak and windows that rattle.

One of the Mumbai-based developers with financial services in its portfolio launched an affordable housing project in Lower Parel, Mumbai during the downturn of 2008. The buyers were promised finance b the same group through its financial services. But with market picking up by the end of 2011, the developer simply sent a notice to all the buyers to deposit the remaining payment within a period of one week or else their booking would be cancelled.

With the financial division of the company refusing to finance, the developer unanimously got the refund deposited in the accounts of the buyers, since the intention now was to scrap he affordable project for a high end apartment. There are even complaints when a consumer whose builder obliged and refunded the entire amount with interest in the wake of project getting delayed. However, the refund was in the form of a cheque that eventually bounced.

Denying electricity and water supply is a fairly regular practice for the builders. The consumers are forced to pull strings, pay money and resort to all sorts of tactics to ensure they get two basic facilities. The developers mostly get away with it and there are only few cases like the Thane Consumer Forum ha sentenced a builder to two years of imprisonment along with fine for denying a building water and electricity supply.

Is not it a case of a sector where justice is not just delayed but denied? Well, Track2Realty thinks so.

Office space strong catalyst to housing revival in Mumbai

Posted on by Track2Realty

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Office space in India, Office space absorption, Commercial real estate in India, Commercial property trends, Indian real estate market, Indian property market, India office market report, Real estate news magazine, Real estate news portal, Real estate website, Track2Media Research Pvt Ltd, Track2Realty, NRI investment in India In the evaluation of sustainability of a housing market, the absorption of office space is the prime indicator across the world. After all, it is the economic activity and the job magnet that fuels the demand for new houses. The city of Mumbai has always been blessed on that count due to demand and supply dynamics.

As a matter of fact, in Mumbai the stock of housing supply has been so less compared to the inherent demand that the city happens to be arguably the only city in the world where the best of residential properties are selling at higher price than the best of commercial spaces.

The slowdown and the resultant slow sales, of late, nevertheless started giving an impression of over-supply in the under-supplied housing market of Mumbai. However, the financial capital of India has time and again proved the prophets of doomsday wrong with its property market proving to be more resilient than any other market.

And hence, market analysts are not surprised with the fact that the dynamics is yet again changing and the office space absorption pattern has already indicated that the revival of Mumbai housing market is on the cards.

Facts speak for themselves. As per a report by Colliers International, the commercial capital of India registered a record over 2.93 million sq feet of office space absorption in April-June quarter this year, its best performance since January-March 2013.

It has also outperformed many other traditional cities known for high business activity, of late. More importantly, there are multiple demand drivers ranging from Banking, Financial Services & Insurance (FSI), IT/ITeS, Manufacturing, Pharmaceutical, Media & Entertainment sector that are bullish on the city. These are the sectors who are at the forefront of high occupancy across the city.

Does it sound like more job creation & economic activity ahead? Doesn’t it sound like more housing demand? Analysts tracking the city property market maintain the fundamentals are heavily loaded in favour of housing demand ahead. The developers also believe it is a matter of one more quarter and the sales figure during the festive season would give an altogether different statistics as far as housing absorption is concerned.

Brotin Banerjee, MD & CEO of Tata Housing agrees that there has been a revival in the fortunes of office space in Mumbai as the city has registered absorption of 2.93 million sq feet with industries like BFSI, IT/ITeS, Manufacturing, Pharma taking over office spaces in the city.  It is currently in sharp contrast to the residential real estate market which is witnessing lower absorption rates. However if commercial sales are to go by, this impetus is directly proportionate to the demand for residential developments.

“With the festival season around the corner in Mumbai, we are expecting an upswing in the property transactions as people prefer buying houses due to the auspiciousness of time. The real estate landscape in Mumbai has reached a plateau but with slew of measures like relaxation in the FDI norms followed by the interest rate cuts and the facilitation of REITs by Government of India and endeavors to introduce clarity through the ‘Real Estate Regulatory Bill’ will help to foster the comeback of housing market in Mumbai region. With festival seasons due to start from September, we are sanguine about the revival of the housing market in Mumbai,” says Banerjee.

David Walker, Managing Director, SARE Homes also points out to the recent report by property consultants JLL that says Mumbai will continue to see an increase in leasing activity by BFSI companies. Major activity will be seen in its sub-markets like the key commercial district, Bandra Kurla complex (BKC), and the western suburbs. Commercial development would continue to define the real estate market in Mumbai, creating a ripple effect on the growth of residential market.

“There is a huge unmet demand for affordable housing in Mumbai. Mumbai is growing in terms of infrastructure and connectivity, and has become a hub for media, entertainment, consultancy and financial services.  This has resulted in job opportunities. It would be prudent to say that demand surged but so have the prices. Looking at the current scenario with an already low profit margin, decline in prices is a farfetched reality. But developers are expected to come up with attractive offers and incentives to accelerate sales during the auspicious festive season,” says Walker.

Manju Yagnik, Vice Chairperson of Nahar Group welcomes the developments and calls it a positive indication that the market is gaining better traction. According to her, we can look forward to better conversions going forward. High absorption of office space indicates healthy outlook in economy and employment, which invariably trickles down to increase in demand for residential property. The important aspect here is revival of the market which bodes well for the entire real estate sector.

“In order to see a genuine housing revival, the government will need to take the initiative by introducing more industry friendly policies which will propel growth and have a ripple effect within the real estate sector. We hope to see some positivity this festive season but most importantly we need to create a conducive environment for growth of the real estate sector,” says Yagnik.

There is no denying that housing revival is directly proportional to the office space consumption. However, it is not just the raw statistics that is giving solace to the residential developers of Mumbai. There are actually three strong indicators that are lending credence to the revival theory of Mumbai housing.

First, it is not just the volume of absorption that is on the higher side; rather the fact that large companies are opting for bigger spaces and even the entire floor plates are being negotiated suggests that revival of housing demand is not far.

Secondly, this demand of office spaces is not single-sector driven but multiple demand drivers are in play today and that suggests the expected growth is not dependent on the fortunes of any one industry. And thirdly, the spirit of festive season with attractive deals and price points across the Mumbai market adds zing to the housing demand.