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Can budget offer bonanza for real estate?

Posted on by Track2Realty
Track2Realty Budget Exclusive

Bottom Line: The state of economy leaves little room for the Finance Minister to grant any budget wish to the real estate sector.

Union Budget, Union Budget 2016-17, Finance Minister, Housing demand in Budget, Fiscal Deficit, Monetary Policy, Repo Rate, NRI investment, India real estate news, Indian property market, Track2Realty, Budget disappoints real estateA budget bonanza is a wish that businesses across the sectors dream about and real estate is no exception. Real estate, as a matter of fact, has to its claim being the key contributor of GDP and job market, besides accelerating a number of allied industries through backward and forward linkages.

However, today on the eve of Union Budget 2018-19 the critical issue is whether the state of economy allows the government to grant a bonanza.  Forget any bonanza, the economists are even pondering whether the economy would allow the Finance Minister to address the legitimate concerns of real estate.

Beyond the routine optimistic overtones on part of the stakeholders of Indian real estate this is one question that is on the top of the mind of everyone. After all, the growth forecast has been corrected and subdued and the key indicators along with industries not picking up as expected.

The underline fact is that the Union Government has very little to offer substantive for real estate as far as the budget is concerned. The former Reserve Bank of India Bimal Jalan has stressed the need to have a balance between fiscal and economic growth.

Contradicting budget compulsions & expectations 

State of economy demands prudent fiscal policy with little populist incentives

Banks are flush with funds but NPAs also rising

Slow job market indicates liberal lending for home buying could be counter-productive

With General Elections 2019 in mind, Finance Minister would be tempted to incentivise middle class 

There is no denying that the focus of the Finance Minister would be to revive demand in the market. However, any largesse or grant to long-standing demands of the sector is highly unlikely. This also includes demands on behalf of the middle class salaried homebuyers.

The developers nevertheless have their own reasons to be optimistic. JC Sharma, VC & MD of Sobha Ltd feels that if the government offers calibrated incentives to the homebuyers, in addition to schemes such as Credit Linked Subsidy Scheme (CLSS) under PMAY, the customers who are fence sitters will be enthused to buy homes.

“If there are schemes or incentives for homebuyers who are single mothers, retirees, physically disabled and other vulnerable sections of the society, it will bring a larger section of people to invest in a property, augmenting the demand for housing. Idea is to address genuine demands of large section of the population by enabling a reasonable set of incentives. This will give fillip to the entire sector, which has been facing challenges for the past few years,” says Sharma.

Ashish R Puravankara, MD of Puravankara asserts that real estate is the second largest employer in India after agriculture. The sector is hopeful for the incentives as these incentives promoting growth will create employment opportunities across the sector and eventually be a catalyst to better the economy. A longer-term view must be maintained in terms of the ROI on the sops provided to the industry, he says.

Nikhil Hawelia, Managing Director of Hawelia Group believes it is not the state of economy but the state of banks that would encourage the Finance Minister to incentivize the home buying. According to him, though there are certain roadblocks in terms of the less than expected economic growth but on a macro level the fundamentals are loaded in favour of the homebuyers, if not the developers.

“Today, the banks are flush with funds and they need one or the other lending driven sectors to grow. Now real estate is the only sector that is appreciating asset class, unlike the automobile that is depreciating asset. The finance Minister has no choice but to incentivize the home buying where the risks are less since the product keeps appreciating constantly. My personal view is that if the homebuyers are incentivized with the Union Budget the business of real estate is resilient enough to bounce back,” says Hawelia.

The state of the economy, on a realistic level, leaves little room for the budget bonanza. Though there might be some relief for the homebuyers but that also is expected for the buyers at the bottom of the pyramid. With the government already looking forward to 2019 General Elections, some symbolic relief could also be expected for the middle class but the financial compulsions of the Finance Minister does not give hope of a budget bonanza. Balance between farm growth and infrastructure growth would be the key a year before the elections.

By: Ravi Sinha

 

Budget expectations for buyers & builders contradict

Posted on by Track2Realty
Track2Realty Budget Exclusive

Bottom Line: The homebuyers and the builders are not always on the same page as far as their wishes and expectations with the Union Budget are concerned.

Union Budget, Union Budget 2016-17, Finance Minister, Fiscal Policy, Fiscal Deficit, Monetary Policy, Budget disappoints real estate, Incentive for home buying, NRI investment, Track2Realty, India real estate news, Indian property marketA friendly budget is always on the wish list of everyone. Across the industries the stakeholders, including the consumers, have more or less the same expectations with the Finance Minister to call it a friendly budget. But in the context of the Indian real estate a friendly budget for the sector does not necessarily mean a homebuyer friendly budget.

The developers for some strange reasons have always been myopic when it comes to budget expectations. On the face of it, they won’t shy away demanding measure that would encourage the buyers. However, anyone closer to the power corridors in the Finance Ministry would be knowing how lobbying has always been for the long standing, often unreasonable, demands for the sector.

On the eve of the Union Budget 2018-19, the question is yet again the same. Whether the budget should be buyer friendly or the builder friendly. Are both the stakeholders on the same page this time around?

To understand this contradiction, let us first see what are on top of the wish list of the homebuyers. These are:   

Reduction in income tax slabs

Lower rate of interest on home loans

Reduction of GST

Stamp Duty reduction

Increase in cap on interest and principle deductions

Restriction on loss from house property 

Now let us see what a large universe of the developers is lobbying for. These are:  

Industry status

Capital for land investments in the affordable segment

Single window clearance/smoother approval process

Reduction of LTCG Holding Period for REITs

Ashish R Puravankara, Managing Director of Puravankara tries to balance the debate when he says that budget in itself a delicate affair, a tough balancing act of allocating necessary resources to every sector for a nation with such diversity and population. So, the best we can hope for that is something for everyone which is enough for both industry and buyers and no one feels excluded.

“Some the critical concerns with the developer fraternity will lie in the realm of policy implications, approvals and sanctions, and ease of doing business. For the homebuyers the concerns remain of price-points, developer reputation, quality of end product. While RERA may have abated some of these direct concerns, the larger picture of economic stability and also job security is where the common man’s hopes lie with the Union Budget,” says Puravankara.

JC Sharma, VC & MD of Sobha Limited admits that while the sector has seen some forward-looking reforms in the recent past, it still has concerns that needs to be addressed. One of them is the demand for industry status for the sector as a whole. In the Union budget 2017-18, the infrastructure status was conferred to only the affordable housing segment, not the entire sector. With the industry status, the sector will be able to secure funding for their projects at reasonable interest rates, which will spur new launches and better quality projects.

“It will enable developers to deliver projects on time as well. This will, in turn, augment well for employment generation, ‘housing for all’ and build the right eco system. Similarly, the tedious approval process for a project leads to delay in delivery of projects and increase the project cost in the range of 10 to 30 percent. Therefore, it is important to have a ‘single window clearance’, a long-waited demand of the realty sector,” says Sharma.

Aditya Kedia, Managing Director – Transcon Developers maintains that the buyers and the developers go hand in hand. If the Acts like RERA benefits the buyers it gives boost to the sector, increases transparency in the sector which ultimately benefits the sector altogether. The relaxation in income tax for first homebuyers, reduction in the HRA limit, high tax savings on home loan and home insurances are some of the much needed expectations from the homebuyers.

“The root cause of all the delays or cost overrun of various projects are somehow linked with the delay in approvals. Developers expect from the government to come up with some mechanism which makes the ease of doing business a reality for the sector. One Window Clearance and Digitization at larger scale in the sector is the need of the hour,” says Kedia.

The sector has been rhetoric with its oft repeated self-glory that real estate sector contributes significantly to India’s GDP with about 6-7 percent. The housing sector alone contributes around 5-6 percent to this. It also plays an important role in accelerating infrastructure development and capital investment. Further, there are claims that the positive effects of the sector are mirrored amply on the ancillary industries such as tiles, paints, fittings and fixtures, cement and steel etc.

More importantly, the sector claims to be the second largest employment generator in the country. This clearly reflects the critical role played by the real estate sector in driving the economy. Therefore, they assert that it is imperative for an ideal budget to focus on the sector where the impetus is on strengthening the ecosystem by taking care of the interests of developers and the buyers alike.

Unfortunately, in this argument and demand of the sector, the buyer is not at the core of the budget wish list. No one is bothered to address the pain point that the buyers are increasingly deserting the housing market. And the buyers have not much to expect in a financial eco system where de-growth in jobs is a big deterrent in home buying. If only the Finance Minister could address this, most of the issues of the buyers and the builders would be settled.

By: Ravi Sinha

Puravankara to invests INR 600 crores in affordable housing project

Posted on by Track2Realty

News Point: Provident Park Square is Puravankara’ s first launch of 2018 and marketed through ‘Book Building Process’ to determine home prices through a transparent, scientific supply-demand model. 

Provident Park Square, Puravankara, Ashish Puravankara, Puravankara affordable housing, Provident housing, IPO style home selling, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in Bengaluru property, Track2RealtyPuravankara Limited has launched its first premium affordable housing project of the year – Provident Park Square -  in a joint venture between Puravankara Limited (Developer on record) and Keppel Puravankara Development Pvt. Ltd. (Landowner).

With an investment of INR 600 crores, Provident Park Square at Judicial Layout, Kanakapura Road, Bangalore, is a mixed development project which caters to the needs of the new age home buyer.

Like a micro mall, the property includes restaurants, retail stores and many more such lifestyle amenities. The property is being developed using state-of the art precast technology.

Provident Park Square is in line with Puravankara’s ambitious plan of developing 10 million sq ft of affordable housing projects through the next 13- 15 months.

Ashish R. Puravankara, Managing Director, Puravankara Limited says, “After some interesting times in 2017, we are optimistic about 2018 being a great year for the industry. The launch of Provident Park Square has kick-started our journey for 2018 and we are confident that the world class design and high quality amenities will truly be the first of its kind in the affordable space. The Government’s strategic initiatives and the country’s encouraging economic growth have fuelled greater interest in the affordable housing segment.  Affordable housing not only triggers a robust growth for the sector, but also enables a higher GDP for the economy.” 

The project is being taken to market through an innovative Quasi Book Building method, where the price discovery process is driven by data from fundamental ‘Demand-Supply’ metrics. The pre-booking process, currently open at this point of time, offers the complete product information to prospective buyers, along with a ‘Price-Band’ for each type of unit within the project.

Expressions of interest from prospective buyers help analyse the demand base for the project, which drives a data driven approach to the eventual pricing decision, which would be announced by mid-March 2018.

All customers during the pre-booking process will be allotted units of their choice, based on first-cum-first-serve queuing methodology. While early adopters / buyers will be at the top of the queue and hence get access to a wider choice of units, all buyers during this process will be offered a “Uniform Base Price”, there-by improving transparency in the customer buying process.

The Home buying process from time immemorial has depended on “Brute-force negotiation” between buyers and the seller. The Quasi Book building method eliminates this wasteful exercise and introduces a transparent yet competitive manner of price discovery and selling of real estate, which becomes even more essential in the “Low-Margin-High-Volume’ affordable housing space.

The first phase of Provident Park Square will be ready by 2021.

Livability index adds to second home charm of Lonavala

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Track2Realty Exclusive

Bottom Line: A traditional holiday home destination, Lonavala has high livability index to attract the investors.  

Lonavala Holiday Home Destination, Lonavala Weekend homes, Lonavala second homes, Investment in Lonavala, Properties in Lonavala, Mumbai holiday home destination, Mumbai holiday home destination, Mumbai weekend home destination, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2RealtyMayur Patil, the property developer who operates in and around Thane was surprised when Rashmi Garg, an NRI from Britain, insisted that she would invest only in Lonavala as her holiday home. Though he had scouted for many quality options in and around Mumbai and Pune, this NRI lady was adamant on her choice of Lonavala as the second home destination. A few interaction later, Patil could understand the method into this madness.

“An outside view might give the impression that all these options of second homes are more or less identical but they are not. While greenery and open spaces are the USPs of most of the second homes, none can match the scenic view that this hill station provides. Add to it, the connectivity and the social infrastructure of the destination. In terms of the overall quality of life, anyone who knows about Lonavala will not settle for any other location,” says Patil.

As a matter of fact, it is the overall livability index that gives Lonavala a cutting edge over other peer second home locations. Moreover, it is as well connected with Mumbai as with Pune. Thus, it is an ideal weekend destination for the residents of both the cities.

Lonavala is about 64 kilometers from the city of Pune and 96 kilometers from the city of Mumbai. In terms of connectivity, Lonavala is on the Mumbai-Pune Expressway by road and is well connected to several other towns of Khopoli, Karjat, Talegaon Dabhade, etc.

Even Navi Mumbai is around 50 kms form Lonavala. Analysts believe that once Navi Mumbai international airport is ready, Lonavala property market will attract more premium.

What makes Lonavala all the more tempting proposition is that it offers the greenery and the kind of livability index that not many markets in and around Mumbai or Pune can match. The kind of open spaces and emerging social infrastructure that this location has, it often gives the indication of living outside the mad rush of Mumbai & Pune and be in the lap of nature.

A study by Track2Realty finds Lonavala to be among the three most desirable weekend home destination, with Goa and Kasauli being the other two. The study finds that the HNIs and the NRIs are most bullish on these locations. And there is a reason to it. Apart from the quality of relaxed life, the investors who were among the first movers in these locations have been rewarded with sizeable appreciation as well.

Lonavala attractions

Green scenic beauty of the region USP of Lonavala

Livability index high in Lonavala

Relatively lower cost of property & high appreciation potential turns Lonavala investment magnet 

Lonavala has been known for its green pastures, the location has undergone a sea change in the last few years. Apart from its natural beauty that has regularly drawn visitors to this place, Lonavala has also seen several new developments for those on the look out for entertainment and adventure, making it a perfect combination. With lots to offer, there is no wonder that Lonavala is shaping out to be an ideal investment hot spot.

The recent developments elevate Lonavala above a mere holiday home destination. More importantly, for those families where members are working in both the cities of Mumbai and Pune, Lonavala is the ideal answer as the first home destination as well.

Alok Jha – Manager, Research & REIS, JLL India says it also is likely to become a satellite town for both Pune and Navi Mumbai in the future. Given the economic activity and employment generation in Navi Mumbai – which now has the potential to become a serious office district – Lonavala can mature from a mere weekend getaway into a residential investment hotspot and end user driven market.

“Once the Navi Mumbai international airport becomes operational, Lonavala will stand to benefit from excellent air connectivity. The rising office stock both in Mumbai and Pune has increased the demand for training centers in the region, and Lonavala is already home to the corporate training centers of L&T and Tata,” says Jha.

Lonavala is so much in demand today that it may emerge as the first home destination in the next few years. Already the attraction quotient of Lonavala is so high among the young generation looking to relaxed lifestyle that many of them are also buying Lonavala as their first home.

Most of the analysts tracking the property market in this part of the world point out that in Mumbai and Pune rapidly increasing population density, grueling commutes and extremely high real estate costs have compromised the quality of life.

The best part is that the Lonavala property is quite affordable for second home investments. While the prices of apartments are in the range of Rs. 3,000 per square feet to Rs. 4,000 per square feet, the independent villa would cost between Rs. 5,000 per square feet to Rs. 7,000 per square feet. Isn’t it a tempting proposition for those in need of some relaxed lifestyle in the lap of nature?

By: Ravi Sinha 

 

Market intelligence lacking in Indian real estate

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Track2Realty Exclusive

Bottom Line: Market intelligence is a critical missing link in the Indian real estate and developers’ gut feeling is what leads to decision making.  

Market intelligence, Real estate market intelligence, Real estate due diligence, Research in Indian real estate, Data analysis in property market, Information gap in real estate, Market survey in real estate, Market analysis of Indian real estate, India real estate news, Indian realty news, Real estate news India, Indian property market news,  Track2RealtySome call it market intelligence and not due diligence where the focus should be more on the micro markets than general trends which could be misleading. However, there are many grey areas where in the absence of proper research and reliable data even the assessment of ground realities is not feasible.

Rohit Gera, MD, Gera Developments agrees over the need for proper due diligence across the real estate sector.  He says whether it is developers purchasing land, investors investing in projects, housing finance companies approving projects or customers purchasing homes; due diligence is needed at every level. Over the years, each of these segment of players in the real estate sector have burnt their fingers for some reason or the other in the absence of due diligence.

“We have already seen a far greater degree of scrutiny from HFIs (Home Finance Institutions) when it comes to checking the approval documents for projects. Unfortunately, the homebuyers still do not undertake the requisite amount of due diligence especially when buying homes from fly-by-night operators masquerading as professional developers.  The cost of reasonable due diligence often is less than one month’s EMI and this offers peace of mind through 240 months of loan repayment.  Yet, customers blindly believe that they will not be victims and they go forth without proper due diligence,” says Gera.

Indian realty, as a matter of fact, lacks proper research and data for the necessary due diligence. Unfortunately, it is not on the agenda of industry bodies like CREDAI and NAREDCO since a transparent due diligence mechanism across the built environment of real estate will expose the developers also to various disclosure norms. A not-so-transparent eco system may not help the developers, it nevertheless suits them because transparency empowers the homebuyers and equips them to force the builders bring closer to best practices in the business.

What is an ideal due diligence and data point for the sector? The nature of the business is such that there cannot be any thumb rule, maintain analysts tracking the sector. For example, forget corporate governance and transparency, even the accounting norms are complex. Time and again, accounting scandals and unexpected losses prove that what is ‘off’ the books is often more important that what is ‘on’ the books.

Developers glorify ‘location, location & location, but never go beyond land competence to develop destinations

Due diligence mechanism is missing and developers’ gut feeling leads to decisionmaking

No focus on need-based housing like affordable & mass housing, senior housing, child-centric housing and serviced residences

It is only through a detailed review of financial disclosures that such exposures can be uncovered. Cash flow is another critical area as more often companies go bankrupt because they run out of cash, not earnings. The due diligence agency can focus on the sustainability of cash flows of the given company, not just earnings.

It will be beneficial for the developers as well because often they have limited expertise in a particular sector of real estate or geographical territory. As a result, they are faced with situations where they are looking to venture into new markets, or alternatively, are evaluating the development of new domain expertise into residential, commercial, retail, hospitality, institutional or industrial verticals within regions where they already have a strong presence.

As India talks about Housing4All today the debate has mainly focused around the country’s failure to construct affordable and mass housing. The fact of the matter is that the developers have failed to create need-based housing in general; reason why there is so much of demand & supply mismatch.

Experience across the industries suggests that the product must be customized according to the need of the buyers to command a premium on aspiration. This conventional wisdom of market does not hold true for the housing market, it seems.

By: Ravi Sinha

Builders need to learn dialogue with buyers

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Track2Realty Exclusive

Bottom Line: Commnication in the Indian real estate is all about monologue than dialogue. Within the offices the developers adopt this strategy with the employees and for the outside world the strategy is rolled out through advertising and public relations 

Communication, Dialogue, Builder Buyer interaction, Builder buyer conflict, Non communicative builders, Monologue of builders, Builders avoiding buyers, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in real estate, Track2RealtyThe real estate sector is in dire need to communicate an connect with the stakeholders and society at large. In the name of communication all that they do is to hire a PR (Public Relations) agency for the purpose of brand building but do not understand what is communication in the right context.

The absence of skilled communication professionals makes the matters even worse. And media is not ready to take the industry and its practitioners who, more often than not, do not even read what they themselves send to the journalists on beat.

The Indian real estate has by and large failed to communicate & connect with the stakeholders in the right spirit

Some of the real estate advertising has evoked sharp criticism and outrage for being class-conscious than classy

Communication of Indian developers is more about monoligue than dialogue

The question is whether comunication is the weakest link in the list of best practices for the Indian real estate. The opinion may be divided over the weakest link, but what cannot be doubted or debated is the fact that media greedy developers do not understand how to connect with the media. More importantly, they do do not know the importance of connecting with all the stakeholders and keeping the communication uniform; something that will definitely cut short the role of the media.

The developer, in their quest to get noticed, often end up revealing the deepest instincts of their target audience. And when they cross the level of sensibilities, they generated public outrage as well. For example, recently a Lodha Group advertisement for a luxury residential project read, “You worked your way up to rise above the crowds. Not live with them.” While real estate groups routinely emphasise ‘exclusivity’ to their potential customers, this advertisement was criticised to be a new low for high-end projects.

While this was perhaps remarkable for its pointed and blatant reference to ‘the crowds’, other advertisements also strike a similar chord. For example, another project of Lodha group, emphasises that one of its projects features ‘Thane’s first by-invitation’ residences, and that people who buy houses in the project will ‘live a life only a handful will have the privilege to enjoy’.

Housing projects exemplify this trend of underlining exclusivity and privilege to potential customers the best. That is perhaps because they address multiple instincts—including security, comfort, ideas of purity and pollution and class consciousness. Gated communities are structured in such a way that they keep the ‘underclass’ at an arm’s length, allowing them inside for the sole purpose of serving the residents of the enclave.

In some cases, housing projects also explicitly aim at keeping out people with certain food choices. For example, a developer in Mumbai and another Chennai tried to promote vegetarian-only apartments. The fact that these factors formed the basis of a marketing pitch indicated that the company believed that they would work with their target audience.

But class consciousness does not reflect only in terms of the amenities available or the people it ostensibly keeps out. Even names bring with them their own set of biases. For example, in Mumbai, developers are resorting to names like ‘New Cuffe Parade’ and ‘Upper Worli’ to increase the market value of their projects. And hence, Lower Parel is rebranded as Upper Worli, as the former is associated with a working-class mill district.

So, while there has been much criticism of such advertising pitches, they only reflect existing biases and social divisions. Needless to say, such insensitive advertisements lead to Internet outrage. But it seems all that the developers believe is that the very purpose of an advertisement is to evoke response, no matter for right reasons or wrong reasons.

Property demand assessment faulty

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Track2Realty Exclusive

Bottom Line: Track2Realty goes into the depth of demand analysis to find that there is no scientific methodology adopted by the developers to assess demand in the market. 

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinhaBeyond the economic rationale, the developers assert that they are doing their homework properly. One of the largest developers claims it has its own empanelled brokers to give constant feedback on the market before the launch of any new project. They supplement it with a proper in-house research of the market, the catchment area, competition and other market forces.

Once the feedback is taken from every possible end and data collated and analysed, there are hardly any chances of demand-supply mismatch.

SARE Homes claims to use the latest scientific methods to identify and meet the needs of customers. This includes in-depth research of the market forces, which helps in targeting customer requirements. The research includes desk as well as field research and the hiring of commercial agencies. This is an important aspect as, with changing times, customer demands are ever changing.

Kolkata-based Srijan Realty claims that before investing in a new project they organise a project viability analysis through their realtor partner NK Realtors. This include the market research, project suitability, demand assessment, project composition and product mix as well as idea about project pricing.

However, not many developers seem to have this much confidence with the market feedback. It has also gone wrong as brokers prefer to sell high-end projects nowadays, leading to plethora of luxury launches while the demand exists in affordable and mid segment housing in most of the micro markets across the country.

The main determinants of the demand for housing are demographic

Along with demographic, factors like income, price of housing, cost and availability of credit, consumer preferences, investor preferences, price of substitutes, and price of complements, all play a role

Demand assessment and market intelligence quite misleading in Indian real estate 

Instead of market defining demand nowadays competition or rather a rat race is defining the demand which leads to cluttered & over supplied pockets of real estate growth. In certain locations appreciation potential is huge and also housing shortage suggests that developers should launch more projects over there. But, on the contrary, over supplied and saturated markets get more launches which defies the conventional wisdom of demand-supply economics.

That probably justifies why certain markets are over heated with maximum launches and record inventory since the institutional investors have deep pockets and pipeline visibility make them calculate the right ROI (Return on Investment) at the right time in the right market. But the very same influencers in the research/report do little justice to the developers’ cause or the homebuyers’ need of a house.

In the absence of due diligence often the Indian real estate market loses sight of fundamentals and gets carried by positive news stories. With no analytical techniques available to support the story with the fundamentals, a catch 22 situation hurts all the stakeholders — the developers, homebuyers, investors and lenders.

The market intelligence of the so-called discerning buyers is only reflective of macro level assessment of property consultants and media which more often than not goes off track.

A section of analysts admit that due diligence has always been done in the Indian realty but the Bull Run made the developers, investors and also the homebuyers a bit over ambitious to ignore the fundamentals in order to get into higher profits with far higher risks. However, the slowdown has taught everyone a lesson and now the developers as well as the homebuyers are over cautious at each and every level.

However, the fact remains that in the absence of a scientific and industry accepted mechanism of due diligence the challenges and risk exposure are as much for the realtors as for the organised investors. Retail buyers any way are clueless with various conflicting reports on the same market.

By: Ravi Sinha

Next: Market intelligence lacking in Indian real estate

What is justified loading in apartment?

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Since the homes are still being sold on Super Built-up Area despite RERA guidelines against it, it is imperative for the homebuyers to understand the anomalies with loading. 

Professional Stress, Real estate professionals, Client demand, brokers pressure, NRI investment, real estate salary, real estate depression, unprofessional real estate, Track2Media Research, Track2RealtyRamnik Sharma, an IT professional, wanted to buy an affordable apartment in one of the projects at Rajajinagar, Bangalore. Everything was up to his liking – the apartment, location, construction, delivery timelines and the pricing – till he enquired about the super built-up area and carpet area.

He was surprised to find that the loading percentage (the additional space to carpet area in the name of super built-up area) was as high as 42 per cent.

This is not just a Bangalore reality. The fact of the matter is that in the absence of any regulation that defines the standard measurement of super built-up area, built-up area and carpet area, every developer defines it as per his convenience. There is no scientific methodology that defines what is an ideal loading percentage.

“It was, after all, supposed to be an affordable house with a price of Rs. 5500 per sq feet but the loading percentage made it like Rs. 10,000 per sq feet. I can understand that in luxury housing projects the loading percentage is higher due to the kind of luxury amenities that the developer has to create. But for an affordable housing this is beyond permissible limit from the buyers’ standpoint,” says Sharma.

Considering the fact that most of the homebuyers in major cities of India are first time homebuyers in the affordable and mid-segment of housing, analysts point out that any loading that is beyond 25 per cent is unacceptable. The developers nonetheless have their own reasons to maintain that loading percentage is proportional to the kind of demand that is there in the market. 

J C Sharma, Vice Chairman & Managing Director, Sobha Limited defends it saying that to move in from an independent house to high rise apartments, homebuyers need to have a good common area, the lobby, club etc because here the outside infrastructure has gone and everything has to be provided within the complex. The thickness of wall itself is consuming seven to eight per cent; somebody has to pay for it. Again, if you are not keeping open areas close to 15 per cent you are not giving them value for money.

“I think the Indians need to come out of certain pre-determined notion if they aspire to live comfortably. For us, the bottom line is that while calculating the loading transparency should be there and we should not cheat. In one of our projects we wanted to give away the balconies because we felt it won’t be used and instead wanted to increase the carpet area inside. But the market did not accept that,” says Sharma.    

“Let it be, whether it is 25 per cent or 45 per cent. The issue here is who is driving that number. It is the customer. So, you are offering whatever the number based on demand. For a luxury project I won’t mind even loading 52 per cent because the buyer in that category is looking for better amenities, bigger club etc. So long the number is factual and you are offering it with transparency, because the buyer demands that kind of common areas etc, it is fair,” says Ashish Puravankara, Managing Director, Puravankara Projects.

According to Puravankara, the problem is when one has the loading of 20 per cent in calculation and out of thin air the developer is charging for 30 per cent. For each segment of housing, it is our understanding of what the buyer demands that is the basis of what amenities we do offer and it leads to the percentage of loading.

However, Ashwini Kumar, Executive Director & Chief Operating Officer, Nitesh Estates admits that if one is looking at it from buyers’ point of view to get an ideal loading share, no one would like to have loading of more than 20-25 per cent.

The developers nevertheless defend the loading that even for a project that is selling at INR 2,500 per sq feet in many of the cities where the demand is high, the buyer today demands card room, clubhouse, indoor pool, outdoor pool, badminton court, basketball, and everything which is adding to the loading. They maintain that there can be some bad number of loading because of the inefficiency or inexperience of the developer but as an industry practice the developers are loading on what they have built. 

One may have erred in making the design more efficient but if the developer is loading 30 per cent then he has actually made it like that. There is always a suspicion with regard to loading and the suspicion in cities like Mumbai or Delhi is that loading is extra due to the location of the project.

However, beyond the developers’ defence the fact lies that it is not just the miscalculation of the loading that is an issue among the homebuyers but there is no logic behind higher loading percentage with most of the affordable and mid segment housing. Any loading above 25 per cent raises the suspicion on the developers’ credibility, intent, calculation and/or efficiency.

By: Ravi Sinha

Santhosh Kumar quits JLL, joins ANAROCK as Group VC

Posted on by Track2Realty

News Point: Real estate industry veteran Santhosh Kumar has joined Anuj Puri’s real estate firm ANAROCK Property Consultants as Group Vice Chairman, after more than a decade with international real estate consultancy JLL India as CEO – Operations.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, JLLM, Jones Lang LaSalle IndiaSanthosh will be based out of ANAROCK’s Gurgaon office, with ANAROCK’s nine India offices, Dubai office and Finance reporting directly to him.

A long-standing associate of Anuj Puri, Santhosh Kumar was closely involved in the merger of Jones Lang LaSalle and Trammell Crow Meghraj (TCM) which created the largest international real estate consultancy in India. As CEO of Operations, he had P&L responsibility of JLL India’s 11 offices, ensuring their seamless business operations and growth. He has over 20 years of hands-on experience in Indian real estate.

“Santhosh’s domain expertise, experience and impeccable relationships with the leading real estate players are invaluable assets for the Firm”, says Anuj Puri, Chairman – ANAROCK Property Consultants. “With his appointment, I tick off a major item on my wish list of top-notch real estate operatives to lead ANAROCK to become a formidable institution in Indian real estate. Our pan India operations are now in the most capable hands, and the key cornerstone of our ongoing expansion and growth firmly in place.”

As ANAROCK’s Group Vice Chairman, Santhosh Kumar hits the ground running and has assumed all operational responsibility for the Firm. “Given my long personal association with Anuj and our partnership being a tried-and-tested success formula for over two decades, this move is nothing but a natural progression for me,” he says.

“Also, the timing is most vital in my point of view. In the aftermath of DeMo, RERA and GST, Indian residential real estate is a battlefield from which only the fittest – be it developers or consultants – will emerge and flourish. The current residential ecosystem throws up unique opportunities and challenges, and ANAROCK’s strong market positioning with digital and offline consultancy support is the key to addressing both.”

He adds, “There are more than 7 lakh unsold housing units across top 7 cities of India. With so much supply stacked up and more hitting the market, there is a tremendous need for transparency-oriented real estate consultants to guide homebuyers and investors to the best opportunities. Demand is plentiful, but so is uncertainty and, in some markets, outright mistrust. ANAROCK will leverage its strong reputation for transparency and digital technology to bridge the trust and information gaps and give buyers fully-vetted options from reputed and reliable developers that they can invest in with complete confidence.”

Santhosh began his career in 1998 as Finance Manager with Chesterton Meghraj, was elevated to Chief Finance Officer in 2000 and became a member of the Board of Chesterton Meghraj to advise on key strategic planning issues and make recommendations on major business initiatives and financial decisions. From 2002, he managed business operations for property consultants Trammell Crow Meghraj (TCM) in Northern and Eastern India and was elevated to Chief Operating Officer.

He is a Master of Commerce from the Delhi University, Associate of Institute of Cost & Works Accountants of India (AICWA), Member of the Real Estate Committee of the Federation of Indian Chamber of Commerce of India (FICCI) and Member of the Indian Cancer Research Society.

Trends to drive Asia property market in 2018

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Bottom Line: With robust economic growth and low real interest rates set to persist in Asia, investment property transaction volumes should remain high 

Real estate trends, Property market trends, Trends in real estate, Asia pacific property trends, India real estate news, Indian realty news, Real estate news India, Investment in property market, Top investment trends in real estate, Track2RealtyTrack2Realty lists down the assessment by Colliers International that will drive the Asia property market in 2018. Here are the Top trends that is expected to be in the headlines.

Firm economic growth and persistent low real interest rates will continue to drive occupier and investment property markets in Asia 

Economic conditions have strengthened around the world: 2017 will see the highest global real GDP growth since 2010, and 2018 should be better still. In Asia- China, Japan, South Korea, Hong Kong and Singapore should all achieve higher or sharply higher growth in 2017, than in 2016, although modest slowdowns look probable for 2018.

Momentum in India slowed in H1 2017, and so growth will be below China’s for that year; however, growth should rebound sharply in 2018. Improved economic conditions have boosted demand for leased office space, especially in Hong Kong but also in Singapore, the leading Chinese cities and in India. Demand for industrial and logistics property has strengthened for similar reasons.

With overall demand for leased office and warehouse property set to stay strong, office and warehouse rents should rise further or at least stay reasonably stable, boosting cash rental streams to landlords and thereby supporting investment property demand.

“We expect the commercial real estate (CRE) market to remain on track with sustained demand from occupiers in the coming years. Flexibility, collaboration, work space efficiency, employee retention and cost effectiveness will be the key focus areas of CRE heads in 2018”, said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India.

Property investment volumes in Asia will remain strong, and yields may well shrink even further 

With robust economic growth and low real interest rates set to persist in Asia, investment property transaction volumes should remain high. Based on RCA data for Asia Pacific as a whole, after a strong 2016 transactions in completed properties rose by 4% YOY to USD102 billion over the first nine months of 2017. Particularly strong were Hong Kong (+38% YOY) and Singapore (+83% YOY); and these two cities rose, respectively, to be the first and third ranked urban investment centres in Asia Pacific over the period.

Looking forward, we expect the investment market in India (+85% YOY over the first nine months) to continue maturing, while Japan may well recover from recent weakness as its economy accelerates. It therefore seems reasonable to expect transaction volumes to rise again in 2018.

“With India forecast to see a notable economic growth in coming years and Indian cities growing at a rate faster than most other cities in the world, the property development to continue witnessing robust growth rate in the medium to long term. Steady economic expansion, persistent loose real monetary conditions and improvement in infrastructure spending ought to support the Indian investment property market. With the investment focus is likely to remain on grade A office assets, organised warehousing sector and affordable housing, these sectors are poised for interesting times ahead”, said Surabhi Arora, Senior Associate Director, Research at Colliers International India.

Office rents in major centres will continue to rise or be fairly stable in 2018 

In India, we continue to project an average 5% annual increase in office rents over the next three years in the technology-driven markets of Bangalore, Hyderabad, Pune and Chennai. We expect the rents in traditional markets such as Delhi-NCR and Mumbai to remain stable, however, grade A properties will continue to command premium in most markets due to the occupier preference.

Flexible workspace will strengthen further as a source of new leasing demand 

The flexible workspace market has seen huge growth in many Asian cities, and this trend should continue. Flexible workspace operators are now a major source of demand for leased office space in Hong Kong, Singapore and the Tier 1 and Tier 2 Chinese cities, and are growing in importance in India with Jakarta and Bangkok set to be the next markets to witness significant growth.

In India, In the past two years, the flexible office operators leased more than 4 million sq ft (0.37 million sq m). With the momentum of flexible office spaces gaining ground we expect more developers to foray into this segment in the coming years. 

Technology companies will strengthen their presence in the CBD and CBD fringe 

As per Colliers International, technology groups need to move towards the CBD or CBD fringe to find and retain talent in R&D, software and IT, and sales & marketing, all groups which should increase in proportion to integration of artificial intelligence; and we expect the attractions of the CBD and CBD fringe to strengthen further over time.

Business parks on city edges are an option for smaller or start-up groups. Different economic criteria apply to manufacturing units, for which location outside cities makes sense. However, technology occupiers attempting to concentrate all their operations in out-of-town campus sites look unlikely to attract all the high-skilled staff needed for the key roles of the future.

Higher trade flows and e-commerce will continue driving industrial and logistics property in China, Hong Kong, Singapore and India, with industrial property emerging as a key organised asset class across Asia. 

India is particularly witnessing more interest in logistics and warehousing sectors due to recent tax reforms which implies a uniform Goods and Services tax across the country. 

There is more demand for new logistics property, as the sophisticated occupiers are demanding more modern and specialised warehousing and logistics solutions.

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