Friday, 27 June 2014

Real estate hopes for transforming Budget

Anticipating encouraging announcements in the forthcoming budget, the Indian real estate industry hopes that the new government will be able to re-establish the country as an economic force and boost consumer and investor confidence.

With the new government now firmly in charge of steering the country, the Indian economy is perched on the threshold of recovery and growth. The serious issues that have plagued the sector for so long may now be proactively addressed.  

Anticipating encouraging announcements in the forthcoming budget, the Indian real estate industry hopes that the new government will be able to re-establish the country as an economic force and boost consumer and investor confidence. 

We look forward to the announcement of progressive policies pertaining to FDI in real estate, since the sector is in marked need of a more liberalized funding flow. Global investors are once again enthusiastically eyeing the Indian market for the immense opportunities it offers. There is now a very real possibility of a huge increase in foreign investment inflows, and the budget is definitely the ideal opportunity for taking serious steps to encourage this. 

The real estate industry once again reiterates its sincere call for preferential industry status. Despite many petitions to the government to this effect, real estate was not been granted this status even though its role as a significant growth driver for the economy is beyond dispute. At the very least, housing must be given infrastructure status, since housing is the very basis and framework of the nation and its economy. The national housing deficit can and must be reduced, especially with regards to affordable housing. 

The new government has announced a very clear mandate in terms of housing for all, and will therefore need to come up with a detailed affordable housing policy. Such a policy will have to focus on increasing the supply of genuinely affordable homes in the budget bracket of Rs. 20-25 lakh. 

The success of such a policy will depend on respective state governments playing a proactive role, as well. Ideally, affordable housing projects should be allowed on smaller land parcels so that such land under private holding can be monetised effectively. Alternately, the government can release land currently being held by it to developers for affordable housing projects, at nominal rates. 

 Also required is a single-window clearance for such affordable housing projects, as well as additional incentives in the form of waiver of registration costs, stamp duties, etc. on land purchase for developers undertaking such projects. Other additional pay-outs for residential projects to the government, such as conversion and internal development charges, could also be waived. The policy could fix the maximum price for such projects, thus enabling them to remain truly affordable. Also, for such affordable housing projects, density and FAR norms can be increased to enable mass housing at lower costs.

Developers of affordable housing can also be incentivised in various ways, such as:  

> Allowing them a certain commercial component within these projects which they can sell at market rates 
> Reducing duties and excise on pre-fabricated materials for use in affordable housing projects
> Providing additional FAR to projects that also comply with environmental sustainability guidelines. 

All such benefits to developers will ensure a pass-through to the buyers, for whom the prices will become affordable. A clearly-defined policy by the governments along such lines would enable long-term investments into this sector. '

The Indian real estate sector also looks forward to a budget that outlines measures to tackle inflation without stifling overall growth. Interest rates must rationalize and home sales pick up once more. The stock markets have already perked up visibly up and the Indian rupee is regaining strength. We certainly expect that the new government will take measures to reduce inflation, but also ensure that this is not done at the cost of the green shoots of market positivity we are now seeing.

Source: JLL India

Monday, 16 June 2014

What NRIs need to do before buying property in India?

Non-resident Indians (NRIs) need to be vigilant and do their research before buying a property in India, says the exhibitor of a property show.
“One looking to buy a property in India must do his research well before investing in a property though the chances of being ripped off are much lower these days,” Sunil Jaiswal, CEO, Sumansa Exhibitions, organisers of Indian Property Show, told Emirates 24|7.
“You have the internet; you can do your research about the developer, or simply call people back home to check the developer’s reputation. I don’t think people do buy just on instinct anymore,” he added.
Investment in Indian property sector is one of the best investments among asset classes for various reasons including tangibility, less volatility, rental income and appreciating asset. JLL, a global real estate consultancy, said earlier that capital appreciation on real estate is far higher than the high-yielding deposits for NRIs.
“If you maintain a broad investment horizon and have chosen properties well, the capital appreciation on real estate translates into multi-fold putting all other asset classes behind,” Jaiswal said.
The 14th edition of the property show was opened on Thursday by Bollywood star Arbaaz Khan, who is the brand ambassador for the event. With four distinct pavilions, 40,000 properties, worth Dh16 billion, are on display by over 150 developers. The organisers expect to witness business transactions worth Dh343 million, which will be about 12 per cent higher than last year.

The three-day property event is being held from June 12 at Dubai World Trade Centre.

“Real estate sector has always been at the top of investment opportunity watch-list of non-resident Indians. A place in the homeland also gives a sentimental support and sense of security, which is another reason for their investment in real estate. NRIs invested over Dh7.34 billion ($2 billion) in Indian real estate in 2013,” said Honey Katiyal, CEO, Investors Clinic.

NRIs spent at least 35 per cent more in real estate across the country in 2013 compared with the previous year and made for almost 12 per cent of total apartment sales in the top seven cities. The Dh7.34 billion investments, however, does not include Punjab, Gujarat and Kerala states where a bulk of repatriation happens.

According to the World Bank, India led remittance flows globally, receiving $70 billion in 2013, which eventually leads to investments in real estate.

The Housing Sentiment Index, released by IIM Bangalore and in May, found that home buyers across eight of 10 cities surveyed expect real estate prices to go up over the next six months.

Cities surveyed include Ahmedabad, Kolkata, Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore and Chennai.
Nearly 70 per cent of the people surveyed preferred to buy apartments, IIM report said.
Pratik Patel, Director, Rajesh LifeSpaces, believes NRIs usually look for a property that can replicate their standard of living regardless whether the property will be utilised for end use or taken purely from an investment point of view.
“They don’t like to compromise on standards, convenience of lifestyle options and most importantly security. Any property with the said features and ranging anywhere between Dh600, 000 and Dh1.5 million is popular with them”, he added.

Source: Emirates 24X7

Saturday, 14 June 2014

Sikka & IHG announce agreement to open Crowne Plaza Hotel in Noida

Sikka Group is one of the largest Real Estate Developers and Promoters in Delhi NCR, Meerut and Dehradun which has left no stones unturned over 3 decades with their extraordinary building structures and timely project delivery. Established in 1986 by Mr. Gurinder Singh Sikka (CMD -Sikka), we tender the most diversified product mix comprising of commercial & residential property, Hotesls, Automobiles, Education, Media Business and filling Stations.

Recently, New Delhi's leading Real Estate Developer, Sikka Group, has signed a deal with InterContinental Hotels (IHG) to open Crown Plaza Hotel in Sector 98, Noida. Under this agreement, Sikka Group will develop a Crowne Plaza hotel on a site called as "The Downtown Noida" at Taj Expressway, Sector 98, Noida having Corporate Suits, Retail Spaces and a Hotel. The hotel Crowne Plaza will be owned by Sikka Group and managed by IHG.

The newly-signed hotel will add to IHG’s strong pipeline of properties of the Crowne Plaza brand. IHG currently manages 7 Crowne Plaza hotels across India and has another 6 Crowne Plaza hotels in the pipeline, which now represent 13% of IHG’s growth in India.

Commenting on the partnership, Gurneet Singh Sikka, Managing Director, Sikka Group said “Hospitality is an important business vertical of the Sikka and we are working on strengthening this expertise. Partnering with IHG is ideal as the company brings with it many years of international hotel management experience with global brands like Crowne Plaza. This will complement our local business knowledge and add to our success.”

Over the years of its inception, the Group has emerged as a diversified group rapidly growing conglomerates with the perpetual urge of performing better and better.

Tuesday, 10 June 2014

The Mumbai Metro – A New Turnaround in Real Estate

By Ramesh Nair, COO - Business, JLL India 

Several years after New Delhi, the country's political capital, witnessed a transformation with the implementation of the Delhi Metro, the financial capital of Mumbai is set to experience a similar phenomenon with the imminent commissioning of the Versova Andheri-Ghatkopar (VAG) corridor of the Mumbai Metro. With equity participation from Reliance Infra and Veolia (a French transportation major), this Public Private Partnership initiative has all the hallmarks of a game-changer for the city's transportation and realty landscape.

Many facts about the VAG have already been well documented : A project investment of $720 million, a fleet of 16 rakes with 4 fully air-conditioned coaches with an individual capacity of 375 passengers, travel time reduced to 21 minutes from the current 90 minutes between Versova and Ghatkopar - and of course, improved East-West connectivity. However, the impact on the Mumbai realty market is likely to be far more pronounced.

Transportation infrastructure economics have historically proven to have a positive impact on real estate values in a city like Mumbai - residential and commercial properties located close to transportation infrastructure tend to command a premium. Independent analyses of pricing reveal that proximity to a Metro station can single-handedly account for a 22 per cent variation in land values, the other factors being location, distance of the land from the central point and income groups.

On the back of the execution of a string of surface transport infrastructure projects - viz. the Jogeshwari-Vikhroli Link Road (JVLR), the Santacruz Chembur Link Road (SCLR) and the Wadala-Chembur Monorail - the VAG corridor will further stoke the already buoyant Mumbai realty market
Each of these transportation infrastructure initiatives have had a tonic effect on the adjoining realty micro markets - for example the expected implementation of the Monorail had pumped up property prices in Chembur and Wadala by more than 100per cent in a short span of 4 to 5 years. This also applies to the SCLR, with which the Chembur micro-market again witnessed a perceptible price rise due.

The areas which will benefit from Metro connectivity have already seen price rises of 400per cent over the past eight years, and this trend is set to continue with this imminent launch.

A more detailed impact analysis follows below:

Near-Term Impact
Developers' interest in projects near the Metro has been increasing since the start of construction. With the commencement of the project, the surrounding region will definitely experience a certain boom in terms of new offerings and price hikes. Rates on both the commercial and residential market will increase, as the properties of northern SBD, BKC and SBD central are the most preferred locations for investors. 

Medium - Term Impact
Intra and inter-connectivity in SBD North and the Eastern suburbs will increase tremendously, given the capacity of 7 lakh passengers per day added by the Metro. Concurrently, East-West connectivity will benefit the maximum by this project, which will reduce the burden on JVLR and SCLR (the current East-West corridors). 

Source: Times of India

Monday, 9 June 2014

Delhi-NCR witnesses stable housing prices in January-March

Average housing prices remained stable in the national capital region (NCR) during January- March period compared with the previous quarter on low demand, according to real estate portal

The report focuses on buying and rental price trends in residential real estate across 7 major cities of India. 

"Prices per square foot in Delhi-NCR region have remained unchanged in Q1-14 as compared to Q4-13. On the other hand, an annual comparison (Q1-14 with Q1-13) reflects no change in capital prices," the portal said in a statement.

Average rental for 3-bedroom flats also remained stable during the first quarter of 2014 calendar year against the year-ago period.

Commenting on the report, Business Head Vineet Singh said: "The real estate market across India is witnessing stability and Delhi-NCR region is no exception to it.

The confluence of factors namely slowing GDP growth, higher costs of borrowing alongside the political uncertainty had taken its toll on the real estate landscape".
Singh expected that developers would start launching their new projects with election process getting completed.

"Pockets like Gurgaon and Noida which were witnessing scarcity of transactions will see deals happening in the coming six months," he added.

In Delhi, Vasant Vihar witnessed an increase of 27 per cent in prices per square foot during January-March period over previous quarter, while Vasundhra Enclave and Mayur Vihar Phase-II saw 12 per cent rise in capital value of apartments.

Prices increased by 8 per cent in Greater Kailash to Rs 18,950 per sq ft during the period under review. On the other hand, localities like Kalkaji and Dwarka Sector 22 saw a decline of 16 per cent each while East of Kailash has seen a dip of 15 per cent.
"The cautious sentiment is pervasive across all territories. If you look at it in terms of region, the northern region primarily NCR has witnessed no movement in capital prices with quarter on quarter analysis (Q1-14 over Q4-13) showing no change in capital prices," the portal said.

Capital values have improved moderately by 2 per cent in Mumbai, while Pune saw 4 per cent appreciation in Q1-14 over Q4-13.

In Southern region, Hyderabad saw a 3 per cent increase in capital prices while Bangalore has seen an increase of 4 per cent, while rates were stable in Chennai market. In Eastern region, rates were stable in Kolkata.

Source: Times of India

Tuesday, 3 June 2014

Modi's mantra of hope for real estate market

The new government promises to aggressively promote affordable housing. Property is once again going to become the most popular investment option, as there will be significant appreciation in real estate prices on the heels of higher demand in the coming years.

Santhosh Kumar JLL India 

For the common man of India, the dream to own a house will soon turn into reality with the Narendra Modi-led NDA government taking charge. Issues such as affordability of real estate, delayed construction projects and delays due to litigations surrounding real estate projects, etc. have impacted developers as well as consumers.

The new government promises to aggressively promote affordable housing. Property is once again going to become the most popular investment option, as there will be significant appreciation in real estate prices on the heels of higher demand in the coming years. With the easing of regulations, developers are expected to speed up the construction process, providing relief to buyers who have already invested. 

The big names of the Indian industry have welcomed the new government with a hope that it will bring the economy back on track and raise the currently plummeting GDP to 8-9% in the coming fiscal. The new government at the centre is expected to infuse life in the existing policy paralysis in the country by removing the major bottlenecks that are deterring growth.

Revitalised funding flow: 
FDI in the Indian real estate sector is expected to get a lift, resulting in amplification of fund flows and strengthening of the battered Indian rupee. With a clear majority triumph, the incumbent government will enjoy unwavering stability at the centre, which will in turn encourage investors’ sentiments with regards to the real estate market. Global investors are now markedly optimistic about the Indian economy, which is expected to witness more than 100% increase in foreign investment inflows, both via FDIs and FIIs, to above $60 billion in the current financial year, as compared to $29 billion during FY 2013-14.

The urban development ministry is expected to repeal the existing restrictions on real estate firms by allowing foreign investment up to 49%, free of all conditions. This will help the real estate sector to raise foreign capital at competitive rates and reduce stakeholder dependency on the beleaguered local financial institutions. Foreign capital for urban renewal and slum redevelopment projects is also expected to see major relaxations. 

Boost to the retail sector:
The retail sector is also expecting significantly enhanced domestic as well as foreign investments. India’s large but capital-constrained retailers have welcomed the liberalised rules that are expected to bring funding and new technologies into the sector. As a result, demand for retail space is going to increase enormously as more and more domestic retailers plunge in to reap the benefits of the new policies.

Fast-tracked infrastructure: 
The completion of large infrastructure projects like the DMIC (Delhi Mumbai Industrial Corridor) and the DFC (Dedicated Freight Corridor) will be expedited. This, in turn, would mean development of many new cities across the belt of these projects. These massive on-going infrastructure projects will lead to a huge demand for warehouses, thereby giving a significant boost to warehousing and logistics-related real estate demand. Once completed, the growth of real estate at India’s hinterlands that will be connected by these corridors will be exponential. 

In terms of real estate, some of the urgent steps that the NDA government needs to take with immediate effect are: 
· Reversal of the land acquisition act
· Clarence of pending receivables to the private sector via fast-tracked bureaucratic decision-making
· Provision of fiscal stimuli to improve industrial growth
·Creation of investment-friendly real estate market via lowered interest rates and increased employment generation. 

Further, the real estate market expects the government and the RBI to be on the same page with respect to checking inflation and curtailing of interest rates, so as to revive the tumbling demand for property in India.
Developers’ hopes:  India’s developers are hoping that: 
The new government will expedite the process of granting regulatory approvals. The chronic lag in this regard has been a major obstacle for most of their projects The Real Estate Development Regulation & Development bill, which has been lingering for quite some time now, will be passed The new government will ease land acquisition parameters so that availability of land is no longer a major constraint. Difficulties in acquiring land due to the current policies have led to vastly escalated real estate cost. With the slowdown in home sales, developers have been battling a severe liquidity crunch and a rise in their inventory levels. Many prospective buyers have abstained from investing in property because of market negativity, an unstable government at the centre, high inflation, high interest rates on home loans, etc. 

Now, with the stock market rocketing and the Indian rupee appreciating, these buyers are expected to snap into action. Increased sales, along with availability of funds from both domestic and foreign investors, will bring significant respite to developers and finally bring an end to the liquidity crunch that they have been facing. 

The hope mantra:
The three major promises made by the NDA in their manifesto that have direct pertinence to the real estate sector are: 
1.The development of 100 new cities
2.Putting a new land use policy in place
3.Planning for low-cost housing 

Modi’s pledge to implement an affordable housing policy and thereby provide homes to every Indian family presents a $150 billion business opportunity to the sector. The real estate industry now also has real hopes of being granted the coveted industry status, which will further ease fund flows. 

Meanwhile, consumers are optimistic about the impact that the new government will have on real estate pricing, and expect a reduction in home loans, the implementation of the proposed GST framework and the implied tax benefits to buyers. 

Source: Money Control

Sunday, 1 June 2014

Split boosts Telangana, Andhra Pradesh real estate sector

Real estate transactions in coastal Andhra and Rayalaseema regions, which had been sluggish for the past year, have picked up since March 2014, after the AP Reorganisation Bill was passed in Parliament.  
In the Telangana region, where the business has been moderate for the past 18 months, it has begun to pick up fast in Hyderabad, Ranga Reddy and Nizamabad districts.

Figures from the Seemandhra stamps and registrations department indicate that the highest number of real estate and property transactions was registered in Vijayawada and Guntur, where there is  talk of the new capital being situated.
Growth in the stamps and registration figures was highest in Guntur, at 118.78 per cent, with a total revenue of Rs 1,818.74 lakh in April 2014, against Rs 831.32 lakh in April 2013.
Next are Vijayawada (East) and Vijayawada with 81.29 and 92.09 per cent growth in real estate, with revenue of Rs 1,593.23 and Rs 1,428.04 lakh respectively in April 2014, against Rs 878 and Rs 743.42 respectively in April 2013.Visakhapatnam came next (64.38 per cent), followed by Bhimavaram (60.86), and Kakinada (59 per cent).
In Telangana, though the growth rate was just above moderate, investments were higher. Overall investment in April 2014 in Telangana was Rs 2,828.46 lakh (58.48 per cent growth), while in Seemandhra investment was Rs 2,007.84 lakh with 41.52 per cent growth.
The highest revenue for the stamps and registration department in the undivided state came from Ranga Reddy and Hyderabad (south) districts at Rs 5,827.34 lakh and Rs 2,574.91 lakh respectively.
“Despite political clarity, investors and potential buyers are focusing more on Hyderabad for the reason that the city is in the phase where it’s gradually developing. With major players entering the market, infrastructure in these regions has seen considerable change and similar attention would be given to its other districts as well,” said Ganesh Vasudevan, CEO, of the website

Source: Deccan Chronicle