| NEW DELHI: Vacant office spaces have seen demand for them rise by 19 per cent during the last quarter amid signs of economic recovery, although the same weakened in the National Capital Region on hopes of a further drop in rentals, a report has said. According to a latest report by global realty consultant Cushman & Wakefield (C&W), the average demand in India's eight major cities rose by 19 per cent at 6.7 million sq ft during July-September period over the previous quarter. "Bangalore witnessed the highest demand in the quarter with 2.3 million sq ft followed by Mumbai at 1.2 million sq ft and Chennai at 0.98 million sq ft," C&W said. However, demand in the NCR region was down by 30 per cent at 0.66 million sq ft from the previous quarter, it added. C&W attributed the decline in demand to "subdued interest from the corporate sector in anticipation of further decline in values along with shelving of their expansion plans". The report said the total supply during the last quarter was much more than demand and was estimated at about 15.9 million sq ft, which was led by Mumbai with 3.73 million sq ft. NCR and Kolkata followed with 2.26 million sq ft and 1.7 million sq ft, respectively. "The gap between supply and demand increased to over 130 per cent (from 50 per cent) in the last quarter, increasing the average vacancy across major cities in India to 17 per cent from the previous quarter's 13-18," the report said. |
Wednesday, October 28, 2009
Demand for office space rises by 19 pc in Q2: C and W
Funds just got costlier for builders
The RBI’s credit policy announced on Tuesday appears intended to rein in an incipient bubble in the real estate sector. The provisioning requirement for loans to commercial real estate has been increased from 0.40% to 1%, implying costlier bank loans for the sector.
As most of the realty companies rely on bank funding, especially in times of financial crisis, this move could have an impact on the sector.
“As banks often keep a cushion for any regulatory changes in provisioning, this measure is more for bringing moderation in the realty sector. Since necessary reduction in prices has still not taken place and there is fair amount of money available for the sector, this step is to avoid creation of another asset bubble,” says M Narendra, executive director of Bank of India.
Not unexpectedly, industry officials differ. According to Rajeev Talwar, executive director of DLF, “Stability in major parameters is a good sign, but increasing the risk weightage for commercial real estate is a negative signal, which is perhaps not required so early in the economic revival process.”
It remains to be seen whether this latest measure has the desired impact of curbing any further rise in property prices. Since there is a huge latent demand to be fulfiled, some builders are confident of sales being unaffected by any increase in prices. Indeed, in some cities property prices have gone up by 5-15% in past 2-3 months.
But other industry officials doubt whether any price increase can be passed on. “Property prices are a function of demand and supply and it will not be easy for developers to pass on this extra cost to buyers as many places, especially in central Mumbai and parts of Delhi, have already seen a significant price run-up,” says Keki Mistry, vice-chairman and managing director of HDFC.
Sudhir Reddy, managing director of IVR Prime, a south-based builder, says: “It is easier said than done that companies will pass on the incremental cost of funds to homebuyers. One must not forget that increase in market price will result in additional construction costs for builders. This will not be possible when places like Hyderabad, Chennai and Pune are still facing a glut in demand.” Sunil Malhotra, CFO of Delhi-based Omaxe, says: “As demand is still price-sensitive, it will not be easy for developers to pass on that extra cost to consumers.”
In short, the current measures may not have significant impact on the financials of real estate companies or prices. Tuesday’s policy pronouncements show that the apex bank has become vigilant. Hari Pandey, VP-finance, HDIL, says the increased provisioning will not cost more than 30-50 bps at present.
As most of the realty companies rely on bank funding, especially in times of financial crisis, this move could have an impact on the sector.
“As banks often keep a cushion for any regulatory changes in provisioning, this measure is more for bringing moderation in the realty sector. Since necessary reduction in prices has still not taken place and there is fair amount of money available for the sector, this step is to avoid creation of another asset bubble,” says M Narendra, executive director of Bank of India.
Not unexpectedly, industry officials differ. According to Rajeev Talwar, executive director of DLF, “Stability in major parameters is a good sign, but increasing the risk weightage for commercial real estate is a negative signal, which is perhaps not required so early in the economic revival process.”
It remains to be seen whether this latest measure has the desired impact of curbing any further rise in property prices. Since there is a huge latent demand to be fulfiled, some builders are confident of sales being unaffected by any increase in prices. Indeed, in some cities property prices have gone up by 5-15% in past 2-3 months.
But other industry officials doubt whether any price increase can be passed on. “Property prices are a function of demand and supply and it will not be easy for developers to pass on this extra cost to buyers as many places, especially in central Mumbai and parts of Delhi, have already seen a significant price run-up,” says Keki Mistry, vice-chairman and managing director of HDFC.
Sudhir Reddy, managing director of IVR Prime, a south-based builder, says: “It is easier said than done that companies will pass on the incremental cost of funds to homebuyers. One must not forget that increase in market price will result in additional construction costs for builders. This will not be possible when places like Hyderabad, Chennai and Pune are still facing a glut in demand.” Sunil Malhotra, CFO of Delhi-based Omaxe, says: “As demand is still price-sensitive, it will not be easy for developers to pass on that extra cost to consumers.”
In short, the current measures may not have significant impact on the financials of real estate companies or prices. Tuesday’s policy pronouncements show that the apex bank has become vigilant. Hari Pandey, VP-finance, HDIL, says the increased provisioning will not cost more than 30-50 bps at present.
India Land's flagship seeks to alter Ambattur facade
CHENNAI: India Land properties (ILP), part of the Madrid-based Americorp group, is betting big on its flagship technology park at Ambattur to give a fresh impetus to the fast changing industrial landscape of the suburb in north Chennai.
By September, the 2.6 million sq ft ILP tech park on 10-acre would be commissioned with marquee clients like the Royal Bank of Scotland (RBS), Kone and Etilsalat. Total office area will be two million sq ft — Tower A (4.2 lakh sq ft) and Tower B (6.3 lakh sq ft) are completed and ready. Tower C (9.5 lakh sq ft) is coming up.The 100% FDI-backed project of the global realty player is in the last leg of completion.
The Rs 450 crore project has a potential to generate over 20,000 jobs in the IT, ITES, retail and support services. It is expected to play a major role in transforming Ambattur, which is one of the oldest industrial hubs in Chennai.
ILP has emerged as the largest player with its plug-and-play tech park by building IT space which is double the size of Tidel (1.3 million sq ft) and Olympia Tech Park (1.2 million sq ft) in the city.
ILP director, S Salai Kumaran told ET Ambattur is witnessing a sea change. From an industrial belt, it is transforming into a catchment area for companies, including MNCs, in diverse fields. It has the potential to become a central business district (CBD) and another OMR given its proximity to leading hospitals, schools and the entire eco-system.
It also has the advantage of a strong road and rail connectivity linking centres like Tiruvallur, Perumbur, Anna Nagar and Vadapalani which have a high concentration of workforce from diverse sectors, he added. "Our development work is progressing well. We expect to become fully operational by September," ILP country head C S Ilangovan alias Umesh told ET, noting that office premises would absorb a space of 2 million sq ft, while the balance would be used for parking, retail (multi-cuisine food courts) and landscaping infrastructure.
By September, the 2.6 million sq ft ILP tech park on 10-acre would be commissioned with marquee clients like the Royal Bank of Scotland (RBS), Kone and Etilsalat. Total office area will be two million sq ft — Tower A (4.2 lakh sq ft) and Tower B (6.3 lakh sq ft) are completed and ready. Tower C (9.5 lakh sq ft) is coming up.The 100% FDI-backed project of the global realty player is in the last leg of completion.
The Rs 450 crore project has a potential to generate over 20,000 jobs in the IT, ITES, retail and support services. It is expected to play a major role in transforming Ambattur, which is one of the oldest industrial hubs in Chennai.
ILP has emerged as the largest player with its plug-and-play tech park by building IT space which is double the size of Tidel (1.3 million sq ft) and Olympia Tech Park (1.2 million sq ft) in the city.
ILP director, S Salai Kumaran told ET Ambattur is witnessing a sea change. From an industrial belt, it is transforming into a catchment area for companies, including MNCs, in diverse fields. It has the potential to become a central business district (CBD) and another OMR given its proximity to leading hospitals, schools and the entire eco-system.
It also has the advantage of a strong road and rail connectivity linking centres like Tiruvallur, Perumbur, Anna Nagar and Vadapalani which have a high concentration of workforce from diverse sectors, he added. "Our development work is progressing well. We expect to become fully operational by September," ILP country head C S Ilangovan alias Umesh told ET, noting that office premises would absorb a space of 2 million sq ft, while the balance would be used for parking, retail (multi-cuisine food courts) and landscaping infrastructure.
Tuesday, October 20, 2009
Is buying real estate a profitable idea?
“Improvement in the overall economic sentiment coupled with liquidity due to a recent upswing in the equity markets have renewed consumer confidence in real estate,” says Sukhraj Nahar, chairman, Nahar Group. “Residential real estate in particular has always been a safe investment option. It holds true even today,” he adds.
Developer Vijay Wadhwa advises parents to opt for real estate as long-term planning for their child's future. “Especially for parents of the girl child,” he says.
“Real estate is probably the best long-term investment one can make. It remains in your child's name, and the appreciation in value over the years makes it a safe and secure option. Or even while planning for your old age, real estate is always an asset,” he adds.
Developer Vijay Wadhwa advises parents to opt for real estate as long-term planning for their child's future. “Especially for parents of the girl child,” he says.
“Real estate is probably the best long-term investment one can make. It remains in your child's name, and the appreciation in value over the years makes it a safe and secure option. Or even while planning for your old age, real estate is always an asset,” he adds.
Realty: Diwali 2009 offers are meant more for end users
It’s that time of the year when you can feel the festive buzz all around you. And real estate developers are cashing in on the festive mood. They have realised that the consumer is not interested in a drop in basic sale price but more in the total outflow that is incurred towards purchase of the property.
Ravi Saund, marketing head of Sare, a real estate-backed private equity fund developing residential properties, says there is a qualitative shift in Diwali offers across years. “The year 2007 was the height of the real estate boom and developers were riding the crest of the boom. Diwali 2008 saw developers struggling with cash flows and global recession and Diwali offers too were highly watered down. This year the offers are structured to be of more use to the end user.” Sare took advantage of the positive buyer sentiment to launch its Chennai and Gurgaon projects. In addition, it offered a Rs 25,000 festival discount.
According to Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj (JLLM), demand this festive season has been 25% higher than it was last year, when the sector was already in the grip of the slowdown.
Whether this demand is on the back of varied offers or an improvement in the overall sentiment, the fact is that many developers are launching special incentives to appease buyers.
Supertech is offering free LCD screens to customers in some of their projects such as 34 Pavilion in Noida, Emerald Court at Expressway Noida, Czar Suits in Greater Noida and Green Village in Meerut. R K Arora, chairman & MD, Supertech, says they have received a good response from buyers. “In the first phase during the Navratras, we had offered ACs per BHK in some of our projects. The response to the previous festival offer and the current offer (AC+ LCD) has been quite welcoming. Around 70-75 units were sold for all the projects put together.”
Delhi-based real estate developer Omaxe too has announced a special offer where customers can win an LCD TV on every on-the-spot booking of flat in their newly-launched group housing project in Bahadurgarh and Rohtak projects. Both the group housing projects offer a 3BHK house for around Rs 35 lakh.
Vijay Jindal, CMD, SVP Group claims that they have seen a 35% growth in booking with the launch of their festive offers. “We are offering 10-55-35 (30+5). Booking amount is 10%, 55% will be financed by bank whose EMI will be paid by SVP. Then on possession 5% will be paid by the customer and rest 30% will be financed by the bank or financial institution. The response for our scheme has been quite encouraging.”
Ravi Saund, marketing head of Sare, a real estate-backed private equity fund developing residential properties, says there is a qualitative shift in Diwali offers across years. “The year 2007 was the height of the real estate boom and developers were riding the crest of the boom. Diwali 2008 saw developers struggling with cash flows and global recession and Diwali offers too were highly watered down. This year the offers are structured to be of more use to the end user.” Sare took advantage of the positive buyer sentiment to launch its Chennai and Gurgaon projects. In addition, it offered a Rs 25,000 festival discount.
According to Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj (JLLM), demand this festive season has been 25% higher than it was last year, when the sector was already in the grip of the slowdown.
Whether this demand is on the back of varied offers or an improvement in the overall sentiment, the fact is that many developers are launching special incentives to appease buyers.
Supertech is offering free LCD screens to customers in some of their projects such as 34 Pavilion in Noida, Emerald Court at Expressway Noida, Czar Suits in Greater Noida and Green Village in Meerut. R K Arora, chairman & MD, Supertech, says they have received a good response from buyers. “In the first phase during the Navratras, we had offered ACs per BHK in some of our projects. The response to the previous festival offer and the current offer (AC+ LCD) has been quite welcoming. Around 70-75 units were sold for all the projects put together.”
Delhi-based real estate developer Omaxe too has announced a special offer where customers can win an LCD TV on every on-the-spot booking of flat in their newly-launched group housing project in Bahadurgarh and Rohtak projects. Both the group housing projects offer a 3BHK house for around Rs 35 lakh.
Vijay Jindal, CMD, SVP Group claims that they have seen a 35% growth in booking with the launch of their festive offers. “We are offering 10-55-35 (30+5). Booking amount is 10%, 55% will be financed by bank whose EMI will be paid by SVP. Then on possession 5% will be paid by the customer and rest 30% will be financed by the bank or financial institution. The response for our scheme has been quite encouraging.”
NRIs to get immediate property possession in Chandigarh
CHANDIGARH: Non Resident Indians (NRIs) having property in the union territory of Chandigarh can now gain immediate possession of both residential and non-residential property, officials said here Monday.
"We have received a notification from the union government regarding the extension of the East Punjab Urban Rent Restriction (Amendment) Act 2001 in the city. Now NRIs can have immediate possession of their property by just applying to the relevant authority," said the official spokesperson of the union territory here Monday.
He added: "Chandigarh administration had been for long urging the centre to make provisions or to devise a mechanism for safeguarding the properties of the NRIs having roots in Chandigarh."
Chandigarh already has an NRI cell, which was established Aug 15, to deal expeditiously with various representations and complaints received from NRIs
"We have received a notification from the union government regarding the extension of the East Punjab Urban Rent Restriction (Amendment) Act 2001 in the city. Now NRIs can have immediate possession of their property by just applying to the relevant authority," said the official spokesperson of the union territory here Monday.
He added: "Chandigarh administration had been for long urging the centre to make provisions or to devise a mechanism for safeguarding the properties of the NRIs having roots in Chandigarh."
Chandigarh already has an NRI cell, which was established Aug 15, to deal expeditiously with various representations and complaints received from NRIs
Saturday, October 17, 2009
Home buyers stay off as builders hike rates
MUmbai's residential property prices are on the rise even as the buyer is not in a hurry to finish a deal. According to the city’s property registration data, there has been a 13% month-on-month drop in the number of apartments registered in August 2009 this year as compared with the previous month. This trend was holding out in September as well.
“As prices increase, customers shy away and this is evident from the registration data,” said Ram Yadav, CFO, Orbit Corporation. The slowdown in demand comes after an average month-on-month increase of 6% since March 2009. “The drop in sales is clearly visible in Mumbai as compared to other parts of the country. It is more visible in projects that cost over Rs 3,000 per sq ft,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research agency.
On the back of the global crisis, property prices were affected quite seriously and fell 15-30% starting April last year. This trend continued till the end of 2008 and prices showed a semblance of stability early this year.
As the economy started to pick up, a change was being felt from March this year. “A lot of pent up demand found its way into the market beginning March this year. However, with a 10-15% price hike, projects are not so attractive now,” said Hari Krishna, director, Kotak Realty.
Real estate agents profess a similar view. “Builders have increased prices faster than expected. This has forced buyers to defer their purchase decision,” said Vipul Shah, a property consultant. Builders have merely reacted to the sentiment which revolves around the demand picking up in the residential segment.
“An increase in prices has directly affected the demand for secondary homes. This shows demand is elastic enough to weather any increase in price,” said Ambar Maheswari, director, Investment Advisory for international real estate consultancy, DTZ India.
“As prices increase, customers shy away and this is evident from the registration data,” said Ram Yadav, CFO, Orbit Corporation. The slowdown in demand comes after an average month-on-month increase of 6% since March 2009. “The drop in sales is clearly visible in Mumbai as compared to other parts of the country. It is more visible in projects that cost over Rs 3,000 per sq ft,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research agency.
On the back of the global crisis, property prices were affected quite seriously and fell 15-30% starting April last year. This trend continued till the end of 2008 and prices showed a semblance of stability early this year.
As the economy started to pick up, a change was being felt from March this year. “A lot of pent up demand found its way into the market beginning March this year. However, with a 10-15% price hike, projects are not so attractive now,” said Hari Krishna, director, Kotak Realty.
Real estate agents profess a similar view. “Builders have increased prices faster than expected. This has forced buyers to defer their purchase decision,” said Vipul Shah, a property consultant. Builders have merely reacted to the sentiment which revolves around the demand picking up in the residential segment.
“An increase in prices has directly affected the demand for secondary homes. This shows demand is elastic enough to weather any increase in price,” said Ambar Maheswari, director, Investment Advisory for international real estate consultancy, DTZ India.
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