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NCR can Have 30,000 Acres of Land Available for Residential Construction

by Paul Joseph September 27, 2010 Uncategorized

The National Capital Region (NCR) may soon have 30,000 acres of land available for residential construction, if the government’s steps in this direction bear fruit. The Centre is attempting to fast-track the resolution of disputes over NCR title deeds, which force developers to stay away. NCR is estimated to be short of 5 lakh housing units, and demand is growing at 1 lakh units a year. The move will spark price correction, releasing over 2 million housing units. The exercise piloted by the urban development ministry and implemented by the NCR planning board, will be kicked off by year-end. The exercise will unlock land in three states: eight districts in Haryana (Gurgaon, Rewari, Faridabad, Sonepat, Rohtak, Panipat, Jhajjar and Mewat); five districts of Uttar Pradesh, (Ghaziabad, Bulandshahar, Meerut, Baghpat and Gautam Budh Nagar) and one district (Alwar) in Rajasthan. The government plans to seek help from local bodies to identify and verify land ownership, after which independent agencies will cross-check data. “This is good for developers who can get land and good for consumers who can get residential units at lower prices. But one has to see how it is implemented. India doesn’t have a very good history in implementing such policy initiatives. One also has to see how soon the free land can be made available for developers,” Abhishek Kiran Gupta, head-research, Jones Lang LaSalle, India said. “In any big transaction, the problem of title deed arises at some point. We are trying to work out a formula. Various suggestions have come in. The exact strategy will be worked out in some time,” an urban development ministry official said. The ministry plans to advise states to create an ad hoc title deed in the name of the claimant to facilitate the transaction. “This should not be difficult as in villages and small towns, everyone is aware of who owns which land. The only problem in some cases is that official records are not available. This exercise will help do away with this problem,” said an official from the Haryana housing board.

Tagged as: abhishek-kiran, delhi, government, india, noida, real estate developers, real estate india, urban, uttar-pradesh

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India’s commercial space to face the problem of plenty

by Paul Joseph August 5, 2010

India’s realty sector is likely to face the problem of plenty with office rental space set to outstrip demand resulting in a further drop in rentals, according to a report released on Tuesday. “With the forecast growth of net completions expected to outpace that of net absorption, a significant supply overhang is expected to remain over the next one year,” Confederation of Indian Industry (CII) and global real estate services firm Jones Lang Lasalle Meghraj said in a joint report. “This will lead vacancy level across India, which was 17.2 percent in 2009 to rise to 20 percent by 2010 end,” it added. It said the commercial lease and rental space in India would witness a low occupancy rate till 2011. The report, however, added that most Indian cities have witnessed an increase in the volume of lease transactions in the first quarter of 2010 with Delhi, including the national capital region, Mumbai and Hyderabad having recorded more than a million square feet of leases each. In 2009, occupiers showed a strong preference towards operational vacant stock rather than projects under construction, a departure from 2007-08, the report pointed out. On the future trend, report said the most micro markets were expected to reach their rental lows within the next 2 3 quarters, if not reached as yet. This indicates that the window of opportunity for occupiers, where balance of power favours them, continues to shrink with every passing quarter. “With India’s economic recovery well under way, its commercial real estate market is beginning to stabilise. Apart from charting the today’s lucrative micro-markets in terms of commercial real estate, this report also affirms that the commercial property landscape will remain favourable for tenants in 2010, and that landlords will have greater influence towards the beginning of 2011,” said Abhishek Kiran Gupta, Head Research and REIS, Jones Lang LaSalle Meghraj. The report titled “The Seven Stars of India India’s best performing micro markets for occupiers” highlights the trend and forecast on realty rental market in seven cities of India Delhi, Mumbai, Pune, Chennai, Bangalore, Hyderabad and Kolkata. Source:http://www.hindustantimes.com/India-s-commercial-space-to-face-the-problem-of-plenty/Article1-581791.aspx Filed under: Builders/ Developers , Hyderabad , Mumbai , Serviced apartments/offices Tagged: Commercial Estate in India , Hyderabad , Jones Lang LaSalle Meghraj , Mumbai

Tagged as: abhishek-kiran, builders/ developers, city-trends, hyderabad, india, indian, lasalle-meghraj, mumbai, real estate, report, research

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Commercial Real Estate Faces the Problem of Supply Overhang

by Paul Joseph August 5, 2010

India’s realty sector is likely to face the problem of plenty with office rental space set to outstrip demand resulting in a further drop in rentals, according to a report released on Tuesday. “With the forecast growth of net completions expected to outpace that of net absorption, a significant supply overhang is expected to remain over the next one year,” Confederation of Indian Industry (CII) and global real estate services firm Jones Lang Lasalle Meghraj said in a joint report. “This will lead vacancy level across India, which was 17.2 percent in 2009 to rise to 20 percent by 2010 end,” it added. It said the commercial lease and rental space in India would witness a low occupancy rate till 2011. The report, however, added that most Indian cities have witnessed an increase in the volume of lease transactions in the first quarter of 2010 with Delhi, including the national capital region, Mumbai and Hyderabad having recorded more than a million square feet of leases each. In 2009, occupiers showed a strong preference towards operational vacant stock rather than projects under construction, a departure from 2007-08, the report pointed out. On the future trend, report said the most micro markets were expected to reach their rental lows within the next 2 3 quarters, if not reached as yet. This indicates that the window of opportunity for occupiers, where balance of power favours them, continues to shrink with every passing quarter. “With India’s economic recovery well under way, its commercial real estate market is beginning to stabilise. Apart from charting the today’s lucrative micro-markets in terms of commercial real estate, this report also affirms that the commercial property landscape will remain favourable for tenants in 2010, and that landlords will have greater influence towards the beginning of 2011,” said Abhishek Kiran Gupta, Head Research and REIS, Jones Lang LaSalle Meghraj. The report titled “The Seven Stars of India India’s best performing micro markets for occupiers” highlights the trend and forecast on realty rental market in seven cities of India Delhi, Mumbai, Pune, Chennai, Bangalore, Hyderabad and Kolkata.

Tagged as: abhishek-kiran, delhi, india, indian, jones-lang, mumbai, real estate developers, research

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Commercial Real Estate In Mumbai Launches At A Low

by Paul Joseph July 27, 2010

Commercial realty, which suggests the actual recovery in the realty sector, is poised to remain a tenant’s market than a seller’s one, this year as well. Mr Abhishek Kiran Gupta, research director, Jones Lang La Salle Meghraj, said, “We are in the recovery stage. Last year 20 million square feet (msf) of leasing happened across the country and this year it would go up by 50% to 30 msf. It is better than the bottom levels, but we expect some fantastic expansion from 2012 unless we are hit by Europe and China.” About 60 msf of leasing space is lying vacant and it will take another 6 quarters to absorb this ready supply, according to an analyst with a domestic brokerage. Very little supply is expected this year and leasing may start happening by the end of this year, Mr Param Desai, research analyst with Angel Broking, said. “About 50% of the supply that is readily available from last year needs to be absorbed first and add to it the fresh supply before we talk of new launches. None of the developers are launching commercial now, everyone is busy completing them and selling it outright,” he added. Source : DNA Filed under: Builders/ Developers , Mumbai , New projects , Retail/ malls , Serviced apartments/offices Tagged: Commercial Real Estate , Jones Lang La Salle Meghraj , Mumbai

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Commercial Realty Market Beginning to Stabilise- Report

by Paul Joseph June 27, 2010

With India’s economic recovery well under way, its commercial real estate market is also beginning to stabilise, said a report released by the Real Estate Intelligence Services division of Jones Lang LaSalle Meghraj. The report titled, “The Seven Stars of India – India’’s best-performing micro markets for occupiers”, highlights the most favourable office micro-markets in India. The report said that while the landscape will remain favourable for tenants in 2010, landlords will have greater influence starting in 2011, which means they should proactively look at locking in attractive leases in the near-term, as office rents are beginning to bottom out. Office micro-markets were rated in the report on the basis of high real estate development, well-developed support infrastructure and sustainable social and business environments. “With India’s economic recovery well under way, its commercial real estate market is beginning to stabilise,” Jones Lang LaSalle Meghraj associate director (Real Estate Intelligence Services) Abhishek Kiran Gupta said in the report. It further states that most Indian cities witnessed an uptick in the volume of lease transactions during the last fiscal, with leases for more than a million square feet given out in Delhi and the NCR, Mumbai and Hyderabad. With the projected growth of net completions expected to outpace net absorption, a significant supply overhang is expected to remain over the next one year. This would lead to a rise in vacancy levels to mid-20 per cent by the end of 2010 against 17 per cent in 2009. The report also gives insights on the changing strategies for commercial occupiers in 2010, factoring in dynamic market movement.

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Commercial Property on an Upswing

by Paul Joseph April 7, 2010

The commercial property is finally on an upswing. The spell cast by the global meltdown in 2008-09 is finally wearing off, as both office and retail space are back in demand. However, most of the development in 2010 is expected to happen in tier-I cities of NCR, Mumbai, Bangalore and Chennai, thanks to a new generation of companies that are considering offshoring for the first time in these destinations. According to global real-estate consultant, Jones Lang LaSalle Meghraj (JLLM) about 60.9 million square feet (sq ft) of office space is expected to become operational in seven Indian cities — including NCR, Mumbai, Pune, Chennai, Kolkata, Bangalore and Hyderabad — during 2010. The tier-I cities of NCR, Mumbai, Bangalore and Chennai are expected to contribute around 74% to this supply. “Although absorption of commercial office space has increased across cities, destinations like NCR, Mumbai, Bangalore and Hyderabad have witnessed large upswings in lease transactions during the first quarter of (calendar year) 2010,” said Abhishek Kiran Gupta, head — real estate intelligence services, JLLM. “Sustained demand upswing from occupiers have led to perceptible strengthening in absorption of commercial office space across Indian cities. The demand, which was initially led by the sunshine sectors like telecom and pharmaceutical industries in 2009, has now been strengthened further by improving conditions in BFSI (Banking, Financial Services and Insurance) and IT/ITES sectors,” he said. “The IT/ITES companies are eyeing large footplates in suburban micro-markets, where large transactions have been recorded during the first quarter of 2010 in several projects that are under construction,” Mr Gupta said. “Occupiers are also on a lookout for outright purchases, realising the narrow window of opportunity which prevails in the market for sales transactions,” he added. Even realtors are feeling the change that has come about in the commercial markets. “Yes, there is definitely an upswing as far as commercial leasing activity is concerned. The cost benefits of offshoring/outsourcing to India are being evaluated by a much wider audience and therefore we see a lot of new companies scouting for leased premises,” said Nandakumar OP, GM — business development, Prestige Estates Projects. An overview of global realty markets by JLLM highlighted a similar trend. “As the global business environment becomes competitive, a new generation of companies are being forced to consider offshoring for the first time. Several US companies, including Deloitte and NetApp, have registered significant space requirements in India,” it stated. “While Bangalore has definitely recorded good absorption in the first quarter of 2010, there is marked improvement in Chennai as well. Without doubt IT has been the main contributor of commercial space absorption in south India, followed by the telecom and banking & financial institutions,” Mr Nandakumar said. Prestige itself has three large commercial projects in Bangalore measuring over 30 lakh sq ft each. It also has 16 lakh sq ft of projects lined up in Chennai. The vacancy in Grade A office space (aggregated for seven Indian cities — NCR, Mumbai, Pune, Chennai, Kolkata, Bangalore and Hyderabad) stands at 18.1% in March 2010 which is much lower than those that existed last year. Similarly, the aggregated vacancy in Grade A retail space stands at 17.5% in March 2010. As far as the retail side of the commercial market is concerned there seems to be a silver lining as well. “Several retailers, both domestic and foreign, are re-charting their expansion plans in India for the next 2-3 years. However, the increase in enquiries from retailers is translating into absorption in select upcoming malls only,” Mr Gupta of JLLM said. Despite strengthening of absorption rates across cities, upswing in market average rentals have not been observed due to thick supply pipeline ready to become operational.

Tagged as: abhishek-kiran, bangalore, chennai, development, financial, global, hyderabad, indian, mumbai, real estate, retail, retail-market, salle-meghraj

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Real Estate Players Plan To Raise $5.7 Billion over the Next 18 Months: JLLM

by Paul Joseph February 18, 2010

Real estate players plan to raise a whopping $5.7 billion over the next 18 months through public offer and private placement of shares to fund projects and repay debts, property consultant Jones Lang LaSalle Meghraj (JLLM) said. “At least $2.45 billion is expected to be raised through QIPs for which real estate players have shareholders’ approval and the remaining $3.31 billion is likely to come from IPOs,” Jones Lang LaSalle Meghraj Associate Director (Research) Abhishek Kiran Gupta told PTI here. Gupta, however, noted that some of the proposed QIPs may find it difficult to sail through due to market volatility and overpricing of the stocks. Still, he said that all the channels for financing realty sector would see enhanced activity in the coming quarters. “While sources of funding have become scarce in the aftermath of the 2008 global financial crisis, there are some emerging channels of real estate financing in India, which are likely to help the sector continue its high-growth story,” the report said. JLLM highlighted that the realty sector had attracted $2.8 billion FDI in 2008-09 fiscal, up 29 per cent from a year ago. During the FY2006 to FY2009 period, FDI in India’s real estate sector grew to $2.8 million from $38 million. Gross bank credit to the realty sector surged 45 per cent to $19.7 billion in FY09 from $13.6 billion in FY08, the report revealed.

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Home Buyers Preferring Tier I Cities for Residential Investment

by Paul Joseph February 11, 2010

Prospective home buyers need to look at certain drivers of accessibility, infrastructure and location viability in a city to earn a profitable return on investment. After the global economic downturn, buyers are now being more cautious about their real estate investment decisions . Locations which show affordability and future capital appreciation potential are preferred. According to a Jones Lang LaSalle Meghraj (JLLM) survey, the most viable cities in terms of residential investment potential currently are Gurgaon and Noida in Delhi NCR, Mumbai, Pune, Chennai and Hyderabad. Abhishek Kiran Gupta, head-research, JLLM, says tier I cities are currently the most preferred residential investment options. “These have a multitude of diversified market drivers and huge latent demand due to inward migration and higher spending power. The preferences range from affordable options within closest proximity to traditional workplace hubs to rationally priced luxury housing at status address locations.” Besides the tier I cities, there are also some other cities that are gaining ground for investment purposes. Cities such as Bhubaneswar, Patna, Gwalior, Pune, Rudrapur and Nagpur are some examples. “These cities have several attractive features such as being IT, BPO, academic, pharmaceutical or financial and commercial hubs. Hence, a lot of people are migrating to these cities thereby adding to the demand for real estate,” feels Rajeev Rai, VP (corporate), Assotech. The developer has residential housing projects in Delhi NCR. Demand, according to developers, is mainly concentrated in the Rs 30 lakh to Rs 60 lakh category. “The demand has been picking up over the last few months. It is mostly for the affordable housing segment with end-users making up a majority of the market,” says Vijay Jindal, CMD, SVP Group. Interestingly, a lot of developers shifted their product portfolio from luxury housing to affordable segment when economic downturn slowed down demand. Mr Gupta of JLLM feels that unlike its counterparts, the residential sector has begun to show signs of stability in many markets, and even recovery in certain cities. “Whether this trend will continue depends on economic factors (mortgage rates, GDP growth, labour market stability) and on prudent decisions by developers on issues relating to prices and quality of product being offered,” he says. Industry experts say that upcoming growth corridors with good infrastructure facilities and connectivity to important pockets of the city hold a lot of potential. Venu Gopal, associate director-real estate practice, Ernst & Young, highlights locations that hold promise. “In the NCR, Gurgaon provides a wide range of options from premium housing to mid-income residential projects as far as pricing and connectivity is concerned. Northern Bangalore holds good potential, primarily due to the airport at Devanahalli and the surrounding infrastructure development like Bellary Road widening, express highway and proposed high speed monorail. In Chennai, the southern and western peripherals of the city are witnessing significant residential developments. As for Hyderabad, Madhapur and other areas surrounding the Hitech city hold good potential.” However, a few important factors have to be kept in mind before investing in a particular city. Factors such as current and expected infrastructural development, linkages on major connectivity corridors, the client profile in the area and the presence of major developers in the area in both residential and commercial space will all make a key difference for an investment decision in a city, according to Harinder Dhillon, V-P, marketing, Raheja Developers. The developer’s residential projects are coming up in Dharuhera and Gurgaon. Factor in all considerations before you take a decision. Paying extra attention to the choice of location, clear title of the property and relevant approvals from the developer will help in making a good choice.

Tagged as: abhishek-kiran, airport, area, market, real estate, real estate india, salle-meghraj

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Indian Real Estate Could See Fresh Investment of $1.5 Billion in Residential Deals in 2010

by Paul Joseph January 5, 2010

The Rs 70,000-crore Indian real estate sector is expected to see fresh investments to the tune of $1.5 billion in residential deals by exclusive real estate funds in the financial year 2010-11, three times more than the total quantum that such funds invested in FY 2008-09. These funds include Sun Apollo, HDFC India Real Estate Fund, RedFort Capital, ICICI Prudential Infrastructure Fund and Xander Real Estate Partners. The investments will be both in the metros as well as Tier II cities in India and signal a rebound in realty fund activity in the country after a lull in the last 12 months. While domestic real estate funds among these may commit overall investments of around $400 million, international funds are expected to pump in over $1.2 billion in the real estate sector during the period. Amit Goenka, national director – capital transactions, Knight Frank India Private Ltd told FE, “These estimates are based on the total active domestic and international funds and their existing corpus strengths. There are some active domestic players like HDFC, ICICI Prudential Fund, IndiaREIT, Milestone and ASK who are expected to do deals in 2010. The bulk of the funds are, however, foreign, with much larger corpuses.” These and other such funds have recently closed deals with Parsvanath, Godrej Properties and Nagarjuna Constructions, among others. Other real estate companies, which have announced qualified institutional placements (QIPs) and initial public offerings (IPOs) but are yet to complete the process, like Purvankara, Omaxe, Emaar MGF and Ambience, would be looking to now enter into new private equity (PE) transactions for their select residential projects. Besides this, there are a host of Tier II developers in the MMR, NCR and Bangalore region who are in active discussions with PE funds for their various residential projects. The residential projects are largely centered in Mumbai, Thane, Panvel, Pune, Ahmedabad, Gurgaon, Noida, Ghaziabad, Faridabad, Bangalore, Chennai, Kolkata and Lucknow. These are prime residential centres in India which form the radar for most fund houses. As per the recent rankings based on Knight Frank research, the top 10 most attractive cities to invest in include Delhi, Mumbai, Surat, Bengaluru, Kolkata, Ahmedabad, Jaipur, Chennai, Pune and Lucknow. International property consultants Jones Lang LaSalle Meghraj (JLLM) recently conducted research on residential markets across India to help identify investment hotspots for retail investors. Abhishek Kiran Gupta, Head – Research, JLLM, said, “While abnormally large returns can be found in specific projects throughout the country, we have limited our analysis to India’s seven largest cities due to high residential demand from their large populations, relatively higher transparency levels and presence of premium regional and national developers. “In order to round out our top 10 list, we have also included three additional noteworthy cities which we feel have the potential to provide significant returns to investors.” As for FDI guidelines, most of the funds are foreign domiciled and have to follow the guidelines for the sector. Such funds can invest in any real estate asset class such as residential, commercial or retail so long as the development is spread over 10 acre of land for development or a minimum development of 50,000 sq mts.

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