Infrastructure, commercial realty to benefit from budget

Approximately 16-18 km of road construction per day has been achieved by the middle of the current financial year, and budget 2016 has adopted measures to significantly step up National Highway Authority of India’s capabilities in this regard. Roads infrastructure has great influence on real estate development, particularly with the new land it opens up for development through highways and feeder routes.

The budget has outlined revival plans for non-functional airports in partnership with state governments, with a vision to spend around 100 to 150 crore on each airport to make them functional again. This will give a boost to infrastructure in many Tier-II and Tier-III cities, and is without a doubt positive for their real estate markets. A select few projects that are commercially viable with good ridership could pick up pace in the near term.

Going by the budget announcements, Central PSUs are going to be encouraged to reduce their exposure to excess land holdings. While availability of land for development is definitely a constraint and the Land Acquisition Bill is increasingly difficult to implement, an alternative route is to make use of land holdings of central PSUs. We have seen this been done in the railways budget, as well.

As far as the retail sector is concerned, the revamp of the Model Shops & Establishment Act is a welcome move and could help the retail sector considerably.

Unorganized retail could receive a fillip as smaller shops will now also be given the option of remaining open for all seven days of the week, like organized malls. While this will make the high street retail real estate proposition a bit more attractive, we will have to wait and see the implications from a labor market perspective.

Also, as more start-ups get encouraged to commence operations, we expect developers to offer more small mixed-use properties or arrangements for sharing of office space to cater to this segment.

Source: HT Estates, Mar 5, 2016, Page 03

Gurgaon tops in office space leasing

Millennium City Gurgaon has beaten Mumbai and Bengaluru to see the highest absorption of office space in the third quarter of 2015, ensconcing itself as the country’s fastest growing corporate hub.

Among the top 8 cities, Gurgaon grabbed 23% of the total office space leased out in Q3 2015. In terms of area, this works out to 2.1 million square feet, according to a report by US-based realty consultant Colliers International.

Gurgaon is followed by Chennai at 20%, Bengaluru 18%, Mumbai 15% and Noida 11%. Pune, Delhi and Kolkata were the other cities on the Colliers list. The report says this upswing in leasing activity in Gurgaon is expected to persist over next two years.

Samsung, according to the report, has taken up 2 lakh square feet at Two Horizon Center on Golf Course Road while American Express has secured l25,000 square feet at One Horizon Center. Spice Jet has leased a 120,000 square feet plot at Udyog Vihar and Olympus Medical Systems has taken up space 80,000 square feet at SAS Tower.

A series of big projects is under construction as well -like the Business Club at 7 lakh square feet by AIPL group that is expected to be completed by 2017,  Neo Square that has an approx. area of 750,000 sq ft and will be delivered by 2018, Parsvnath IT Park Technicia that has an area of 695,000 square feet and will be delivered by 2016, and Unitech Infospace at Dundahera, which is a 450,000 square feet project and is likely to be completed next year.

According to the report, the IT and ITeS sectors were the key occupiers of office space, accounting for 60% of the leasing activity, followed by the banking and finance sector (20%), manufacturing (10%) and others (10%). NH-8 remained was the most preferred destination, accounting for about 29% of the total office absorption, followed by Golf Course Road (25%) and Udyog Vihar (21%).

“We anticipate the demand momentum in Gurgaon will continue from sectors like IT and ITeS, banking and manufacturing. Due to location advantages and rates, micro markets like Udyog Vihar, institutional sectors and NH-8 will continue to garner companies’ interest,“ said Surabhi Arora, associate director, research, at Colliers.

The Noida market has, meanwhile, seen a recovery with a 0.98 million square feet increase in absorption of office space over last year. The highest absorption was accounted for by Vivo Mobile, which has taken up a 3 lakh square feet space at World Trade Centre in Greater Noida. It is followed by Cognizant, which leased 2 lakh square feet in Infospace 2, and Genpact (1lakh square feet) at Stellar IT Park.

Source: Times Property, Oct 21, 2015

Four things to know about budding ‘Green Office’ realty

Residential and commercial property developers are now increasingly being prevailed upon to evolve and incorporate green features.

Make no mistake:
Environmentally sustainable real estate is extremely important for India today. Given the massive demands on infrastructure, energy, potable water and waste handling and disposal, there are no other options for the real estate sector but to go green. Given that low cost housing is bound to see a huge growth in the next two decades and more than 60% of India’s infrastructure yet to be built, residential and commercial property developers are now increasingly being prevailed upon to evolve and incorporate green features.

India not a slow adopter:
The common perception is that India was generally a late adopter of the ‘green’ mantra in real estate. However, the country has not lagged behind on this front at all. In fact, the growth of green real estate in India is a saga of some compelling and impressive statistics. According to the Indian Green Building Council (IGBC), green real estate in India has grown from a mere 20,000 square feet in 2003 to a little over 3.0 billion square feet of registered, pre-certified and certified projects in 2015. Of this, green office spaces account for 200 million square feet, primarily in the 10 major cities.

Contrary to common belief, Indian developers are not ‘going green’ merely because more and more MNCs will now consider moving only into certified green office spaces in India. The demand for green office spaces is equally high among Indian corporates; some of the top Indian MNCs have now included green office spaces in their corporate sustainability objectives.

This indicates that India is far from a reluctant adopter of green real estate practices. In many cases, the requirements laid out by the Ministry of Environment, Forest and Climate Change (MOEF) for projects over 20,000 square meters has helped the cause of green commercial real estate, as well.

Today, a large number of IT / ITES companies and BFSI firms have an explicit ‘green’ mandate when it comes to leasing commercial spaces. Bank of America Continuum, Citibank, UBS, Inautix and Intuit (among others) are some of the firms that are firmly committed to occupy sustainable office spaces. IGBC, which works under the aegis of the CII spearheaded the initial awareness drive, and the members of CII were the first to imbibe green concepts in their CII Sohrabji Green Business Centre in Hyderabad.

The green rationale:
There is more to the green office realty movement than goals related to carbon footprint, CSR and enhanced corporate image. The improved indoor air quality, better ambience, natural lighting and comfort cooling control in sustainable office spaces have been proven to improve employee productivity and wellness. A typical 100,000 square foot green office building saves the occupier Rs. 30 to 40 lakh in a year on energy alone. Savings in water could be close to half this amount. In comparison to conventional office spaces, green offices are 20-30% more efficient on the use of water and energy. Of course, there are added costs to green office spaces, as well. Office rental benchmarking studies in the 7 major cities have revealed a typical premium of 2-3%.

A large number of developers have now recognized the importance of building green because it improves the lease probability in a market that is currently witnessing parity between supply and demand. Simply put, corporates that are committed to green office spaces prefer leases in buildings whose core and shell is certified green – and such corporates are on the increase.

Common features:
The features typically found in green offices include space design and fittings which enhance energy and water efficiency while simultaneously providing occupants with higher levels of comfort, ventilation and glare free illumination.

The building envelope is designed to minimize heat gain via higher window/wall ratios.

Building facades use high-performance glazing systems to reflect exterior radiant heat outward.

Energy consumption via efficient lighting and high-grade heating, ventilation, and air conditioning (HVAC) systems and integration of sub systems, controls and Building management systems.

Source: ETRealty.Com

Office leasing down 15% in February; housing demand remains subdued

Office leasing fell 15 per cent while demand for ready housing properties remained subdued during February, according to property consultant CBRE.

“Transaction activity dipped by approximately 15 per cent over the previous month, with Bangalore accounting for almost 50 per cent of the overall space transacted,” CBRE said in its monthly update.

Pune and Delhi-NCR also saw strong transaction activity (about 30 per cent of the total transacted space in leading cities) during February, it added.

Cities such as Bangalore, Hyderabad and Kolkata observed an increase in occupier demand in the month.

“Few large sized transactions (above 100,000 sq ft) were also concluded in Bangalore. Among the transactions concluded, Tech Mahindra committed around 140,000 sq ft in Goldhill Supreme, Walmart took up around 130,000 sq ft in Salarpuria Aura and RBS Business Services leased around 100,000 sq ft in RMZ Ecoworld,” CBRE said.

This month also saw the renewal of existing leases (around 0.33 million sq ft) mostly from corporate occupiers, it added.

Absorption of office space increased by nearly 10 per cent in 2014 to over 33 million sq ft compared to previous year.

On housing market, CBRE said the “demand for ready residential properties remained subdued”. The quantum of residential unit launches also remained low during the month.

Real estate market, especially housing, is facing a huge slowdown since last couple of years due to skyrocketing property prices and high interest rates.

“While the focus remained on the mid-end segment, the total number of launches declined due to abundant availability of ready-to-occupy inventory and cautious buyer sentiment,” the consultant said.

Most of the housing projects were launched in Bangalore and Chennai in the mid-end and high-end segments (measuring 100-700 units), while other cities attracted limited new launches during the month, the report said.

“Capital values across most micro-markets in the leading cities largely remained stable due to prevalent low-end user demand and inventory build-up in most locations. Going forward, residential markets are likely to see stable price points with a gradual pick up in launches in most of the leading cities,” CBRE said.

However, emerging and peripheral locations with a substantial supply pipeline might witness a slight price correction in forthcoming months, it added.

Source: CredaiNCR.Org

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Neo Square, HT Estates, Nov 6, 2014, Page 05

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