Residential sales in top 8 cities grew 13% in 2017-18: Report

Affordable housing continued to be the mainstay of the demand as the contribution of this segment to the overall sales in tier I cities

Residential sales in top 8 cities grew 13% in 2017-18MUMBAI: Residential sales across top 8 tier I cities of India has grown 13% during the financial year 2017-18 (April-March) with Mumbai Metropolitan Region witnessing maximum growth of 25%, showed data from Liases Foras Ratings & Research.

Affordable housing continued to be the mainstay of the demand as the contribution of this segment to the overall sales in tier I cities including Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad stood at 18% during the fourth quarter.

The government has been pushing affordable housing through various schemes and incentives. Lower home loan interest rates and necessary impetus by the government to affordable housing has played a key role pushing sales in this segment.

The government has supported the housing sector through affordable housing fund, lower Goods & Services Tax (GST) rates, increased tenure of loans under Credit Linked Subsidy Scheme (CLSS) of Pradhan Mantri Awas Yojana (PMAY) and extended income tax benefits to apartments of carpet area of 645 sq ft.

Mumbai was followed by Delhi-National Capital Region with 19% increase in sales for the year. In south zone, Chennai and Bangalore have shown a slow down with sales numbers showing a drop of 15% and 5%, respectively while Hyderabad witnessed a growth of 17%.

On year-on-year basis, new launches across these top 8 markets have declined in most cities except in Mumbai, Hyderabad and Kolkata where launches grew 42%, 53% and 29%, respectively.

With a growth in sales and drop in new launches the unsold inventory in the tier 1 cities have dropped by 3% from a year ago to 9.29 lakh units as on March end.

During the fourth quarter ended March, residential sales across these tier I cities increased by 14% with Hyderabad emerging as the leader with a 33% increase followed by Bangalore with 30% rise, MMR with 19% growth and 14% increase in Pune. Kolkata is the only city that witnessed a marginal decline of 1%.

During the fourth quarter, sales in affordable segment with price tag of less than Rs 25 lakh increased 24% from a year ago. Sales in the cost bracket of Rs 25 lakh to Rs 50 lakh increased by 4% on an annual basis. Sales in the cost bracket of Rs 50 lakh to Rs 1 crore increased by 17%, while sales in luxury segment with Rs 1 crore to Rs 2 crore rose 13%. Sales in ultra-luxury segment above Rs 2 crore rose 13%.

Weighted average price across tier I cities witnessed a muted increase of 1%. Marginal decline of 1% was observed in Pune and NCR while prices dropped by 4% in Chennai. Prices in Ahmedabad witnessed no change while a slight increase of 1% was observed in Hyderabad , Kolkata , MMR and Pune each, the data showed.

NCR led with the highest contribution to sales in the affordable segment with 26% followed by MMR with 23%, Ahmedabad with 20% and Pune with 15% of total sales in this segment. All 8 cities cumulatively sold highest in cost range of Rs 25 lakh – Rs 50 lakh, with sales of 35% of total sales, followed by cost range of Rs 50 lakh to Rs 1 crore at 30% of total sales.

Among regions, MMR contributed the highest to overall sales at 17,143 units or 25% of total sales followed by NCR at 15,326 units or 22% of total sales, the data showed.

During the quarter, MMR added the highest new launches, with a contribution of 25% followed by Bangalore 17% and NCR 11%. Among various cost segments, the cost bracket of Rs 50 lakh to Rs 1 crore witnessed maximum new launches amounting to 39% of total new supply followed by the cost brackets of Rs 25 lakhs to Rs 50 lakhs with 36% contribution.

The Rs 50 lakh to Rs 1 crore segment of MMR witnessed maximum launches of 5,545 units contributing 11% of the total new launches across eight tier 1 cities. Kolkata contributed 29% of the new launches in the affordable segment with less than Rs 25 lakh followed by MMR 25% and Pune 24%.

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Top 5 reasons to invest in Dwarka Expressway

Dwarka Expressway has created much hullabaloo in the real estate market of the Delhi-NCR. Top real estate developers have assured and re-assured about putting your money in this eight-lane expressway.

Also known as the Northern Peripheral Expressway, it covers areas such as Bijwasan, New Palam Vihar, Kherki Daula and finally meets the NH-8.

According to reports, Dwarka Expressway had done exceedingly well in the Oct-Dec FY2012-13 quarter with its proposed infrastructure.

Why should you invest?

Maximum Price Appreciation: Alimuddin Rafi Ahmed, MD of ILD opines that the Expressway falls in the R-Zone in the Gurgaon Master Plan-2021 which means in the coming years, the value will increase significantly.

Ideal for Investment Purpose: If you are an end-user then plan to invest in someplace else. Dwarka Expressway is excellent for people who wish to invest with a horizon of 3-5 years. Like Sohna Road in Gurgaon, the Expressway will be in proximity with commercial areas in sectors 105, 106, 109, 110, 110A, 111, 112, 113 and 114. Sectors 100 and 101 will be used for public utilities.

Location Benefit: Its close proximity to Delhi and IGI Airport will always ensure a quality price.

Better Options for Lesser Amount: Because the stretch is still under construction, there are more chances of getting a good size apartment as compared to other areas in Gurgaon. Rakesh Kaul, CEO, Experion Developers Pvt Ltd. in Times Property Virtual Expo mentioned “Look at parking your money in sectors 108, 109 and 111 along the Dwarka Expressway to gain almost 50 per cent returns ….” This stretch will soon be at par in investment potential and will also surpass Sohna Road in appreciation, he added.

Easy Connectivity: As per the new Master Plan, there will be a well-built 100m-wide roads connecting the area to the Metro corridor and the proposed diplomatic enclave. The 18km Expressway will be close to some SEZs that are coming up near Kherki Dhaula. This Expressway will reduce the travel time of commuters from west Delhi. It will be parallel to the NH8 till it merges ahead of the IFFCO Chowk.

Source: Content.Magicbricks.Com

Shared office concept gaining popularity

Shared office spaces provide opportunities for many entrepreneurs to set up their own office at an early stage in their business in a cost effective manner.

In the last one decade, the concept of shared office space (also known as serviced offices or business centers) has become quite popular in the city. With entrepreneurship becoming big and start ups gaining momentum, there is a significant rise in the demand for such spaces in Chennai today.

A business center is a professionally managed commercial facility that offers end-to-end business infrastructure for short to medium-term duration. One can choose from a wide range of flexible options that suits one’s needs. Based on specific requirements with respect to space and infrastructure, people can enjoy the advantage of customized, unbranded serviced offices. The business centers offer tenants a private, often glass-walled office on a floor, which is also occupied by other firms. Amenities such as cafeteria, boardrooms, meeting hall and reception are shared between the firms. An organization or an individual entrepreneur can rent a desk, if they don’t need or can’t afford a huge office of their own.

According to Satish Chander Narayanan, associate director, investments, Cushman & Wakefield, “It is increasingly becoming a preferred choice for companies that operate on a small scale. For large scale firms, these help as temporary solutions until they move into their permanent facility. Additionally, these spaces were high on demand during the recent floods and almost all business centers were packed with more than their usual capacity during the months of December, and January.”

The occupancy rates are also high for this kind of property. Geethapriya R, general manager, Regus says, “People are looking at cost effective offices with good infrastructure, as real estate costs are escalating. Hence shared offices are being looked at as a viable option as it doesn’t involve infrastructural cost and initial investment. The prospective clients range from start ups to Fortune 500 companies. There is surely a good demand in this office space category.”

Sathish adds, “Over the last few years, a change is being seen in the attitude towards a serviced office, which initially posed a challenge for firms that were used to operating in their own office. With real estate costs going up, the need for a serviced office is seen as advantageous to a tenant who might be testing the waters with his new business. Besides, business centers have come in handy to provide long-term customized solutions for a number of firms who prefer operating from a serviced office than getting to invest in a full-fledged office space which would warrant them to invest in interiors and pay a significant amount as advance towards the premise. It isn’t surprising that there are firms which have been operating in these serviced offices for more than five or six years, though they have grown substantially.”

Puneet Murthika, senior business development executive, Lema Labs says, “Shared office spaces allow the company to enter a market without making a big financial commitment in an area that’s often unfamiliar. At the same time, employees get a wonderful and professional working environment. We look for work spaces that allow us to innovate and motivate us to work better. Shared offices provide such a platform.”

The story is set to be better with demand rising from domestic and international players. “For firms that place a lot of importance on convenience and flexibility, these spaces are being much sought after. With flexible options like single seat occupancy, many start-ups are also preferring to go with a cost per head arrangement.” says the spokesperson from Doxa Business Center.

“Features such as cost being calculated per workstation, convenience, ease of accessibility, flexibility, lesser planning, lower capital investment, hassle-free maintenance, professional reception services, high-speed broad band and single in voice attract entrepreneurs as they allow them to concentrate on their work. It also gives room for scalability. These are valued highly by emerging enterprises,” adds Puneet.

Source: CredaiNCR.Org

Private equity investments in realty rise 40 per cent to Rs 3,840 crore in March quarter

Home sales in the top Indian cities may not be growing at a brisk pace but private equity investments in real estate rose 40% year-on-year in the quarter to March at Rs 3,840 crore. Of this, 48% or Rs 1,870 crore went into the residential segment, according to a report by property consultancy Cushman & Wakefield.

The retail real estate segment witnessed the second highest investment, accounting for 26% of total investments in the quarter since 2008 on the back of a single investment, where Singapore’s sovereign wealth fund GIC bought the Viviana Mall in Mumbai from Sheth Developers for Rs 1,000 crore.

The commercial office segment recorded total investment of Rs 470 crore again in just one transaction where Blackstone invested in Salarpuria Sattva group’s project in Knowledge City in Hyderabad.

In 2015, private equity investments from foreign as well as domestic funds in Indian real estate grew 72% over the previous year to Rs 25,680 crore, the highest since the peak of 2008. In 2015, 70% of the total investments went to the residential segment, followed by the commercial segment at 21%.

In the quarter to March 2016, investments in Mumbai increased 12 times from the corresponding quarter of the previous year to 44% (Rs 1,710 crore) of total investments. This was followed by Hyderabad, which got a 19% share with investments of Rs 720 crore.

The Delhi-NCR region got 12.5% of the investments at Rs 480 crore, though investments here were only in the residential space.

“Domestic funds have continued to invest and focus primarily on the residential asset class as developers raised funds to meet their growing funding needs for working capital, construction financing and refinancing of loans,” said Sanjay Dutt, managing director-India at Cushman & Wakefield.

Dutt pointed out that the investments are being made mostly at the special purpose vehicle (SPV) level, amid a slowdown in residential sales over the past few years. Some of the large foreign PE funds such as Blackstone, GIC and Xander have sought to diversify their investment portfolios in India and are venturing towards the retail, mixed-use and hospitality segments apart from investments going into commercial and residential segments.

“This could be attributed to several opportunities arising across India wherein developers have been trying to raise capital by monetizing their distressed or non-core assets to reduce the high debt levels,” he said.

The total number of deals closed during the March quarter increased 13% to 17 from 15 in the corresponding quarter of 2015. The average deal size increased 23% to Rs 230 crore. But unlike the year-ago quarter that saw investments only in residential assets, the quarter to March 2016 witnessed investments across asset classes.

In the residential space, financial services firm IIFL invested Rs 500 crore with Aristo Realtors in Mumbai through a structured debt transaction. KKR India Asset Finance put in Rs 150 crore with Sunteck Realty in Mumbai.
Dutt said the SPV level route continues to be the most preferred by domestic as well as foreign PE funds.

“However, it is observed that joint venture partnerships and strategic alliances route have picked up over the past two years, wherein more foreign PE funds, pension funds and global financial institutions have entered into such partnerships with their Indian counterparts and real estate developers,” he said.

In the last few quarters, funds dedicated to specific asset classes have been set up through partnerships between builders and funds to invest in income generating commercial and residential assets besides the warehousing sector.

Source: Economictimes.Indiatimes.Com

Office rentals up in Gurgaon, Bengaluru

Office space rentals have appreciated in Gurgaon and Bengaluru, while remaining stable in Mumbai. Noida’s information technology segment saw a marginal rise.

Corporates were seen pre-committing space in under-construction developments in three cities – Bengaluru, Gurgaon and Mumbai – due to the limited availability of investment-grade space at prime locations, said Ram Chandnani, Managing Director-Transaction Services, CBRE South Asia.

Bengaluru office rentals witnessed an increase of 2-6 per cent q-o-q across non-IT spaces in certain micro-markets during the January-March quarter.

Chandnani said sustained demand led to marginal rental appreciation across South Bengaluru and areas of Indira Nagar, Koramangala, Old Madras Road, Domlur and CV Raman Nagar.

The rise in rentals in Gurgaon was led by DLF Cyber City and Golf Course Road. Noida too witnessed a marginal appreciation in rentals the IT segment, led by high demand for space in certain quality developments along the Expressway.

In other micro-markets of the region, however, rental values remained largely stable.

According to Chandnani, in Mumbai, rental values of corporate real estate across remained largely stable during the first quarter of 2016, with a marginal increase in certain office districts.

The peripheral locations of Malad/Goregaon in the Western Suburbs were the exceptions that noted a slight quarterly increase due to increased occupier demand in quality IT projects.

Meanwhile, the city recorded capital value growth for non-IT space across most front office space locations in the first-quarter, said Chandnani.

“As seen in past years, the first-quarter of the year usually witnesses muted transaction activity as most corporate real estate occupiers’ use this time to strategise their plans for the year ahead,” said Chandnani.

Source: CredaiNCR.Org