Commercial realty business in India rebounds

The year 2015 marked a turnaround for India’s commercial real estate as steady economic growth and renewed corporate confidence, especially among ecommerce and IT companies, propelled transactions to the second-highest level in terms of area.

After over three years of weakness, total purchases and leases of office space in the top eight property markets rose to 35 million square feet during 2015. Net commercial real estate transactions by companies rose 17.1% from a year ago.

In 2011, a record 37 million sq. ft.of office space was taken up as rents eased after the global financial crisis. This time, however, it was the result of companies implementing growth plans, according to a report by property consultant Jones Lang LaSalle (JLL) India.

“During the year, office space demand was mainly driven by information technology IT enabled services, ecommerce, startups and large consulting firms,” said Anuj Puri, chairman at JLL India. “Players in many other sectors like fast moving consumer goods, banking, financial services and insurance, manufacturing, telecom and pharma did not come into the market – however, this should happen in 2016 and 2017. Next year will also see demand for built to-suit properties, especially from the larger IT occupiers.”

Commercial space transactions were distributed across new and old buildings in 2015, compared with largely newly completed buildings in 2011. There was a pick-up in large transactions this year, led by Flipkart, which leased 2 million sq. ft. of a custom-built office campus in Bengaluru, and Tata Consultancy Services, which rented over 2 million sq. ft. of built-to-suit space at Hiranandani Estate in Thane for 15 years.

Among purchases, pharma major Abbott IndiaBSE 1.38 % bought 5 lakh sq. ft. of space at Godrej Properties’ commercial project in Mumbai’s Bandra-Kurla Complex for about Rs 1,479 crore. A revival of momentum in commercial realty is an indicator of the economy’s health and augurs well for job creation. Deals by both investors and occupiers suggest that sentiment is improving for the office property market.

The pan-India vacancy level still stands at 16%, although the `realistic’ availability is actually 8-9% because total supply is not always relevant for corporate entities, he said. Many occupiers do not consider Grade-A buildings with multiple owners or those located in areas with inherent disadvantages and connectivity issues. Cities such as Pune, Bengaluru, Hyderabad and Chennai have a vacancy rate of 5-10% and would need fresh supply to meet growing demand, the report said.

Rental growth across Indian cities was steady, with Pune leading the pack with an 8.4% rise. This was followed by a 5.3% increase in average rentals in Bengaluru, 3% in the National Capital Region (NCR) and 1% in the Mumbai Metropolitan Region.

Source: CredaiNCR.Org

Commercial space worth $15-20 billion eligible for REITs in 2-3 yrs

Nearly 80-100 million sqft of commercial space worth USD 15-20 billion are eligible for Real Estate Investment Trusts (REITs) in the next 2-3 years, a recent survey said. According to the survey by KPMG, India potentially has about 375 million sqft of Grade-A office space which is valued at USD 65-70 billion.

Out of this, 80-100 million sqft is estimated to be eligible for REITs in the coming 2-3 years and would be valued at USD 15-20 billion. “REITs pose a large opportunity in the Indian real estate market which is backed by growing economy and more importantly by a large existing Grade-A commercial portfolio,” KPMG said.

The report said in 2015 and 2016 nearly 52.6 million sqft and 57.1 million sqft, respectively, of commercial space is expected to be added. “Most of the Grade-A properties, which will be added in the two years, will be concentrated in seven major cities like including Delhi NCR, Mumbai, Bengaluru, Chennai, Pune, Kolkata and Hyderabad,” it said.

Apart from the Grade-A office spaces, there are other commercial assets such as shopping centers, hospitality and industrial warehouses which might come under the purview of ‘REIT-able’ space, thereby presenting a potential for increasing the overall stock, it said.

KPMG noted that REITs would not address the liquidity challenges faced by developers but are expected to help streamline the sector by creating a transparent mechanism for raising finance in the market as it would be governed by SEBI guidelines which would help in maintaining transparency and their accountability.

The agency, however, noted that certain amendments in the taxation and regulatory aspects of REITs are required, which would further enhance the attractiveness of Indian REITs for global investors.

Source: CredaiNCR.Org

Land records to soon be put online

The additional chief secretary and financial commissioner of revenue department, Dalip Singh, on September 11 said that land records will soon be made available on http://www.jamabandi.nic.in.

Singh was speaking at a function organized to lay the foundation stone for a new office building for the revenue department at Jharsa Road.rnrn”Since land has become costly in Haryana, it has gained importance and is considered wealth, so its proper maintenance is necessary. The land records are in the process of being made available online. Anybody can see the record on http://www.jamabandi.nic.in,” he said.

He added that a system was being devised under which the data will be uploaded on the website as soon as the sale deed is registered. Under this system, fraud in land deals could be checked to a large extent, said Singh.

Singh further said that he had directed revenue officials to clear pending mutations in a time-bound manner and said the deputy commissioner has prepared a schedule for it. He said that Tehsil areas in Gurgaon and Faridabad could be further divided as uploading of data in the two districts has been slow due to the large number of transactions.

He also said that in order to solve the problem of lack of government accommodation for employees of the revenue department, forming a housing corporation within the department was being considered.

Source: CredaiNCR.Org

Government will invite private players to plan, build ITO infrastructure

A shortage of funds with the government for infrastructure development may usher in the private sector in works like maintenance of roads, and construction of flyovers and foot overbridges. The ITO decongestion plan is set to become the first project in which the government will outsource planning and construction. The trend may pick up pace if this project is perceived as successful.

The work at ITO involves construction of a foot overbridge and a skywalk. “ITO is a prominent locationand we also wanted to involve the public in the work of constructing the FOB and skywalk. For that, we have started a competition for innovation designs that are not only aesthetic but also fit in with the surroundings.

It is open to everyone. Five designs will be shortlisted for which winners will be paid Rs 50,000 each. Thereafter, each will have to make a detailed presentation. The winner will be awarded Rs 2.5 lakh after which the design copyright will be transferred to PWD. This is the same amount that is paid to a consultant,” said a senior PWD official.

The project will then be tendered out for construction and maintenance. Two to three models of earning from the project are being considered. These include setting up of kiosks, advertisements on the FOB and skywalk and even installation of small cellphone towers on the structure. “There will be a concession period and a penalty clause as part of the contract wherein the company will be penalized for not maintaining the structure. The city is growing at breakneck speed and, if infrastructure has to keep pace, we will need to involve private players. The government will closely monitor such projects,” said a source.

ITO, where the first such project will come up, witnesses a huge volume of both vehicular and pedestrian traffic due to a heavy concentration of offices, a Metro station, the Tilak Bridge railway station and seven major arterial roads. A new complex for the Supreme Court and another court on Deen Dayal Upadhyay Marg will lead to increase in volume of traffic. At present, there is only one footbridge in the area which is on Vikas Marg. Delhi Metro has built a pedestrian subway.

PWD has, therefore, planned a skywalk connecting Sikandara Road to the parking lot near Pragati Maidan Metro station across Mathura Road. The deck of this skywalk could be linked to the proposed footbridge being constructed by DMRC near the Metro station.

The footbridge will connect the footpath of Deen Dayal Upadhyaya Marg to the lane near the drain close to the Institution of Engineers building for access towards the Hans Bhawan side from the Tilak Bridge railway station.

Source: CredaiNCR.Org

Bill for converting 101 rivers into waterways in next session: Nitin Gadkari

Keen on promoting water transport, the government will introduce a bill in the upcoming monsoon session of Parliament that seeks to convert 101 rivers across the country into waterways.

Converting existing rivers into waterways will propel economic growth as it is a cheaper mode to transport cargo and with this objective in mind, government has set the target to convert 101 rivers into waterways, Road Transport, Highways and Shipping Minister Nitin Gadkari told PTI.

“In the next Parliament session, the Bill will be introduced,” Gadkari said.

Promoting waterways is the top-most priority of the Ministry as it will ease the burden from road and rail network besides being cost-effective and eco-friendly, he said.

“Unfortunately, this mode of transport is yet to be tapped in the country whereas this mode accounts for 47 per cent of China’s transportation and 40 per cent of Europe’s transport.

“The total transportation cost through waterways comes to barely 30 paise/km in comparison to Re 1/km through railways and Rs 1.5/km through road. Unfortunately, this mode of transport is yet to be tapped in our country,” Gadkari said.

Even Japan and Korea depend on waterways, he said, adding that in India it is a minimal 3.3 per cent, of which 3 per cent is coastal transport and remaining 0.3 per cent is inland transport.

The government has so far declared only five river stretches as waterways. For 55 rivers, consultants have been appointed and detailed project reports (DPR) will be formulated once necessary approvals were sought, he added.

The projects will be done on public-private-partnership basis, he said.

Inland waterways comprising rivers, lakes, canals, creeks, and backwaters extend to about 14,500 kms in the country.

However, potential of this mode of transport has not been fully exploited so far.

The government has already decided to launch projects for setting up dry and satellite ports, besides converting rivers into waterways.

Five National Waterways are Ganga-Bhagirathi-Hooghly river system (Allahabad-Haldia-1620 kms); river Brahmaputra (Dhubri-Sadiya-891 kms); West Coast Canal (Kottapuram-Kollam) along with Udyog Mandal and Champakara Canals-(205 kms); Kakinada-Puducherry canals along with Godavari and Krishna rivers (1,078 kms) and East Coast Canal integrated with Brahmani river and Mahanadi delta rivers (588 kms).

Source: CredaiNCR.Org