Housing shortage to hit India hard: Knight Frank

According to Knight Frank, India will have to face or witness severe housing shortage. One of the main drawbacks in the construction sector is funding.


Knight Frank India has published its latest research report entitled “Economy and Realty @ Glance.” In the global property consultant’s opinion the best way to meet the housing shortage is Real Estate Investment Trust.

The report concentrates mainly on the housing shortage which India faces now. According to the property consultants the best thing to meet the housing shortage is Real Estate Investment Trust (REIT) model.

Knight Frank India suggests that the funding of real estate projects can be met with REIT effectively. Funding is one of the main problems which the developers are facing and it can be well tackled through REIT.

As per Economy and Realty @ Glance, by 2031 the population in the cities will be around 600 million. It means an increase of over 200 million in just 20 years. This population increase will have many adverse impacts on the social and economic segments.


Housing shortage is going to be severe in India

Moreover the housing sector will be the worst hit by this population explosion in the cities. Already, according to the figures of 2012, around 94.98 million people live in slums in the top cities of India.

In order to meet the housing demand of these people, the government has launched Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a housing project which aims to provide homes to the poor and weak economic class people. However the allotted number of homes, for the coming seven years, is only 1.6 million.

This alone shows how sharp the shortage of housing units will be. If the situation goes on like this, India will see a huge shortage of housing units within a couple of years.

Lack of viable funding options and foreign investment are the two main problems which the real estate sector faces now. Worsening the situation the amount of NRI investment in the real estate sector also decreased.

As a remedy for funding problems, Knight Frank suggests REIT which will enable the construction sector to raise sufficient fund for construction and property development.


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Correction in the housing market may be round the corner

NEW DELHI/MUMBAI/BANGALORE: Home prices in Mumbai softened in the December quarter while price growth in other Indian cities slowed, two real estate consultancy firms have said, reinforcing speculation that a correction in the housing market could be round the corner.

According to property consultancy CBRE, prices of new homes in India's financial capital Mumbai were down 2-5% in the October-December period from the previous quarter.

Liases Foras, another property research firm, said prices in the city had dropped 1%. Both said that the rate at which prices were growing in the other cities, too, had come down significantly.

"Pressure is building up. We are likely to see a correction soon if the sentiment remains the same," said Anshuman Magazine, CBRE's chairman and managing director for South Asia.

Data also showed a 16% quarter-onquarter drop in home sales across top cities, a sign that inventory build-up across the country due to economic slowdown could worsen. Over the last 12 months, home sales have dropped across cities (14% in Bangalore, 32% in Chennai, 25% in Hyderabad, 10% in the national capital region), increasing pressure on developers who are already facing funding problems.

"The situation is so bad that many developers have been forced to bring down the prices," said builder Lalit Kumar Jain, who is also head of the Confederation of Real Estate Developers Associations of India (Credai).

CBRE said that while new launches in some parts of Mumbai happened at lower price points, other cities have started facing pricing pressure due to a flurry of new project launches. Another property advisor, Jones Lang LaSalle, said that while price correction has started in some areas of Mumbai, in most others, prices have remained stagnant.


According to Liases Foras, the top six property markets in the country saw close to 100 million sq ft of housing space being launched in the December quarter. It was the highest since the spike in project launches after the recession of 2008-09 and about 28% more than that in the previous quarter. "We've reached the tipping point and it may be the start of a correction," said Pankaj Kapoor, managing director of the research firm.

Sales of new homes in India have dropped due to high interest rates and the job insecurity due to the economic slowdown. According to Liases Foras, unsold inventory at the end of December quarter was higher than the previous quarter's at 602 million sq ft, which would take up to 29 months to be sold at the current pace of absorption.



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What's In Store for Indian Real Estate in 2013?

Bangalore: In 2012, the market has brought discouragement for the developers in real estate which is why it is now a big question on how the market performance would be in 2013. This article speaks about the insights of India’s real estate market in 2013 from real estate expert, Ashutosh Limaye, Head- Research & Real Estate Intelligence Service, Jones Lang LaSalle India. Some of the points covered in this article are listed below, reports Moneycontrol.com.


Policy initiatives

This New Year, developers are hoping for an optimistic future for real estate segment with the government’s plan to give realty sector an industry status and favourable policies, after a long wait. The government had instigated certain policies in favour of real estate industry at the end of 2012, and this current year will witness many of such favourable government policies being implemented. Few of these policies are the most awaited real estate regulatory bill, the real estate investment trusts (REITs), the real estate mutual funds (REMFs), likely to get introduced this year; and the Land Acquisition and Rehabilitation and Resettlement Bill.



Residential segment

Several market experts believe that this New Year will bring changes that will help real estate industry to revive. In India the residential real estate sector will witness a new trend when the proposed Real Estate Investment Trusts (REITs) will allow investments in rental housing. It means the structure of this policy is expected to drive the investors demand for housing mainly in prime cities in India. Moreover, from past two years, the country is witnessing a trend where the absorption rate for volumes under the range of 2000-3000 a square feet was more. And, this year, the range is likely to increase a bit to 3000-Rs5000 a square feet in the midst of high inflation and soaring construction costs.


Office space absorption

In 2013, the rate of absorption for office space is expected to be the same like last year. This year, the hunt for office space in prime locations is likely to rise and these office spaces will fetch premium revenues. Rental amount may also witness a stiff rise due to less project launches.



Delhi real estate

The capital city is witnessing most of the real estate absorption in areas like Gurgaon and Noida. Also, Dwarka Expressway and Noida Extension in Delhi-NCR are showing the most promising when it comes to property investment. Noida Extension has emerged as one of the best location to invest in residential segment as the housing prices are likely to jump by 111 percent during 2012-2017. Property prices might shot upto 6760 per square feet from 3200 per square feet, which is the existing rate currently. Since 2010, Noida Extension has witnessed the launch of more than 80,000 residential units.


With the price appreciation of 108 percent during 2012-2017, Dwarka Expressway is emerging as a new residential belt. This Expressway will improve the connectivity between Delhi and Gurgaon, making the real estate boom in this area. According to the report, since 2007, total of 12,649 residential units were launched along the Dwarka Expressway stretch.


Mumbai

In 2013, Mumbai will witness healthy demand for housing as well as office space. Less chance for price correction in Mumbai but the city is expected to get new residential launches this year. The financial capital is one among the largest traditional real estate market in India. In Mumbai, places like Wadala and Chembur are emerging as the most promising investment destination. These places are witnessing maximum growth in real estate movement because of close proximity to premium office space markets, strategic location and proposed infrastructure projects like Eastern Freeway project and Monorail. It is expected that the upcoming projects will increase the housing demand in these places in the near future.


Bangalore

When it comes to office space, Outer Ring Road will remain the most preferred localities for office space in 2013. "Meanwhile, Whitefield will continue to retain its sheen for both office and residential real estate because of affordability, proximity to key work places and good social infrastructure," said Ashutosh Limaye - Head - Research & Real Estate Intelligence Service, Jones Lang LaSalle India, reports Economic Times.


"Bangalore is primarily driven by IT/ITeS segment, which has been growing consistently," said Gaurav Pandey, senior vice president, PropEquity Research & Consulting.


"Bangalore property market has done reasonably better than other major cities of India, such as National Capital Region (NCR) or Mumbai Metropolitan Region (MMR) during the last year," added Pandey.


Also Read: India's 7 Attractive Property Investment Hotspots In 2013


Real Estate in other cities

In 2013, Chennai is expected to see slowdown; however, the city has witnessed immense number of residential launches last year. This scenario is likely to continue for Pune as well. On the other hand, metros like Hyderabad and Kolkata are expected to see more number of new residential launches. Property prices may increase further due to the hike in construction costs. Other cities like Bhubaneswar, Ahmedabad, Kochi and Coimbatore to witness more real estate movements in 2013.



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12,000 affordable new flats at Greater Noida, Yamuna e-way

GREATER NOIDA: With aim to promote affordable housing, the Greater Noida and Yamuna Expressway authorities will develop 12,000 flats in the next couple of years. Land has been identified for the project and on Thursday a layout plan was sanctioned by the authorities.

A total of 7,000 flats in Greater Noida and 5,000 flats in Yamuna Expressway will be developed. "We have identified Sector Mu-2 and Sector 10 in Greater Noida for the project while in Yamuna Expressway, the flats will be developed in sector 18," said a senior official.

The fast pace of work shows the Authority's seriousness on the project. Land was earmarked and approved in the board meeting on January 11 and in just 13 days the layout plan of the project was duly sanctioned. "We are committed to develop these flats as soon as possible," an official said.

Elaborating the features of the flats, the official said these will be one-bedroom units and four storeys high. "The blocks will be spread on a campus equipped with state-of-the-art infrastructure including a community centre, shopping complex, kiosks, schools, nursing homes, playground and parks," the official said, adding that special care will be taken to provide for ample parking space and planned greenery on the campus. "There will be no need of painting the building. Keeping the increasing number of vehicles in the city, there is also a provision of garages in the project," the official said.

The entire project costs Rs 150 crore. Each flat will be priced between Rs 6.5 lakh and Rs 8 lakh. "In the Greater Noida project, the cost of a ground floor flat is Rs 8 lakh while a third floor flat costs Rs 7.5 lakh. In the Yamuna Expressway project, cost of a ground floor flat is Rs 6.5 lakh while a third floor flat costs Rs 6 lakh. Banks are ready to sanction loan up to 90 per cent of the total cost of the flat but we are in talks to finance flat 100 per cent," the official said.

Centre to introduce Real Estate Regulatory Authority Bill

NEW DELHI: Withstanding objections from real estate bodies and industry pressure groups against the proposed Real Estate Regulatory Authority Bill, the housing and poverty alleviation (HUPA) minister Ajay Maken, on Tuesday, said the bill will be introduced before parliament during the Budget session.

Earlier in the day a joint consultation meeting was held by Maken and urban development minister Kamal Nath where representatives of Confederation of Real Estate Developers' Association of India, National Real Estate Development Council, Confederation of Indian Industries, Federation of Indian Chambers of Commerce and Industry had objected to the bill. "But government put its foot down saying the bill aims to address concerns and protect interest of buyers. They are being shortchanged and hence there cannot be any compromise," said a government official.


The fate of the bill was hanging in balance after differences had cropped up between the housing and urban poverty alleviation and urban development ministries. Kamal Nath had objected to HUPA's move of circulating the proposed bill without consulting his ministry.

Finally, the issue reached the Prime Minister and a meeting of the two ministers was held on Friday where they were asked to sort out the issue to protect buyers' interest.
If the proposed law goes through there will be a real estate regulatory authority in every state.

articles.timesofindia.indiatimes.com/2013-01-16/india/36373550_1_kamal-nath-ajay-maken-urban-development

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13 insights for India real estate in 2013

The year 2012 closed with a few notes of positivity as the inflation was below the Reserve Bank of India’s (RBI’s) projected levels and the Index of Industrial Production (IIP) growth increased in the last two months of the year, giving new hopes for 2013.

The year 2012 closed with a few notes of positivity as the inflation was below the Reserve Bank of India's (RBI's) projected levels and the Index of Industrial Production (IIP) growth increased in the last two months of the year, giving new hopes for 2013.

Overall, 2012 remained inactive, affecting all the major sectors in real estate. Office space absorption remained lower compared with 2011. Meanwhile, retail faced challenges of quality supply, affecting the overall absorption. The residential demand improved; however, developers continued to struggle with unsold inventories. With the expected moderation in inflation and strengthening policies, we have gathered few interesting insights for 2013 from real estate experts.  
 

1. Economy - As per RBI, the policies will focus towards growth in 2013, although risks of inflation will continue to remain. Interest rates are expected to witness a downward correction of 100 to 150 bps in 2013. The softening of interest rates is expected to reduce the home loan rates, in turn increasing the buying of real estate assets. Increasing urbanisation and consumption despite the slowdown in GDP growth will be the key drivers of the economy in 2013.

2. Policies - The recent policy initiatives are expected to improve the investment climate and business environment, and they are likely to benefit the real estate sector in 2013. Few policies to look at in 2013 are: the Real Estate Regulation Bill, likely to be tabled in the upcoming winter session of the parliament; the real estate investment trusts (REITs) or real estate mutual funds (REMFs), expected to get launched in 2013; and the Land Acquisition and Rehabilitation and Resettlement Bill, likely to be tabled in the upcoming budget session in 2013.

3. Infrastructure - The infrastructure sector achieved a substantial FDI of USD 2.8 billion, accounting for a notable 7.7% of the total FDI inflow in FY 2012. In the year 2013, the relaxation of FDI policies in multi-brand retail is expected to surge the investment in back-end infrastructure development such as logistics. Moreover, an FDI of up to 100% is also permitted under the automatic route in built-up infrastructure and is likely to surge the development of the city and the regional level infrastructure in 2013.

4. Office Real Estate - Office space absorption in 2013 is likely to remain equal to that in 2012. Supply correction will lead to fewer options for occupiers, and steady absorption will decrease vacancy levels. Competition for space in prime buildings in prime locations is expected to increase in 2013, and these spaces will start earning a premium. Rents are expected to increase from 2H13 onwards as fewer new projects are being launched, and vacant spaces are steadily filling up. Decisions on occupying special economic zone (SEZ) spaces will be taken by occupiers who are sure of taking a position in India as they have to go live by March 2014 to avail the benefits.
 

5. Retail Real Estate - The relaxation in FDI policies in multi-brand retail interestingly has surged aggressive growth amongst Indian retailers to take the first-mover advantage. This is expected to drive the demand in 2013. However, as supply of retail malls remains a challenge, retailers are likely to opt for built-to-suit (BTS) options or high-street properties. As most developers are focusing on residential developments, the supply of malls will reduce in the major cities over the year. In 2013, retailers will be cautious and take more time to execute agreements as they will do a detailed analysis before closing transactions. Retailers will commit to space only if they see approvals in place and the construction of the space in progress.

6. Residential Real Estate - REITs in India allowing investments in rental housing is a new trend worth watching. The framework and details of REITs, once formulated, are likely to drive the investor demand across the prime cities in India in 2013. Another interesting trend observed in the last two years was that the stock in the range of INR 2,000-3,000 per sq ft was fast sold out. In 2013, this range is likely to shift to INR 3,000-5,000 per sq ft with the increase in inflation and construction costs.

7. Industrial Real Estate - Sale-cum-leaseback of exiting industrial assets by existing companies is likely to increase in 2013. MNCs testing the waters in India are likely to focus on BTS industrial properties. Warehousing companies are now preparing for the goods and services taxes (GST) and are slowly moving from godowns to distribution centres. The growing trend in e-retailing and FDI in multi-brand retail is expected to surge the demand for warehousing spaces in 2013.

8. Education and Health Care - There are aggressive growth plans in K-12 and skill-space educational institutions in 2013, particularly in the non-metro cities of India, where there are large opportunities. In the health care segment, hospital chains, along with day care centres, are expected to expand aggressively in 2013. Both these segments are expected to attract private equity investment in 2013.
 

9. Investment Sentiments - Debt capital is likely to increase in 2013. Banks are expected to be more flexible in lending. Most of the realty funds are close to their exit periods as they were invested around 2006-2007. Therefore, the exit of real estate funds is expected to increase in 2013. Meanwhile, interest on income-producing assets by institutional investors is likely to increase over the year. However, the availability of such assets will continue to remain a challenge. Assets will witness a softening of yield rates amidst increased liquidity. 
 

10. Delhi - Most of the absorption in Delhi NCR is likely to focus around Gurgaon and Noida, with the exception of Delhi International Airport Limited (DIAL) and few select stand-alone Grade A projects of Delhi. As the demand supply gap of quality office space is expected to increase because of the supply constraints in select precincts of Delhi NCR, rents are expected to increase in certain micro-markets by 2H13. Developers will focus on delivery of the products.

11. Mumbai - Office absorption and residential demand will continue to increase in Mumbai. The trend of completion of highquality new office projects pushing up Grade A office vacancy levels and providing tenants with greater bargaining power will reduce in 2013. With banks drastically reducing lending activities over the last two years, resulting in debt remaining a constraint, not much of new  commercial supply (except spill over from 2012) is expected to be completed in 2013 and 2014. Residential launches are expected to increase; however, price drop is unlikely to happen over the year. Amidst constrained supply of quality retail malls, rental gap between Grade A malls and Grade B malls will further widen in the year.

12. Bangalore - In terms of office space, Outer Ring Road will continue to be the sought-after destination in 2013. For residential real estate, North Bangalore is expected to continue to remain as the best performing region in the city with strong infrastructure development, increased demand and price appreciation in 2013. Meanwhile, Whitefield will continue to retain its sheen for both office and residential real estate because of affordability, proximity to key work places and good social infrastructure.

13. Other Cities - Chennai, which witnessed a historical high number of residential launches in 2012, is likely to slow down in 2013. This trend is also expected in Pune. Meanwhile, Kolkata and Hyderabad are likely to witness increased launches. Prices of residential units are likely to increase in all the cities because of the increased construction costs. Ahmedabad, Bhubaneswar Kochi and Coimbatore are other cities in India that are likely to witness immense development activities in 2013.

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Yamuna Expressway Authority will launch 3000 plot scheme on 26th jan

3000 plot scheme by yamuna expressway authority soon
संवाददाता, ग्रेटर नोएडा : यमुना एक्सप्रेस-वे के किनारे उद्योग लगाने के लिए प्राधिकरण औद्योगिक भूखंडों की योजना लाने की तैयारी में जुट गया है। गणतंत्र दिवस के मौके पर प्राधिकरण दो हजार भूखंडों की योजना लाएगा। योजना के लिए जमीन चिन्हित करने की प्रक्रिया शुरू हो गई है। ड्रा के माध्यम से भूखंडों का आवंटन किया जाएगा। स्थापना के बाद यमुना एक्सप्रेस-वे प्राधिकरण पहली बार औद्योगिक भूखंड की योजना ला रहा है।

यमुना एक्सप्रेस-वे प्राधिकरण ग्रेटर नोएडा से जेवर तक एक्सप्रेस-वे के करीब दस हजार हेक्टेयर जमीन आवासीय, संस्थागत के तहत आवंटित कर चुका है। उद्योगों के लिए एक इंच भी जमीन अभी तक आवंटित नहीं किया है। उद्योगों की तरफ अब प्राधिकरण का ध्यान गया है। 11 जनवरी को हुई बोर्ड बैठक में प्राधिकरण ने औद्योगिक भूखंडों की योजना लाने पर निर्णय लिया था। बोर्ड बैठक के निर्णय पर प्राधिकरण ने अमल शुरू कर दिया है। सेक्टर 21 ए में दो हजार औद्योगिक भूखंड के लिए जमीन चिन्हित करने में प्राधिकरण का परियोजना विभाग जुट गया है। भूखंडों का क्षेत्रफल चार सौ वर्गमीटर से लेकर एक हजार वर्गमीटर तक होंगे। योजना 26 जनवरी को लाने की तैयारी प्राधिकरण कर रहा है। औद्योगिक भूखंड पहली बार ड्रा के माध्यम से आवंटित किया जाएगा। आवंटन में पारदर्शिता लाने के लिए प्राधिकरण ने बोर्ड बैठक में दो हजार वर्गमीटर तक के भूखंड ड्रा के माध्यम से आवंटित करने का निर्णय लिया था। अभी तक सभी प्रकार के औद्योगिक भूखंड साक्षात्कार के माध्यम से आवंटित किए जाते थे। छोटे उद्योगों को भूखंड आवंटित करने के बाद प्राधिकरण बड़े उद्योगों के लिए योजना लाएगा। भूखंडों का ड्रा कंप्यूटर के माध्यम से कराने की योजना प्राधिकरण तैयार कर रहा है।

तीन हजार आवासीय भूखंड़ों की योजना

सं,ग्रेटर नोएडा: यमुना एक्सप्रेस-वे प्राधिकरण औद्योगिक के साथ आवासीय भूखंडों की योजना लाने की तैयारी शुरू कर दी है। फॉर्मूला वन रेस के पास आवासीय भूखंड के लिए जमीन चिन्हित की गई है। योजना 26 जनवरी के आसपास लाने की तैयारी है।

प्राधिकरण ने 2009 में सेक्टर-18 व 20 में 21 हजार भूखंडों की योजना लाया था। योजना में चार हजार वर्गमीटर से लेकर तीन सौ वर्ग मीटर तक के भूखंड थे। इस बार प्राधिकरण 120 से 200 वर्गमीटर के भूखंडों की योजना ला रहा है। सफल आवंटियों को एक मुश्त भूखंड का भुगतान करना होगा। भूखंड़ों का ड्रा कंप्यूटराइज्ड होगा। ड्रा निकलने के 90 दिन के अंदर आवंटियों को भुगतान करना होगा।

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Noida and Gurgaon to lead the way in realty in 2013

Delhi/NCR

The outlook for real estate sector in the New Year looks promising in the NCR. However, consultants and developers says that those areas where the prices have not yet peaked and where the authorities concerned and builders are developing world-class infrastructure like roads, sports complexes, parks, etc, will have the maximum appreciation. Jones Lang LaSalle (JLL), a global consultancy agency, says in a report on the NCR region that areas like Dwarka Expressway, New Gurgaon-Manesar, Noida Extension and Noida Expressway show huge potential for investors as well as end users.

The report says that Dwarka Expressway, because of its infrastructural advantages and the locational benefits, has immense potential. The area has been able to successfully withstand the heat that many other areas and pockets of NCR have faced. The price sustainability and appreciation trends of the recent past, and also its relative affordability, will continue to maintain investor interest and confidence, the report says.

Other important areas to watch out for in 2013 for residential realty, the report says, will be New Gurgaon and Manesar. The increase in commercial developments, its developing infrastructure, continuing affordability and the proposed connectivity via Metro and the expressway will put this region on top of the realty radar in 2013.

Noida Extension and Noida Expressway will continue to generate interest as more and more IT-ITeS companies shift their offices to Noida Expressway for its rental affordability when weighed against the rentals in the Cyber City of Gurgaon.

The Noida Expressway will further increase its appeal as a residential hub. Better infrastructure, easy accessibility and availability of affordable options will appeal to investors and end users, the report says. Supply in this region will not be an issue, and good levels of absorption, with appreciation in capital values, are a high possibility in 2013. However, affordability will remain the key factor for the sector to do well in the New Year.

Sanjeev Srivastva, the CMD of Assotech and whole-time director of Crossings Infrastructure, says that residential real estate market in 2013 will depend on many factors. Year 2012 was not very good for the sector and market picked up only a little at the end of the last quarter.

However, in the coming year, several steps are needed from the government and the developers to make sure that the market remains affordable for buyers, Srivastva said. One very important step is to bring down the home loan interest rates, as they are hampering the decision of many homebuyers in the affordable segment, he says. The market for luxury offerings will remain stable in the year and many high-end projects recently announced might pick up some pace. Talking about the areas in the Delhi NCR, Srivastva said that Noida’s new sectors and projects near highways in Ghaziabad would also get a good response.

Anuj Goel, the ED of KDP Infrastructure, also said that Year 2013 is anticipated to be better because of the government’s focus on economy as a whole, and FDI in particular.

With increase in prosperity, the demand for commercial and residential properties is bound to increase tremendously. Goel said real estate has almost acquired a status of industry in India, as it plays a great part in the economy of the country. Thanks to Credai, which has played a vital role in regulating real estate players, there is a lot more sense of confidence in the minds of investors about the sector today, Goel said. However, the growth depends largely on the government policies like reduction in home loan interest rates, availability of land at reasonable rates, control on inflation, and introduction of a single-window approval of projects, Goel said.

Sumit Berry, the MD of BDI Group, said Year 2013 would definitely see increased sales in Tier II and III cities, as property prices in these cities are much cheaper than that in Tier I cities. While in Tier I cities prices have gone awry, Tier II and III cities are enjoying attention because of reasonable pricing, he said. Bhiwadi, which is not very far from Delhi, is expected to reap rewards because of ease of travelling, as do places like Meerut, he said. Sanjay Rastogi, the director of Saviour Builder, said that FDI in multi-brand retail would likely boost retail and commercial markets of India.

In terms of investment potential, the Delhi NCR would continue to be of highest interest to big-ticket investors focused on real estate in 2013. “We expect 2013 to bring a larger-than-usual number of NRI investors into the commercial property arena. In terms of residential market, the Delhi NCR is going to win the race. Noida market would be vibrant as projects in Greater Noida West (Noida Extension) will see a huge turnout. New sectors in Noida are also expected to see good turnout, as also projects near Ghaziabad’s highways.”

The realty sector saw a slowdown in 2012 mainly because of the rise in prices and interest rates. JLL says in its report that the ongoing liquidity crisis, high interest rates and persistent inflation levels kept the residential property market in the NCR subdued in 2012. There were comparatively lower transaction volumes, though some of the micro markets clearly outperformed the rest and remained promising bets for investors.

The report said Gurgaon’s residential market performed decently in 2012, but it was not uniform all across. There were high levels of unsold inventory in some of the projects, while many others sold exceedingly well. Golf Course Road, Golf Course Extension Road and Sohna Road achieved handsome appreciation in both capital values and rentals.

These regions can be classified as the best performing pockets in Gurgaon for 2012 in terms of sales volume and appreciation achieved. The factors that worked for them were their good connectivity with New Delhi through the six-lane NH-8 and MG Road, providing quick and easy access to the IGI airport, and the14km Southern Peripheral Road (SPR), which covers all the major developments in this part of Gurgaon and connects MG Road and Golf Course Extension Road with NH-8, the report said.

However, the most sensational performer in NCR region for 2012 was Dwarka Expressway. Its proximity to the international airport and the proposed diplomatic enclave, along with its rapidly evolving infrastructure and good connectivity with west Delhi and Gurgaon continued to work in this region’s favour.There was high level of interest from investors in this region, resulting in price appreciation and high sales volumes in 2012. At the start of the year, projects pegged at around Rs 4,000 per sq foot were quoting at Rs 7,000 per sq foot towards the later part of 2012, JLL said.

Price appreciation did hurt the region’s affordability tag, which used to be its USP, and thus alienated a significant section of end users. The region also saw a high level of supply to tackle the absorption by investors, JLL said. Residential demand on Golf Course Road was driven by heavy demand from corporates. Projects there saw an average appreciation of around Rs 1,500-2,000 per sq foot during the year, thereby taking the price point to an average of Rs 12,000-15,000 per sq foot, the report said.

Golf Course Extension was also a hot destination for residential real estate in 2012. Project in the area saw capital appreciation of around Rs 1,500-2,000 per sq foot, thanks to this area’s vicinity to Golf Course Road, its various other locational advantages. With good-quality supply under construction and more affordable options, Golf Course Extension saw high level activity from investors looking for lucrative returns over an investment period of three-four years. However, it did not find a lot of traction with end users looking for ready-to-move-in residential options, as most of the projects were under construction in 2012.

Similarly, Sohna Road saw very decent residential sales levels as it is more affordable than Golf Course Road and Golf Course Extension and had a steady supply of ready-to-movein units to offer. This made it a location of choice for end users.Projects on Sohna Road appreciated by around Rs 1,500-2,000 per sq foot, bringing price points to the current average of Rs 8,000-9,500 per sq foot, the report said. Sohna Road also benefited from the cyclical impact of high-level leasing of office space by companies to base their office out of the area. This, in turn, generated the demand for residential options which further augmented the office leasing activity.

Yet another region whose residential market did well in 2012 was Noida, in particular Noida Extension and Noida Expressway. The Noida Extension region was mainly driven by end users due to the affordability of available options. Some of the projects in the Extension area achieved an appreciation of 40% over their start-of-year values. Noida Expressway was able to maintain its appeal due to its positioning as a commercial hub and its affordability compared to Gurgaon or Delhi. The demand was equally balanced between investors and end users. Overall, Noida’s residential realty market achieved an appreciation of around 20% in 2012.

Anuj Goel of KDP Infrastructure says that overall, real estate in India saw tremendous growth in the last decade but its performance was quite dismal in 2012. Steep hikes in properties caused sales to be very sluggish; other factors like increased interest rates on home loan, non availability of funds from banks, high rate of inflation, non availability of land at reasonable rates coupled with cumbersome approval procedures also stymied the sector. Despite the situation being unfavorable, this segment survived because of enhanced employment opportunities in urban areas and approval for FDI in commercial and residential segments.


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Seven hot spots for property investors

These areas are growing fast due to infrastructure developments or proximity to business hubsThere is a real estate boom in India. And, it is almost like a gold rush. That is, even a bit of information that an airport or railway station or special economic zone is being planned in an area is enough to have both builders and investors rush. Business Standard spoke to several leading property consultants and identified seven areas seeing enormous development. Some are good places to invest, too. These areas are not in any metro but could have proximity to one. The consensus candidates are:
Dwarakanagar (Visakhapatnam, Andhra Pradesh )
An upcoming residential area, Dwarakanagar is 15 km from Visakhapatnam and has seen an influx of non-resident Indians (NRIs), on the back of many software and business processing outsourcing (BPO) companies setting up offices in and around the city, which has a biotech special economic zone (SEZ) and steel and power plants in the south. The Dwarakanagar belt has multiplexes and schools, and has become a commercial hub, with shopping centres in a two-three km radius. “The major growth corridor is towards the north, along NH-5 towards Vijayanagarm,” says Ashutosh Limaye , head of research and real estate intelligence services, Jones Lang LaSalle . The state government has started an IT SEZ in the Rushikonda hills. A 1,000-sq ft flat in Dwarakanagar will cost Rs 38 lakh, against Rs 36 lakh last year. Ramesh P, a realty broker, says that a 1BHK flat in Dwarakanagar can earn Rs 8,000 in rent, as against Rs 7,200 last year. While he concedes that the growth in rentals has not been great, he is quick to add that the area has a lot of potential because of all the development work taking place.

Gorwa (Vadodara, Gujarat )

Gorwa has a mix of residential and commercial properties, along with a number of restaurants, colleges and hospitals. The city lies on the the famous Bhailal Amin Road in Vadodara, which connects several towns in the district. By 2015, Chief Minister Narendra Modi plans to build a foreign trade centre near Vadodara, the state’s largest theme park in Ajwa Garden , a township in Padra village, and make Gotri a satellite City.
Since Gorwa is five-10 km from these places, property rates in and around Gorwa are appreciating by eight-12 per cent every year. Hence, it makes sense to buy a residential property now, and hold it for three or four years. By this time, property prices are expected to appreciate on the back of positive sentiments.

Vadodara, Vishvamitri and Goya Gate railway stations are within a 7 km radius. The area attracts a lot of attention because of a centrally-located lake. Other developed residential areas around Gorwa are Gotri, Nizampura, Vishvamitri, Alkapuri, Old Padra Road, Vasna and Karelibaug.

The average cost of a residential space in Gorwa has increased to Rs 4,000 a sq ft from Rs 3,200 last year. However, the rents earned on commercial properties have dropped or remained constant in some areas. A 350-sq ft shop in Gorwa can fetch rent of Rs 25,000 against Rs 30,000 last year.

The Vadodara-Surat national highway is expected to be completed by the year-end.

Vaishali Nagar (Jaipur, Rajasthan)
Vaishali Nagar, nine km from Jaipur, has become a satellite city. Ghat ki Guni, a tunnel project, is one reason why property prices on Agra Road are rising. If the government approves an increase in the reserve price, land prices in the city will shoot up by 15 to 20 per cent, say real estate experts. Vaishali Nagar is among the plush areas that have established residential spaces. This affluent neighbourhood in the southwestern part of Jaipur stretches from Queens Road to the Delhi Bypass (east to west) and Ajmer Road to Sirsi Road (south to north). According to the National Housing Bank, Jaipur was one of the three cities whose housing prices dipped by 2.6 per cent in the April-June quarter. However, plush residential areas such as Vaishali Nagar, Tonk Road, Ajmer Road and Jagatpura showed up to 10 per cent increase in prices. A Jaipur-based realty broker says his client purchased a commercial plot on Vaishali Road for Rs 12,000 a sq yd 10 months ago. “Today, the price for the same plot has gone up to Rs 12,700 a sq yd.” (1 square yard = nine sq ft). Limaye of Jones Lang LaSalle India says Jaipur and Jodhpur are good property investment destinations, as they are part of the golden triangle on the tourism circuit.

MIHAN (Nagpur, Maharashtra )
Thanks to the Multi-modal International Cargo Hub and Airport (MIHAN), a special economic zone, Nagpur has been identified as a promising city for the IT and BPO. Recently, Mahindra Satyam commenced construction work on its IT development centre at MIHAN.

First City is the first residential township of MIHAN, selling at Rs 3,500 a sq ft now from Rs 2,600 a sq ft a year ago. According to property consultants, developers will cash in on this opportunity soon, with a sizeable working population shifting to MIHAN and given the fact that this is the only township available in the area.

One can also consider buying residential properties at Hingna and Wardha Road, within five km of MIHAN. Today, a 2BHK (two bedrooms, one hall, one kitchen) flat in Hingna commands a rent of Rs 6,200 a month. By next year, it is expected to go up to Rs 8,000. A 2,000 sq ft bungalow in H B Town near MIHAN can set you back by Rs 1.2 crore, as against Rs 1.1 crore a year ago.

Vytilla (Kochi, Kerala )
Vytilla is a part of Kochi that has witnessed a spurt of residential and commercial projects. It is one of the largest and busiest intersections in Kerala. This node intersects the main north-south artery of the state with NH-47 through three city roads.

According to Joseph Mathew, an independent property consultant, property prices have risen by 30 per cent in the vicinity. The proposed Kochi Metro will pass through this area. He said prices are expected to rise 40-50 per cent once the metro becomes operational.

There is an increasing demand for properties near Kochi metro stations in anticipation of a spurt in property prices once the project is completed in 2016. Values of apartments at Kaloor, Edapally and Aluva (expected metro stations) vary from Rs 2,500 to Rs 5,000 per sq ft and are expected to rise by 15 per cent every year.

Kishor J bought a 3BHK apartment in 2007 near Vytilla for Rs 41 lakh. When he purchased the property, the building was under construction. “Today the cost of the same apartment has appreciated to Rs 65 lakh,” he says. That’s a neat 60 per cent return in five years, a good bet for those looking at property solely for investment purpose.

Peelamedu (Coimbatore, Tamil Nadu)
Coimbatore is the largest industrial centre in Tamil Nadu after Chennai, and has transformed into a preferred destination for IT/ITeS, as a result of lucrative incentives given to IT companies by the Tamil Nadu government. Peelamedu is a suburb in Coimbatore. It lies on Avinashi Road, said to be the busiest road of Coimbatore. The area stretches from Nava India to the international airport. Two years earlier, Suresh K bought a 2BHK in Peelamedu at Rs 2,500 a sq ft. He says property prices have shot up to Rs 4,200 a sq ft today. The prices are expected to increase further.

Realty players say Peelamedu is developing in a big way as it is home to many major textile and wetgrinder companies, schools, colleges, hotels and residential complexes. It is the educational hub of Coimbatore, with renowned medical, paramedical, engineering, arts & science colleges there. Peelamedu is seven km and 11 km from Coimbatore and the airport, respectively. The area is said to have good infrastructure, quality of life and low cost of living to offer.

The rapid pace of infrastructure development and a proactive government are aggressively promoting the city. R S Puram, Avinashi Road and Race Course are plush areas. However, a property consultant says, if you go six to eight km from these areas, one can find good flats, starting at Rs 50 lakh.

Zirakpur (Chandigarh)
Zirakpur is situated on the outskirts of Chandigarh, on the Chandigarh-Ambala highway. It is an established and plush residential area, with good connectivity. If you wish to buy a house in Zirakpur, you will have to spend Rs 12,000-13,000 a sq ft, up from Rs 10,000-10,500 a year ago.

With the completion of Aerocity Road, Zirakpur will become equidistant from Chandigarh, Mohali and Panchkula. Zirakpur is well connected with these and other neighbouring areas through air-conditioned and non-air-conditioned local buses. In the second phase of the Chandigarh Metro, Zirakpur will be connected with other parts of the region.

Chandigarh airport is just eight km from Zirakpur, while Chandigarh city lies within five km. Sector 51 and Sector 52 are the upcoming residential areas in Chandigarh.

The Rajiv Gandhi Chandigarh Technology Park, spread over 400 acres, has put Chandigarh on India’s IT/ITeS map. Major Indian and multinational corporations such as Quark, Infosys, Dell, IBM and Tech Mahindra have set up offices in the city and its suburbs.

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Real estate capital market prediction for 2013

In 2013, the availability of debt capital is likely to increase while the flow of equity capital will remain more or less stable. The bidask spreads will reduce, increasing overall transaction volume even as additional cuts in CRR and repo rates will infuse more liquidity into the system. Cross-border capital will begin to make a gradual comeback in the coming year and cap rates for office and retail properties are likely to descend to 10.5 percent and 11.5 percent from 11 percent and 12 percent respectively.

Investors will focus more on transparency, governance and liquidity before investing. Given the on-going challenges that the Indian real estate sector faces on these fronts, even fewer development companies will be successful on the public equity markets. Nevertheless, private equity deals volumes will increase, and there will be more M&A activity within the PE industry. A number of vintage funds from 2007-2008 will have to look at exiting in 2013, some of them at low IRR’s. Given the overall uncertainties, these funds would look at postponing their exits to 2014.

Insurance firms will start investing directly in low-risk, income producing office real estate. Investment bidders per property will increase, this time around with lower return expectations. Investment periods of funds will reduce from five years to four years.  In 2013, after a lull of two years, banks are likely to start offering construction finance to residential projects with approvals. They will also become marginally more flexible on interest rates, collaterals, LTV’s and upfront fees. Established funds will get back into the fund raising mode after a three-year hiatus.

As before, developers with longer operating history such as Oberoi, Shobha and Prestige who have managed growth effectively over the years and predictability of income will find it easier to raise funds in 2013. It is unlikely that any major player will venture out nationally, with the accent for 2013 remaining firmly on local expansion. Also, we will see developers focusing more on joint ventures with landlords rather than on buying land.

In 2013, we will see most PE deals being structured to give the investor the first preference to cash flows. Most real estate PE investments will be focused on Tier I cities. Funds with a good track record that have a strategy to target a narrow asset class within specific locations such as last mile funding for residential under construction projects in Tier 1 cities and having strong delivery teams will be able to raise funds more easily. Regulatory authorities will increase their scrutiny of private fund raising offerings and closely monitor if the funds raised by the companies are being used for stated objectives.

Private Equity funds will raise distressed real estate funds and get traction from bank NPA’s and ARC’s. A number of new domestic real estate PE funds backed by corporate entities are likely to be launched in 2013. Also, large family offices will now begin creating dedicated real estate teams. PE fund terms such as waterfall structure, carried interest, general partner commitment and management fees will change to address investor concerns such as governance, transparency, reporting and operating controls post the global financial crisis.

Limited partners will scrutinize fund platforms lot more carefully before investing on the heels of previous negative experiences with issues such as integrity of the general partner and quality and sustainability of earnings. Many more funds will adopt a conservative cash flow-driven investment approach and focus on investing in income producing office assets, with an accent on asset repositioning, refinancing and refurbishment. We expect new guidelines for non-banking HFCs to assist in pushing funding for the housing sector in 2013. There will be more liquidity available in the housing finance market as rules for raising external commercial borrowings will be relaxed for HFCs, and with SEBI allowing debt funds to invest an additional 10 percent in HFCs. HFCs will also look at tapping the QIP market to raise funds in 2013.

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