Reviving Real Estate is Good News for us all

Reviving Real Estate is Good News for us all

Reviving Real Estate is Good News for us all
After undergoing a slump, real estate in India is poised for a comeback. This means good news for a host of other industries related to construction. Mukta Naik recounts the trends in the industry for 2010.

Market sentiments have undergone a roller coaster ride in the past eighteen months in the Indian business environment. More so for real estate, which is a high-risk, high-investment and high-involvement business.

During the global economic recession, cash flow was severely restricted both to the developer segment as well as to consumers as home loans became expensive. The stimulus package came as a relief, offering tax reprieves to builders and also sweetening the pill for buyers of middle-income housing with an interest subsidy offered on home loans less than Rs ten lakhs. Policy measures like these as well as a concerted move on the part of builders to lower prices, focus of completing existing projects and offering customer-friendly schemes worked to slowly turn around the mood for the residential housing market. Commercial real estate, more directly connected to the larger economy, continued to be on the backburner.

The first quarter of 2010, however, brought the stirrings of hope into the larger economy and into real estate as well. The GDP grew with an encouraging rate of 8.6% between January to March period. Industrial output increased significantly with the Index of Industrial Performance clocking a 17.6% growth in April 2010. The RBI is confident that the Indian GDP will grow steadily from now on, predicting an overall 8% growth this year. In fact, some 16 realty firms are planning their initial public offerings this financial year, aiming to raise Rs 9000 crore of capital.

The challenge in this will be to support the economic growth with the required infrastructure and suitable policy environment. It is here that real estate plays a critical role, providing necessary infrastructure in vital areas like housing, retail, commercial realty, hospitality, and transport. Lets take a look at how real estate has fared in 2010 so far and what the outlook is for the next 15 months.

Residential real estate

Reviving Real Estate is Good News for us all

Housing is a pillar of the country's economy. Not only does the construction of homes employ million of construction workers, homes fuel demand for white goods, consumer goods, services and nearly everything in the market that is needed for those who live in them. Creating housing infrastructure in relation to existing or proposed employment opportunities is a sure shot way to develop an area. Developers have studied and imbibed this and are focusing on housing as was seen by several seminars of housing, especially affordable housing organized in 2008 and 2009.

Reviving Real Estate is Good News for us all
Urban India has a housing deficit of 24.7 million units, so demand is not a problem. However, most of this is in the EWS/LIG segment and some in the MIG segment. Developers are therefore diversifying to explore new types of business models in the affordable housing segment. Several players like Tata Housing, LIC Housing, Janapriya, Ajnara Group and many others have entered the segment with specific business plans.

In fact, housing demand is the main reason for the Indian economy's resilience through the recession as compared to developed economies, where falling home prices signalled the biggest economic disaster of all. "This time, residential real estate demand did not let the global slump affect the Indian market (for too long)," said Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia Pvt. Ltd, in a recent interview.

Geographies

This recovery is not consistent across the country, though some pockets are faring better than others. "Recovery has been relatively faster in pockets such as south Delhi and south Mumbai, parts of Gurgaon, central Delhi and Bangalore," said Magazine. "But one has to look at other regions such as Kolkata, Pune, Chennai and Hyderabad. These markets are still lagging behind active markets of Delhi-NCR (National Capital Region) and Mumbai. However, markets are more realistic now." There is an overall feeling of increased investor confidence.

Reviving Real Estate is Good News for us all
A recent survey by real estate portal makaan.com showed the maximum appreciation over a 12-month period to be in Mumbai. The Mumbai residential market saw a 24.7% jump in prices between January and December 2009, while realty rates in the Delhi-NCR region grew by 8.8 percent largely due to an oversupply in micro markets like Noida and Greater Noida. Pune has been another market that has done well, gaining by 9.9 percent, but Bangalore and Hyderabad are slow on the uptake. Kolkata remained stable and saw several new launches in the residential space with a focus on the end-user segment, especially middle-income homes. Property prices increased by 12.8% nation-wide in this period.

Office market

The office real estate market was directly impacted across the country. At present, there is an oversupply of office space across the country. However, it is heartening to see demand picking up. The cumulative off take across the seven active cities of NCR, Mumbai, Pune, Bangalore, Hyderabad, Chennai and Kolkata rose by a 42% quarter-on-quarter in Q1 of 2010. The number of deals were more, deal sizes larger and vacancy rates in many cities began going down as supply went down by 30% year-on-year basis and demand rose. Rentals are also stable and even strengthening in some markets.

The IT/ITeS sector has been the main driver of office space demand as it recovers business-wise in a global context. With the 2010–11 budget not extending tax break to the STPI units, demand for office space increased. A strong trend was the continued moving of occupiers out of the Central business Districts to cost effective suburban areas. It is, however, going to be a slow journey and recovery of the commercial real estate market is only expected to happen in the last quarter of the year and beginning 2011.

NCR Region

Reviving Real Estate is Good News for us all
According to a report by DTZ, the NCR region saw a take-up of 1.0 million sqft in Q1 2010, with most of the activity in Gurgaon, Noida (Sector 62) and Delhi SBD. In Bangalore, absorption increased by 125% and the vacancy ratio has peaked at 26%. In short, the city will revive soon.

Chennai supply levels are lower, but there are no conclusive signs of recovery. Kolkata saw some buoyancy, but many deals are still being negotiated. A small increase in uptake is not significant enough to call it a recovery yet.

Pune witnessed a spurt in office space demand during Q1 and absorption rose by 55%, making it promising for commercial real estate. The Hyderabad market was buoyant with take-up increasing by 32% y-o-y.

According to JLLM reports, demand is gearing up in the Mumbai commercial property market. A demand of about 28-29 million square feet exists today, coming largely from the telecom, pharma and corporate sectors. Prices are reaching peak values once again, after coming down 25-30% during the recession.

Other Sectors

Reviving Real Estate is Good News for us all
With several new hospitality chains eyeing the Indian market, new resort and hotel properties are being started across the country. Retail, however, remains weak with demand still low and few new projects coming up. Footfalls and sales are beginning to pick up in some micro markets, but a nation-wide trend has still not emerged.

Eye on the Future

Not everything was lost during the recession. The real estate community took away important lessons, which will serve them well in good times as well. One of the most vital changes that analysts observe is an increased sensitivity to customer needs and expectations. Though not taken very well by the developer community, the government is planning to introduce a Real Estate Regulatory Bill soon to protect the rights of consumers and increase the answerability and transparency in the system. This will be an independent regulatory body like in the insurance and telecom industries. This will urge developers to have a more customer-oriented outlook and better communication. Many of the existing problems are expected to be resolved by the bill.

On the policy front, the upcoming Goods and Service Tax (GST) is being viewed with interest and could spell good news for real estate. Currently, different rates of stamp duty and various taxes at local, state and central government levels make it difficult to transact in real estate. The industry is looking forward to mechanisms for faster approvals and permissions, a better land record system, improved rental laws and other reforms to help real estate grow unhampered.

Going forward, the real estate industry hopes to be a pillar for the revival and continued growth of the Indian economy. Along with its growth, the real estate industry takes forward with it over 250 ancillary industries including construction products ranging from brick, cement and steel, to earth moving equipment, construction machinery, tiles, paints, electrical fittings, sanitaryware, home décor and many others. All in all, a reviving realty market is good news for everyone!

NBMCW July 2010

Click Here
To Know More / Contact The Manufacturer
Please provide your details we will contact you as soon as possible
Please let us know your name.
Invalid Input
Please let us know your Designation.
Invalid Input
Please let us know your City.
Please let us know your State.
Please let us know your Country.
Please let us know your Contact Number.
Please let us know your email address.
Please brief your query.

“Nal Se Jal” - SPML Infra Playing Key Role in Developing Water Infrastructure in India

SPML Infra Limited, India’s leading water management company will play a key role in the development of sustainable water infrastructure to realize the vision of “Nal Se Jal”. This ambitious scheme announced by the Finance Minister during Read More ...

Indian Aviation on a Growth Path

The Aviation Industry in India has emerged as one of the fastest growing industries in the country, especially so during the last three years. Introduction of low-cost carriers, FDI in domestic airlines, advanced information technologies Read More ...

Redefining Urbanity with international transport system

Creative Group presents a new vision for Chandni Chowk (a very congested area in Old Delhi) with re-planned interconnectivity, intermodality, and green spaces, that release the current stress above the ground and create opportunities to restore Read More ...

Rapid Transit System in India Making inroads

To quote Mark Walport, “Industrialisation, Mass Transit, and the Internet are technological revolutions that have reshaped lives, nations, and the planet.” The Indian economy is poised to grow at over 7% in the coming years, placing it Read More ...

Attracting Private Investments to Boost Highway Growth in India

Ever since India set out on a path of economic liberalization in 1991, the policymakers for almost three decades remained focused on developing infrastructure to commensurate with the economic growth of the nation. But the task was humongous Read More ...

Transport Infrastructure in Focus

Transport Infrastructure to continue as a key focus area for new Government with massive capital outlay of up to ₹30 trillion expected over next five years. Construction companies are likely to be the major beneficiaries and will witness Read More ...

Real Estate Market Outlook 2019

India continues to retain its position as the world's fastest growing major economy on the back of improved investor confidence and better policy reforms. The IMF's database also suggested that India's contribution to world growth Read More ...

Infra Construction - Positives Outweigh Negatives

For a large part of the current up-cycle which started in CY2016, road work has largely been the biggest demand driver, followed by railways/metro.Notwithstanding the general slowdown in public/private infrastructure work Read More ...

ICRA - Strong demand growth for Mining & Construction Equipment Industry

The Indian Mining & Construction Equipment (MCE) industry is likely to see a moderation in demand growth, which is expected to fall to 4-6% in the medium term, more particularly during CY2019. The basic reason are the policy Read More ...

THE ILAN AND ASAF RAMON INTERNATIONAL AIRPORT

Israel's Ilan and Asaf Ramon International Airport will service the Red Sea resort city of Eilat and surrounding region. Commissioned by the Israel Airport Authority (IAA), the project was handled from A to Z by design Read More ...

Real Estate

Staving off the triple impact of Real Estate Regulation and Development Act (RERA), Goods and Services Tax (GST) and Demonetization (which had brought the sector to a grinding halt), India's Real Estate is back on Read More ...

Construction Dust Causes, Effects and Remedies

Construction dust can seriously damage the health of construction workers and if exposed for longer times can eventually even kill them. About 22,000 to 52,000 persons per year are dying due to inhaling polluted air in USA alone Read More ...

3-D Printing in Construction: A Review

Three dimensional printing has made its advent in construction in the recent past. With recent advancements in technologies, materials and further inclusion of building information modelling into the construction process, 3D printing is Read More ...

Reforms leading to higher expectations

The RRE has witnessed a prolonged downcycle owing to high inventory, muted demand, weak affordability, and declining investor interest. However structural changes over the last two years in the form of Real Estate Read More ...

Real Estate Industry in 2019

Post the revival of the Indian real estate sector through a series of initiatives by the government, the confidence of the homebuyers has increased with a clear understanding of the market. The developers have also witnessed Read More ...

Technology Transforming Indian Real Estate

One of the most potent and radical ground-breaking technologies set to transform property markets in current times is artificial intelligence (AI), which along with machine learning are reforming technology all Read More ...
NBM&CW

New Building Material & Construction World

New Building Material & Construction World
MGS Architecture

Modern Green Structures & Architecture

Modern Green Structures & Architecture
L&ST

Lifting & Specialized Transport

Lifting & Specialized Transport
II&TW

Indian Infrastructure & Tenders Week

Indian Infrastructure & Tenders Week