HT Estates - - HTESTATES -

The gov­ern­ment pre­sented a for­ward look­ing and progressive Union Bud­get in July, which man­aged to touch upon all top­i­cal is­sues of re­viv­ing economic growth, at­tract­ing in­vest­ments, churn­ing in­dus­trial pro­duc­tion, pro­mot­ing ur­ban devel­op­ment and cre­at­ing in­fra­struc­ture.

The bud­get struck a fine bal­ance between fis­cal pru­dence and pop­ulism, and man­aged to project the gov­ern­ment’s thought process on con­tentious is­sues such as ret­ro­spec­tive tax­a­tion and fuel/food sub­si­dies. The real im­pact on the econ­omy, how­ever,will be upon in­vest­ing all the funds al­lo­cated in the bud­get through project im­ple­men­ta­tions.

Mean­while, t he Cen­tral Bank’s move of keep­ing base rates un­changed in its lat­est pol­icy re­view was widely ex­pected as con­sumer price in­fla­tion re­mained a con­cern, and the im­pact of the bud­get was yet to be felt across sec­tors.

Any re­duc­tion in base rates in the com­ing months will be a pos­i­tive in­di­ca­tor for the sec­tor, spurring hous­ing de­mand and con­struc­tion ac­tiv­ity across the coun­try.

Yet an­other pos­i­tive pol­icy ini­tia­tive saw the gov­ern­ment clear­ing upto 100% FDI in rail­way in­fra­struc­ture seg­ments such as elec­tri­fi­ca­tion, sig­nal­ing, high speed and subur­ban cor­ri­dors; while per­mit­ting upto 49% in in­fra­struc­ture and de­fense.

One of the most im­por­tant an­nounce­ments for the real es­tate sec­tor was the Se­cu­ri­ties and Ex­change Board of In­dia’s ( SEBI’s) i ssu­ing t he f i nal guide­lines for In­fra­struc­ture In­vest­ment Trusts and Real Es­tate I nvest­ment T r usts (REITs) in In­dia. This sig­nalled a pos­i­tive move for In­dia’s cap­i­tal mar­kets as a whole, and its re­alty sec­tor in par­tic­u­lar.

Hous­ing mar­ket up­date

Dur­ing t he month of July, hous­ing sales re­mained muted and new sup­ply saw a de­cline across lead­ing cities. A large ma­jor­ity of new pro­jects were launched in the mid-seg­ment, con­cen­trated in mi­cro-mar­kets such as the Old Ma­ha­balipu­ram Road/Grand South­ern Trunk Road, Am­bat­tur and Porur in Chen­nai; Maratha­halli ORR, Old Madras Road, White­field, Heb­bal, Thanisan­dra Main Road and Got­tigere in Ban­ga­lore. In con­trast, res­i­den­tial real Any re­duc­tion in base rates in the com­ing months will be a pos­i­tive in­di­ca­tion for the real es­tate sec­tor, spurring hous­ing de­mand and con­struc­tion ac­tiv­ity across the coun­try The gov­ern­ment clear­ing upto 100% FDI in rail­way in­fra­struc­ture seg­ments is a pos­i­tive pol­icy ini­tia­tive. High streets across In­dia’s lead­ing cities wit­nessed healthy de­mand for re­tail es­tate ac­tiv­ity re­mained sub­dued in Delhi NCR, Mum­bai, Hyderabad and Kolkata dur­ing July. Mean­while, Pune is likely to at­tract sig­nif­i­cant sup­ply ad­di­tion as part of the pro­posed town­ship de­vel­op­ments by prom­i­nent de­vel­op­ers in the pe­riph­eral lo­ca­tions of the city.

Hous­ing prices re­mained l argely sta­ble dur­ing July. Ow­ing to sub­dued de­mand lev­els, pre­mium res­i­den­tial lo­ca­tions – such as Chanakya­puri in Delhi and Golf Course Road in Gur­gaon – saw a slight price cor­rec­tion. Con­versely, strong de­mand cou­pled with limited avail­abil­ity led to a price ap­pre­ci­a­tion in cen­tral Chen­nai.

Of­fice space up­date

Com­mer­cial leas­ing ac­tiv­ity picked up in July, with leased space ap­pre­ci­at­ing by about 10% over the pre­vi­ous month. Al­though most of the de­mand was for small to medium sized of­fice spa­ces, a few big ticket trans­ac­tions were ob­served in Ban­ga­lore – pri­mar­ily in IT/ ITeS, manufacturing, au­tomo- space. Global re­tail­ers such as Michael Kors and Gi­ant for­ayed into Ban­ga­lore while Spa Cey­lon launched its first In­dia out­let in Mum­bai The Depart­ment of In­dus­trial Pol­icy and Pro­mo­tion is likely to scrape the 30% do­mes­tic sourc­ing clause for FDI in sin­gle brand re­tail which in turn will en­cour­age for­eign in­vest­ment in­flows tive and telecom­mu­ni­ca­tion seg­ments.

Ban­ga­lore also re­mained the largest con­trib­u­tor to of­fice space de­mand among the lead­ing cities, fol­lowed by Pune and Chen­nai, rep­re­sent­ing about 84% of the to­tal space trans­acted dur­ing this month.

Oc­cu­pier in­ter­est re­mained strong in mi­cro-mar­kets such as the Outer Ring Road (ORR) and White­field in Ban­ga­lore; IT Cor­ri­dor in Hyderabad; Kharadi and Baner in Pune; and Guindy and Mount Poon­na­malle Road in Chen­nai, with de­mand mostly driven by IT/ ITeS fir ms for their ex­pan­sion and con­sol­i­da­tion needs.

SEZ de­vel­op­ments in Gur­gaon, Ban­ga­lore and Chen­nai also wit­nessed healthy take-up dur­ing the month. Go­ing for­ward, a f ew l arge sized trans­ac­tions are ex­pected to reach com­ple­tion in prom­i­nent tech parks along the ORR in Ban­ga­lore.

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