In­dia re­alty mar­ket up­date

This year while 6% of global re­tail­ers are tar­get­ing In­dia for their of­fice spa­ces, res­i­den­tial project launches are likely to in­crease in most of the lead­ing cities

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years. Dur­ing this time, the cost of ac­qui­si­tion or even just hold­ing the land for a project rises.

How­ever, this is only one side of the pic­ture. Many de­vel­op­ers i nten­tion­ally un­der­take a slower pace of con­struc­tion if sales in their project are slug­gish or a larger part of the project is un­sold. They may have di­verted a size­able chunk of the rev­enue gen­er­ated from pre-launch sales to an­other project, or utilised it to pay off a press­ing bank debt.

Project qual­ity and de­vi­a­tions

Re­course for con­sumer

The Real Es­tate Reg­u­la­tion and Devel­op­ment Bill that is long lan­guish­ing on the pol­icy drawing board (and still un­der con­sid­er­a­tion by the gov­ern­ment) was for­mu­lated with the in­ten­tion of pro­tect­ing con­sumers bet­ter. How­ever, af­ter the most re­cent re­vi­sions to RERA, it seems that it will in fact now be less protective to­wards buy­ers. While the bill aimed at pro­vid­ing an al­ter­nate re­dres­sal mech­a­nism, the new pro­vi­sions are talk­ing of no re­course to other con­sumer fo­rums. Con­sumers should be aware that a cer­tain de­gree of due dili­gence and aware­ness about their rights can pro­tect them against un­scrupu­lous prac­tices by de­vel­op­ers. In the first place, due at­ten­tion should be given to de­tails while draft­ing the sale agree­ment. De­vel­oper’s sales team will usu­ally present a buyer with a ready­made agree­ment for­mat, and a buyer must en­sure that this cap­tures ev­ery rel­e­vant de­tail. If it does not, the buyer is fully en­ti­tled to ask for miss­ing de­tails to be in­cluded, and po­ten­tial grey ar­eas to be clar­i­fied. A copy of the fi­nal agree­ment must be re­tained, as this will serve as the pri­mary ev­i­dence in a legal ac­tion filed for agree­ment vi­o­la­tions.

The Gov­ern­ment of In­dia pre­sented its Union Bud­get 2015-16 on Fe­bru­ary 28, 2015, high­light­ing that In­dia’s econ­omy was in a bright spot com­pared to the rest of the world. This was mainly at­trib­uted to re­duced vul­ner­a­bil­i­ties con­cern­ing eco­nomic slow­down, per­sis­tent in­fla­tion, slack­en­ing do­mes­tic de­mand and cur­rency fluc­tu­a­tions. The Bud­get es­ti­mated a GDP growth rate of 7.4% in 2014- 15 ( an in­crease over 6.9% in 2013-14). Bank­ing upon macro-eco­nomic sta­bil­ity, greater fis­cal pru­dence, high em­ploy­ment gen­er­a­tion and in­dige­nous man­u­fac­tur­ing, growth is ex­pected to touch 8.18.5% in 2015-16. This would make In­dia a lead­ing growth driver in the global econ­omy. Over­all, the Bud­get struck a fine bal­ance be­tween pop­ulist mea­sures, pro­ce­dural ef­fi­ciency, and ease of do­ing busi­ness, which was very wel­come. For the real es­tate and con­struc­tion sec­tor, how­ever, it was a bit of a dis­ap­point­ment as many ex­pec­ta­tions re­mained un­met.

Of­fice space up­date

Trans­ac­tion ac­tiv­ity dipped by ap­prox­i­mately 15% over the pre­vi­ous month, with Ban­ga­lore ac­count­ing for al­most 50% of the over­all space trans­acted. Pune and the Delhi Na­tional Cap­i­tal Re­gion (NCR) also saw strong trans­ac­tion ac­tiv­ity (about 30% of the to­tal trans­acted space in lead­ing cities) dur­ing Fe­bru­ary. Cities such as Ban­ga­lore, Hy­der­abad and Kolkata ob­served an in­crease in oc­cu­pier de­mand in the month. Few large sized trans­ac­tions (above 100,000 sq. ft.) were also con­cluded in Ban­ga­lore, largely con­cen­trated in lo­ca­tions such as the Outer Ring Road (ORR) and Elec­tronic City. Among the trans­ac­tions con­cluded, Tech Mahin­dra com­mit­ted around 140,000 sq ft in Gold­hill Supreme, Wal­mart t ook up around 130,000 sq f t in Salarpuria Aura, and RBS Busi­ness Ser­vices leased around 100,000 sq. ft. in RMZ Ecoworld.

Oc­cu­pier in­ter­est also re­mained strong in mi­cro­mar­kets such as Gur­gaon in the NCR; Thane and Airoli in Mumbai; ORR and Elec­tronic City in Ban­ga­lore; Ban­jara Hills, and Mad­ha­pur (IT Cor­ri­dor) in Hy­der­abad; Hin­je­w­adi, Aundh, Talawde and Kharadi in Pune; and Cen­tral Chen­nai, with de­mand mainly driven by IT/ ITeS, bank­ing / fi­nan­cial ser­vices and telecom­mu­ni­ca­tions ma­jors.

Hous­ing mar­ket up­date

De­mand for ready res­i­den­tial prop­er­ties re­mained sub­dued and the quan­tum of res­i­den­tial unit launches also re­mained low dur­ing the month. While the fo­cus re­mained on the mid-end seg­ment, the to­tal num­ber of launches de­clined due to abun­dant avail­abil­ity of ready- tooc­cupy in­ven­tory and cau­tious buyer sen­ti­ment. Most of the hous­ing projects were launched in Ban­ga­lore and Chen­nai in the mid-end and high-end seg­ments (mea­sur­ing 100–700 units), while other cities at­tracted limited new launches dur­ing the month. Go­ing for­ward, res­i­den­tial mar­kets are likely to see sta­ble price points with a grad­ual pick up in launches in most lead­ing cities.

Or­gan­ised re­tail space

High streets in Ban­ga­lore, Hy­der­abad and Chen­nai saw healthy de­mand from F&B, and ap­parel and ac­ces­sories re­tail­ers. Ac­cord­ing to CBRE’s lat­est re­port, How Ac­tive are Re­tail­ers Glob­ally, around 6% of global re­tail­ers would be tar­get­ing In­dia in 2015.

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