QuikrHomes India Residential Real Estate Annual Report

The year 2016 was yet another lackluster year for the Indian Real Estate Industry in terms of sales and new launches. However, the flurry of policy announcements in the form of RERA, GST, Demonetization and Benami act made during the year have ensured that 2016 will be remembered as a year of reincarnation of the Indian Real Estate Industry.

The perennial issues of transparency that had severely impacted buyers sentiment were addressed by the government by making RERA into a reality. Passing of RERA was welcomed by almost all the recognized builders. It helps weed out the bad apples of the developer community, that normally tarnishes the image of the entire real estate developers. The sector is expected to witness consolidation in the coming years, predominantly due to the smaller players who may find complying with RERA norms difficult as well as expensive and may end up merging with a stronger entity.

Having said that, well established developers too will now have to re-look at their strategy of new launches, project planning and execution. Not to mention the importance of better capital deployment will gain the center stage. With the vigil increasing on Benami transaction and black money, the early stage investors and speculators almost abandoned the pre-launch and early stage construction projects. However, there has been a gradual increase in the enquiries of ready-to-move-in projects. This is a good sign for the industry, as it clearly indicates that the interest of genuine end users that stands to gain momentum over a period of time.

Overall, in 2016, the rules of the games were reset, but, its evident that all the policy development and announcements made during the year have laid down a very strong ground for the revival of industry.

Domestic Private Equity Investment Rising in India; 2017 May Set New Benchmark

Given the improving regulatory framework, India is now looking way more attractive to investors – both foreign and domestic – than ever before. The recent state election results have only reaffirmed that the central government will keep working on improving and introducing newer policies that are aimed at growth of different sectors, including the important real estate sector.

This positivity will not only lend a huge impact when getting more foreign businesses and investments into India but also in improving the confidence of domestic investors. Already, in the last two years, a change has been witnessed in the private equity investment scene wherein investment from domestic sources has been exceeding that originating abroad. Most notably, the total private equity (PE) inflow (domestic) in 2016 crossed its peak seen in 2007.

Source: JLL Capital Markets Research

While the total PE inflow (domestic) investment in 2015 stood at USD 1,770 mn, it was almost double of that in 2016 at USD 3,410 mn. The corresponding figure in 2007, which was the previous peak, stood at USD 3,300 mn. Compare this to total PE inflow (foreign), which stood at USD 1,540 mn in 2015 and USD 1,850 mn in 2016. The corresponding figure in 2007, which was the previous peak, stood at USD 4,600 mn in 2007.

Looking at this data, it can be said that that equity investment is on a return journey to India and rising consistently in the last three years. Domestic investors seem to have realised the potential of Indian real estate aided by the improvement in India’s political and economic scenario and are investing more than ever before.

Local knowledge also makes them more confident investors than their foreign counterparts that do not necessarily get to witness all the positive changes taking place in India. With many states on the verge of setting up a real estate regulator and REITs coming up, 2017 could very well set a new benchmark as far domestic PE inflows into Indian real estate are concerned.

By Shobhit Agarwal, Managing Director – Capital Markets and International Director, JLL India

MIG housing of 900-1200 sqft accounts for 40% of demand; low cost housing makes entry into formal market: Magicbricks Affordable Housing report

With affordable housing set to drive the Indian real estate market for the next decade, the maximum supply and demand is currently being driven by the 900-1200 sqft segment. The 300-600 sqft apartments which also attract credit linked subsidies for those with a salary level of upto Rs.6 lakh is expected to soon be transacted in the formal market, revealed thelatest report – Affordable Housing Policy Perspective 2017 – by India’s No.1 property site Magicbricks.

Affordable Housing Policy Perspective 2017 is an earnest effort by Magicbricks that puts the focus on affordable housing and its multiple facets. The report also gives a deep insight to consumers on what affordable housing is all about, policy changes, informal renting, taxation on vacant property and the benefits of Pradhan Mantri Awaas Yojana (PMAY).

 Affordable Housing Policy Perspective 2017 revealed that for the first time there is a sync between demand and supply. This has been due to the slow demand movement and rising levels of completed stocks entering the market.  Demand has now rationalized and supply in the market is now in various stages of completion.

Affordable Housing Policy Perspective 2017 also highlighted that the major chunk of supply and demand currently was in the 900-1200 sqft property that would classify as MIG 1 and 2 under the government categorization for CLSS benefits. This segment has accounted for more than 40% of the demand in urban India in the January-March 2017 quarter. The sizes of 1350-1500 also accounted for about 14% of demand.

The report also stated that between the 300 and 450 sq ft, the latter was in greater demand and in both cases demand and supply were in sync. But apartments with a built-up size of 600 sq ft was more popular than the smaller sizes. It accounted for a healthy 11% demand across cities.

“Government policies such as Housing for All (HFA), Affordable Housing, CLSS and Pradhan Mantri Awas Yojana (PMAY), have made affordable housing the buzzword in the market. As the largest Property portal in the country, Magicbricks has been tracking the efforts of the Ministry of Housing and Urban Poverty Alleviation in finding solutions to the huge shortfall in affordable housing and making the Prime Minister’s dream of making Housing for All by 2022 a reality,” said E Jayashree Kurup, Head – Editorial and Advisory, Magicbricks.

Affordable Housing Policy Perspective 2017 uses quarterly supply and demand data on Magicbricks to gain an insight into what is happening in the housing markets at the ground level. Backed by analysis, viewpoints and interviews with market players and governments, it is an attempt to study the impact of policy on housing stock. Even though it is early days yet, affordable housing seems to enter the formal housing stock and is getting listed and transacted through formal channels. We are in transition and affordable housing is expected to dominate the markets for the next five years at least,” Jayashree added.

Magicbricks graded supply from 1-18 ranking for the report Affordable Housing Policy Perspective 2017 and assessed supply across sizes from 300-2950 sq ft. The results were startling. The 300 sq ft size was lowest priority for most cities like Noida, Pune, Hyderabad, Gurgaon, Bengaluru and Ahmedabad. The 450 sq ft size fared much better.

On the other end of the spectrum was the 2200 sq ft and above which ranked high only in Gurgaon. Sizes 600-1300 sq ft were the most supplied categories across most cities. However, there are multiple factors that determine the supply profile. In cities like Faridabad and Ahmedabad, affordability of larger sizes like 1000-1200 sq ft because of lower per sqft cost determined supply profiles. In expensive cities like Delhi, Navi Mumbai and Mumbai, smaller sizes were in supply.

The supply of smaller sizes was missing in Delhi for a long time. However, redevelopment in lower income group colonies such as Uttam Nagar and Chattarpur have ensured that the supply of these properties has also come into the formal market. The Gurgaon market is an aberration where the most supplied categories were sizes 1500-1650 sq ft, with the 3 BHK topping the chart.

A further analysis of the demand profiles showed that 600-1000 sq ft topped demand in most cities. This was directly linked to the purchasing power. Gurgaon, for instance, posted maximum demand for 1000 sq ft and the next was 1350 sq ft. This preference for larger units is linked to the purchase capacity of professionals living and working in the city.

Nine Indian Cities in JLL’s latest ‘Global 300’ Rankings

A total of nine Indian cities figure on the latest edition of ‘Global 300’ cities – the annual JLL ranking exercise, which represents 300 major cities that are the focus of commercial activity and interest, 40% of the world’s economy, and three-quarters of global real estate investment. In an ever-changing world, more urban centres in India are rapidly emerging as players on the global stage – moving beyond the powerhouses of Mumbai, Delhi and Bangalore.

While the megacities of Delhi and Mumbai rank in the ‘Global Top 30’ – thanks largely to their huge scale, other cities such as Bangalore, Chennai and Kolkata sit within the ‘Global Top 100’ – with Hyderabad sitting just outside. Mumbai (17th) is among the 20 largest cities in the world by gross domestic product (GDP), while Delhi (22nd) sits just outside of this – with both cities having a GDP of more than $400 billion. This also makes them the fifth and sixth largest cities in Asia, respectively, only behind Tokyo, Shanghai, Seoul and Jakarta.

Both the megacities demonstrate their sheer scale by being larger than the likes of Singapore, Hong Kong, Washington and San Francisco. However, in GDP per capita terms, Mumbai and Delhi lag behind their global counterparts, due to their large populations. While both Indian megacities significantly lag Shanghai, Beijing and Seoul, even the American cities and Singapore have per capita incomes that are three to four times larger.

In terms of corporate presence, Mumbai comes ahead of San Francisco, Shanghai, Sydney, Singapore, Washington, Atlanta, Toronto etc. Delhi, too, is ahead of cities like Guangzhou and Frankfurt. Corporate presence is based purely on number of headquarters of the Forbes 2000 list. The scale of the Indian market means that 38 companies – based in either Delhi (14) or Mumbai (24) – make the list from India’s largest IT firms, banks and energy firms. This does not account for regional or secondary offices of global firms, which may help account for Mumbai and Delhi’s high positions.

Image result for Nine Indian Cities in JLL’s latest ‘Global 300’ RankingsAlthough some attention is starting to turn to the country, India’s cities are not large recipients of direct real estate investment – given the difficulties in accessing stock and market transparency. Mumbai sees similar investment volumes to cities such as Guangzhou and Mexico City – but just 5% of those seen in Shanghai (USD 37 billion) and 10% of those seen in Beijing (USD 18 billion). Over the past three years, Mumbai has attracted USD 1.7 bn of real estate investment, while Delhi has seen USD 0.6 bn.

This puts both cities outside the ‘Global Top 100’ real estate investment destinations, despite their scale. These markets are dominated by domestic players, rather than international investors. These lower rankings suggest that, while Mumbai and Delhi have the scale to match their global counterparts, they are underperforming in terms of direct real estate investment. It is also indicative of an historic preference by investors to look to development and debt lending to gain exposure to real estate in the Indian market.

However, a number of key policy-level changes taken by the government in recent times such as RERA, REITs, simplification of taxation, easing of FDI restrictions, are expected to counter this. Along with completion of new high-quality stock by commercial developers, which will increase the amount of investable assets across India, these developments are encouraging increased interest from international investors of the likes of Blackstone, GIC and Brookfield.

Prime Minister Awas Yojana housing gains traction in Bengal post-budget

KOLKATA: Developers of luxury real estate have started scouting scope in affordable housing and Prime Minister Awas Yojana seriously as the segment is getting traction from budget sops.

Bagaria Group, co-promoter of the compact super luxury residences ‘Unimark Solitaire’ on EM Bypass between ITC Sonar and upcoming J W Marriott hotels, said the group was keen in foraying into PMAY housing.

“We have identified a land in North 24 Parganas and we will commence with the work after elections in the state. Housing demand for affordable and dwelling units upto 660sq ft segment is set to jump with budget proposals,” group chairman S S Bagaria told PTI.

Another city-based Unimark group has also firmed two housing schemes under PMAY scheme.

Is Buying a House With a Friend a Good Idea? - Pros & ConsThe Shapoorji Pallonji Group has forayed into affordable housing segment with the launch of its new brand ‘Joyville’ and a project had been announced in Howrah.

Developers body CREDAI said the budget proposal to raise the exemption limit of income tax from Rs 1.5 lakh to Rs 2 lakh for buyers who have invested in a unit costing upto Rs 50 lakh and availed a housing loan of upto Rs 30 lakh, which is likely to boost demand for affordable houses.

“Exemption of income tax payment by developers for housing units measuring up to 30 sq m in metropolitan areas and up to 60 sq m in non-metropolitan shall result in creation of more housing stock in the affordable segment,” CREDAI Bengal president Sushil Mohta said.

Total housing shortage envisaged to be addressed through the new mission is 20 million and will be implemented during 2015-2022 providing central assistances.

Bidhannagar Accelerates Its Demand For Inclusion In Smart City Mission

The Bidhannagar Municipal Corporation held a webinar today to present its demand of being included in the Smart city. In the Webinar the speakers enumerated the steps taken by the corporation to strengthen its demand for being included in the Smart City Mission. The webinar was held at the Poura Bhawan (Bidhannagar Municipal Corporation office). Mr Alokesh Prosad Roy, Commissioner – Bidhannagar Municipal Corporation, Mr Debashish Jana, Member, Mayor-In -Council and Mr. Chandrim Banerjee, Advisor, briefed the program in detail.

Mr. Sabyasachi Dutta, Mayor, Municipal Corporation, Bidhannagar could not attend the webinar but extended his wishes for the success of the webinar. In his message, he stressed that, “Bidhannagar is a city of prospects; we are working hard towards being included in the Smart City scheme. Being a Suburb of Kolkata, Bidhannagar has been on the path of development, with the inclusion it will soar to new heights.” The Bidhannagar Municipal Corporation conducted this webinar to strengthen its case for being included in the smart city scheme.

Elaborating on the plan to turn the city into a smart city Mr. Chandrim Banerjee said, “SMART has to be understood in a different light. We at Bidhannagar think of SMART as S-Safe, M-Megalopolitan Culture, A-Acumen-Intellectual capital, R-Rational and T-Tranquil.” He stressed that there is a need to add surveillance to ‘Safe’ to make the city secure, ‘Megalopolitan culture’ needs to be added with manoeuvrability to make it a mobile city.

He further added that intelect and acumen should be bonded by associating the citizens, so that the citizens can become an associate of the corporation. The idea that tranquillity should be combined with technology was also proposed by him wherein he said that by doing so we will be in a position to place urban governance, which would work effortlessly through app based system.

The Corporation has selected a pool of intellectuals who will aid in the transformation of the township into a smart city. The most prominent among them is Mr. Altamas Kabir- Ex CJI. He along with the other eminent residents would help in the planning and development of the city. The Council at the same time doesn’t want to ignore the demands of the alienated and poor. It is running a door to door campaign in the poor areas of the suburb to identify their demands and requirement which if included would ensure a holistic development. Mr. Banerjee further stressed the need to establish the four R’s namely Responsive, Resilient, Responsible and Rich.

The call for ‘Amar Sahar, Tomar Sahar, Sabar Sahar- Bidhannagar’ resonated and reverberated through the webinar.

Wipro seeks government nod to set up IT SEZ in Kolkata

NEW DELHI: Software major Wipro has sought the government’s nod to set up an IT special economic zone (SEZ) in Kolkata.

The company’s application will be considered by the inter-ministerial body, Board of Approval (BoA), headed by Commerce Secretary Rita Teaotia, in its meeting on June 22.

Wipro has proposed to set up IT/ITeS SEZ over an area of 19.76 hectares in Kolkata, the boards meeting agenda said.

“Development Commissioner of Falta Special Economic Zone has recommended for in-principal approval (of the proposal). State government’s recommendation is awaited. The proposal of the developer is submitted for consideration of BoA,” it added.

Real estate firm Embassy Property Developments has also sought approval to set up a similar zone in Karnataka.

The board would also take the case of Devbhumi Realtors Pvt Ltd, which wants to surrender its IT zone in Telangana.

Besides, nine SEZ developers and units including Gulf Oil Corporation and Lanco Solar have sought more time from the government for implementing their projects.

In the last three years till February, the BoA has granted more time to as many as 132 developers of SEZs across the country to complete projects.

SEZs are exports hubs which contribute about 23 per cent to the country’s total outbound shipments.

The commerce ministry is taking steps to revive investors interest in these zones.

The Board deals with SEZ related matters.

Exports from special economic zones have declined 1.89 per cent year-on-year to Rs 3.41 lakh crore in April-December of 2015-16.

Exports from such zones stood at Rs 4,63,770 crore in 2014-15 compared with Rs 4,94,077 crore in the previous fiscal.

Bengal emphasises on developing new tier II & III townships

KOLKATA: West Bengal government emphasised on new smaller twonships in the state but so far its proposed theme cities had failed to attract bidders for development in PPP model.

“I am interested in new tier II and III townships,” state Finance Minister Amit Mitra said on the sidelines of the CII organised realty conclave.

But, a real estate developer on the sidelines said, “The theme cities have not able to attract bidders’ interest and so the state government has decided to develop Bolpur theme city of their own.”

The state governemnt had decided to promote six theme based cities with government land – Siliguri, Baraipur, Asansol, Kalyani, Bolpur and Howrah.

Mitra asked investors to come forward for the theme townships.

Meanwhile, Mitra said state has taken several reforms to boost real estate sector.

Brexit fuel on Paris property price fire: Survey

Prices for real estate in Paris are set to reach new records this summer, as buyers — many of them Britons — scramble to get their hands flats in the French capital`s most well-heeled districts, a survey of notaries showed on Tuesday.

“The number of buyers is rising unstoppably,” said Paris notary Thierry Delesalle.

Demand was outstripping supply, particularly for the most select properties, “and perhaps because of Brexit,” Delesalle said.

While Italians were the biggest group of foreign homebuyers in Paris, snapping up 17 percent of properties sold to non-French buyers, Britons came second, accounting for 10 percent of such transactions.

Already in the first three months of this year, prices for existing apartments in Paris rose by 5.5 percent to 8,450 euros ($9,410) per square metre, a survey by the Chamber of Notaries of Paris and Ile-de-France region estimated.

Brexit fuel on Paris property price fire: SurveyAnd they could rise even further to 8,800 euros per square metre in July, the survey suggested, based on preliminary contracts prepared for signing.

The previous record of 8,460 euros per square metre was reached in the summer of 2012.

Real estate prices in Paris had seen “a slow erosion in the past three or four years,” slipping to 7,880 euros per square metre.

But apartment prices in the capital have been rising again since the summer of 2015.

In the city`s most well-heeled districts or “arrondissements”, prices have risen to more than 11,000 euros per square metre, the notaries estimated.

Omaxe sales down 43% at Rs 946 crore

New Delhi: Realty firm Omaxe Ltd’s sales bookings fell 43 percent to Rs 946 crore in the last fiscal due to lower volume as well as sales realisation.

According to investors presentation, the company sold 3.2 million sq ft in the 2016-17 fiscal, down 35 percent from 4.89 million sq ft in the previous year.

The average sales realisation declined by 12 percent to Rs 2,956 per sq ft from Rs 3,372 per sq ft during the period under review.

As a result, the company’s sales bookings in the value term decreased to Rs 946 crore in the last fiscal from Rs 1,648 crore in the previous year.

The sales bookings in the housing segment fell sharply to Rs 407 crore in the last fiscal from Rs 1,264 crore in the previous year. However, the sales bookings in the commercial segment rose to Rs 539 crore from Rs 384 crore.

Omaxe delivered 5 million sq ft area in the last fiscal.

Omaxe sales down 43% at Rs 946 croreThe company’s gross debt increased to Rs 1,475 crore as on March 31, 2017 from Rs 1,306 crore as on March 31, 2016.

Omaxe has to repay Rs 591 crore debt in the current fiscal.

The company recently reported 55 percent decline in its consolidated net profit at Rs 12.98 crore for the fourth quarter of 2016-17 as against Rs 29.03 crore in the year-ago period.

Income from operations rose by 20 percent to Rs 451.92 crore for the quarter ended March from Rs 376.11 crore in the corresponding period of the 2015-16 fiscal.

During the full 2016-17 fiscal, the net profit went up by 32 percent to Rs 101.9 crore from Rs 77.09 crore in the previous year.

Total income from operations stood at Rs 1,626.75 crore in the 2016-17 fiscal, up 17 percent from Rs 1,385.73 crore during financial year 2015-16.

Omaxe Chairman and Managing Director Rohtas Goel had said that the real estate sector is “slowly witnessing steady recovery in the aftermath of demonetisation and as has been the case for some time now, tier II and III cities continue to outperform metros.”

Since, Omaxe major thrust areas are tier II and III cities, the company has been performing better than the industry, he had said.