Please refer to Disclosures and Disclaimers at the end of the Research Report.
State of Real Estate For the month of November 2013
11 December 2013PhillipCapital (India) Pvt. Ltd.
The month that was‐ PE deals in commercial real estate gathering more momentum and news flow indicates more funds (Rs44 bn) are likely to be deployed in the near future – indicative of improvement in macro? Cost of Joint development agreements to reduce in Bangalore following a change in policy. The key developments which took place in November – • Unsold inventory remains high across the nation: According to a JLL report,
Mumbai currently has an inventory of close to 48 months, while Delhi has that of 23 months and Bangalore of 25. These are above the comfortable level of 14‐15 months.
• Non‐IT takes a big bite of Bangalore's property sales: The sales contribution from non‐IT sectors has surged past the halfway mark for most city‐based developers. (ReferPage7).
• Mumbai’s iconic properties in demand: Prime properties are still fetching good value in this land‐starved megapolis even as rentals are seem to be falling, going by the recent trend of landmark buildings changing hands.(Referpage2).
• Impact of DDA's land‐pooling policy: About 40,000 acres of land expected to come into the market because of Delhi's new land‐pooling policy. This could mean some 1.5 million apartments will be launched over the next three‐four years in the city, possibly having an impact on the appreciation in the value of property in the wider National Capital Region, which includes Gurgaon and Noida.
• Office occupiers opting for unconventional cities: Share of cities such as Mumbai, Pune, Kolkata, and the Delhi National Capital Region (NCR) in absorption of IT/ITeS spaces has gone up to from 38% between 2004 and 2011, to 52% in January 2012 to September 2013 while that of Bangalore, has come down from 34% to 18%.
• New launches were down across the cities except Bangalore: For January‐July this year, the number of new launches has come down drastically — between 38 per cent and 59 per cent — in key markets like Gurgaon, Navi Mumbai, Pune, Noida and Kolkata. The highest drop, of 59.5 per cent, was seen in Noida.
• No new malls space helps lower mall vacancy to 14.5%: Cushman & Wakefield : The overall vacancy levels in malls declined by 0.6 percentage to 14.51% on account of consistent leasing activities while supply has been only 0.77 msf gets added in Kolkata and Pune, states a latest report by Cushman & Wakefield.
• Discussions with Government officials on FDI, has given some understanding that the FDI policy in Construction Development sector is currently being considered for modification. While the investment cap and entry route may continue to remain the same, several modifications in the investment conditionalities are being contemplated for Cabinet's consideration. (ReferPage16).
Abhishek Ranganathan (+ 9122 6667 9952) [email protected] Neha Garg (+ 9122 6667 9996) [email protected]
11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
Mumbai • Large loans on the rise in banks’ home portfolio: Banks have seen a rise in the
proportion of home loans above Rs 3 mn in the past two years, reflecting the sharp increase in home prices over the past few years. However, loans below Rs 3 mn still account for more than half the banking sector's home mortgage portfolio. The share of larger‐sized home loans rose to 42.45% in September from 33% in March. The total home loan portfolio of banks is Rs 5 tn, of which Rs 2.1 tn is accounted for by mortgages above Rs 3 mn. Loans below Rs 3 mn qualify as priority sector lending for banks. The data also reflect rising home purchases in smaller cities, where prices are relatively more affordable.
• Mumbai’s iconic properties in demand: Experts: Prime properties are still fetching good value in this land‐starved megapolis even as rentals are seem to be falling, going by the recent trend of landmark buildings changing hands. The one which is believed to be on the block is the past headquarters of Citigroup India at the Badra‐Kurla Complex (BKC) area. According to sources, the 8‐storeyed Citi Centre us up for sale. Private equity firm Blackstone and Pune‐based Panchshil Realty are said to be in discussions to buy majority stake in the iconic Express Towers in Mumbai in a big‐ticket deal. At the same time, Air India Towers, another equally iconic landmark, has been trying to lease out most of its 22 floors but with little success. TCS, SBI and just launched Mahila Bank are the only big tenants there.
• Court asks Bombay Dyeing to hand over part of mill land: The Bombay High Court has asked Wadia‐promoted Bombay Dyeing to hand over 66,651 sq m of its mill land in Wadala to the Municipal Corporation of Greater Mumbai and the Mumbai Housing Development Authority so that a long‐pending dispute can be settled and the company can redevelop its Wadala and Lower Parel lands in the city. The court, upholding a petition filed by the textile firm said the company can go ahead and redevelop the rest of its now defunct Spring Mills, now known as Island City Centre, at Wadala.
• Diamond merchant Dilipkumar Lakhi buys Cadbury House for Rs 3.5 bn: A Mumbai‐based diamond merchant has bought Cadbury House, a popular South Mumbai landmark for around Rs 3.50 bn. Realty developers like Lodha Group, Oberoi Realty and Peninsula Land were among the players that had shown interest in acquiring the property for redeveloping it. But the new owner of Cadbury house, Dilipkumar Lakhi, the diamond merchant is believed to be acquiring the property for personal use.
• Sahara's Rs 190 bn land valuation based on future developments: The Rs 190 bn valuation for Sahara group’s 106‐acre land at Versova in Mumbai hinges on many things for it to become real. In the contempt case filed by the Securities and Exchange Board of India (Sebi) against the Sahara India Real Estate and Sahara Housing Invest
• IL&FS secures Rs 6.75 bn project in Mumbai: IL&FS Engineering Services has received Letter of Award (LoA) from Neelkamal Realtor Tower Private Ltd for construction of the latter's Orchid Heights, a high‐rise residential project at Byculla, Mumbai, with a built‐up area of around 2.8 million sft. The total value of the contract is Rs 6.75 bn, and is expected to be completed in 39 months. This will be the first work in Mumbai for the company.
• Maharashtra to pursue 22‐km MTHL project: Metropolitan Region Development Authority (MMRDA), plan to actively pursue the development of the Rs 93.6 bn Mumbai Trans Harbour Link (MTHL) project. The government and MMRDA are keen to develop the 22‐km link, which will connect Sewri on the island city to Nhava Seva in Navi Mumbai, on an engineering, procurement and construction (EPC) basis and not on the build‐operate transfer model, considering past experience. The project was tendered three times in vain as no bids were received. The Union finance ministry in January had already sanctioned a viability gap funding of Rs 19.20 bn. Furthermore, the Japanese International Cooperation Agency (JICA) has expressed its desire to provide a loan to the state government for the project.
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
• Maharashtra waters down Inclusive Housing Policy: Almost two years after it unveiled an ambitious plan to generate low income housing from private developers in the State, the Maharashtra government has watered down its own policy by severely restricting the plots which fall under the scheme. In January 2012, the government released its draft Inclusive Housing Policy. This made it mandatory for developers of residential plots of 2,000 square metre and above to reserve 20 per cent of the land for low income group housing. The builder was expected to construct small flats on this land to be sold to the State housing agency, Maharashtra Housing and Area Development Authority (MHADA). However, the final policy which has been introduced this month, only applies to plots which are 4,000 square metres or more. The developer can hand over the 20 per cent reserved land to MHADA, or can do so after constructing affordable flats on the plot.
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
Residential Projects ‐ Recent and New Launches in Mumbai Developer Name of the
Project City Location Subventio
n schemeResidential/ Commercial
Size (In Sqft) Price/ unit Possession
Hiranandani Rodas Enclave Thane West Off Ghodbunder Road
Residential 2‐3‐4‐5 BHK Rs 14.5mn onwards
Hiranandani Cardinal Thane West Off Ghodbunder Road
Residential 2.5‐3 BHK Rs 20.2mn ‐31.7mn onwards
Hiranandani The Walk Thane West Off Ghodbunder Road
Residential 1 BHK‐419 Sqft Rs 8.8‐9.1mn onwards
Nahar Amrit Shakti Andheri East Near Chandivali Film Studio
Residential 3 BHK Rs 20.07mn onwards
Ready possession
Nahar Amrit Shakti Andheri East Near Chandivali Film Studio
20/80 scheme available
Residential 2‐3 BHK Rs 20.06 onwards/Rs
30.6mn onwards
Under Construction
Mayfair Mayfair Greens Kandivali West S.V. Road Residential 2‐3‐4 BHK (817‐1103 sqft)
Rs 20000/sqft; 2 BHK‐ Rs 18.2mn
onwards, 3BHK‐ Rs 24.2mn onwards
Jun‐15
Mayfair Hillcrest Vikhroli west near lbs marg Y Residential 1‐2 BHK 655 sqft 10‐Rs14.6mn onwards
2015
Mayfair Akshay Andheri West Lokhandwala Residential 2‐2.5‐3 BHK Rs 24.9mn onwards
Dec‐15
Mayfair Kumkum Andheri West Residential 990 Rs 39000/sqft Ready
Mayfair Boulevard Santacruz West Off link Road Residential 3 BHK Rs 70mn onwards Jun‐14
Mayfair Serene Bandra West Guru Nanak Park Residential 3‐4 BHK Rs110mn onwards Dec‐14
Oberoi Realty Exquisite Goregaon East Off Western Express Highway
Residential 3 BHK (1690‐1820 Sqft)
Rs 34.5mn onwards
Lodha Splendora Thane West Ghodbunder Road Residential 3 BHK Rs 9.7mn onwards
Hub‐Town Rising City Ghatkopar East Off Eastern Express Highway
Residential 2‐3 BHK Rs 17.8mn‐Rs22.6mn onwards
Marathon Group Marathone nexzone
Panvel National Highway 4B
Y Residential 2 BHK Rs 5.2mn onwards
Marathon Group Monte Vista Mulund west off L.B.S Marg Residential 2BHk Rs 14.0mn onwards
Ready possession
Marathon Group MBRYO Bhandup (W) Residential 1‐2 BHK Rs 6.2mn onwards Ready possession
Marathon Group NAGRI NX BADLAPUR (E) BADLAPUR (E) Residential 1‐2 BHK Rs 2.2mn onwards Nearing Possession
Puraniks Builders Rumah Bali Crème
Thane west Off Ghodbunder Road
Residential 2‐3 BHK Rs 8‐1.1 mn onwards
Lodha Fiorenza Goregaon East Off Western express highway
Residential 2‐3‐4 BHK Rs 21.0mn onwards
Sheth Developers Avalon Thane west Eastern Express Highway
Residential 2‐2.5‐3‐4 BHK Rs 11mn onwards
Vijay Group Vijay galaxy Thane west waghbil naka, G.B. road
Residential 1‐2 BHK Rs7.9mn onwards
Ajmera Group I‐Land Wadala East Next to I‐ Max, Bhakti Park
Residential 4 BHK Rs 17100/sqft Dec‐15
Gundecha Zenith Mulund West P.K.Road Residential 2‐3 BHK 17.3mn onwards
Wadhwa Group ever Green Heights
Thane West Parshik Nagar Residential 1‐2 BHK Rs 5.429mn‐8.26 mn
Lodha New Cuff Parade
Mumbai Near IMAX Dome Residential 2‐3 BHK Rs 29.0mn onwards
Source: PhillipCapital India Research
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
NCR • DDA's land‐pooling policy: About 40,000 acres of land expected to come into the
market because of Delhi's new land‐pooling policy. This could mean some 1.5 million apartments will be launched over the next three‐four years in the city, possibly having an impact on the appreciation in the value of property in the wider National Capital Region, which includes Gurgaon and Noida. The policy announced by the Delhi Development Authority recently is aimed at freeing up land and ensuring infrastructure is in place before construction of homes begins in newer areas of the city that are residential zones under the city's master plan. Landowners can pool their land for development by the city's land‐owning agency. But instead of being compensated when the government takes over the land, the owners will get 48‐60% of it back after the authority has set up the infrastructure. The owners will be allowed to build on this land themselves or give it to real estate developers. The Master Plan of Delhi 2021 envisages development of several hundred acres of land for accommodating an additional population of 4.8 mn by 2021, up from the current 16 mn.
• Parsvnath to build township at Gurgaon‐Sohna road for Rs 11 bn: Realty firm will launch the 107‐acre township early next year and is eyeing a revenue of Rs 27 bn over the four year period. As per the new master plan of Sohna, this land has been notified as residential zone. The company will develop 2 mn sq ft each of group housing and independent floors. About 1 mn sq ft will be plotted development.
• 3C Company to invest Rs 35 bn on mixed‐use project in Noida : The company will invest Rs 35 bn on developing a mixed use project at Noida comprising a 5‐star hotel and branded homes, to be managed by hospitality major Four Seasons Hotels and Resorts. About 3.5 mn sq ft of area would be developed in this project, comprising 2 mn sq ft of office and 0.3 mn sq ft of luxury retails. Company is selling these residences by invitation at Rs 22,000‐26,000 per sq ft. The size of flat is about 7,500 sq ft. The project will be complete by 2016.
• Haryana urges bankers to fund its housing scheme: Haryana has urged the bankers to provide finance to beneficiaries of its flagship housing scheme for poor families living in rural and urban areas. Under these two schemes the state intends to construct 0.25 mn houses in the current financial year. It has launched a new scheme, each for rural and urban areas for the below poverty line and economically weaker sections of the society. Under the scheme for the rural areas, called ‘Priyadarshini Awaas Yojna’, poor families have been granted 100 square‐yard lands by the government at subsidized rates and intend to construct 100,000houses during the current fiscal year under our flagship housing scheme meant for rural people.
• Defaulters owe Rs 55.15 bn to Noida administration: A total of 3,696 allottees pertaining to group housing, commercial department, industrial department, institutional department and residential plots are defaulters in Noida. Around Rs 25 bn is pending from 48 defaulters of group housing, followed by Rs 21.2 bn due from 1,117 defaulters in commercial department; Rs 3.29 bn against 2,022 defaulters in industries department; Rs 1.71 bn from 159 defaulters in institutional department; and Rs 920 mn pending from 350 allottees of residential plots.
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
Residential Projects ‐ Recent and New Launches in Delhi Developer Name of the
Project City Location Subvention
scheme Residential/ Commercial
Size (In Sqft) Price/ unit Possession
Amaatra Group Amaatra Homes Greater Noida West
GH‐ 02C, Sector‐10
Offer Samsung Galaxy TAB T2110 Free/ Free Car
Parking
Residential 2‐3 BHK
Jaypee Greens Klassic Noida Residential 1‐2‐3‐4 BHK Rs 4.512mn onwards
Jaypee Greens Garden isles Towers Noida Residential 2‐3 BHK Rs 6.3mn onwards
Jaypee Greens KOSMOS Noida Residential 2‐3‐4 BHK Rs 3.825mn onwards
Jaypee Greens KRESCENT HOMES Noida Residential Luxurious Penthouses
Rs 21.0mn onwards
Jaypee Greens KUBE Noida Residential 2‐3‐4 BHK Rs 5.4mn onwards
JM Housing JM Aroma Greater Noida sector‐75 No pre PMI till January 2014 and
24% P.A. Guranteed Return
Residential 2‐3 BHK Rs 4300‐4600/ sqft
JM Housing JM Orchid Greater Noida sector‐76 No pre PMI till January 2014 and
24% P.A. Guranteed Return
Residential 2‐3 BHK Rs 3550‐3650/sqft
JM Housing JM Florence Greater Noida (West)
DV‐GH‐09C, Sector‐Tech Zone‐4
Residential 2‐3 BHK Construction Started
Mahagun Group Mirabella Noida Sector‐79 Residential 3‐4 BHK Now Launched
Mahagun Group MANTRA‐1 Greater Noida west
Sector 10 pay 20% and next 24 months no payment
Residential 2‐3 BHK Budget homes
Rs 2.972mn onwards
Mahagun Group Moderne Noida Sector‐78 20/80 and 10gm free coin
Residential Apartments Rs 6.625 onwards
Mahagun Group Mywoods Greater Noida West
Sector‐92 20/80 and 10gm free coin
Residential 2‐3‐4BHK Rs 3.169 onwards
Shubhkamna Advert Group
Shubhkamna Legacy
Noida Yamuna Expressway
Residential Villas Rs 2995 psf.
Shubhkamna Advert Group
Shubhkamna Sublime
Noida Yamuna Expressway
Residential 1‐2‐3‐4 BHK Rs 1.246mn onwards
Shubhkamna Advert Group
Shubhkamna Legend
Noida Sector‐150 Residential 2‐3‐4 BHK Rs 3895 psf.
Shubhkamna Advert Group
Shubhkamna Masters
Noida Sector‐150 Residential Villas Rs 7495 psf.
Ahluwalia Contracts The Jewel of Noida Noida Sector‐75 Residential
EMAAR MGF Commerce Park Gurgaon Sector‐61 35/65 Commercial 845‐2421 Sqft
Sunworld Vandita Noida Yamuna Expressway
Residential 1‐2‐3 BHK Launching Phase II
Ansal Housing & Construction Ltd.
Florence Residency Gurgaon Sector 56& 57 No Pre‐ EMI Residential 4 BHK Rs 15.8 mn onwards
Wave Infratech Edenia Noida Sector 32 & 25A Commercial Multi‐use studios Rs 3.5mn onwards
Venetian LDF Projects LLP.
Bridgestreet Gurgaon 83 Avenue Commercial Retail, Miniplex, Office Spaces, Restaurants and
Food Court
Total space=180093
sqft.
Umang Great tech Winter Hills Dwarka Morh Possession linked payment plan
Residential 2‐3‐4 BHK Dec‐14
Unitech The Willows Noida Sector‐96 Residential Plots (192 sq yrd.)
Aqasia Homes Ltd. Aqasia Enclave Alwar Sector‐106A Residential Plots and Villas Rs 2.5mn onwards
Construction Started
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
Developer Name of the Project
City Location Subvention scheme
Residential/ Commercial
Size (In Sqft) Price/ unit Possession
Amrapali Group Amrapali Crystal Homes
sector‐76 Noida Residential 3 BHK Construction started
Purvanchal Projects Pvt. Ltd.
Purvanchal Royal Park
Sector‐137 Noida Residential 3‐4‐5 BHK Possession soon
Purvanchal Projects Pvt. Ltd.
Purvanchal Royal City
Plot No. GH‐05
Greater Noida Residential 3‐4‐5 BHK Construction in full swing
Jaypee Greens Udaan Yamuna Expressway
Residential 2‐3 BHK Rs 4.278mn onwards
Oasis realtech pvt. Ltd.
Oasis grand stand sector‐2 Noida Residential 1‐2‐3BHK (695) Rs1.528 mn (Rs2199/sqft)
Unnati Fortune Elites Arena Noida Sector 119 Residential 2‐3 BHK (1050‐1350 sqft)
Rs 4499/ sqft
Ansal Housing & Construction Ltd.
Ansal HUB 83 Gurgaon NH‐8 and Dwarka Expressway
Commercial Retail and offic espace
starting Rs 2.5mn only
Today Homes Ridge Residency Noida Sector‐135 Residential 2‐3 BHK Homes Rs4200/sqft
Horizon Concept Orizzonte Greater Noida KP‐3 Residential 2‐3‐4 BHK
Amrapali Group Leisure Park Greater Noida West
Greater Noida west
Residential 2‐3 BHK
Dhoot Infrastructure Projects Limited
Time Residency Gurgaon Sector‐ 63 Residential 2‐3‐4 BHK Rs 8000/sqft Structure Nearing
Completion
Unitech UGCC Burgundy Noida Noida Expressway
Residential Apartments Rs20mn onwards
Starting from 2014
Aditya Builders Aditya World City Ghaziabad NH‐24 10% disocunt and Rs 35000 gift vouchers
Residential 2‐3 BHK Rs2.8mn onwards/ Rs 1990 sqft
Aditya builders Urban Casa Noida Sector‐78 Residential 2‐3‐4 BHK Rs4.5mn onwards
Nearing Possession
DLF King's Court Greater Kailash‐ II
W‐ Block Residential Rs 210. 0mn onwards
DLF Prime Towers‐I South Delhi Okhla Phase‐1 Commercial Shop size‐97‐237 sq. mtrs; Office sizes:‐98‐231 sq.
mtrs
Rs 18.6mn‐Rs 15.8mn onwards
Source: PhillipCapital India Research
Bangalore • Cut in registration fee for GPAs and joint development agreements: In a move
expected to give a boost to the housing sector, fee for registration of documents pertaining to joint development agreement and the general power of attorney (GPA) has been amended. While a flat fee of 1 per cent of the guidance value of the property was being collected till now for registration of joint development agreements and GPAs, the State government has changed it to 1 per cent of the property value or a maximum of Rs. 0.15 mn. This became effective on November 1. However, there is no change in the stamp duty structure that remains at 1 per cent of the property value or a maximum of Rs. 1.5 mn.
• Non‐IT takes a big bite of Bangalore's property sales: The sales contribution from non‐IT sectors has surged past the halfway mark for most city‐based developers. For Mantri Developers, non‐IT professionals contribute 60% of its sales. Likewise, Shriram Properties, the revenue contribution of the non‐IT sectors stands at about 55% now. "Just five years ago, the revenue contribution from the IT sector stood at 70%, which now stands at around 45%. Sectors such as manufacturing, banking and financial services, automobile and aerospace are propelling the growth share of the non‐IT segment. The changing consumer profile of the city's real estate market, which clocks average residential sales of 35,000 units a year, is reflected in the share of office space absorption by the non‐IT sectors. A recent report by Knight Frank showed the share of office space absorption by 'other sectors' (that includes
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11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE – NOVEMBER 2013
pharmaceutical and healthcare, media, consulting and telecommunication) had expanded to 26% in the H1CY13, from 11% in the same period a year ago. The share of IT/ITeS in office space absorption fell by 4% points to 61% in the H1CY13.
• Bangalore sees robust supply of residential units: Bangalore has witnessed launch of 13,200 units, accounting for the highest share of 30 per cent of the launches across the top eight cities during Q3 of the year. It was the only city to register over 10,000 unit launches for the third consecutive quarter in the year. With this, the number of launches in 2013 more than tripled in Bangalore to nearly 35,000 units till September, 2013. According to data from Cushman & Wakefield (C&W), a real estate advisory firm, the mid‐end segment contributed to 55 per cent of the launches in the city and 29 per cent of the mid‐end segment launches across top eight cities during Q3 2013. Despite the higher number of launches, the mid‐end segment saw an appreciation of 5‐12 per cent in the capital values across select sub‐markets. This was primarily due to the growing demand for residential units in proximity to IT hubs and the paucity of new launches in certain central areas of the city. Majority of the launches in the mid‐end segment were concentrated in areas like Sarjapur Road and Bannerghatta Road in the South, Whitefield in East and Yelahanka and Jakkur in the North of Bangalore. Though the affordable segment contributed to nearly 31 per cent of the total launches for Bangalore, it amounted to 44 per cent of the launches in top eight cities during the quarter.
• Real estate lobby demands changes in Land Reforms Act: Karnataka chapter of real estate body The Confederation of Real Estate Developers' Associations of India (CREDAI), has asked Karnataka to make changes to the recently‐announced Karnataka Land Reforms Act. As per the Karnataka Land Reforms Act, a non‐agriculturalist cannot purchase agricultural land directly from the owners of the land in Karnataka. CREDAI has requested the state government to give exemption to the lands which are earmarked under the Developmental Plan prepared by the BDA, BIAAPA, and BMRDA among others, in Bangalore district. all the lands earmarked for development plans prepared in Mysore, Mangalore, Belgaum, Hubli‐Dharwad, Gulbarga and other cities should also be exempted from the application of Section 79 A & B of the Karnataka Land Reforms Act.
• Registration of ‘B’ khata property in BBMP limits approved: The State government approved registration of ‘B’ khata certificate (title deeds) buildings constructed on revenue land in the Bruhat Bangalore Mahanagara Palike (BBMP) limits. A meeting of the Cabinet permitted the BBMP to issue ‘B’ khata to buildings/houses on revenue land and also provide electricity, water, drainage and other facilities. The decision is expected to bring in around Rs. 10 bn revenue to the government.
• BDA circumvents guidance value through auctions: BDA acquires land from farmers for distribution among the public at subsidised rates. Hence, the legality of auctioning plots by the State‐run body has been a matter of debate for some time. But the latest announcement on Thursday has been a source of consternation because of the price at which the government agency wants to dispose the plots. The base price of the plots has been fixed between Rs. 6,500 and Rs. 8,500 per square feet.
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Segregation of locations on Usage HIGH‐END SEGMENT MID‐END SEGMENT
Central Lavelle Road, Off Palace Road, Off Cunningham Road, Ulsoor Road, Richmond Road, Race Course Road
Brunton Road, Artillery Road, Ali Askar Road, Cunningham Road
South: Koramangala, Outer Ring Road, Bannerghatta Road, JP Nagar, Kanakpura Road, Banashankari
Sarjapur Road, Outer Ring Road, HSR Layout,Jayanagar, J P Nagar, Kanakapura Road, Bannerghatta Road, BTM Layout, Banashankari
Off Central: Frazer town, Benson Town, Richards Town, Dollars Colony Vasanth Nagar, Richmond Town, Indiranagar,Cox Town, Frazer Town, Benson Town, etc
East: Whitefield, Old Airport Road Marathahalli, Whitefield, Old Airport Road, Old Madras Road North: Hebbal, Yelahanka, Jakkur, Devanahalli Hebbal, Bellary Road, Yelahanka, Doddaballapur Road, Jalahalli, Hennur
Road, Tumkur Road, Thanisandara Road North‐West Magadi Road, Malleshwaram, Rajajinagar Malleshwaram, Rajajinagar West Mysore Road, Uttarahalli Main Roa Far South Electronic City
Source: PhillipCapital India Research
Residential Projects ‐ Recent and New Launches in Bangalore Developer Name of the
Project Location Subvention
scheme Residential/ Commercial
Size (In Sqft) Price/ unit Possession
Mantri Developers Mantri Webcity Hennur main Road Residential 2‐3 BHK Rs 4.82mn onwards
Nearing Possession
Mantri Developers serenity Kanakapura Main Road Residential Rs5.36mn onwards
Mantri Developers Alpyne Banasshankari 5th Stage Residential Rs8.00mn onwards
Mantri Developers Heights Off Whitefield Main Road, Near Safal Market
Residential Rs 6.48mn onwards
Mantri Developers Espania Opp. Intel, Outer Ring Road
Residential Rs 21.2mn onwards
Mantri Developers Pinnacle Off Banner‐ghatta Road Residential Rs 28.8mn onwards
G. Corp. Developers pvt. Ltd.
The Icon Thanisandra road Residential 3‐4 BHK (1795‐3097 sqft)
Rs 11mn onwards
DS‐ Max Properties Pvt. Ltd.
Attible E. City Residential Rs1.444‐3.680mn
DS‐ Max Properties Pvt. Ltd.
Peenya Opp. Rock Line Studio Residential Rs 2.627‐4.271mn
DS‐ Max Properties Pvt. Ltd.
Opp. Manyata Tech Park Residential Rs 4.3‐5.772mn
VRR & Co. Builders & Developers
VRR Nest Off Hosur Road Residential 2‐3 BHK Rs 3.6mn onwards
VRR & Co. Builders & Developers
VRR Vista Whitefield Residential 2‐3 BHK Pre‐launch offer
Maithri Developers Shilpitha Splendour Annex
Mahadevapura Residential 2‐2.5‐3 BHK May‐14
Veracious Builders & Developers Pvt. Ltd.
Vani Vilas Doddaballapur Road, Yelahanka
No Pre‐EMI till Possession
Residential 2‐3 BHK Rs 5.7mn onwards
Samruddhi Realty Ltd. Rhythm Off Hennur Road Residential 2‐3 BHK Rs 4.5mn onwards
Samruddhi Realty Ltd. North Square Off Bellary Road, Kogilu Residential 2‐3‐4 BHK Rs 4.9mn onwards
Maxworth Realty India MaxWorth City Vidyaranyapura Residential Premium Apartments
Vasathi Housing Vasathi Avante Hebbal Residential 2‐2.5‐3BHK Rs 4.536mn
DSR Infrastructure Pvt. Ltd.
Ultima Haralur, Off Sarjapur Road Residential 2‐3 BHK Oct‐13
DSR Infrastructure Pvt. Ltd.
Green fields Whitefield Residential 2‐3 BHK Oct‐13
Fire luxur developers pvt. Ltd.
The Empyrean NH 207 Residential Villa Rs 6.6mn onwards
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Developer Name of the Project
Location Subvention scheme
Residential/ Commercial
Size (In Sqft) Price/ unit Possession
Radiant Group Silver Oak Begur Road Residential Villa Rs 9.9mn onwards
Mahaveergroup Amaze Kadugodi, Whitefield Residential 2‐3 BHK Rs 4.251mn
Mahaveergroup Tranquil Whitefield Residential Rs 7.738mn
Mahaveergroup Laurel BTM 4th Stage Residential Rs 5.915mn
Mahaveergroup Cedar Hesaraghatta Road Residential Rs 3.5 mn
Mahaveergroup Desire Off Tumkur Road Residential Rs 3.2mn
Mahaveergroup Fortune Off Magadi Road Residential Rs 2.5mn
Mahaveergroup Galaxy Off Mysore Road Residential Rs 2.4mn
Mahaveergroup Jonquil J.P.Nagar, 6th Phase Residential Rs 6.1mn
Mahaveergroup Oberon JP Nagar 5th Phase Residential Rs 5.7mn
Mahaveergroup Willet Kumbena Agrahara Residential Rs 4.439mn
Golden Gate Golden Homes II Off Sarjapur Road Residential Villas (1795‐4055 sqft) Rs 6.45mn onwards
Sumadhura infracon Pvt. Ltd.
Silver R\ipples Borewell Road, whitefield Residential 2‐2.5‐3‐3.5 BHK
Azven Realty Pvt. Ltd. Breathe Next to Indus International School, Sarjapur
Residential 200 Hamlet Villas
Surya Shakti Greenlands
80 Trees Bellandur Residential 2‐3 BHK Rs 3850/Sqft
Reliaable Developers Magnoliaa Off Sarjapur Road Residential Plots Rs 3850/Sqft
Krishna Enterprises Krishna Mystiq Pragathi Nagar, Basapura Residential 2‐3 BHK Rs 3.7mn onwards
Launching Soon
Maya Ventures Private Limited
Indradhanush Kanakapura Main Road Residential Apartments Rs 4250/Sqft
Sowparnika projects Sowparnika Sanvi Whitefield Residential 2 BHK Rs 3.699mn onwards
Zonasha Building Landmarks
Zonasha Vista harlur Road Residential 1‐2‐3 BHK (780/1020/1350sqft)
Rs 3900/sqft
SLS developers Sapphire marathahalli‐sarjapur outer ring
Residential 2‐2.5‐3 BHK Rs 3.76mn onwards
SLS developers Sunny gardens Doddanakundi Residential 2‐3 BHK Rs 4.1mn onwards
S2 Homes Senart City (Avantika)
Sarjapur Road Residential 2‐3 BHK (1095‐1509 sqft)
Rs 2.997 mn onwards
DSR Infrastructure Pvt. Ltd.
Sunrise Towers Hope Farm, Whitefield Residential 3 BHK
DSR Infrastructure Pvt. Ltd.
Woodwinds Sarjapur Road Residential 2‐3‐4 BHK Mar‐14
DSR Infrastructure Pvt. Ltd.
Eden Greens Off Sarjapur Road Residential 2‐3 BHK
DSR Infrastructure Pvt. Ltd.
Ultima Haralur, Off Sarjapur Road Residential 2‐3 BHK Oct‐13
DSR Infrastructure Pvt. Ltd.
Green fields Whitefield Residential 2‐3 BHK Oct‐13
Mana Projects UBER Verdant Sarjapur Road Residential Special launch offer
Sreenidhi Group Jeevanadi Sanskar Hebbal Residential 2746‐3309sqft Rs 17.1mn onwards
May‐14
Keerthi Keerthi‐Surya Shakti Towers
ITPL Road, Whitefield Residential 2‐3BHK (1235‐1295,1484‐1832sqft)
Rs 6.3‐7.7mn onwards
GGR Housing India Pvt. Ltd.
Aditya Grand Off. Whitefield Residential Villas and Plots
Golden Gate Golden Grand Phase‐I
Yeshwanthpur Station Residential 2‐3 BHK Rs 7.84mn onwards
Ready Possession
Zuari Infraworld India Ltd.
Zuari Garden City Mysore Residential 2‐3‐4BHK (1225‐2335 sqft)
Rs 2599/sqft
Golden Gate Panorama Jayanagar Residential 2‐3 BHK Rs 5.1 mn onwards
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Developer Name of the Project
Location Subvention scheme
Residential/ Commercial
Size (In Sqft) Price/ unit Possession
Ajmera Ajmera Stone Park Electronic city Residential 2‐3 BHK Rs 4.9mn‐6.0mn onwards
Krishna Enterprises Shelton Bagalur Main Road Residential 2 BHK Rs 7.0mn onwards
Source: PhillipCapital India Research
Chennai • Parsvnath looks to monetise land assets in southwest region: Company plans to
monetise non‐core land parcel in South‐ West India either through joint ventures with local builders or outright sale of plots. It has assets in Chennai, Hyderabad, Kochi, Goa, Mysore and Palghat. Parsvnath has 85 acres land in Kochi, of which 50 per cent has already been notified as Special Economic Zone and process for the next half is in progress. It has 35 acres in Chennai and 75 acre in Mysore.
• Japanese firm shortlisted to set up facility at OneHub: Japanese companies Hitachi Automotive Systems, Ajinomoto and Takasago International Corporation are to set up manufacturing facilities near Chennai. The companies are among the early players to enter into agreement with Ascendas and a Japanese consortium setting up a 1,450‐acre integrated industrial township 50 km south of Chennai. The industrial township, OneHub Chennai, previously dubbed Omega Industrial Township in the concept stage, is aimed at drawing investments from Japanese and international businesses. The project is facilitated by the Tamil Nadu Government. Ajinomoto will set up a new packaging facility and office in OneHub Chennai and has plans for product development; Hitachi Automotive Systems manufacture automotive components; and Takasago will set up a manufacturing and R&D facility which will be its headquarters for India and South Asia.
Residential Projects ‐ Recent and New Launches in Chennai Developer Name of the
Project Location 20/80
scheme Size (In Sqft) Price/ unit Possession
Malles Constructions (P) Ltd. Altius Perubakkam 1001‐1458 Sqft
Malles Constructions (P) Ltd. Alankar Manapakkam 903‐1447 Sqft
Malles Constructions (P) Ltd. Aashira Perubakkam 550‐1620 Sqft
Jain housing and construction Ltd.
Inseli Park OMR‐Padur Pre ‐EMI Offer Rs4.5mn onwards Nearing completion
Jain housing and construction Ltd.
Alpine meadows Pallavaram Pre ‐EMI Offer Rs 4.2mn onwards Phase I handover
Jain housing and construction Ltd.
Pebble Brook Thoraipakkam 2‐3‐4 BHK‐996‐2523sqft no pre emi 200/sqft discount
LCS citymakers LCS Pallikaranai 3BHK Rs 7.8mn onwards
VGP Housing Royal Springs Madhurandhagam
25% and rest in 12 installment
Row Houses
VGP Housing Sri Chakaa Town Sriperumbudur‐ On Nemili road
25% and rest in 12 installment
Row Houses
Arihant Villa viviana Maraimalai nagar 3 BHK‐1413 sqft; 4BHK‐3686 sqft; residential
plots‐1810sqft.
North town estates pvt ltd. North ‐Town perambur 1‐2‐3 BHK 650‐1396 sqft Construction in full swing
Unitech Uniworld city Nallambakkam, 2‐3 BHKUnihomes, Palm villas and aspen greens
Rs 2250‐2300 villas‐Rs3550, Apartment‐
Rs2800
Arinhant/ unitech greenwoodcity plots on Omr 1800‐3500sqft plots
Arinhant/ unitech greenwoodcity Perambur 1‐2‐3‐BHK‐650‐1396 sqft Construction in full swing
Romaa Housing Romaa Gaarden Maduravoyal Villas
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Developer Name of the Project
Location 20/80 scheme
Size (In Sqft) Price/ unit Possession
Colour Homes Color Castle Perumbakkam 2‐3 BHK 774‐1453 Sqft Rs 3290/Sqft
Landmark construction Tivoli Mogappair 2‐3 BHK 1213‐1884 sqft
Landmark construction Orlando Korattur 3 BHK (1600‐1805sqft)
Landmark construction 7th Avenue Annanagar 3 BHK (1525Sqft.) Construction in full swing
Landmark construction La Verde Mare Perungudi launching shortly
Voora Voora Villa Injambakkam 3‐4BHK (2500‐3300Sqft)
KG Foundations Pvt. Ltd. KG Earth Homes Siruseri 2‐2.5‐3 BHK‐ 570‐1010‐1210‐1265 Sqft
Rs 2899/sqft; increasing to Rs 3150/sqft
Mayances Myans Mayajaal,ECR Luxury Villas (3‐4‐5 BHK) Rs 25/35/45mn Sumantha & co. Sreshta Kolapakkam 2‐2 1/2‐3 BHK (1150‐
1571 sqft) construction in full
swing (May 2014)
Source: Media sources, PhillipCapital India Research
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Commercial • RICS Commercial Property Survey shows drop in occupier demand : The RICS India
Commercial Property Survey showed signs of a fall in both occupier and investor sentiment during the third quarter of 2013 (July ‐September). The Occupier Sentiment Index (OSI) for India fell deeper into negative territory during this period, going from ‐1 in the second quarter to ‐22. This was a result of a drop in occupier demand, a pick up in inducements and a moderation in near term rental expectations, although the latter still remain positive. Investment Sentiment Index (ISI) slipped back into negative territory with a reading of ‐23. This was a result of falling investment enquiries, a pick up in distressed property supply and a moderation in near term capital value expectations. Weakness in the occupier market appears to be fairly broad based amongst the retail, office and industrial sectors.
• Rentals to remain under pressure on lower supply: Experts: Decline in supply of additional office space is likely to put pressure on rental values in the coming quarters, even as the demand is expected to be moderate. According to a report, less than 3 million sq ft of office space was added in July‐September quarter, which is a decline of nearly 50 per cent compared to the same period in 2012, and 75 per cent compared to April‐June quarter of 2013. During the quarter, six major cities ‐ Mumbai, Delhi NCR, Bengaluru, Chennai, Kolkata and Pune recorded a cumulative rental space absorption of 6.2 million sq ft, which is 20 per cent less than 8 million sq ft year‐ago. A significantly large percentage of the uptake for office space is being generated due to companies relocating or consolidating their operations to a single larger but cheaper location. Kolkata's office market remained sluggish due to the overall negative economic scenario and recorded absorption of nearly 200,000 sq ft, while steady occupier demand from the IT/ITeS sector kept Pune's office market steady during 3Q 2013 as the absorption in the city stood at 850,000 sq ft.
• No new malls space helps lower mall vacancy to 14.5%: Cushman & Wakefield : The overall vacancy levels in malls declined by 0.6 percentage to 14.51% on account of consistent leasing activities while supply has been only 0.77 msf gets added in Kolkata and Pune, states a latest report by Cushman & Wakefield. Increased leasing activities and lack of infusion of new mall space led to a 1.8 % dip in Bengaluru's mall vacancy. Chennai and Ahmedabad witnessed marginal reduction in mall vacancy. Mumbai and NCR however recorded slight increase in vacancy levels due to ongoing churn in various malls. ccording to C&W, mall rentals increased by 7‐10% in Lower Parel (Mumbai), South Delhi (NCR) and Gurgaon (NCR), primarily due to high persistent and low availability of space. In South Delhi malls, the ongoing churn further propelled the rental appreciation.
• Office occupiers opting for unconventional cities: Study: Share of cities such as Mumbai, Pune, Kolkata, and the Delhi National Capital Region (NCR) in absorption of IT/ITeS spaces has gone upto from 38% between 2004 and 2011, to 52% in January 2012 to September 2013 while that of Bangalore, touted as country's commercial capital, has come down from 34% to 18%, said a report by property consultant Jones Lang LaSalle. Vacancy in IT/ITeS buildings in Mumbai, the country's commercial capital, has fallen to 24% from 29% while that in non‐IT buildings has risen from 16 % to 21%. This trend may continue as by December 2015 another 13 mn sq ft of non‐IT office space will hit the market contrasting with just 6 million sq ft in IT Parks‐SEZs. IT Parks can host non ‐IT occupiers to a certain extent, but IT occupiers have to operate from IT Parks ‐SEZs for business efficiency. Pune’s dependence on IT ‐ITeS has fallen from 59% to 45% and Hyderabad has be come first choice for healthcare, biotech, telecom, and construction companies, which together have taken up 28 % of the total space leased in the city (up from 12% at December 2011).
• Citibank’s old headquarters in Mumbai put up for sale: Citibank has decided to put its old headquarters in Mumbai on the block and has appointed the CBRE group as
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its consultant. Citi Centre, an 84,000‐sq‐ft space in Mumbai’s prime business district Bandra‐Kurla Complex, was Citi India’s headquarters until April last year. The bank had shifted to its new location First International Finance Centre about six months ago. The new office space was bought at Rs 9.85 bn.
• Shapoorji Pallonji Group plans to expand its infotech properties by 50 per cent ‐ The addition by the conglomerate will be in existing properties, increasing its portfolio by around 2 mn sq ft next year. Shapoorji Pallonji operates information technology parks under the SP Infocity brand in IT and IT‐enabled services (ITeS) at software technology parks and Special Economic Zones. It has IT parks and SEZs in Chennai, Gurgaon, Manesar, Mohali, Nagpur and Pune, with 4.6 mn sq ft of space.
• Mumbai Commercial market absorption rate: According to Colliers, Mumbai commercial market recorded absorption of around 650,000 sq ft of Grade A offices.
• NCR Commercial market absorption rate: Delhi saw only a few mid‐sized deals were concluded resulting in 0.15 mn sq ft of Grade A office space absorption during the quarter. During the quarter, absorption in Gurgaon was around 1.6 million sq ft, while Noida witnessed absorption of 0.4 mn sq ft, which was primarily from IT/ITeS sector followed by banking and financial services sector.
• Bangalore Commercial market absorption rate: Bengaluru commercial maket saw a weak demand this quarter with nearly one million sq ft of office space being absorbed, which is significantly less than the previous two quarters absorption of 2.9 and 2.7 million sq ft.
• Chennai Commercial market absorption rate: The Chennai commercial market witnessed increased demand this quarter with overall absorption of Grade A office space about 1.68 million sq ft.
Fund Flows/Land Deals/Infrastructure announcements • Lodha group buys Canadian high commission’s building in London for over Rs 31.2
bn : The 0.67‐acre property, a stone's throw from Buckingham Palace and known as McDonald House, will be converted into super‐luxury residences for the ultra‐rich, people. Lodha has already paid the initial amount to the government of Canada and the rest of the money is expected to be paid in two or three tranches. The property is believed to have a total saleable area of 0.16 mn square feet. The developer has time till March end to pay the entire consideration, but the group is believed to be keen on paying the full amount by end‐January.
• Milestone Capital plans to raise Rs 5 bn real estate fund in January : Milestone Capital Advisors is planning to raise a Rs 5 bn real estate fund, which will be launched in January and will have a greenshoe option of additional Rs 2.5 bn. The fund, with a total tenure of 6 years including two extensions, will be Milestone's eighth real estate fund and first since last two years following the sudden death of its founder and CEO Ved Prakash Arya.
• Blackstone Real Estate partners to exit Synergy Property for Rs 2.60 bn : The Blackstone Group LP, is exiting its investment in Bangalore‐based Synergy Property Development Services in a deal valued at Rs 2.6 bn. private equity firm invested Rs 600 mn in the property management company in 2008. Synergy Property Development Services is in project management consultancy business across segments including commercial, hospitality, health care, high‐end residential projects in India and globally. The company has delivered 100 mn sq ft in the last 10 years and has 135 mn sq ft under management.
• Blackstone to buy Mumbai's Express Towers with Panchshil Realty for Rs 9 bn : Blackstone together with Panchshil Realty, is buying out the current owners ‐ the
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Indian Express Group and ICICI Venture, the PE arm of India's largest private sector lender ‐ for Rs 9 bn,. Express Towers, with 25 levels of office space, was built by Ramnath Goenka, the legendary founder of Indian Express Limited, with the aim of building the tallest tower in South Asia ‐ a record it did manage to achieve and hold on to for two years after it was built in 1972. Blackstone's India headquarters is in the same building along with fellow PE companies Warburg and General Atlantic and consultant McKinsey.
• Wadia, trust to sell Mumbai plots through e‐auction: The four land parcels measuring around 67,257 square feet in Malad East area in Mumbai are expected to fetch Rs 800‐900 mn. The plots are auctioned through online process.
• Real estate attracted most of the investments, accounting for 19.32% of the total in terms of deal value, with an aggregate of$1.89 billion (40 deals).
• Cadbury to set up plant at SriCity: Cadbury India inked a Memorandum of Understanding (MoU) with the Andhra Pradesh government for setting up its largest Asia‐Pacific manufacturing facility in the state. It would be ~ 134 acres in the SriCity SEZ, the 250,000 tonne capacity per annum plant would be commissioned in four phases moving into 2020. In Phase‐I, involving an investment of Rs 10 bn, Cadbury plans to bring around 50 per cent of the planned capacity by mid‐2015.
• GIC, Ascendas to invest Rs 30 bn India real estate: GIC, Singapore government’s wealth fund, and Ascendas, a developer‐investor from the same country, will invest S$600 million (Rs 30 bn) in Indian property. The target investments include business space developments that may have other complementary uses and pre‐stabilized completed business space assets.
• Shapoorji inks pact with CPPIB: Shapoorji Pallonji Group and Canada Pension Plan Investment Board (CPPIB), announced the formation of a venture to acquire FDI‐compliant office assets in major metropolitan areas of the country. CPPIB will own 80 per cent of the venture with an initial equity commitment of $200 million. The venture will target FDI‐compliant office assets that are substantially leased to prominent tenants, with scope for value‐added returns from active asset management.
Regulatory/National Trends • Final guidelines on REITs to be issued shortly: Arvind Mayaram : The final
guidelines on the proposed real estate investment trusts (REITS), which help the fund‐ starved realty sector with long‐term funds, will be issued soon, Economic Affairs Secretary Arvind Mayaram. A REIT shall be set up as a trust under the provisions of the Indian Trusts Act of 1882, however, they are not allowed to launch any schemes. According to the draft rules, only such entities would be allowed that have at least 90 per cent investment in completed revenue generating projects. The draft norms come as the real state sector witnessed rapid growth in recent years underlined by robust economic growth in the country.
• Decision on relaxing FDI norms for housing sector likely: The government is likely to take a decision on relaxing FDI norms for the housing sector, including easing conditions for exit before the three‐ year lock‐in period. The Cabinet note has proposed easing conditions for exit of foreign players before the three‐year lock‐in period. It has also proposed a change in the current requirement of having a minimum built‐up area of 50,000 sq mts to 20,000 sq mts of carpet area for FDI in construction development projects.
• India's real estate sector to need $ 257 bn by 2015: The real estate sector in the country would need an investment of $ 257 billion by 2015, including Economic Weaker Section (EWS) housing, of which residential real estate alone would require $ 29 billion, according to an EY‐FICCI real estate report. Investments required in the Indian real estate market by the year 2015, is approximately $ 42 billion (excluding
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EWS housing) and $ 257 billion (including EWS housing). Residential real estate alone will require an investment of $ 29 billion.
• Bengal Assembly passes Bill to prevent use of land for real estate: The West Bengal Assembly today passed the Land Reforms (Amendment) Bill, 2013 which would prevent use of land, earmarked for township development, in excess of the prescribed ceiling for real estate purpose.
• Unsold inventory remains high across the nation: According to a JLL report, Mumbai currently has an inventory of close to 48 months, while Delhi has that of 23 months and Bangalore of 25. These are above the comfortable level of 14‐15 months. Real estate firms, battling a slowdown, are betting big on festive‐season demand for a push to the sector.
• New launches were down across the cities except Bangalore: For January‐July this year, the number of new launches has come down drastically — between 38 per cent and 59 per cent — in key markets like Gurgaon, Navi Mumbai, Pune, Noida and Kolkata. The highest drop, of 59.5 per cent, was seen in Noida. Here, only 5,994 units were launched till July this year, compared with 14,797 during the same period last year. In Gurgaon, launches dipped 38 per cent to 11,955 till July, from 19,310 in the corresponding period of 2012. Similarly, launches were down 40.3 per cent in Navi Mumbai, 46.6 per cent in Pune and 41.6 per cent in Kolkata, according to data by real estate research firm PropEquity. Overall, launches in 15 major cities till July this year were down 15.8 per cent to 188,145 units across segments.
• Govt to open doors for companies to invest in low‐cost rental homes: The government plans to rope in corporates to provide low‐cost rental homes on a large scale in cities and towns. A Housing Ministry Task Force has recommended that the money invested in building rental flats under 60 square metres (600 sq ft) be made part of the Corporate Social Responsibility spend mandated under the New Companies Act. This move will allow a deduction of over 100 per cent of the capital expenditure incurred by corporates and significantly improve the viability of such projects.
Discussions with Government officials on FDI policy in Construction Development sector Discussions with some Government officials, has given some understanding that the FDI policy in Construction Development sector is currently being considered for modification. While the investment cap and entry route may continue to remain the same, several modifications in the investment conditionalities are being contemplated for Cabinet's consideration: • Minimum land area to be developed in case of development of serviced housing
plots to be 5 hectares (existing 10 hectares). • Minimum “carpet area” (existing “built‐ up area”) to be developed is expected to be
20,000 sq. mts. (existing 50,000 sq. mts) in all class‐1 cities having a population of more than 0.1mn as per the 2011 census. Also, for the purposes of the proposed policy the term 'carpet area' defined as "the net usable floor area of a dwelling unit, excluding the area covered by the walls".
• In case of combination project, any one of the abovementioned conditions; i.e. minimum land area or carpet area to be developed to be complied with.
• Minimum capitalisation of US$ 5 million (presently US$ 10 million). The said capital should be brought in within 6 months from commencement of the “project” (earlier “business of the Company”).
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• Investor may be permitted to exit and repatriate FDI in the project prior to lock‐in of 3 years, provided it obtains completion occupancy certificate issued by the competent local authority or with prior approval of the FIPB.
• The present onerous condition to develop at least 50% project within a period of 5 years from the date of obtaining all statutory clearances is proposed to be dropped.
• FDI is real estate business is not permitted. In this regard, the term “Real Estate Business” defined as “dealing in land and immovable property with a view to earning profit or income there from”
• In addition to the above, it is also proposed that FDI up to100% under the automatic route may be permitted in brownfield (under construction) projects subject compliance with minimum built up area requirement and applicability of three year lock in condition on the amount brought in as FDI.
• The policy per se would facilitate inflow of FDI in the form of private equity to the sector. Moreover, inclusion of brownfield/under construction projects for FDI will be a major positive for leveraged real estate companies such as DLF (net Debt of Rs 195 bn).
11 December 2013 / INDIA EQUITY RESEARCH / REAL ESTATE MONTHLY BUZZ
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