Gaining Ground

After a lull last year, demand for commercial property is steadily rising and is expected to thrive in the coming months on account of steady enquiry levels, coupled with strong leasing activity. Realtors and developers feel market conditions are improving in the present quarter of the current fiscal.

Enquiry levels have increased by around 30 per cent compared to the last 6-7 months. It is a good sign, said a city-based broker. “There are about 50 transactions a month currently against 10-20 deals executed per month six months ago,” added the broker.

The eastern region has seen a greater percentage rise in both rental and capital values over the previous quarters compared to the other parts of the country. “It is expected to witness a large influx of supply to cater to the increasing demand from all segments. The increase in overall market activity in the region will provide further impetus to the growth of the eastern region,” said Kaushlendra Singh Sengar, CMD, Incubators Trading Gurukul, a market research firm flats in noida.

Commercial developments in the eastern region helped to build a favourable scenario for retail development. Rising income levels and exposure to international brands have raised aspirations of consumers who now demand a complete shopping experience, said Prabhakar Kumar, managing director, Nice Properties.

Some people are now negotiating 15,000-40,000 sq ft deals too.

Kumar said in the eastern region many big brands are yet to come. “The companies could not get space in the desired location in the last few years, he said.

“Demand for office space has shot up of late. With the revival in industries and the telecom sector witnessing rapid growth after issuing of new licences, our hopes on commercial real estate have been resuscitated. New companies need space for office and new call centres,” he said.

However, Abhijit Das, founder and managing director, Lemongrass Advisors, said: “The commercial real estate market in Kolkata and the eastern region has been comparatively slow, like the rest of the county now.”

In 2013, around 56.1 million square feet of office space will be developed and 45.9 million square feet is expected to be absorbed in India, JLL said. While from 2011 to 2014, demand is estimated to be approximately 160 million sq ft with a compounded annual growth rate of over six per cent.

Prices, which dropped 35-40 per cent in most markets after the global meltdown, bottomed out. This would offer investors a good opportunity to buy into commercial real estate, analysts said.

Lalit Kumar Jain, president, Credai said: “After the slowdown, not many new projects had kicked off. Consumption of 40-50 per cent of the property has taken from the old stocks. All the stocks will be exhausted soon.”

Talking about the current trends, brokers said individuals are increasingly investing in commercial space. At present, institutional investors account for 70-80 per cent but in the coming years, with surplus money and options there would be a huge demand for smaller office space.

“The office retail segment, once the domain of institutional investors and high network individuals (HNIs), is increasingly seeing a demand from retail investors. The demand for captive use of office space will increase by 20-25 per cent in the coming years,” say analysts.

The next few years will see a quantum spurt in the services and knowledge sector, opening up tremendous opportunities for retail investors, said analysts.

Many developers, in cities such as Mumbai, are offering smaller units of space (as small as 500-1,000 sq ft). Investors are now considering options in free-standing high street outlets or shops in malls, Kumar added.

Talking about the Kolkata market in particular, developers said the present situation of proper Kolkata is saturated. There is hardly any land left for developing structure. Going forward, commercial real estate in the CBD area of Park Street, Camac Street and Theatre Road will continue to witness steady enquiry levels, said Champalall Baid, director, Champalall and Co, adding that the outright sale value is likely to go up by 15-20 per cent in the next six months and rents in the same line in the CBD (central business district) area in the absence of lesser new supply.

“We expect the Kolkata market to absorb around two million sq ft in the current year. Kolkata as a market is adding huge amount of space and hence vacancy levels are expected to be high in the next two quarters,” Das said.

Prices for commercial property in central Kolkata have already appreciated,

Now there are a host of options for commercial space - on EM Bypass, Sector V and the Ruby Connector.

“The Kolkata office market has witnessed a revival in sale and lease transactions and will continue to do the same,”Agarwal said.

Availability of large grade-A spaces at reasonable rates have made the Kolkata SBD area office market buoyant and it is expected to remain upbeat in the coming months. Relocation of old business houses from CBD to SBD areas will continue to increase in the coming quarters.

However, when we talk about Salt Lake and Sector V, which mainly house IT and ITeS companies, supply will exceed demand in the coming years as more office space will be created by then. The market will crash and tremendous pressure will be seen on the pricing, resulting in stable rentals in these locations, say experts.

Continued completion of office space in New Town has resulted in an increase in the vacancy rate. The average grade-A vacancy rate at New Town stood at around 43 per cent with no grade-B supply at present. The Salt Lake Sector-V experienced average vacancy rate in grade-A and grade-B supply at around 30 per cent,” said Pawan Agarwal, director, NK Realtors.

There is more demand for commercial spaces in the non-IT sphere,” said Nirmal Lunawat, executive director, Forum Group. “Around 2.5 million square feet built up area is lying vacant as IT global demand is going through a recessionary phase. The bare sale price per sq ft in Rajarhat hovers around Rs 30-Rs 50 and the plug-in plug-out facility is available in the range of Rs 45-Rs 70.”

Sources on the condition of anonymity said space in Techno polis, Godrej Waterside, Infinity Towers are lying vacant.

There are some who would not want to be too optimistic of the situation and would only hope that the market would be steady. The market is showing signs of rising demand for office space, especially in the outskirts but buyers are still price-conscious, it is learnt.

“Government support is required for speedy approvals and clearances from concerned departments to boost demand for commercial real estate,” said an expert.

However, with construction of a 90,000 sq ft commercial project by the Belani Group at Woodburn Park, another one lakh sqft commercial project at Theatre Road by the Heritage Group, Diamond Heritage, a B+G+ 14 commercial projects at Strand Road, the supply dynamics in the CBD area will dictate the rental movement in the coming years, the spokesperson from 99 acres said.

In the eastern region, rentals at present are in the range of Rs 60-70 per sqft. “The brands which forayed into the Kolkata market are now looking at smaller cities like Patna, Ranchi, Jharkhand, Guwahati and Bhubaneswar for expansion,” said Kumar.

Sources said around 3.5 lakh sqft in mall development is under way in Rourkela.

There is good demand in tier II cities like Asansol and Dhanbad as they are witnessing construction of  malls and multiplexes.

Talking about Delhi and the NCR region, Raj Sharma, MD, Best Property Deals, said: “The interest of MNCs and SMEs in office space is the reason why developers are concentrating on commercial projects. Connectivity with Delhi through the Yamuna Expressway is considered a very positive point.”

Greater Noida and Noida have witnessed tremendous growth in the commercial sector in the past couple of years. Property value has increased by 12-15 per cent across the city. Going by market trends, Greater Noida seems to have immense potential of becoming a commercial destination in NCR, Sharma said.

Bangalore and Hyderabad are expected to outperform due to good pre-leasing and affordable rentals. In Mumbai, however, prices have crashed, sources said.Publishing Link.... http://bestpropertydeals.co.in/News/21/Gaining-Ground

Moderately Encouraging

The real estate sector in India has been on a rapid growth trajectory as compared to past decades. However, Budget 2013 has apparently underwhelmed the real estate sector. As the finance minister said that India has faced huge fiscal deficit and there is a need to rationalise the expenditure; the Union Budget 2013-14 is a very controlled budget from the real estate sector point of view. It is not a big budget which could have encouraged the market as a whole. 

 

The real estate sector contributes close to 7%, which is around Rs 140,000 crore to the GDP of the nation. However, it is still facing suffocation due to various administrative delays on varoius counts. There is a shortage of 270 lakh dwellings and by 2025, shelter would be of a matter of a huge concern for about 50 crore people."The real estate sector is one of the most important sectors to be affected by macro-economic changes in the country. Therefore, the annual budget of the nation is of prime importance to this sector, to determine the way forward: divulges Raj Sharma, MD, Best Property Deals. 

 

Hence, there is a major challenge to bring back the growth rate at 8%. The budget gave a sign of relief to the real estate sector which was going through tough times by giving an extra Rs. 1 lath tax exemption on the first housing loan upto Rs. 25 lakhs though it wouldn't offer much help to those planning to buy a house in the metro cities or those who have already availed a housing loan earlier. Undoubtedly; this will boost housing sales in II-tier and III-tier cities, peripheral areas as well as distant suburbs of metro cities. Om Chaudhry, Chairman & CEO, Astrum Homes and Founder & CEO, FIRE Capital, is of the view that the finance minister could have relaxed the home loan interest rates which affects the end customers more than speculators.

 

However, the tax exemption will help in increasing the demand for affordable housing and encourage first time home buyers to buy or invest in the real estate sector across the country.

 

Another long term positive step which he has proposed is to set up an Urban Housing Fund with an allocation of Rs. 2000 crore which will infuse liquidity for urban housing, thereby boosting demand in urban centres. , Fitt on the other hand with the reduction in the abatement in service tax from 75% to 70% for homes that cost Rs.1 crore or above or are of 2.000 sq. ft or more in size would make the luxury housing more costly. 

 

The TDS of 1% to be charged on the-transfer of immovable property is an obvious move to curb speculation and bring about improved reporting and accountability in high-value immovable property transactions. Considering that the TDS is to be charged on the gross transaction value rather than net gains, sellers will have a cash-flow impact in situations where the sales are at a loss or at zero/negligible gains property in delhi ncr. 

 

One of the key announcements for infrastructure sector in the budget was setting-up of regulatory authority for road sector.This is a welcome step for road sector which is currently facing various issues.However, it is to be noted that one of the critical success factor for regulator in road sector would be defining its scope and role with clear guidelines."A regulatory authority in road sector has to be different from the ones in telecom, aviation or port sectors. In ease of road sector, as also announced by FM, the regulatory authority can be envisaged to focus more on addressing financial stress, construction risk and contract management since in road sector the user charge is pre -defined" emphasizes. 

Real Estate Evolution In India- Realty In India Market

Between 2002 – 2007 Indian Real Estate witnessed historic boom, record numbers of projects were launched in the same period and the introduction of Real Estate Consultants came into limelight. The real estate consultants compared to property dealers were professionals, educated people and knew the presentation level required for the projects to the end users. In term of trust there is still a lack as the dealings in Indian Real Estate are not based on transparency, in some areas there is always a demand of some percentage of cash money and on the other hand there is a concept of credit note been offered against discount to the buyer. Due of lack of trust the satisfactory service level for the buyer is at all time low. Real Estate Consultants do try to make usage of CRM but due to Inaccurate, Incomplete or outdated data even the CRM is not favourable for the industry.

 

Since the incorporation of Best Property Deals, we have been driven by Professionalism, Reliability and Transparency. Our platform is based on PRT – what you see is what you get. We have completely eliminated the concept of Credit Note for the offered discount, instead we have gone into agreement with selective developers to calculate the offered discount (which is the maximum commission slab) at the time of booking. Besides saving money, buyers also save time by not visiting multiple real estate consultants for negotiation. As the discount is now offered online and is visible to everyone

 

A prospective buyer wants a complete assurance that his hard money is safe in the project that he is investing in, Also transparency in project dealing is what the buyer is looking for from the consultant. While buying a property the buyer is more interested in the surrounding and a place for himself and his family instead of appreciation. Locality, amenities and connectivity plays a major role for apartments in noida the buyer.

 

There is a lack of transparency in Indian Real Estate Dealings. Be it project details, amenities, connectivity or the area development. Real Estate consultants are only referred for 13% by their clientele. Immediate effort would be to provide licenses to those operating in Real estate dealings and keeping a database of all the consultants, keeping a track on their practices and penalising them on their wrong doing would bring more confidence for buyers while dealing with a consultant.

 

A registration and tracking system in place along with strict actions against fraudulent activities by any consultant would bring more transparency in Indian Real Estate Dealings.”

Press Release At Postly On Date 12 March 2013... http://bestpropertydeals.co.in/News/20/Real-Estate-Evolution-In-India--Realty-In-India-Market