Author: Liyans.com

India realty space to see $4-5 billion foreign inflows in 2 years

India’s realty sector is set for robust inflows of USD 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, global real estate consultancy giant Jones Lang LaSalle has said.

“The early foreign investors in India, who came in around 2006-07, did not have very good experience, partly because of their inexperience in doing business in India and partly because of global financial crisis,” JLL Asia Pacific CEO Alastair Hughes said here.

“However, foreign investors are now looking with a renewed interest at India, given its still robust economic growth rate as that bodes well for good returns to their investments,” Hughes told PTI in an interview here.

Hughes, who was here to participate in the World Economic Forum Annual Meeting, said foreign fund inflows were expected to pick up in the Indian realty sector going forward.

He added: “They (investors) are now looking much more closely at India to put in their funds into Indian real estate sector. They had come in between 2006-2007 and first half of 2008, but they completely went away in 2009 and have been mostly away since then.

“The overseas investors are now looking to come back and what they are looking for right now is good partners in India, because it is a difficult place to do real estate business because of various reasons.”

Right now, many Indian developers and fund managers are seeking to get international money and that is much more likely to come in, Hughes said, adding that there is more international money today waiting to be invested in India than any of the last five years.

Overseas investors have invested USD 14 billion into the Indian real estate sector over the period from 2006 to 2012. In the last two years, foreign investment into Indian real estate has been around USD 1.2 billion per annum.

Around half of all transactions were invested in residential property, a quarter in the offices sector and the remaining quarter was split among the other sectors. Regionally, half these investment come from US with rest coming from the Middle East, Singapore, the UK, Hong Kong and Germany, Hughes said.

Terming the next two years as much more promising, Hughes said that 2013 and 2014 will have a total of USD 4-5 billion come into the sector, mainly to buy income yielding SEZ assets at a capitalisation rate of 10.75 per cent.

“We expect interest from global and US investors to maintain. Favourite location foreigners will be Bangalore, New Delhi and Mumbai,” he added.

Globally, Hughes said, there was a big boom in 2007 and then a big bust in 2008 for the realty sector, while there has been a gradual recovery since the end of 2009.

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As per a report released by JLL here at Davos, global investment capital is leaning towards real estate and the commercial real estate direct investment volume is expected to more than double to USD 1 trillion by 2030 and Asia Pacific region is leading the investment growth since crisis.

Hughes said investments into Asia Pacific commercial real estate market fell by around 10 per cent in 2012, from USD 98 billion to about USD 92 billion.

“That was because of a sense of caution prevailing in different countries. But now we are seeing a change in the sentiments.

“One of the reasons for that is people looking to divert their investments from bonds to equities and other asset classes and that include real estate. Therefore more money is coming to real estate and a bigger proportion of that we see coming to Asia Pacific,” he added.

Hughes further said: “We believe that the volume of real estate investment deals would go up in 2013 to something close to USD 105 billion, from USD 92 billion last year.

“This would make 2013 the biggest investment year for real estate market since the global financial crisis hit the world, although it would still be below USD 120 billion figure recorded by Asia Pacific in 2007. We are not back to where we were in 2007, but the scenario is getting better and closer to that level.”

Hughes said that 2012 was very bad for the Indian real estate sector, as there were difficult market conditions and India was probably the only country in the world where conditions were even worse than 2009.

Going forward, he said, the growth in Indian office sector would depend on the economic growth.

In the retail sector, a very high growth is expected with the entry of foreign retailers, as they would need large space to set up shop in the country and most of the current developments are not designed for the international retailers.

Besides, manufacturing and industrial sector would also benefit a lot as these companies would need to set up logistics and other facilities.

Hughes said that robust activities are expected in residential space also.

Source: The Economic Times

Will the investment in Kolkata Real Estate Market be profitable?

Kolkata, a major metropolitan city of India, has been known as the commercial capital of Eastern India as it is the only IT hub in that region. The city accommodates more than 15 million people in an area of 185 km2 (71 sq mi).

Kolkata can be divided into THREE main regions:

• Central Kolkata – Encompasses locations like Park Street, Elgin Road & Camac Street
• Eastern Kolkata – Micro markets like Salt Lake, Rajarhat and eastern parts of EM Bypass
• Southern Kolkata – Comprises locations like PA Shah Road, Rashbehari Avenue, Gariahat & southern parts of EM Bypass

The city is spreading in the following directions:

• Garia-Narendrapur in the southeast
• Behala-Joka in the south west
• Rajarhat in the northeast
• BT Road in the northwest
• Howrah in the west

According to estimates by the Confederation of Real Estate Developers of India, in the next five years 250 million sq. feet will be added to greater Kolkata, requiring an investment Rs 37,500 crore. Rajarhat in the north-east, Dankuni in north-west, Howrah in the west, Diamond Harbour road beyond Joka and Batanagar in the south-west and the Garia-Narendrapur stretch in south-east are areas which will see more than 50 per cent price rise in the next one year, said real estate sector sources. Kolkata has highest market potential value share among the States of India and the living cost is lowest among all major cities in India.

PRESENT SCENARIO:

Real Estate Properties in Kolkata is no longer a factor of safe investment for the investors rather this has turned out to be a place of high profit along with stability. A constant growth in the market graph is the perfect evidence that investors are really taking a serious part in the visible growth of the property rate in the city.

Real Estate circumstances have gone for an absolute revolution recently. It has been showing a marked improvement across all the sectors of the realty industry i.e. residential, commercial and retail. It has long shed off the image of being a “lazy city” and is emerging as an expansive and prospective city.According to real estate services firm Jones Lang LaSalle Meghraj, “The city is witnessing a resurgence driven by Government policy and support for the service industry and infrastructure development that is once again attracting industry and capital to the city.” IT revenue from Kolkata witnessed a growth of 70% , as compared to India’s IT revenue growth of 29%.

The Central Business District (CBD) in Kolkata has limited supply of land. Due to lack of space in the CBD area, areas like New Town Rajarhat, Salt Lake and EM Bypass (East Kolkata), are gaining prominence in the Real Estate market. The CBD area is not expected to have any significant addition to commercial stock in the near future due to unavailability of land.

The demand for residential real-estate in the city continues to derive from diverse quarters. The inherent latent demand of the city residents are added over by that from the investors. The demand for residential space at Rajarhat, definitely, is most noticeable. This is primarily because the perceivably higher living standards offered in the area, including connectivity and accessibility to
basic infrastructure, which remain high priority.

PROMINENT AREAS:

It is certain that Kolkata is on the threshold of modernisation and is rapidly adapting to establish itself as a world-class city. This will continue to drive demand for space in the city and also rentals upwards. Dankuni, Dum Dum and Ballygunje are amongst the other prominent places. ABSORPTION: The absorption rate for the residential developments is high especially in New Town – Rajarhat, E.M. Bypass and suburbs. Most major developments witness a high absorption ratio.

RETAIL SPACE:

The Retail market in the city is stabilizing and the projects which were stalled and delayed have restarted, however rental values in the mall may witness a marginal rise on account of buoyant demand, but rental values at city’s high streets are expected to remain stable in the medium term.

A few of the prominent high street retail destinations in the city include Park Street, Esplanade area, Camac Street, Shakespeare Sarani and Gariahaat. Properties like Diamond Plaza, Lake Mall & La-Vida will contribute approximately 0.7 mn Sq.Ft of retail space by early 2011.

Kolkata is set to witness 4.03 million sq.ft of fresh retail space supply by end 2011. Eastern Kolkata is slated to address maximum supply infusion. The region would account for 38% of supply expected by the end of 2011 of which Rajahart shall delivered the maximum space. Central Kolkata is the second most
preferred region and will witness 19% of supply infusion.

The key upcoming project lined up is Varnaparichay Mall by Bengal Shelter. A number of mall projects are also lined up in North Kolkata contributing 18% of upcoming retail space. Sisirkunja Mall by Bengal Shelter & Diamond Heritage Mall by Diamond Group would be the space to look out for in North Kolkata.

West and South Kolkata shall account for around 15% and 10% of upcoming retail space respectively. While West Kolkata region has two projects by the Avani Estates and Forum Group underway to get operational by 2011, South Kolkata also expects to address new retail project Lake Mall at Lake Market.

Park Street and Camac Street have rentals in the range of ` 205- 360/Sq.Ft per month, while southern highstreets of Rashbehari Avenue & Gariahart commands in the range of `165-270/Sq.Ft per month. The quarter witness the retailers demand in locations like Gariahat, Behala and Shyambazar, however the
transactions in prime retail properties remained few owing to the lack of quality space and irrationally rents.

National developers like DLF, Unitech, Godrej Properties and Chaterjee Group are also looking at large scale development in the city.

RESIDENTIAL SECTOR:

Better connectivity and easy accessibility with the help of the upcoming Metro Projects and easy availability of land parcel is expected to boost the pace of construction of realty projects and influence the pricing in the near future. Enquiries for high-end luxury projects have increased by an appreciable
amount in the past one year and are expected to rise even further since the stability of the Real Estate market. Multinational companies are aiming at maintaining global standard of living despite spending extra money and by employing additional resources. Kolkata property market is perky with activity
as it welcomes new construction and re-developments.

At the moment, it would be safe to say that around 60% of Kolkata’s residential real estate market is driven by investors. As a matter of interest, the costliest residential areas in Kolkata today are Park Street, Ballygunge, Alipore and Camac Street, where rates range from Rs. 12000-15000/sq.ft. The cheapest areas are in the PBD, in areas such as Dumdum and Garia. Rates there range from Rs. 1500-2500/sq.ft. National developers DLF Limited and Unitech Limited will be developing theDankuni township over 4,860 acres of land, that will be allotted by the state government.

Overall residential property prices in the city appreciated in the range of 9–15% over the past nine months. High end residential rentals in Kolkata continued to see negligible rise over the previous quarter. The mid segment lease market, however, saw quarterly appreciation in the range of 4–10% for the first time during the year. The south east micro market, especially, saw the highest rise because of its status as the city’s emergent real estate destination with many locational advantages and large supply options in the housing market. Not unlike the rental market, the south east zone showed the steepest rise for high range capital rates too.

The north east micro market also saw cap rate growth in the high (9%) as well as mid (14.0%) segments due to burgeoning end user (especially from the IT sector) demand with gradually improving social and physical infrastructure in the region.

Both rental and capital values are likely to increase further in select micro markets. With steadily improving demand and appreciating prices over the past three quarters, the city’s residential market is likely to continue witnessing further improvement through year end 2010.

UPCOMING PROJECTS:

PROJECT NAME DEVELOPER LOCATION

Kolkata West Int.City Salim And Siputra Groups Howrah
Active Acres Ruchi Realty E.M. Bypass
Rosedale Garden Rosedale Developers Pvt. Ltd. Rajarhat, New Town
New Town Heights DLF Group Rajarhat, New Town
Bellagio Team Taurus Rajarhat, New Town
Urbana Bengal NRI Complex Ltd. E.M. Bypass

Unitech, one of the world’s top 50 Real Estate developers, is developing a 100-acre residential project called, “ Uniworld City” which is only 10 minutes to Dumdum Airport. Unitech is also developing a 50-acre IT project. The State Government of Bengal announced plans earmarking 500-acre for an IT-cumbiotech park near the city airport as part of a Rs. 5000–crore program to upgrade industrial infrastructure.

OUTLOOK:

Prices in prime locations will carry on witnessing an upward trend, making it the right time to explore investment options in Kolkata real estate. The announcement of key infrastructure projects and the expansion of existing metro connectivity to the peripheral region of Rajarhat will help drive new
occupiers to the PBD micro-market. Moreover, the recent government allocation of land parcels in Rajarhat to companies including Wipro and Infosys for campus style developments has further helped improve ailing sentiments. All these factors highlight a revival in market conditions in the Kolkata office
market.

Source: Axiomestates.com

WB Government working on digitization of land use map

The state land use board under the land and land reforms department has completed digitization of zoning land in Hooghly, Howrah, South 24 Parganas, Nadia, East Midnapore and Murshidabad districts. The digitization of zoning North 24 Parganas will be completed soon. Also, the block wise land use maps of Malda, North Dinajpur, South Dinajpur, Coochbehar, Jalpaiguri and Darjeeling have been completed and zoning work is on.

The technical support for digitizing land zoning in six districts was provided by the state science and technology department and the centre’s NIC.

The block wise land use map shows single or double crop land, barren land, forest land, national and state highways, industrial areas, water bodies and areas under infrastructural development. The basic objective of marking such zones is to ensure future industrial and other big projects are set up in appropriate areas without endangering the state’s food security.

The state land use board was reconstituted on June 29, 2011 with chief minister as the chairperson and the chief secretary as deputy chairperson.

Kolkata, Mumbai and Pune positioned top, by adding New Homes in 2012

At a time when the real-estate sector across the country is witnessing a slowdown, Kolkata, Mumbai and Pune recorded significant growth in new residential units, in 2012.

According to study released by real estate consultants Cushman & Wakefield, the total new units launched across eight cities went down by approximately 16 per cent (to 162,000 units) in 2012 when compared to 2011.

Mumbai, Pune and Kolkata were the exceptions with 72 per cent, 34 per cent and 19 per cent increase.

The study was carried out across eight cities — Delhi & NCR, Ahmedabad, Bangalore, Hyderabad, Chennai, Mumbai, Pune, and Kolkata.

While Bangalore saw the highest decline of nearly 50 per cent (16,543 units), Mumbai witnessed the maximum growth of 72 per cent (22,423 units).

Of the total number of units launched, majority were in the mid-end segment, which comprised approximately 83 per cent of the total launches.

According to the report, a total of 8,900 units were launched in Kolkata in 2012.

Nearly, 62 per cent of these units were in the mid-end segment (5,535 units) and priced between Rs 36 lakh and Rs 60 lakh. This was followed by the high-end segment, priced upwards Rs 60 lakh, which accounted for another 38 per cent of the launches.

On a year-on-year basis, supply of mid-level homes increased by 26 per cent to 5,535 (from 4,372). Similarly, high-end home launches too increased to 3,360 units – 17 per cent up from the 2,863 units launched in 2011.

Interestingly, supply of luxury homes dipped drastically in 2012. The number of units launched dipped from 280 (2011) to just 23 (2012) — a near 92 per cent fall.

“Cash-strapped developers were not willing to take up projects that may fall short in interest from end users, thereby keeping their risk exposure minimum,” Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says.

According to the report, the short term outlook of the city suggests a cautious approach by end-users in the wake of high home loan rates coupled with inflation.

Harsh Patodia, President (Bengal), Confederation of Real Estate Developers Association of India (CREDAI), pointed out that over the last 18 to 24 months, launches in Kolkata were much lower than in other cities.

Source: The Hindu Business Line

Tax Benefits On Home Loans May Boost Kolkata Real Estate Market

The recent Budget proposal which links tax benefits on account of home loans up to Rs 25 lakh may invigorate the Kolkata real estate market more than any other major metro city.

This year’s Budget gave additional tax deduction on interest of up to Rs 1 lakh for first time home loan of to Rs 25 lakh, and property value of Rs 40 lakh. Interestingly, among the four metro cities of Delhi, Mumbai, Chennai and Kolkata, it is only in Kolkata that Rs 40 lakh can still buy as much as 1,000 sqaure feet home, that too not very far from the city.

While Kolkata may not have seen many mega housing projects in city proper, city fringes are likely to see a multitude of small housing projects in areas like Rajarhat, E M Bypass, Diamond Harbor, Garia and Kona Expressway over the next twelve to eighteen months.

According to data from Magic Bricks, the lowest prices for property around Kolkata range between Rs 1,500 to Rs 2,500 per square feet. In fact, Kolkata seems to be the only market where residential real estate development in some areas is still selling at prices less than Rs 2,000 per square feet. For example, property prices in Amtala, about 20 KM away from Kolkata at present is close to Rs 1,500 per square feet, while that in slightly more developed areas like Airport is about Rs 2,723 per square feet. A 1,000 sqaure feel house within a Rs 40 lakh budget gives ample options for home buyers in areas like Bangur, Bransdoni, Behala and even in the IT hub of City Centre New Town area. The highest property prices in Kolkata is at Alipore area, its costs Rs 12,000 to buy a square feet of residential block.

However, the highest in Kolkata could buy one average property in terms of locality in Mumbai. According to information at magicbricks.com, per square feel residential real estate in Altamount Road in Mumbai sells at Rs 64,778 per square feet. Residential property prices in Borivali East and West is about Rs 12,000 per square feet, a price equivalent to real estate price in the high street locality of Aliopore in Kolkata. In Delhi too, the property market is not much different from that in Mumbai. The lowest property prices in Delhi seem to be nothing less than Rs 8,000 per square feet. A property price in plush areas like Defence Colony is as high as Rs 32,000 per square feet, according to magicbricks.com.

In Chennai, a sub-Rs 40 lakh budget gives a buyer many options, but not as many as in Kolkata. However, nothing much would be available at below Rs 3,000 per square feet price.

“Kolkata could see a higher number of real estate transactions over the next few months due to the Budgte proposal. It will have more impact in Kolkata than in cities like Delhi, Mumbai and Bangalore,” said Jitendra Khaitan, chairman and managing director, Pioneer Property.

Traditionally, Kolkata has been regarded as an end-users, rather than investors market, which has kept the real estate sector immune to sharp price movements in other parts of the country.

In spite of a number of small projects lined up to be launched, land is posing a problem in launching big projects.

One of the biggest hurdles in developing new townships in West Bengal is the the Urban Land (Ceiling and Regulation) Act (ULCA), 1976. According to the Act, the ceiling limit on vacant land in a category ‘A’ city like Kolkata is 7.5 cottah or about 500 square meters.

West Bengal is one of the few states in the country to have a legislation like the ULCA.

Recently, the West Bengal government had formed a task force to look into the issues related to allotment of large land.

Source: Business Standard