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The Future Of Retail Real Estate in India

Real estate industry has been providing scrupulous solution for commercial property solution over the decades. Now the commercial real estate market is hooking on the retail portfolio to attract more and more domestic and international revenues. The future prospect of retail real estate in India attracts the Private Equity (PE) investment flow to this very sector. Observing a limited supply chain all over the country, global PE firms started investing in retail sector with a view to branch out their investment selection in the country.

The reason behind investor sentiment is flowing towards retail real estate in India is stable economy of the country which is relatively less sensitive to the global slowdown. Nevertheless, the growth in the retail real estate sector won’t take place abruptly. It will be rolling slower than anticipated. Retail real estate boom will put India on the global map, as many FMCG, E-Commerce, Manufacturing companies and large Logistic providers are going to expand their business opportunities in India. The retail sector in India is emerging as one of the prominent employment sector with growing middle-income group populace and rapid urbanization of the peripheral areas of metropolitan cities. Indian retail market is expected to grow at a Compound Annual Growth Rate (CAGR) of 10% to US$ 1.6 trillion by 2026.

The combination of retail and real estate will be highly-productive for both of the sectors. Retail real estate is considerably a complex subject other than the two major investment segments of real estate i.e. – residential and commercial sectors. A retail investor needs to assess many factors before investment such as- stipulation of the retail space, return on investment, commercial trends, performance of t competitive companies, consumer spending and laws governing retail leases. We can see half of the expensive retail micro-markets are Delhi-based. Malls and other expensive market places earns their revenues largely from rents comes from the retail industry.

Online presence of a company is crucial for business gains for any industry. Both the retail and real estate sector boast strong web identity and offerings. Retail industry owns the popular choice category as India’s Business to Business (B2B) E-commerce market is a mass-scale hit. The retail market of India has two major divisions ‘Organized Retail Market’ which is valued only 9% of the entire sector and ‘Unorganized Retail Market’ encompasses the remaining 91% of the sector. With the steady development of E-Commerce Industry in India, there are several start-up and large-scale companies are opening business hubs in tier II and tier III cities across the country. However, India’s retail real estate sector developing faster with changing consumer behaviour and better investment resources.

“The decision of leasing of a retail space is driven by the potential purchase capacity of the location. On the other hand a retailer determines a real estate investor’s return on investment. To earn long term stable return from real estate sector investors are putting their money on malls and other mixed-used retail projects managed by either a competent agency or by the development house,”- asserted Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).

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500 Flat Buyers In Mumbai Fear Losing Millions After Projects By Two Diamond Traders Got Into Trouble

FIR issued against two diamond traders of Mumbai Dahyabhai Sutaria and Bhupat Lukhi and their partner Sangeeta Hegde, after a hi-end project in Mira Road gets suspended. Approximately 500 people, who had paid up to 85% advance money for the project in Mira Road, are in dilemma of neither getting the possession nor the money back as construction process was stopped over the last four years.

Last hope of these affected buyers is in the hand of Thane Police now, which are in command of the investigation, taking over from Kashimaira Police. Reportedly, Thane Police filed a first information report against realty firm Kashimira Ceramic Products LLP, run by diamond traders Dahyabhai Sutaria and Bhupat Lukhi, advocate Vijaykumar Hegde, and his wife Sangeeta Hegde who are also the administrative bodies of another realty house called Tanvi Constructions. The FIR is consisting names of Sutaria, Lukhi, and Sangeeta but not Hegde, who said he was the non-executive director of realty firm Tanvi Construction.
The complaints of the suffering flats buyers revealed that Kashimira Ceramic launched in 2010 was one of the biggest projects in the suburbs- the 22-storey Tanvi Eminence Phase I & II in Kashimara, Meera Road (E). The project was supposed to deliver 400 flats of one and two-bhk in Phase- I in 2013 and in Phase-II there were 250 flats to be delivered in 2014.

The project was stalled in 2013; till that time the construction work had completed till the 10th floor in Phase- I and there was no introduction of Phase-II, according to the complaint filed by the flat buyers. Once they had realized that they had been “cheated”, they held quite a few meetings with the builders and during each and every meeting the builders only gave nothing but high assurance for keeping their expectations alive. One of the buyers claimed that she had paid Rs. 35 lac long back in 2012 for 2-bhk allotment, which was of 58 lac cost.

She said, “First the builders told us they had run into problems with environment department because the project was in the vicinity of the Sanjay Gandhi National Park. Then we found that the builders had a problem among themselves and one of them had filed a case against his partners.”
Another home buyer claimed that he purchased a flat in 14th floor of Phase-I. Now he is living in a 350bhk apartment in Borivali with is ailed mother. He borrowed Rs. 5 lac as home loan to pay 24 lac advance amount and he sees no chance of the project completion in near future.
The flat buyers have also written to the Chief Minister’s Office and regulatory authority (RA) MahaRera seeking complete justice. The flat buyers have also claimed that the builders, while getting their project registered with MahaRera as per the guidelines, disclosed 2021 as project completion timeline.

Another report published in Mumbai daily claimed that both of the diamond merchants’ bank account has been seized for quite some time now. Despite several attempts Sutaria remained inaccessible. Both Sutaria and Lukhi reserved 150 flats in Mumbai for their friend circle in diamond business. They collected the advance amount from the homebuyers and stalled the project. On the other hand Sangeeta reportedly claimed that her name has been intentionally dragged into this mess and her construction company has nothing to do with this project.

–LNN (Liyans News Network)– Invest in on-hand residential property in north Kolkata under our expert guidance. Ready-for-possession OC ready apartments await your family. We are acclaimed for genuine property listing and trustworthy association with the renowned builders of the city.

West Bengal: Revised Real Estate Act To Standardize Business

RERA implementation in West Bengal is struck dumb after the drafting completed on Aug 16. It seems like overruling the deadline and penalty panic hardly have any impact on the execution stroll of the state. A month is over after the introduction of West Bengal Housing Industries Regulation Bill, 2017 in the assembly; still, the Real Estate Regulatory Authority is not formed in Bengal. Reportedly, it will get constituted within coming couple of the months.

West Bengal Housing bill suggests that for all ongoing projects, for which the completion certificate has not been issued, the developer should make an application to the Housing Industry Regulatory Authority (HIRA) within a period of three months, from the date of rollout of the Act. It was also asserted that government will take strict action against those builders for filling up wetlands and ponds for the development purpose. Once the Act gets notified by the Bengal government, all residential projects above 500 sq metres/ with eight apartments, have to be registered with the state regulator HIRA.

“People who are looking to buy property in Kolkata will have to hold their purchase decision for some more time till the registration process of real estate stakeholders and projects successfully completes. A series of project dispensing is on halt due to the tardy restoration process of the central Act,’’- said Mr. Mahesh Somani, Head- East Zone, National Association of Realtors India (NAR).

RERA mandates registration of builders, realtors and realty projects. Without RERA registration number a project can’t be even on the display. Registration process only can be started after the formation of the state RA (Regulatory Authority). That reminds, West Bengal realty industry has to wait for another couple of months for the registration process commencement. Real Estate sale in Kolkata is already low-hanging after demonetization blow. Additionally, GST has computed hefty tax burden on the under-construction projects for the end-users. Over and above state’s delay in RERA implementation is further influencing pessimistic investment sentiment in realty.

Apparently, after the outset of the registration process real estate industry of West Bengal will need at least a year to be accustomed to the new set of law on the back of registration fruition. Looks like the watchdog of Indian realty RERA Act has been victimized by the inferior state infrastructure. This has hit the housing loan companies directly as buyers are in no mood for long-term asset investment.

However, the Act will ensure that developers adhere to the delivery schedule and uphold their commitment. Unscrupulous promoters or realtors will be kicked out of the market in order to provide improved and transparent consumer support. The Act will steer orderliness in the real estate sector and build benevolence among buyers.

–LNN (Liyans News Network)

Common Negotiation Mistakes That First-Time Homebuyers Do

Real estate is any day, not that investment, where investment details could be sidelined out of home buying frenzies. The joy of home-buying shouldn’t meddle with clauses and conditions of the investment part. The first and foremost criteria to be met before buying a home is fulfilling of asset requirement more than the artistic quality of the construction. Rejecting a property on the scale of luxury fluffiness is justified with a substantial bank balance.
Being an indeed large-scale purchase option real estate investment demands special attention towards its pacts. A silly negligence can dig a big hole inside your pocket. In most of the cases, we have seen those home buyers repenting on their hurriedness of action while finalizing a property deal. There could be a whole lot of other reasons of remorse; one of those is not having enough negotiation with the seller. One has to be good in negotiation with an apt presence of mind. Buying property is certainly not task to be finished in haste.

However, if you are in process of buying a home, here are a few key things you must not do while having negotiation with the seller–

Lack of preparation-It’s your hard-earned savings that you put for a property investment. For most of the people buying home is a lifetime investment. Thus, one needs to do all the groundwork before approaching the seller for property purchase. You should do the market research before attempting to negotiate the price of the property.
Before approaching the seller one should have the competitive market knowledge, the average ongoing price of per sq ft in the locality where you are aiming to have your property and most importantly the idea about the necessity of the seller behind selling his property.
Being oblivious- Sellers for the eternity quote a price which is higher than the existing market rate for higher profit margin. Most often they will do their every bit to prove the price being quoted in fair. A little awareness can save unnecessary money outflow.
Ignorance about payments– It may be possible while negotiation, the seller agrees to your price under the condition that you make a significant part of the payment in cash. This offering can land you into trouble with the law, in case you give in. A pre-approved home-loan can not only make your investment secure, but also makes you a better outlook in the seller’s perspective.
Being inflexible– To have an open mind while negotiation is always a good idea. It’s not an easy task to make the seller reduce his quoted price; instead he will convince buyers with more add-ons. Don’t hesitate to say your version before the seller. If anyhow he doesn’t move an inch from his quotation, make a room for holding off.
Being unwary– Refrain from disclosing your purpose and utilization of savings after buying the property. Don’t show eagerness and excitement to the seller during the negotiation. Speaking your heart out can biff the negotiation process.
Never let it be out-and-out a seller’s deal, until you are not fully satisfied with your amount quote and list of inclusion.

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PE investment to cross $4 billion (30% up) mark in Indian realty

It seems like Indian realty market is the next big investment pocket of Private Equity companies. PE inflows into real estate sector may set to hold a new record this year with cross $4 billion during the end of 2017, claims a report. Startlingly, a greater part of this investment belongs to commercial assets such as- pre-leased office spaces and retail assets. The prime focus of PE investors has taken a sharp shift from high-end residential segment to the commercial ones, as they find low-risk involvement and definite return from this very sector. The latest market report says that adding over 80% of the PE capital by far this year is from long-term independent and pension funds.

PE investment share into residential sector declined by 50% in 2011 to 28% in 2016 and further has dropped by a little 4% in 2017. Against this scenario, Investment in commercial property sector accounted for 29% in 2011, which augmented to 66% in 2017, while that of retail jumped to 19% in 2016 from almost zero in 2011 and till this September it stood at 14% this year.

Another investment sub-category in commercial property investment i.e. warehouse investment has recorded double investment from 9% in 2011 to 16% in 2016. Private Equity investment will surpass the record of 2015, which was the highest since 2010. Real estate sector failed to grab notice during the 2011-2014 time period, while as of now this year is turning out to be the golden period of PE investment into realty sector.
From an average investment of $2.1 billion in 2011-2014, PE inflow rose by 57% to an average of 3.3 billion in between 2015 and mid- September 2017. In 2017 till now, the number of deals declined to 13, just over one-fourth of the mark in 2010. On the other hand, the average investment per deal improved 10-folds to $246 million per deal, appreciation to a major deal alone accounted for $1.8 billion.

Most of these PE investors are domestic investors followed by investors from the US and Canada recorded by far this year, Singapore had the highest investment per deal on account of a single giant investment GIC-DLF deal of $1,800 million this year.

Going by the ranking in order to fetch most of the PE investments Gurgaon stands at No: 1 position with 56.4%, riding on the back of $1.8 billion DLF-GIC deal, Mumbai holds the second position with 39.8% record. Last month, DLF’s promoters revealed sale of 40 percent stake in a rental arm DLF Cyber City Developers Ltd (DCCDL) for Rs 11,900 crore, which incorporated sale of shares to Singapore’s sovereign wealth fund GIC for Rs 8,900 crore. Institutional funds control the private equity inflow, which reflects long-term resumption in country’s active economic fundamentals.

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