FACE TO FACE
Jaxay Shah
Chairman, CREDAI and Managing Director, Savvy Group
WHERE IS INDIA'S WEALTH INVESTED ? INTERNATIONAL LONDON: PRIME PROPERTY DESTINATION FOR INDIAN INVESTORS
Editor’s Letter
Publisher Raj Kumar CEO & Business Head Biswaroop Padhi Editor Vinod Behl ADVISORY BOARD Dr. PSN Rao Chairman, DUAC & Director, SPA, New Delhi Ramesh Nair Country Head & CEO JLL India Pradeep Aggarwal Chairman, Assocham National Council on Real Estate, Housing & Urban Development Ambar Maheshwari CEO, PE Funds,Indiabulls Asset Management Farook Mahmood Founder President & VC NAR- India & President, FIABCI India Ankit Kansal MD, 360 Realtors Sachin Sandhir CEO - India, Valocity EDITORIAL Assistant Editor Vishal Duggal Senior Reporter Sujeet Kumar Jha Vishnu Rageev R. Content Research Nivriti Raj Mannu Kantt Photographer Atul Chaudhary CREATIVE & DESIGN Art Director Kumar Mangalam Graphic Designer Himanshu Rawat ADVERTISING & SALES Vice President Sales Krupal Nayak krupal.nayak@proptoq.com +91 70456 56796 ENQUIRY Editorial editor@proptoq.com Advertising advertisement@proptoq.com Subscription subscription@proptoq.com
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Gaining Investors Confidence Amidst real estate slowdown, the news of foreign and domestic private equity funds committing record investments for the sector comes as a whiff of fresh air. According to the industry data, during the nine months (January -September 2019), PE investments have jumped 19% to $3.8 billion, with the beleaguered residential sector recording a 40% increase in fund flows to $295 million. The PE fund flows between 2015 and the third quarter of 2019 are equally impressive. Indian real estate attracted nearly $14 billion of foreign private equity. The domestic PE funds pumped in $2.4 billion during this period, with residential realty accounting for 71 percent-approximately $1.7 billion. Out of the total foreign investments, 63% flowed into commercial real estate. It is also an encouraging sign that is bucking the trend of economic slowdown; office offtake increased by 30% to 47 mn sq ft in the first nine months of 2019. Blackstone, Brookfield, GIC, Ascendas, and Xander have been leading the foreign fund infusion into the realty sector. On the domestic front, Motilal Oswal, HDFC Venture, Kotak Realty, Ask Group, and Aditya Birla PE are the front runners. There has been a marked trend of foreign investors floating joint investment platforms with Indian players. In 2015, Warburg Pincus and Embassy Group launched a $200 million joint platform. In 2017, CPPIB and Indospace inked $1.3 billion pact while First Space and Ascendas Singbridge announced a $600 million joint investment platform for warehousing. More recently, Shapoorji Pallonji and Abu Dhabi Investment Authority have planned $1.2 billion logistics fund. What is no less reassuring is that despite all the odds, real estate remains the second most preferred investment avenue, next to Gold in FY 2019 with 74.5 lakh crore of investment. Also, real estate continues to dominate physical assets along with gold in terms of share of investments(44.4%), But then there are some worrying signs also. Land acquisition challenges cast their shadow over investments. Asian Infrastructure Investment Bank has labeled project implementation delays due to it and resultant cost overruns as the biggest concern. Land buying hurdle is hitting PE firms investing in warehousing. As such, there is an urgent need to remedy this situation along with further improving ease of doing business to promote investments in the fund-starved realty sector.
Vinod Behl
Vinod.behl@proptoq.com vinod.behl
v_behl
vinodbehl
56
FACE TO FACE Jaxay Shah
36
talks about the crisis gripping the real estate sector, government's initiatives to revive realty and investment prospects of real estate, vis-Ã -vis other asset classes.
INTERNATIONAL ROUND UP
INVESTMENT FRIENDLY REAL ESTATE
Chairman, CREDAI and Managing Director, Savvy Group
LONDON: PRIME PROPERTY DESTINATION FOR INDIAN INVESTORS London property market continues to remain one of the preferred overseas destinations for wealthy Indians.
70
CONTENTS NOVEMBER 2019
REGULATION
COMMERCIAL REALTY DESTINATION REPORT
33
50
Record Rise in RERA Registrations
There has been a 40 % growth across the country in project registrations under the Real Estate Registration Act (RERA) in a year.
52
View Point Shishir Baijal,
MD, Knight Frank India
Demonetization Hits Investment, Prolongs Recovery
Office Rentals on Upswing
Strong demand for offices coupled with low vacancy have led to rental growth in IT/ITeS dominated cities such as Bengaluru, Hyderabad and Pune.
84
Alternate Asset Class Morgan Stanley Fund Eyes Warehousing Space
91
Realty Etc.
And Now Fire - Resistant Paint
62
Dwarka Expressway, Gurugram
Nearing completion, Dwarka Expressway holds good prospects as a potential residential investment hub of Gurugram.
+
Plus
News Line, Pot Pourri, Product Line, News in Numbers and much more…
POTPOURRI
Residential real estate sales register 59% increase in the first nine months of the calendar year, compared to same period in 2017, pointing to an uptick in demand.
SPOTLIGHT
Ahmedabad based HCP Design, Planning and Management, has hit the headlines for winning the final contract for the ambitious redesign of New Delhi's Central Vista
Global Ratings agency Moody's Investors Service has lowered India's sovereign credit rating outlook to negative from stable.
Event of the Month
International Conference in Construction, Real Estate Infrastructure & Project Management December 13-14, 2019 Pune November 19 - PropTOQ | 7
NEWS IN NUMBERS
Residential
Real Estate SALES
Overall Sales (Units) : Jan - Sept 2013 2014
2016
2015
Estimated Value (₹Cr) of Units Sold in Q3, 2019
₹17,300
₹7,540
₹4,775
₹2,350 Mumbai - MMR
₹6,745
₹1,620
₹1,710
Bengaluru
Pune
Hyderabad Delhi - NCR
Kolkata
8 | PropTOQ - November 19
-7%
-29%
-31%
-35%
-13%
-10%
5%
Chennai
115,200
101,300
72,300
119,700
119,400
124,400
148,000
2017
2019
2018
% Change over Q3, 2018
Source - JLL & Anarock
REALTY FACTS
DID YOU KNOW? India is Home To The Most Expensive House In The World - Antilia Owned by - Mukesh Ambani The 27 storied building is built at a cost of about
$ 1 billion A 10-Storey Building In Mohali(Punjab) holds the distinction of being constructed in a span of just
Of The Total 525 Million Indian Internet Users , 20 Million Indians Search For Homes Online Every Month. Almost 53 % of the total real estate transactions in India are influenced by the internet.
48 hours The tallest wood-frame building in the world is at the University of British Columbia (UBC) Point Grey campus in Vancouver, Canada.
The 18-storey student residence building will provide housing for 404 students with
33 Four-BHK Units &
272
studio units
Hui Ka Yan Owner and Founder of Evergrande Real Estate Group China is the richest real estate tycoon in the world in 2019 with a networth of.
$ 29.5 billion New Delhi’s Central Business District Connaught Place Is Seventh
among the most expensive prime office markets in the world with an annual occupancy cost of
$ 149.71 per sq.ft.
There Are About 248,408,494 Households In India, Second Only To China. This staggering number is even more than the population of half of the world's countries.
Maharashtra Ranks First In The LEED Certified Space List, With 334 certified projects and 106,057,234 certified sq.ft space.
November 19 - PropTOQ | 9
NEWS LINE
GOVERNMENT TO LAUNCH REAL ESTATE ONLINE MARKETPLACE
The Housing and Urban Affairs Ministry is planning to launch a real estate e-commerce platform in January next year to ease the process of buying a house. The Ministry is holding discussions with real estate apex bodies -Credai and Naredco in this regard.
According to Durga Shanker Mishra, the secretary at the Housing and Urban Affairs Ministry, a common portal would be set up to provide information regarding rulings and orders passed by different RERA authorities across the country. The platform would provide all rulings related to the properties in various states categorised according to the subject and with a summary. It would help people in applying the earlier decisions in any part of the country to their particular case, if applicable. It would bring all the best
practices in the home-buying sector under one umbrella. The recommendation to develop a common platform was made by a committee headed by Vijay S Madan, RERA chief for Delhi and Chandigarh.
those projects that have been completed and projects that have received occupancy certificates will be given. Information regarding size of the house, price of the house and the location will be available on the portal.
Through this portal, the Ministry will be putting in place a transparent mechanism so that all judgments can be accessed by RERA members, members of the public and all stakeholders such as builders and financiers.
The Ministry will get this portal started through Naredco and Credai. It would make property buying as simple as buying something on Amazon or Flipkart. The e- platform will enable buyers in any part of the world to buy property pan- India.
All
information
pertaining
to
November 19 - PropTOQ | 13
NEWS LINE
EDELWEISS TO RAISE $ 1 BILLION FOR STALLED HOUSING PROJECTS The Edelweiss Group has chalked out plans to raise to $1 billion in dedicated real estate funds, and deploy the proceeds to finance housing projects stuck due to liquidity or solvency constraints.
Edelweiss has partnered South Korea’s Meritz Financial group to launch the first fund of $425 million. The Seoul- based company manages about $46.5 billion in assets. The company has identified about ten housing projects in Mumbai and Delhi-NCR that will be provided with completion financing by the fund, according to Venkatchalam Ramaswamy, Executive Director, Edelweiss Group.Edelweiss will deploy its management skills to complete these housing projects and deliver the homes to the end-users. The fund will buy out existing loans of these projects and will be managed by Edelweiss’ Alternative Assets platform, which manages $3.6 billion in assets. It will directly benefit home buyers.
DLF'S QUARTERLY REVENUE DROPS BY ₹ 1756 CRORE
Real estate major DLF reported a 19.8 per cent Y-o-Y drop in consolidated operating revenue for the July-September quarter, to Rs 1,716 crore. Expenses towards the cost of land, plots, constructed properties and developmental rights dropped 28 per cent, to Rs 885 crore. During the quarter, it utilised Rs 1,036 crore (of the Rs 2,250 crore it had got against the exercise of warrants in June) towards repayment of bank loans. And, another Rs 149.5 crore for working capital requirement, including loans to subsidiaries. It had invested another Rs 288.4 crore. Cost of finance came down by 16 per cent, and its Consolidated profit before tax remained flat at Rs 517.6 crore. On a standalone basis, profit before tax jumped 464 per cent to Rs 1,967 crore, as it received Rs 1,939.4 crore as dividend from DLF Cyber City Developers, a JV group company. Standalone total revenue also grew over last year, with the dividend received. After taking the latter into account, it reported a total income of Rs 2,556 crore for the quarter, 166 per cent higher than in the same period last year.
14 | PropTOQ - November 19
NEWS LINE
AIR INDIA TO AUCTION 38 REAL ESTATE ASSETS The loss-making and debt-laden Air India Ltd has made a renewed bid to raise funds by auctioning about 38 real estate assets, including some it could not sell in previous auctions, by lowering the reserve price of some of the properties. While state-owned MSTC Ltd has is involved in undertaking online auction for Air India, global real estate consultancy Cushman & Wakefield is advising the national carrier on the property sales. The properties on the block include flats at Asian Games Village Complex in New Delhi, flats in Kolkata's Golf Green area, residential land in Mumbai's Bandra, Khar and Prabhadevi areas, a holiday home in Lonavala, flats at Chennai's Besant Nagar, apart from flats in Bengaluru and Mangaluru. The airline is also offering to sell properties in Nashik, Pune, Gwalior, Thiruvananthapuram and Bhuj in the upcoming auction. The reserve price of these units ranges from Rs 15 lakh to about Rs 8 crore. However, unlike the past few attempts, Air India has lowered the reserve price of some of these properties, especially
those in Tier 1 cities, to attract buyers. Air India's plan to monetize its real estate is part of a turnaround plan (TAP), which was approved by the government in 2012. The airline was then directed to raise Rs 500 crore every year from monetizing real estate. The loss-making airline has however missed this target every year since 2012. Air India's net debt swelled from Rs 55000 crore at the end of March 2018 to Rs 58351 crore at the end of March 2019.
to a particular purpose vehicle (SPV), Air India Asset Holding Ltd (AIAHL), which was set up in January 2018, as part of a financial restructuring plan. The government had transferred the debt of Rs29,464 crore, as well as noncore assets, real estate assets, and non-operational assets of Air India to the SPV.AIAHL has raised about Rs 29,000 crore through bond sales to retire a part of its debt.
Air India reportedly put on sale more than 100 properties worth about Rs9,000 crore Rs10,000 crore in India and overseas since 2012. The airline at present sold some 30 properties, raising close to Rs1,000 crore from the proceeds of these sales. About half of the debt got transferred
November 19 - PropTOQ | 15
NEWS LINE
RETAIL SHOPPING CENTRE STOCK TO TOP 120 MILLION SQUARE FEET Retail space demand continues to grow in 2019 as the customer base in India is expanding with the number of millennials steadily on their way to dominating India’s demographic profile, with shopping no longer limited to the “chore” shopping but has started moving towards “cherish” retail. According to CBRE, there was a supply addition of 1.2 million square feet in H1 2019, led by Bangalore, Chennai, and Hyderabad, dominated by apparel brands and supermarket chain retailers. Food chain retailers also remained active in Delhi-NCR and Mumbai. According to Bimal Sharma, Head, Retail, Advisory & Transaction Services, CBRE, the Indian retail realty market witnessed a continuous supply addition of 1.2 million sq ft in H1 2019. It was led by Bangalore,
16 | PropTOQ - November 19
Chennai, and Hyderabad, dominated by apparel brands and supermarket chain retailers. Food chain retailers also remained active in Delhi-NCR and Mumbai. The Indian retail real estate market, according to Bimal Sharma, Head, Retail, Advisory & Transaction Services, CBRE, witnessed continuous foray of international brands, the launch of retail developments, and sustained demand. Since retail has garnered interest and confidence among several institutional investors, several
prominent retail developers are re-evaluating their portfolio to create a retail space that has an optimum balance of tenant mix, target catchment, and customer experience. India is set to emerge as the 3rd largest consumer market behind the US and China. The retail shopping center stock in India is expected to go up further with the supply pipeline likely to strengthen across Hyderabad, Bangalore, Delhi-NCR, and Mumbai in H2 2019. By 2030, the retail space will reach 120 mn sq ft.
NEWS LINE
NITESH ESTATES TO MONETIZE LAND WORTH ₹ 227 CRORE Out of the Rs 227 crore, around Rs 152 crore would be used to reduce debt by repaying the lender and the remaining money for repaying the liability towards customer refunds and land owner’s obligations. The company is selling one land parcel in Bengaluru’s Old Madras Road, to Pune-based developer Kolte Patil Developers Ltd, for around Rs 113 crore and the second parcel in north Bengaluru to another developer, through a consortium of landowners. Together, both these land assets have a potential of around 2 million sq. ft. of residential development. Besides these, another Rs 200 crore of debt will get reduced by exiting three other luxury residential land parcels, in the next few months.
monetization in the course of the year.
Bengaluru based premium residential developer Nitesh Estates Ltd has signed agreements to sell and exit two land parcels in the city for Rs 227 crore, as part of its plan to monetize assets to pare debt.
Around Rs 440 crore was repaid earlier in the year, through the sale of land and a shopping mall. The overall strategy of Nitesh Estates is not just towards paring debt but also to eventually exit the residential development business in a phased manner as from being a B2C company. It is now moving towards B2B company where they don’t own the products.
In April, the developer had said that around Rs 700 crore of debt would be reduced through asset
November 19 - PropTOQ | 17
NEWS LINE
SUPERTECH SLAPPED ₹ 293 CR RECOVERY NOTICE BY NOIDA AUTHORITY
HIRANANDANI GROUP PLANS ₹ 500 CR INVESTMENT
The Noida Authority has issued a recovery certificate against Supertech Ltd, for major default on the payment of Rs 253 crore in principal amount for its Cape Town project in Sector 74, Noida. The project, which was started in 2010, is complete and residents have begun moving in.
The group is selling apartments in this project at Rs 1.25 crore onwards. This investment in residential real estate assumes significance particularly as the housing sector is witnessing very limited launches during this festive season because of weak demand and unsold inventories lying with real estate developers.
The total dues of Rs 293 crore to the Authority include interest amount of Rs 40 crore. According to Noida Authority, Supertech was sent a recovery certificate as despite sending several reminders to the real estate firm, the company showed no intention of paying up. According to Supertech, the project was delayed due to a case before the National Green Tribunal, and the Noida Authority assured the company that the interest amount would be reduced though no such relaxation came. Authorities can now recover the dues by seizing the property of Supertech. The group housing plot has 40 towers of 22 to 24 storeys each. Of this, construction of 35 towers has been completed, and possession has been given to 4,000 people. Finishing work will be completed in five towers in which the practice of providing ownership to investors will start in the next three months. A 66-storey tower will be erected as North Eye inside this project.
18 | PropTOQ - November 19
Leading real estate firm Hiranandani Group will invest about ₹ 500 crore to develop a new housing project in Mumbai. The project, Regent Hill' coming up at Powai will see the construction of 500 one-bedroom apartments in the first phase of this RERA registered project. An estimated investment of Rs 500 crore will be made in the first phase of this end - user-friendly project, according to company chairman Niranjan Hiranandani. This new project has a strategic location - close to Hiranandani Group's township project Hiranandani Gardens that comprises of a world-class hospital, an international school, a five-star hotel and retail areas.
The launch of this new housing project follows a recent announcement by the group about an investment of about Rs 1,000 crore to develop 115-acre industrial and Logistics Park in Chennai.
NEWS LINE
SHAPOORJI TO SCALE UP MID-SEGMENT & AFFORDABLE HOUSING BUSINESS The Mumbai-based company plans to acquire 3-4 land parcels within the next six months under the Joyville brand, which will give its mid-income housing platform a deeper pan-India presence. Each land parcel will have 1.52 million sq. ft of development potential. The company plans to acquire land in cities such as Hyderabad, Bengaluru, Pune and Mumbai, according to Venkatesh Gopalkrishnan chief executive officer, Shapoorji Pallonji Real Estate. It had launched the Joyville platform in 2016 and partnered with Standard Chartered Private Equity (now Actis), Asian Development Bank and International Finance Corp. to invest around $250 million. Currently, Joyville has four projects in the National Capital Region’s Dwarka Expressway and suburban
locations near Pune, Mumbai and Kolkata. Joyville, which sells most of its homes in the price bracket of Rs 30-60 lakh, launched its first project in NCR in January in the price range of Rs 65 lakh to 1.2 crore which was received well. Meanwhile, Shapoorji Pallonji Real Estate is reportedly in talks with HDFC Capital Advisors, the real estate fund management arm of HDFC, and International Finance Corporation (IFC) separately, to float a platform to invest and develop low-cost homes across the country. They plan to build homes in the Rs 10 lakh to Rs 20 lakh category on the peripheries of large and tier-II cities, such as Jaipur and Indore, among others.
The real estate arm of Shapoorji Pallonji group has chalked up plans to acquire multiple land parcels for its Joyville mid-market housing brand while monetizing non-core land.Shapoorji Pallonji Real Estate, which hasn’t launched a project since June, also plans to launch 6-7 housing projects between November and March, including three projects under Joyville Shapoorji Housing Pvt. Ltd, besides four premium projects in Mumbai, Pune and Kolkata.
November 19 - PropTOQ | 19
NEWS LINE
₹350 CR PROJECTS UNDER SHIMLA SMART CITY MISSION
As many as 28 projects worth Rs 350 crore, including construction of three flyovers, five roundabouts, five escalators and three smart parking lots, have been approved by the Board of Directors of Shimla Smart City Mission Limited. All projects have to be started before March 31, 2020. The directors took up the 28 projects on priority as most of these did not need approval from the National Green Tribunal, which had banned construction in the green and core areas around three years ago, according to a news report. Three flyovers have been proposed at Talland, Bemloe and between Winterfield and Victory Tunnel near the Railway Station on the Cart Road. The flyovers and chowks when widened will ease the traffic problem in the city.“Five major traffic junctions which are proposed to be developed into roundabouts are Sanjauli Chowk, Dhalli Chowk, Old BarrierTuttikand, Chhota Shimla
20 | PropTOQ - November 19
near Ashiana restaurant and Boileauganj Chowk. The eight road projects would cost Rs 11 crore, while the widening of the roads in the city would cost Rs12.50 crore. A road would be constructed from Manchanda Clinic near Indira Gandhi Medical College and Hospital to link the IGMCSanjauli Road to the Circular Road near the new parking complex near the Auckland tunnel. Three major smart parking lots which have been approved are - 1,000-vehicle complex near the IGMC’s new OPD block, 500-vehicle marking at Vikasnagar and 200-vehicle parking at SDA Complex, Kasumpti. The five escalators are proposed to be installed at Lift-Metropol-The Mall, Jakhu parking to temple
top, Cart Road to The Mall, Auckland tunnel to police chowki, Lakkar bazaar, and Tibetan Market to The Ridge. One elevator, too, is proposed to be installed from Lakkar Bazzar to Bantony Castle. The construction of pedestrian paths from Sanjauli to IGMC, Dhalli tunnel to Dhalli Bazaar, the smart way along Circular Road, two-foot bridges near the Lift over the Cart Road and the Chotta ShimlaVikasnagar Road were also approved. The Rs10-crore Dhalli tunnel, parallel to the present tunnel, has also got a green signal. A project to beautify the façade of The Mall has also been approved. These projects will boost tourism.
NEWS LINE
SC GIVES 3 MONTHS TO COMPLETE JAYPEE INSOLVENCY PROCEEDINGS The apex court has also directed that only stateowned blue-chip company NBCC (India) Ltd and Suraksha Realty Ltd can bid for Jaypee Infratech. Adani Group, which had reportedly made an offer of Rs1,700 crore to complete the held-up housing projects of Jaypee Infra, is also out of the race for the realty firm. The case was first admitted to the National Company Law Tribunal (NCLT) for bankruptcy proceedings in August 2017 after stateowned IDBI Bank had applied on behalf of the lenders. Even after more than two years of admission, the case is unresolved as proceedings following a plea by homebuyers in September 2017 in the SC to include their voting rights in the bidding procedure took nearly a year to complete. The court had ruled in favour of the homebuyers, allowing them to participate as financial creditors and directing the insolvency process to start anew.
Reserve Bank of India in June 2017 for immediate insolvency action. Lenders had requested excluding the 250 days from 17 September 2018 to 4 June 2019 from the stipulated period for corporate insolvency resolution process (CIRP), as this time was taken by the NCLT to decide on the voting rights of the homebuyers. Given the delay in resolution of several large corporate accounts, the government had in July extended the deadline to complete insolvency procedure within 330 days from the earlier 270 days, starting from the day a case gets registered with the NCLT.
The Supreme Court has directed to complete resolution process of Jaypee Infratech Ltd within 90 days and barred parent Jaypee Associates Ltd from bidding for the Noidabased real estate developer.
Jaypee Infratech was part of the list of 12 large defaulting corporate accounts identified by the
November 19 - PropTOQ | 21
NEWS LINE
DDA TO DEVELOP THREE MODEL SECTORS UNDER LAND POOLING
As part of the land pooling policy, the Delhi Development Authority (DDA) has identified three areas in north Delhi villages to be developed as “model sectors�. It has written to the Delhi government to verify details of land parcels offered by locals for land pooling.
The authority plans to develop sectors 17, 20 and 21 in Bawana and Pooth Khurd and Sultanpur Dabas villages as model sectors spread over 180-210 hectares. According to DDA, it has got more than 70% of contagious land in these three sectors. Once the Delhi government verifies the land records, the authority will call a meeting of landowners so that they can start the process of forming consortiums, which is essential for the implementation of the policy. Spread over 180 hectares, Sector 17 comprises land parcels owned by residents of Bawana, Pooth Khurd and Sultanpur Dabas. In contrast, Sector 20 and 21 have land parcels belonging to the villages of Bawana and Pooth Khurd. All the three sectors are located in Zone N, one of the five zones earmarked for land pooling. DDA is expected to start the process of preparing a detailed plan for the development of these three sectors soon. For quick verification of the land parcels, the DDA has asked the Delhi government to provide the names of nodal officers. The land pooling policy was launched in January this year. Till September 6, the last date for people to participate, 6,407 hectares of land across 95 villages were pooled by locals in four landpooling zones. Maximum land was pooled in Zone N in North Delhi where the DDA plans to develop the model sectors. Under the policy, 40% of the combined area will be earmarked for essential services and civic infrastructure. Service providing agencies will develop parks, roads, social infrastructure, etc., in a timebound manner. The developer will get 60% of the total pooled land, of which 53% will be residential; 5% commercial and 2% for public and semi-public facilities. DDA and other service providers will get 40% of the land for developing civic infrastructure.
22 | PropTOQ - November 19
NEWS LINE
IBREL HEADED TOWARDS ZERO DEBT COMPANY
Indiabulls Real Estate Ltd (IBREL), which has monetized some of its real estate assets and partially sold promoter stake for around Rs6,500 crore, has managed to reduce its leverage levels substantially and is moving towards a zero debt company. The Mumbai-based developer has completed the strategic divestment of its 50% stake in the joint venture portfolio to the entities controlled by Blackstone Group for an equity value of Rs 2,717 crore and has reduced around Rs 2,242 crore of bank loans exposure, according to the company. In November, it also sold its Hanover Square property in London to a promoter group for around 200 million pounds (Rs 1,830 crore), reducing around Rs1,162 crore of bank loan exposure. Indiabulls had said earlier this year that it would exit real estate by making IBREL debt-free. The developer has been on an asset monetisation spree and also sold 14% stake of Gehlaut
in IBREL to Bengaluru-based developer Embassy Group in June for around Rs 950 crore. Indiabulls Group’s original plan to completely exit the real estate business by making IBREL debt-free and not having Sameer Gehlaut as a promoter of IBREL faced a roadblock of sorts following the Reserve Bank of India’s rejection of a merger proposal of Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd in October. Embassy Group chairman and managing director Jitu Virwani subsequently said it would like to remain as an investor in IBREL with 14% stake even if it does not buy the remaining 14% stake from the promoter. However, IBREL is still pushing
forward its plan to go debt-free and work out its ownership pattern. According to IBREL, it will focus on its core markets Mumbai Metropolitan Region (MMR) and National Capital Region (NCR). The company will make regular sales from the under-construction office properties to investors and deploy funds to acquire land parcels/unfinished projects for development. It will focus on an asset-light model through joint venture development with landowners or other developers without incurring significant upfront land acquisition cost.
November 19 - PropTOQ | 23
NEWS LINE
GERA REALTY OFFERS 7 YEARS WARRANTY
Gera Developments Pvt Ltd, developers of premium residential and commercial projects in Pune, Goa and Bengaluru, has introduced the country’s first seven years warranty in real estate.
issues such as leakages. Another unique feature on offer is annual preventive maintenance under the seven-year warranty as well.
The warranty will be serviced through the GeraWorld app for efficient tracking and speedy resolution. The app also helps reduce the turnaround time on warranty and common area maintenance requests. Gera Developments was the pioneer in India in 2004 to provide the five-year warranty on real estate that consists of preventive maintenance and repairs, which then became a RERA norm in 2017. The five-year warranty
24 | PropTOQ - November 19
covered repairing or re-fixing of fittings or fixtures with manufacturing defects, and
According to Rohit Gera, Managing Director, Gera Developments, the company has started offering the seven-year warranty to customers currently enjoying the five-year warranty for a nominal fee for the 2-year extension. It will be extending it to new projects. So far more than 2000 units have been covered under five-year warranty, and over 3500 units will be added in the next two and a half years.
POLICY
TAX SOPS EXTENSION TO SEZS LIKELY To check slide in investments and boost investors sentiment, the Centre is mulling a five-year extension of tax benefits for units in Special Economic Zones (SEZs) by extending the sunset clause beyond March 31, 2020. The Commerce Ministry feels that an extension of SEZ tax benefits could be critical in kick-starting the investment cycle. Especially as out of the 351 notified SEZs, 117 SEZs are still not operational. A five-year possible extension and abolishing Alternate Minimum Tax (MAT) on the export turnover of SEZs are in consideration. Earlier this year, the government slashed the MAT rate to 15 per cent from 18.5 per cent. The sunset clause that gives 100 per cent income tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for the first five years, 50 per cent for next five years and 50 per cent of the ploughed back export profit for subsequent five years, will expire on March 31, 2020. Following this expiry, operational SEZs will not get income tax benefits. “All SEZs that are operational on or after April 1, 2020, will not be given income tax exemptions, which are the biggest drivers for investments. If the government seriously wants to do something for the economy, it should give more time to SEZs. This will help a
26 | PropTOQ - November 19
large number of projects that have not yet been operational to take off,� said Hitender Mehta, Managing Partner, Centrum Legal. A total of 351 SEZs have been notified so far, of which only 234 SEZs are operational. It means, there are 117 SEZs that may lose motivation to start operations if income tax benefits lapse in April 2020. Considering that the tax exemptions are the primary driver for investments, the government, according to the Export Promotion Council for EOUs and SEZs, should either extend the sunset clause for SEZs or at least keep the SEZs notified till date out of its purview. Especially as exports from SEZs are growing at a faster rate than overall exports from the country. In April-June 2019, even as export growth from India slowed down to 2 per cent valued at Rs 5,62,000 crore, exports from SEZs posted a robust 15 per cent growth at Rs 1,85,763 core. Total investments by SEZs notified under the Act so far stand at Rs 4,76,166.49 crore, and 21,17,685 persons have been provided employment in these zones.
MORTGAGE
NBFCS COME UNDER LIQUIDITY COVERAGE RULES The Reserve Bank of India has extended its liquidity coverage rules to all deposittaking non-banking finance companies (NBFCs), large nonbanks, and systemically important core investment companies to prevent a fund squeeze in the financial system.
All non-deposit taking NBFCs with asset size of Rs 100 crore and above, systemically important core investment companies and all deposittaking NBFCs irrespective of their asset size shall adhere to the set of liquidity risk management guidelines. The regulator has exempted the non-operating financial holding companies from the liquidity framework. The RBI has mandated NBFCs also to monitor liquidity risk based on a “stock” approach to liquidity. The monitoring shall be by way of predefined internal limits as decided by the board for various critical ratios about liquidity risk. Indicative liquidity ratios are short-term liabilities to total assets, short-term liabilities to longterm assets, commercial papers to total assets, non-convertible debentures (NCDs) (original maturity less than one year) to total assets. RBI also advised extending relevant principles to cover other aspects of monitoring and measurement of liquidity risk, viz., off-balance sheet and contingent liabilities, stress testing, intra-group fund transfers, diversification of funding, collateral position management, and contingency funding plan.
LIC INVESTS ₹2,500 CR IN PNB HOUSING FINANCE Life Insurance Corporation of India (LIC) has invested Rs 2,500 crore in the PNB Housing Finance by subscribing to its secured redeemable non-convertible debentures (NCDs). The issuance of bonds having a tenure of 10 years is via private placement. The proceeds would be used for its ordinary course of business operations. According to Sanjaya Gupta, Managing Director of PNB Housing Finance, this is a foreign bank subscribed the second NCD issuance by the company for FY1920 after the first lot of Rs 500 crore. The NCD facility will augment the firm’s liquidity and ALM position across buckets. During the current fiscal, PNB Housing Finance has so far mobilised about Rs 27,000 crore through long-term sources, including Rs 6,379 crore through fixed deposits, Rs 5,899 crore through securitisation (direct assignment route), Rs 3,000 crore through NCDs, Rs 1,211 crore through external commercial borrowings and the rest in the form of bank facilities. Dependency on commercial paper was reduced to around 5% of total resources during the period, according to Gupta.
In line with banks, RBI earlier introduced Liquidity Coverage Ratio (LCR), a measure aimed at maintaining enough cash with an NBFC. All non-deposit taking NBFCs with asset size of Rs10,000 crore and above, and all deposittaking NBFCs irrespective of their asset size, shall maintain a liquidity buffer in terms of LCR, RBI said.
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MORTGAGE
NBFCS RAISE ₹2.361 LAKH CRORE VIA LOAN SECURITISATION Non-banking finance companies (NBFCs) have stepped up securitisation of their loan portfolios in the past one year, raising as much as Rs2.36 lakh crore since the IL&FS crisis in September 2018, as per a report by rating agency ICRA. The funds raised were much needed in light of the liquidity squeeze these companies faced from other sources like banks and bond markets. NBFCs and housing finance companies (HFCs) together raised Rs2.36 lakh crore between October 2018 and September 2019 by selling down their loans in the open market through securitisation or direct bilateral assignments (DAs). ICRA expects securitisation volumes to touch an all-time high the fiscal ended March 2020, with direct assignments remaining at the forefront. “NBFCs and HFCs continue to rely heavily on securitisation as a tool for raising funds, manage liquidity and to correct any ALM mismatch,” said Abhishek Dafria, head - structured finance ratings at ICRA. “The partial credit guarantee scheme of the government of India will also add bulk to the overall market volumes. With the PSBs directed to disburse funding of Rs1 lakh crore under the PCG scheme by February 2020, we believe that the size of the securitisation market would be at an all-time high, more than Rs 2 lakh crore for FY2020.”
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HDFC BANK QUARTERLY PROFIT SOARS TO ₹ 6345 CRORE HDFC Bank, India’s most valued lender, has reported a net profit of Rs 6,345 crore for the September quarter of 2019-20 (financial year 2020) , registering an increase of 26.8 per cent over Rs 5,006 crore in the same quarter of the previous year. Gross non-performing assets (NPAs) were at Rs 12,508 crore, or 1.38 per cent, of gross advances, as on September 30, 2019.The bank’s total income for the quarter ended September 30, 2019, grew by 19.6% to Rs 33,755.0 crore from Rs 28,215.2 crore in the year-ago quarter. Net revenues (net interest income plus other income) increased by 21.1% to Rs 19,103.8 crore for the quarter from Rs 15,779.0 crore in the same quarter of the previous year. Total deposits as of September 2019 were Rs 1,021,615 crore, an increase of 22.6 per cent over September 30, 2018.
MORTGAGE
FALL IN FRESH HOME LOANS
Fresh disbursement of home loans and loans against property have fallen by 6% and 21% respectively in the quarter ended June 2019 compared to the corresponding period of the previous year due to stress in the NBFC sector. According to a report by TransUnion Cibil, funding challenges are forcing NBFCs to shift from larger-value loans to smaller-ticket personal loans, which are riskier. The slowdown in long-term loans like mortgages takes longer to be visible because loan growth is calculated using the difference in the outstanding balance Q-o-Q. Because of their long term nature, outstanding loans continue to grow even when disbursements fall. The report says that fresh disbursement of home loans by banks and housing finance companies stood at Rs 1.2 lakh crore in the quarter ended June 2019, down 6% from Rs 1.28 lakh
crore in the year-ago period. Loans against property disbursed during the quarter stood at Rs 30,300 crore, down 21% from the year-ago period. NBFCs, in general, have been finding it difficult to raise funds in the wake of the IL&FS crisis. In the case of housing finance, the second-largest private company DHFL had stopped disbursing loans after a default. According to lenders, loan against property is mostly availed by owners of small businesses to get cheaper credit. To that extent, the slowdown in this segment reflects a reducing in SME borrowing activity. According to the report, consumer credit balances
across all major credit products grew 17% Y-o-Y in the quarter ended June 2019, compared to 23.5% in the same quarter of the previous year. Growth in credit cards and personal loans significantly outpaced increases in auto loans, home loans and loans against property. The fintech and NBFC segment continue to expand access to financing with the total number of consumers with access to credit increasing by 21.7% in the quarter during the quarter Y-o-Y in Q2 2019. Although still quite high in comparison to most major economies worldwide, this was down materially from the 26.3% jump Y-o-Y in Q2 2018.
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REGULATION
NOIDA AUTHORITY CANCELS LAND ALLOTMENT OF UNITECH
Noida Authority has cancelled the allotment of a group housing property to beleaguered real estate firm Unitech over non-payment of dues worth Rs 1,203 crore. The defaulting property is located in Sector 113 where the real estate group had also come up with 17 towers without getting the map cleared by the authority, in violation of the Noida Building Regulation, 2010, according to authority. The allotment was cancelled on October 21 on instructions of Noida Authority CEO Ritu Maheshwari who had directed officials to reclaim possession of the property within 15 days. The non-payment of dues includes those accruing from EMIs, interest, lease rent, construction delay by Unitech worth Rs 1,203 crore. The allottee (Unitech) was served a notice on August 24 and multiple other notices before that, in which it was asked to clear the pending dues. The action came as the developer could not present any satisfactory explanation within the stipulated time limit.
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RATING FOR UP BUILDERS Real estate builders and projects in Uttar Pradesh will receive a rating from next year, a move seen helping potential investors and homebuyers make informed decisions. A consultant appointed by the Real Estate Regulatory Authority (RERA) of Uttar Pradesh has finalised a rating system which is linked to disclosures required under the RERA Act, Rules and Regulations. The grading, to be done annually, will be based on a developer’s track record and background, financial profile, construction quality, buyer feedback and legal status of the project, according to UP-RERA chair-person Rajive Kumar. Currently, the exercise of rating the builders is underway and the first such rating will be announced in January next year.
REGULATION
NGT SLAPS â‚š22 CR PENALTY ON 6 BUILDERS The National Green Tribunal has slapped an interim penalty of Rs 22.5 crore on six builders in Haryana's Sonipat area for serious violation of environmental norms.
A bench headed by NGT Chairperson Justice Adarsh Kumar Goel also constituted a joint committee comprising representatives of Central Pollution Control Board, Ministry of Environment and Forests and IIT-Delhi to suggest realistic compensation to be recovered from them. The NGT imposed environment compensation of Rs 10 crore on TDI Infrastructure Ltd, (For Kingsburry apartments), Rs 2.5 crore each on TDI Infrastructure Ltd's My Floor project in Sector-60, Tuscan City, CMD Built-Tech Pvt. Ltd, Parker Estate Development Pvt. Ltd and Narang Constructions and Financiers Pvt Ltd. "The period of violations is two years or more. "Though the environment is priceless, the quantum of Environment Compensation has to be adequate to restore the environment and must have deterrent aspect so that such violations are not profitable. No lenient attitude can be shown nor can such matters be unduly prolonged," the bench said. The tribunal directed the Haryana chief secretary to consider referring the matter to vigilance to ascertain an intentional and collusive violation of the law and overseeing remedial action for speedy enforcement of environmental norms in the interest of the health of the inhabitants. The green panel said that the amount may be recovered by the state pollution control board and spent for restoration of the environment. The interim compensation will abide by the final determination of payment by the SPCB after following due procedure, including hearing the affected parties, in the light of the report of the joint committee constituted as above. The tribunal heard a plea filed by Haryana based organisation Kissan Udey Samiti seeking action against violation of environmental norms by builders in Sonipat. It alleged that the builders were not providing proper sanitation system and sewage system in buildings constructed in Sectors 58 to 64 at Kundli in Sonipat.
RERA NOD TO HOMEOWNERS TO COMPLETE DSK GROUP'S PUNE PROJECT In a first of its kind of decision, Maharashtra's realty regulator has allowed home buyers in a project of the stressed company DSK Group to complete a stuck project in Pune.
Over 90 % of the project, christened 'Sadaphuli' in Talegaon was completed within six years of its launch. However, the rest will now be completed by buyers who have booked apartments, DSK's financier Tata Capital Housing Finance and a two-member panel appointed by the Maharashtra Rera. MahaRera on October 22 ordered the resolution under sections 7 and 8 of the state's Rera Act and revoked the registration of the project. While doing so, it allowed home buyers or the association of allottees (AOA) to execute the remaining construction and register the sale agreements for the project. The authority has also directed Tata Capital Housing Finance, an investor in the project and MahaRera designated resolution panel comprising developer Niranjan Hiranandani and consumer rights activist Shirish Deshpande, to assist the AOA to submit the blueprint by February for completing the project. The project consists of 279 apartments to be constructed over two phases, and 161 apartments have already been sold. The first phase includes two towers having a total of 184 apartments out of which 100 are already sold or booked. In the second phase, comprising 95 apartments, as many as 61 are already sold or booked. Meanwhile, MahaRera has directed to freeze the bank accounts opened by the promoters of the company in Bank of Maharashtra's Pune branch for the project until further notice. It has suggested filing a caveat application by the AOA and Tata Capital Housing with the NCLT, Mumbai Bench, to ensure that they are heard and the NCLT is apprised of the efforts of the authority in case of a possibility of an operational creditor, if any, initiating insolvency proceedings against the DSK Group.DSK Group chairman DS Kulkarni and his wife are currently lodged in Yerawada jail in Pune for allegedly cheating nearly 33,000 depositors and investors of nearly Rs 2,043.18 crore.
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REGULATION
UP RERA ORDERS STAY ON INFLATED DEVELOPMENT COST
The UP RERA has passed an order staying the escalation of development costs by the firm responsible for building Wave HiTech city, which is part of Ghaziabad’s Hi-Tech Smart City. The extra charges demanded amounted to more than Rs 5,000 crore. Uppal Chaddha Hitech Developers Pvt Ltd was to build the township project under a public-private partnership inked in 2009. Over the years, the peripheral development charges rose from Rs 350 per sq yard to Rs 850 per sq yard, which was contested by buyers. According to UP RERA chairperson, the cost escalation stayed as the builders could not produce the charge sheet explaining the rise nor for the Rs 350 per sq yard charge for that matter. On October 10, the chairperson stayed the escalation of charges, allowing only addition of inflation charges to the external development charges, raising it to Rs 418 per sq yard from Rs 350 per sq yard. The order said the firm’s demand was unreasonable. The builder had also asked for Rs 1,430 per sq yard as external electrification charges from buyers, which got denied. A spokesperson of Wave HiTech city said that by the judgment of October 10, the RERA Authority had upheld the terms of allottee arrangement. Other charges like water conservation, telephone, etc. should be charged after disclosing same to the purchaser who is entitled to pay when changed by the builder on a pro-rata basis.
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REGULATION
RECORD RISE IN RERA REGISTRATIONS There has been a 40 per cent growth across the country in project registrations under the Real Estate Registration Act (RERA) in a year, from 32,306 projects at the end of September 2018 to 45,307 projects as on October 5.
According to a report by Anarock Property Consultants, the states with maximum project registrations in early October 2019 include Maharashtra, Gujarat, Karnataka, Madhya Pradesh and Uttar Pradesh. Altogether, these five states account for a significant 81 per cent share with 36,576 projects registered. Among them, Maharashtra tops the list with 22,455 project registrations. Interestingly, a year ago, Assam, Chandigarh, Daman & Diu and Puducherry saw no project registrations under RERA. This year, these states have cumulatively seen property registrations of 154 projects. The State of Maharashtra is among the largest in terms of real estate development, and the successful implementation of RERA is in itself an accomplishment. The gradually improving performance of the State's real estate sector sets the benchmark for other states to emulate, as per the report.
Karnataka and Uttar Pradesh which already top the list in overall RERA implementation, states like Haryana and Punjab have also seen significant registrations of real estate agents. Punjab, for instance, witnessed 1,772 agent registrations as on October 2019 while Haryana saw the record of 1,673 agents. Authorities across states/ UTs have helped dispose 27,970 cases during the year to October, with the highest number of cases, at 11,596 or 41 per cent of the overall, solved in Uttar Pradesh alone. Maharashtra comes next with 5,817 cases disposed of, followed by Haryana (2,480 cases) and Madhya Pradesh (2,465 cases). Gujarat clocks in with 1,259 cases solved, Karnataka with 1,513 and Odisha with 727 cases.
The North-eastern states of Arunachal Pradesh, Meghalaya, Nagaland, and Sikkim, which abstained earlier, will soon officially notify their RERA rules. West Bengal is the only state which has announced its real estate law under West Bengal Housing Industry Regulatory Authority (WBHIRA). Agent registrations have also risen in this one year. Anarock data suggest 54% growth in agent registrations under RERA across states and UTs. Besides Maharashtra,
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MOBILITY
DELHI METRO PHASE 4 WORK SET TO TAKE OFF
The construction of Delhi Metro Phase-IV, which had been hanging for quite some time, will commence by the end of this year. This follows the move by the Central and Delhi governments to sanction funds worth Rs 800 crore for the metro project. Work will first begin on the Janakpuri West-RK Ashram Marg corridor, which is the longest line of the project.Tenders for the longest corridor have been floated in addition to the tender floated for one package of the Tughlaqabad-Delhi Aerocity corridor. There are a total of six corridors under Phase-IV with a total length of around 104 km. The Delhi government had given its approval for all six corridors in December last year and three top priority corridors, with a combined length of 61.6 km, were approved this year, in March. The funds released are meant for three priority corridors, which are Janakpuri West-RK Ashram (28.9 km), Aerocity-Tughlaqabad (20.2 km) and Majlis Park-Maujpur (12.5 km). The first civil tender for 10 elevated stations and the viaduct of the Janakpuri West-RK Ashram Marg line was floated in July this year.
DMRC TAKES OVER GURUGRAM RAPID METRO
The Delhi Metro Rail Corporation (DMRC) has taken over the operations of the Rapid Metro Link, Gurugram from October 22. Services on the 11.6 km corridor, developed by Rapid Metro Rail Gurgaon Limited (RMGL) and Rapid Metro Rail Gurgaon South Limited (RMGSL), will continue to operate as per the normal time table as earlier. The DMRC has taken over the operations and maintenance of the Rapid Metro. Following this, the operational metro network covers 389 kilometres spanning 285 stations including the NOIDA-Greater NOIDA corridor. After the takeover of Gurugram Rapid Metro link by Delhi Metro, the stations of Sector 55-56, Sector 54 Chowk, Sector 53-54, Sector 42-43, Phase - 1, Sikanderpur, Phase-2, Phase-3, Moulsari Avenue, IndusInd Bank Cybercity, Vodafone Velvedere Towers have come under DMRC operations. The rapid metro was constructed by IL&FS Infrastructure in two phases. In the first phase, the company built 5.1 km elevated track, connecting National Highway No 8 at Shankar Chowk to Sikandarpur DMRC station, covering six stations. The service, built in three years for Rs1,450 crore, was opened for public in November 2013.
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COVER STORY
INVESTMENT FRIENDLY REAL ESTATE
Despite reeling under prolonged slowdown with low sentiment index, real estate still holds lot of promise as an investment- friendly asset class. - Vinod Behl 36 | PropTOQ - November 19
COVER STORY While the real estate recovery is still some quarters away, the new regulated landscape has done good to the sector with market encouraging players to become more disciplined and organised and adopt good business practices. This has given lot of confidence to both domestic and foreign investors. As Pirojsha Godrej, Chairman, Godrej Properties puts it, "When a sector is going through bad period, it is not so bad for companies which have a good track record." As the dust over key reforms like RERA and GST settles down, property buyers are gradually gaining confidence. While the commercial real estate has seen decent recovery with increasing demand from both domestic and foreign investors, even crisis hit residential realty seems well on its way to recovery, with residential real estate sales registering 59% increase in the first nine months of the calendar year, compared to the same period in 2017. Homes worth Rs 1.54 lakh crore were sold in top 7 cities in the first three quarters of 2019. This has been made possible due to large inventory of ready-to-move homes available in the market which have a big attraction of zero percent GST. As these projects are bring lapped up by home buyers, developers are focusing on projects completion. Otherwise also, for fund starved developers, it makes more business sense to complete these projects, especially in a market where there is a big overhang of unsold units. Due to government's consistent focus on promoting affordable housing through policy incentives, homes have become affordable for investment/self-occupation. A home is considered affordable if it costs 4.5 times the average annual household income . The affordability index in Pune, Kolkata and Ahmedabad has come down to 3 while in NCR it hovers around 5. In case of other cities except Mumbai, it is below 4.5. As average growth in home prices has not been keeping pace with average increase in disposable income, this has made homes affordable. The average disposable income per annum between 2014 and 2018 has grown to about 9% across top 7 cities whereas the average growth in home prices has been just about 2%.
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COVER STORY " Today in view of rising affordability, more and more people want freedom from rent. This is clearly evident from the fact that today in cities like Gurgaon in the NCR under PMAY, and Haryana Government's Affordable Housing Policy, 1 BHK-2BHK homes are available for Rs 17-23 lakh" says Pradeep Aggarwal, Chairman, Assocham National Council on Real Estate, Housing & Urban Development. Jaxay Shah, Chairman, CREDAI counts the benefit of investing in affordable housing, there is 2.60 lakh subsidy under PMAY. And factoring EMI on 20-25 year loan term, this amount comes to 5.50 lakh which is interest benefit on first day itself when you buy a home". In this backdrop global property consultancy like CBRE are out to seize the opportunity by entering into residential brokering. Anshuman Magazine, Chairman & CEO, CBRE India, South East Asia, Middle East & South Africa says," Today in a regulated environment, the challenge is to deliver quality project in a stipulated time with cost optimization. Our project management team takes care of all this". According to Sudhir Pai, CEO, Magicbricks, this is conducive time to invest in real estate especially in view of tax breaks for first time home buyers and healthy supply of ready - to - move homes. For those planning a second house, new rental models and investing in certain pockets in specific micro markets would ensure higher rental yields". Magicbricks data suggests that properties in affordable markets priced at Rs 6000 psf offer a rental yield of over 3% while those above Rs 6000 psf have a yield of 2-3%. The new rental models of Co Living offer average yield of 10-20%. Commercial real estate, according to Anuj Puri, Chairman Anarock is doing significantly well with steady demand. There is an opportunity for small retail investors to partake in commercial real estate and also earn decent returns. More well-heeled investors are bullish about
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For those planning a second house, new rental models and investing in certain pockets in specific micro markets would ensure higher rental yields.
COVER STORY
Grade A commercial properties in prime locations. A good commercial property in a high grade mall can fetch a yield of 7-10%.Shobhit Agarwal, MD, Anarock Capital adds that there is a string of investor interest in rentyielding industrial real estate, besides office and retail assets. Currently, many developers are engaged in bolstering their commercial real estate portfolios for monetizing of their assets to gain maximum value. Sudhir Pai says that with falling interest rates REITs are
Reformed and regulated realty is boosting lot of institutional investment.
likely to give higher returns than FDs and government bonds and emerge as preferred way of investing in commercial real estate. Reformed and regulated realty is boosting lot of institutional investment. Says Anshuman Magazine, "There is lot of activity happening into logistics and warehousing and we are tapping it on all India level. We are also focusing on newer asset classes of Co Living and Senior Living".
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COVER STORY
Real estate has proved to be an appreciating asset class with fairly good returns. No other investment has been a long run bet That real estate is holding fort as an investment class of choice is quite evident from the recent Karvy India Wealth Report. it reveals that in FY 2019, real estate is second most preferred avenue for investment garnering 74.5 lakh crore., next only to gold bagging Rs 80.9 lakh crore of investment. Real estate also occupies second place in physical assets, next only to gold with an investment share of 44.4%. Niranjan Hiranandani, President Naredco says that historically real estate has proved to be an appreciating asset class with fairly good returns . No other investment has been a long run bet. Sudhir Pai adds that when compared with other asset classes real estate has given home owners high rate of appreciation over a larger period of time.
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COVER STORY The equity market is generally a high risk and volatile investment particularly when economy is in a fluid situation. Investment in gold is good but there is a limit to buy gold. Nimish Gupta, MD, RICS India adds that commercial real estate has been traditionally a string segment and even today defying slowdown, commercial & industrial realty is giving a return of 10-12%. Residential real estate that had hit the rock bottom is expected to pick up on the strength of 'Housing for All' and give a better yield , particularly as the investment prospects of CoLiving brighten up. As reforms have organised the sector and made it much more transparent, it is
attracting domestic and global investors. Anshuman Magazine says that global institutional players have warmed up to regulated realty. Moreover both retail & institutional investors are coming to terms with reasonable returns. in such a scenario, going forward, we will see institutions owned real estate. Sanjay Dutt, Managing Director & CEO of Tata Realty & Infrastructure Limited and Chairman of FICCI Real Estate Committee adds that with course correction happening in regulated realty, it is good time for real estate in general including corporates, developers and institutional investors.
Today in view of rising affordablity, more and more people are looking to invest in real estate.
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COVER STORY
Where is
India'sWealth
Invested?
Most Preferred Investment Avenues in FY19
19% 9%
Gold
₹80.9
Insurance
Lakh Crore
₹36.9 Lakh Crore
12%
17%
Direct Equity
₹52.1 Lakh Crore
11%
Real Estate
Fixed Deposits & Bonds
₹45.8 Lakh Crore
GOLD AND REAL ESTATE DOMINATE PHYSICAL ASSETS
GOLD
48.20%
REAL ESTATE
44.40%
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OTHER PHYSICAL ASSETS
7.40%
₹74.5 Lakh Crore
WITHIN FINANCIAL ASSETS , DIRECT EQUITY CONTINUES TO BE MOST PREFERRED
Financial % Share Assets Direct Equity 19.90% Fixed Deposits & Bonds’ 17.40% Insurance 14.10% Saving Accounts 13.10% Cash 7.80% Provident Fund 6.30% Mutual Funds 5.30% Other Financial Assets 16.10%
PROPERTY GUIDE
GUIDELINES FOR INVESTING IN LAND
Where flats are traditionally the most sought-after type of investment in property, the attractiveness of buying land for long-term and potentially higher gains has never lost its sheen. However, investing in land is not as simple as it may appear. While deciding to invest in land, one must consider various do and don'ts.
To begin with, there might be (and usually are) many number of legal requirements to meet and procedures to follow before a piece of land becomes a marketable item. Most buyers are aware of the difference between the Agricultural and Non-Agricultural (NA) categories – one cannot put in the development of any magnitude on agricultural land. However, even if the land is NA, one still needs clearance from the local authorities to build on it. Furthermore, one should not purchase land without any idea of whether it is included in some other developmental plan. For instance, the town planning board may have scheduled a highway to run through it or allocate it to the building of some government structure. If this is the case, one may own a piece of land and still have no right to do anything with it – including selling it. In the case of highway construction or electrification, the owner may eventually wind up with a high-tension cable perched in the middle of the plot, or a Super
Expressway running through it. This is a real risk when we consider a land purchase in one of the cheaper rural areas which are continually being hawked on the real estate market. Anyone hoping to develop land will, in any case, require a building permit. A plot must have a clear title and be adequately demarcated. Assuming that it has already been sufficiently developed to make it marketable, it still needs to be appropriately protected from encroachment. Plots gain value only over periods - if left unattended, other developments usually encroach on it and this raises legal problems that make the plot unmarketable for the duration of the legal struggle over it. Furthermore, no kind of property development involving even a minimal degree of habitation is feasible without a primary septic tank and drainage system. In other words, what lies underground is as crucial as what stands above it. If the plot is unsuitable for digging deep enough - unstable or extremely rocky soil could be possible
reasons - one could be in deep trouble while trying to sell it. The geologically unstable ground would mean that it can support no structure at all. The absence of sufficient groundwater would also be a significant drawback, especially in a resale scenario. It is a severe mistake to rely on municipal water supply alone since this can be pretty sporadic in rural locations. Availability of electricity is another critical consideration. Many buyers are under the mistaken assumption that it is not necessary to engage the services of a real estate consultant in the case of land/plot purchase. The fact is, only an expert can foresee all the complications that can arise with any property, be it 'raw' or developed. Many sellers of developed plots have taken steps to avoid such problems for their customers. However, one may still wind up with a 'dead duck' property if one buys it without knowledgeable guidance, or from an unknown property dealer.
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PROPERTY GUIDE
NRI PROPERTY INVESTMENT & OWNERSHIP
Though the Indian real estate environment has once again become very conducive for NRI investors, there is still hesitation to take the plunge because of uncertainty about the legal implications. Many first-time NRI property investors have very pertinent doubts and finding answers to them is far from easy. Here are key issues pertaining to NRI property ownership in India. Can an NRI use a Will to bequeath property in India to someone else - either another NRI or a resident Indian? The answer is that NRIs can certainly bequeath property to their legal heir/s or any one of their choice via a Will. An NRI can inherit any immovable property in India, whether it is residential or commercial - and even agricultural land or a farmhouse (which they are otherwise not entitled to purchase). An NRI is also free to inherit property from another NRI or resident of India. However, the RBI’s permission is necessary if the property is inherited by a citizen of a foreign state and is a resident outside India. A related question that often crops up in discussions with NRI investors is
Can a property be gifted, and what are the statutory charges levied on a gifted property? An NRI can gift residential and commercial property to a person residing in India, or another NRI. However, if the property is agricultural land, plantation property or a farmhouse, it can only be gifted to a citizen of India residing in India. Gifts received from relatives (as defined under the Income Tax Act) are not taxed but at the time of registration, one has to pay the prevalent stamp duty and registration charges. Relatives include spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents and any lineal ascendant or descendant of self or spouse. If the gift is received on the occasion of marriage or from a registered trust, it is exempt from tax. Some NRIs are more interested in investing in Indian real estate via companies they have formed on foreign soil, or they may work for a foreign company interested in establishing a footprint in India. In such cases, a common question is:
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-Shajai Jacob
PROPERTY GUIDE
Can an overseas company or a subsidiary company outside India invest in Indian real estate? Well, the Indian real estate sector is eligible for 100% FDI (Foreign Direct Investment) under the automatic route in the construction development segment, which includes townships, housing, built-up infrastructure. An overseas company or a subsidiary company outside India can invest in Indian real estate via this route, but not in finished buildings.
How to repatriate funds from real estate investment, both for rental income and proceeds on sale? Here, too, the laws are quite lenient but have some provisos. There is no restriction on NRIs for repatriating rental income or even property sale proceeds (other than agricultural land, a farmhouse and plantation property) as long as the total proceeds are within the set limit of USD1 million in a fiscal year. There are certain conditions like the property being sold should have been acquired as per the foreign exchange regulations applicable during that period.The amount being repatriated cannot exceed the cost of the sale proceeds from the transaction.The sale proceeds from a maximum of two residential properties can be repatriated though the maximum amount of repatriated funds from a Non-Resident Ordinary (NRO) account is capped at $1 million per fiscal year. Also,funds can be repatriated only after settling all the applicable taxes and other charges. If the property was purchased with money received from inward
remittance or debit to NRE/FCNR/ NRO account, the entire principal amount can be repatriated outside India immediately while the balance must be deposited in an NRO account.To start the repatriation process, the NRI must get a certificate from a Chartered Accountant (CA) in India, issued in 'Form 15CB' that verifies that the money acquired was via legal channels and all due taxes have been paid. The NRI needs to fill another form called ‘Form 15CA’ and submit it online. The final step is to take the signed undertaking along with the CA certificate on Form 15CB to the bank where one has an NRO account. The concerned bank will check the forms and transfer the money abroad (up to $1 million in an FY). Apart from these forms, the bank will also ask for a copy of the sale document of the property. If the property has been inherited, the bank will ask for the Will copy, legal heir certificate, and death certificate of the person on whose death the property was inherited.
How to verify whether an Indian property is legally compliant in all respects? It is obviously very important for an NRI to pay attention to factors like the legitimacy of land, compliances to be followed during construction, environmental clearances, etc. at the time of a property purchase. As real estate is a state subject, laws may differ from state to state and there is, therefore, no onesize-fits-all response. Before buying such a property, the NRI should ideally consult a lawyer to examine all the legal documents and verify their authenticity. They must also check whether the project is registered under the respective state RERA and whether or not it
is fully RERA-compliant. However, many Indian states and Union Territories still do not have a functional RERA website, and this is where the services of a reputed real estate consultancy can prove to be invaluable .
What is the jurisdiction of any dispute related to property investment in India? This is indeed a very important question to ask, especially given the large number of litigations in the Indian property market. It is not advisable for NRIs to file property dispute cases anywhere else other than the jurisdiction where the property is located. Only the court in that particular jurisdiction can try a propertyrelated case. Delays in the construction process beyond the extension period mentioned in the agreement fall under the purview of consumer courts concerning ‘deficiency in rendering of service’ under the Consumer Protection Act of 1986 if the project is not registered under state RERA. If the project is registered under RERA, buyers can file a complaint against the builder under Section 31 of the regulation with the appointed regulatory authority within the respective state. Interestingly, there may soon be a law in place in the state of Punjab to protect NRIs against property-related frauds. The state government is planning to bring the NRI Property Safeguards Act to resolve issues of NRI buyers effectively and transparently. An ombudsman for resolving issues would also be set up under the law. If this happens, it would indeed be a worthy precedent for other states to follow.
The writer is CEO (GCC) Middle East, Anarock Property Consultants
November 19 - PropTOQ | 45
INVESTMENT TRENDS
INSTITUTIONAL INVESTMENTS ON THE UPSWING With the institutional interest in rent-yielding office assets backed by strong occupier demand the office real estate has emerged as a favorite asset class for institutional investors. 46 | PropTOQ - November 19
INVESTMENT TRENDS Private equity investment volumes for YTD 2019 figures are higher by 19% on a comparable Y-o-Y basis, despite taking a dip by 13.9% Q-o-Q. Q3 2019 number stands at INR 99.83 bn, as per data recorded by Cushman & Wakefield India. The reduced investment flows in the residential sector continued to decline further, recording over a 60% Q-o-Q drop in Q3. With real estate lending numbers slowing down due to the domestic NBFC stress, 83.5% of quarter’s inflows were in the form of equity capital infusion. It is also indicative of the fact that institutional investor interest continues to remain active in the Indian real estate space. The office segment continues to be the favoured investment asset class, and there is an expectation of further traction
of Indiabulls Real Estate in Mumbai and Delhi NCR, having bought a 50% stake earlier in 2018. Virtuous Retail (the Xander-APG retail platform) announced an investment of INR 24 bn for the acquisition of a land parcel in Thane, Mumbai for development of a retail project as part of a greenfield mixed-use project. Xander Investment Management acquired Weikfield IT Info Park in Pune from New Vernon Capital in yet another key office transaction during Q3. One can look forward to specific distinct trends. The successful REIT listing of Embassy-Blackstone platform with the scrip performing well past the listing bodes well for new REIT listings. With players like K Raheja-Blackstone next in line and likely to be followed by others like RMZ and Godrej Properties also
PERE inflows (₹ Bn) SECTOR
YTD 2018
YTD 2019
Office
175.35
207.57
18%
Residential
82.8
62.55
-24%
Retail
19.88
48
141%
Industrial
10.3
19.71
91%
Hospitality
20.25
39.5
95%
Others
20.32
14.5
-29%
Total
328.9
391.82
19%
Percentage Change
Source: Cushman & Wakefield Research India
in the near term. Institutional interest in rent-yielding office assets continues to be backed by strong occupier demand with 2019 slated to surpass 2018’s leasing numbers for a new historical peak. With low vacancies and strong demand in key office markets, investor interest in this asset class continues unabated. Mumbai led the Q3 investments at a city-level, with a 24% share, followed by Hyderabad and Pune with shares of 9.3% and 9.0%, respectively, in fund inflows. Hyderabad saw the sharpest quarterly increase among all cities with investment inflows increasing by a multiple of 5.6X Q-o-Q. Multicity investments (across Maharashtra and Haryana) had a 47.3% share in the quarter’s fund inflows with two notable transactions in the office and industrial segments. Among important deals in Q3, Blackstone Group agreed to buy the remaining 50% stake in the office assets
contemplating future listings, select core and core-plus assets along with brownfield/greenfield developments shall remain on the investor radar as more significant portfolios remain extremely limited. Key asset classes, including office, retail, and industrial, continue to prevail. One can look forward to specific distinct trends. The successful REIT listing of Embassy-Blackstone platform with the scrip performing well past the listing bodes well for new REIT listings. With players like K Raheja-Blackstone next in line and likely to be followed by others like RMZ and Godrej Properties also contemplating future listings. Select core and core-plus assets along with brownfield/greenfield developments shall remain on the investor radar as more significant portfolios remain extremely limited. Key asset classes, including office, retail, and industrial, continue to stay mainly in the office sector.
November 19 - PropTOQ | 47
TALKING POINT
LIQUIDITY LIFELINE FOR STALLED HOUSING PROJECTS Will the government's liquidity lifeline in the form of Rs 25,000 crore Alternative Investment Fund (AIF) to push for the completion of stalled and unfinished products prove to be a saviour to salvage stalled projects?
This was the need of an hour to bring back the confidence of both developers and end buyers. The government should consider increasing the Alternate Investment Fund allocation to cover a few critical infrastructure projects which resume direct investments. It will help reduce bank NPAs, leading to a faster revival of the eco-system.
Sankey Prasad
CMD, Colliers International India
Anuj Puri
Chairman Anarock Property Consultants This move couldn’t have come at a better time because the delays are causing serious apprehensions. The delay in the on-ground deployment of the stressed fund gave rise to severe perceptions about the main issue of stuck and delayed projects that had remained unaddressed. The timeline for setting up this fund and its actual implementation is quite critical.
Nayan Raheja
ED, Raheja Group
Liquidity has been the biggest problem faced by the real estate sector. The infusion of massive liquidity through AIF will bring back the confidence of the buyers & investors into real estate, which in turn will put the economy back on the high growth track in the coming years.
Madhusudan G
Chairman, Sumadhara Group It is a significant relief for genuine developers who are facing liquidity challenges. However, we will have to see if this decision of capping the funding for apartments and villas of about 2150 sq. ft sizes pan out in the long-term, as this is likely to create funding issues for the stalled projects having larger sized units.
Sharad Mittal
CEO & Head Motilal Oswal Real Estate Fund The bailout fund would kickstart the process of restoring normalcy to the sector while encouraging buyers to stop being fence-sitters. As a result of this, we expect the sales number to improve in the coming quarters. Further domestic & global investors who consider Indian real estate as a significant growth opportunity, will finally be able to invest through this other fund.
Dhruv Aggarwal
Group CEO, Housing.com, PropTiger.com, Makaan.com
48 | PropTOQ - November 19
The INR 25,000 crore fund infusion will be a considerable a m o u n t to address the chronic situations in the starved fund sector. However, there is a need to see the modalities of implementation, mainly as time is the essence of delayed projects.
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COMMERCIAL REALTY
OFFICE RENTALS ON UPSWING
Strong demand for offices coupled with low vacancy have led to rental growth in IT/ITeS dominated cities such as Bengaluru, Hyderabad and Pune. Rentals in office spaces have grown by more than 5% on a Y-o-Y basis during the third quarter of 2019 as compared to the corresponding period in the previous year. These cities are becoming preferred destinations for occupiers who are expanding their footprint. Availability of developable land and higher rental arbitrage is making it easier for occupiers to look at these cities.
rates. As a result, average rents increased by 5% on an annual basis. The strong demand has restricted This was driven primarily by the SBD vacancy levels to single digits despite increased by 9% on a Y-o-Y basis. and Suburbs (Hinjewadi) submarkets addition of more than five million sq The city of Bengaluru continues ft in Hyderabad and more than three to reflect India’s growth story which saw increased activity. million square feet in Bengaluru in Q3 in truest sense. As availability of Big metro cities like Mumbai and 2019. ready - to - move - in Grade A office Delhi NCR witnessed negligible rental change in Q3 2019. With a Mumbai and Delhi-NCR are the only spaces remained constrained, rents limited supply of Grade A commercial exceptions, where office rentals have witnessed a substantial increase of 6% on a Y-o-Y basis with good quality properties in the Mumbai market, not shown any movements. In both select submarkets like BKC are buildings witnessing a steady upward these cities, their most sought-after movement. Tenants are vying for tilting towards becoming landlord business districts like BKC in Mumbai favourable and the rents are expected and DLF Cyber City in Delhi-NCR and agreeing to pay premium rental are experiencing vacancy to go up in the short term. levels less than 5% with Delhi-NCR’s story is no healthy rental movements. different. DLF Cyber City is Q3 2019 Y-o-Y Q3 2018 CITIES However, as a whole, there a leading example where (₹ per sq ft (₹ per sq ft Growth (%) per month) per month) are many peripheral and we are observing healthy suburban business districts upward pressure in rental 68.83 72.93 6% Bengaluru in these two cities, with momentum already. 56.20 9% 51.50 Hyderabad high vacancies, leading Today, the availability 68.17 5% 64.81 to almost non-existent Pune of ready-to-move - in rental movements when 52.14 3% 50.83 premium office spaces Kolkata observed from a macroremains constrained, 59.00 4% 57.00 Chennai level. especially in the core 123.87 1% 122.76 Mumbai submarkets. Against this, Considering the city 77.25 -1% the occupier interest in wise trends, Hyderabad, Delhi-NCR 77.86 quality office assets is high Bengaluru and Pune Source: JLL as cities like Hyderabad and have emerged as top Bengaluru witness strong performers.For Hyderabad, the year 2019 so far has witnessed amounts for high quality office spaces pre-commitments. The demand in the office market is expected to an absorption of 4 mn sq ft of Grade and projects developed by reputed grow strongly in the next few years. A office space. The continued builders of the city. In Pune, sectors such as co-working With time, this growth in commercial expansion by IT/ ITeS occupiers combined with increasing interest and consulting have gained share demand is likely to transfer into higher residential demand which augurs from large co-working occupiers like in the last few quarters . The rental arbitrage opportunities and growing well for the future of the real estate WeWork led to a substantial increase in the rental values. Hitec City drove office market in the city is attracting market in India. corporates to set up their offices in the Samantak Das - Chief Economist the rental values with select projects commanding higher rentals when city. With increasing absorption and and Head Research JLL India decreasing vacancy, rents in Pune compared to the average market
50 | PropTOQ - November 19
COMMERCIAL REALTY
INFINITY SPACES IN EXPANSION MODE Infinity Spaces is planning to take 200,000 sq. ft. office area on lease in Gurugram, Pune, Bangalore, and Indore as part of its expansion plans .
The Noida based start-up has recently taken space on Noida expressway to set up corporate office spaces which will be providing lockable spaces to the start-up companies. Founded in 2012, Infinity Spaces is a corporate office space solutions provider, offering services at an affordable cost at prime locations. With 12 corporate office spaces spread over 25,000 sq.ft. in Sector 63, Noida and having more than 100 offices with 99 per cent occupancy rate, the company is planning to spread its wings keeping the market demand in mind. Infinity Spaces offers fitted out space (ready-to-move) as per the requirement of the client,
which helps to minimize the initial fund outflow of the startup companies. Also, they are known for providing quality basic amenities in the offices that reduce the setup cost of start-ups. “From office table to fully-furnished meeting rooms and from the pantry to private customized commercial space, we have everything that makes the office space complete. Our trained team ensures smooth management of the client’s infrastructure requirements and administrative services” according to Vishu Goel Founder, Infinity Spaces.
November 19 - PropTOQ | 51
VIEW POINT
DEMONETIZATION HITS INVESTMENT, PROLONGS RECOVERY Despite helping to formalize business, making transactions transparent and rationalizing property prices, liquidity crisis generated by demonetization that marks three years, has prolonged the recovery of real estate.
The real estate sector, which had historically served as a safe haven for black money, was struck by one of the biggest cleansing measures by the government in the form of Demonetisation on 8 November 2016. It coincided with the period when the housing sector was reeling under slow sales and increasing inventory overhang for around three years. Furthermore, it was looking up to some form of recovery, with the climate steadily becoming conducive to trigger the fence-sitters for making their home purchases, on the back of government measures such as Smart Cities, Housing for All 2022 and AMRUT. However, with demonetisation, the real estate sector was inflicted with a significant disruption, which further postponed its recovery process. Demonetization sucked out a lot of liquidity from the system, by slowly depleting the parallel cash economy. Other reform measures introduced around the same time also had a significant impact on the real estate sector. The Real Estate Regulatory Authority (RERA), introduced in 2016, created a crunch on the supply side for some time till all the projects became RERA certified. The Insolvency and Bankruptcy Code (IBC) also produced some level of uncertainty for several developers who had weak finances, which led to many companies shutting shop. The Goods & Services Taxes (GST), which was introduced to formalize the sector, also added to the woes in the interim.
What's even more alarming is that the future sentiment, or the outlook for the coming six months, has also turned 'pessimistic' for the first time for the real estate stakeholders. In terms of zonal data as well, all the zones have seen a reduction in their respective future scores since the demonetization Demonetisation targeted those period of Q4 2016. unscrupulous practitioners who The demonetization decision was also evaded taxes and black money expected to rationalize prices, which holders who could use such currency is reflected in house prices that have to inflate market pricing artificially. corrected by 30% in some markets. Demonetisation did leave many However, that has not revived demand willing homebuyers cash strapped for actively from domestic buyers or NRIs a while but only to infuse the system Potential buyers are only buying if with greater transparency. The buyer there is a need to self-occupy, and is confident now that builders or real speculative buyers are staying away estate agents cannot cheat him and from the market, thereby contracting cannot demand unaccounted money. the market size significantly. The The move also pushed banks to go residential market has begun to revive in for home loan rate cuts, making from the affordable end of the market, buying homes cheaper. and there is a slow and steady increase the markets to adjust to the paradigm shift and structural changes. The sector’s transformation towards transparency and formal business practices may have impacted the housing sales in the short-term, but all of us would agree that it was a muchneeded change.
However, three years have passed since Demonetisation, but the real estate sector is still far from recovery, with around 4.5 lakh houses remaining unsold in the market as on June 30, 2019. As measured by the Knight Frank – FICCI – NAREDCO Real Estate Sentiment Index, the current sentiment index of the real estate supply-side stakeholders has plummeted to 42 in the JulySeptember quarter of 2019 (Q3 2019), a level previously seen during the demonetisation period (41) in the last quarter of 2016. It has happened despite a slew of measures to arrest the slump by the government and the On the whole, the combined impact Reserve Bank of India (RBI) to boost was massive, and it took some time for liquidity and revive demand.
52 | PropTOQ - November 19
Shishir Baijal
in buyers.
However, buyers are currently observing the growth in the Indian economy before taking buying decisions. To sum it all, while the measures like demonetization have surely formalised the real estate sector, ably helped by policy measures like GST and RERA, the recovery is not in sight anytime soon due to a severe liquidity crunch and the overall economic slowdown. However, the positive news is the government is privy of the issue and is taking measures to solve both supply and demand related issues, which will surely help in giving momentum to the recovery of the sector.
GROUND REPORT
REALTY GAINING GROUND
With housing sales increasing by 14% and office segment net absorption witnessing a robust 40% growth in the first nine months of 2019, real estate is steadily gaining ground.
After witnessing a revival of sorts in 2018, the housing sales in the top 7 cities (Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata) have seen a growth of 14% during January-September period of 2019, as per India Real Estate Market Update Q3 2019. The office space segment has registered a jump of 40% as against the same period last year. However, according to the report, housing sales during the period couldn’t touch the levels seen in the pre-demonetisation era, when nearly 120,000 units were sold across the top seven markets. Compared to this, the top seven markets during the JanuarySeptember period of this year witnessed a sale of 115,000 units. Mumbai, Bengaluru and Delhi NCR continued to account for 60% of the total sales during the period. During the July-September quarter of 2019 (Q3), sales momentum remained the same as compared to the corresponding period of 2018. Existing unsold inventory has come down as a result of a steady momentum in sales and drop in launches across the top seven markets. The third quarter of 2019 saw a moderate decline in new launches of 4% on a Y-o-Y basis. Except for Mumbai and Delhi NCR, all the other cities witnessed a dip in new launches in Q3 2019. Mumbai and Bengaluru continued to dominate new launches and formed more than 60% of the overall launches during the quarter.
54 | PropTOQ - November 19
GROUND REPORT
Residential Sector Update PROJECT
YTD 2016
YTD 2017
YTD 2018
YTD 2019
YTD
YTD 2018
YTD 2019
Q3
Launches
105,566
69,441
121,426
Sales
119,672
72,285
101,283
110,593
-9%
39,133
37,544
-4%
115,073
14%
37,324
36,826
Unsold Inventory
433,881
422,556
446,117
-1%
444,673
-0.3%
446,117
444,673
-0.2%
Y-o-Y Growth 2019
Y-o-Y Growth
Source: Real Estate Intelligence Service (JLL), (Figures in number of units)
According to Ramesh Nair, CEO & Country Head, JLL India, the revival seen in housing sales in 2018 has been maintained during 2019 as well. Developers are focusing on the timely delivery of launched projects and trying to clear their unsold inventory. Since the beginning of the year, several measures, including a cumulative 110 bps rate cut have been announced to help the sector revive and grow. While banks are yet to transmit the rate cuts by a corresponding reduction fully transmit the rate
Solutions, and Strategic Consulting.
completions.
The third quarter has only strengthened the growth narrative of office market set out at the beginning of this year. Nearly 11 mn sq ft of Grade A office space was absorbed during the third quarter (July-September), increasing the overall countrywide net absorption by 40% to about 33 mn sq ft in the first nine months of the year. To put things into perspective, 2017 and 2018 witnessed net absorption of 28.7 mn sq ft and 33.2 mn sq ft
Among all prime markets in the country, Hyderabad topped the chart in net absorption and new completions, registering a 36% and 44% market share, respectively, on the two parameters during the July-September quarter. Bengaluru and Delhi-NCR market followed Hyderabad in net absorption and new completions. At the same time, quality commercial supply continued to be constrained within Mumbai.
The office market across the top seven cities in India has performed YTD 2019 Y-o-Y Q3 2018 Y-o-Y Q3 2019 well in 2019. (mn sq ft) Growth (mn sq ft) (mn sq ft) Growth From the 32.7% 40% 5.3% 10.9% 105% launch of the country’s first 36.2% 42% 6.2% 11.9% 92% real estate 13.2% 13.7% 13.2% investment trust (REIT) to Source: Real Estate Intelligence Service (JLL) a historic high in office space respectively in the entire year. With leasing, this year has been remarkable the current pace, the net absorption by all standards. Investors, domestic is likely to surpass the historical and foreign alike, have been chasing benchmarks well beyond 40 mn sq ft investment-ready commercial assets by the end of the year. and development opportunities in The country also witnessed stronger top cities. The demand in the office market is expected to grow at a new completion during January to September 2019 period. Registering similar momentum for the next few a growth of 42%, y-o-y, 36 mn sq ft of years, believes Samantak Das, Chief new office space was added to the Economist and Head of Research & stock. More significantly, the new REIS, JLL India. completions in the first nine months The co-working operators have put of the current year have already in sustained efforts in expanding surpassed the levels witnessed in the their footprint, with their leasing last three years. share going up significantly. While
Office Market Update PROJECT
YTD 2018 (mn sq ft)
Net Absorption
23.4
New Completions
25.5
Vacancy
13.7%
cuts by a corresponding decrease in lending rates, this has strengthened consumer sentiment. As per the report, developers have continued to concentrate on the mid and affordable segments. However, new launches in this segment have reduced in most of the cities, mainly attributable to the already existing substantial number of underconstruction units in this segment. Going forward, a surge in sales will primarily hinge on improved consumer confidence and rising affordability, which in turn depends upon the effective and uniform implementation of progressive government policies and regulations such as RERA across all the states. The residential sales will improve going forward with the lowering of bank lending rates. For now, buyers will continue to incline towards ‘nearing completion’ and ‘ready to move in’ properties in the backdrop of challenges on timely deliveries of projects, according to Siva Krishnan, MD - Residential Services, Developer
According to Nair, the country’s regulatory scenario relating to REIT has also come a long way and is now a piece of established machinery for investors and occupiers. As a result of this, the office segment offers significant incentives for investors and occupiers in terms of returns and savings, respectively. The market is now heading towards tremendous growth. The year 2019 is expected to set new benchmarks in terms of new
the pace of leasing in the co-working segment remained muted during Q3 2019, space taken up by operators increased to 13% of the overall rental from January to September 2019 as compared to 10% seen during the corresponding period the last year, it said.
November 19 - PropTOQ | 55
FACE TO FACE
Jaxay Shah
REAL ESTATE REMAINS FIRST PREFERENCE FOR INVESTMENT
Under the dynamic stewardship of Jaxay Shah, Ahmedabad based Savvy Group has established itself as a strong and reliable real estate player over two decades of its operations, with prestigious projects like a 900 acre signature golf living - Kensville and first Leed certified commercial green project of Ahmedabad. Shah who is also the Chairman of CREDAI, an apex body of developers in India , in this interview talks about the crisis gripping the real estate sector, government's initiatives to revive realty, growth prospects of real estate ,particularly in tier 2-3 cities like Ahmedabad in the regulated real estate scenario and its attractiveness as an asset class for investment. Excerpts.
- Vinod Behl 56 | PropTOQ - November 19
FACE TO FACE Why do you think despite landmark reforms undertaken by the government, real estate sentiment index is still quite low and revival is eluding the sector, mainly residential realty? We are all aware that there have been numerous factors that have led to negative sentiment in the real estate industry in India – the overall slowdown in the consumption, NBFC crisis, bankruptcies, and so on. I feel that the current crisis is temporary, and we will see the positive effects of the measures taken to firm up the growth. It may take some time; however, there is no cause for any panic. What's your take on government's recent initiative to provide Rs 25,000 crore liquidity lifeline for stalled housing projects? How effective will it be in helping aggrieved home buyers and boosting business sentiment? This recent move is the most significant boost for the sector and will have a far-reaching positive effect, which will surpass the figure announced. It is just not a 25,000 Crore lifeline, but the overall positive impact will exceed 1.25 lakh crore. It will help developers of RERA registered stalled projects to complete construction and deliver projects, even in the case where the developer is a bank defaulter. The fund will be utilised for development, whereas the sale or the realisation value will be higher. As stalled projects receive lifeline, it will help buyers who have booked to get delivery of their dream homes.Moreover, it will help to regain customer confidence which will lead to higher sales for the remainder of such projects.
Investments into the Indian real estate continue to show an upward trend year on year. We are also seeing newer emerging segments which are making inroads into tier 2 and tier 3 cities. November 19 - PropTOQ | 57
FACE TO FACE
Regulated real estate industry has created a very professional and transparent environment for both buyers and developers.
As liquidity crisis is weighing heavily on real estate and ongoing consolidation is benefiting big players with financial prowess, how do you see the prospects of small and medium companies like yours? Consolidation is a continuing process, and credible and organised developers with a good track record will always find the right opportunities and buyers for their projects. It holds across companies in different segments and sizes. With regulated and transformed realty, how do you look at the growth prospects of tier 2 and
58 | PropTOQ - November 19
tier 3 cities, Ahmedabad?
especially
Regulated industry has created a very professional and transparent environment for both buyers and developers across segments. The industry is getting more organised, and today a buyer knows clearly what he’s looking at, the approval status, what is the exact carpet area, delivery time, bank loans availability and so on. It has only had a positive impact. It has not only made the buyers more aware but also more confident as they are now clear on various aspects, and it is easier for them to make a confident purchase decision.
FACE TO FACE What is the business plan/ strategy of your group in terms of expansion, new launches, entering new geographies and newer asset classes? We are currently in the process of expanding and launching new commercial and residential schemes in Ahmedabad. Apart from Ahmedabad, we are also in the process to expand in other states in the commercial and residential space. According to you, how attractive is real estate as an asset class vis a vis other asset classes, both for domestic and foreign investors? Real estate will continue to dominate as the first preference for investment vis a vis other asset classes. There is a natural pride and a sense of responsibility in owning a property, be it a residential home or commercial property or weekend plot. People are not well versed with the workings of the capital market, and there are huge risks involved. On the other hand, in real estate, one is assured that there is a property which can be occupied, leased, and so on irrespective of the market trend. Plus real estate returns are steady over a long term period and are less susceptible to price fluctuations. Even among NRI’s, we notice that the majority of them prefer to invest in real estate over any other asset class. And with the sector now becoming better governed and organised, on back of reforms and new laws, it has opened up new avenues of growth for even institutional investors. Investments into the Indian real estate continue to show an upward trend year on year, we also are witnessing new segments such as co-working and shared living coming up; which are also now making inroads into Tier 2 and Tier 3 cities. Post the last global financial crisis, India has gradually developed into an investment destination of international repute. Challenges and business cycles will always be there; however, the overall growth potential will continue.
Consolidation is an ongoing process and credible and organised developers with good track record will always find the right opportunities and buyers for their projects. November 19 - PropTOQ | 59
CORPORATE LADDER
VIVEK ANAND JOINS AS NEW CFO OF DLF
Vivek Anand has taken over as the new Chief Financial Officer of DLF Limited. Anand was earlier CEO India Sub Continent and board member at GlaxoSmithKline Consumer Healthcare. He has 25 years of experience in India, Singapore and Bangladesh and has been a business leader at Unilever, Telenor and GSK Consumer.
Vivek Anand CFO - DLF Ltd.
Vivek will lead the group's finance, treasury, investor relations and IT functions. He will take over these responsibilities from Ashok Tyagi who continued to be Whole Time Director and was acting CFO of the company.
BV Krishnan Quits As Head, KKR India NBFC
Urban Ladder CoFounder Rajiv Srivatsa Quits
B V Krishnan
Rajiv Srivatsa
The Chief Executive Officer of KKR India's non- banking financial company (NBFC), B V Krishnan fas stepped down citing personal reasons.
Urban Ladder Co-Founder, Rajiv Srivatsa has resigned after 8 years of association with this startup which he founded with Ashish Goel.
KKR India's CEO, Sanjay Nayar will now take over the reins of KKR India Financial Services that provides structural funding, promoter financing, acquisition funding and
Srivatsa will transition from his current role as chief product and technology officer, but will continue to engage with the company's board and promoters on strategic
mezzanine financing.
initiatives.
60 | PropTOQ - November 19
Rajani Sinha Is Chief Economist Knight Frank India
Knight Frank India, one of the leading international property consultants, has inducted Rajani Sinha as the Chief Economist and National Director-Research in order to further strengthen its research and thought leadership position in the industry. Rajani comes with a strong and illustrious track record having worked as a senior economist in companies such as Kotak Mahindra Bank, JM Morgan Stanley as well as Dun & Bradstreet over a career spanning close to two decades. Her last assignment was with Aditya Birla Management Corporation Pvt. Ltd. as Vice President, Senior Economist. In her role at Knight Frank India, Rajani Sinha will lead a strong team of researchers and provide strategic and innovative insights to take Knight Frank India's research capabilities to the next level.
SS Sandhu Takes Charge As NHAI Chairman
SS Sandhu has taken over as the chairman of National highway Authority of India. He succeeds N N Sinha who has been appointed as the Secretary, Department of Border Management. An IAS officer of 1988 batch Uttarakhand cadre, Sandhu has vast experience in field of state roads, infrastructure development, PPP projects, urban development, rural development etc. Prior to his current assignment, he looked after technical education including IITs, NIT's, SPAs etc.
DESTINATION REPORT
DWARKA EXPRESSWAY GURUGRAM
PROMISING TIMES AHEAD - Nivriti Raj
As the sentiments of buyers and investors gain momentum with a large number of marketable projects and upswing in supply, sale, and prices, Dwarka Expressway, which is nearing completion, can become a potential residential investment hub of Gurugram.
62 | PropTOQ - November 19
Dwarka Expressway connects western parts of Delhi with Gurugram and is considered as an integral part of the Delhi Mumbai Industrial Corridor (DMIC) project. On completion, it will witness a boost in industrial development along its alignment. Investors and homebuyers are flocking to the Dwarka Expressway realty market. Besides end-users from Gurugram, the Dwarka Expressway micro-market is also capitalizing heavily on buyers from nearby regions in Delhi, such as Paschim Vihar, Dwarka, Janakpuri, Vasant Kunj, etc. As demand is going up, prices have started moving northwards, and transaction volumes are expected to rise further, especially as the longdelayed expressway looks set to get a big infrastructure boost following its completion in a couple of years.
DESTINATION REPORT
Dwarka Expressway Realty Market Snapshot Parameter
Q4 16-17
Q1 17-18
Q2 17-18
Q3 17-18
Q4 17-18
Q1 18-19
Q2 18-19
Q3 18-19
Q4 18-19
Q1 19-20
Marketable Supply (Unit)
9476
9102
8397
7131
6380
6910
6840
7941
7589
8000
Sales (units)
614
957
1345
806
906
621
800
998
588
1272
Unsold inventory (units)
8862
8145
7052
6325
5474
6289
6040
6943
7001
6728
Months inventory
43
26
16
24
18
30
23
21
36
16
Source: PropTOQ Datalabs
In the last ten quarters, Dwarka Expressway has witnessed a tremendous change in its market sentiment on the back of construction work getting speeded up by Delhi and Haryana governments, especially after the go-ahead given by the Delhi government to complete the pending work. It is evidently clear from the above data that with enhanced supply & sale of housing units and substantial improvement in inventory, there is an upsurge in the market. As transaction volume has picked up over the previous 12 months, there has been a considerable dip in the inventory overhang. A whopping 116% Q-o-Q increase in sales of housing units has been registered in Q1 2019-20 over Q4 2018-19. The spike in sales and reduction in unsold housing units signifies the revival of investors and homebuyers' interest and their
sentiment. In Q1 2019-20, the months' inventory was the lowest in the past three years, and the Dwarka Expressway micro-market maintained a healthy supply and absorption ratio of housing units. Months inventory during Q1 2019-20, witnessed improvement by 56% over Q4 2018-19. The recent announcement of repo rate cut by RBI and linking of housing loan with the repo rate ahead of the festive season will spur demand and further uplift the sentiment of investors and home buyers. Notwithstanding the long delay faced by Dwarka Expressway, the hope generated for early completion of the remaining stretch of the expressway has pushed up the average prices of the residential properties. This micro-market registered healthy demand and supply of new housing units, which in turn checked the prices of
properties going southwards. Currently, the average prices in Dwarka Expressway hover around Rs.5, 581 per sq.ft, registering a rise of around 3.5% in the last three quarters of 2019. Amidst the current slowdown, Gurugram is the best performing real estate market in the entire NCR, though many micro-markets of NCR have registered negative capital appreciation. An upward movement in prices on Dwarka Expressway has put this micro-market ahead of its peers in Gurugram, such as Golf Course Road, Golf Course Extension, and New Gurgaon. Only New Gurgaon outperformed Dwarka Expressway with regards to the capital appreciation of residential properties, whereas Sohna Road registered marginal price depreciation in the same period.
Comparative Quarterly Price Analysis of Dwarka Expressway with other micro-markets of Gurugram (Jan-Sept’2019) 4.2%
2.7%
3.5%
3.1%
New Gurgaon
Golf Course Road
Dwarka Expressway
Golf Course Extension
Sohna Road
-0.8%
November 19 - PropTOQ | 63
DESTINATION REPORT
PROJECTS AT A GLANCE Project Name
Developer Name
Location
BSP (₹/sq.ft)
Shapoorji Joyville
Shapoorji Pallonji
Sector 102
5,600
Hero Homes
Hero Group
Sector 104
5,500
Godrej Meridian
Godrej Properties
Sector 106
7,571
Sobha City
Sobha Developers
Sector 108
8,500
ATS Tourmaline
ATS Infrastructure
Sector 109
6,714
Tata La Vida
Tata Housing
Sector 113
7,650
Chintels Paradiso
Chintels India
Sector 109
6,500
Raheja Vanya
Raheja Developers
Sector 99A
4,775
Experion The Westerlies
Experion Developers
Sector 108
6,565
Puri Emerald Bay
Puri Constructions
Sector 104
11,454
Shapoorji Pallonji Joyville Dwarka Expressway, Sector 102, Gurgaon
64 | PropTOQ - November 19
DESTINATION REPORT Over the last three quarters of 2019, Dwarka Expressway has done exceedingly well compared to other micromarkets of Gurugram. New residential supply from Q1Q3’19 period stands at 1,799 units, out of which 1,360 units were sold.
Currently, there are over 55 marketable projects. As the sentiment of buyers and investors continues to gain momentum, big developers will continue to propel the market. Dwarka Expressway also has larger parcels of land which is further drawing developers to this market.
As we compare the Dwarka Expressway realty market with other micro-markets of Gurugram, we find that
By and large, all litigation issues have been resolved
Unit Type Analysis (Annual Sales)
2.4% 2.8% 5.9% 8.8% 44.6% 33.5%
1 BHK 2 BHK 3 BHK 4 BHK +4 BHK Villas/Row Houses
it has performed better than others. Only New Gurgaon outperformed Dwarka Expressway in the last three quarters of 2019 in terms of new launches of residential properties. Still, in terms of units sold, Dwarka Expressway has surpassed all micro-markets in Gurugram.
and with the final nod to the construction of the Delhi portion of Dwarka Expressway, it is expected get completed within the next 24 months. These positive developments have contributed to pushing up new launches and sales of units. The Dwarka Expressway realty market is a major hub for budget and mid-segment homes in Gurugram. Sectors like 104, 106, 112 & 114, which
As capital appreciation in and around Dwarka Expressway is going up, developers are embarking on new launches.
are near Delhi, command premiums over other sectors of Dwarka Expressway realty market. With a share of 46.6% of overall sales, 2 BHK units (700 - 2250 sq.ft) are most favored, followed by 3 BHK units(900 - 2750 sq.ft) having a share of 33.5% of over all sale. Surprisingly, around 2.8% of the total annual units sold in Dwarka Expressway are villas and row houses. Sectors such as 103, 99, 104, 107, 99, 109, and 99A registered the highest number of residential units sold in the last three quarters of 2019. The buzzing Dwarka Expressway micro-market in the recent past has witnessed many retail and office commercial developments. It is one of the best affordable residential realty markets in Gurugram as compared to other micromarkets. Currently residential properties are pegged at Rs. 5, 581 per sq.ft in the Dwarka Expressway micro-market. These are affordable in comparison to properties on Golf Course Road, Sohna Road and Golf Course Extension by 121%, 35%, and 56% respectively. Apart from the new property purchase, the rental market of Dwarka Expressway is equally lucrative than other micro-markets of Gurugram. Presently, Dwarka Expressway enjoys a rental yield of around 2.52%, which is as attractive as the capital appreciation of new residential home purchases.
New Launches and Units Sold in key micromarkets 4,350
1,799
1,360
1,189
1,106
1,155
143 Dwarka Expressway
Golf Course Extension
New Gurgaon New Launch
701
Sohna Road
616
175
South of Gurgaon (Sohna)
Sold Unit's
November 19 - PropTOQ | 65
DESTINATION REPORT
Housing Price Movement Avg. Housing Price Trend 6,000 5,084 5,000
4,729
4,426 4,881
4,811
4,753
5,215
5,271
5,385 5,581
5,561
4,899
₹ Per Sq. Ft.
4,000
3,000
2,000
1,000
0,000
Oct-Dec16 Jan-Mar17 Apr-Jun17 Jul-Sep17 Oct-Dec17 Jan-Mar18 Apr-Jun18 Jul-Sep18 Oct-Dec18 Jan-Mar19 Apr-Jun19 Jul-Sep19 Q-o-Q
Source: PropTOQ Datalabs
Investment Outlook
Average Price of Residential Properties in Dwarka Expressway & Others Gurugram Micro-markets 12,369
₹ Per Sq. Ft.
14,000 12,000
8,689
10,000 8,000 6,000
7,522 5,581
5,362
4,000 2,000 0,000
New Gurgaon
Golf Course Road
Dwarka Expressway
Golf Course Extension
Sohna Road
Localities
PropTOQ Perspective The upcoming infrastructure developments like Diplomatic Enclave, India International Convention & Exhibition Centre (IICE), the extension of Delhi Metro Rail along Dwarka Expressway, and development of industrial clusters in and around this micro-market will spur growth in near future. The construction of the remaining portion of Dwarka Expressway is underway. Once it gets completed, it will boost the connectivity of Gurugram with
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the western parts of Delhi as well as with Delhi International Airport (IGI). The Dwarka Expressway realty market has witnessed the development of retail & commercial office spaces and improvement in physical and social infrastructure development over the last two years. Due to the reasons mentioned above, PropTOQ has a positive outlook towards the Dwarka Expressway realty market. The rally of residential prices is expected to continue despite the
general slowdown in the real estate market due to positive infrastructure developments and surge in buyers' and developers' interest in this market. The availability of land parcels in abundance, among others, is other factors that attract developers and investors towards Dwarka Expressway. PropTOQ forecasts an upward movement of 3-4 percent in prices in the next three quarters.
FINTECH
CREDIWATCH RAISES ₹ 23 CRORE SERIES A FUNDING
Bengaluru-based Crediwatch, a techfin company that builds artificial intelligence (AI) and machine learning (ML) tools to help the financial services industry reduce credit risk, has raised $3.2 million (about Rs 23 crore) in Series A funding. This is the fourth round of funding for the company. According to Meghna Suryakumar, Founder and CEO, the funds raised will be used to accelerate research and development (R&D) and commercialisation of AI platform and to get more clients. Artis Labs lead the current round of funding. Other new investors in the series include Abstract Ventures. Earlier, Crediwatch had raised $1.6 million (about Rs10 crore) funding from Modern India Limited, family offices of VK Jatia, Contrarian Vriddhi Fund, Vaibhav Domkundwar of Better Capital, Mekin Maheshwari (Flipkart), and Pithambar Gona (former MD of Blackstone
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Private Equity Asia). Crediwatch has developed an early warning system (EWS) for banks and non-banking financial companies (NBFCs) that can help monitor their loan portfolios in near real-time by using both public and private data. The company’s offering assumes importance in the background of the massive pile of bad loans at most of India’s banks and non-banking financial companies (NBFCs). State Bank of India, Karur Vysya Bank, Aditya Birla Finance, and RBL use the system for credit appraisal. According to Crediwatch, less than 15 per cent of the over five crore small
businesses in India have access to formal credit. Crediwatch says it offers a dynamic ‘Trust Score’, which is derived from millions of data points that are extracted and analysed from across thousands of formal and alternative sources to help lenders assess borrowers and monitor them at near real-time. Such an environment requires a dynamic business information exchange that can create transparency and continuous monitoring of borrowers to weed out bad cases early on. Crediwatch, according to Suryakumar, work helps measure trust through verifiable data, insights and ethical behaviour.
INTERNATIONAL ROUND UP
LONDON : PRIME PROPERTY DESTINATION FOR INDIAN INVESTORS
London property market continues to remain one of the preferred overseas destinations for wealthy Indians, with Mayfair, Belgravia, Hyde Park, Marylebone and St John's Wood emerging as hottest investment locations, outdoing Singapore, Australia, United States and Canada. Brexit-related political uncertainty is the primary reason, however, that some buyers and vendors are still hesitating, the London SuperPrime Sales Report said, adding that, once the political
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uncertainty recedes, the level of pent-up demand that has formed in recent years is likely to start moving and suggests that the conditions are in place for an increase in trading activity.
Shishir Baijal, Chairman & Managing Director of Knight Frank India believes that London has always been a hotspot for Indian investors
INTERNATIONAL ROUND UP due to its economic and political importance. Despite the recent political and economic developments, the long-term economic fundamentals for the market has remained strong and is therefore continuing to generate interest amongst Indians looking to purchasing properties outside of the country. When compared to investments in Indian markets, the yields for both capital and rental are higher. As the domestic economy hits a slow block, we can expect Indians to continue the momentum of investments in a mature market such as London that offers higher returns and relatively shorter hold period. In terms of super- prime properties or homes priced above 10 million ponds , global buyers spent a total of 2.06 billion in London in the year to May 2019, marginally higher than a figure of 2.05 billion in the previous 12 months as high net worth individuals take advantage of the weak pound. Alasdair Pritchard, Knight Frank Private Office and Knight Frank’s Ambassador to India exudes confidence that London will always remain an interesting market for wealthy Indian buyers. Many have an affinity to it– enjoying the history, the culture and lifestyle on offer. A large number also send their children to the UK to be educated, investing in property at the same time. A key emerging trend amongst Indian purchasers is that there is a younger generation of investors coming through – younger generations of wealthy families who are keen to spend time in other areas of the world including London, the US and Dubai.
November 19 - PropTOQ | 71
INTERNATIONAL ROUND UP
TheWealthiest
Cities
Worldwide in 2019 San Francisco
1
NEW YORK WEALTH $3.0 TOTAL (TRILLION)
2
Tokyo $2.50
WEALTH $2.40 TOTAL (TRILLION)
4
3
TOTAL WEALTH (TRILLION)
WEALTH (TRILLION) $1.40 TOTAL
WEALTH Sydney (TRILLION) $1.20 TOTAL WEALTH $1.10 TOTAL (TRILLION)
9
$2.40 (TRILLION)
5
6 Shanghai WEALTH (TRILLION) $1.90 TOTAL
Los Angeles 7
8 Hong Kong
London TOTAL WEALTH
Beijing
WEALTH $2.10 TOTAL (TRILLION)
10 Singapore
WEALTH (TRILLION) $1.0 TOTAL
12 mumbai
WEALTH $0.96 TOTAL (TRILLION)
11
Chicago WEALTH (TRILLION) $0.98 TOTAL
13 Toronto
WEALTH (TRILLION) $0.9 TOTAL
18
Seoul
WEALTH (TRILLION) $0.78 TOTAL
15 Geneva
WEALTH (TRILLION) $0.85 TOTAL
14 Houston
WEALTH (TRILLION) $0.88 TOTAL
17 Osaka TOTAL WEALTH $0.79 (TRILLION)
19
Paris
WEALTH $0.77 TOTAL (TRILLION)
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20 Shenzhen
WEALTH (TRILLION) $0.75 TOTAL
16 Frankfurt WEALTH (TRILLION) $0.8 TOTAL
VOICES
V. Gopalakrishnan
Sharad Mittal
Ajay Piramal
The liquidity situation in the market is worsening by the day. While we are happy with our sales, we hope the crisis gets some kind of a push for the government.
We are going light in both NCR & Mumbai regions for lack of good developer partners, besides liquidity issues among developers after their NBFC credit squeeze.
One of the reasons why we raised capital now is to demonstrate that even in this environment there are people who are willing to invest in NBFC space.
Shishir Baijal
Amit Bhagat
Anshul Jain
Fund houses given their inclination to invest in modsegment purely residential opportunities, would rather go with the next set if smaller markets.
We have not done any investment in the Mumbai region in four years for lack of good opportunity in mid segment housing.
The funds are chasing a mix of core and core plus assets along with strategic brownf ield / greenf ield opportunities.
Atul Suri
Sanjay Nayar
V. Vaidyanathan
Real estate is in the eye of the storm. when things stabilise, these guys will be market leaders. Hence I would look into that space.
We are seeing an enormous number of opportunities coming out of the credit pressures in the market of controlled transactions.
NBFCs which have largely lent to real estate and corporates without cash flows are having issues. However, I believe that string non-banking lenders who have healthy business models will pull through again.
CEO, Shapoorji Pallonji
Chairman Knight Frank India
CEO, Marathon Trends - PMS
CEO, Motilal Oswal Real Estate
CEO Ask Properties
CEO, KKR India
Chairman, Piramal Enterprises
Country Head & MD India Cushman & Wakefield
CEO & MD, IDFC First Bank
November 19 - PropTOQ | 73
TRENDS
HOT NEW GLOBAL TRENDS IN FLEXIBLE WORKSPACES
As the flexible workspace sector matures, industry-specific offerings are emerging to provide greater diversity and service differing needs. And with new entrants to the Asia market from the UK, Europe and the US, there will be a more excellent range of products. PropTOQ tracks the emerging global trends in co-work/ flexible workspaces across APAC markets. Ever-Increasing Range of Products Flexible workspace will become even more accessible and reach higher parts of the commercial real estate industry with an increasing range of products. In addition to the usual hot desk and private office options, more products are coming to the market such as those pioneered by WeWork, including WeWork GO which allows users to pay-asyou-go. Building owners are also evolving their products, offering fully furnished spaces on flexible terms.
is likely to hit the market, driven in part by yet more new entrants to the Asia market. The shift in products is enabling occupiers to outsource various elements of their real estate portfolio. Well Designed Spaces
As the flexible workspace sector spreads its wings, there is an increasing trend of welldesigned workspaces that offer the end-users a range of work settings. Activity-based working is becoming common in newer flexible workspace locations hitting the market. And as occupiers take larger spaces as A more excellent range of products part of their real estate strategies,
74 | PropTOQ - November 19
this will raise the bar in the workspace design. Tailoring Shared Space to Newer Industries The tailoring of shared space opens the market to a broader range of industries. Like Campfire has customised its offerings at its Whampoa, Hong Kong location to meet the needs of education providers like classrooms, kindergarten, playground and children's cooking schools alongside private and shared offices. At other places, space dedicated to media has recording studios while fashion space has a catwalk area.
TRENDS More Global Players In the longer term, the sector is expected to have 4-5 global operators, some with multi-brand strategies to capture specific market segments, together with a range of smaller local and regional players. They will be targeting MNCs as their client base, providing holistic amenity-rich offerings and have operating models that put the building owner at the core of the deal. Bespoke Solutions As more employees look for workspaces that enable a great day at work with additional amenities like a cafeteria, health club, large co- working areas, community events, many corporate clients are working with players like IWG to build bespoke workspace solutions within the buildings they occupy. Franchising Opportunities Flexible workspace players are taking to franchising as an essential growth tool. IWG has partnered with TKP Corporation in Japan to franchise their entire operations in that country essentially. As the model provides an opportunity for investors to share the success of flexible workspace players, this trend is expected to gain further traction. Landlord-Operator Partnerships As international operators are increasingly looking at leveraging local market knowledge as a way of entering the market; they are forging partnerships with landlords who have increased their exposure to flexible workspaces. In Singapore, which is considered the most mature market in Asia for flexible workspace, Ascendas, Frasers, GIC and Capital Land have made significant investments as well as leased space in their portfolios. In Beijing also, landlords have gone for partnerships with international operators, though some have created their offerings. As more occupiers are identifying buildings with access to the flexible workspace as a preference to allow for flexibility, they should grow beyond their cire office space or for ad hoc projects. As a result, more landlords are developing their concepts to enable occupiers to flex within their portfolio. For example, GPT continues to open their space and CoConcept across Australia. - Colliers International
November 19 - PropTOQ | 75
INFRASTRUCTURE
NHAI WANTS â‚š 25,000 CR MORE BUDGETARY SUPPORT
ADANI PLANS â‚š 18,000 CR INVESTMENT IN AIRPORTS
The National Highways Authority of India (NHAI) has sought Rs 25,000 crore more from the Centre for the next financial year (2020-21), mainly to fund its ambitious highway projects. The NHAI has the approval to raise Rs 75,000 crore in borrowings during the current year, while the government support is Rs 36,691 crore. The NHAI has lined up a portfolio of projects worth Rs 18,000 crore for bidding in the next few months. It includes five hybrid-annuity packages on the Vadodara-Mumbai expressway, four EPC (engineering procurement-construction) packages on the Delhi Vadodara expressway, besides projects in Uttar Pradesh and Bihar. As the budgetary support fails to compensate for the lack of private investment, the NHAI finds itself highly leveraged with its debt expected to touch Rs 2.5 trillion by the end of the current financial year. In FY19, a mix of debt raised from banks, toll revenue, and a road monetisation scheme, was to yield Rs 62,000 crore to the NHAI. This financial year, the allocation has been made to the NHAI for significant works under the Bharatmala Pariyojana, entrusted to the organisation for execution. The money will come from the Central Road Infrastructure Fund (CIRF), the Permanent Bridges Fee Fund, and Monetisation of National Highways Fund. The Bharatmala programme envisages construction of 20,000 km of roads at an estimated investment of Rs 7 trillion. In the first phase to be undertaken over three-five years, the project would cost Rs 5.5 trillion. It would be funded through various sources, including Rs 2.09 trillion from the market, Rs 1.06 trillion through private investment, and Rs 2.19 trillion from the central road fund or toll collection. While the overall allocation for NHAI has seen a rise in the past couple of years, the authority's IEBR (Internal and Extra Budgetary Resources) has increased. IEBR is essentially the money raised by the department itself in the form of profit, debt, and equity. In FY18, the NHAI's IEBR was Rs 50,532.41 crore. It went up to Rs 62,000 crore in FY19 and further to Rs 75,000 crore in FY20.
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Adani Enterprises Ltd (AEL), the flagship firm of Adani Group, has committed an investment of Rs 10,000 crore for airport business by 2026. The government had recently announced that Airports Authority of India (AAI) had issued letters of award for handing over Ahmedabad, Lucknow and Mangaluru airports to Adani Enterprises Ltd after the Cabinet approval.AEL's arm Adani Airport had won bids for six airports recently. The company has committed about Rs 10,000 crore investment for seven years for the airports business. The company will make an upfront payment of Rs 3600 crore for six airport projects and capital expenditure of about Rs 6000 crore over seven years," according to Jugeshinder Singh, the chief financial officer of AEL. The three airport projects are expected to generate revenues from April 2020. Adani Airports Ltd had won bids for six airports -- Ahmedabad, Jaipur, Lucknow, Guwahati, Mangaluru and Thiruvanathapuram for operation, management and development through a public-private partnership model. The AAI will continue to carry statutory functions of providing communication navigation surveillance, air traffic management services, etc., of these airports.
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EVENTS & AWARDS
NEED FOR COLLABORATIVE APPROACH TO ENERGY EFFICIENCY
Experts drawn from different sectors of industry called for a Comprehensive, collaborative and holistic approach to address the challenge of driving energy efficiency and sustainability at the three-day CII Conference on Energy Efficiency. Meher Padumjee, Chairperson, Energy Efficiency Summit, 2019, said that though Indian economy has grown from half a trilliondollar 20 years ago to a near $3 trillion one with the energy demand growing by five times and energy efficiency measures resulting in savings of about 6 per cent, yet a lot has to be done as we set out to achieving our long-term goals of sustainability and meeting 2030 SDGs. Ravichandran Purushothaman, President, Danfoss Industries, said Internet of things, big data and digitalisation have immense scope to play a role in addressing the issues relating to energy
78 | PropTOQ - November 19
efficiency. IoT, machine learning and blockchain technologies could be integrated into the energy efficiency platform and empower people in decision making. Expressing concern about MSMEs not participating in energy efficiency initiatives due to various factors, including lack of finance, Pankaj Sindhwani of Tata Cleantech Capital, said the Energy Service Company (ESCO) model could be one way of addressing their needs. KN Rao, Director of Energy and Environment at ACC, said: "The cement sector is a shining example of how it took to energy
efficiency". It had no option but to take to energy efficiency initiatives as it had to bring down costs and could not pass it on to customers. The energy efficiency measures have now covered practically every aspect of cement factories. Rene Van Berkel of UNIDO Regional Office said there was a need to integrate renewable and other sources of energy into energy efficiency. The experts at the summit felt that energy efficiency should be viewed holistically and not addressed in silos for which both Centre and States should work collaboratively.
EVENTS & AWARDS
SKILL UPGRADATION COURSE
As part of its ambitious programme of skill upgradation to prepare construction workforce for future challenges, CREDAI launched a new batch of Bridge RPL on 30 October, 2019 at Shaikpet, Hyderabad.
CREDAI CARE AWARD FOR SOBHA SOBHA Limited, India's much admired and trusted real estate brand, has been conferred with CREDAI Awards for Real Estate (CARE) 2019 in the category Best CSR Activity by CREDAI Karnataka at an award ceremony held in Bengaluru recently. The award acknowledges SOBHA’s constructive work towards enriching the lives of underprivileged in the society. The award , according to J.C Sharma, Vice Chairman and Managing Director, SOBHA recognises company's unwavering contribution towards building a sustainable community. Since inception the company has developed a human face and taken up the responsibility of building social capital at the grass root level. SOBHA’s CSR initiatives are undertaken by its CSR arm - Sri Kurumba Educational and Charitable Trust. The company’s CSR activities encompasses the areas of education, health, livelihood, and women empowerment – a more holistic
approach to improve the quality of life of the rural masses and to enable the beneficiaries to become selfsufficient. CREDAI CSR Awards was instituted in 2015 to celebrate and honour real estate’s commitment to social development, embodying the principles of corporate social responsibility in their business philosophy and operations. The awards acknowledge efforts of the companies that engage in CSR in a strategic and systematic manner and integrate it with their overall philosophy. The guests of honour at this year’s ceremony were Sri. M R Kamble, IAS, Chairman for RERA Karnataka, Sri. M N Reddi, IPS, Director General of Karnataka State Fire & Emergency Services, Sri Abhijit Majumder, Chief General Officer of SBI Karnataka and Sri. Satish Magar, President of CREDAI.
November 19 - PropTOQ | 79
PROJECT LAUNCH
AMRITSAR
EXPERION VIRSA A 100% FDI - funded Experion Group has launched an integrated township - Experian Virsa in the holy city of Amritsar. The township, spread over 93.5 acres, is strategically located on GT Road, NH 44 with seamless access from the domestic and international airport, railway station and the spiritual and Harmandir Sahib. The gated development is aimed to be self- reliant with all modern facilities and amenities for a modern lifestyle. The themebased township with wide boulevards, open parks are built on the principle of sustainability for conserving
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resources by way of rainwater harvesting and other advanced recycling systems. To be developed in phases, Experion Virsa in its first phase offers plots ranging from 153 sq mt to 633 sq mt. The plots are available for Rs 11000 per sq yard, starting from Rs 25 lakhs. The township will have facilities such as supermarket, community centre, multipurpose courts, hockey and football grounds, lawn tennis court, cycle tracks, kids play
area. According to Ananta Singh Raghuvanshi, Senior Executive Director, Experion Developers, Experion Virsa will not be a just brick and mortar township but an architectural marvel with definitive design, strong character and a native soul, making it a proud possession and invaluable asset for those who buy it.
PROJECT LAUNCH
HYDERABAD
SUMADHURA HORIZON
Sumadhura Group, one of South India’s leading realty majors has come up with its new iconic premium residential project ‘Sumadhura Horizon’ at Masjidbanda main road, Kondapur, Hyderabad. The Rs300 crore high-rise luxury project is spread over 5.04 acres with 72% open space, offering 486 functionally planned 2, 3 and 3.5 BHK well-designed units ranging from 1325-2710 square feet sizes across 4 towers.
This 18-storey apartment complex, offering a magnificent view of the surroundings, is designed to provide optimal-sized living spaces, luxury, comfort and functionality for residents to experience modernday living. This luxurious gated community in Kondapur is close to bus and railway station, top-end IT Parks, retail hubs, educational and healthcare facilities, five-star hotels, premium restaurants and entertainment destinations. Sumadhura Horizon comes at the back of the 300-crore premium residential project ‘Sumadhura Acropolis’, a 564 unit and 32 floors property, in Gachibowli Hyderabad which is scheduled to be completed by December’ 2019. According to Madhusudhan G, Chairman and Managing Director of Sumadhura Group, this is a
unique project as it offers an array of amenities catering to the entire spectrum of customers, from aspiring yet quality-conscious local population to NRIs and investors alike. Living at Sumadhura Horizon will provide its owners with the unique advantage of being flanked by an already expanding IT hub which is well-connected to all the social infrastructures and create an enticing value proposition for the home-buyers. Over 150 units were booked on the first day of the prelaunch. With top cricketer, M S Dhoni as the brand ambassador, Sumadhura Horizon offers clean and quiet environment with sustainable design parameters focussing water and waste management, vastu compliant floor plans, well-ventilated internal spaces and enduring construction
quality. It houses a mega 28000 sqft clubhouse ,providing a plethora of sports activities and a state-of-the-art gymnasium. Sumadhura Horizon homes are fitted with all the global brands one can think of. This premium project also features guest suites, work from home cabins. av room, library ,a multipurpose hall, kid’s play area, indoor games and multiple sports facilities like table tennis, work from home cabins, badminton court, squash court, swimming pool, kid’s pool, billiards, aerobics. The designer landscaped greens and other amenities match today's pace and standard of smart living.
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PROJECT UPDATE
SUNRISE, KARNAL
SETTING NEW BENCHMARKS IN DELIVERY
Signature Global Group, the pioneers in affordable housing, has once again lived up to the trust of home buyers by achieving the distinction to deliver a part of its affordable housing project- Sunrise in Karnal before the scheduled delivery time. The company has readied 66 units for offering possession, and families are already staying there.
Signature Global, the pioneers of affordable housing, has set the benchmark of delivering homes six months ahead of the stipulated deadline. There are 66 ready-tomove-inn units out of the total of 348 units measuring 115 square yards while ten families have already shifted in the project. The construction of the project was started in April 2018, and the completion certificate was received in February this year. The complete project will be delivered until June 2020. Before this, in 2018, Signature Global had given possession of their affordable housing project- Solera
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in Sector 107, Gurugram, under the Haryana Affordable Housing Policy, four months ahead of the mandated timeline. By the end of this year, Signature Global will be delivering two more projects- Synera in Sector 81, NH8, Gurugram (824 units) and And our Heights in Sector 71, NH8, Gurugram (980 units) in Gurugram, complete with retail centers. The company has already launched 11 affordable group housing projects across Haryana in prime locations of Gurugram, Sohna, and Karnal under the Haryana government's Affordable Housing Scheme, offering a total of 10737 units.
Says Pradeep Aggarwal, Founder & Chairman, Signature Global and Chairman, Assocham National Council on Real Estate, Housing and Urban Development, "Living up to our mission of 'Har Parivar Ek Ghar' to support PM Narendra Modi's Housing for All Mission', we are honoring the trust of home buyers by not just delighting them with high quality, well designed homes, but also by delivering homes well before time by way of deploying modern mass housing technology of Aluminium Form Work".
ALTERNATE ASSET CLASSES
MORGAN STANLEY FUND EYES WAREHOUSING SPACE Morgan Stanley, which discontinued investing in the real estate sector a couple of years ago, has bought majority stakes in a warehousing developer and other such projects this year.
Morgan Stanley and a fund management company set up by its former executives are aggressively looking at the country’s warehousing space.
Recently, Morgan Stanley Real Estate Investing (MSREI), the real estate investment management arm of Morgan Stanley Investment Management, purchased a controlling stake in warehousing project built by the Pragati Group in the National Capital Region (NCR) region. Earlier this year, MSREI bought a majority stake in KSH Infra, a Punebased warehousing and industrial logistics park developer. KSH Infra operates two warehousing and industrial logistics parks in Pune. The warehouses, with a total area of one million square feet, are leased out to blue chip multinationals. Morgan Stanley has also set up a platform with Bengaluru-based developer Puravankara Projects for industrial parks. “They are also evaluating other opportunities in the space,” said the sources, adding that the fund manager could also tap the real estate investment trust or REIT space in the future.
Though Morgan Stanley inked residential real estate deals earlier, it is now reportedly focusing only on rent-yielding assets.Interestingly, Proprium Capital Partners, a real estate fund manager set up by former Morgan Stanley executives, is also focusing on the same segment. Proprium is looking to set up three joint platforms with companies to develop warehouses in the country.Proprium will invest $25 million to $30 million each in the platform and scale it up later. Proprium has already put in $150 million into an existing platform with Hyderabad Scalar Spaces. The Proprium Scalar platform will be scaled up to 12-15 million sq ft in 12 to 24 months from four million sq ft now. Proprium’s combined assets under management are around $2 billion. The logistics industry is around $160 billion and is growing at a compound annual growth rate (CAGR) of 10.5 per cent. It is likely to touch $215 billion in the next three years, according to the government estimates. Global investors such as CPPIB and Warburg Pincus have invested in the warehousing space as the country adopted goods and services tax, which unified all markets. A rise in e-commerce has led to increase in the warehousing space in the country.
WEWORK INDIA TO ENTER NOIDA MARKET WeWork India, owned by realty firm Embassy Group, is getting set to enter into the Noida market and has taken on lease over 3 lakh sq ft office space to open three coworking centers comprising nearly 3,900 seats. WeWork India currently has 26 operational coworking centers with 46,000 seating capacity. It has 9 centers in Bengaluru, 10 in Mumbai, 6 in Gurugram, and one in Pune where seats are available in a price range of Rs 5,000 to Rs 40,000 per desk per month. It has taken on lease nearly 1.4 lakh sq ft area from Berger Group, 74,000 sq ft from Logix, and around 92,000 sq ft from Advant in Noida for
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three new facilities. WeWork sees an uptick in demand for collaborative spaces by large enterprises, freelancers, and consultants because of flexible lease terms, lower deposit requirements, overall cost reduction as well as plug-and-play advantage. The demand for office space in Noida is growing at an excruciating rate. It is due to the presence of large
corporations and media hubs, which prefer collaborative workspaces fulfilling all their requirements. Bengaluru-based Embassy Group had partnered US-based WeWork in 2016 to enter into the coworking business. Its recent foray into Noida is a part of its strategic expansion plans with an accelerated path to profitability.
ALTERNATE ASSET CLASSES
REITS, InvITs GET ₹9000 CRORE BOOST FROM MFS SO FAR
Emerging alternate investment instruments - REITs and InvITs seem to be finally catching the fancy of investors as mutual funds have invested nearly ₹9,000 crore in such units in the first nine months of the year. Fund managers have infused Rs451 crore in real estate investment trusts (REITs) and Rs8,528 crore in infrastructure investment trusts (InvITs), according to the Securities and Exchange Board of India (Sebi). Mutual funds have increased their exposure in these investment avenues over the past nine months. The investment by fund houses in REITs jumped to a staggering Rs69 crore in September from a mere Rs 7 crore in January, while the same in InvITs rose to Rs 1,034 crore in September up from Rs611 crore in January. Recently, Sebi chairman Ajay Tyagi, who met scores of foreign investors in the US, witnessed a keen interest among them for REITs and InvITs.During the meeting, the participants were enthusiastic about emerging areas such as REITs and InvITs, which have more than $10 billion asset size as on date.Sebi first issued the guidelines for REITs and InvITs in 2014, and revised them in 2016 and 2017.
COWORKING PLAYER SMARTWORKS RAISES $25 M FROM KEPPEL LAND Singapore based, Keppel Land has invested the US $25 million in Smartworks Coworking Space, a flexible space solutions provider for a minority stake.
The company will use the money to increase its desk counts across the cities where it already has a presence and to enter new markets. It plans to take the total desk count to 65,000 by the end of this year, up from 25,000 now. It is series-A funding for the company and shows how global institutions still believe in the growth of co-working space, according to Neetish Sarda founder of the company. The Delhi-based co-working spaces operator has signed 1mn sq ft lease agreements across Bengaluru, Hyderabad, Pune and Mumbai. “This investment allows Keppel Land to enter one of the world’s fastest-growing flexible office markets, opening doors for further growth through this collaboration,” according to Tan Swee Yiow, CEO of Keppel Land. Presently, Smartworks has 23 operational centres in nine cities, offering a total of about 43,000 workstations spread over 2.3 million sq ft. The centres cater to over 400 organisations, comprising mainly large companies and high-growth startups such as Amazon Web Services, Bacardi Limited, DHL, Ernst & Young, Hitachi, Jaguar Land Rover Automotive PLC, Microsoft Corporation, Petronash, Red Hat, Ricoh and Samsung. Over the next five years, Smartworks plans to grow its footprint to 20 million sq ft and provide office solutions for over 200,000 working professionals, as per Harsh Binani cofounder Smartworks.
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ALTERNATE ASSET CLASSES
GUESTURE TO LAUNCH YOUTH CITY, ADD 2500 BEDS IN BENGALURU
Guesture, India's leading shared, rental and managed accommodation provider has announced the addition of 2500 beds to its Guesture Dwellington, the 3.5 lakh sq. ft. property in Electronic City, Bengaluru. Guesture's expansion in the Bengaluru's Electronic City, which is home to hundreds of students, working professionals, and families, has positioned it as one of the largest purpose-built housing providers in Karnataka. Purpose-built living is more than just sharing spaces - it is a combination of privacy, safety as well as opportunities for interaction and self-growth and experience life in a vibrant community. Guesture’s purpose-built housing addresses the modern-day challenges of urban living amidst youth by promoting thoughtfully designed spaces meant for collaboration, community building, and sustainability. Guesture targets millennials in the age group of 18-35 by offering various amenities that make up for a perfect social living environment, a much-needed concept for a city that is home to a sizeable migratory population. Currently, the two properties cater to working professionals and students from Symbiosis, NSB (international
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students), Azim Premji University, IFIM Business School, & PESIT College. According to Sriram Chitturi, Founder, Guesture, Bengaluru is the IT and university hub of India where students and working professionals come in search of opportunities. Renting out an apartment, PG, or a hostel can be quite tricky with a lack of security and unnecessary imposed restrictions. Guesture focuses on these and many other aspects that are not taken care of by the largely unorganized rental and managed housing sector, often compromising on their comfort and safety. Guesture provides holistic social spaces that can help address the increasing need for social contact and yet offer much-needed privacy. It provides amenities such as swimming pool, gym, amphitheater, yoga hall, snooker tables, laundry services, open-air screen, outdoor bowling alley, basketball court, mini football court, cafeteria, doctor on
call and shuttle bus services. The company also plans to add a library, learning center, aerobics hall, art gallery, indoor swimming pool, and a ten-meter shooting range by the end of this year. The upcoming Youth City will be a big-ticket project aimed at recreating an entire mini-city with facilities and infrastructure for housing, education, work, sports, events, and entertainment (Strip Mall and Food Courts) making this project a real social life space. Universities, offices, and co-working/ shared workspaces will have the opportunity to set up campuses in the property, making it easier for working professionals and students to set up base here. In Bengaluru, Guesture has two properties- Alta Vista at Electronic city Phase 1 and Dwellington in Phase 2 and it aims at expanding to other parts of the country soon to cash in on the significant opportunity in student housing.
ALTERNATE ASSET CLASSES
AWFIS LAUNCHES ITS 10TH CENTRE IN PUNE Continuing to spread its footprint in the sprawling city of Pune, Awfis, India’s largest network of coworking spaces, is all set to expand its presence by introducing a new center in the dynamic micro-market of Pimpri Chinchwad with its latest offering in GK Mall at Pimple Saudagar. Spread across 33,000 sq. ft., it is the 10th center in the technological hub, Pune. The vibrant space boasts of 380+ workstations and a large collaboration area, making it an ideal choice for the workforce in Pune. Strategically located, Awfis’ new center is easily accessible from Mumbai-Pune Expressway along with secure connectivity from all modes of local transportation. It is close to Rajiv Gandhi InfoTech Park, located at Hinjewadi, making it an attractive location for people working in the vicinity. Awfis’ other centers in the city have renowned clients such as Vodafone, Hinduja Global, Dassault, Syngenta, Blazeclan, etc. and this center will further enable more excellent choice for corporates, SMEs & start-ups in Pune. Awfis aims to expand further in Pune over the next 10-12 months to cater to the
evergrowing demand of shared SMEs, and large corporate clients. With the growing demand, the workspaces. Awfis, which set up its first center company aims to expand in this in Pune in 2016, aims to create a city aggressively over the next robust ecosystem for startups, three years. entrepreneurs, large enterprises and SMEs alike to nurture the spirit of innovation and creativity in this region. Awfis’ 5000+ seats in Pune across ten centers is proof of the receptiveness of Pune’s workforce to the concept of shared workspaces.
Awfis is creating a strong network of Grade A workspaces to build an active community of professionals and thereby foster their growth with ‘just-in-time’ workspace solutions. According to Amit Ramani CEO & Founder, Awfis, Pune has been a robust market for the company to strengthen its footprint and cater to the demands of various startups,
Awfis, which recently received a Series D funding of $30 million from marquee investor ChrysCapital along with existing investors Sequoia India & The Three Sisters: Institutional Offices, currently has a nationwide network of 63 centers with 30,000 seats across nine cities. It plans to launch new tech-driven innovative products, deepen its existence in metros & foray into Tier II markets - like Jaipur, Ahmedabad, Bhubaneshwar, Kochi, and Indore, having already forayed into Chandigarh. The company has set a target of 200,000 seats in 15 cities in the next 30 months.
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ALTERNATE ASSET CLASSES
REAL ESTATE DEVELOPERS MAY RAISE $25 BILLION THROUGH REITS Real estate developers may raise more than $25 billion over the next three years by listing their rent-yielding commercial properties through the Real Estate Investment Trusts (REITs) route, according to realty consultant Anarock. This year, global investment company Blackstone and realty firm Embassy group successfully launched India's first REIT to raise Rs 4,750 crore and their joint venture firm Embassy Office Parks listed its rental assets on the exchanges. This has opened new funding avenues for more real estate companies to take REIT route, and it is expected that commercial REITs may raise over $25 billion for Indian real estate over the next three years. It involves the listing of more than 150 million sq ft of rent-yielding Grade A office properties across top seven cities, covering 25-30 per cent of the overall Grade A office space in these cities, according to Shobhit Agarwal, MD & CEO - Anarock Capital. Currently, top seven Indian cities, Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad and Pune have close to 550 million sq ft Grade A office supply. Of the total space, 310-320 million sq ft is 'REITable' as of now, and several large developers are keen to list their commercial assets. According to
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Anarock, Prestige Group is planning to list its first commercial REIT very soon and has already started segregating its residential, office, retail and hospitality businesses. It may also launch a retail REIT as and when the opportunity arises. Other players in the REIT fray are RMZ Corp, K Raheja Corp, Godrej Properties and Panchshil Realty. According to Agarwal, REITs would help commercial developers improve their liquidity by unlocking the value of their assets to raise capital. For big and small investors, it is a highly de-risked investment route offering annual returns of as much as 12-14 per cent over the long-term, an attractive proposition when viewed against more volatile asset classes. Several foreign investors have expressed their keen interest to SEBI in emerging areas such as REITs and InvITs, which have more than $10 billion asset size as on today. REITs in the residential segment would take time though the draft Model Tenancy Act, 2019 will make rental housing a more attractive investment play. For Indian residential REITs to succeed as in countries like Singapore and the US, renta l yields need to surpass the current 1-3 per cent significantly, believes Agarwal.
ALTERNATE ASSET CLASSES
XANDER SETS UP $ 250 MILLION INDUSTRIAL REALTY FUND Singapore’s Xander Investment Management has set up a $250 million industrial real estate venture to purchase assets in the high-growth logistics and e-commerce sectors at industrial corridors across major cities in India. Sponsored by Xander Group, the platform has raised capital from leading European institutional investors that have previously been limited partners in the firm’s sponsored opportunity funds.Xander Investment ,a private equity real estate arm of The Xander Group Inc., a global investment firm will be the investment advisor to the platform that will invest the capital in high-quality assets over the next 12 months. The platform has recently acquired two million sq. ft of industrial assets in Mumbai and Chennai for $80 million. It is anchored by multinational and domestic corporations such as Amazon, Kerry Indev, DB Schenker and TVS Logistics. “We have been investing opportunistically in the industrial/logistics sector since 2007. With the economy poised for retail, manufacturing and consumption growth, it is the opportune time for us to create a platform with like-minded investors that will execute a longer term, targeted program, says Rohan Sikri, senior partner, Xander Group and managing director of Xander Investment .
As international and domestic companies expand their footprint in India to cater to this growth, the platform will be well-positioned to capitalize on the underlying demand for high quality, institutionally owned/ operated industrial real estate, Sikri added. Industrial real estate is fast emerging as the go-to class for developers and investors in India, driven by growth in the e-commerce and consumption sectors, and aided by the Union government’s Make in India initiative and the introduction of the goods and services tax (GST). Ram Reddy, managing director, Xander Advisors India said, “The group has a strong presence across the real estate ecosystem in India and our exposure to the retail and industrial sector in India positions us well to execute on this new platform. Our expansive advisory network in India enables us to leverage our local expertise and relationships to provide best in class solutions to global and domestic occupiers." Logistics leasing grew 31% on a yearly basis, crossing 13 million sq. with Mumbai, Chennai &
Bengaluru comprising 60% of leasing activity, according to India Industrial and Logistics Market View, H1 2019 by property advisory CBRE South Asia ..As technology permeates the sector, demand for quality space is increasing and corporates across segments are opting for large, modern warehouses. Advances in technology, particularly automation, will continue to enhance the specifications and operations of logistics assets, thereby pushing older, inferior-grade properties down the demand pyramid. This year, Xander has announced multiple investments across its verticals such as commercial office and retail.In August, Xander acquired Weikfield IT Citi Info Park, an office park in Pune, for $130 million ( Rs 900 crore), marking the deepening presence of global investors in India’s expanding commercial office sector. Xander purchased the 1.1 million sq. ft office park from private equity firm New Vernon Capital, Llc.In October, Raymond Ltd announced selling of a 20-acre land parcel in Mumbai’s Thane area to Xanderbacked Virtuous Retail South Asia (VRSA) for Rs 700 crore.
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ALTERNATE ASSET CLASSES
Evolution of Data Centers in India Stage 1 (Pre-2007)
Dot-Com Boom
DC growth for captive facilities at thehighest level in the wake of the dot-com boom during 2005-06
Stage 2 (2007 - 2012)
125+ Data Centers (DCs) in India
Outsourcing Data Storage Spaces
MAJOR INVESTMENTS IN DCS IN INDIA
Data storage requirements continued to grow exponentially; corporates moved to outsourcing storage spaces in co-location
Stage 3 (2012 - 2016)
Cloud Awareness Picked Up Pace
CTRIS (2,000 ₹ Crores)
Three new upcoming hyperscale data centers in Mumbai, Hyderabad & Chennai
Foreign cloud players entered India and conducted ‘cloud computing’ awareness campaigns"
A LARGE E-COMMERCE COMPANY (1,380 ₹ Crores) For improving in-house data service platform
Stage 4 (2016 Onwards)
Emergence Of Hyperscale, Hyper-Converged Infrastructure (HCI) And Multi-Clouds" "The data requirements of occupiers started growing, resulting in operators constructing hyperscale DCs"
NETMAGIC (2,000 ₹ Crores) Two new high density & hyperscale data centers in Mumbai recently completed
LINODE (35 ₹ Crores)
Started its first India operations with an open cloud DC in Mumbai
Outlook for DCs in India Sustained Policy Impetus
Digitization and Tech Enhancement in India
Alignment with Global DC Trends
Personal Data Protection Bill, July 2018
High level of internet penetration, by 2030 it is estimated that India would be home to more than one billion internet users.
Influx of investments by prominent global/domestic DC operators expected to surge in India.
Make in India' will improve manufacturing sector contibution from current 16% to 25% of GDP by 2025, this involves higher scale of R&D and AI, IoT, Big Data & Machine Learning developments.
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Spending in Infrastructure as a Service (IaaS) expected to touch USD 2.3 - 3.4 billion and Software as a Service (SaaS) exports to reach USD 19-22 billion by 2022. Emerged as a third largest start-up hub of the world, the addition of about 14,600 start-ups alone is an indication of growing demand for data storage in the future.
Augmented demand from the BFSI sector Rising demand from global/domestic firms
REALTY ETC.
AND NOW FIRE RESISTANT PAINT
Amidst growing concern over fire incidents in residential, commercial and industrial establishments causing loss of property and human life, a Hyderabad-based firm - Esskay Laboratories has developed a fire - resistant paint that can withstand a temperature of up to 1000 degrees Celsius for about two hours, making it nearly unlikely to catch a fire. These days the interiors of many residential and commercial establishments are made of wood and other combustible materials that can quickly catch fire. By applying the fire-resistant paint, the company is reducing the calorific value of the combustible material, thereby reducing the chances of these materials catching fire and by reducing the propagation, according to Gurudath Patalay, Head of Marketing for Hyderabad- based Esskay Laboratories. Recently, Esskay conducted fire demos in Ahmedabad and Delhi to demonstrate the efficiency of the paint against the fire. The paint has received a global patent, as there are no other similar coatings that can withstand the heat of up to 1000 degrees for two hours. In contrast, the existing paint products in the market mostly fail to withstand temperature beyond 500-degree celsius .“Based on the end-user requirements, the coat, with 2 mm to 4 mm thickness, is applied. The National Building Code recommends fire ratings for properties with specific usage. We see a potential market for this paint in the segments of schools, hospitals, banks, corporate offices, and refineries,” said Patalay. Firolac paints, though about 30 percent expensive than the conventional ones, come with much lower Volatile Organic Compound (VOC) compared to all the other products available in the market, causing toxic smoke. Environment- friendly Firolac paint coat does not emit smoke beyond the permissible limit of VOC emissions. The shelf-life of a packed container is 12-months, while after application, the shelf-life of Firolac is for about 7-8 years.
DUROFLEX TO GO FOR ₹ 100 CR EXPANSION Mattress maker Duroflex is working on a Rs 100-crore expansion plan under which it will expand the Hyderabad plant as well as add more manufacturing capacities in the western region.
The investment will help increase the manufacturing capacity of the company from the existing six lakh mattresses to 10 lakh, in phases, over the next few years, according to Managing Director Mathew Chandy. Duroflex has six manufacturing facilities – three in Hosur and one each in Hyderabad, Alleppey, and Bhiwandi (Maharashtra). Elaborating on the expansion plans, Chandy said in the western region, Duroflex was evaluating options of expanding the Bhiwandi plant or setting up a new unit either in Maharashtra or Gujarat. It was looking for collaborations too. The company, which last year had raised Rs 100 crore PE investment from Lighthouse, is “well-funded” to carry out its expansion plans. Duroflex with Rs 500 crore annual revenue grew by 30% last year and expects a 20% growth rate this year.
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REALTY ETC.
URBAN CLAP FORAYS INTO AUSTRALIA
Home services marketplace UrbanClap, in line with its expansion plans, has entered Australia, the second country outside of India, following a successful launch in UAE last year. UrbanClap will launch home care and personal care services, including hair and beauty services in November. Australia, with its demographic advantages, holds great promise for UrbanClap. “We will launch first in the Greater Sydney Area. We believe that there is a massive opportunity for us to deliver high-quality service, in-home repairs and beauty services. We have created a new axis in matching demand to supply, and we look forward to contributing to building a healthy service eco-system in Australia," said
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Abhiraj Bhal Co-founder of UrbanClap. According to Ritesh Garg, Country Head at UrbanClap, Sydney, there is a massive demand for standardised services in the region and UrbanClap has a tremendous opportunity to provide more quality-driven experience to all its customers. The gap between service providers and customers is a clear opportunity in a market like Australia. UrbanClap aims to bridge this gap and provide reliable services by matching quality service professionals
with the service seekers. UrbanClap that offers services such as beauty and spa at home, cleaning, plumbing, carpentry, appliance repair, painting etc. through its mobile app and website, currently operates in 14 cities in India and two international markets (Dubai & Abu Dhabi). It has a partner network of over 20,000 hand-picked service professionals, who get financing, training and product or consumables support.
REALTY ETC.
JSW STEEL RAISES â‚š 2000 CRORE JSW Steel has raised Rs 2,000 crore through issuance of non-convertible debentures (NCDs) on private placement basis. The company has reportedly raised fresh funds of around Rs 2,000 crore from 10-year bonds from LIC at 8.79 per cent payable semi-annually. The Sajjan Jindal-led company has allotted NCDs having a rate of 8.79 per cent, of Rs 10 lakh face value each, aggregating to Rs 2,000 crore on private placement basis, according to a regulatory filing. The proceeds would get utilised for meeting long-term working capital requirements, refinancing existing debt, general corporate purpose and ongoing capital expenditure.
AMBUJA CEMENT PROFIT SURGES 34% Ambuja Cement has reported 34 per cent increase in its September quarter, with consolidated net profit at Rs 385 crore (Rs 288 crore) on the back of lower cost and higher realisation.Net sales jumped one per cent to Rs 5,957 crore (Rs 5,877 crore).
According to Bimlendra Jha, Managing Director and CEO, in the backdrop of the general slowdown in the economy and subdued construction activity, Ambuja has managed better growth despite lower volumes due to focus on product mix and reduction in logistics costs. Premium products registered an increase of 17 per cent year-onyear and the company maintained its progress on fossil fuel substitution with alternative fuels and renewable energy. On a standalone basis, the company's net profit was up 31 per cent at Rs 235 crore (Rs 179 crore) while net sales were flat at Rs 2,556 crore (Rs 2,522 crore). Sales volume was down 4 % to 5.23 million tonnes (5.46 mt). Cement realisation registered a growth of 5 % to Rs 246 per 50 kg bag.
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REALTY ETC.
SCHINDLER'S ROBOTICS INSTALLATION SYSTEM FOR ELEVATORS
Schindler, a leading global provider of elevators, escalators, and related services, has introduced R.I.S.E, a Robotic Installation System for Elevators. This innovative robotic system provides a new level of worker safety and takes the precision of elevator installation to the next level. This breakthrough symbolizes Schindler’s commitment to delivering digital and urban mobility solutions to shape smart cities of the future. As a technology leader in innovative urban solutions for tomorrow’s smart cities, Schindler’s R.I.S.E couples artificial intelligence with elevator technology to enable the safe and precise installation of elevators. Robotic systems are becoming increasingly crucial for ways of automating many of the construction industry’s repetitive and physically demanding tasks.
set the anchor bolts to support a safe and fast installation of the elevators. This automation sets the stage for mechanical installation on pre-installed anchor bolts, which is repeated at every level, making it ideal for high rise installations. Increased accuracy, better quality installations, and excellent safety in demanding work conditions are some of the critical benefits for the customers.
R.I.S.E consists of a self-climbing robot, which measures the elevator shaft, drills holes with greater precision, and accurately
Digitization extends the capabilities of R.I.S.E by improving its ability to record actions performed by the robotic
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system and to exchange data with digital models of buildings automatically. The innovative technology got shortlisted for the Innovation Award 2019 from the Council on Tall Buildings and Urban Habitats. According to Vivek Dwivedi, Head – Corporate Research and Development, this technology symbolizes Schindler’s commitment to shaping the smart cities of the future by providing digital and urban mobility solutions.
PRODUCT LINE
AIR OF DISTINCTION
Inspired from the European island, Luxaire Luxury Fans, introduces ‘Formentera’ Luxury Fans to India, that brilliantly combines innovation with modern refined design. With Minimalist Nordic style, efficient air movement, convenience and control, Formentera promises an air of distinction in any space, be it home or office. The luxury fan comes in textured silver grey or full white. It is designed with aerodynamic wooden blades, that create a unique airflow pattern that pushes the air at an angle instead of straight down, unlike a traditional fan. The Luxury Fan is designed for low height living spaces of 9 ft or less. It has optimal air delivery and lower temperature rise, remote with 3-speed
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control – with speeds up to 200 RPM. Engineered with a built-in LED Light kit, the fan helps illuminate and add elegance when in use. Both light and fan can also be operated independently.
This luxury fan supports ‘Whisper Quiet Technology’, balancing the form and functionality of the space, in which the fan is installed. The Luxury Ceiling Fan is priced at Rs. 42,000/- and is available at all Luxaire Luxury Fan showrooms The fan is designed with premium in Bangalore, Hyderabad, Kochi and quality materials which is corrosion online at free ensures longer life with five years warranty on the motor.
www.luxaire.in
PRODUCT LINE
DAZZLING, DURABLE & ARTISTIC COLLECTIONS
Creative and consumer-centric innovation lies at the heart of the latest offerings by Orient Bell Limited (OBL). The manufacturers of ceramic and vitrified tiles have launched a superior range of tiles with their most recent collections- Duazzle and Magnifica. The Duazzle Collection stands for durability and dazzling appeal. While the Magnifica Collection brings art to your floors. On the other hand, each floor tile from the Magnifica Range is a work of art, showcasing mesmerising finishes and textures. The Duazzle and Magnifica Collections have been curated and designed, keeping in mind the preferences of their consumers in South India. The colour shades and hues of each collection have been specially selected to appeal to their tastes. The Duazzle range is for the wall. It comes with high specifications, staying true to its superior visual impact. The double firing process used while manufacturing each wall tile lends a dazzling finish to this range. Vital quality parameter such as strength is more than double, in comparison to other leading players. With multiple options to choose from, customers can match
their highlighter tiles, with their preferred colour in base tiles. Accompanying these impeccably designed wall tiles in 10”x15’’ size, are the matching floor tiles in 12”x12” size. The Magnifica range floor tiles have designs which are painstakingly curated based on inputs from customers across Karnataka, Tamil Nadu, Andhra Pradesh and Kerala. This range has a mix of various finishes such as Glossy Marbles, Cement, Wood, Matte/Slate, Metallic and Glint. The light and dark coloured offerings in these tiles cater to different interior aesthetic sensibilities. The intent behind the contemporary designs of the Magnifica range is to bring exciting variety to existing Channel Partners and relevance to the new partners. This range launched in South India offers 56 beautiful designs, with 37 tiles in 4X2 size and 19 tiles in 2X2 size, respectively.
November 19 - PropTOQ | 97
TOQ TEN
Rajat Rastogi
Executive Director, Runwal Group
REGULATED REALTY WILL BE GOOD FOR ALL IN THE LONG RUN What does regulated realty mean to you, especially in this age of disruptions? It means more organised business, greater transparency, increased customer confidence and the demarcation between trusted developers and others. The impact will be disruptive in the short run but will be good for all in the long term. What sets your company apart i.e USP? At Runwal Group, the core philosophy has always been to create value for the customer. Whether it is in terms of clear titles, approvals, quality or the lifestyle on offer. Hence the green open spaces in the heart of the city or a premium lifestyle in a high-rise, our products are designed to offer value to the customer every time. What is your success mantra? I believe in hard work and smart work. There is no other mantra for success. There will be a few mistakes along the way but this is the only route.
98 | PropTOQ - November 19
What keeps you tickinginspiration? I think seeing something that you have worked on succeed, is a great motivation. It to propels you to do something bigger, better and in a more consistent manner. That’s my inspiration. What's your leadership lesson? Build a strong team and then ensure the team is managed well. No one can achieve anything without a proper team. What's your strength? Determination and the ability to perform in changing environment. Or in other words, perseverance and adaptability. With millennials believing in work hard, party hard, what is your idea of rejuvenation /unwinding? I like playing tennis and outdoor sports. Also, spending time with my family is a great rejuvenator for me. What's your definition of success
and what's your winning strategy? Like I said before, smart work and hard work are two key ingredients for achieving success. Together with team work and persistence, any target is achievable. What is your biggest asset? Self-belief and the never say die attitude. What is your ambition in life? To be good at whatever I do and to be able to add value, whether it is my job or business or relationships. What's your vision- where would you see your company and yourself in 2022? The way we are growing, I think by 2022 Runwal Group will be in the top 3 realty majors in the country. Personally, I would like to be a key component of this success and growth story.