Anuj Puri – Page 22

Housing Sales Herald A Tepid Gudi Padwa 2018 For Real Estate

Anuj Puri, Chairman – ANAROCK Property Consultants

Traditionally, the Gudi Padwa festival season is an auspicious time to invest in real estate. Considered a time of renewal, it coincides with Punjab’s Baisakhi, Tamil Nadu’s Puthandu, Andhra Pradesh’s Yugadi and Kerala’s Vishu.

Since a large cross-section of Indians tends to link property acquisition with auspicious dates, activity levels on the property market tended to increase visibly in this period.

However, Gudi Padwa 2018 is not likely to bring the accustomed uptick, which – though almost non-existent even in the last 2 to 3 years – arrived in the backdrop of a more complex set of challenges than ever before. This year, this festive season will be juxtaposed with some interesting market dynamics.

The residential real estate market in many cities has been slowing down, and developers are hoping that Gudi Padwa will prove to be a turning point for many developers who have been struggling with slow sales as well as policy-induced compliance pressures and generally negative market sentiment.

Indian developers tend to look at the tradition-fuelled appetite for housing purchases during festivals like Gudi Padwa so as to mitigate slow sales during the rest of the year and offer lower prices under the guise of festival discounts.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Real estate prices in Mumbai – India’s high-flying financial capital – are never out of the news.

From South Mumbai’s spectacularly pricey trophy properties to the chronically unaffordable price tags of what passes for mid-income and affordable housing in the city, there is no getting over, under, around or through the extremely high property prices in Mumbai.

Mumbai’s sky-high real estate rates – what lies beneath?

Before we go into which parts of Mumbai can still reap decent returns on real estate investment, it is important to understand why the city was such an investment hotbed in previous years – and in fact still draws patient, well-capitalized investors.

Of course, the city’s extremely steep capital and rental values were (and continue to be) their primary incentive. There are several reasons for Mumbai’s exorbitant property prices – some are logical and have to be accepted as facts of life here, while others have more to do with unabashed market manipulations.

Supply-related challenges

Geographical constraints:

Its unique geographical attributes have been one of the leading factors influencing the astronomic property prices in Mumbai.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

With the advent of e-commerce in India, shopping converged into mobile devices in the form of websites and/or apps.

At the click of a button, one could buy groceries, apparel, electronics and almost everything else. For a while, it appeared that ‘couch potato shopping’ was a real threat to physical retail, and that shopping malls will run out of business.

That has not happened – in fact, shopping malls are witnessing a visible resurgence in India.

A clear measure of increasing focus on the retail sector is that private equity (PE) players invested more than $700 million into Indian retail in Q1-Q3 2017 itself – around 90% of the investments that came in during the past two years (2015 and 2016).

Shopping malls in India have come a long way indeed, from less than 5 malls in 2001-02 to more than 500 in 2017. Over the last few years, as the overall economy struggled, there was a drift of negativity about Indian shopping malls being able to sustain and were ‘going to be out of fashion’.

by Anuj Puri

Anuj Puri, Chairman, ANAROCK Property Consultants

Green shoots of improvement in new launches; 100% month-on-month rise in new launch absorption levels

2017 has been an action-packed year, not just for the real estate sector but for the entire nation.

While the structural changes and policy reforms (demonetization, RERA and GST) shook up the economy, it imbibed financial discipline, accountability and transparency across various sectors.

As per the statistics released by Economic Survey, the Indian economy is expected to grow at 7 to 7.5% in 2018-19, eclipsing China to become the fastest growing economy.

In 2017, the performance of Indian residential real estate was lacklustre due to the sector’s transition from an unorganized to an organized one, amidst changing regulatory environment.

The big-picture reforms are making the market buyer-friendly and further attracting global investors to consider India as one of the preferred destinations for real estate investments.

With two months into 2018, ANAROCK Property Consultant’s research report presents some of the trends reflecting the state of residential real estate market across the country’s top seven major metropolitan cities.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

After a protracted period where interest for real estate investment was concentrated primarily in the larger cities, we are now seeing a resurgence of the Tier 2/Tier 3 cities story in India.

Many of these cities are seeing increasing economic activity and infrastructure growth, to some extent reducing the outward migration to the metros.

This is a welcome dynamic which will eventually result in a more uniform spread of real estate demand across the country, and reduce the pressure on the larger cities.

What lies beneath

The ticket sizes for residential properties in tier 2 and tier 3 cities and towns start from a significantly lower base, owing to cheaper land prices and also the fact that developers active there are more aligned with affordability.

Buyers tend to be more cost-sensitive as economic drivers in the city may not be on par with those in the larger cities. Also, under the incumbent Government, many of these cities are now seeing significant infrastructure deployment. Quite a few have come under the Smart Cities program,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Real estate investors need to be an exceptionally canny lot, since various factors can negatively affect the value of one’s real estate assets. Being aware of these – and making suitable provisions and allowances for them – is an inalienable part of successful property investment.

The rising cost of money

Increasing inflation is the first factor that inhibits the profitability of a real estate investment. While investing in any kind of property solely for capital appreciation, one should always consider what the overall earnings would be worth at the point in time one wishes to liquefy them.

If one fails to plan for the inflationary effect, further property purchases may be out of reach – rendering the whole concept of real estate investment an exercise in futility.

A simple method of establishing whether inflation will erode one’s real estate investment is to determine if the interest rate earned on one’s savings is less than or equal to the rate of inflation. If it is, it means that your real estate investment too will suffer because of inflation.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Consolidation is the process of combining a number of separate parts into a single, more effective or coherent one. Whenever there is consolidation in any sector, the general perception is that everything is going down the drain.

However, the reality is that this process usually happens at the fag end of an industry downturn and actually helps in catalyzing a much stronger come-back.

The real estate sector is a clear case in point. It is emerging from a prolonged slowdown coupled with landmark policy inputs which have begun to edge out the ‘small fry’ – essentially creating an environment of large-scale consolidation of tier II and III developers. This dynamic alone will define 2018 as a year of massive positive change for Indian real estate.

In 2017, the overall Indian economy and the real estate sector, in particular, were well and truly shaken up by a series of unprecedented reforms and structural changes.

Without a doubt, demonetization, RERA and GST will go down in the annals of Indian real estate history as the ‘trishul‘

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The construction sector is one of the largest employment generators in India, and the country will need approximately 76.5 million workers in the building, construction and real estate sector by 2022.

Despite it being a job creation engine for people from the economically weaker section of society, the basic working conditions of construction workers have been long ignored.

Migrant workers are the most vulnerable – they are more often than not forced to work under inhuman conditions, and are simultaneously bereft of any real bargaining power.

Under the labour laws, migrant construction workers are entitled to housing and other social security benefits apart from minimum wages, overtime payments and weekly offs.

However, on the ground, the implementation of this clause of the labour law has been abysmal. In far too many cases today, it can be said that the bottom line literally consumes the bottom of the pyramid.

Without a doubt, a more humane approach needs to be taken towards migrant construction workers. It has previously been suggested that the amount collected through construction cess can and should be used for providing rental accommodation to migrant workers.

by Anuj Puri

PRESS RELEASE

18% of MMR’s Housing Launches In 2017 Added In Thane – ANAROCK Report

53% of 70,000 units launched between 2012-2017 already absorbed

Mumbai, 8th February 2018: ANAROCK Property Consultants‘ latest research report ‘Thane – An Emerging Megapolis‘ highlights this city’s unstoppable rise to become one of the hottest real estate development and investment destinations in the Mumbai Metropolitan Region.

Launched at the MCHI CREDAI Thane Property Expo today, the data-driven report vouchsafes that Thane, driven by specific micro-markets, has not only shed its previous ‘industrial’ image but become a stand-alone real estate boom city.

“Thane’s emergence as a preferred destination for corporate office occupiers as well as homebuyers has been nothing short of spectacular, ” said Anuj Puri, Chairman – ANAROCK Property Consultants at the report’s unveiling. “Last year alone, the city contributed as much as 18% of the entire supply of housing project launches in MMR. Even more interestingly, of the 70,000 housing units that hit the Thane market in the last five years,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The Reserve Bank of India’s stance of keeping the repo rate unchanged at 6% is exactly along the lines of our expectations.

Considering that the inflation has inched up (Dec-17 CPI at 5.21%, up from 3.58% in Oct-17 and well above the target of 4%), crude oil prices are rising in the international market and the Government plans to increase the crop support price, maintaining the lending rates unchanged is justified.

We believe that the interest rates will soon start inching upwards, which is already being factored into the rising bond yields for the past few months.

The real estate sector can and should look at the long-term economic prospects and implications on which the monetary policy decisions are based, as these will dictate the growth trajectory for the sector.

Housing Sales Herald A Tepid Gudi Padwa 2018 For Real Estate

Which Mumbai Real Estate Locations Still Deliver Good ROI?

The Resurgence Of Shopping Malls In India

State Of India’s Residential Real Estate Sector – 2 Months Into 2018

Tier 2 And Tier 3 Cities Stage Their Real Estate Comeback In India

3 Factors That Can Negatively Impact Property Investment Profits

The rising cost of money

Why 2018 Will Be A Year of Consolidation for Smaller Developers

Housing India’s Construction Workers

18% of MMR’s Housing Launches In 2017 Added In Thane – ANAROCK Report

Monetary Policy – Lending Rates Unchanged, But May Inch Upward Soon