Commercial Real Estate – Page 5

Private Equity Still Votes For Commercial Real Estate

The commercial segment saw a total PE inflow of nearly USD 2.8 bn in 2018 – up from USD 2.20 bn in 2017
Office yields are 12-14% PA, rental yields for housing 2.5-3.5%
Residential revival depends on returning investor interest

Anuj Puri, Chairman – ANAROCK Property Consultants

If the prolonged slowdown in the residential was not bad enough, to begin with, major policy overhauls over the last five years – DeMo, RERA, GST, amendments in the Benami Transactions Act etc. – literally paralysed the residential segment.

While any policy change brings with it some amount of teething pains, the residential segment took a prolonged hit because it had attracted the bulk of black money in the sector. Commercial real estate was far less affected, if at all.

Residential was also far less organized than the commercial office segment. Largely driven by IT/ITeS and BFSI sectors, the commercial real estate segment has been quite transparent and predictable – the primary criteria for foreign investors’ confidence.

Commercial Vs.

by Arun Chitnis

Approx. 8,574 keys to hit the market in 2019; nearly 19% increase over the last 2 years
Revenue per available room (RevPAR) sees 17% growth between 2016 and 2018
Average daily rates saw a 6.25% rise in 2018, faster than 4.5% long-term inflation rate
Goa saw the largest signing of keys in 2018 at nearly 2,209 keys, eclipsing Bengaluru by just 192 keys
Hotel transaction volume hit an all-time low in 2018 at INR 5,354 mn since 2007; 2019 likely to witness the sale of high-value hotel assets valued USD 800 mn across key markets

Mumbai, 10 April 2019: With demand finally outpacing supply, the Indian hospitality industry is on an upswing. The ‘India Hospitality Industry Review 2018’ report by HVS ANAROCK predicts RevPAR to grow by 9.5% in 2019.

Interestingly, Q1 2019 itself saw unexpected growth in the India hotel industry. The successful transaction of the Leela Hotels & Keys portfolio in Q1 2019 set a healthy tone for the start to the year, and trends indicating that 2019 could see transaction volumes reach around USD 800 mn.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

No discussion about Mumbai’s notoriously land-starved real estate market is complete without mentioning the massive tracts of land held by various Government and non-Government agencies and bodies.

Arguably, Mumbai Port Trust (MbPT) is currently one of the largest landowners in the country’s otherwise land-scarce financial capital.

Mumbai Port Trust owns nearly 1,900 acres of commercially useable prime land in South and South-Central Mumbai along the sea-facing eastern coast. If put to good use, this large tract of land can help considerably in solving the city’s immense housing shortage.

Initially either oblivious or indifferent to its real worth, the port authorities have now realized that they sit on a veritable goldmine that can fetch massive capital. However, it is definitely not as easy as it may appear since many are now trying to capitalize on this precious land.

Some existing lessees are refusing to vacate the leased premises – even post expiry of their lease period of 100 years – or even allow the rentals to be hiked to match the current market rates. Others are engaged in long-drawn court cases commissioned by either party.

by Arun Chitnis

Three-fold jump of mall supply this year – from 3.2 mn. sq. ft. in 2018 to nearly 10 mn. sq. ft. – following supply rollover from the previous year
Online players plan survival tactics post new E-commerce policy; eye brick-and-mortar spaces
E-commerce pegged to grow at 27% CAGR, offline retail at 16% between 2017 & 2021
Nearly US $1.42 bn FDI infused in Indian market between April 2000 to June 2018

Mumbai, 25 February 2019: Responding to burgeoning consumerism in India, mall developers are rapidly infusing new retail developments across the top 7 cities, with nearly 10 mn. sq. ft. new mall supply in 2019.

Factoring in the rollover of some supply from 2018, there will be a three-fold jump in 2019 against the preceding year.

These and other critical insights are outlined in the research report ‘Customer Experience (CX): The Epicentre of Retailing’ by ANAROCK Property Consultants, released at the Retail Leadership Summit (RLS) 2019 in Mumbai today.

Customer experience and built environment are completely metamorphosing the retail business in the country,

by Santhosh Kumar

Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Bangalore, Hyderabad & Chennai saw a 77% increase in new residential supply in 2018; NCR 16%, MMR & Pune 17%
Chennai led new launch supply with a 98% increase, Bangalore 91%, Hyderabad 43%
Bangalore, Hyderabad & Chennai saw a 20% increase in housing sales; 18% in North, 15% in West

The year 2018 was a mixed bag of highs and lows for the Indian real estate sector. The initial pangs of policy alterations seemed to fade away with each region seeing visible signs of recovery across segments.

Even as the liquidity crunch and stalled/delayed projects continue to plague the sector, the main southern cities of Bangalore, Chennai and Hyderabad actually saw faster growth momentum than their northern counterpart NCR.

Retail, commercial and residential real estate saw a lot more activity in Southern cities than in the North.

Residential

As per ANAROCK data, the southern cities raced far ahead of those in the North, including entire NCR.

by Anuj Puri

Bengaluru, NCR and Mumbai, followed by Hyderabad and Chennai currently offer the best opportunities
India is the world’s youngest start-up nation with >70% founders less than 35 years of age

Anuj Puri, Chairman – ANAROCK Property Consultants

India has emerged as one of the world’s most-preferred investment markets, thanks to its thriving economy, burgeoning start-up ecosystem, and its ever-deepening talent pool.

With businesses big and small continuing to grow and broaden their horizons, expensive real estate coupled with new-age professional’s desire to work in an aesthetically appealing environment has spurred demand for collaborative workspaces in India.

In fact, the new millennial workforce will accelerate this changing office dynamic further in the years to come.

As per statistics, millennials are set to form 50% of the global workforce by 2020 – and India is the youngest start-up nation in the world, with a rapidly-increasing millennial workforce.

This generation is ready to ditch conventional workspaces for more swanky, flexible and cost-effective office spaces that effortlessly embrace the latest technologies into their system. To meet this growing demand,

by Anuj Puri

New housing supply estimated at 1,93,600 units by 2018 end; an annual increase of 32%
Housing sales in 2018 estimated at 2,45,500 units; an annual increase of 16%
NBFC crisis holds sector at gunpoint as 2019 begins

Anuj Puri, Chairman – ANAROCK Property Consultants

The year 2018 was a veritable roller-coaster ride for Indian real estate. Despite signs of recovery across segments, the liquidity crunch – further exacerbated by the NBFC crisis – put all industry stakeholders on tenterhooks.

Consolidation via mergers and acquisitions was rife in all sectors, completely redefining the concept of ‘financial health’ among players and drawing clear lines on who will survive the heat. This process will continue throughout 2019, as well.

Despite all odds, economic indicators remained positive with India’s GDP growth rate pegged at 7.3% in 2018. CPI inflation, a major concern in the past, remained reined in at a manageable 4.8%.

GDP growth and contained inflation are generally considered panacea for most real estate woes. However, it took a lot more than that for real estate to retain even a semblance of an even keel in 2018.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

4.25 lakh housing units ready-to-move-in in top & cities
Only 5% buyers will consider under-construction projects

RERA was supposed to save the day for homebuyers, but that doesn’t seem to have happened – at least not yet. In many states RERA, in its present form, is currently either non-existent or a pale shade of what it was intended to be. It is a fact that RERA has been diluted in some states to favour developers while in a few others it hasn’t even been deployed yet.

RERA’s primary area of focus is under-construction properties. After all, this is the area where buyers had been facing the most challenges on account of project delays, project plan deviations and various other issues.

As things stand now, states like Maharashtra, Uttar Pradesh, Gujarat, Karnataka, Punjab, Madhya Pradesh and Rajasthan have the benefit of operational RERA, but even in these states, the registration numbers are far from motivating.

While Maharashtra comes out on top with over 18,300 projects registered under it, other states where RERA has been implemented are lagging far behind.

by Arun Chitnis

91% of Indian retail sales driven by brick-and-mortar stores, but smaller cities remain underserved
Good quality mall stock to increase by 10-15%; mediocre-to-weak stock to decline by 5-10%

While e-commerce and brick-and-mortar stores will continue to co-exist in India, e-commerce currently has a definite edge over physical retail in India’s tier II and tier III cities warns ANAROCK Retail’s report ‘Rebirth of Retail Malls: New, Improved and Revitalized’.

The report, which was released at the India Retail Forum (IRF) in Mumbai today, mentions that India’s tier-II / tier-III cities will also be key contributors to the country’s retail growth going forward. The organized retail market is growing at CAGR of 20-25%.

“Nearly 100 million people out of India’s 300-400 million-strong middle class currently live in tier-II and tier-III cities,” says Anuj Kejriwal, MD & CEO – ANAROCK Retail. “This indicates that a significant portion of Indian retailers’ target clientele lives in the non-metro cities. In cities such as Jaipur and Surat,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Coworking spaces have redefined the work culture globally and India is one of the most fertile grounds for the growth of this new work environment option.

From simple workplace with ungainly desks and chairs to much better-utilized spaces, automation and even added recreational facilities, office space structures in India have indeed changed a lot.

One of the offshoots of this evolutionary process is the rise of workplaces that can be easily accessed anytime and from anywhere – a plug-and-play concept of office spaces.

In short, coworking or shared office spaces.

Buoyed by the Central Government’s efforts to create a viable eco-system for young entrepreneurs, India is witnessing the mushrooming of multiple start-ups and SMEs across the country. Such businesses are increasingly focusing on co-working spaces.

These shared spaces are often in prime locations and provide a perfect platform for growth-seeking start-ups.
Moreover, they come at significantly lower costs than traditional office formats
They offer more flexibility greater flexibility to both employees and employers, and
They do not require a massive fixed capital investment.

Private Equity Still Votes For Commercial Real Estate

Indian Hotel Industry’s RevPAR to see 9.5% Growth in 2019 – HVS ANAROCK Report

Mumbai Port Trust: Multiple Issues, No Easy Solutions

New Mall Supply To Touch 10 Mn. Sq. Ft. In Top 7 Indian Cities In 2019: ANAROCK Report

Southern Cities Took the Lead for Real Estate Activity in 2018

Coworking: Workspaces for Indian Millennials

The Highs And Lows Of Indian Real Estate In 2018

Ready-to-move Vs. Under-construction – Caveat Emptor!

Indian Malls Resurge, But E-Commerce a Threat in Tier-II, Tier-III Cities – ANAROCK Report

91% of Indian retail sales driven by brick-and-mortar stores, but smaller cities remain underserved

Good quality mall stock to increase by 10-15%; mediocre-to-weak stock to decline by 5-10%

Coworking Space – A Threat To Conventional Offices?