India Property – Page 20

NRI Investors Zero In On Indian Real Estate’s Revival Signals

Shajai Jacob, CEO – GCC (Middle East) – ANAROCK Property Consultants

NRI investments into Indian real estate are led Indian expatriates from UAE, USA, UK, and Canada
Bengaluru, Mumbai, Pune, Hyderabad, Chennai and Delhi-NCR currently attract the lion’s share of NRI investments
Equities score higher than real estate on capital appreciation, but residential property comes with the benefit of rental yield, relatively lower risk and considerable tax benefits

Riding on a wave of economic reforms, improving transparency and better governance, foreign investments in Indian real estate are set to scale new heights.

With laws now allowing 100% FDI (foreign direct investment) in construction development and REITs now in place for commercial real estate, the Indian real estate industry will see increasing investment infusions from NRIs (non-resident Indians).

According to a World Bank report, India received USD 79 billion in remittances in 2018 – with a sizeable portion going into real estate.

NRI investments into Indian real estate are led Indian expatriates from UAE, USA, UK, and Canada. In terms of Indian cities,

by Santhosh Kumar

Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

By what seems like a cruel twist of fate, the grounding of the country’s largest airline coincided with provisional construction approval for India’s largest (by surface area) airport at Jewar in Noida.

It may be recalled that the Allahabad court dismissed petitions filed by farmers and gave in-principle approval to commence the construction of Jewar International Airport, which is estimated to be built at a cost of USD 3.1 bn.

Naturally, the expectation is that just like any mega infrastructure project, this greenfield airport will give a major boost to the overall economic activity around Noida and Greater Noida region. Let’s take a closer look.

Economic Impact Of Jewar International Airport

Once completed, Jewar International Airport will not only ease traffic at Delhi’s IGI Airport but also create multiple job opportunities and give decent impetus to the property market in Noida, Greater Noida and Yamuna Expressway.

These markets have been reeling under tremendous pressure over the last three to four years, and require a fresh injection of opportunity and intent to overcome this slump.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Inarguably, the Indian real estate vertical that in the direst need of funding is the residential sector. In a perfect world, the private equity that is now pouring into the country’s realty sector would focus on where it is needed the most.

However, PE firms have their own investment rationale, and Indian residential real estate has been far from attractive to them.

There are sound reasons for this. The Indian residential sector has been hounded by multiple problems for the last 3 to 4 years. These include the issue of stalled/delayed projects, liquidity crunch, and high property values despite weakened demand and slow sales.

The country’s housing market has also seen the highest impact of policy-induced disruptions. Given the fact that the housing market was tainted by malpractices and lack of customer-centricity by developers, the Government had to step in with policy interventions squarely aimed at cleaning up the sector.

The inevitable fallout of demonetization (DeMo) on an industry which was ‘thriving’ on black money aside:

The long-pending enactment of the Real Estate Regulation Act (RERA) drew clear regulatory lines for the housing market –

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Maharashtra still leads with 20,718 projects & about 19,699 RERA-registered real estate agents
Gujarat comes second – 5,317 RERA-registered projects & 899 registered agents and agencies
Karnataka – 2530 projects & about 1342 RERA-registered real estate agents; Andhra Pradesh – 307 RERA-registered projects
West Bengal the only state with its own real estate law WBHIRA

It’s been two years since the deployment of the Real Estate Regulatory Authority (RERA) across the country and the Centre’s aim to enforce it in each state is gathering visible momentum.

Even the north-eastern states including Manipur, Meghalaya, Mizoram, Nagaland, and Sikkim – which earlier shied away from it – have agreed to officially notify RERA rules soon.

West Bengal is the only state which notified its own real estate law under West Bengal Housing Industry Regulatory Authority (WBHIRA).

It may be recalled that RERA intended to cover developers as well as real estate agents seamlessly across the country.

As it stands now,

by Arun Chitnis

PRESS RELEASE

18% Homebuyers Prefer New Launch Homes Against Previous 5%: ANAROCK Consumer Sentiment Survey

RERA implementation & lower GST revive consumer faith in new launches; 36% of buyers still prefer ready-to-move-in units
Lower prices influenced >50% homebuyers to purchase homes in 2018; nearly 52% would buy again with the same developer
End-user-driven Bangalore saw 44% of respondents buy homes for investment
70% of prospective buyers prefer properties under INR 80 lakh
Tier 2 & 3 cities new investment hotspots; Bangalore favourite investment destination for NRIs

Mumbai, 24 April 2019: While ready-to-move-in homes remained the preferred choice for several homebuyers, new launches (which drew the least consumer interest in the previous survey) saw a decent revival according to ANAROCK’s Consumer Sentiment Survey H1 2019.

Over 18% of respondents now prefer new launch properties as against mere 5% in the previous survey.

Interestingly, 44% NRIs would now consider new launch properties over under-construction (to be completed in 1 year) or ready-to-move-in homes (obviously a welcome development for developers facing funding issues due to previously negligible advance sales).

by Anuj Puri

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 Anuj Puri

New supply across top 7 cities up by 27% q-o-q – from 55,600 units in Q4 2018 to 70,490 units this quarter; defies conventional election period trends
Pune and MMR see max. quarterly rise in both housing sales and new supply; absorption in Pune rose by 24%, in MMR by 19%
Bengaluru frontrunner in shedding unsold stock; sees 9% decline in Q1 2019 over previous quarter & a 27% yearly fall
New affordable housing supply sees over 47% q-o-q jump – from 20,800 units in Q4 2018 to 30,750 units this quarter
Annual housing sales rise 58%, new launches up by 91% across the top 7 cities

Defying previous election year trends when sales and new launches remained muted during this period, Q1 2019 saw both housing sales and new supply rise due to multiple Government sops in the first three months of 2019.

ANAROCK Property Consultants’ data shows that housing sales rose by 12% and new residential supply by 27% q-o-q due to sops in the interim budget, GST rate cuts and lowering of home loan rates post RBI’s recent repo rate cut.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Self-redevelopment of old, dilapidated housing projects in cities like Mumbai is a much-talked-about new phenomenon and is rapidly catching on because it is, in many cases, a practically possible proposition. Self-completion of stalled projects is, however, another ballgame altogether.

The issue of stalled or delayed project is one of the major pain points of the Indian real estate sector currently. With buyers feeling the heat of delays, it is not surprising that some are now considering completing the projects themselves.

This falls within the realm of possibility if the project in question has sufficient cash flows but is delayed for other reasons.

Rather than being victims, some buyers prefer to take matters into their own hands and are forming groups, hiring contractors and even consulting with Government authorities about the process of completing their projects themselves.

The Challenges of Self-Completion

Realistically speaking, it is a mammoth task to build a real estate project, and only experts within this domain will know the inherent challenges. Projects stuck due to land ownership titles flaws or litigations may not be doable self-completion propositions for buyers at all.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Gudi Padwa is a traditionally auspicious time to invest in real estate in India. While Gudi Padwa is a Maharashtrian concept, the period of oncoming spring and the sense of renewal it brings is acknowledged across the country.

Punjab has its Baisakhi, Andhra Pradesh has its Yugadi, Tamil Nadu celebrates Puthandu and Kerala knows it as Vishu.

Historically, Indians have always seen certain dates as highly auspicious for property purchase and other wealth-creation measures.

For this reason, property sales tend to spike up during festivals like Gudi Padwa and builders align various offers, schemes and discounts with them to encourage this brief phenomenon.

In recent years, this trend came in on a more subdued note because of the prevailing conditions on the real estate market.

In fact, Gudi Padwa in 2018 was anything but a vibrant time for the property sector. It was defined by significantly lower housing sales than developers would have wished for.

However, 2019’s Gudi Padwa is very different.

The slew of sops offered by the Government in just the first three months of the year –

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The new GST-related announcement has given real estate developers the choice to either opt for the old rates and the accompanying input tax credit (ITC) benefits or else to adhere to the new reduced GST rate of 5% without ITC.

While not exactly ground-breaking, it is indeed an intelligent move by smart play by the incumbent Government. With this decision, it has carefully side-stepped conflict with both builders and buyers.

Most developers reacted to last month’s announcement of the new GST rate minus ITC with trepidation.

There was justifiable worry about what would happen to the input stock which they have accumulated much before as part of their long-term purchases. For them, this new move will be beneficial.

However, developers choosing to go with the second option of new GST rates may not be able to hike property prices in the immediate future.

The possibility of prices being hiked was a matter of concern for aspiring buyers, but the fact is that developers can ill afford to test the currently fragile market sentiment by raising rates immediately.

NRI Investors Zero In On Indian Real Estate’s Revival Signals

Jewar International Airport: Revival For Noida And Greater Noida?

Will India Housing Sector Return To Favour With PE Firms?

2 Years of RERA – Project and Broker Registrations Rise Across States

18% Home Buyers In India Prefer New Launch Homes Against Previous 5%: ANAROCK Consumer Sentiment Survey

Private Equity Still Votes For Commercial Real Estate

Govt Sops Boost Housing Sales By 12% In Q1 2019 Over Q4 2018: ANAROCK

Housing Project Self-Completion: Far-Fetched Or Viable?

Housing Sales May Surge In Gudi Padwa 2019

GST Announcement: Government Side-Steps Conflict