India Real Estate – Page 32

Real Estate – FinMin To The Rescue?

Anuj Puri, Chairman – ANAROCK Property Consultants

Finance Minister, Piyush Goyal’s meeting with top industry stakeholders shows clear intent to salvage the sector

Despite the many interventions by the Government directly or indirectly benefiting the real estate sector in recent times, many pressing problems besetting this industry have remained unaddressed. A major one among these is the issue of stalled projects, which has been at the core of buyers’ discontent.

Taking cognizance of this and several other issues, officiating finance minister Piyush Goyal held a meeting with the top bankers and industry stakeholders to discuss measures that can be taken to bring the industry back on track.

After RERA, this was potentially the most direct and straightforward intervention move that the Government has taken on behalf of the struggling real estate sector.

The item of highest interest on the meeting agenda was the proposal to rope in the National Buildings Construction Corporation (NBCC) to complete stalled projects, a predominant burden of which is NCR.

What is at stake?

Even if 50% of the stalled projects are picked up by NBCC,

by Santhosh Kumar

Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

For a very long time, real estate developers and investors focused almost exclusively on the metros and tier 1 cities, as these were considered the safest bets for sales and returns on investment. After all, these cities were generating the most employment and therefore inward migration.

As a result, the metros and tier 1 cities across India are currently experiencing the immense pressure of overpopulation due to urban migration in search of better livelihood and enhanced quality of life, thus resulting in an inadequate infrastructure for the citizens.

The Smart Cities Mission, launched in 2015, aims to tackle the escalating problems being faced in urban areas with regards to transportation, energy supply, governance, basic urban infrastructure services and overall quality of life.

Although the mission is trying to address these issues to a certain extent, the challenges of remodelling India’s tier 1 cities into smart cities are considerable, as many of them have reached their saturation point.

Tier 2/3 cities stage a comeback

As a result, more and more real estate demand and supply are now drifting down towards tier 2 and tier 3 cities of the country.

by Anuj Puri

Below ₹ 40 lakh budget category rules supply, followed by mid-segment (₹ 40-80 lakh)
Of all supply between 2013-Q1 2018, affordable housing contributed 64%, mid-segment 23%

ANAROCK Property Consultants’ latest report ‘Kolkata: The Shining Star of the East’ analyzes the city’s major real estate trends, and highlights that affordable housing has gained significant traction in Kolkata.

The state government has given a major push to this segment with its a new housing scheme ‘Nijoshree’, which provides homes under two categories to people whose monthly income is < ₹ 15,000 and < ₹ 30,000.

An important finding of this report is that a majority of the supply of housing units is in < ₹ 40 lakh budget. In terms of unsold inventory ageing pattern, only 9% of the units are ready-to-move-in, whereas more than 50% units are due to complete in the next 2 years.

Approximately 1,19,000 units launched in Kolkata between 2013 and Q1 2018, of which 68% were added between 2013 and 2015.
Kolkata accounted for 7% of the overall unsold inventory across the top 7 cities of India as of Q1 2018.

by Santhosh Kumar

Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Gurugram Residential Real Estate

The Millennium City of Gurugram has a very prominent place on India’s residential real estate map and is considered a bellwether of the state of the market for NCR.

If we study what happened in the city’s housing market in the first quarter of 2018 against the same period in 2017, some interesting changes emerge.

Pricing

Q1 2018– The weighted average price for housing properties launched between January to May in 2018 is INR 4580/sq.ft.
Q1 2017– The weighted average price for housing properties launched between January to May in 2017 was INR 4,300/sq.ft.

In other words, we are seeing an uptick in pricing for newly-launched housing projects in Gurugram, in line with the returning end-user demand as a result of improving market transparency.

Launches

In Q1 2018, approximately 4,100 new units have been launched in Gurugram,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The landmark reform of Goods & Services Tax (GST) was, in many ways, the final bullet shot to the Indian real estate sector in July 2017. The industry was already reeling under the immediate impact of DeMo and RERA.

GST was touted to be a gamechanger for all sectors including real estate. It was largely anticipated that GST will provide a much-needed respite to homebuyers by way of reduced property prices. Unfortunately, with GST completing one year, it emerges that these expectations were unrealistic.

While the tax-on-tax has been eliminated with the advent of GST, the overall outgo from homebuyers’ pockets seems to have increased by as much as 8% across cities. This ultimately reduces the demand in real estate.

Also, the higher tax rate on purchasing a home – an already staggering expense for most Indians – has kept many home buyers and investors off the market.

Let’s understand this better.

In real time, the cost of raw materials under the GST regime underwent minor changes – cement, paints and plasters were taxed at 28%,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Home loans are paid in instalments which are commonly known as Equated Monthly Instalments (EMI). These are fixed amount which is expected to be paid by the borrower to the bank every month as a part of loan repayment.

A bank considers a home loan to be in default when the borrower fails to make a payment and is behind by 90 days. In such a case, the borrower would have missed 3 payments of EMI.

When the home loan is in default, banks do not seize the assets of the borrowers immediately. They send a notice to the borrower stating that the EMI payment has been missed and strict action will be taken in this regard.

Banks are ready to understand the various reasons behind non-payment of the EMIs, which might include financial crisis, accident, etc. if the borrower approaches the bank with an explanation.

Once the reason is conveyed by the borrower or is otherwise evident to the lender, the bank restructures the EMI and extends the loan tenure on the request of the borrower.

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.

by Anuj Kejriwal

Anuj Kejriwal, MD & CEO – ANAROCK Retail

There is so much talk of the death of brick-and-mortar retail as a consequence of the aggressive advent of e-commerce into the country, when the fact is that shopping malls have just got started in India – and they are definitely here to stay.

As developers learn through trial and error and come up with more winning formulas for their malls, and as retailers get more into omnichannel selling, we will see the Great Indian Mall revolution spin into its next cycle of evolution.

Why the Indian Mall Story Rocks

Unlike ‘couch potato’ e-commerce shopping, malls offer an experience… a touch-and-feel benefit which online shopping cannot. Also, going to a mall becomes an outing for the family and friends, often coupled with a meal at the food court and a movie at the cineplex.

All this in air-conditioned comfort, escalators and lifts connecting everything to the parking below, and scrupulously cleaned sanitary facilities at all levels. The massive Indian middle class loves this experience and online retail is unlikely to put malls in the shade in India anytime soon.

by Sukhdeep Aurora

Sukhdeep Aurora, Chief People Officer – ANAROCK Property Consultants

Open offices are a new-age commercial spaces trend which is catching up across the globe, including in India. Improving wireless technology to suit changing business requirements is truly an enabler for this transformation.

Millennials and globe-trotters today account for a large and ever-increasing share of the Indian working population – they operate on a very collaborative wavelength and are, by and large, not at home in the traditional cubicles model that so far defined most Indian office spaces.

To cater to the evolving mindset of a Gen Next workforce – and to achieve better productivity and employee retention – an increasing number of progressive firms are now transforming their offices into trendy, happening, open spaces that promote innovation and collaboration.

Advantages of the Open Office Culture:

Employees can interact and collaborate easily, which not only improves productivity but also fosters a stronger sense of camaraderie
Colleagues can discuss and seek advice without scheduling formal meetings
Collaborative offices are vibrant spaces that emit positive energy and therefore uplift the innovation quotient
Making the spaces where employees spend a significant portion of their day more vibrant and energetic makes them look forward to hitting the office
Open offices reduce the cost of construction as walls,

by Prashant Thakur

Prashant Thakur, Head – Research, ANAROCK Property Consultants

Project delays are one of the most alarming issues historically dogging the Indian real estate sector.

The dearth of effective planning and execution of construction activities, escalating construction costs, approval delays, diversion of allocated funds to other projects and tepid sales are some of the predominant factors resulting in project delays. The homebuyer is, of course, at the losing end.

To put it in numbers, during 2017, out of the total 5.8 lakh residential units slated to be completed across the top 7 cities in India, only 1.5 lakh units were actually delivered until December 2017. This indicates that around 4.3 lakh units actually missed their stipulated completion deadlines.

The National Capital Region (NCR), one of the country’s largest residential markets, was seriously wounded by sudden policy changes, structural reforms – and the dubious practices of unscrupulous developers.

As a result, it topped the list of cities with maximum project delays. Around 1.5 lakh units in NCR missed the 2017 deadline. The story in Mumbai Metropolitan Region (MMR) was no different with nearly 1.1 lakh units missing the said deadline.

Real Estate – FinMin To The Rescue?

Smart City Mission – Tier 2 and Tier 3 Cities Take the Lead

Affordable Housing Dominates Kolkata Property Market – ANAROCK Report

Gurugram Real Estate – Q1 2018 vs Q1 2017

GST Enters Year 2 – Real Estate Still Flummoxed

How To Avoid Defaulting On A Home Loan

Coworking Space – A Threat To Conventional Offices?

Indian Malls – Change Is The Only Constant

India Inc. Goes Global with Open Offices

NCR Real Estate Market Report: Can NCR Deliver On Its Promises?