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Anuj Puri, Chairman – ANAROCK Property Consultants

With the implementation of accounting standard – IND AS 115, real estate developers will have to do away with the existing percentage completion method and adopt project completion method.

This is not a mere accounting change as it will have a severe impact on the ways & means in which the real estate developers run business, raise funds, price and sell projects.

Under the percentage completion method (old accounting standard), advance payments received from a home buyer towards an under construction flat were considered as revenue and added to the company’s turnover and net income generated from such projects were treated as profits.

However, under the project completion method (new accounting standard), advance payments received from a home buyer towards an under construction flat will have to be treated as loans and not income from sales. This will bear the following impact:

  1. Real estate stock prices may witness a significant correction – stock prices are a function of the company’s profitability and leverage. With changes in the accounting standards, the price-to-book value ratio will change and will bear an impact on the current stock prices.

Anuj Puri, Chairman – ANAROCK Property Consultants

When it comes to Indian real estate, the topic of NRI investments is pretty much an evergreen one. The fact that Indian developers had, in the past, launched and marketed projects with an almost exclusive eye on NRI customers is certainly no secret.

There were many reasons for this, but the primary one was that NRIs – especially NRIs based in the Gulf and the US – were seen as cash cows with more money than sense.

Time has proved this theory erroneous. NRIs are among the savviest property investors on the Indian market today. This is amply demonstrated by how adroitly they have gauged the new investment trends on the Indian real estate market.

For a long time, the returns on investments that NRIs could get on residential assets were extremely rewarding, considering the significant capital appreciation whilst the rental yields have always been low.

However, during the last couple of years, the market slowdown resulted in capital appreciation on residential assets no longer being as per NRI investors’ expectations.

In the current market conditions,

Anuj Puri, Chairman – ANAROCK Property Consultants

The Goods and Services Tax (GST), a revolutionary tax reform rolled out in July 2017, has effectively replaced the previous Gordian Knot of multiple taxes like VAT, central excise duty, commercial tax, service tax, octroi, etc.

It has made India a ‘tax-neutral’ nation – and while it evoked a response best described as ‘mixed’ from real estate buyers, most of them are in favour of it.

This is natural, as the unitary tax compliance system has simplified the homebuying process – and with the passage of Input Tax Credit (ITC), there may not be a significant additional burden to buying a home.

Homebuyers in the affordable housing segment – specifically homes of up to 60 sq.m carpet area in size – have benefited significantly from the reduction of GST by 4% (from 12% to 8%).

However, even almost a year after GST implementation, the only real clarity that exists for property buyers is on the prevailing GST rate of 12% on under-construction projects.

There is still confusion about the amount of rebate that a prospective homebuyer is entitled to on the back of the pass-over of ITC.

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ANAROCK Launches ANAROCK Retail To Tap Into India’s $700 Bn. Retail Market

  • Partners with Faithlane PC to create India’s most focused retail advisory firm

Mumbai, 6 June 2018: India’s leading independent real estate services firm ANAROCK Property Consultants today announced the official launch of ANAROCK Retail, a new firm dedicated to tapping into India’s $700 bn. retail market via its expert retail consultancy services.

The new firm is the result of a partnership between ANAROCK and Faithlane Property Consultants, headed by retail realty veteran Anuj Kejriwal who joins as CEO & MD – ANAROCK Retail.

ANAROCK’s entry into the retail real estate domain was really only a matter of time,” says Anuj Puri, Chairman – ANAROCK Property Consultants. Mr Puri is himself an acknowledged retail real estate expert who, in addition to his previous role as Chairman of a leading IPC in India, was also Chairman of its Global Retail Leasing Board.

“We have a deep market reach in this domain,

Anuj Puri, Chairman – ANAROCK Property Consultants

Across the globe, 5th June is celebrated as World Environment Day, which is the principal platform of the United Nation to create more awareness and action towards protecting Earth’s environment. This day has a very special significance for the real estate sector

Over the past few decades, fast-paced economic development coupled with rapid population growth and urbanization has led to a rapid depletion of natural resources.

The accelerated rate of resource consumption and rise in greenhouse gases’ emission has resulted in significant environmental degradation. This has, in turn, resulted in climate change, the rise in average temperature and deterioration of air quality.

The building sector is one of the major consumers of natural resources such as water, energy and other raw materials. It generates a large number of wastes and pollutants during the three phases of its life cycle – construction, maintenance and deconstruction.

As per estimates, the construction sector consumes an approximate 25% of water and 35-40% energy, apart from other raw materials. Additionally, it emits 40% of global wastes and 35% of greenhouse gases.

Prashant Thakur, Head – Research, ANAROCK Property Consultants

Located in south-eastern peripheries of Pune, Undri was once a small and unremarkable village outside the Pune municipal corporation limits. After opposition from residents regarding merging of Undri into the Pune Municipal Corporation (PMC) in 1997, it was demerged in 2002.

In 2017, Undri came under the purview of the Pune administrative authority – Pune Metropolitan Region Development Authority (PMRDA). Many residents of the region, whose primary occupation was agriculture, sold their land parcels to private real estate players, thus paving the way for rapid growth of residential and commercial developments in Undri.

Surrounded by micro-markets such as Hadapsar, Pisoli, and Handewadi, Undri offers relatively serene surroundings with thick green cover. It has good social infrastructural facilities including educational institutions, healthcare facilities, and entertainment options.

Various IT-ITeS establishments including Magarpatta City in Hadapsar, Eon Free Zone in Kharadi and SP Infocity in Phursungi have created massive residential demand in and around the regions, eventually hiking property prices in these areas.

Undri caught the spill-over demand from these nearby markets with its relatively lower property values.

Anuj Puri, Chairman – ANAROCK Property Consultants

‘Small is beautiful’ is the new buzzword with Indian millennials when it comes to buying homes in cities like Mumbai.

These young professionals are less focused on size and look for homes in locations close or well-connected to their workplaces so that their daily commute is reduced and work-life balance is maintained. Compact homes are also low on maintenance expenses and are invariably very budget-friendly in all respects.

With the ever-increasing rents in a city like Mumbai, buying a compact home is also a very suitable option for several new citizens. Taking a small loan and paying up the monthly EMIs on an investment-grade asset which can be easily resold is seen as preferable to shelling out hefty rents.

On the back of this trend – and the prevailing market sentiment which is averse to overly heavy investments into residential property – apartment sizes in the Indian metros are definitely shrinking as developers increasingly deploy affordably-priced homes for which the demand is currently the highest.

In fact, apartment sizes have already reduced significantly enough to justify any and all measures that help maximize the usability of the available spaces.

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Santhosh Kumar, Vice Chairman – ANAROCK Property Consultants

Despite being hit by the overall slowdown in the real estate market and seeing price corrections up to 10% in most areas, Delhi-NCR continues to be attractive to end-users and investors. Being the national capital, Delhi attracts migrants from all across the country.

In fact, as per the Economic Survey of 2017, Delhi, Noida, Greater Noida and Gurugram saw the maximum influx of migrants between 2001 and 2011. Obviously, there is a dire need to fulfil the housing needs of these migrants.

As per ANAROCK data, the housing supply in Delhi over the last two years has been fairly low as compared to its counterparts – Gurugram and Noida. This is essentially due to demand-supply mismatch; there is massive demand for affordable housing in the city, while property prices in most pockets of the city have skyrocketed.

Consequently, the pockets that offer affordable or mid-segment projects have been performing relatively better than the expensive ones – such as Greater Kailash II, Panchsheel Park and South Extension II, to name a few.

In 2018 as well,

Anuj Puri, Chairman – ANAROCK Property Consultants

The Union Cabinet’s amendment to the Insolvency and Bankruptcy Code now effectively treats homebuyers as financial creditors and comes as a massive relief to them.

Residential property buyers are now effectively considered at par with banks and other institutional creditors when it comes to recovering dues from real estate developers who have gone bankrupt.

However, it needs to be seen how the resolution mechanism for claiming the dues actually falls in place for the concerned homebuyers. In fact, to be truly relevant, the entire implementation process needs to be clarified to homebuyers.

They need to know how exactly they will be represented in the creditors’ committee – in other words, whether the NCLT will appoint a resolution professional to represent their rights and interests.

That said, this amendment will certainly go a considerable way in bringing more transparency into the overall funding of projects across the country. With homebuyers now getting the opportunity to claim their dues from builders, there is an even stronger burden on developers to deliver on time.

We will now see builders become more cautious while taking funds from financial institutions and banks,

Anuj Puri, Chairman – ANAROCK Property Consultants

  • Over 30 new shopping malls covering 14 million sq. ft. of the area expected across top 8 cities by 2020
  • Indian retail pegged to grow by 60% to reach US$ 1.1 trillion by 2020
  • Tier 2 cities fast catching up with the metros

Rapid urbanization and digitization, increasing disposable incomes and lifestyle changes of the middle-class are leading to a major revolution in the Indian retail sector, which is pegged to grow by 60% to reach US$ 1.1 trillion by 2020.

The Government has clearly hit the bullseye by easing the FDI norms in the retail sector over the past few years. Reacting to the immense opportunities and diminishing entry barriers into the Indian retail scene, overseas retailers are now expanding exuberantly.

And it’s not just the metros they’re targeting – even tier 2 cities like Ahmedabad, Chandigarh, Lucknow and Jaipur, to name a few, are opening up for organized retail in a big way. Malls are literally mushrooming across the Indian subcontinent.

Ready,

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