Real Estate in India: Land, Emerging Cities, Growth, Potential

Weekly news updates on trends in the Indian real estate market

The retail boom is one of the major factors driving real estate markets in 50 cities in India. Developers and realty wings of companies have accumulated land reserves for future capitalization. Industry watchers expect a correction in property prices soon.

Chillibreeze Business Research Team

Banking on land

Big real estate developers and realty wings of corporate houses have accumulated huge land reserves.

According to industry estimates, Emaar-MGF has reserves to the tune of 10,000 acre, DLF has 10,255 acres while Unitech’s holdings stand at 10,700 acres. realty wings of big corporate houses such as Tata Housing Development Company (THDC) and Godrej Properties are gearing up to accumulate land for the future.

Cushman and Wakefield estimates that 215 million sq ft is expected more in office space, 90 million sq ft more in retail space and 1,800 million sq ft of additional residential space is expected across India by 2010.

The land banks will provide these players the competitive edge as well as supply of land for future residential and commercial plans.
Jun 24, 2007
Source: Economic Times

Letting agencies, decorators see slowdown amid real estate woes

There is a slow down in the real estate market due to the rising prices and lending rates. Realtors are feeling the pinch. Enquiries for buying residential property have reduced 50% and there are hardly any investors in the residential market.
Jun 27, 2007
Source: Livemint.com

CapitaLand to launch new India, China funds-CEO

CapitaLand is set to launch two more property funds this year that will invest in India and China with initial funds of S$500 million (US$325 million) each. This was stated by their CEO at the Reuters Real Estate Summit in Singapore.

CapitaLand, 43-percent owned by Singapore state investor Temasek Holdings, has been aggressive in expanding its financial services business and controls five real estate investment trusts (REITs), including CapitaMall - Singapore's most-valuable property trust. CapitaLand earns up to 80 percent of its profit abroad with projects in markets such as Australia, China and India.
Jun 25, 2007
Source: Reuters

Jones Lang Lasalle Meghraj Identifies “India 50” - The Emerging Cities for Retail Activity

Jones Lang LaSalle Meghraj released its World Winning Cities report on Indian Retail entitled “The Geography of Opportunity - The India 50”

The report points out that the real estate sector has responded well to the retail growth. The total retail mall stock has been doubling every year, from a meagre one million square feet in 2002 to a staggering 40 million square feet by end of 2007 and an estimated 60 million square feet by end of 2008.

The study identifies 50 cities across India that are expected to benefit from the retail boom. A new retail city classification has been defined based on socio-economic characteristics, retailer activity and shopping mall development.

The research identifies five types of cities (Maturing, Transitional, High Growth, Emerging and Nascent), each of which is at a different stage in its retail market evolution and offers different types of opportunities for retailers and the property sector

The top 15 cities (Maturing, Transitional and High growth) from the 50 retail destinations are expected to contribute more than 80% of the total national retail business by 2008.
June 29, 2007
Source: Business Wire India

Home buyers face smaller penalty

The government has introduced a clause in the Real Estate Management & Regulation Bill under which penalties have been capped at 1% of the value of a house. The bill will be taken up by the cabinet soon.

House owners are subjected to stiff penalties by realty companies and builders for failing to make payments on time during the construction of a house. Penalties are charged as interest on the defaulted payment. Industry sources say developers charge interest at rates as high as 8-12% in the absence of any regulation. Almost 30-35% of real estate transactions are construction-linked while the balance is done on the basis of down payments.

The real estate regulator would be first set up in Delhi. Other states will need to decide since property is a state subject.
Jun 28, 2007
Source: Economic Times

India is a country that has "huge potential"

Seek Ngee Huat, president of GIC Real Estate views India as a significant market. Residential, commercial as well as holiday homes are huge oppurtunities for investors.
26th June 2007
Source: Assetz® Property News Service

Smaller realtors take exit route

Small developers are under pressure now as fund flow into real estate has reduced substantially. Many want to liquidate their land or incomplete projects by selling them to larger developers or private equity players even on reduced valuations.

The property valuations are expected to be more realistic in the near future.
Jun 27, 2007
Source: Economic Times

JP Morgan may put $100 m in Prestige Group

JP Morgan’s real estate arm is in talks with Bangalore-based realty developer Prestige Group to infuse close to $100 million in the company, sources said. The proposed funding into Prestige could be sourced from JP Morgan Asset Management’s $360-million India Property Fund.

Prestige plans to develop a mall in Hyderabad, a residential development in Kochi, a technology park in Chennai and villas in Goa. The Group’s existing land bank in south India is reportedly over 500 acres.
Jun 27, 2007
Source: Economic Times

Aerens to invest over Rs 2,000 cr in Punjab

Real estate company, Aeren R enterprises is likely to invest over Rs 2,000 crore in Ludhiana, Punjab, in the next three years.

Plans include a mall, offices, residential apartments, hotel and integrated township.
Jun 26, 2007
Source: PTI via Economic Times

Realty boom: Small-town investment to bear fruits

Real estate action is gradually shifting to upcoming smaller towns and cities.

Guwahati, Nagpur, Bhuvaneswar, Ludhiana, Surat, Kochi, Indore, Vishakhapatnam, Mysore, Coimbatore, are the emerging tier II and III cities
Jun 25, 2007
Source: Times of India