News and views about the Real Estate in Indian cities

Weekly news updates on trends in the Indian real estate market

According to an Ernst & Young study, Delhi is India’s most livable city. The city has the best urban infrastructure compared to other Indian cities. A PwC study on promising Asian real estate markets includes Mumbai in the top 10 Asian cities for investments. The luxury homes have caught the fancy of the Indian consumer, a trend which started with the liberalization of the Indian economy. India’s promising real estate markets include cities like Chandigarh, Jaipur, Ludhiana, Indore, Kochi, Bhubaneswar, Vishakaptanam, Kochi and Surat.

- Chillibreeze Business Research Team

Emerging hubs

The Ernst & Young and FICCI report on ‘Indian Real Estate’ says that rapid economic growth witnessed across the more developed cities has begun to trickle down to other cities. According to the report, newer markets like Chandigarh, Jaipur, Ludhiana, Indore, Kochi, Bhubaneswar,Vishakaptanam, Kochi and Surat, among others, will yield better returns.

The report has tried to do a systematic analysis of 47 cities and categorized them with the growth and investment potential. The analysis is based on a set of parameters related to governance, infrastructure, income, business environment and quality of life. The indices were primarily based on general affluence of the residents, government policies and regulations, which influence the investment climate, confidence of the private sector in investing in the city, level of existing social and physical infrastructure and the general quality of life in city.

8 cities are in the ‘A’ category, 16 are in ‘B’ category and the rest are in ‘C’ category.

Cities like Delhi, Greater Mumbai, Bangalore, Chennai, Hyderabad, Kolkata, Pune and Ahmedabad are in ‘A’ category.

Beyond these eight cities, five cities which have emerged as winners are Surat, Chandigarh, Nagpur, Vadodara, Visakhapatnam and Jaipur. Panaji, Chandigarh, Pune and Ahmedabad are rated high in terms of quality of life. Cities of Gujarat scored high on the Urban Governance Index. Chandigarh ranks sixth after Delhi, Greater Mumbai, Bangalore, Kolkata and Pune on the City of Prosperity Index followed by Hyderabad and Chennai. Among these cities, in the north India, Chandigarh, Jaipur, Ludhiana, Lucknow Amritsar and Agra are prominent ones.

September 29, 2007
Source: Economic Times

Luxury for all

A 2006 Technopak study estimated that India has around 28 million affluent consumers, 1 million of which belong to the 'luxury' category and another 6-7 million fall under the 'very affluent' . Over and above this are 9-10 million consumers in the 'mid-affluent' category and 11-12 million under 'mass affluent' . The study estimated that the Indian luxury market is about USD 444 million with a huge potential in the future. Much of this money, as any developer will tell you, is channeled into luxury homes.

'India Exclusive Homes Anthology’ by Jones Lang LaSalle points out that luxury homes are not a new concept in India. Post-liberalisation saw the emergence of new 'built-for-purpose' premium and luxury housing for the emerging affluent by developers in the main cities.

September 29, 2007
Source: Economic Times

Finding right assets, the ‘real’ challenge for investors

Mumbai has entered the Top 10 list of most promising Asia Pacific cities for real estate investments in the Pricewaterhouse Coopers annual investor survey titled ‘Emerging Trends in Real Estate Asia Pacific 2008’. Greater amounts of capital will be flooding Asia Pacific real estate markets in 2008.

The report provides an outlook on Asia Pacific real estate investment and development trends, real estate finance and capital markets, trends by property sector and metropolitan area, and other real estate issues pertinent to the countries in Asia. About 20 markets were included in the report. Based on the opinions of internationally renowned real estate professionals, Emerging Trends’ Asia Pacific version reflects interviews with and surveys of more than 190 professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

According to the report, the Asia Pacific property market is still as diverse today as it was a year ago, in terms of opportunities, risks, capital markets, economics, demographics and business cycles. The fact that more businesses understand and recognise the diversity and variations is seen as a step towards market maturity.

The Asia Pacific cities included in Emerging Trends fall into different categories, based on each market’s investment and development prospects, and on respondents’ opinions about buying, holding or selling specific property types within each market. In the first category are the top 20 investment cities – with Shanghai, Singapore and Tokyo as the top three.

In the strong development markets segment, Ho Chi Minh City topped the list followed by Shanghai, Singapore, Bangalore and Mumbai. In terms of favoured property types, the hotel sector is ranked highest in terms of investment prospects in Asia Pacific cities followed by the office sector, retail, industrial /distribution, residential for-sale and apartment residential rental sectors.

Significant changes from last year’s buy/hold/sell recommendations for Mumbai include higher buy percentages for industrial (57 per cent in 2007 and 64 per cent in 2008), lower buy percentages for retail (79 per cent down to 63 per cent), apartment/residential (67 per cent down to 59 per cent), and hotel/resort (75 per cent down to 64 per cent).

The report said high returns are especially visible in central business district (CBD) office sectors, where supply shortages have resulted in Grade A rental increases of 60-70 per cent in the Delhi and Mumbai CBDs for the year to March 2007.

September 28, 2007
Source: The Hindu

Real estate finds its 'green' pasture

The concept of 'green buildings' is fast catching on. This is true of IT parks, SEZs, commercial properties and to a small extent, residential properties

The projected growth potential for green buildings in India is estimated to be Rs 2,000 crore by the year ending 2008 according to the last Green Building Congress held in India.

September 28, 2007
Source: Hindustan Times

Deutsche Bank buys 25% in Lodha's SPV

Deutsche Bank Singapore has picked up around 25% stake in a special purpose vehicle (SPV) owned by Mumbai-based developer Lodha Group for Rs 1,700 crore.

The SPV will set up three FDI-compliant real estate projects over 70 acres in Thane and Dahisar
The deal is believed to be the single-largest FDI in the real estate sector in India by a financial investor till date.

The group currently has over 25 million sq ft under construction in and around Mumbai and has a land bank of around 4,000 acres

September 28, 2007
Source: Economic Times

Delhi is the best Indian city to live

Delhi is the best city to live in India. The city top ranks on city prosperity index, transportation infrastructure and business environment.

An E & Y study has evaluated 48 Indian cities on 57 parameters including city prosperity index, business environment, transportation infrastructure, urban governance, social infrastructure, and health services

September 27, 2007
Source: Economic Times

Indian Developers May Sell $4.7 Billion of Shares

According to Ernst & Young, Indian property developers may raise $4.7 billion selling shares this fiscal year, more than the amount raised by them in the past two years.

Construction of houses accounts for 80 percent of the real estate industry. "There has been an increased focus from the developer side on strategic alliances, creation of land banks, geographic expansion and raising capital to fund their extensive development pipeline,'' said Ganesh Raj of E&Y.

Nearly 80 percent of 50 global investors surveyed by Ernst & Young said India was an "excellent'' investment destination compared with China, Malaysia, Indonesia and Thailand. Investors and developers are also turning to smaller cities such as Pune, Indore, Nashik and Coimbatore.

September 27, 2007
Source: Bloomberg

Indiabulls Real Estate Seeking 23.2 Billion Rupees

Indiabulls Real Estate Ltd., India's third-biggest developer by assets, plans to raise 23.2 billion rupees ($585 million) from its founders to fund the building of shops across Tier 2 and 3 cities and an electricity generation plant at the Nashik SEZ.

Shares of Indiabulls Real Estate, which have more than doubled in the past six months, rose 7.3 percent to 615.5 rupees at the 4:15 p.m. close on the Bombay Stock Exchange.

Indiabulls Real Estate Ltd., carved out of Indiabulls Financial Services Ltd. in December, was listed on the Bombay Stock Exchange in March.

The company is building offices, residential townships, and special economic zones that cover an area of 10,000 acres (4,047 hectares) of land. The company has projects coming up in and around Mumbai, Gurgaon, adjacent to New Delhi, Nashik, Chennai, Goa.

September 26, 2007
Source: Bloomberg

Foreign banks, funds exit red-hot real estate

Close to $1 billion investments were sold off in the early days of the subprime crunch. Wall Street banks and leading international investors who have invested in India’s red-hot properties, have turned sellers. Due to the subprime fiasco and credit woes that followed, there is a de-leveraging of books taking place across markets, where investors are keen to pull out of investments made with borrowed funds. The lock-in simply means that money cannot move out of India, but it does not stop a foreign investor selling the exposure to another foreign investor in an overseas transaction.

September 26, 2007
Source: Economic Times