News Letter

Homes worth around Rs 88,730 crore sold in top-7 cities in January-September

October 12, 2020 Ref - moneycontrol.com

Severely impacted by the COVID-19 pandemic, the top-seven cities saw homes worth approximately Rs 88,730 crore sold in the first three quarters of 2020 as against around Rs 1,54,320 crore in the corresponding period of 2019. This is a 43 percent decline, with total value reduction amounting to approximately Rs 65,590 crore during the period, a report by Anarock has said.

Between January to September, as many as 87,460 units were sold across the top seven cities as against approx. 2.02 lakh units sold a year ago. However, the quarterly numbers indicate that the worst is over for the residential sector.

In the third quarter of 2020, home sales values increased by more than 2.3 times to approximately Rs 29,731 crore - up from Rs 12,694 crore in the preceding quarter. The first quarter of 2020 saw home sales worth approximately Rs 46,306 crore.

The upcoming festive quarter (Oct.-Dec.) will very probably see home sales values go up on the back of increased demand fed by financial schemes and offers, it said.

Meanwhile, city-wise, MMR was on top and clocked sales worth Rs 49,313 crore in the first three quarters of 2020. On a yearly basis, MMR saw total sales value reduce by 22 percent - from Rs 62,964 crore in 2019 to Rs 49,313 crore this year. But, interestingly, as against 2018-period – when MMR recorded sales worth Rs 47,242 crore – it became the only city to witness an increase (of 4 percent).

Bengaluru sales values in the first nine of months of 2020 stood at Rs 12,569 crore as against Rs 28,159 crore in the 2019-period. The city saw sales of nearly 17,020 units between January to September 2020, the report said.

Hyderabad witnessed housing sales worth Rs 3,116 crore in this period as against Rs 9,391 crore back in 2019. The overall units sold in the three quarters here is approximately 4,980 units.

Chennai saw housing sales worth Rs 2,777 crore in the three quarters of 2020 as against Rs 5,575 crore in 2019. The city recorded home sales of nearly 4,280 units in 2020-till September, the report said.

As for the third quarter of 2020, sales did go up. Despite the ongoing pandemic, end-users are making the most of bottomed-out property prices and historic low home loan rates and financial schemes offered by developers.

Housing sales value in the top 7 cities in Q3 2020 collectively rose to Rs 29,731 crore as against Rs 12,694 crore in the preceding quarter – a significant q-o-q jump of 134 percent over Rs 46,306 crore of the pre-Covid-19 quarter.

Chennai housing sales values jumped up almost 3.3 times - from Rs 314 crore in the second quarter of 2020 to over Rs 1,039 crore in the third quarter of 2020.

NCR was next, recording a jump of 157 percent in its sales value – from Rs 1,263 crore in the second quarter of 2020 to over Rs 3,246 crore in the third quarter.

MMR saw homes worth Rs 16,500 crore sold in the third quarter of 2020 against Rs 6,748 crore in the preceding quarter - an increase of 145 percent.

Office transactions across prime cities witness growth recovery: Knight Frank India

October 8, 2020 Ref - moneycontrol.com

Gross office leasing across top eight cities in the country witnessed a strong recovery, registering 80 percent growth to 0.44 mn sq m in the third quarter of 2020. New office completions during the same period, reported recovery of 126 percent to 0.33 mn sq m compared to second quarter of 2020, Knight Frank India’s quarterly report titled India Real Estate Update - Q3 2020, said.

As Q2 2020 was marred by lockdown, the report cited the need to evaluate commercial market recovery compared to pre-COVID levels. Thus, besides looking at a single period, i.e. Quarter on Quarter analysis, Knight Frank India established a comparative matrix of Q3 2020 recovery against the quarterly average number of transactions in the year 2019.

The total office transactions of the eight markets in Q3 2020 have improved and reached 33 percent of the 2019 quarterly average level. Chennai, National Capital Region (NCR), and Mumbai recorded higher recovery in Q3 2020 with transactions reaching the level of 57 percent, 43 percent and 42 percent  respectively of the quarterly average of the year 2019, the report said.

New completions also improved to 29 percent  of the 2019 quarterly average. In terms of new completions in Q3 2020, Ahmedabad was the only market to report higher new office completions, 125 percent  of quarterly average levels of the year 2019, the report said.

However, with the unlocking in progress, going forward as India edges back economic recovery, the office market dynamics are also expected to improve. The recent success of REITs can be understood as an indicator of long – term confidence of investors for office space, he said.

COVID-19 impact: Work-from-home forcing occupiers to set up multiple offices across cities

October 6, 2020 Ref - moneycontrol.com

The year 2020 brought with it disruption and forced businesses to undergo transitions and alterations. With COVID-19 spreading its tentacles far and wide, offices had to adapt the work-from-home culture, put social distancing norms in place wherever necessary and adopt some unique office space trends.

One such model is the reverse trend that is being witnessed by the commercial office market space wherein occupiers are now looking at reducing their dependence on a single headquarter office and are subsequently adopting a distributed occupancy strategy.

This enables them to set up multiple office spaces in smaller hubs or micro-markets across a city or region usually at a lower cost location resulting in improved work-life balance for employees and reduced commute time, given the lockdown restrictions and current social distancing norms.

Noida experienced the biggest year in 2019 with approximately 2.8 mn sq ft of gross absorption, which was led by approximately 1.7 mn sq ft of leasing on the Noida expressway alone. In H1 of 2020, Noida overtook Gurgaon in terms of overall office space absorption owing to its quality supply of offices, aggressive commercials, enhanced infrastructure, and better connectivity.

Another reason for this increase was the fact that Gurgaon witnessed more exits than fresh take ups leading to negative absorption in the market more specifically in Q2 for 2020.

Golf Course Extension Road is another micro-market that has been observing a significant amount of growth and interest over the last two years. Improved connectivity with Cyber City has led to major growth in terms of leasing here.

The Golf Course Extension Road has close to 10 mn sq ft of supply where most of the leases were signed recently. In 2019, this stretch saw about a 1 mn sq ft of leasing. It is one of the most active micro-markets in India along with Noida expressway.

Previously, leasing options were concentrated in Central Business District (CBD) in most micro-markets. There was low vacancy and thereby only a few suitable options were available for tenants.

However, with recent exits, there is quality supply at disposal for tenants in both CBD and non-CBD markets. Over 12-18 months, the market is going to be tilted towards favouring tenants as there will be good quality supply available and marginal correction in terms of rentals too.

Mumbai’s real estate revival depends on lesser greed — not from the developer

October 4, 2020 Ref - moneycontrol.com

No segment is as disappointed with the fate of Mumbai real estate as apartment owners of buildings scouting for redevelopment. In the exuberant days of 2006-11, developers were jumping over each other to gain favour among residents of buildings that had potential to get redeveloped. The older the building, the better.

Owners of apartments in creaky and shabby buildings saw the notional value of their houses multiply. The premise was simple: the owner of an apartment in a worn-out building would get a bigger apartment in a new and flashy building - free. If luck had another name in Mumbai, it was redevelopment.

In its simplest definition redevelopment involves the demolition of an old & small building and replacing it with a bigger building – subject to municipal authority norms. The equation is straight-forward: Residents of the old building get apartments in the newer building, a certain number of apartments in the new building are sold in the open market by the developer for his profit and the government earns revenues by selling FSI to the builder.

Eight years later, it will be fair to say that the real estate story in Mumbai has been a major disappointment. Given the paucity of open land, real estate in the commercial capital is predominantly a redevelopment theme. And, things are not looking good.

Redevelopment proposals in the last year have come down by 50 percent. It is certain that 2020 and 2021 will see even a further decline. It is easy to blame the real estate industry for this quagmire, but that would be wrong. Profitability levels are at an all-time low while regulatory accountability is at an all-time high.

A large part of the blame goes towards the notorious level of levies and premiums charged by government authorities. In the current crisis, there may be waivers and deferred payments dangled for a limited period but it is unlikely to be sustained. From 2022, the journey towards bankruptcy of the BMC is likely to begin as the central government stops compensation in lieu of octroi.

House price index increases by 2.8% on an annual basis: RBI

October 1, 2020 Ref - moneycontrol.com

The all-India House Price Index increased by 2.8 percent in the first quarter of 2020-21 on an annual basis as compared with 3.4 percent a year ago. The annual growth in city wise HPI varied from an increase of 16.1 percent in Bengaluru to a contraction of 6.7 percent in Delhi, the quarterly HPI by RBI for the April-June 2020 period has said.

The quarterly HPI is based on transaction-level data received from housing registration authorities in 10 major cities that include Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow and Mumbai.

House prices in Bengaluru, Kochi, Ahmedabad and Lucknow increased during the quarter.

The all-India HPI increased by 1.2 per cent on a sequential basis (q-o-q) during the first quarter of 2020-21, the RBI said.

 

Indian house prices to fall 6% this year, risk to downside: Poll

September 29, 2020 Ref - moneycontrol.com

Indian house prices will fall more sharply this year than expected just three months ago amid surging coronavirus cases which are hurting demand in an economy fighting its deepest recession on record, a Reuters poll showed.

Even before the pandemic struck, house prices had declined nearly 1% during the January-March period from the previous quarter, according to Reserve Bank of India data. That is with consumer inflation averaging 6.67% during that same period.

Most new housing projects are either unsold or delayed due to the coronavirus spreading in the country at the fastest rate in the world - causing massive job losses, pay cuts in almost every sector and migration of labour out of top-tier cities.

That gloomy job market was likely to hurt demand and already-slowing housing market activity, suggesting a recovery would not come any time soon, according to the Sept. 16-28 Reuters poll of 15 analysts.

While house prices were expected to decline, retail inflation held above the central bank's medium-term target range of 2-6% for the fifth consecutive month in August, giving little room for the RBI to support the economy.

Nine of 12 respondents who answered an additional question said the risk to their housing market outlook was skewed more to the downside. Nine of 13 analysts predicted the recovery from the recent slowdown to take at least a year.

A regional breakdown in the poll showed house prices this year would fall 7.5%, 7.0%, 5.0% and 3.5% in Mumbai, Delhi, Chennai and Bengaluru, respectively, compared to 7.3%, 7.0%, 3.0% and 3.0% contractions predicted in the June survey.

Housing.com logs 60% traffic surge from pre-COVID level; focusing on tech, brand building

September 27, 2020 Ref - moneycontrol.com

News Corp and Softbank-backed Elara Technologies group owns three real estate portals — PropTiger, Makaan.com and Housing.com.

In an interview with PTI, Agarwala, who is also the CEO of PropTiger and Makaan.com, said the group is investing a significant amount on brand building of Housing.com during the ongoing IPL cricket tournament being held in the UAE.

To cater to the rising trafiic from smaller towns, he said Housing.com has been launched in Hindi and the platform will soon be available in other regional languages.

Stating that the Indian digital real estate market offers huge opportunity, he said the group will continue to invest to grow the business and raise funds if needed.

Asked about the impact on its business and recovery post lockdown, he said the traffic on its three platforms fell sharply in the initial days of lockdown, which was imposed on March 25 to curb the spread of the coronavirus disease.

Now, the traffic on all platforms are well above pre-COVID levels, he added.

"Housing.com has seen the maximum gains with organic traffic up by 60 percent from the pre-COVID number. Conversion rates, from traffic to enquiries, on all our platforms are also higher than what they were in March, which suggests that prospective buyers are beginning to come back into the market to search for homes,” Agarwala said.

He noted that the digital adoption in the sales and marketing of real estate has gone up significantly after the coronavirus outbreak, both from demand and supply side.

The trend would only become stronger with consumer unlikely to reverse their buying behaviour.

Webinars, video conference, live drone views, online walkthroughs of sample apartments have become more common.

On fund raising plans, Agarwala said: "The opportunity for digital real estate continues to be big in India. We would raise the necessary capital to continue investing in our business as and when needed to drive growth and increase market share.”

In January this year, the US-based News Corp and its Australian arm REA Group invested around $70 million (Rs 500 crore) in Elara Technologies.

With this funding, Elara has raised $175 million so far from investors.

Second pre-bid meeting for redevelopment of New Delhi Railway Station held

September 25, 2020 Ref - moneycontrol.com

The second pre-bid meeting for the redevelopment of New Delhi Railway Station (NDLS) was held on September 25. As many as 35 national and international firms including The Société Nationale des chemin de fer français (SCNF), Arabian Construction Company, Anchorage Infrastructure, Adani, GMR, I Squared Capital, JKB Infra, Kalpataru, among others, participated, sources told Moneycontrol.

The last date of submission of Request for Quotation (RFQ) for NDLS is on November 6, a source added.

The total cost of the project is estimated at Rs 6,500 crore and is expected to be completed in around four years.

The objective of the project is to position NDLS as a multi-model hub by upgrading infrastructure and provisioning for amenities such as an elevated concourse, multi-level car parking, among others.

Some of the salient features of the planned redevelopment include an elevated concourse with segregation of arriving and departing passengers; refurbished platforms with easy access from the concourse level; mezzanine level exclusively for passenger facilities such as lounges, food courts and restrooms; an elevated road network with multiple entry and exit points; a multi-level car parking facility; and Green Building provisions such as optimum use of natural ventilation and lighting.

The project would also include a significant commercial component entailing a mix of retail, office, and hospitality developments such as 5-star hotels, budget hotels and serviced apartments on approximately 30 acres of land.

Rail Land Development Authority (RLDA) is a statutory body under the Ministry of Railways for the development of vacant railway land for commercial use in line with the objective to generate revenue by non-tariff measures.

Currently, Indian Railways has approximately 43,000 hectares of vacant land across India. RLDA has over 85 sites, 84 railway colonies redevelopment works, and 62 railway station development works across India for leasing and eligible developers for each will be selected through an open and transparent bid process.

Will Film City project near Jewar boost real estate markets in Noida, Greater Noida and Yamuna Expressway?

September 23, 2020 Ref - moneycontrol.com

After Jewar airport, there will be another feather on Yamuna Expressway Industrial Development Authority’s cap. Chief Minister Yogi Adityanath has announced that a 1,000-acre plot located just about 6 km from the proposed Jewar International Airport, has been identified for a film city project.

While this is expected to revive the fortunes of Noida, Greater Noida and Yamuna Expressway real estate market that has taken a beating especially after the COVID-19 pandemic, the real benefits in terms of price appreciation and increased infrastructure activity will only be witnessed once construction gets underway, say real estate experts.

Besides the commercial segment which is expected to see a spurt in demand, the residential category which may benefit from this project would be the luxury segment, say experts.

“Similar to any mega infrastructure project, proposed film city too will help in reviving the property market in nearby areas like Noida, Greater Noida and Yamuna Expressway. However, the ‘real’ benefits - in terms of price appreciation and heightened real estate activity in residential, commercial and retail will be seen only once the project sees visible signs of construction activity or nears completion,” Santosh Kumar, vice chairman, Anarock Property Consultants

For instance, property prices in Ayodhya shot up 25-30 percent back in 2019 when the SC verdict was announced and then almost doubled when the temple ‘poojan’ was done back in August.

In this case there was some activity or progress that happened. “Likewise, even while the film city project has been announced and the area for it has also been identified, we need to see some ground activity for property prices to scale up significantly. Those having land parcels nearby or even the investors will be in a wait and watch mode,” he explained.

The site is located in Sector 21 along the Yamuna Expressway in Gautam Budh Nagar which is barely an hour’s drive from Delhi. According to the presentation, of the 1000 acres, 220 acres would be kept aside for commercial activity.

“The site is also located close to the proposed logistic hub in Noida, the proposed dry port and freight corridor, thus providing all facilities of transport and movement,” chief minister Yogi Adityanath had said on September 22.

The region would also boast of an international electronics city and a global financial hub in the coming years.

The Jewar international airport is expected to be functional by 2023. While there is no official date with regard to the completion of the film city project, sources said that it could be ready by 2023.

Value of real estate under construction jumps to $243 billion from $94 billion in 2009, reveals FICCI-ANAROCK report

September 21, 2020 Ref - moneycontrol.com

The entry of large corporates and consolidation have led to the expansion of the Indian property market with the value of real estate under construction jumping over two-fold to $243 billion in the last one decade, according to a report by FICCI and Anarock.

The expansion of the property market was largely driven by the residential segment. Property consultant Anarock and industry body FICCI pointed out that the number of developers has declined 53 percent across India’s top 14 cities between 2012-2019.

"The Indian real estate sector has been undergoing constant metamorphosis since the turn of the century. This transition has been for the better and the accomplishments so far have been remarkable. The results are quite visible today as the sector has become better organised, compliant, accountable, and transparent compared to what it was during the last decade of the 20th century,” the report said.

The sector saw a slew of structural reforms and policy changes which led to the elimination of weaker players, large-scale consolidation, and entry of large corporate houses, it added.

"Until 2008, the real estate business was highly unregulated and more of a localised play. It was a sellers’ market and was driven by the landlords who had become developers overnight to take advantage of the boom in the sector.

"Until the Global Financial Crisis hit in 2008, funding was readily available, and many developers went overboard in leveraging their assets. As a result, the sector was operating with several inefficiencies,” the report said.

However, Anarock said several corporate houses made inroads into the real estate sector between 2008 and 2015, even as the sector continued to remain unregulated.

"The entry of large players led to an expansion of the overall market and imparted pressure on the government to intervene and change the face of the sector that was growing in an unstructured manner."

"The value of real estate under construction increased from $94 billion in 2009 to $243 billion as on H1 2020, a 2.6X increase. During the same period, the share of housing (residential) grew from 49 percent to 88 percent indicating large-scale expansion witnessed in this segment,” the report said.

Anarock Chairman Anuj Puri said the housing segment is set to undergo a momentary phase of trouble due to the coronavirus pandemic but would emerge stronger in the post-COVID world.

He listed out various factors that would drive the growth of the residential segment.

"Home loan interest rates are at their decadal lows of 6.85 percent. Amid stagnant prices and declining home loan rates, affordability is all-time best. Branded and corporate developers dominate and are being largely preferred by homebuyers,” he added.

That apart, Puri said the government has been supportive and has come up with a slew of measures to support the real estate sector – the second-highest employment generator and a key contributor to the nation’s GDP.

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