Property consultant JLL India on Monday said it has tied up with online marketplace RoofandFloor to facilitate prospective homebuyers in purchasing their properties.

The platform showcases properties across 24 cities and supports buying, selling and resale, JLL India in a statement.

RoofandFloor is a technology-driven online marketplace for homebuyers in India. “Through this association both firms aim at creating a smooth journey for homebuyers as they together support project discovery, shortlisting, site visits, negotiations and bookings,” it said.

The partnership brings together JLL’s long-established relationships with several top developers in the country and RoofandFloor’s tech-savvy online marketplace.

JLL India is a leading real estate consultancy firm with a turnover of over Rs 4,000 crore last fiscal.

The housing and urban affairs ministry has launched the India Cycles4Change Challenge to support smart cities to implement cycling-friendly projects in response to the COVID-19. In the first phase, 10 cities will be selected and will receive technical support from the Centre and also a reward of Rs 1 crore each.

“The portal would be launched on July 10,” Durga Shanker Mishra, secretary, housing and urban affairs, said on June 25 at a webinar to mark the 5th anniversary of PMAY (U), Smart Cities Mission (SCM) and Atal Mission for Rejuvenation and Urban Transformation (AMRUT).

The demand for personalised form of transport has gone up as a response to COVID-19 and as a result several countries around the world are now embracing quick and temporary cycling interventions. Milan is in the process of transforming 35 km of streets to pedestrian and cyclist priority lanes while Paris is creating 650 km of pop-up cycle-ways. Britain has decided to invest £2 billion in cycling and walking in response to the coronavirus.

India Cycles4Change Challenge is an initiative of the Smart Cities Mission, ministry of housing and urban affairs, to support Indian cities to quickly implement cycling-friendly initiatives in response to COVID-19, Mishra said.

The India Programme of the Institute for Transportation and Development Policy (ITDP) will be the knowledge partner of the Smart Cities Mission to assist the Mission in conducting this challenge and guiding cities in developing and implementing their proposals.

A recent survey by the ITDP India Programme showed that cycling would increase by 50-65 percent as cities come out of lockdown. This was corroborated by the actual response on the ground with a sudden spike in the use of cycles.

“With most of us working from home, the traffic on the road is lesser and has given us an opportunity to reclaim the space for cycling and reduce the pressure on public transportation. This cycling challenge looks at giving cities the knowledge and building the city’s capacity to do quick transformation but across a vast part of the city so that the investment is low but transformation is overnight. People will reap faster benefits,” Aswathy Dilip, Senior Programme Manager, ITDP India Programme, told Moneycontrol.

Cycling can be a sustainable alternative to private motor vehicles. Cycling provides equal access to jobs, education, recreation, and other everyday activities for all sections of society – rich, poor, children, women, and others, she said.

The challenge aims to help cities connect with their citizens as well as experts to develop a unified vision and initiatives to promote cycling. In addition to creating extensive cycling-networks through low-cost interventions like pop-up cycle lanes and traffic-calmed or non-motorised zones, cities could launch programmes such as community-led cycle rental schemes that increase the availability of cycles to citizens and promote the usage of cycling through public events and outreach, transport experts said.

In the longer term, the Smart Cities Mission would encourage cities to convert temporary interventions into permanent.

The India Cycles4Change Challenge will have two stages. As part of stage 1, cities would have to register for the challenge after the launch of the portal on July 10. They would have about 10 days for the same.

The ‘India Cycles4Change Festival’ will be launched in October to showcase the entries of the shortlisted cities as a virtual exhibition.

In October-January, shortlisted cities would be hand-held to further develop and commence the implementation of the concept scale-up plan submitted in Stage 1 with inputs from national and international experts. They would be provided support through online workshops to review designs, peer-to-peer workshops to share learnings.

Where would the funding come from? Funds for this urgent COVID-19 recovery measure would be made available through the Smart Cities Mission. More details are awaited on July 10.

Mahindra World City Jaipur Ltd on Thursday said it has provided nearly 16 acres in its industrial township to four companies for setting up their facilities.

The land parcels have been provided on 99 years lease to four companies from the IT/ITeS, medical devices, manufacturing and warehousing logistics sectors, said Sanjay Srivastava, Business Head – Mahindra World City, Jaipur.

The four companies including Programmers.io, Vitromed Healthcare, Bansal Oil Mill, and Bhagwati Group are investing to establish new facilities/expand existing operations at Mahindra World City (MWC) Jaipur which is spread over 3,000 acres.

"We have signed up four companies and provided them 15.7 acre land parcels on a long-term lease," Srivastava told PTI.

These companies will provide over 1,000 direct employments, he said.

MWC Jaipur is a joint venture between Mahindra Lifespace Developers Ltd (MLDL) and Rajasthan State Industrial Development and Investment Corporation (RIICO).

At the end of the last fiscal, MWC Jaipur had 92 clients, including large corporates and MSMEs. Mahindra group has already invested over Rs 5,000 crore to set up this township.

Srivastava said the industrial township in Jaipur is the chosen destination for the MSME clients' due to its strategic location and ready plug-n-play infrastructure.

"Our integrated industrial ecosystem offered business continuity and safe restart for all operational clients during the pre- and post-COVID-19 situation," he said.

Bharatiya Skill Development University, JCB, Dev Milk Foods, Deutsche Bank Group, Gaston Engineering, Infosys, KnitPro, Mahindra & Mahindra, Pinnacle Infotech Solutions and TTK Healthcare Ltd are some of its clients.

Established in 1994, Mahindra Lifespace Developers Ltd is the real estate and infrastructure development business of the $19.4 billion Mahindra Group.

The company markets residential developments under the 'Mahindra Lifespaces' and 'Happinest' brands, while integrated cities and industrial clusters under the 'Mahindra World City' and 'Origins by Mahindra World City' brands.

India’s real estate sector –both the residential as well as the commercial segment – has been impacted by the Covid-19 pandemic. The industry will need to reconsider pre-crisis priorities and accelerate new strategic initiatives to adapt to a “next normal”, according to a report by global realty firm JLL.

“Real estate as an asset class is here to stay; however, it is inevitable to reinvent, to stay relevant in this new paradigm. It is indisputable that the pandemic induced disruption is changing the rules of the game, but also accelerating the increased adoption of technology and artificial intelligence (AI) in processes ranging from marketing and sales to loan modelling and data management,” said Ramesh Nair, CEO and Country Head (India), JLL.

While the office sector is expected to lead the recovery cycle in the real estate sector, the green shoots of recovery in residential sector will be in tandem with overall economic growth, said the report titled “The Next Normal - Real Estate in Post COVID World,” released on Monday.

The pandemic has resulted in homebuyers putting on hold their decision to buy houses which led to a 30% decline in sales in the first quarter of 2020, said the report

According to top developers surveyed in residential sector, there are Indications of price rationalization in Delhi NCR, Bengaluru, Chennai and Kolkata. Construction activities are expected to gradually resume nationwide and in major cities, projects are resuming.

The report says that sales in affordable and mid segments are expected to start recovering towards the end of the year.

“Residential market’s revival hinges on intensity and duration of the pandemic. As consumer sentiments improve post the lockdown period, sales in the affordable and mid segments are expected to show initial green shoots of recovery towards the end of 2020, with the onset of the festive season,” the report pointed out.

For the office real estate market, the JLL report said that as a result of the pandemic, re-negotiation of contracts between landlords and occupiers is the underlying trend in the short term as the first quarter of the year saw the net absorption fall by 30%, ie, to 8.6 million sq ft, mirroring the moderation of quarterly economic growth to 3.1%.

According to top developers surveyed in the office sector, many are looking at Common Area Maintenance (CAM) charges discount or waivers. This has emerged as a significant trend where landlords / developers are either agreeing or reviewing the same with occupiers.

In addition, the larger markets of Delhi-NCR and Mumbai, developers are open to discuss extra rent free period in cases of new deals. Similar trend seen in Chennai and Kolkata..

The report added that in the medium to long-term, occupiers and developers will re-evaluate their strategies. Office demand will remain robust in the medium to long-term. “The office market fundamentals are strong – with low vacancy, stable rental growth and limited upcoming supply. It is expected to recover the fastest once the outbreak is under control.”

It added that majority of the construction activity has largely resumed across the cities except Chennai where it has been slow.

The suicide of actor Sushant Singh Rajput has forced social media to unleash war on the Bollywood elite. No one knows the exact reason for the suicide but it is undeniable that industry insiders view outsiders with a mixture of insecurity and scorn. It will be naïve to view this as an inflection moment for introspection and change within the industry. Bollywood is easily the best managed cartel in India.

The real estate sector shares a few peculiar traits to the movie industry. Low credibility, weak planning and shoddy execution have been the hallmark of the two industries. However, these are only symptoms of a much larger problem for both the industries. That problem is the inability or resistance to attract quality talent or adopt a superior set of practices. It’s not as if there is a shortage of players in the housing industry.

One of the real estate associations alone boasts of over 20,000 members. There is near unanimity in the view that most of them will not survive the next five years. COVID-19 will probably accelerate that trend.

No one will complain. A substantial chunk of the developers are only part-time builders who will return back to their original core business or are the ones who only specialize in ‘optimal utilization of regulations’.

The real problem

The problem however in real estate is not the outflow of uncommitted players. That’s necessary as most were beneficiaries of an environment that had low barrier to entry and even lower accountability. The real problem is the lack of inflow of committed players. Only an outflow of uncommitted and weak players will eventually leave a small niche dominating the market. Evidence so far suggests that many players in this small club display an arrogance that is as bad as the sort one witnessed when real estate was a wild beast.

The premise for their arrogance in front of the customer is broadly this interpretation: “I will surely complete the project unlike most others whom you can’t trust. For that solid guarantee – I will charge you 25-30 percent more than every other project.” If the quality isn’t up to the mark for the steep premium one has paid – it is well, the problem of the buyer. This attitude is not limited only to buyers. It’s even to the stock market community. I am repulsed by the practice of a leading listed player who often refuses to name their joint venture partner – while announcing a joint venture to the exchanges. It’s a shame that the regulator and the stock market community has permitted this to continue for so long.

Here’s the challenge that has existed in attracting talent and players for the industry: premium talent has largely considered the real estate business as intellectually inferior or professionally exasperating. Besides, most of them previously perceived it as an industry dominated by unscrupulous entrepreneurs.

That has had consequences for the lack of innovation and upgradation in the industry as old hands still lead the way. Their historical success has convinced them that their way of doing business is the only right way of doing it. When challenged in a debate, their argument often ends with “real estate is very different from every other business.”

On highlighting global comparisons within real estate, the retort then diffuses to “Indian real estate is very different from real estate elsewhere.”

Some hard truths

The sector has often lamented, with some justification that it has improved amidst the disruption over the past five years.  Yet it must be pointed out that all of it has been imposed by external factors like RERA, GST, demonetization etc. There has been minimal disruption that has been brought by an insider who is challenging the existing framework of doing business.

Unfortunately, it’s not as if the younger generation in the industry is a beacon of light. Based on my interactions the thought process of most of them appears almost stuck in a time-warp — with few exceptions. That leaves an industry where a majority of the players lack the imagination or boldness and the dominant minority don’t care.

Yet housing is an industry that should never be written off even if today it is on a weak structural footing. In this framework — the light can come from outsiders. And here is the most important difference between real estate and Bollywood that spells optimism for the future of the construction industry. Bollywood can block outsiders and shun them because it remains lucrative even without them. The cinema quality may be poor, performances may be mediocre and scripts may be stolen – it yet works commercially. The real estate business does not anymore. It will now need to attract new talent to revive the industry from the quagmire it finds itself in. It will need true disruptors who can change the landscape of the real estate business – be it in cutting construction cost and time as we move to an era where ready products are preferred, marketing strategies that revolve around story-telling of projects, innovative designs and structures etc. All of this is likely to need the support of the ecosystem.

When that will happen is impossible to forecast but the conditions are ripe. Sushant Singh Rajput battled a hostile industry in Bollywood. His real estate equivalent should not face the same challenge. 

When not busy with his newstoon platform Snapnews, Vishal Bhargava is a real estate enthusiast who views and reviews new projects. Views expressed here are personal.

The Delhi high court on Thursday came down heavily on the Delhi government and civic bodies for non-implementation of action plan for ensuring seismic stability of buildings in the national capital.

A bench of Chief Justice D N Patel and Justice Prateek Jalan said the replies filed by the Delhi government and the municipal bodies, with regard to steps taken or proposed to make the city safe from earthquake, are just “paper tigers”.

The court was hearing a plea by lawyer Arpit Bhargava on the issue of lack of seismic stability of buildings in Delhi.

Bhargava said the court sought to know why responsibility was not fixed on officers for non-compliance. He said the court directed the Delhi government and the municipal bodies to file status reports indicating at least 25 buildings in each of their jurisdictions where the action plan has been implemented and listed the matter for hearing on July 8. A detailed order in the matter was not released till the time of print.

Potential homebuyers who have been scouting for homes have pressed a pause button for six to 12 months because of liquidity concerns and uncertainty over the COVID pandemic but a majority of them will gradually start returning to the market in the coming months, a new survey has said.

Price-points of residential realty have remained muted for the past few years, but are still a key deterrent, with the perception of being still unaffordable. This was the response from nearly half of the potential homebuyers surveyed, who are currently staying in rented accommodation, a survey by Housing.com and Naredco titled Concerned Yet Positive – The Indian Real Estate Consumer (April – May 2020) has said.

It noted that real estate (35%) is still perceived as the preferred mode of investment, followed by gold (28%); fixed deposits (22%), stocks (16%); and homebuyers are likely to slowly return to the market in the coming six months, it said.

The real estate consumer remains positive with regard the economic scenario and income stability for the coming six months, it said.

As many as 59 percent of respondents think overall economic scenario will either remain at the current levels or may slightly see some revival in coming six months. As many as 53 percent of respondents confident of income for the coming six months but the rest were not too sure. Another 53 percent of the respondents have ‘only postponed’ their search for a home for the coming six months, the survey said.

A majority of respondents surveyed (73%) comprise ‘first time homebuyers’, who are looking to buy a ‘ready-to-move-in-house’ for end-use and are from the age group of 25-45 years. While 60 percent of respondents were of the view that for the next six months, they would prefer a ready-to-move-in property, 21 percent said they were okay with a property with a delivery timeline of maximum one year.

No GST and an aversion to project delays makes ready-to-move-in projects more lucrative for homebuyers, the survey said.

It also noted that right price with added discounts and credibility of developer have been ranked the highest driving factors to close the purchase.

The survey was conducted in April and May 2020, through a random sampling technique for a fair representation across regions. The insights presented in the survey entirely represent the view of more than 3,000 potential homebuyers.

Going forward, NAREDCO believes, real estate will be ‘positive’ for both end-users and investors in the post-COVID-19 world. Those living in rental homes have realized the importance of being in their own homes while NRIs facing challenging times in their present domiciles are looking at creating a safe haven ‘back home’ in India. Demand for additional space for home offices is on the rise, with need for more efficient layouts.

“Our survey clearly shows that potential homebuyers who were searching for flats have pressed a pause button for the time being because of liquidity concerns and uncertainty over the COVID pandemic. But, a majority of them will gradually start returning to the market in the coming months,” said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com

While the sector recalibrates the approach to stay afloat in these challenging times, we are moving towards a more digitally inclined world.

"The overall behaviour of the consumer has changed to save more, spend less and invest smart model, said Rajeev Talwar, Chairman, NAREDCO and CEO, Director DLF Limited.

The gap between the ready reckoner rates (RRR) and the actual market prices in the primary (sale by developer) real estate segment in the top cities has narrowed over the last five years. From a more than 100 percent difference between the two rates in certain areas in Mumbai, Pune and Gurgaon in 2015, some localities presently show a mere 6 percent variation, says a report.

The gap between market values and RR or circle rates in many areas is as low as 6-7 percent, equal or even negative, the report by Anarock has said.

Ready reckoner rates - also known as circle rates or guidance values - are the minimum values set by a state government below which a property cannot be registered. Each area within a city has its own RR rate on which stamp duty is calculated.

To align circle rates with the actual market prices, most state governments previously regularly reviewed and increased the RR rates in cities either year-on-year or in two years. However, market values increased only marginally in the same period.

The major advantage of this reduced gap is that it discourages 'black money' transactions. The primary sales market in tier-1 cities today offers limited scope for unaccounted cash infusions because of the minimal gap between the state-notified circle rates and the market value quoted by developers in such regions.

Contrary to other top cities, Noida saw a reduction of as much as 10 percent in circle rates in the last two years - a step taken to boost real estate demand. Circle rates on Noida Expressway have reduced from Rs 4,700 per sq. ft. in 2016 to Rs 4,366 per sq. ft. in 2020. As a result, the gap between the market values and circle rates has increased in the last four years. The difference between the two rates was 10 percent in 2016 and is now at 16 percent.

In the same period, average market values in Noida also decreased by 2 percent – from Rs 5,185 per sq. ft. in 2016 to nearly Rs 5,075 per sq. ft. in 2020. Similarly, in Sector-150 the circle rates remained stagnant at Rs 3,716 per sq. ft. in the last four years.

However, in Central Noida areas, the difference between circle rates and market prices has reduced from 47 percent in 2016 to 34 percent in 2020.

The average RR rates at Jogeshwari East (in Mumbai) stood at Rs 11,571 per sq. ft. in 2015; today it is Rs 15,143 per sq. ft. – an increase of over 31 percent in the last five years. Concurrently, the market value in this period increased by only 6 percent – from Rs 16,300 per sq. ft. in 2015 to Rs 17,280 per sq. ft.

In value terms, the average RRR for flats in Mumbai's Lower Parel is approximately Rs 32,609 per sq. ft. while the average market value is Rs 34,660 per sq ft. In Worli, another high-profile area in the city, the average RR rate is Rs 35,350 per sq. ft. as against the average market value of Rs 38,560 per sq. ft.

There are also some localities where the difference between the two rates remains as high as 58 percent. However, this can be attributed to the ultra-luxury specifications in some projects. For instance, in Tardeo, the gap between the market value and the RR rate is 58 percent. The average RRR is Rs 23,597 per sq. ft. while the average market value is Rs 56,659 per sq. ft. In Dadar, the average RRR is approximately Rs 13,624 per sq. ft. and the market value is Rs 32,600 per sq. ft.

Sohna Road, for instance, saw the gap reduce to 35 percent in 2020 as against 38 percent early in 2016. In Golf Course Road, the difference has reduced to 75 percent now as against 104 percent in 2016. Interestingly, average prices have also reduced at Golf Course Road - to Rs 13,150 per sq. ft. in 2020 as against Rs 13,700 per sq. ft. in 2016.

"The gap between market values and RR/circle rates in many areas is as low as 6-7 percent, equal or even negative. Registering a property below circle rates is not permissible. Section 43CA of the I-T Act says that developers/sellers will attract penalties for selling lower than RR rates. Moreover, even if buyers somehow purchased property below the circle rates, they will bear an additional tax burden as the difference between two rates is taxable – both in the hands of the buyer and seller,” said Anuj Puri, chairman, ANAROCK Property Consultants.

Reducing RR rates would reduce stamp duty on property purchase, thereby boosting buyer demand and also providing relief to developers as the multiple premiums they pay to the state governments are linked to the RR rates, he added.

Cement may soon be available at a lower price in Telangana following an agreement between manufacturers and the state government to reduce prices to help revive the real estate sector affected by the lockdown imposed on March 25 to curb the spread of coronavirus pandemic.

At a meeting with ministers KT Rama Rao and Prashanth Reddy on Thursday, representatives of the cement industry also agreed to continue supplying cement at the existing rate of Rs 230 per bag for the next three years for various state government projects including the “2BHK Dignity Houses” scheme.

The state government has been getting cement at this price since 2016, while the price of a cement bag in Hyderabad open market is Rs 350 per bag, according to report in hansindia dot com.

During the meeting, the ministers told the manufacturers that the real estate sector had ground to a halt due to the Covid-19 lockdown and unless cement prices are slashed, it might not be able to revive, the report added.

The final decision on the quantum of reduction in price will be in a week’s time after a meeting of the heads of the industry.

Meanwhile, the state government agreed to set up a training centre at Huzurnagar that would create skilled manpower by training local youth, according to an official press release. A large number of cement industries are located in the Huzurnagar area, reports news agency PTI.

The industry representatives said they would support the centre, the release added.

The coronavirus pandemic has had a severe impact on private equity investment activity in the real estate sector with only five deals getting sealed in 2020. The investment in 2020 at $238 million was down 93 percent over last year, according to Knight Frank India.

The year has also seen 80 percent drop in the number of deals concluded in the first five months when compared to the same period last year, Knight Frank said in its report titled Investments in Real Estate.

Sharp slowdown in the domestic economy and specifically real estate sector will keep the investors cautious. Moreover, challenges such as a recall of capital by Sovereign Wealth Funds and Pension funds to give bailout in their home countries and the emergence of attractive opportunities in the developed economies on account of a drop in valuations due to recession would cast its shadow on the PE investments in Indian real estate in 2020, as per the report.

After rising for four consecutive years, the private equity investments in office assets declined in 2019. The lack of mature office assets is forcing investors to look at opportunities in under-construction assets and greenfield developments.

In the office segment space, so far in 2020, only two deals amounting to $141 million have been concluded and 2.9 million square feet of office space got transacted in the year.

After rising for four consecutive years, the private equity investments in office assets declined in 2019. The lack of mature office assets is forcing investors to look at opportunities in under-construction assets and greenfield developments, the report stated.

The risk premiums associated with India and office assets would also increase due to the pandemic. Further, the cycle of strong office rental growth witnessed in India over the last few years is also expected to taper down or stagnate on account of lower occupier demand, impacting valuations, the report said.

Moreover, the G-sec yields would not come down in line with the repo rate cuts on account of greater government borrowings and breach of fiscal deficit targets. Investors are in a wait and watch mode and are likely to slow down their investments in office assets in India and on account of all the above factors, the capitalisation rates are expected to expand from 2019 levels, it said.

Residential may find it challenging to attract private equity capital

In the past few years, private equity investors’ preference for investing in residential assets has shifted from equity to debt or structured debt instruments. In 2020, there has been only one private equity investment in the residential sector worth $40 million.

The share of PE investments in the real estate space has come down from 60 percent to 11 percent, the report said.

Retail may be among the last segment to recover

The year 2020 looks to be a bleak year for the retail segment and may not witness much investor activity over the next 12 months. Investors are now associating much greater risk with retail assets compared to office and accounting for longer periods of no rentals or lower rentals in their financial models in the near term on account of revenue share arrangements.

Lower investor appetite, G-sec yields not compressing as much as repo cuts, rental degrowth on account of revenue share and heightened risk perceptions would lead to a significant expansion of cap rates for retail assets and take it much higher than office, which was contrary to the scenario in the pre-COVID years, the report said.

Limited impact of COVID on the warehousing segment 

Private equity investors have invested over $7.3 billion in the warehousing industry in the previous decade with 78 percent of the investments going towards creating new assets.

The $5.6 billion worth of investments which has gone into new developments are expected to create over 300 mn sq ft of warehousing space in the coming years.

In 2020, only two deals were concluded, suggesting an overall investment volume decline in warehousing space due to COVID-19 induced lockdown. However, the adverse impact of the pandemic on the warehousing segment will be relatively less compared to other asset classes.

Warehousing segment will be supported by a significant shift in supply chain management methods and renewed growth in e-commerce business. The rising share of e-commerce will to some extent mitigate the adverse impact of lower demand from the other segments, the report said.