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Mumbai Real Estate Market Updates & Trends

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Despite the ‘developing nation’ tag, India is one of the leading property markets worldwide and property builders and developers across the country provide a back bone for this development.

The aim of India Real Estate.org is to help Indian real estate investors across the globe, in learning about good opportunities, and reliable builders/developers. Indian companies are more resilient than ever to a global downturn these days, with lower borrowing costs and healthier debt-equity ratios.

Now coming to the point….Mumbai real estate is among the most expensive in the world – more than that of Tokyo or New York – and there is no shortage of those who can afford to pay. The city also attracts millions of low wage workers every year, and there are ever-expanding slums that house more than half of the city’s population.

Mumbai real estate is a multi-billion dollar market on a daily/weekly trading basis. In addition to sea view penthouses on Marine Drive, Worli, Juhu etc, there are luxurious duplexes across the city….with many new residential projects to fully furnished offices and ‘built-to-suit’ commercial spaces including upscale multi-family apartment communities.

Some analysts say that Mumbai real estate has started seeing a slide in property prices; others may witness the decline gradually. Some experts believe that over the next three to six months, the liquidity crunch will have its full impact on property prices.

Market estimates say many people who had purchased property for investment purposes had a big exposure to the equity market, which is currently 25% down from its high levels in Dec 2007. This means, the turmoil in the stock market may lead to drying up of available free cash, leading to default in paying installments.

That said, Mumbai real estate market has pockets of attractive opportunities even at high P/E levels. Investors have many good reasons to invest in Mumbai property market. Mumbai is the India’s business capital, and the most populous city of India.

Investors and HNIs have been investing in various pre-leased properties having insurance, banking, IT/ ITES, residential and retail sector occupants. Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert’s stock analysis or opinion.

Another interesting trend is the remodeling of commercial spaces to retail spaces. The property values for commercial spaces are touching skies and developers are finding it difficult to sell their commercial/office property. Hence, many of them are positioning their property as retail space in a hope to find more takers.

Investors are targeting Navi Mumbai because the prices here are on the increase. It is a newly developed area just across the harbor.

Unitech, India’s second largest developer, was involved in two such land deals. It snapped up 1,750 acres in Vizag for Rs 3,350 crore last year and won 340 acres in Noida for Rs 1,582 crore in 2006, while India’s biggest real estate developer DLF clinched a 38-acre land deal in the national capital for Rs 1,675 crore. Unitech is expected to close FY08 with revenues of Rs 4,350 crore and a net profit of Rs 1,650 crore.

Developers are constructing properties with facilities and amenities at par with international standards. Yearly appreciation on commercial real estate market across the Indian metro ranges from 9 to 11%. So there are many opportunities there at all levels: residential and commercial real estate.

About the Author: Shankar AVSB of 7Avenues Private Equity, who is an investor in Indian Real Estate. He believes that Mumbai real estate presents great opportunities in both bullish and bearish market sentiments. He is based in London.

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Chennai Real Estate Prices & Updates

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Driven by strong demand from multinational companies, banking and financial sectors, commercial rental values in the Central Business District (CBD) of Chennai have increased in the past 12 months. Notably, the Chennai CBD comprises Nungambakkam, Salai, Anna Nagar and Adyar areas.

According to city-based property brokers, most of the companies look for A Grade quality office space in Chennai and expect robust infrastructure around their office.

The real estate developers operating in Chennai commercial real estate space observe that Old Mahabalipuram and Guindy are among the most preferred commercial areas for IT/ITES companies. Most of the companies are coming to these regions and the real estate values are likely to take a ride over these trends.

  • As per studies, rental values of commercial properties viz. offices and shops located at CBD region is reported to have the highest rental values at around Rs 45-55 per sq. ft. These rental values decreases off CBD region of about Rs 35-40 per sq. ft.
  • At present, commercial rental value in Chennai varies from Rs 30-55 per sq. ft, which is about 5-15 per cent higher as compared to last year.

Residential properties around the south-west part of Chennai are likely to move up in the next 2-3 years. The business opportunities created by the modernization of airport can boost the property values in the areas around the facility.

  • According to the property experts, the areas of Guindy and Vela Chery would be among the most-benefited.
  • Besides, the property prices in Chennai’s Saidapet area are also likely to go up as the airport project would progress.

As far as investment opportunities in Chennai Real Estate are concerned, investors can delve for investing in properties around Inner Ring Road as it connects the central city localities like Kodambakkam and Mambalam with the airport, and is likely to reap rich dividends in the near future.

George Gonigal provides you the best and latest information on Chennai Real Estate Builders, if you want to Buy Apartments in Chennai.

Article Source: http://EzineArticles.com/?expert=George_Gonigal

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Indian Real Estate Overview & Trends

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Introduction

Indian real estate is witnessing a boom and the scenario keeps evolving with every passing day. Indian real estate is heating up big time no doubt. It is estimated that Indian real estate is presently growing at 30 % per annum and the property industry boasts of a wide range of products that includes property prices which would suit even the people of the low-income group. Indian real estate industry is expected to grow beyond $100 billion in the near future.

A key point to note is that the Indian real estate is mostly privately owned, and is a highly unregulated, unorganized market with huge potential.

Indian Real Estate is certainly zooming away in the wake of current scenario witnessing its being riding on high growth wave. Indian real estate is happening, and a number of non-real estate companies are entering the sector to leverage the opportunities. Indian real estate is a growing sector for both investors and people who are looking for a home. Indian real estate is making rapid strides oIn the back of country’s surging economy.

After a slow start, FDI in Indian real estate is poised for rapid investments of over USD 10 billion likely in the coming near future. The attraction of Indian real estate is now in no doubt after an international investor pledged to put millions of pounds into the Indian real estate sector. From consultants to financiers to developers and construction companies, Indian real estate is witnessing a sea change in terms of operations.

For Non-Resident Indians (NRIs) and Persons of Indian Origin (PIO), investment in Indian real estate is monetarily rewarding and emotionally gratifying, as it helps maintain bonds with their homeland.

Indian Real Estate Investments

Policy changes introduced by the Government in February 2005 allowed 100 per cent foreign investments in construction projects with fast-track approvals. But the real attraction for foreign investors is potential investment returns of 25 per cent and more in Indian projects that might be hard to come by in the US and in Western Europe today.

Kishore Gotety, ICICI Venture Funds’ director of investments, says the internal rate of return net of developer margins and fees could be between 25% and 28%. Vornado’s investments through this partnership are primarily in the booming market for information technology parks in cities like Bangalore, Hyderabad and Navi Mumbai.

Vornado’s president Michael Fascitelli declines to detail the company’s investments in India, but says that it plans to create a fund that will co-invest with its Indian partner. ” He adds that while his company has targeted China and India as the top destinations among emerging markets for real estate investments, India scores higher marks. “Vornado’s Fascitelli says he expects high returns from investments in India “because of the risks.

Various authors have published tables showing 30 to 100 percent gains in a year through real estate investments. What the Indian Real Estate investor needs to be doing is deliberately evaluating if he is making the right investments, not by getting carried away by glossy advertisements but getting relevant provisions endorsed in the buyers agreement.

If you intend to add real estate investment in your overall investment portfolio or looking for the most productive commercial property, residential property or any other form of investment property, now is indeed a great time.

We intend to showcase the developing India which is open to investments and offers world class environment for work, luxury, relocation and retirement. This has been one of the most crucial factors for India gaining its status as a highly favored investment destination through FDI and funds. Property investment doors open for NRIs The policies set out by the government regarding property investment and repatriation, has made opportunities of investments in India even more favorable.

Approximately 94% of the capital investment being made in property is in Mumbai, Delhi and Bangalore. From Singapore, Lee Kim Tah Holdings is putting down its investment of US$115 million in a 100-acre township, with commercial and social infrastructure adjoining, near Mumbai. Nevertheless, the high profile investments which have arrived would have been unheard of as little at 10 years ago.

Real estate experts believe the country will need an investment in the order of US$75 billion to US$90 billion to bridge the expected deficit in housing, with only about 25% of that total being expected from banks and other institutes, as well as central and state governments.

Real Estate Growth in India

Real estate maturity in India focuses on three primary areas: commercial, retail and residential. Commercial Real estate refers to Office space; IT, BPO, KPO space leasing continues to boom with 12 million sft leasing across India; with 6 million square feet in Bangalore, and 7 million square feet Mumbai.

Growth in commercial office space requirement is led by the burgeoning outsourcing and information technology (IT) industry. One is a $200-million project for residential and commercial development on 42 acres in Bangalore’s prime Whitefield suburb. Industry experts believe that Indian real estate has huge demand potential in almost every sector — especially commercial, residential and retail.

As an indication of global interest in Indian real estate, LaSalle Partners, a major commercial real estate firm with headquarters in Chicago, last month announced the opening of an office in New Delhi, India. In India, banks had never thought of funding a commercial or residential real estate property a decade or two ago.

Some relevant regulations

Acquisition by way of gift: An NRI or a PIO may acquire residential/commercial property by way of gift from a resident of India, an NRI or a PIO. However, a foreign national of non-Indian origin resident outside India cannot acquire residential/commercial property in India by way of gift.

Sale of immovable property: An NRI can sell residential/commercial property in India to a person resident in India, an NRI or a PIO. However, a PIO can sell residential/commercial property in India only to a resident of India.

Furthermore, the commercial real estate sector promises better results with the demand for office space in the top seven cities shooting up to 70million per square foot, within the next three years. Another factor pushing the average rentals in the commercial business district (CBD) areas is a sharp increase in value of rupee. The demand for commercial property is steadily on the rise, especially in the retail sector.

Conclusion

The Real Estate explosion in the Indian real estate is in large part due to the by the burgeoning outsourcing and IT and BPO industries, which are bringing large amounts of cash. The underlying reason for all these moves is that the Indian real estate is tremendously attractive, because of basic demographics and a supply shortage. Truly Indian real estate is having a dream run for last five years.

Though there is a sort of saturation in the Tier 1 cities but the good news for Indian real estate is that Tier II cities started growing with the IT Sector and the industrial sector investing in such places. Thus Indian real estate is poised for a boom, taking the rest of the economy with it.

The notion that Indian real estate is expensive is based more on the cost of undeveloped land, which is becoming a scarce commodity, than finished residential or office space, which is still available at reasonable prices in most places, except maybe places like Marine Drive in Mumbai or Connaught Place in Delhi. Indian Real Estate will remain bullish for the foreseeable future.

Please Note: we will update this article from time to time with newer facts. If you want to share any facts related to India real Estate, you are welcome to contact us through the Contact page. Thanks.

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FDI Investments in Indian Real Estate 2008

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Since RBI deregulated FDI investment norms for real estate sector in India is 2005, the amount of money in the sector has attracted has grown significantly over the years. And 2008 will be no different.

According to the Associated Chambers of Commerce and Industry of India (Assocham), the Indian realty sector is likely to see a growth rate of 40-45% in 2008. The organization expects that more than $ 10 billion worth of FDI is likely to flow in the sector by the end of the year. Also the organization believes that the rate of growth is likely to be stable for the next three years when it might go down a little. Also most of the FDI investment is still predicted in the tier 1 cities.

The key points to note from the report are:

  1. The growth in Indian realty sector is here to stay for next few years.
  2. Most of the growth will still happen in big cities. The tier 2 cities are getting increasingly prominent in press but it will still be a while before they compete with tier 1 Cities for the FDI investments.
  3. FDI in the Indian real estate sector will continue to grow because it provides an attractive investment opportunity for foreign investors who have hardly anything cheerful/comparable in the real estate sector in western markets.

Foreign investors have multiple ways to invest in this growth story.

In the last year, companies from this sector floated 12 public issues which included the countries largest IPO of more than Rs 9000 crore by DLF. Also with real estate funds growing in increasing number, they provide attractive alternate investment avenue. Preferred avenue for large investors does seem to be the private equity deals though. Some of the deals are mentioned on Sify.com:

“DLF sold 49 per cent stake in its seven townships to Merrill Lynch and Brahma Investments to raise Rs 1,675 crore.
The private equity deals also happened at entity level. Wachovia Corp, one of the largest financial institutions in the US, picked up 15 per cent stake in Vipul for Rs 234 crore.”

Recently one of the largest real estate firms in Mumbai also entered into significant deal with group of foreign investors. “the Shapoorji Pallonji group has finally struck a $290 million deal — the largest so far in the real estate space — with a clutch of foreign investors. CVC International and the Government Investment Corporation (GIC) of Singapore, along with others, have picked up a 15% stake in a special purpose vehicle (SPV) floated by the group”. (Source: Economic Times)

The same report also quoted the attraction of SPV for foreign investors:

“Mumbai-based real estate analyst said foreign funds continue to pour money into India, especially in FDI-compliant projects, despite concerns voiced by RBI and the government over heavy inflow.”

As quoted by a source:

“The SPV is the most favored route for foreign investors. Since it is almost like a new company, it helps foreign investors avoid all possible issues emerging out of existing companies”.

Lets hope that the experience with the SPVs is better for the foreign companies than with the SIVs, which have been so much in the news recently.

About the Author: Yogesh Dashrath is a financial services professional based in Europe, and keenly tracks the Indian Real Estate market, and can be reached using the contact page of this site.