No more mala-mall for India

Over 55% of the malls in Delhi-NCR region are vacant partly due to economic slowdown, poor designing, lack of robust revenue generation model and located in unattracted location, reveals the Associated Chamber of Commerce and Industry of India (ASSOCHAM) recent survey.

As per ASSOCHAM estimates, the total rate of vacancy in malls in Delhi-NCR is 55%, while in Mumbai it is 52% followed by Ahmedabad (51%), Chennai (50%), Hyderabad (48%), Bangalore (45%) etc. The position in the nearby town of these locations is much disturbing. 

ASSOCHAM conducted a random survey of all the shopping malls in Delhi-NCR, Mumbai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Pune, Dehradun, Chennai etc between October and December 2012. The survey found that many upcoming malls have significantly been delayed and withdrawn due to lukewarm response from retailers. They will also face manifold hike in construction cost.

Commenting on the malls scenario, ASSOHAM Secretary General D S Rawat said that vacancy levels are due to poor location, poor design and poor parking facilities while some are operating at 60% occupancy others are struggling at less than 20% occupancy. The occupiers are finding difficult to manage economically.

The survey also highlighted some of the challenges the industry is facing, which include inadequate infrastructure, unavailability of retail space, multiple taxes, lack of clarity in policies and shortage of experts in areas such as supply chain and store management. Now, they are shifting from lease/rentals models to revenue sharing models and this is encouraging large number of branding showrooms to open shops in malls.

“Biggest shopping mall can feel like a pretty lonely place, majority of retailers said that they are holding back on new store openings and focusing on existing stores,” adds the survey. 

The sharpest decline in mall rental values are also recorded high in Delhi-NCR by 60%, while Mumbai also dropped by 58% in rentals followed by Ahmedabad (55%), Chennai (54%), Hyderabad (52%), Bangalore (49%), Kolkata (45%), Pune (42%) and Dehradun (40%), points the ASSOCHAM survey.

Nearly 82% of the retailers said that they are shutting down some of stores in areas where rentals are too high, and with the slowdown in consumption complicating things further, point out the survey.

Nationally, the vacant rates of shopping malls are 55% and will likely rise to 70% by 2015, according to the ASSOCHM analysis. More than 90 percent of shopping in India is still done at unorganised one-off shops, adds the survey.

Sunil Kumar Dhaiya, Co-Chairperson of ASSOCHAM Real Estate committee also specialising in malls said that the real estate prices and construction costs are rising but the retail business is not growing enough to absorb this. There are just not enough footfalls.

Retail rents are down 60-65% from peaks in 2010 and that's especially painful for developers, when servicing loans is expensive at 12-13 percent interest," said Rawat.

Nearly 76% of the shop owner’s said that increasing rents will not work because at the end of the day it has to be affordable for retailers to do business and the fate of the retail realty segment is intertwined with the retail industry.

The retail sector is forecast to grow rapidly, but mall rentals and valuations are not rising in of most markets, added Rawat.

According to the ASSOCHAM estimates, rental values of malls remained stagnant across Delhi-NCR, Ahemdabad, Mumbai, Pune, Chennai and Kolkata in the October-December 2012 quarter. However, certain micro markets in Ludhiana, Indore witnessed a growth over the quarter in the range of 10-15%.

There are approximately 1,200 shopping malls in India, the growth in the retail sector has driven a mall building boom across the country, with the total number of malls expected to increase to 1,500 by 2015 from 1,200 in 2012," added the ASSOCHAM report.

The malaise of high vacant malls can be seen in micro markets, such as Ghaziabad, Noida and Gurgaon, where retail has not picked up. Clubbing this with the fact that spending was really low, the demand for malls is likely to remain dull for the coming next 2013, commented Rawat.

The survey adds demand for mall space across most micro markets remained slow because of lack of fresh supply, conservative approaches from retailers and overall slowdown in consumer demand. Slowdown in retail demand in many micro markets has led to rental values either remaining stable or correcting marginally in the range of 10 to 15% over the previous quarter.

Indian Real Estate 2013: Uncertainty haunts developers

Amidst a global economic slowdown as a consequence of the US fiscal cliff and Eurozone debt crisis, India’s growth forecasts too have been revised downward over the last three quarters of the year. Even in 2013, it is unlikely that we will see a spurt in growth given the existing inflationary pressures and large fiscal deficit which could adversely impact the scope for policy stimulus in the country. Specifically in the real estate sector, despite the opportunities, the prevailing global and local market conditions have affected investor sentiment, experts feel.

Given the overall economic climate, coupled with the increased incidence of property prices, high interest rates and low sales, along with dismal corporate earnings growth, weak employment scenario in the sector and fluctuating rupee value are keeping investors at bay. Additionally, India hasn't really delivered since 2005 on the promise that it held as an investment destination. With exits difficult and returns less than half of those initially promised, international investors seem to be staying clear of property markets in the country.

According to Sachin Sandhir, Managing Director, RICS South Asia, “Across micro-markets, investor sentiment has been impacted due to inflationary pressures and rising interest rates through the course of 2012, which have only come down marginally with a few policy revisions by the apex bank in the second half of the year. Slower GDP growth rate projections; shortage to the tune of 85% in real estate and construction professionals available today, as highlighted by a recent RICS research and high debt burden of real estate developers have also impacted investor confidence in the residential sector.”

Pinning hope on the forthcoming real estate regulatory bill to meet certain challenges the industry is facing today, Ashwani Prakash, Executive Director, Paramount Group, said, “With expected reforms, in terms of real estate regulatory bill we expect to address various challenges the industry has faced throughout the year.”

Further elaborating the existing demand the year has witnessed for the segments starting from luxury to the theme projects, Ashwani said, “The solution of Greater Noida West (Noida Extension) issue has also brought smile on the faces of many who have invested in the region and can expect the region to grow further in the future. The announcement of D.M.R.C to connect the area by Metro has given a further boost to the developers and also to the prospective buyers. In NCR Noida has emerged as a preferred region and has seen tremendous development and we expect the trend to continue in the year ahead.”

Predicting that the sagging momentum will pick up for real estate from the second half of 2013, Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, said, “The country’s economic environment will certainly improve in 2013, with a corresponding gain in momentum for real estate. The most tangible benefits of economic improvements on the Indian real estate space will be seen in second half of 2013.”

Blaming several bottlenecks from plan approvals to land acquisition for the slow growth and high property prices in 2012, Puri said, “Residential property prices have breached affordability limits in cities like Mumbai. Nevertheless, developers will have to factor in the ground realities of the business while debating the lowering of prices to catalyse sales in 2013. Obtaining the 57-odd permissions to begin construction of a project can take as much as two years. During this time, the cost of acquisition or even just holding the land for a project rises. Builders are already beset with the increased costs of license costs and cost of construction.”

Although most of the cities of India will see an increase in residential launches in 2013, the southern cities of Bangalore and Chennai will witness a decline in launches as compared to 2012YTD, Puri said, adding, “It is important to note that these two cities recorded a historical high in terms of the number of launches during 2012.”

According to Sanjay Dutt, Executive Managing Director – South Asia, Cushman & Wakefield, “For the Indian real estate sector, 2012 was a year of cautious approach as stakeholders - developers, investors and occupiers began the year with an air of skepticism, a trait that continued through the year. Rising inflation, rupee depreciation and increasing cost of capital added to the woes that affected demand as well as future supply dynamics of real estate in the country.”

Pointing out that the residential was the only sector that had witnessed moderate growth, compared to the commercial sector that includes office, retail and industrial that saw limited or no growth, Sanjay blamed the government for not acting swiftly to arrest the trend.

Interest rates remained stable but on the higher side in 2012 which affected both developers as well as end user purchasers, he said, adding, “Developers, who were reeling under aspects like high debt, high cost of servicing debt, increased cost of construction, and restrained demand from end – users, were forced to maintain the prices rather than reduce it. Thus, they adopted innovative solutions to increase profitability by adopting measures as increasing operational efficiencies, re-packaging offerings, attractive schemes and targeting HNIs and customizing offerings as per buyers’ preferences.

“Majority of new launches were aligned to end user and investors taste. On one side residential units are smaller with no frills to appeal to masses, on the other lot of branding is being done to attract and differentiate residential developments. Tall, Green, Designer etc. are the signs of competitive environment,” he signed off.

CNBC Awaaz presents Real Estates Awards 2012

CNBC AWAAZ in association with R.R. Kabel, hosted the ‘Real Estate Awards 2012’ – India’s biggest and most credible honor to recognize commendable merit of visionaries and professionals from the industry. The event, themed as Modern Marvel, was attended by Ajay Maken, Housing and Poverty Alleviation Minister of India, along with some of the biggest names from India’s real estate fraternity.

CNBC AWAAZ Real Estate Awards returned this year with a new avatar and made it viable for the small builders to compete along with the established players in the market. Nominees were critically judged, based on distinguished criterions like standard, quality of project, customer satisfaction and efficiency. This year more than 8000 projects across 12 cities were evaluated for the awards.

On the occasion of the awards Sanjay Pugalia, Editor-in-chief, CNBC AWAAZ said, “We have earned the respect of being one of the transparent and most credible recognition is the real estate industry. It gives us great pleasure to know that our awards are considered as a benchmark in the industry. This year we have altered the format to focus “on ground performance” of real estate projects, which have allowed many participants to enrol from tier I and tier II cities. It is our pleasure to say that we have got such encouraging response from diverse players of the industry.”

All entries were diligently scrutinized thereby making it the most admired and credible award for the Real Estate sector.  Several crucial factors were evaluated to arrive at the “on ground performance” of real estate projects. Scientifically graded features and amenities offered in a project was another important aspect, while construction progress, timely delivery, inhabitability and customers’ satisfaction was considered paramount for being adjudged as “Best Project”. Projects across India was invited and evaluated by Liases Foras with the help of its exhaustive database.

Awards went out to the following categories:

Affordable Segment -  100% Complete	Shipra Estate	NCR
Mid Segment – 100% Complete	Brigade Group	Bangalore
Luxury – 100% Complete	Lunkad Realty	Pune
Ultra Luxury -  100% Complete	Amar Builders	Pune
Affordable Segment – U/c – More than 70% Complete	City Corporation Limited	Pune
Affordable Segment – U/c – More than 70% Complete	Ashiana Housing & Finance ltd.	NCR
Mid Segment – U/c – More than 70% Complete	Kalpataru Limited	MMR
Luxury – U/c – More than 70% Complete	The Advantage Raheja	Bangalore
Ultra Luxury – U/c – More than 70% Complete	Queens Court	NCR
Best Commercial Project	DLF IT SEZ	Chennai
Best Retail project	DLF Emporio	NCR
Most Consumer Friendly Developers	Magarpatta Township	Pune
Best Project Execution	Mahindra SEZ	Chennai
Best Greenest Project	Magarpatta City	Pune
Commercial Greenest Project	Pritech Park – RGA software System (P) Ltd. and Primal Projects Pvt Ltd	Bangalore
Best Integrated Project	Magarpatta City	Pune
Best managed projects: Post sales	City Corporation Limited	Pune
Most Reliable Builder	Sobha Developers	Bangalore
Architect’s choice/Best Design	Brigade Gateway
Best Home loan provider	State Bank of India
Best Real Estate fund	HDFC Real Estate PMS
Best State Government Initiative	Rajasthan Govt
Building world class infrasturcture	Jaypee Group

Premia Projects launches first corporate city in India

Premia Projects Limited, a leading real estate developer in India, has recently announced an ultra luxurious, architectural masterpiece, commercial projects 'Premia Corporate City' in Greater Noida (West) which is promoted as 'India's First Corporate City' by the organisation.

Highly acclaimed and appreciated by investors due to strategic location and masterpiece planning by Design Team 3, Singapore, Premia Projects has recently got "Best Location in the City" & "Premium Project of the Year” award by Builder Council of India (BCI).

Competing with the other Real Estate Commercial Projects and Corporate Parks, Premia Corporate City is ahead to any comparisons, due to its Ideal Location, Investment Advantage of 12.5% Assured Returns, 5 Star Luxurious Services and Amenities Offering, Key Features, Commitments in delivering its Projects, backed up with strong leadership of Tarun Shienh (Managing Director, Premia Projects Ltd).

The company has launched its Patna Regional Office on December 17, inaugurated by P.K. Shahi (Education Minister, Bihar) and Guest of Honor Chotu Singh (General Secretary, JDU)

"Premia Projects Limited is committed towards evolving real estate industry in India by developing the Highest Quality Projects matching the expectation of Modern & Urban India”,  Tarun Shienh, Managing Director, Premia Projects Limited, said.

Premia Corporate City at Greater Noida (West) is a complete corporate destination of coming year with five Star Hotel, Corporate Offices, Service Studios, Luxurious Power Villas, Amusement Park, Golf Course, Retail Mall and many other 5 Star attractions and Luxurious Facilities.

Spread in 15 Acres of area, Premia Corporate City still will be soft on environment by providing 70% of rich lush green open area. Luxury combined with Architectural excellence will make it an unmatched preferred destination for any Corporate house, Leisure traveler or a preferred Shopping destination.

Tekla India wins EPC World Award 2012 for contribution to construction industry

MUMBAI: Tekla India has been honoured as an Outstanding Contributor of IT in Infrastructure & Construction industry during the 3rd EPC World Awards 2012 at Hotel Ashok, New Delhi.

Nirmalya Chatterjee, COO, Tekla India receiving the award. 

The EPC World Awards is the foremost event that acknowledges the achievements of the companies and Individuals from Infrastructure, Construction and Real Estate sectors in India and encourages them to perform even better.

Harish Rawat, Union Minister of Water Resources, Balbir Punj, MP along with Dr. Sudhir Krishna, Secretary to the Ministry of Urban Development and Amitabh Kant, IAS – CEO & MD, Delhi- Mumbai Industrial Corridor Development Corp. Ltd. (DMICDC) attended the event along with the organising committee members. 

Tekla was chosen as a winner from the various contemporary software vendors nominated in the same category.  

Tekla India has set the standard for innovation and creativity in the construction & Infrastructure industry and this award is yet another proof for Tekla’s consistent performance and becoming the preferred technology provider in the industry. 

“We are delighted and honoured to receive this recognition and this is a testimony of why Tekla is one of the best technology providers in the construction fraternity. We would like to thank the organising committee members and the jury members for this award. We will continue to serve the industry with our best ability and ensure our support towards growth of construction industry in India.”  Says Nirmalya Chatterjee, COO, Tekla India. 

The EPC World awards have evolved as the national platform considering one of the best industry recognition awards in India. It is an effective platform to recognize the qualitative and quantitative performance, innovation and strategic initiatives of the companies, individuals & projects in the field of Infrastructure & Construction.

About Tekla

Tekla drives the evolution of digital information models and provides competitive advantage to the construction and infrastructure industry. The company was established in 1966, and today it has customers in 100 countries, offices in 15 countries, and a global partner network. Tekla became part of Trimble Buildings Group in 2011.

Real estate sector likely to revive in 2013: Experts

MUMBAI: After a long lull, the year 2013 is expected to bring back hopes of growth to the real estate sector, mainly due to the government's positive approach towards reforms and moderation of interest rates, a media report quoting experts, said.

Land Acquisition and Real Estate Regulation Bills are expected to be passed during the year, while there is a likelihood of Reserve Bank bringing down the interest rates, ET said in a report.

"The passage of FDI in multi-brand retail by the government shows its seriousness on introducing reforms. RBI can be expected to lower interest rates in the coming months which will benefit developers as well as consumers. This will boost the sentiments," Knight Frank India chairman Pranab Datta said.

Residential prices, which have been increasing over the past few years are likely to witness subdued growth in most markets in a short to medium term till the pressures of unsold inventory are eased out, CBRE chairman and managing director Anshuman Magazine said.

Finance Minister P Chidambaram had recently asked the developers to sell their unsold inventory at a lower price.

"Besides, infrastructure initiatives such as Greater Noida metro rail network and proposed metro link in north-west Bangalore are likely to have a positive impact on the residential market of these cities," Magazine said.

FDI in multi-brand retail will also boost the demand for commercial real estate.

"Apart from the international brands, several domestic brands are also exploring opportunities to increase their foot prints across the country. This anticipated growth in demand is expected to bring some upward movement in retail rentals, particularly along established hubs," DTZ-India chief executive officer Anshul Jain said.

According to Jones Lang LaSalle, major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 9.5 million sqft of mall space in 2013.