The Unstoppable Growth Of Luxury Homes In Pune

Pune is drawing a lot of interest from luxury home seekers, both from within the city and from Mumbai and beyond, says Kishor Pate, CMD – Amit Enterprises Housing Ltd.

The reasons are not hard to find:

• Price points for Pune luxury homes are lower than for comparable options in over-heated cities like Mumbai
• Luxury homes in Pune are more spacious and have superior individual specifications as well as common-use luxury amenities
• Pune’s pleasant climate provides the ideal setting for luxury homes – unlike in Mumbai, there is no need for wasteful year-round air conditioning
• The investment value of luxury homes is very high, as there is constant demand for them
• The Pune luxury homes market is not restricted to ugly, polluted, over-developed and overcrowded ‘prime’ locations

The last factor is probably the ultimate selling point for luxury homes in Pune. Since it is a relatively compact city, commuting from various parts of the city is easier. As in Mumbai, the demand for luxury residential units in Pune is highest in areas that provide ready access to the central business district and employment nodes. However, unlike Mumbai, these focal points are quickly accessible from various points of the city.
This factor has played an important role in boosting the demand for luxury housing even in non-central areas. While traditional luxury home locations such as Sahakarnagar, Boat Club Road and Kalyaninagar continue to see a lot of demand, areas like Baner, Aundh and Ambegaon are also very successful hotspots for luxury projects.
These locations provide scenic natural splendour as well as excellent connectivity to the city’s economic nerve centres. This aspect has proved to be a major draw for Pune’s Generation Z luxury home seekers. Again, there are valid reasons for this:

• The unique advantages of these locations allow them to provide a lavish lifestyle to the elders in their families in serene, convivial surroundings without compromising on their need to be connected to their workplaces.
• Their children grow up in neighbourhoods that have been specifically tailored to a certain economic profile.
• In Pune, luxury homes projects do not co-exist with unsafe, high-density tenement developments and are invariably close to major international schools and top-of-the-line hospitals.

Thanks to these factors, the premium housing segment in Pune has continued to thrive even as the market for luxury homes in Mumbai declined steadily. In short – both from an ownership as well as investment perspective, luxury housing in Pune will thrive and grow in the future.

Pune Real Estate, A Lopsided Growth Curve

Arvind Jain

There are good reasons why Pune has emerged as one of the most aspired-for residential destinations in India today. The fact that it is so well connected to Mumbai is only the tip of the iceberg, says Arvind Jain, Managing Director - Pride Group.

Pune is an economic powerhouse in its own right, being home to a wealth of multinational companies and industries. These organizations have ensured that Pune has emerged as one of the most important employment centres in the country. Needless to say, employment drives demand for real estate.

Pune's pace of urban growth has been unparalleled, with the number of people migrating into the city from all over the country increasing every year. This influx has required major infrastructure upgradation on all fronts, including road connectivity, parking facilities, public transport and electricity and water supply.

Accordingly, the Government has laid out a very ambitious roadmap for Pune's infrastructure in the Pune Development Plan 2041. One of the most important aspects of this plan is a multi-faceted transport which envisages a considerably enhanced road network, a metro system as well as a number of new bridges, flyovers, subways and skywalks.

This is necessary, as it is very evident that Pune's growth is not a temporary phenomenon - the city will expand exponentially in the years to come, both geographically and in scope. If Pune's development authorities do not take a realistic look at what the next two to three decades hold in store, the city will eventually fail to maintain this growth and begin to decay.

One of the most important aspects that need to be considered is the maintenance and enhancement of accessibility. This includes internal accessibility between Pune's various residential and commercial nodes, as well as approachability from other key cities.

Boosting accessibility includes the construction of new roads, widening of existing roads which tend to bottleneck, providing flyovers and subways to ease traffic congestion and more efficient and reliable public transport. As far as the proposed Pune Metro is concerned, there are serious questions about how effective it would be to ease the city's rapidly increasing accessibility issues.

On the other hand, the approval of the 90-meter wide Ring Road which will connect the PMC and PCMC is definitely a reason to cheer. Likewise, the approval of Pune's new international airport is definitely a step in the right direction. The city's economy is very much dependent on foreign business, and opening the city up to global business travel will assuredly bode well for its various industries.   

But is accessibility the only aspect that the city's development plan should focus on? Is more efficient transport really all it takes to keep a city like this viable over the long haul? Thanks to the fact that Pune has a lot of potential for horizontal urban growth, the city is constantly adding new areas to its borders. But at the same time, the standard of living within the inner city is on a visible decline. Holistic urban growth is not just about expansion, but also about the constant improvement of existing central areas.

Also, it is important for Pune to maintain a healthy balance of housing types across various affordability bands. As we face the prospect of ever-increasing urban density in the city, both the planning authorities and Pune's real estate developers must remember that it takes more than just 'premium' and 'luxury' housing to maintain and grow a city. Whenever an imbalance of housing for all income groups occurs, the economic viability of a city begins to degrade.

A city like Pune is sustained a huge cross-section of service streams, ranging from blue-collar workers on factory shop floors and in retail warehouses to white-collar business executives and CEOs. The economic relationship between these classes is inalienable and symbiotic - neither can exist without the other. Each individual from all income streams has a family that needs to be housed in safety and relative comfort. This means that the city will, at all times, have to produce housing that is affordable from the lowest to the highest income streams.

The latest regulations require a minimum of 20% housing in large townships to be reserved for the economically weaker sections. However, despite the fact that townships are proliferating in Pune, such a reservation will not suffice to meet the needs of the city's less prosperous denizens in the future. Meanwhile, we are looking at a scenario wherein Pune's developers are increasingly focusing on high-priced mid-income and premium housing projects.

Affordable housing requires special incentives to developers, and these must necessarily come from the Government. However, it also requires a consensus of collective consciousness among a city's developers themselves. There has to be a point at which one is willing to look less at the bottom line and more at what the city really needs in order to continue to grow and prosper.

Khan Market remains most expensive office location in India

Chennai: Punjagutta in Hyderabad has recorded the highest retail rental growth in India with an annual 29 per cent growth y-o-y while Brigade Road in Bangalore has witnessed the sharpest decline of 17 per cent in rental values. Globally, India has placed among the top ten markets having highest rental increase year on year. 

While Punjagutta took 8th position in the global scale in growth in retail rental values, South Extension in New Delhi took 17th position with an annual growth of 20 per cent, according to global Real Estate consultancy firm Cushman & Wakefield’s annual report ‘Main Streets across the World 2013’.

The report, which has analysed the most expensive locations of top 334 shopping destinations across 64 countries, has revealed that Kutuzovsky Prospekt in Moscow was recorded the highest rental growth of 42%.  

In the global ranking of most expensive retail locations, Khan Market (1,250/sf/mnth) in Delhi has been emerged at the 28^th most expensive in the world. Obviously, it also became the most expensive retail location in India.  

India however, was dropped in the global ranking from 26^th to 28^th position due to the weakening of the Rupee against USD and largely stable rentals with limited increment in rental values in established retailing sectors. 

Hong Kong’s Causeway Bay remained at top position as the most expensive retail location in the world followed by New York’s 5th Avenue (2^nd) and Avenue des Champs Elysées in Paris (3^rd).

Main street location of Punjagutta (155/sf/m) in Hyderabad recorded the highest annual growth in retail rental values of 29% reaching its 2007 peak value for the first time in seven years due to renewed interest from retailers specially jewellery brands. South Extension in New Delhi has registered the second highest annual growth of 20% in retail rental values on account of consistent demand and churn. Ahmedabad’s C.G. Road recorded an impressive growth of 15% in rental values due to increased interest from retailers to enter the market as many national and global brands are keen on entering the market and expanding their presence in the location.

Brigade Road in Bangalore, however, saw the sharpest decline in retail rental values of over 17% y – o – y across the globe due to lack of interest from retailers. Many brands have now moved out of the location to occupy space in nearby shopping centres. Mumbai’s Linking Road, which recorded a correction of approximately 12% y-o-y ranked 11^th in the survey for Sharpest declines globally. 

Once popular with brands for opening their flagship stores, has been witnessing competition from some upcoming shopping centres in the vicinity which retailers prefer on account of better amenities and lower rentals. Linking Road suffers from aspects like poor accessibility, parking and other amenities. 

In India during the first half of 2013, prime rents in most cities remained stable as a result of steady demand from retailers, particularly from the fashion and food & beverages segments. Steady demand from fashion and F&B brands was also the catalyst behind rises in India (2.1%). Overall, activity was slightly more restrained than in other major markets. New Delhi generally outperformed other cities. However, rental movements varied across sub-markets, with double-digit positive and negative growth depending on the location. Occupier demand from fashion, jewellery and F&B retailers was evident during the year for both high streets and shopping centres.

 Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield said, “New age retailers are focused on providing an experience to their customers moving beyond just merchandise, therefore are showing preference for quality shopping malls that offer the right amenities. However shopping centre development is limited due to poor cash flow situation and over leveraged conditions of developers. Most investors, with the exception of few, are also showing limited interest in shopping centres. India’s main streets continue their appeal as new retailers are trying to create brand presence in key main streets. Large formats are selectively willing to go for stand alone or built to suit options as well.” 

Sanjay Dutt further added, “Going forward we can expect some of the well managed shopping centres in key locations to start commanding significant rental values at par with main streets as Retail Malls are now increasingly positioning themselves as destinations with a few even going as far as putting added attractions like adventure rides etc. apart from high end cinema and F&B. Destination malls, specialty malls and luxury shopping centre developments are other formats being explored by NCR, Mumbai and Bangalore .Key  High street locations in locations with solid captive audience and adequate facilities for shoppers will remain high on priority for retailers and therefore a rise in their values over a period of time.”

What is luxury living in real context?

In Indian real estate, 'luxury' is by far the most-abused word by residential project developers. Any project offering basic amenities is classified as 'luxury' in marketing materials, advertisements and pitches. We have actually seen projects wherein 1 BHKs are being offered along with 2 and 3 BHK units being touted under the luxury tag.  

In the first place, luxury living in any context must necessarily involve generous living spaces. Secondly, the interpretation of luxury in the Indian context also includes an element of exclusiveness. In other words, the buyer of a luxury apartment - apart from superior amenities and facilities - also expects to live in a project which offers a certain socio-economic standard as a neighbourhood. Therefore, when a project offers one-bedroom apartments, it automatically disqualifies itself from the 'luxury' classification, says Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India.    

Given that developers will continue to call every project luxurious, it is important for buyers to understand the definition, context and meaning of luxury in Indian residential real estate. But before this, let us first examine the investment dynamics of genuine luxury homes.

Buying a luxury apartment for self-use already involves the need for multiple checks and validations in any case. However, when it comes to buying such an apartment for investment, the need for 360-degree due diligence is even higher. After all, the final objective is returns on investment. If one is considering investing in a luxury apartment, one must understand what the hallmarks of genuine luxury in residential real estate are:

Location

This is one of the most crucial parameters. Though central location is certainly an important qualifier for the luxury tag in India, a project that stands at a central city junction beset with traffic congestion does not provide a luxurious experience. No matter if a project is 'normal' or 'luxurious', it is not home if one cannot reach it or get out of it. Investors need to look at many location parameters, such whether the project benefits from approach roads that allow for convenient vehicular egress and ingress.

Also, very few people buy luxury homes and then hide them from the rest of the world. Most owners of such a home want others to see and admire their properties, and to entertain people there. Noise and air pollution apart, this purpose is not achieved if the project lies in a chronic traffic gridlock zone. Finally, the owners themselves must have ready access to markets, schools, colleges, hospitals and their offices. And before we forget - the most spectacular edifice of luxurious living falls flat on its face as an investment bet if it is located in a crime-ridden area.

The view available to the project’s occupants is also very pertinent. A project may be genuinely luxurious in its internal specifications and amenities. However, if it overlooks a slum or congestion-prone highway, a graveyard or a hospital, both rental and resale potential take a beating. The availability of a rooftop swimming pool and a Jacuzzi in every bathroom will not make a difference - a very basic ingredient of the luxury experience is unavailable.

Floor-to-Ceiling Height

This is one of the most important parameter to evaluate a project's true 'luxury' value. If the floor-to-ceiling height is less than 12 feet, the luxury feel is severely compromised. Moreover, apartments with low ceilings do not lend themselves optimally for tasteful interior decoration.

Project Density

This means the number of people living in the project. There is no ideal thumb-rule for this parameter - however, it is generally understood that a one-acre project should not house more than 60 families. Anything more means that the project does not qualify as 'luxury'. This is because the available amenities are shared by too many people, destroying the project's ambience, exclusiveness, convenience and charm.

Parking

Again, there is no specific yardstick by which to measure parking sufficiency. The commonly followed norm is that the number of bedrooms in a project should equal the number of available car parks. A 3 bedroom apartment should therefore have three parking spaces within the project. Though many luxury projects in the larger cities now offer puzzle-type mechanized parking, the fact is that HNI buyers and tenants actually prefer normal or stack parking.

Elevators

The mere provision of branded elevators does not suffice in a luxury project. The project must also have service elevators with separate entries, to ensure that domestic help and external suppliers do not populate the elevators and lobby being used by residents. Investors must also ensure that the elevators are spacious enough to accommodate a stretcher.

 Security

Inhabitants of a luxury project do not expect to have to install ugly security grilles over their front doors and windows. They expect to have the assurance that their families and property are safe in all respects. A genuine luxury project has uncompromising human security as well as electronic surveillance and safety measures firmly in place.

As is evident, it takes more than a mere word like 'luxury' to place a project head and shoulders above the rest - and thereby make it a worthwhile investment option. While one cannot stop developers from misusing the luxury tag, it is certainly possible to understand what true luxury - even in the Indian context - really is.

Mumbai property prices to correct next year: Report

Mumbai: Rising inventories due to weak absorption in the residential market may lead to price correction here in the early part of 2014, real estate consultancy firm Knight Frank has said.

Nearly 2.9 lakh residential units are under construction in the city while unsold units stood at 1.3 lakh during the January-September period, Knight Frank said in a report.

"The weakening real estate prices suggest that long-standing stalemate between buyers and builders is finally turning in the buyers' favour. The increase in inventories coupled with weakening absorption levels would put further pressure on prices," a PTI report quoting Knight Frank’s research director Samantak Das having said.

Mumbai's unsold inventory level is almost 44 per cent in comparison to NCR, which stands at 26 per cent even with twice the number of units under construction, the report said.

Owing to weakening demand, new launches in the city plummeted over 40 per cent compared to peak levels in 2010 as developers shift focus on liquidating current inventories. As many as 47,488 residential units were launched during January-September.

"The residential market has been witnessing a steep decline in new launches as well as demandj....Unsold inventory pressure in Mumbai is the highest among all other cities and is depicting a growing trend. We expect a more pronounced price correction which may drive the market to a better equilibrium," he said.

The current environment will put pressure on prices in the medium term and the scenario is expected to last till the forthcoming general elections.

Further, the rise in interest cost and decline in net profit in 2013 will compel developers to lighten load and de-leverage their balance sheets.

 "Major listed companies have defaulted their loans this year, which depicts significant stress levels on their balance sheets. Developers are now trying to salvage the situation by limiting fresh launches and boost sales by promotional activities to avoid reducing the base price.

"Overall, the right time for buyers to expect good deals in the market," company's national director Mudassir Zaidi said.

Top construction expo 'Big 5' opens in Dubai

Dubai: Leading international players from the construction industry are showcasing their latest technologies and products for the next three days at the ‘Big 5 construction show’, which opened in Dubai on Monday.

According to TradeArabia News Service, as the largest event for the building and construction sector in the Middle East, the ‘Big 5’ is the preferred launching platform of new technologies for thousands of manufacturers, said the event organisers, DMG events.

With $67 billion worth of new contracts awarded in the GCC in the first half, a 53 per cent increase over the second half of 2012, the international companies see the Middle East construction market as the ideal platform to introduce new technologies and solutions to the industry, the report said.

Companies from around the world, including India, Germany, Italy, Greece, Egypt, Turkey and Cyprus, as well as local UAE brands, will present their latest innovations at show in a bid to capitalise on the significant market opportunities.

A number of companies exhibiting at The Big 5 are investing in the region for the first time, including Germany’s RGenau Industries, who will launch a range of new surface technologies for the sanitary industry.

“Our company considers the construction industry in Dubai and the MENA region a very strong business sector, as current building projects show,” remarked Sebastian Schäfer, from RGenau.

“We chose The Big 5 as the first trade fair we will ever exhibit at because we see it as an excellent platform to introduce our new products and to establish business contacts,” he stated.

Other global companies will also be testing the Middle East waters for the first time in 2013, including HP International from India, launching their entire product range for the international market, and Rabel Systems from Cyprus, who will be introducing their new super thermal series, which help contribute towards zero energy buildings.

Many longstanding players in the regional market continue to see the benefits of exhibiting at The Big 5. The UAE’s IBS Ramfoam has exhibited at the event since 2011, and will also be launching new products this year.

Commercial director Tim Mulqueen said: “We invested heavily in 2013, having brought to the UAE some of the world’s leading machinery in order for us to now manufacture here. Our objective is to provide an integrated solution from design, material selection, prototyping and development to volume production, delivering a complete service to all of our customers."

"There will be an estimated $5 trillion spent in the construction industry within the next four years. The UAE is really back and open for business," he noted.

Andy White, the group event director, The Big 5, said: “The event has become synonymous with launching new products and innovations into the market, but to see so many international companies seeking out this opportunity for the first time this year is testament to the strength of the Middle East marketplace.”

The Big 5 will run from 25-28 November at Dubai World Trade Centre, with Middle East Concrete and PMV Live taking place alongside, providing access to all information across the concrete, plant, machinery and vehicle sectors of the industry.

Sharjah Property Expo to kick start from November 29

Sharjah:: As the countdown begins for ‘Homes for All’, the biggest Indian property  expo in Sharjah, UAE, thirteen property developers and promoters from Mangalore and Udupi region will gather under a single umbrella to reach out to potential property buyers from twin districts of coastal Karnataka.

Apart from coastal-based promoters, a large number of developers from Bangalore, Mumbai, Goa, Delhi, Kerala and other parts of India are also participating.

The event, which will kick off at Sharjah Expo Centre on November 29 at 3 pm, will remain open until 10 pm, and also on the next day, November 30, from 10 am to 10 pm.

"This effort ‘Homes for All’ will showcase new projects and new property developers from all over India who wish to reach out to the common people and their property needs by coming to their door step.  It is the first ever expo in UAE that will target affordable homes where the mid income group and upper middle income group both will for sure find a match for their property requirements which suit their budgets," say the promoters.

The following property promoters will be available at your service during this Expo with new developers from Mangalore, Udupi, Suratkal, Kinnigoli and all parts of rest of India:

Property Promoters from Mangalore:

ACE Builders, Bhandary Builders, Clavier Estates, Godrej Alpine, N J Builders, Nidhi Land Infrastructure, Rohan Corp, Red Bricks Builders, SMR Builders, Shetty Construction Company, Signature Villas, T 3 Builders and Vishwas Bawa.  Property Promoters from Udupi: Khain Properties

The event organizers are committed to ensure that you can meet as many builders and buyers during this event. The expo aims to bring together developers, real estate brokers, private and institutional investors from the Middle East and Asia Pacific regions. This show will be a meeting point for key real estate investors, and more than 500 properties from India will be at your disposal from builders of repute from Mangalore, Udupi, Bangalore, Goa, Mumbai, New Delhi, Gurgaon, Kerala, Pune, Chennai and many more. 

‘Homes for All’ property expo will also be a launch pad for all Indian property developers. New projects with exciting deals will be announced and showcased here for the first time and NRIs will get best bargains in return. Properties as low as INR 20 lac to high end luxury properties will be available. It promises a good mix of properties with pan India developers coming from small to big cities. The show enables the buyers to understand the pulse of property scenario back home. Footfall is expected to be very high.

It is an event not to be missed also because of the amazing free gifts on offer on every registration of the event.  Just visiting the event may give you a chance to win a free plot of land in India, free air tickets to India, and holiday packages. And if you book a property at the event – you can win free tickets to Las Vegas, USA.

The event - complete solutions for real estate in India will also showcase special services which include lawyer and legal assistance, Vaastu service, interior designing and banks for your loan requirements.

Event promoted by Maestro Events, Dubai and organized by Pan India Events & Exhibitions, India

Punjagutta and South Ex top in retail rental growth; Brigade Road nosedives

 Chennai: Punjagutta in Hyderabad has recorded the highest retail rental growth in India with an annual 29 per cent growth y-o-y while Bangalore’s Brigade Road has witnessed sharpest decline of 17 per cent in rental values. 

Globally, Punjagutta has placed 8th in the growth of retail rental values while South Extension in New Delhi took 17th position with an annual growth of 20 per cent y-o-y, according to global Real Estate consultancy firm, Cushman & Wakefield’s annual report ‘Main Streets across the World 2013’. 

The report, which analysed the most expensive locations in the top 334 shopping destinations across 64 countries, has revealed that Kutuzovsky Prospekt in Moscow has recorded the highest rental growth of 42% y-o –y.  

In the global ranking of the most expensive retail locations, Khan Market (1,250/sf/mnth) in New Delhi has emerged at the 28^th in the world, retaining its first position in India.  India however, has go down in the global ranking from 26^th to 28^th position due to the weakening of Rupee against US Dollar and largely stable rentals with limited increment in rental values in established retailing sectors, the report said. 

Hong Kong’s Causeway Bay has achieved the top position as the most expensive retail location in the world followed by New York’s 5th Avenue (2^nd) and Avenue des Champs Elysées in Paris (3^rd).

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield said, “While retail rentals globally registered a slower growth of 3.2% as compared to previous year on account of slowdown in economic uncertainties in the leading markets. The Asian markets saw a better average of rental increase at 4.5% in the same period.  Economic risks remain for 2014 but conditions are expected to steadily improve across most markets.  The retailers’ push towards the best and most sought-after locations will continue; however, limited supply and higher rental costs will create obstacles for some brands, leading a number of retailers to look at b alternative locations in close proximity to the main thoroughfares.  While cities will grow in importance, a stronger focus on the use of all channels including online will also be seen to both speed and support expansion.”

Main street location of Punjagutta (155/sf/m) in Hyderabad recorded the highest annual growth in retail rental values of 29% reaching its 2007 peak value for the first time in seven years due to renewed interest from retailers specially jewellery brands. South Extension has registered the second highest annual growth of 20% in retail rental values on account of consistent demand and churn.

Ahmedabad’s C.G. Road recorded an impressive growth of 15% in rental values due to increased interest from retailers to enter the market as many national and global brands are keen on entering the market and expanding their presence in the location.

On the flip slide, Brigade Road in Bangalore saw the sharpest decline in retail rental values of over 17% y – o – y across the globe due to lack of interest from retailers. Many brands have not moved out of the location to occupy space in nearby shopping centres. Mumbai’s Linking Road, which recorded a correction of approximately 12% y-o-y ranked 11^th in the survey for sharpest declines globally. 

Once popular with brands for opening their flagship stores, has been witnessing competition from some upcoming shopping centres in the vicinity which retailers prefer on account of better amenities and lower rentals. Linking Road suffers from aspects like poor accessibility, parking and other amenities. 

 INDIA RANKING: 

In India during the first half of 2013, prime rents in most cities remained stable as a result of steady demand from retailers, particularly from the fashion and food & beverages segments. Steady demand from fashion and F&B brands was also the catalyst behind rises in India (2.1%). Overall, activity was slightly more restrained than in other major markets. New Delhi generally outperformed other cities. However, rental movements varied across sub-markets, with double-digit positive and negative growth depending on the location. Occupier demand from fashion, jewellery and F&B retailers was evident during the year for both high streets and shopping centres.

Khan Market witnessed high demand from retailers but due to limited availability and transactions, rental values have only seen a marginal increase.  Despite a correction of 11% over last year due to lack of interest from retailers, Mumbai’s Linking Road (750/sf/m) has emerged as the second most expensive retail location followed by Connaught Place and South Extension.  

Sanjay Dutt further added, “New-age retailers are focused on providing an experience to their customers moving beyond just merchandise, therefore are showing preference for quality shopping malls that offer the right amenities. However, shopping centre has its development limited due to poor cash flow situation and over leveraged conditions of developers. Most investors, with the exception of few, are also showing limited interest in shopping centres. India’s main streets continue their appeal as new retailers are trying to create brand presence in key main streets. Large formats are selectively willing to go for stand alone or built to suit options as well.”

Sanjay Dutt further added, “Going forward we can expect some of the well managed shopping centres in key locations to start commanding significant rental values at par with main streets as Retail Malls are now increasingly positioning themselves as destinations with a few even going as far as putting added attractions like adventure rides etc. apart from high end cinema and F&B. Destination malls, specialty malls and luxury shopping centre developments are other formats being explored by NCR, Mumbai and Bangalore .Key  High street locations in locations with solid captive audience and adequate facilities for shoppers will remain high on priority for retailers and therefore a rise in their values over a period of time”

Lotus Greens becomes first realty firm to make its office carbon neutral

Lotus Greens, a promising real estate developer in India set to create a difference in the perception of the real estate sector, has become the first real estate company in India to make its office environment completely 'Carbon Neutral'. The company has recently been awarded a certificate by a leading carbon offsets agency, which recognises and applauds the company attempts and efforts to make its office carbon neutral.

Lotus Greens plans to become a 100 percent green company and has already started moving in this direction. Lotus Greens promotes its employees to use public conveyance like Delhi Metro for commuting. To encourage such practice, it reimburses the cost of transportation for every single employee. Company uses recycled products and stationeries at its office.

Setting itself apart from the crowd, the company has joined the league of the global multinational giants like Microsoft, Woodland and Lamborghini who are striving to reduce carbon footprint by 2015, and sets precedence for its Indian peers.

Lotus Greens has planted 21,000 saplings on the periphery of Sariska Tiger Reserve on Aravalli Hills in Alwar, Rajasthan, which is an exercise intrinsic to the company's 'Green and Sustainability' initiative. What is remarkable about this afforestation drive is that it has been done in a reserve park area, where any cutting down of trees is illegal and attracts penal sentence. Standing true to its name, the real estate developer has embarked on a mission to maintain India's environmental balance and improve biodiversity from the very first day of its inception.

The move is in line with the company's efforts to limit and balance the usage of natural resources like timber, a high demand commodity for the real estate sector. Lotus Greens aims to contribute towards a sustainable development model for environment by planting such massive forest covers and setting an example that a real estate developer too can do what it takes to make a difference for the society and humanity. This drive by Lotus Greens will benefit about 300 surrounding villages in the ecologically sensitive Aravalli Hills.

Commenting on the prudent exercise, P Sahel, Vice Chairman and Co - Promoter, Lotus Group said, "We will not shy away from our responsibility and accountability toward our environment and mother Earth. We believe in responsible urbanization and latest green initiative will help maintain the biodiversity of the oldest mountain range on Earth. As a realty developer, it is all the more important that we own up to our responsibility and set precedence for others."

"Prioritizing ecological balance and minimizing damage to the environment is actually the only way to promote and sustain real estate development in today's ecologically fragile world. We have not been lacking in taking singular initiatives at the community level as well," Sahel further said.

Reasons To Buy Instead Of Rent a Home

If you've been indecisive about buying a home and have so far preferred to rent instead, this is a good time to finally make your move. Home ownership is one of life's greatest joys, but that is not the only reason why you should finally take the plunge, says Arvind Jain, Managing Director of Pride Group.

Advantages Of Home Ownership

• Bargains

It is a buyer's market now. There have never been more developers in the fray, and there is a huge number of projects out there to choose from. This means that you can get a real bargain today - and that too with top developers who are known for excellent locations, construction and project amenities. Even with a less-than-spectacular budget, you can now own a great home in a great neighbourhood. Banks are also falling over each other to sanction home loans. In other words, your application will get successfully processed faster than ever before.

• Investment Value

When you pay rent on a home, the money is basically gone forever. You get no returns and no security - all that your money has paid for is accommodation. The landlord gets richer, but you have not reaped any investment benefits. It is true that buying a home involves a large initial financial outlay. However, unlike with paying rent, these expenses are recovered over time, because you are building equity in your own home. Residential property in major Indian cities appreciates very well indeed. Remember, home ownership is not only about occupancy but also about long-term investment. Also, you save tax on your home loan.

• A Sense Of Community And Belonging

People who rent homes in a major city never really build firm relationships with their neighbours. When you own a home, your children make long-lasting friendships, and the adults in your family become part of a long-term support system. Research has proved that people who have healthy relationships tend to be happier and have less stress in their lives.

• The Security Of Ownership

Obviously, home ownership means that the home is yours - not somebody else's. There are various advantages built into this, because you have the right to do what you want with your home. In other words, you can renovate, refurbish, paint and decorate it as much as you please (within the bounds of the housing society byelaws, of course). In short, you can make your own residential property into a real home. Also, you have the financial assurance of a rock-solid asset to fall back on.

Should You Buy A Resale or New Flat?

Should you buy a new flat or a resale? There appears to be no easy answer to this question. People buy resale flats instead of new ones for various reasons. Sometimes, a certain location just does not offer suitable options on the primary market. 

 

At other times, buyers do not do enough research and are unaware of the availability of very good new projects. Or they succumb to the pressure tactics of a persistent real estate broker and buy a resale flat when a new one was available in an excellent location, and within their financial reach. Or they believe that a serviceable flat available at a slightly lower price is always a good bargain.

Most often, people buy resale flats because they are in a hurry and want immediate possession. This renders them unwilling to opt for a flat in a project which is under construction, even if completion and possession are only a few months in the future, says Kishor Pate, CMD - Amit Enterprises Housing Ltd.

Because real estate is an eminently re-sellable asset, many people put perfectly acceptable flats on the market after a few years of use because they want to upgrade. This fact makes the market for resale flats almost as big as the primary market. However, this does not mean that resale flats and new apartments fall in the same value chain.

Assuming that a buyer learns of both new and resale options in the location of choice, it is important to understand the benefits of opting for the former:

• A home, both as an asset and a possession, is very much like a car - neither offers the same value or experience when it is second-hand. The feel of a used home or car cannot match that of a brand-new version, simply because it has already passed through the hands of one or more owners. It is true that this is something of an intangible psychological factor - but it is nevertheless very real.
• Assuming that one has bought it from a reputable developer, a first-sale flat has newer fixtures and fittings that come with a minimum guarantee of problem-free performance. Nor is wear and tear the only problem with older fixtures and fittings - like in the case of most other products, there is also a question of product generation. To illustrate - a first-generation iPhone cannot perform with the same speed, efficiency and reliability as a first-generation one.
• Flats in new projects by good developers tend to be more energy efficient, environmentally compliant, user-friendly and space optimized. Reputable developers are like doctors - they are constantly upgrading their knowledge, techniques and equipment. They do this to remain relevant and competitive in a market which they know to be replete with other options for buyers. The benefits of this mind-set are directly passed on to the buyers.
• It is very difficult - if not impossible - to paint a unique masterpiece on a used canvas. Previous owners of a resale flat always leave a certain indelible part of their personality or culture imprinted on the property. While it is possible to fill in and paint over nail holes in unwanted parts of the wall, undoing serious structural modifications is a challenge.   
• New flats in under-construction and sometimes even ready-to-move-in projects can, in fact, be cheaper than resale flats. In the case of under-construction projects, the sale value of individual units rises only in tandem with the stages of completion. But resale flats often cost as much as (if not more than) new apartments because the relative cost of original acquisition was higher. This is often a function of obsolete construction methods, which are costlier and more wasteful than more evolved construction technologies.
• New flats have higher resale value and also longer shelf-life on the resale market because of the lower age of the building.

Home purchase is never a decision one should make in a hurry. Also, regardless of whether a new flat is slightly cheaper or marginally costlier than a resale apartment, it should not be made solely on the consideration of budget. Few investment decisions have as many long-term financial implications and appreciation potential as property purchase. 

It is therefore important to understand the pros and cons of old versus new flats, and to always take an informed call when it comes to buying a home.

Industry predicts six-fold growth for construction equipment market

"The Indian earthmoving and construction equipment (ECE) market has the potential to grow six times -- from total revenues of USD 3.3 billion in 2010 to USD 22.7 billion in 2020. But to realise the potential, the government would have to create an enabling environment. The Indian ECE industry wants the government to clear important national infrastructure projects without delay by addressing issues of land acquisition, dispute resolution and awarding contracts under clear PPP framework,” said Jasmeet Singh, Head - Customer Experience Programs & Defence Sales, JCB India Ltd. 

He was addressing a road show on Asia's third largest trade fair for equipment industry-Excon 2013, organised by the Confederation of Indian Industry (CII), in Chandigarh at its Northern Headquarters, Sector 31 A, recently.

“In addition, it has to be ensured that liquidity is available, while taxes need to be simplified with uniformity across states,” he emphasized. Excon 2013 is scheduled to be held at the Bangalore International Exhibition Centre (BIEC), from November 20-24, 2013. Spread over 2, 20,000 square metres of display area and with a participation of 800 exhibitors, Excon would witness over 100+ new product launches by participating companies. There will be country pavilions, including leading economies like China, Sweden, Germany, Italy, Japan, South Korea, and Turkey. The event would also have a large presence of SMEs in the component and aggregate manufacturing, showcasing India's potential as a preferred outsourcing destination for construction equipment manufacturing.

“For a country focused on development, it is imperative to mechanise its infrastructure creation. Besides this, collaboration with suppliers, competitive enhancement and skilled manpower are also crucial to boost the Indian Construction equipment sector, said Mr Narendera Arora, Vice President, GBP Group.

Calling skilled man power, a major challenge for construction equipment industry, “Ms Ritu Singhal, Director, Raglan Constructions said, “By 2020, the construction equipment industry will need an estimated one lakh trained operators and three lakh trained mechanics especially in areas of operations and maintenance. Skilled manpower remains a key challenge in this segment which calls for a skill development council.”

“Fast urbanization and industrialization has paved the way for multi-billion dollars infrastructure construction projects which propelled demand for construction equipments in the country. However, the industry recorded slight slowdown in FY 2012-13 amidst economic downturn, but the industry will sustain its positive growth momentum in coming years at a CAGR of 17.6%. Given these facts, it is absolutely essential for the construction equipment industry to work closely with all stakeholders including government agencies, and events like Excon can go a long way in facilitating that,” Mr Vinayak Sanger, Zonal Head, Schwing Stetter.

“The construction industry is a major contributor to the country's GDP (8% in FY12) and one of the largest employment generators, currently employing around 33 million people but the construction equipment market is still untapped. In such scenario, event like Excon will be a great platform for national as well as local players to share global best-practices and would aim at facilitating faster and sustainable development of infrastructure and related sectors in India,” said Mr Manmohan Singh, Chairman, CII Chandigarh Council. 

“From live demonstrations of equipment to a display of power tools, Excon promises to give close to 35,000 visitors from different parts of India, a great business opportunity. Apart from the participation of major equipment renting companies, and leasing and finance companies that offer on the spot loans, visitors can benefit by benchmarking product features of different makes, interacting about their requirements with technical heads, and negotiating deals with chief executives. The event also acts as a forum to position India as an outsourcing destination for components, aggregates and equipment,” said Pikender Pal Singh, Regional Director, CII NR region.

TDR hike will increase property prices in Mumbai

The sudden rise in the Transfer of Development Rights (TDR) price has taken the market unawares, despite the fact that such a rise was likely because not much of TDR generation was taking place. Effectively, TDR prices have now doubled, and such a steep rise was not expected. The current price of TDR is now around Rs 4000 per sq ft, says Subhankar Mitra, Head - Strategic Consulting (West), Jones Lang LaSalle India.

A close reading of the TDR scheme from a regulatory perspective indicates that the supply of TDR was expected to be driven largely by slum rehabilitation schemes. Such projects have a long gestation period and their success is a function of diverse factors - factors which do not always work cohesively. In other words, a regular flow of TDR from these projects may not be always possible.

The current TDR rate rise is the result of a slowdown of supply from such schemes, and is also linked to performance of some of the leading developers within the SRA projects sphere. Another reason for a drop in supply is the fact that developers who earlier created projects purely to house PAPs in the Mahul Road area (south of Chembur) and generated TDR which they sold in the open market have seen sale prices rise sufficiently in this specific area to make a project with a sale component profitable. Hence, developers have stopped projects directed towards generation of TDR.

Since the base FSI in the suburbs is only 1, it is a practice for developers to load about 60% TDR in the project in order to take the FSI about 2.0. Thus, the increase in TDR cost will increase project costs. At present, when sales are slack and the developers are finding it difficult to sustain prices, the additional cost are going to squeeze their margins even further.

One way to check further TDR price hikes would be to place more emphasis on TDR generation through SRA schemes and other infrastructure projects. The BMC can also consider allowing more premium FSI to be used as against TDR.

Assocham wants states to follow Maharashtra model in stamp duty and registration fee collections

'The industry body predicts the revenue can go up to Rs 2 lakh crore if things are streamlined at registrar offices'

Following innovative approach, transparency and progressive policy, the revenue collected on account of stamp duty and registration fees on property and capital transactions across India could be more than doubled and be raised to about Rs two lakh crore, an ASSOCHAM study said, which has advised states to follow Maharashtra model to curb evasion by builders and property buyers.

Lauding Maharashtra for following transparent and innovative policy, the study titled, ‘Trade Policy & Tax Regime: State Level Initiatives’ said, “Maharashtra alone accounts for over 20 per cent of both stamp duty/registration fees and overall taxes on property transactions as the state has largely streamlined compliance and tax administration in this area, thereby curbing evasion.”

Stamp duty and registration fees on property and capital transactions form a major component in the states’ revenue basket.

Other smaller states, viz., Delhi, Kerala, Haryana and Punjab too maintain robust collections on this account, which is reflective of the real estate industry in the respective states, highlighted the ASSOCHAM study while suggesting that Maharashtra’s pattern should be studied by other states and adopted with necessary modifications.

“With property prices skyrocketing in most metropolis and price of agricultural land too rising sharply in recent past, a progressive policy in this regard is the need of the hour,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s study.

“The stamp duty and registration fees on property and capital transactions form a major component in the states’ revenue basket,” said Rawat, adding, “In India, where property transactions are often regarded as shady and undervalued to avoid payments vis-à-vis stamp duty and registration fees, an innovative approach to this aspect would result in much larger collection, besides tackling parallel economy to an extent.”

“As stamp duty and registration fees collections show strong growth, state governments should do away with land revenue and property tax or factor this at the time of sale or purchase and make it a one-time payment,” suggested the ASSOCHAM study. “While local bodies can be compensated for the loss of revenue on this account, it could save the stress and trouble for village and urban poor who own a small piece of land.”

Stamp duty and registration fees have much wider ramifications in so far as streamlining and management of a very important segment of the economy, highlighted the ASSOCHAM study.

Taxes on property and capital transactions cover two important aspects viz., stamp duty and registration fees, besides land revenue and tax on urban immovable property tax. Thus, this segment covers a very huge financial sector which determines the flow of savings, housing, land and property holding.

“Hence a very close look at various aspects of this item of revenue will ensure a greater transparency in the economy and also a steady inflow of revenue to the exchequer,” said the ASSOCHAM study. “This will also result in monitoring and administratively gathering vital data on land and property holdings both in urban and rural areas.”

ASSOCHAM has also emphasized about a pressing need for taking an all-inclusive view of the entire fiscal policies and tax structure to pep up domestic demand and make India’s exports more competitive. “Creation of an efficient and cost effective production base within the country would lead to a gradual rise in demand from internal and external markets.”

“Desperate times call for desperate measures, more so as India is facing one of the worst economic phase due to the recent rapid rupee devaluation together with the burgeoning current account deficit (CAD) threatening the country’s ability to meet foreign currency payment obligations, multitude of taxes and sluggish pace of reforms are also key reasons why Indian economy is tottering,” said Mr Rawat. “There is a need to develop a national level single market by removing all existing trade barriers, multiplicity of acts, fiscal policies and marketing arrangements across India.”

A customer friendly and responsive service environment should be created across the country for consumer, trade and industry demand to flourish, added the ASSOCHAM study.

In its study, ASSOCHAM has further said that it is possible to marginally raise the motor and commercial vehicle tax and abolish the passenger and goods tax. “With the increasing number of vehicles produced and used in India, there is a compelling need to make road traffic smooth and free from bottlenecks and this will go a long way in easing the traffic and undue harassment to transporters and passengers as local bodies could be compensated by the state governments for loss of revenue in this regard.”

ASSOCHAM has also suggested that policy makers should focus on increasing efficiency of tax collections with a customer friendly approach as increasing volume of goods and services are being produced and traded in the country. “Money will flow into government coffers if the policy initiatives focus on ‘tax collection with human face’.”

By taxing diesel, petrol and other petroleum products (including cooking gas) more and more, it will result in a cascading effect and lead to overall inflation and make household necessities prohibitively expensive due to rising transportation costs, added the ASSOCHAM study.

ASSOCHAM has also suggested that the government, on its part should streamline all procedures relating to both real estate and automobile sectors and rationalization of tax rates across the country and the industry will continue to grow if these initiatives are considered seriously and are applied to other sectors too.

With agricultural production and trade going up steadily together with compelling need to promote both production and consumption of value added and manufactured goods, ASSOCHAM study has suggested that states should rationalize taxes on all items of mass consumption and consumer goods.

“There is a scope to bring down tax rates to promote consumption, thus focus should be on collection without increasing rate of taxes,” said the ASSOCHAM study. “In view of the growing demand for value added food items, consumer durables and fast moving consumer goods (FMCG), production needs to be incentivized to increase tax revenues.”

Property Investment: Focus Shifts from Mumbai to Pune

Arvind Jain

Over the last three years, an increasing number of property investors who were previously focused solely on Mumbai have shifted focus to Pune. The reasons are not hard to understand. Mumbai’s real estate market is caught in a cycle of unrealistic property price escalation that cannot last much longer, feels Arvind Jain, Managing Director of Pride Group.

Such a scenario is called a ‘bubble’ because it will eventually burst. Paradoxically, one of the foremost reasons why real estate prices in Mumbai have gone through the roof in the first place is excessive investor activity.

Today, Mumbai’s property market is facing oversupply and lack of demand. In the short to medium term, I expect this market to see a downward correction in pricing as the current price levels are beyond the reach of most buyers. Mumbai’s luxury homes market continues to perform well, but it takes more than good performance in one niche segment for the overall market to bounce back.

 The highest demand in Mumbai is for homes in the Rs. 65 to 80 lakh bracket, and there are very few options available in this budget range. Considering the lack of demand for the overpriced properties in most areas, it is logical that there will be a mark-down in prices very soon.

Pune, located less than 200 kilometres from Mumbai, is a far more rational market and has been performing very differently. The ratio of supply and absorption is much better in this city because prices are still within the budgets of mid-income buyers.

The city has been steadily adding new areas to its real estate development landscape, and the supply coming up in these areas helps to keep prices in other areas at rational levels. These positive dynamics have acted like a ‘detour’ sign for property investors. They can see where Mumbai’s real estate market is headed and prefer to plunge their capital into the prospering neighbour city of Pune.

Going by experience, these investors are not looking at saturated areas where price growth has slowed down. The maximum growth is in the city’s developing areas which have more competitive rates and therefore the highest demand. Also, these investors are looking at large projects by reputed players.

The safest and most promising investment opportunities in Pune today lie in townships. These provide residential products which include all the right ingredients for protracted capital appreciation as well as rental income. While prices in the centrally located townships are no longer attractive to property investors, they are drawn to the ones coming up in strategic upcoming areas. These properties are available at lower rates and have the highest potential for appreciation over the next 3-5 years because the city's population growth is headed towards them.

Illegal Buildings Not New to Mumbai: Anuj Puri

The problem of illegal buildings in Mumbai - and their impact on the existence of Mumbai's citizens and organizations, as well as its real estate market - is not a recent phenomenon. In fact, it is as old as the BMC itself, says Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. 

"Whether they were the result of corruption and collusion or lack of vigilance of, the issue has always persisted in what is India's financial capital, which is also the country's most space-challenged city," he adds.

However, the issue of illegal buildings started intensifying from 1995 onward. This was when the BMC introduced a slew of new regulations pertaining to development control, FSI and TDR. What followed was a significant increase in violations such as consumption of excessive FSI, building being built higher than permitted, flouting of CRZ and air space regulations, and projects being built without environmental clearances. Yet another common violation is the illegal utilization of open spaces that must mandatorily be maintained around buildings.

Considering that the problem of illegal construction is rampant throughout Greater Mumbai as well as the Kalyan-Dombivali belt, Thane and Ulhasnagar, it is impossible to define a focal point of highest incidence. What is certain is that the problem has been more or less been kept under control in Navi Mumbai, where CIDCO enforced strict norms on such matters. The rest of the city seems to have been, and continues to be, wide open to the rampant spread of illegal constructions.

The fallout of illegal buildings or constructions on the city is severe. In the first place, residents of such buildings face the constant risk of traumatic life disruption and displacement, as such buildings are liable to be identified and illegal and consequently demolished without much notice. Also, since illegal additional constructions are not part of the original approved building plans, the entire project is effectively rendered structurally unsound.

Residents at Campa Cola compound in Mumbai protesting against demolition drive by BMC

Because of huge shortage of FSI within Mumbai and its surroundings, illegal constructions are on an inexorable increase. When development clearances and increased FSI are not available, areas which are defined by huge demand for built-up spaces and no supply of new land parcels, illegal buildings are and will always be an unfortunate but logical consequence.

Also, property prices in buildings tend to be lower in illegally constructed buildings. In a city like Mumbai, where astronomically high property prices represent the greatest rift between people and homes, this factor plays a significant role in maintaining demand for any kind of available space.

A  building's overall legality can be verified by the availability of an occupation certificate and original drawings approved by the BMC. However, it is beyond a layperson's capacity to verify whether the offered space lies within the approved part of a project or is an illegal extension.

 

Mumbai is not alone when it comes to the plague of illegal structures - most other Indian cities have their share of the problem as well. The notable exceptions are cities where development rules are more flexible and practical, or are enforced with greater strictness. Some of these cities are New Delhi, Hyderabad, Chandigarh and Bangalore.  Ahmedabad, which earlier had major issues with FSI violations, clamped down seriously after the earthquake in 1991 and completely overhauled its regulation process. As a result, the incidence of illegal construction in Ahmedabad has reduced considerably.