Fake luxury market in India to double by 2015: Study

Thanks to the overwhelming demand to Chinese products, the ‘fake’ luxury market in India is growing at a rapid pace and if one goes by a study, the market size will become Rs 5,600 crore from the current level of Rs 2,500 crore next year.

Growing at a compounded annual growth rate of almost 40-45 per cent, the counterfeit luxury products market in India is about five per cent of the overall market size of luxury industry, which currently is worth over $8 billion, according to an ASSOCHAM-Yes Bank study titled ‘Indian Luxury CEO Survey.’

According to an analysis of the trade in counterfeit luxury goods conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), “Market for fake luxury goods in India is growing at twice the growth rate of genuine luxury products and is largely being driven by web shopping portals that account for over 25 per cent of the fake luxury goods market in India.”

With a share of about seven per cent, fake luxury products account for over $22 billion of the global luxury industry worth about $320 bn.

“Over 80 per cent of the entire imitation luxury products in India come from China,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the chamber’s analysis, adding, “Majority of counterfeit luxury goods sold comprise handbags, watches, shoes, clothes, hats, sunglasses, perfume and jewelry.”

“More corrective measures need to be taken to lock down the emergence and continued existence of counterfeit goods market in the form of effective intellectual property enforcement, plugging loop holes in the legal & judicial structure and higher conviction rates since the absence of these measures collectively lead to the global brand‘s equity getting diluted and reduced consumer trust in their brands,” said Rawat while expressing concerns over sizeable revenue losses borne by global luxury retailers as fake products cause major hurdles for them in conducting operations in India.

“There is an urgent need to educate customers on brand heritage and create awareness about original products as they cannot be substituted,” added Rawat. “Certification of authenticity and quality of products by luxury goods makers, digital serialization/authentication, multi-channel protection program and inclusion of appropriate technologies into product or label are certain effective tools which can be employed by luxury goods’ manufacturers to combat counterfeits.”

With the online luxury market worth about Rs 17,000 crore growing at over 20 per cent CAGR, internet has surely evolved as one of the most powerful means for counterfeiters as it provides them with simplified additional channels to promote and sell fake products to consumers, highlighted the ASSOCHAM analysis.

“Many aspiring consumers not able to afford originals deliberately purchase counterfeits as global websites selling fake products ship them after receiving online payment,” said Rawat. “Most of these websites delivering fake luxury stuff in the country have their domain names registered outside India’s jurisdiction,” he added.

“The luxury brand owners and online service providers need to work in tandem to address the sale of counterfeits and protect trademarks over internet,” he said, adding,  “Shopping websites should also take concrete steps to educate their users about sale-purchase of fake products and its repercussions.”

Govt assures help to investors facing problems due to Land Acquisition Act

Dr E.M.S. Natchiappan

Stating that the land acquisition act is not a hurdle in industrial development, minister of state for commerce and industry, Dr E.M.S. Natchiappan has assured the investors that the government is ready to help and solve the problems faced by them.  

While inaugurating the 4th India-Japan Business Conclave organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) held in New Delhi recently, the minister said, “If you look at the Land Acquisition, Rehabilitation and Resettlement Act, the first appearance may be very troublesome but is in no way a barrier in industrial development and if you feel there is some problem in any area, we are ready to solve it and even the rural development ministry is very much there to help you and solve the problem as quickly as possible.”

“We want to have a process of democracy and peaceful settlement of industry as the previous colonial land act may be giving a chance to grab the property from the individuals,” said Dr Natchiappan, adding, “If you want to establish an industry you don’t have to feel shy in discussing with people who’ve been possessing land for generations and centuries and these people living around the area (where the industry is to be set up) should be made party to the development of the industry as it will go a long way and save time from litigation.”

Dr Natchiappan also informed that the Commerce Ministry is coming out with an electronic method of clearance. “We at Ministry of Commerce and Industry are now working on a model where clearances will be given online through computers and you can go through the process of getting the clearances of the Government of India numbering about 20.”

Talking about the various efforts of the Commerce Ministry’s stress upon creating National Investment and Manufacturing Zones (NIMZ), the minister said, “We are now creating a Kanchi-Nippon chamber of commerce in Kanchipuram and the Japanese companies have purchased 3,000 acres already in this regard, besides in Kanchipuram we want a Japanese exclusive cluster zone that will be graduated into NIMZ and further post-graduated into an industrial corridor.”

He further informed that German companies have been granted 4,000 acres near Bengaluru, which will be established purely for German companies in tools and machineries. “In the Hossur area we are working together with the state government and they are contributing more than 3,000 acres and German companies are ready to invest their money there and we want to create a NIMZ.”

On the issue of India-Japan trade, the minister said, “Inflow of Japanese MSME sector is very much needed to boost Indo-Japan relationship and the Japanese co-operation in the MSME sector in the technology transfer, investment, partnership and fully established areas can be come up.”

IT/ITeS and SME sectors to drive Chennai office market in 2014

The Chennai office market has managed to beat the absorption level achieved during the post-recession recovery period of 2010 by 13% with a fair amount of transaction activity in 2013, although it fell behind the peak level of 2011 by 22%, according to a Knight Frank analysis.
 

The resurgence in office space demand from the IT/ITeS sector bodes well for the city's office market, it said, adding, 'While the past few years saw developers of all grades joining the fray in developing office space to attract IT/ITeS occupiers, the stringent economic conditions have dampened the enthusiasm bringing in a sense of realism into the market.'
 

IT/ITeS companies, although recruiting, are behaving prudently and taking up genuine numbers for employment. Along with occupiers, the developers have also become cautious and are presently adopting a conservative approach to their project completion timelines.
 

The year 2014 has been ear-marked as a very important period, owing to the impending formation of a new central government at the helm. Sentiments are expected to improve, but they need to sustain for some time in order to bring in the required confidence in the market.

While IT/ITeS sector will continue to drive demand, the Small and Medium Enterprises (SME) sectors with requirements of smaller office spaces will show increased activity, providing an opportunity to the developers to tap this demand. The manufacturing industry is expected to gain momentum in 2014.

Going forward, office projects in OMR post toll and GST Road will evince interest from occupiers having large floor plate requirements at lower rentals. Pre-toll OMR do not have much supply planned, barring SP Infocity in Perungudi. The IT/ITeS sector will be the driving force for office space demand.
Guindy is poised to emerge as an alternative to CBD and off-CBD locations, catering to the demand of the non-IT/ITeS sector with a smaller office size mandate.

The upcoming Metro Rail would be an added advantage to this office micromarket. Meanwhile, considerable supply is in the pipeline along the post-toll OMR which will be released into the market in phases over long intervals. Among the upcoming areas of growth, Porur holds much potential, although it depends on the developers whether they would be willing to live with the fact that residential development would fetch a better price.
 

On the other hand, the CBD will continue to remain an important market in terms of value with non-IT/ITeS sectors contributing to office space demand here. On the rental front, values are expected to remain stable in most micro-markets, although marginal appreciation is envisaged in projects
witnessing occupier interest.

Housing sales drop 33% in Chennai in 2013

New Delhi: New housing sales in Chennai has dropped 33 per cent to 18,200 units in 2013 due to slowdown in the realty market cause by macro-economic conditions coupled with high interest rates, according to a report by property consultant Knight Frank.

Though the sales volume was poor and below expectations, housing prices in the southern metropolis gave gone up by 5-7 per cent last year as developers restricted supply by offering fewer homes in the market.

Launch of new homes fell by 35 per cent to 20,100 units in 2013 compared to the previous year, when it was 30,900 units, the report by Knight Frank said.

"The year 2013 has not been very kind to the Chennai market and like all the other major cities in the country even Chennai has suffered the onslaught of the current slowdown in the real estate sector," said the report.

Chennai witnessed drop in sales volume to the tune of 33 per cent during 2013 making it as one of the worst performing years for the residential sector in the history of the city, it added.

It noted that since January 2013 absorption levels have been gradually declining with each passing quarter reporting a lower level than the previous quarter.

"Sales volume has dipped from 27,000 units in 2012 to 18,200 units in 2013 resulting in a fall of 33 per cent. The latest quarter, that is October–December 2013, has been one of the worst quarters in terms of sales and has recorded its lowest volume since 2008-09," the Knight Frank report said.

Factors such as slowing economic growth, rising interest rates by banks, high inflation and the weak rupee among others have contributed towards building a negative sentiment among home buyers, it said.

They have delayed their purchasing decision and are waiting for some sort of positive signal on these fronts. 

"Poor sentiment among home buyers has resulted in a decelerating trend in terms of sales over last four quarters.

However, developers in Chennai have been smart enough to take cognizance of such a trend and have cautiously reduced the number of new launches in the preceding 12 months," it said.

Tata Housing launches luxury housing project in Mumbai

Mumbai: Tata Housing Development, the real estate arm of Tata Group, has launched a luxury residential
project in the northeastern suburb of Mulund, Mumbai.

The project, named 'Gateway Towers,' is spread across 8.5 acres and is a part of the 19-acre redevelopment project.

"We have invested around Rs 2,000 crore for the entire redevelopment project across 19 acres, out of which the saleable component would be around 8.5 acres, where we will be developing six luxury residential towers," a PTI report quoting company sources, said.

The company, which has not revealed the number of units as well as the per-unit cost, will develop six residential towers, ranging from 31 stories to 41 stories. Managing director and CEO Brotin Banerjee said, "This project is in line with our strategy of creating marquee projects in major metros."

Mulund has witnessed an increasing demand for luxury housing from consumers and investors because of proximity to south Mumbai and fast growing Thane areas, he said.

The towers are designed by Callison. The construction is expected to be completed in four years.

Know facts and pitfalls in real estate transactions

To bring in awareness as well as transparency amongst the general public in terms of real estate transactions, HomeShikari.com, a real estate portal based in Bangalore, has initiated a campaign that addresses about some of the undisclosed and unfamiliar real estate facts to protect buyers’ interests.

The objective of the campaign is to bring in awareness as well as transparency amongst the general public- in terms of real estate. The campaign will be promoted throughout the social media portals and will be exclusively aimed at Bangalore consumers.

The thrust behind the initiation of the campaign is based on the website’s personal experiences with their customers. A large number of customers has faced legal issues and were being conned by builders and developers simply because of basic lack of real estate awareness. Besides, since inception, HomeShikari has been striving towards bringing in transparency in the real estate industry. It is the only such real estate portal that uses transparency as the core business module, a press release claimed.

According to Nishita Agarwal, Senior Marketing Manager, HomeShikari, “Bangalore has seen a steady rise in buying and selling despite the real estate glut in the country and the increased jurisdiction of the BBMP with the creation of greater Bangalore has resulted in a lot of irregularities which are still under the BBMP's scanner. Ultimately, this makes it even more important for a property buyer to be aware of realty facts- from legal issues to paperwork, the type of property, property tax and a lot more.”

HomeShikari anticipates that the campaign will not just make a layman aware of the furtive facts but will also bring in transparency to an extent in any sort of property transactions.

Besides working to eradicate deception and manipulation against property buyers through its transparency features, HomeShikari offers a plethora of other realty services under its strong suit. The prominent home buying services include; procuring an Encumbrance Certificate, Khata Certificate, tenant management, property monitoring, legal assistance, rental agreement assistance, property tax payment, utility bill payments etc.

Property Investment - should you wait further or act now?

Om Ahuja

In the closed circles of large investors, we hear that that the rally of real estate as an asset started in 2003 when country’s GDP growth was hovering at 8% and inflation was at 5%. In 2013, the trend got reversed as India's GDP growth hovered at around 5% and inflation reached 10%.

In such scenarios, informed investors believe that the price growth of physical assets like commodities and real estate slows down. With high inflation eating into the savings of the common man, available budgets do not encourage the taking of long-term investment calls. The middle income segment perceives that limited finances prohibit exposure to assets like gold and real estate, says,  Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India.

Oversupply – Fact And Fiction

Over the last few months, many research and media reports have spoken of excessive real estate supply and slowing demand across many Indian cities. In such an environment, developers roll out discounts and extras that are not part of the normal offers. Despite sporadic incidence of such offers in some cities and locations, this trend is by no means a common one; it is limited to developers who are struggling to attract demand. However, market pundits continue to predict that it will catch up across the board very soon.

This has created an expectation that first few months of 2014 will see a correction in property prices from developers across markets and projects. The obvious question that comes to the mind of hesitant property buyers is whether they should hold their purchase decisions in abeyance in order to benefit from a price correction, or make the best out of the current offers and discounts.

Economy – Here Comes The Sun

With the rupee weakening, exports-led sectors in India will do exceedingly well in 2014. The global economy is looking up once again, and export-centric sectors like Information Technology, automobiles, textiles, garments, diamonds and jewellery will be the early beneficiaries of this trend. Large corporate listed players like TCS, Infosys, Wipro and many other reputed IT companies are hiring more employees and planning to pay better salaries in the next increment cycle. This will lead to improved sentiments - and the stock market is already reflecting this mood.

More pertinent to real estate is the fact that once the positive sentiment gathers forward momentum, fence-sitters will rush to buy apartments. This will be a key trend to watch, especially in cities that are directly catering to these sectors - specifically Chennai, Bangalore, Hyderabad, Pune and Gurgaon.

Evidently, looking at the macro picture is becoming crucial when it comes to property investments. With exports-led sectors set to flourish in the improving economic climate, further fuelled by the agriculture sector's revival on the heels of an excellent monsoon in 2013, a pick-up in GDP growth by the 3rd quarter of 2014 is definitely on the table. The multiple measures by the Central and State governments as well as the RBI to contain inflation will further improve market sentiments.

So far, so good. But what about the real estate supply overhang that has been so generously hyped by the media?

Infrastructure – Not Oversupply – Is Key

Most cities have pockets with excessive supply, as well as pockets wherein supply is severely constrained. Despite concern about economic growth and high inflation, areas with excessive supply will continue to see demand, and therefore price appreciation. As long as an area is seeing infrastructure development, it remains a safe investment bet.

However, areas which are not immediately in line for infrastructure enhancement - such as the far suburbs of Mumbai and many areas in Delhi NCR - are definitely avoidable. Budget-conscious home buyers gravitate towards areas which offer relatively lower real estate prices, but they will understandably not compromise on minimum livability and connectivity standards. 

One last question remains unanswered - that of the elusive price correction versus the real, on-ground discounts and offers currently available.

Considering that sentiments are all set to improve on the back of increased corporate earnings and a revitalized capital market, the current sluggishness in property sales can continue for a maximum of two more quarters. This interim period is crucial for property buyers and investors, as the currently available deals and offers will continue for this period. The basis for this prediction is not conjecture, but the visible presence of economic factors that drive growth in the real estate sector. From this point onward, the clock is ticking and the countdown has begun.