2011 Real Estate Forecast

REALTOR SPEAK: PLAYERS TRY TO PRE-EMPT 2011
Pallavee Dhaundiyal Panthry, January 23, 2011
The Economic Times

Players in the real estate industry hope to better their fortunes in 2011, going by what they tried to offer the customer in 2010. As a roundup of last year’s fortunes, it is evident, that this industry has to innovate and redefine business models all over the place.

Ravi Saund, head, business development, Chd Developers Ltd.
2010 was a year of surprises with realty sectors regaining momentum after the lull caused by the economic slowdown. The year has been positive for real estate sector with heightened activity in the sales. 2011 is certainly going to be promising year as well for real estate developers. With positive sentiments floating in the market and the economy being stable, we expect higher demand in the housing segment, making the market more competitive for residential players.

Brijesh Bhanote, senior VP, Sales and Marketing, The 3C Company
The real estate sector picked up momentum in 2010. The economy recovered from recession, the market improved and witnessed people from all the spectrums investing in the sector. We expect the year 2011 to be as good as 2010.

REAL ESTATE MARKET IN PUNE AND SUBURUBS
The Economic Times

For mid-income homes , most new launches are now in western Pune in locations like Hinjewadi, Wakad, Pimple Nilakh, Pimple Saudagar, Aundh and Balewadi. The increase in supply has also kept prices in these locations affordable.

Buying options (Average property rates in Rs per sq ft)

Locations in demand

Aundh: High rental demand from software professionals from Hinjewadi IT Park; good infrastructure and central location.

Baner: Proximity to the Mumbai-Pune expressway, good connectivity to city centre and lower rental and capital values compared to Aundh make it an attractive destination.

Kharadi: Location on Pune-Nagpur Road and proximity to international airport have sustained demand.

Price appreciation compared to cities in the region

There was a minor correction in property prices at some locations in Pune in 2008. However, an abundance of residential property has resulted in a slow pickup in prices compared to most cities in the region.

Growth drivers
Some big infrastructure projects under way that could influence real estate prices in nearby locations

Road transport
The Pune Municipal Corporation recently approved a proposal to implement the Bus Rapid Transit System (BRTS) on 27 more roads in the city. Prominent among the selected roads are Tilak Road, Bajirao Road, Shivaji Road, Fergusson College and Jungali Maharaj. The total length of the BRTS will be about 101 km. In the first phase, it will be implemented on roads which have already been widened to 36 metres.

Ring Road
The proposed 110-km ring road, which will have 90-metre wide roads, is aimed at decongesting Pune city’s traffic by diverting heavy vehicles.

Power supply
34 new sub-stations are proposed to be set up during the year to improve the quality of supply and reduce interruptions.

ACTION MODE
The Times of India (Delhi edition)

Residential property as an asset type has driven real estate towards recovery. The demand downturn in 2009 shifted focus from premium and luxury to affordable and budget housing. Hence, many developers decided to focus on the untapped mid-segment demand leading large-scale project launches in suburban locations and debt restructuring by developers through 2009 and 2010.

The initial phases of affordable projects garnered good response even as the catchments shifted from investor to end-users. At reduced pricing, low mortgage rates, multiple options from a huge supply inflow, flexible payment plans and a product mix aimed at low mid to mid income strata there was a increase in transaction volumes and absorption rates. While supply pipeline would be large, concentrated within the price brackets of 30-50 lakh, rate hikes by RBI may impact medium term demand. The healthy absorption witnessed in the affordable housing segments resulted in a supply influx in 2010. As a result this year, over 100,000 units were launched in Mumbai and the NCR accounting for over 80% of the residential supply in 2010. While the prices are on an upward trend in the short term in select markets of Mumbai and NCR, prices could be impacted by decline in activity and large expected supply in 2011.

SUPPLY WILL CHECK PRICES
Prabhakar Sinha
The Times of India (Delhi edition)

The year is likely to witness growth in demand for residential units across major cities in the country. Property consultants, however, say prices may not appreciate because supply has gone up with a large number of projects launched recently.

Shveta Jain, director (residential services) of Cushman & Wakefield India, says that despite the increasing demand and improving market sentiments, the large available supply is expected to keep a check on the capital values across cities. Improved economic and employment outlook will boost residential demand in select markets. Southern cities like Bangalore, Chennai and Hyderabad, which are largely driven by end user demand and supported by growing IT/ ITeS and automobile sector are expected to remain strong in 2011, whereas markets which have witnessed strong recovery with capital values reaching high price points and significant supply entering the market like Gurgaon, Mumbai and Pune are likely to see some correction in the coming year, Jain says.

Consultants say that real estate sector has come out of the slowdown phase, which was set in because of the recession in the developed world. The industry has bottomed out in the current cycle. Abhishek Kiran Gupta, head of research at Jones Lang LaSalle India says that the fears of a possible double-dip recovery have given way to belief in the sustained healthy levels, if not a rapid growth.

HYDERABAD REALTY IN CONSOLIDATION PHASE
V. Rishi Kumar, January 23, 2011
The Hindu Business Line

The real estate market in Hyderabad is entering a phase of consolidation, after a relatively extended subdued phase. Majority of builders continue to maintain prices, which had settled down to their lows in the last quarter of 2010 after ruling high in 2007-2008. End-users, having postponed purchases for some time, have begun to take a call on buying properties. An interaction with some of the property developers shows that this trend is likely to continue. Also, most of the issues with regard to demand for a separate statehood have been factored, they say.

“Price rise at this point is a sensitive issue. No buyer would like to hear anything on that front at least for some more time,” said S. Pochendar, chief operating officer of Lanco Hills, which is developing a mixed development project with residential and office spaces near the IT hub of Hyderabad.

HONEY I SHRUNK THE HOUSE
Namrata Dadwal, January 24, 2011
Mail Today

“People will stay for 3-6 months in a city find cheaper to buy a studio apartment and sell it rather than stay in a hotel” Sanjay Dutt, CEO, Business, Jones Lang LaSalle India

Since the dawn of civilisation, man has been obsessed about the roof over his head. In fact, one of the biggest financial concerns of an individual is buying a house. More so as property prices continue to zoom upwards. One way to find a house that fits your budget is to shrink your requirement. Fortunately, developers have anticipated this need and a flurry of projects offering apartments between 300 sq ft and 800 sq ft have come up.

However, a nagging worry for most buyers is whether such small- sized apartments offer value for money, especially where the resale value is concerned. It makes sense for a young professional or a couple to buy a small house, especially if it’s near their office. Rather than paying rent, it is better to pay the EMI as one also builds an asset. Most such apartments are coming up in the suburbs, which makes them cheaper than renting a room within the city limits.
(Page 26)

Hospitality Sector

EWDL TO SET UP 10 HOTELS, PUMP IN RS 350 CRORE
Rupesh Subhash Janve, Mumbai
Financial Chronicle

Entertainment World Developers (EWDL), a Phoenix group company, plans to invest around Rs 350 crore in setting up 10 upscale hotels in Madhya Pradesh, Jharkhand, Chandigarh and Maharashtra over the next two-three years. “We are developing 10 hotels in the central part of the country, for which we are seeking partners who will manage them. We are looking for brands like Royal Orchid and Sarovar, among others,” Vivek Narain, executive vice-president (finance and business development), EWDL, said.

Information Technology Sector

IT SECTOR MAY NEED 1.8 LAKH PROFESSIONALS, SAYS INFOSYS CEO
Thiruvananthapuram, January 24, 2011
The Hindu Business Line The Economic Times Mail Today

Growth is back in the IT industry and most companies are hiring in large numbers again, according to Kris Gopalakrishnan, Managing Director and Chief Executive Officer, Infosys. The top five companies are estimated to hire 1.6 to 1.8 lakh employees over the next 12 months, he said here while speaking on IT and its multiplier effect on city infrastructure at a function here on Sunday.

There will also be a construction boom with new commercial and residential buildings. As the city expands, it will require new schools, colleges, hospitals and other civic amenities. Multinational corporations are looking at India to expand their markets and create back office functions. “Many of them are looking at Tier 2 and Tier 3 cities to expand. This will also put pressure on cities to grow,” Gopalakrishnan said.

Infrastructure

A RARE OPPORTUNITY! GOLF COURSE EXTENSION ROAD GURGAON (NCR)
The Economic Times (Delhi edition)

The advantages of Golf Course Road (Extn.) in Gurgaon are manifold. Not many people are aware of the future connectivity of the Golf Course Extension Road, which is going to be extended towards Vasant Kunj and thereby into Delhi itself. Such convenient accessibility is a boon for residents who live in the vicinity. This also means that the land prices will spiral, and subsequently increase in the price of apartments in this area.

IS MONORAIL ANSWER TO CAPITAL’S TRAFFIC MESS?
Rajesh Kumar, New Delhi
The Pioneer

With Mumbai about to get its first monorail, the focus is back on the pilot monorail line project connecting Kondli to Rohini Sector 21. The Delhi Government is considering carrying a detailed project report on the monorail corridor (Kondli to Rohini via Delhi Gate), identified by RITES in its latest study on problems related to Delhi traffic.

The biggest advantage of monorail is that it can be constructed on roads with Right of Way (ROW) as little as 18 metres and a turning radius of 50-70 metres, making it ideal for congested city roads. Hitachi Monorail System on Friday made a presentation before Chief Secretary Rakesh Mehta and Secretary (Transport) Rajni Kant Verma and other experts including DMRC.

L&T, ALSTOM VENTURE BAGS CHENNAI METRO PROJECT
Chennai
The Hindu Business Line

The Chennai Metro Rail has awarded the Rs 449.22-crore contract for design and construction of track works to a joint venture of L&T and Alstom.

According to a press release from Chennai Metro, the joint venture of Larsen & Toubro, Alstom Transport, SA, and Alstom Projects India has bagged the tender for design, construction of track work in viaduct, tunnel, underground, and depot in corridor I & II. The track work consists of 104 route km, including 15 route km in the depot at Koyambedu, to be completed in four years.

Policy

VOTING RIGHTS FOR NRIS BEING CONSIDERED: GOVERNEMENT

The Times of India

THIRUVANANTHAPURAM: The government is considering the issue of granting voting rights to Non-Resident Indians and suggestions have been submitted to the Election Commission on the matter, Union minister for overseas Indian affairs Vayalar Ravi said on Sunday.

Speaking to reporters here, he said there was a provision in the existing rules which said that a person not residing in the country for more than six months will have no right to vote.

The law ministry and overseas Indian affairs ministry had suggested to the Election Commission that NRIs could apply for vote through e-mail if they possessed Indian passports, Ravi said.

Like in the case of regular voters, the suggestion was that political parties could register complaints in case of doubts in the identity of any voter, he said.

A TIGHTROPE ACT?
Suchitra Patel
The Times of India (Mumbai edition)

In the backdrop of a number of controversies hitting the housing industry in the city, the government seems to be keen on acting fast to get the regulatory system in place. Chief Minister Prithviraj Chavan has recently announced that he will soon come up with a regulator for the real estate industry.

Creating a licensing system will cause more corruption and problems. Niranjan Hiranandani, MD, Hiranandani Constructions says, “Regulation should not lead to strangulation. After liberalisation, the government deregulated every sector from telecom, TV, aviation and now they are talking about regulating real estate. There are already 52 permissions for the sanction of a building. There is no need of a regulation but more transparency which can be achieved by putting all the information about the building plans over the Internet to be viewed by everyone.”

Economy

NO END IN SIGHT TO INDIA’A GROWTH BOOM: GOLDMAN
The Economic Times

FRANKFURT: Stocks remain a clear buy for the next few years because inflation fears and concerns about overvaluation are unjustified, Goldman Sachs Asset Management’s chief investment officer for India said.

Thomson Reuters StarMine showed Indian equities trade at 13.5 times estimated 12-month forward earnings, the highest multiple among high-growth emerging markets dubbed BRIC (Brazil, Russia, India, China).

This has fuelled concerns that parts of the Indian equity landscape, such as the IT sector, may be overvalued, a view not shared by Prashant Khemka.

“Indian equities have always traded at higher relative multiples. But I believe a premium does not equal an overvaluation. In fact, I see more value in the country given the prospects going forward,” he told Reuters in an interview.

INDIA TOPS GLOBAL CONSUMER CONFIDENCE SURVEY – NIELSON
Reuters

Consumers in most countries globally look set to keep a tight grip on spending in coming months as they worry about job security and rising inflation, a survey by the Nielsen Company showed on Sunday.

U.S. consumer confidence in the fourth quarter held steady from the third quarter but 45 percent of Americans see a weak economic environment this year, compared with 38 percent of Europeans and 19 percent of consumers in the Asia Pacific.

“The U.S. jobless rate remains at the heart of the issue for Americans,” said James Russo, vice president of The Nielsen Company. “It has topped 9 percent for 20 months straight, which is the longest streak on record.”

URBAN HOUSING NEEDS STRATEGY TO MEET DEMAND: PRANAB
The Times of India

CHENNAI: The growth of India’s economy would accelerate the pace of urbanisation, requiring a proper strategy to meet the demand for housing as well as quality urban services, finance minister Pranab Mukherjee said Sunday.

Speaking at the 24th All India Builders Convention, Mukherjee said: “The sustained economic growth will double the population living in urban areas over the next 25 years. The urbanisation growth is in line with the global trend.”

Stressing the need for a strategy to meet the demand for housing and services in urban areas, Mukherjee termed the housing shortage in urban centres as an opportunity for the construction sector. He however also said that the issue of meeting the demand is not just a commercial proposition but there is also a social angle to it.

CANADIAN MP BELIEVES INDIANS CAN RUN WORLD
The Times of India

FATEHGARH SAHIB: Here is a good news for all those, who want to settle their next generation abroad but are scared from recent racial attacks in Australia. The Canadian government wants to utilize the expertise of Indian students and engineers as they believe Indians can run world if given proper chance, this was stated here by Patrick Brown, Member of Parliament from the Barrie constituency of Ontario and the Chairman of Canada-India Parliamentary Association, Canada.

The Canadian MP came here to deliver an address in the Seminar on ‘Educational/Employment opportunities for Indians in Canada’ organized by the Computer Science Department of SGPC-run Baba Banda Singh Bahadur Engineering College (BBSBEC) Fatehgarh Sahib. Patrick was accompanied by Sukhpal Dhanoa and Sunawal Singh Dhillon from the International Punjab Development Council Canada.

“Since the educational set up of India has potential to create world class Engineers, we expect that their students can run world if they get proper guidance and chance. We have decided to increase the number of visas to skilled Indian youngsters” said Patrick.

State Bank of India

SBI NET PROFIT UP 13.4%
Business Standard

Backed by robust growth in net interest income, State Bank of India (SBI) today reported a 13.45 per cent increase in consolidated net profit to Rs 3,806.49 crore for the third quarter ended December 31.

The bank’s consolidated net profit in the third quarter of 2009-10 was Rs 3,354.94 crore.

The bank made a provision of 1,797 crore as compared to Rs 515 crore in same period last year to improve its loan loss coverage ratio. Excluding this, the profit would have been higher, Chairman O P Bhatt said after the board meeting.

The bank’s provision coverage ratio is 64.07 per cent. RBI has given SBI time till September 2010 to reach the 70 per cent level. “The coverage ratio norm is arbitrary. The bank has sought time till March 2012 to reach the 70 per cent level,” he said. If the bank gets more time, the stress on profits in the coming quarters will be much less.

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