India Ratings has revised its outlook for the Indian real estate sector to negative to stable for 2013, from negative in 2012. Demand remains subdued and EBITDA margins low, leading to weak credit metrics for companies in the sector. The agency however sees signs of improvement, in terms of stability of margins and the easing of liquidity pressures, with free cash flows turning positive since H2FY12.
Demand for residential real estate stabilized in 2012, with y-o-y growth in home loans from banks showing an uptrend from May 2012. However, the sales of large players declined marginally in 2012. Economic weakness continued with the associated apprehension of employee downsizing and salary freezes, which adversely affected consumer sentiments. Persistence of adverse sentiments, high inflation and high interest rates which reduce affordability, coupled with high property prices, continue to hinder improvement in demand. Commercial demand will be hit by subdued job growth in the IT sector, where average quarterly net headcount addition in 2012 has been around 28%-32% lower than in the previous two years. Demand for retail space is likely to be muted in the near term.
Read more: Money Control
Real estate developers using canny branding to lure address-conscious buyers
If dress and address matter to you, real estate developers may not be able to do much about the former but they can sure give you an address that may make even the boondocks appear like New York’s Fifth Avenue – at least on paper. Consider: Cuffe Parade in south Mumbai is one of the most upmarket residential locations in the financial capital where apartments have changed hands for more than Rs 1 lakh per square foot. If you can’t afford that price tag – few can — you have an option: move into New Cuffe Parade where you can buy a home for just a little over Rs 15,000 per sq foot (although the price for an apartment still works out to over Rs 2 crore). The only catch: New Cuffe Parade isn’t exactly adjacent to the original address. In fact, you won’t find it anywhere in south Mumbai-it’s some 15 km into the city in a suburb called Wadala, parts of which are covered by salt pans.
Real estate developers are resorting to such canny branding to lure address-conscious buyers. The Lodha group is developing the New Cuffe Parade project of two-bedroom and three-bedroom hall, kitchen apartments. Says R Karthik, chief marketing officer, Lodha Group: “New Cuffe Parade bears a striking resemblance to its roots in Cuffe Parade in terms of size, creator and type of development. Both developments are roughly 20 acres, created by nodal government agencies and are mixed use developments. We take this approach for only select marquee developments that take inspiration and are similar to landmarks that change the face of the city.” He adds that since real estate is a “long-term, futuristic product category, a name gives our customers a visual representation of what the development envisions and gives it a unique identity.”
Read more: The Economic Times
Disney India plans to take ‘theme home’ biz to global market
Disney has planned to bring its ‘theme home’ business closer to households. Now a real estate developer can buy the rights to Disney’s characters and design spaces that give an experience of Disney’s world. “It is innovative business for us, which is being experimented in India,” Roshini Bakshi, Managing Director, Consumer Products, Publishing and Retail, Disney UTV, said. According to Bakshi, this model may be taken to the US and other markets. To begin with, Walt Disney Co (India) has tied up with two realty developers — one in Kolkata and another in Mumbai — for the theme home.
Pallikaranai in South Chennai emerges as top residential locality
The Times of India,16 January, 2013,Chennai
South Chennai is seeing some of the unprecedented growth in the residential real estate. The suburb has witnessed maximum value appreciation of up to 15 per cent and holds highest number of upcoming residential units. Within the region, Pallikaranai in the southern suburbs is seen as an ideal residential investment option with high appreciation expected in the coming years.
According to Sree Kumar of Kumar Properties, “Chennai is the next upcoming realty destination of the southern India after Bangalore. The expanding IT sector, entry of international retailers, changing banking and finance firms and upcoming service sector are some key attributes propelling the growth of residential rates.” The demand for housing is increasing by each day and is expected that property prices of suburban areas such as Pallikaranai, Perumgundi, Kelambakkam, and Medavakkam are going to be double in another 4-5 years.
Pallikaranai has already witnessed a 10-15 per cent rise in residential capital values, while there has been a significant rise of more than 20 per cent in the inquiries generated in the past 4-5 months,” says Raghvendra Kumar of RK Realtors. The main real estate drivers of Pallikaranai includes growing job opportunities, presence of physical infrastructure, connectivity to important locations, access to social infrastructure, planned development, proximity to premium office spaces and land availability, he added.
Read more: Business Week
Centre to introduce Real Estate Regulatory Authority Bill
Withstanding objections from real estate bodies and industry pressure groups against the proposed Real Estate Regulatory Authority Bill, the housing and poverty alleviation (HUPA) minister Ajay Maken, on Tuesday, said the bill would be introduced before parliament during the Budget session. Earlier in the day a joint consultation meeting held by Maken and urban development minister Kamal Nath where representatives of Confederation of Real Estate Developers’ Association of India, National Real Estate Development Council, Confederation of Indian Industries, Federation of Indian Chambers of Commerce and Industry had objected to the bill. “But government put its foot down saying the bill aims to address concerns and protect interest of buyers. They are being shortchanged and hence there cannot be any compromise,” said a government official. The fate of the bill was hanging in balance after differences had cropped up between the housing and urban poverty alleviation and urban development ministries. Kamal Nath had objected to HUPA’s move of circulating the proposed bill without consulting his ministry.
Read more: The Times of India
Builders oppose real estate regulatory bill
Realty industry bodies CREDAI and NAREDCO opposed the government’s proposed real estate regulatory law saying that the bill in the current form is not practical and only favours property buyers. Minister of Urban Development Kamal Nath and Minister for Housing and Urban Poverty Alleviation (HUPA) Ajay Maken today called a meeting of six industry chambers — CREDAI, NAREDCO, CII, Ficci, Assocham and PHDCCI — to discuss the draft bill. HUPA is planning to bring this bill in the forthcoming Budget session of the Parliament to regulate the sector. At present, inter-ministerial consultations are on after which Cabinet clearance will be sought. “We opposed the bill in the current form. Bill is not practical and it is one sided, in favour of consumers,” NAREDCO President Naveen Raheja said. “We have demanded that all stakeholders in the development of real estate should be brought under the ambit of this bill including government agencies which give clearance to this project,” he added.
After slowdown, India set to grow: World Bank
The slowdown in India, South Asia’s largest economy, also weakened growth in the region to an estimated 5.4% in 2012 (7.4% in 2011), said the World Bank’s latest Global Economic Prospects, issued on Tuesday.
Regional GDP is projected to grow by 5.7% in the 2013 calendar year, and by 6.4% and 6.7% in 2014 and 2015, respectively, driven by policy reforms in India, stronger investment activity, normal agricultural production, and improvement in export demand.
However, growth in the region remains vulnerable to an uncertain external environment and country-specific factors, the report said suggesting a resumption of financial market tensions in the Euro Area or protracted debt uncertainty in the United States would affect the South Asia region through both trade and financial channels.
Read more: Hindustan Times
Noida, Greater Noida generated 87 percent jobs in UP in 2012: Study
The twin cities of Noida and Greater Noida accounted for a whopping 87 percent of the total jobs generated in the top six cities of UP between January-December 2012, a trend is likely to continue in 2013, says a study by Assocham. A total of over 65,300 new jobs were generated in six major cities of – Agra, Allahabad, Aligarh, Kanpur, Lucknow, Noida and Greater Noida – during the year. About 31,900 jobs were created in the first six months and about 33,400 jobs in the second half of 2012, according to a sector specific analysis titled ‘Job Trends Across India in 2012’. In UP, IT and IT/ITeS sector remained on top with over 28,800 jobs, followed by banking, insurance and financial services sector which jointly created over 9,400 jobs followed by academics and education (with about 7,400 new jobs). Engineering (over 3,700 jobs), automobile (over 1,800 jobs), real estate (over 1,600 jobs), other manufacturing (over 1,500 jobs), telecom (over 1,000 jobs) and fast moving consumer goods (FMCG-with over 900 jobs) are other significant job generating sectors in UP.
Twenty cos from India among 100 global challengers: BCG report
Twenty Indian firms including RIL, Infosys and Bharti Airtel are among the 100 ‘global challengers’ that are not only reshaping their respective industries but are also outpacing established players from the West, according to the Boston Consulting Group. The study said in the past five years, these companies have added 1.4 million jobs, while employment at the non-financial S&P 500 index constituents stayed flat. Tata Chemicals, Tata Consultancy Services, Tata Motors and Tata Steel are among the 20 Indian firms in the list. Others from India are Bajaj Auto, Bharat Forge, Crompton Greaves, Dr Reddy’s Laboratories, Godrej Consumer Products, Hindaclco Industries, Larsen & Toubro, Lupin, Mahindra & Mahindra, Motherson Sumi Systems, Sun Pharma, Vedanta and Wipro.
Metro expansion hits green hurdle again
Though the Delhi Metro Rail Corporation (DMRC) is confident that it will complete the third phase of Metro expansion on time, green concerns may pose serious hurdles. The Centre has requested the Delhi government to reduce the number of trees to be planted for each tree felled from the standard 10 to now three or four. But the Delhi government thinks such a huge concession will mean a massive reduction of the Capital’s green cover. “We’re preparing a reply. Metro expansion is needed but not at such a cost. Trees planted under compensatory plantation take time to grow. If we tinker with 1:10 ratio, the Capital will lose a massive chunk of green for a long time,” a senior Delhi government official said. In a letter dated December 24, union urban development minister Kamal Nath had requested Delhi Chief Minister Sheila Dikshit to allow the concession.
Read more: Hindustan Times
New lane at DND to ease extra traffic flow
In stark contrast to steps taken to ease congestion on the Gurgaon expressway, the DND Flyway authorities have decided to construct a new lane so that vehicles taking the road as a detour due to repair work on the Okhla Barrage do not face any problems. This 4m-wide lane will cater to the additional traffic flow from Noida to Delhi expected to get diverted to the DND Flyway from next week after repair work on the Noida to Delhi carriageway of the Okhla Barrage begins. DND has been bearing an additional traffic burden of around 30,000 vehicles commuting from Delhi to Noida daily due to closure of the Delhi-Noida carriageway of the Okhla Barrage due to repair work being carried out by the UP irrigation department.
Read more: The Times of India
Starwood Hotels to focus on resorts this year
Starwood Hotels and Resorts will focus on resorts this year with nearly three of its upcoming properties in this segment opening at Mahabaleshwar, Bekal and Goa under Le Meridien, Westin and W brands. The company is also looking to bring its hotel brand Element into India. Stephen Ho, President, Asia Pacific, Starwood Hotels & Resorts, said, “We believe more than international travellers, it will be the large number of rich Indians who will visit these properties. There is a lack of enough resorts in this country. Also, resorts have a big opportunity to cater meetings, incentive travel, conferences and exhibitions (MICE).” On the company’s plans for this year, Dilip Puri, Managing Director-India and Regional Vice-President, South Asia, Starwood Asia Pacific Hotels & Resorts, said, “We expect to open 6-8 hotels this year.” Factoring in all the delays the sector has been facing, he said the firm expected to have 100 hotels under various stages of development by the end of 2015.
Read more: The Hindu Business Line