Mid-income housing sees increasing demand

According to the Cushman & Wakefield India Real Estate Investment report 2010: ‘Riding the wave – Re-emergence of Indian realty sector’, the demand in the residential sector in the country is estimated to be approximately 4.25 million units of which, mid-range and affordable sectors, will account for a significant share of 70 percent between 2010-2014. Rise in disposable incomes of the middle-income group in Pune, has had a dramatic effect on the demand of middle-income housing in the city. The robust demand for middle-income housing in the city, mostly on the periphery (as real estate is more affordable in these areas), is expected to outstrip the supply of middle-income housing. Everyone yearns for a house of their own as it is a basic necessity. The first time home buyers purchase a property if it is good and affordable. Also, in India, buying a house is a collective decision taken by the entire family. Therefore, if there is family approval and the loan and total cost of the house is also affordable, then generally an increase of one or two percentage points in the interest rates, will not deter people from buying a house. Research indicates that the impact of interest rates is less on first-time home buyers than on second-home buyers and the middle-income class mostly, is able to buy one home in their lifetime.

Read more:  The Times of India

Current construction progress at Ireo Uptown, located in Sector 66, Gurgaon. Click for more images.

Rapid metro to boost realty fortunes in Gurgaon

With the Rapid Metro Rail becoming operational in Gurgaon soon, the realty sector here is likely to get a further boost. The first phase loop of 5 km will connect Cyber City with Sikanderpur Metro Station. The second phase will connect the Sikanderpur Metro Station and the densely populated sectors 55 and 56 as well as the Golf Course Road, which is one of the major hubs of commercial and residential real estate development in Gurgaon. Since the already functional Metro line being operated by Delhi Metro did not connect all areas in Gurgaon, the Rapid Metro is poised to save the day for the sectors it will soon connect. While the Delhi-Gurgaon corridor saw a steep increase in property prices, the private Metro will impact commercial real estate in the area. Better connectivity after the Delhi Metro line became operational in Gurgaon had lead to increase in property prices in the nearby areas. The prices in Heritage City project were around Rs 4,400 per sq ft when the Metro was launched around 2006, these increased to Rs 4,800 per sq ft in 2007 and Rs 5,200 per sq ft in 2008 when construction was in full swing, the same project commanded a price of Rs 8,000 per sq ft when the Metro between Delhi and HUDA City Centre became operational.

Read more: The Tribune

Will the 20:80 formula click?

Developers, saddled with huge unsold inventories, are wooing hesitant buyers with seemingly attractive payment schemes. Earlier, buyers kept off the sales counter as the price points were high, and the global slowdown resulted in delayed deliveries, and in many cases, projects not taking off at all. While price points do not look like they would witness a correction, developers are aggressively advertising payment schemes, the most popular being the 20:80 scheme and its variants such as the 25:75 or 35:65, with an aim to keep their sales counters abuzz with activity. Under this scheme, the buyer pays 20 percent of the unit price upfront and 80 percent on possession, with the EMIs (equated monthly instalments) in between being handled by the developers. This is usually advertised as ‘no pre-EMIs’ for certain duration. Such developers undertake to pay the EMIs for up to two years, with the assurance that the buyer will get possession of the unit by then. It is a huge gamble for developers who are taking the responsibility for interest payments on behalf of the buyer for a designated period.

Read more: The Indian Express

High street rent up 12 percent at Delhi’s CP, down 12 percent at Mumbai’s Linking Road

New Delhi’s Connaught Place

Prime main streets across big cities showed robust rent appreciation in the first quarter of 2013, as prominent brands, including international ones, triggered demand, even as quality space supply was running low. Mumbai’s high street Linking Road was, however, a rare exception.

Retail rentals in New Delhi’s Connaught Place in the quarter rose as much as 12 per cent, both sequentially and year-on-year, according to Cushman & Wakefield. In contrast, Mumbai’s Linking Road saw a drop of a sharp 12 per cent in rentals. Jaideep Wahi, director retail services at Cushman, linked the Linking Road phenomenon with the exit of some retailers that were not profitable. “Retailers these days focus not only on top lines but bottom lines, too,” he said.

Read more: Business Standard

Policy

Vertical thrust in Punjab

Punjab is all set to bring in a new housing policy for the state by the next month in a bid to attract more investments for its real estate sector. The final draft of the policy is currently being fine-tuned. “Notifications regarding the related aspects of the change in policy are being fine-tuned, keeping in mind the procedural requirements and the legal components involved. The wings concerned of the government have been handed over specific assignments. The entire work will be completed by the end of the month. We expect all the notifications with regard to the new housing policy to be issued by June 1,” said Manvesh Singh Sidhu, Chief Administrator PUDA The Deputy Chief Minister, Sukhbir Badal, who has been instrumental in bringing the new policy, says the underlining feature of the housing policy is to ensure hassle-free and time-bound clearances for the investors, besides offering incentives in Floor-Area Ratio for green buildings like five percent extra FAR for green buildings in the state.

Read more: The Tribune

Are our high rise buildings quake-proof?

The two earthquakes that rocked major parts of north India, within weeks of each other, have once again raised a pertinent question: Can highrise buildings, which are coming up in our cities at a furious pace, withstand strong quakes? The recent quakes forced lakhs of office-goers to rush out from their highrise office buildings to the relative safety of the streets, as the tremors rattled their offices. But, is it possible to build an earthquake-proof building? The answer is ‘yes’ and ‘no’. Chandra Ghosh, a civil engineer working for National Institute of Disaster Management (NIDM), says: “There are engineering techniques that can be used to create a very sound structure that will endure a modest or even strong quake. However, during a very severe earthquake, even the best engineered building may suffer severe damage.” According to NIDM, over 90 percent of our so-called reinforced framed buildings across India are vulnerable to natural disasters. Gaurav Mittal, the MD of CHD Developers, says: “I can make a modest claim that my firm, along with other leading realty companies, is constructing tall buildings according to the prescribed norms. It is possible that some shady builders do not follow the building codes. I recommend stern action against such builders.”

Read more:  The Times of India

Delhi to get transparent property registration system

In a major revamp of existing property registration system, Delhi government will put in place a transparent mechanism by end of the year under which people will be able to access hassle-free services in all 13 sub-registrar offices without any jurisdictional issue. The aim of the ambitious project -first of its kind in the country -is to offer people a tout-free and seamless property registration experience through a highly secured online platform, which will replace the six decade-old current system. Under the new mechanism, people from any area of the city will be able to get their properties registered in any one of the 13 sub-registrar offices and they will even be able to check genuineness of the properties as well as ownership details and past transactions. Admitting that there was corruption in the existing system, urban development and revenue minister Arvinder Singh Lovely said the government is determined to rid it of lacunae and the new mechanism will offer “great relief ” to people who often faced lot of hardships in getting their properties registered.

Read more: Financial Chronicle

100 changes in Master Plan, review to be over by year-end, says DDA

The process of reviewing Delhi Master Plan (MPD) 2021 is expected to be wrapped up by the end of this year, with over 100 modifications, Delhi Development Authority officials said on Saturday. According to DDA, 89 modifications have either been finalised or are being processed. “After due process according to the Delhi Development (DD) Act for amendment of MPD, a total of 25 modifications have been forwarded to the Ministry of Urban Development for final notification and about 64 are being processed further. A new chapter in the MPD-2021 is being added on transit-oriented development and the chapter on environment is also being re-drafted,” a DDA official said. Apart from these modifications, the policies for motels, multi-disciplinary clinics for persons with learning disability and farmhouses in Delhi have also been processed.

Read more: The Indian Express

Know your rights before opting for redevelopment

If you reside in an old building, located in a prime area, it is likely builders have come up with a flood of offers to redevelop your society. Redevelopment is usually seen in metro cities and developing tier-II cities, where demand for real estate is high and supply doesn’t match demand.

Though all properties can be redeveloped, the incentive limit against the floor space index (FSI) varies across cities and locations. For instance, the FSI offered in the Bandra area in Mumbai is 1.33. In other words, on redevelopment, against a 1,000-sq ft flat, the occupant would get a 1,330-sq ft flat.

Read more: Business Standard

Economy

Salary hikes to be at 12% this year: TeamLease Study

via Business Standard

With companies emphasizing more on skills, there seems to be greater synchrony between skills and salaries, states TeamLease’s Salary Primer for 2013. According to a TeamLease report, salaries will see a 12% increase, whereas hiring will register 11% growth across industries and functions. Salaries and hiring, both will see an upward movement going forward.

With companies striking a balance between skills and increment, attrition rate also has been brought under control, making room for a buoyant and mature job market. Most sectors register a healthy growth in increments.

Read more: Business Standard

April M&A tally at $1.66 bn; rise in inbound deals: Thornton

Corporate India announced merger and acquisition (M&A) transactions worth $ 1.66 billion in April, with inbound deals being the flavour of the month as foreign firms continued to show interest in Indian businesses.

According to audit and advisory firm Grant Thornton, the total value of M&A deals in the month of April were valued at $ 1.66 billion through 39 deals as compared to $ 1.97 billion by way of 60 transactions during the same period of last year.

Read more: Business Standard

National News

India’s first defence university to come up in Gurgaon

Indian National Defence University, a dedicated first-of-its-kind institution for training and research in military studies, will be set up in Gurgaon close to the national capital Delhi.

The foundation stone of INDU, to be constituted under an Act of Parliament, will be laid by Prime Minister Manmohan Singh on May 23, Deputy Commissioner P C Meena said.

Read more: The Economic Times

Infrastructure

Government mulls alternate models to kick start delayed expressway projects

The government is considering alternate financial models, involving low-cost foreign loans and leveraging adjoining land, to kick-start its much-delayed plan of building a series of national expressways even as it has junked the earlier deadline of 2015 for rolling out 1,000 km. The road ministry plans to start with the Delhi-Jaipur expressway, which is expected to cost over Rs 16,000 crore. In 2006, the Cabinet had cleared Rs 16,680 crore for the entire 1,000 km. But project costs have escalated several times over as the government’s plans to build expressways, including one mandated by the Supreme Court, continue to be stuck because of the red tape and funds crunch.

The 93-km Ahmedabad-Vadodara expressway remains the only national expressway in India. “Expressways can cost between five to eight times more than highways, which cost about 10 crore per km. We are working on new models to come up with that level of financing,” said a road ministry official, “Expressways are access-controlled and the traffic will not be enough to make the project viable for developers unless we have higher toll rates.” The ministry is working on a proposal to charge toll rates that are 1.25 times more than that on highways, added the official, who did not wish to be named. The government had hoped for private sector investment of Rs 9,000 crore, but given the market scenario it is not sure funds will come in. The road ministry is, therefore, planning to build the expressways through the Engineering Procurement & Construction (EPC) route by using cheap foreign loans.

Read more: The Economic Times

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