Demand for rental homes down 50 percent as India Inc turns thrifty
Demand for rented homes has halved and rents are down by 25 percent in several popular residential localities in Mumbai, Delhi and Bangalore, as India Inc tightens housing budgets in its battle against economic slowdown. In Mumbai, rentals in marquee buildings like the sea-facing Haveli on Malabar Hill, NCPA Apartments at Nariman Point and Maker Towers at Cuffe Parade, where rentals range between Rs 5.5 lakh and Rs 12 lakh a month, are down by up to 30 percent. In Delhi’s Vasant Vihar, West End, Chanakyapuri, Shanti Niketan and farmhouses in Chattarpur and West End Greens, rentals have dropped 25 percent in the last one year. Rentals in apartment buildings in posh neighbourhoods of Bangalore like Epsilon in Yemlur and Prestige Exotica on Cunningham Road are also down by 35 percent this year, say brokers. Rents in Epsilon range between Rs 7 lakh and Rs 10 lakh. “Corporate earnings have been subdued and no new expansions have been announced in the recent past.
This was the slowest growth in two years, reflecting the country’s lacklustre growth performance. With GDP growth slowing down to a decade low of around 5 percent in 2012-13 from a peak of 9.6 percent in 2006-07, companies are paring costs on all counts, including hiring at all levels. A recent survey by the Planning Commission showed that India lost 5 million jobs between 2005 and 2010. “People always want the best when it comes to company accommodation and so costs go for a toss. Clients are preferring a Mumbai person for Mumbai and Delhi person for Delhi,” says Keith Rowe, managing director of HR Solutions, a Delhi-based executive search firm. Rentals constitute nearly 15-20 percent of cost to company (CTC). But not just companies, those being hired too are looking for cheaper accommodations, even when they are entitled to company-rented homes, as rising inflation cuts deep into their pockets.
Read more: The Economic Times
Feeling the impact of higher construction costs
In an interview, Ashok Tyagi, Group CFO, DLF, shares his views on the company’s performance and business outlook. Edited excerpts:
Whichever way I cut and dissect your Q4 performance, things were very ordinary for DLF, profits were flat, markets were static and sales clearly are under pressure. Why is that happening?
Q4 was the first quarter when the full impact of the new accounting policy was felt and honestly that is going to be the order of the day for the next many quarters because all the projects that we launch from now on, most of them would be governed by the new accounting policy in which case you would see the cash first and you would actually see the accounting EBITDA a good four to six quarters into the post launch period. So we launch Sky Court and Ultima, two projects in Gurgaon in the last three months and both did not translate to EBITDA in this quarter. Of course as on the analyst call also earlier the issue is that we are at the fag end of a lot of old projects that we had launched in 2008, 2009, 2010 and frankly those were launched at relatively lower price points and the construction costs went up. So the residual impacts of those were also being felt. Going forward we believe that we have the new set of launches lined up for fiscal 2013-2014 and thereafter and while the EBITDA performance may still take some time to translate to the books given the new accounting policy, you should hopefully start seeing the first symptoms of positive operating cash flow in the next couple of quarters.
Read more: The Economic Times
Jones Lang LaSalle closes first round of realty fund
Jones Lang LaSalle’s Segregated Funds Group today announced the first closing of its maiden real estate fund in India, Residential Opportunities Fund – I (ROF – I). The group raised Rs 101 crore of capital commitments in its first closing, in line with the Rs 300-crore fund-raising target, according to a statement from Jones Lang LaSalle. The Segregated Funds Group is a new entity set up by the global real estate consultancy firm Jones Lang LaSalle. Its mandate is to raise a series of funds with dedicated investment themes for the Indian real estate market. Scheme ROF – I was amongst the first real estate funds to be registered with SEBI under the new Alternate Investment Funds (AIF) regulations. The objective of the fund is to invest in the residential sector in prominent locations across seven cities of Delhi NCR, Mumbai Metropolitan Region, Bangalore, Chennai, Kolkata, Hyderabad and Pune.
Soon, Starbucks at hospitals, schools, corporate campuses
Taking a leaf out of the marketing and distribution manual of archrival Cafe Coffee Day, Tata Starbucks, the joint venture between Starbucks Coffee Company and Tata Global Beverages, is considering opening outlets in hospitals, educational institutions and corporate campuses to expand its retail footprint. People in the know say the joint venture may also set up outlets near gyms or health stores.
Since debuting in India in October 2012, the company has opened 15 Starbucks stores across Mumbai and Delhi. These outlets are a combination of standalone ones, including the 4,000-sq ft flagship cafe at Horniman Circle here, those located at malls, airports and metro stations (at Nehru Place in Delhi), and one at a commercial complex (India Bulls Financial Centre at Elphinstone in Mumbai).
Read more: Business Standard