Luxury projects: A flagship for brand value of developers

Main Arrival at Ireo Gurgaon Hills

Main Arrival at Ireo Gurgaon Hills

Launching crème-de-lacrème real estate projects for upscale and upmarket buyers, is an ambition that is driving the developers across the country. It seems the Indian real estate has woken up to the reality that the destination of brand positioning is ‘luxury’ and in this rat-race, the term is so over-used and abused that it has lost its relevance. From high-end condominiums to affordable, the tag of luxury seems to be the biggest brand driver for the sector.

In a competitive real estate market where the housing shortage may be in the affordable or mid segment apartments, luxury projects are on a roll. It seems every developer in the last few years, has been on the spree of luxury launches, including those that have been traditionally known for slum rehabilitation. This may defy the conventional demand-supply wisdom of economics but the fact of the matter is that luxury projects are seen as flagship for the brand value of developers, hence, adding a premium to their overall project portfolio. To add to it, profit-per-apartment is much higher in this segment and investors with deep pockets, seem to bet on luxury projects for better appreciation in the long term.

This raises a fundamental question – whether Indian real estate, of late, is obsessed with luxury. If the luxury launches in the last few years by developers across the country, often repositioning themselves into this segment, is any indication, it seems this obsession has made the term ‘luxury’ as an over used and abused term as well. From the top of the demand pyramid to newly coined term ‘affordable luxury’, it is made to appear that Indian homes buyers want nothing less than luxury.

Read more: The Times of India

The Growth Catalyst

The real estate sector in Delhi- NCR has witnessed unparalleled growth over the last decade. Now, with increasing metro connectivity, expressways, wider highways and more land banks, Delhi- NCR promises to be a formidable growth destination for real estate. It is an established fact that infrastructure projects increase the value of properties in the adjoining areas as these projects eventually become part of the USP for developers and property owners. There have been instances when property prices have increased by up to 50- 70 per cent due to the announcement of some infrastructure initiative or the other by the government. For instance, the residential rates in Essel Towers, Gurgaon, increased from ` 5000 per sq. ft. in 2006 (which is when the Delhi Metro was announced) to around 9000 per sq. ft., by the time it became operational in 2010, said Saugata Maitra, National Director (Strategic Consulting), Jones Lang LaSalle India.

Source: Mail Today, page 8

NRI’s Rush to Invest in Homes as Rupee Slides

As the president of the Confederation of Real Estate Developers Associations of India (CREDAI NCR), the apex body of real estate developers in Delhi- NCR, Anil Kumar Sharma has his task cut out. From ensuring speedy redressal of real estate issues to rushing in help for the flood victims of Uttarakhand, Sharma has had a hectic schedule ever since he assumed charge of the new office, a few months ago. He spoke about the latest trends in the real estate business in the region. Edited excerpts:

How do you foresee the expansion of NCR to Mahendragarh, Bhiwani and Bharatpur?

These areas are well connected by highways and railways, but to meet future needs, the highways need to be widened and also be connected to Delhi through the rapid rail to justify their NCR status. It is a futuristic decision with vast ramifications for the NCR region. According to reports urbanisation is expected to increase by about 11 per cent in the region by 2021. So in order to reduce the pressure on Delhi, there was an urgent need to expand. Moreover land too is in short supply in the present area, so it was imperative to expand to meet the housing needs of the future.

Source: Mail Today, page 2

Realty Awaits Market Reforms

The real estate sector is in a constant state of evolution and subject to change due to newly suggested policies and reforms. The monsoon session of Parliament could bring some progressive announcements for the sector. It is likely that the long pending draft Real Estate (Regulation and Development) Bill 2013 will become a reality once the parliament clears it with absolute majority. The year could thus prove to be a milestone for the Indian property market in terms of setting up a regulatory body. If implemented, the Bill is expected to make the market better, which is currently burdened with problems such as irregularities within property transactions, general lack of trust among investors, delay in sanctioning key projects and high property rates. While the Bill is not flawless, it is certainly a step in the right direction. However, in order for the sector to become more stable and grow at a rapid pace, there is little choice but to embrace such changes.

Source: Mail Today, page 11

Economy

Investment Alerts: Attracting foreign capital

Telecom companies and insurance providers had reasons to cheer this week. Government increased foreign direct investment (FDI) limit in these sectors, aiding higher foreign capital inflow. Currently many global majors have invested in the Indian companies operating in these sectors. However, telecom and insurance being capital intensive, additional inflows are welcome by Indian players.

FDI in Telecom: FDI limit in the sector has been increased to 100 per cent from the current 74 per cent. This increase will likely ease the debt burden of telcos who have been struggling with ballooning interest outgo.

With foreign partners owning 74 per cent equity in Vodafone, Telenor Maxis, they will be the immediate beneficiaries of this move. Others such as Bharti Airtel, Idea Ceullar who are well below the limit of FDI holdings are also set to gain. The sector may also likely see more consolidation due to higher FDI inflows.

FDI in insurance: The government has proposed to increase FDI limit in insurance from 26 per cent currently to 49 per cent. By end-March 2012, the capital invested in Indian life insurance ventures totalled Rs 24,931 crore. Of this, foreign promoters had infused nearly a fourth. The joint venture agreements of many insurers allow foreign partners to increase their stake in the Indian venture, if regulations permit.

Read more: Business Line

Infrastructure

Gurgaon e-way service roads to be repaired

The National Highway Authority of India (NHAI) has started the process of getting the service roads of Delhi-Gurgaon expressway repaired by a private contractor following an order of the highway administration.

With the private concessionaire, Delhi-Gurgaon Super Connectivity Ltd’s , failure to repair the service lanes even after a notice, the court of highway administration on July 12 directed NHAI to get the expressway repaired from any other contractor or agency and recover the expenditure from the private concessionaire.

NHAI invited bids to repair work on July 25 while fixing the last date as August 1 for submission of the bid documents. The bids would be opened the same day.

The length of service road on each side is five kilometer and the cost of repair is around Rs 3.76 crore.

Source: The Times of India

Elevated Road to Bring S Delhi Closer

In a bid to ease traffic flow in the city, the Noida authority has decided to build a 4.8-km elevated road at a cost of Rs 500 crore along the Master Plan-II road, which is one of the busiest stretch. The proposed signal-free road will benefit thousands of south Delhi-bound commuters who are coming from Ghaziabad areas. The six-lane road will be constructed between Vishwa Bharati Public School in Sector 28 and Flex Crossing.

Sorce: Hindustan Times

Investment

Logistics sector may touch $200 b in 7 years

To meet the growing trend in the logistics sector, India needs more logistics professionals with analytical and technology skills, supply chain knowledge and line management leadership.

The logistics sector is valued at $110 billion and expected to touch $200 billion by 2020. The sector is will double its growth in seven years from the present growth rate of 15 per cent, K.V. Mahidhar, Head, CII Institute of Logistics, said.

He was speaking to reporters at Vidyabharathi Group of Institutions, Kochi in connection with the orientation of June 2013 batch of logistics courses. He said India is emerging as one of the world’s leading consumer market and the FMCG sector alone is expected to grow at a base rate of 12 per cent annually by 2020.

To service such a large market at shortest possible time with least cost, he said the logistics sector is expected to play an important role in accessing this emerging market and enabling growth.

Job opportunities

Quoting FICCI survey, he said a huge demand of supply chain and logistics professionals is expected in the sector which would touch over 9 lakh by 2015. The emergence of infrastructure facilities such as container transhipment terminals, port-based economic zones, entry of multinationals and innovations in the logistic industry would lead the growth of logistics industries, he added.

Read more: Business Line

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