Realty sector can double its share in GDP to 13% by 2025: CBRE

Ireo Gurgaon Hills

Ireo Gurgaon Hills

The realty sector can more than double its contribution to GDP to 13 percent by 2025 on rising housing demand, if the government removes bottlenecks in infrastructure, lowers borrowing cost and makes process of approvals shorter, global property consultant CBRE said.

The share of the real estate sector in GDP is likely to be 6.3 percent in 2013, CBRE said in a report titled ‘Assessing the Economic Impact of India’s Real Estate Sector’.

The size of country’s gross domestic product (GDP) was USD 1.8 trillion in 2012-13 fiscal.

The report projected that the realty sector will generate employment for 17.2 million people and supply 8.2 million sq ft by 2025, more than double the figures for the current year.

“India’s real estate sector is poised for significant growth in the coming decade as it benefits from significant opportunities such as increasing urbanisation, demand for new housing and the expanding urban fabric of tier II and tier III cities in the country,” CBRE said in the report.

That sector, however, faces numerous challenges like high borrowing costs, slow and uneven infrastructure development and lengthy approval processes, the report said.

“Once these bottlenecks are addressed, we can expect the economic contribution of the sector to increase considerably, with its share of the GDP to more than double from 6.3 percent in 2013 to almost 13 percent by 2025,” it added.

Read more: Zee News

Demand for IT parks at its highest since 2009

Investor demand for information technology (IT) parks and IT special economic zones or SEZs appears to be strengthening.

Between January and July, private equity (PE) companies invested in 16 commercial projects in India, compared with 11 in all of 2012, according to data provided by consultancy firm KPMG India.

The demand, in particular, is for those IT parks and IT SEZs that are nearing completion since they offer safer exits for PE companies.

“PE players are more interested in projects which can deliver quickly and, hence, projects at the conceiving stage or where construction has just started is still not favoured by them,” said Neeraj Bansal, partner, advisory, at KPMG.

About 18.2 million sq. ft of new office space is expected to come up in the next few quarters across key cities, according to KPMG data, of which about 60% is going to come up in Delhi-National Capital Region (NCR) and Bangalore, followed by Pune, Chennai and Mumbai.

A PE cycle lasts for about four-five years, after which investors demand returns from PEs; but commercial projects take about six-seven years to complete, making exits difficult.

Read more: Mint

Economy

Indian economy sees positive momentum: OECD

The Indian economy is witnessing a positive momentum while neighbouring China’s growth is losing steam, according to Paris-based think tank OECD.

The latest reading from the Organisation for Economic Cooperation and Development (OECD) comes amid rising concerns about India’s growth prospects on account of the falling rupee and relatively sluggish investments.

OECD, a grouping of mostly developed nations, today said that economic growth is firming up in many developed nations including the United States, Japan and the United Kingdom.

The readings are based on Composite Leading Indicators (CLIs) that are designed to anticipate turning points in economic activity.

India’s CLI inched up to 97.9 in June, from 97.7 recorded in May. The indicator has been increasing since March when it stood at 97.5.

“The CLI for India continues to show signs of a tentative positive change in momentum. On the other hand, the CLIs for Russia and Brazil continue to point to slowing momentum,” the grouping said.

In the case of China, the indicator slipped to 99.4 in June from 99.6 seen in May.

Read more: Indian Express

Infrastructure

Railways changes track to attract investors for Rs 22,500-cr project

The Indian Railways has finally dropped its fixation for broad gauge tracks to attract more bidders for the 63-km Mumbai suburban rail project. It has decided to adopt standard gauge tracks for the project between Churchgate and Virar, to be undertaken at an estimated cost of Rs 22,500 crore.

The Mumbai suburban rail project is one of the projects flagged by the Prime Minister’s Office for award within the next six months.

Gauge is the width between tracks. Standard gauge tracks are marginally less wide than broad gauge ones. The Railway network is based on broad gauge.

Adoption of standard gauge will increase the pool of coach suppliers, as globally more coach suppliers are available for standard gauge tracks.

To make the public-private partnership project more attractive, the Railways said bidders could ask for viability gap funding (VGF) of more than 20 per cent of the project cost to build and operate it.

However, in case bidders demand more than 20 per cent of VGF, the decision to award the project with more grant would be taken by the Finance Ministry. It also changed the route alignment to ensure minimum land acquisition, and a mix of over and underground network.

Read more: Business Line

Haryana govt opposed to shifting Delhi-Gurgaon toll plaza

Even as the Centre readies to takeover the Delhi-Gurgaon toll plaza and shift it from its current location to ease congestion, Haryana government has expressed its disagreement fearing that the realty prices alongside the highway’s periphery will get impacted.

“Haryana (government) wants that the Delhi-Gurgaon toll plaza to be shifted and located outside Manesar. A lot of townships are proposed to be set between Gurgaon and Manesar and they feel the price of real estate will be adversely impacted due to likely congestion,” a Road Ministry official said.

The official also said that the government is of the view that the National Highways Authority of India (NHAI) should completely takeover the toll.

“We feel that this is the best solution,” he said, adding thereafter NHAI will decide whether they will charge levy and how will they do it.

The decision to shift the current location of the toll plaza is significant as it will pave way for smoother flow of traffic on the highway.

Read more: Zee News

Retail

Mall developers build big despite slowdown: Study

The slowdown in the Indian realty sector has surprisingly not hampered the development of new malls across the country. India has 570 operational malls (as of May 2013) with a total area of 180 million sq ft compared to just 225 malls that were up and running five years ago, according to numbers collated by a real estate consultancy firm which were shared with TOI exclusively.

The seven metros have 190 operational malls even as more than 60 opened across India in the last one year alone, data from Bangalore-based Asipac Consulting says. And it’s not just the number of malls that has more than doubled since 2008 — the average area of the top 15 malls across the country has gone up 40% (from 6.17 lakh sq ft to 8.66 lakh sq ft) in the last three years.

Developers such as the Rahejas (Inorbit), Phoenix (Market City), DLF and Prestige (Forum) are now building larger malls as these have a better chance of succeeding in an overcrowded marketplace , the report from Asipac says. Industry experts say consumers prefer bigger malls which offer more brands under one roof rather than visiting multiple malls, mirroring what happened in the mature retail markets years ago.

Read more: The Economic Times

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