Shilphata May be The Next Biggest Residential Belt in Navi Mumbai

When it comes to housing in Mumbai, some of the current hotspots are Mira Road and Ghodbunder Road. There are several reasons such as affordability, good connectivity and growing infrastructure leading to real estate growth in these areas. Similar to these areas in Mumbai, Shilphata has the potential to become the next residential hotspot belt in Navi Mumbai.

Shilphata area profile

Shilphata is a strategic area lying between Thane and Navi Mumbai. It lies on the intersection of NH-4 and SH-76, with neighbouring areas such as Mumbra in Thane, Airoli, Ghansoli, Kopar Khairane and the MIDCarea near Vashi. The area also connects the upcoming areas of Dombivli and Kalyan to the industrial areas of Kharghar and Vashi via theKalyan-Shilphata Road. Some of the other important roads in the area are Kalyan-Shilphata Road and Shilphata Mahape Road. Due to these roads, Shilphata acts as a gateway to Navi Mumbai for people coming from Thane and Kalyan-Dombivli areas. There are regular buses plying this area from Thane and Navi Mumbai.

The area is yet to be developed in terms of social infrastructure, civic amenities and housing. There are plans to improve the rail connectivity to the area. The planned monorail line between Mahape and Kalyan will pass through the area. Currently, there is also a shortage of drinking water and electricity in Shilphata. If developed properly, these problems too may be resolved.

Real estate trends

The biggest deterrent for Shilphata’s real estate development is the current lack of civic amenities and social infrastructure. Yet, this has not deterred developers from coming into this area. There are already several projects available by developers such as Gajra Group, Marathon, Lodha Group and Runwal Group. The most common apartment configurations in the area are 1 and 2BHK apartments. Most of these apartments are sought after by employees in the nearby industrial zones. The typical built area of a 1BHK apartment is about 630-835 sq. ft. and that of a2BHK apartment is about 800-1,100 sq. ft.

While one may buy a 1BHK apartment for about Rs 30-50 lakh, a 2BHK apartment may be bought for about Rs 35-55 lakh. The approximate property values in the area are in the range of Rs 4,300-5,700 per sq. ft. If the infrastructure is developed properly, the locality’s real estate will gain a big boost.

Shilphata has a huge potential in terms of real estate growth, primarily due to its strategic location and good road connectivity. With proper development, it may become the next Ghodbunder Road and Mira Road.

Navi Mumbai to soon be a hub for affordable housing

If you are planning to buy a house soon, Navi Mumbai will soon be a good place to look. In the next nine months, 4,750 acres of land is going to be available for residential construction due to a change in policy.

Where did this land come from?
The City and Industrial Development Corporation (Cidco) recently issued a notification freeing 350 hectares (875 acres) of 1,500 hectares of land for residential construction. Earlier, this land was a regional planning zone, where most plots and its surrounding areas were reserved for the government to build gardens, schools, hospitals, etc. "The 350 hectares now mostly belong to private owners. Now, land owners can apply for conversion and develop it as per their convenience," said senior Cidco official requesting anonymity.

Cidco has earmarked another 400 hectares (1,000 acres) of land to rehabilitate those affected by the Navi Mumbai airport project. Cidco will rehabilitate them by giving them 22.5 per cent of developed land near Ulwe and its surrounding areas. Cidco has also decided to develop a modern township called Navi Mumbai Airport Influence Notified Area (NAINA), close to the new airport in Panvel taluka on 1,200 hectares (3,000 acres) of land.

Asia's biggest township in NaMu soon
NAINA will be well-planned and is being touted as Asia's biggest township. It will be developed in the next five years in a phase-wise manner on a public-private partnership model.

How much will these houses cost?
Arvind Goel, president of the Maharashtra Chamber of Housing Industry (MCHI), Navi Mumbai Unit, welcomed Cidco's decision of converting the reserved land for residential purposes. "It is good news for developers and potential buyers. Because of the availability of so much land, large numbers of affordable houses will be constructed. These houses will be in the Rs 40-60 lakh bracket," said Goel.

Manohar Shroff, general secretary of MCHI, Navi Mumbai said, "Land prices are going through the roof, so developers were compelled to raise property prices. The availability of a huge chunk of land will surely help reduce land prices and subsequently, property prices. The input cost is important in the construction business."

Development should by eco-friendly: Real estate expert

Atul Nemade, a real estate expert, said that it was good news that some much land is going to be available for housing. "But the development should be sustainable and eco-friendly. It shouldn't just be a concrete jungle, or there will be chaos. Besides, the state government controls the prices and development," said Nemade.

Why Real Estate Investment Trust's (REITs) aren’t right for investors

They may be a godsend for the realty sector, but it isn’t clear how REITs will deliver lucrative returns to the retail investor

August, 2014:  

To me, it is an ominous sign that stock prices of cash-strapped realty companies should jump for joy when Securities Exchange Board of India (SEBI) notified its regulations for Real Estate Investment Trusts (REITs) last week.

Yes, developers and the analysts who track them are pleased that realty companies such as DLF, which have found few buyers for their malls in recent times, can now offload these assets to the brand-new REITs and pare down debt. Property consultants are hoping that REITs will pump anywhere between ₹60,000 and ₹1 lakh crore into the beleaguered sector, ‘unlocking’ cash from illiquid assets for players to carry on with business as usual.

But what about the investors in REITs? Isn’t all this a little err… worrying for them? If realty companies are so cash-strapped and debt-burdened, how lucrative are these assets in reality? Plus, if a flood of new money really chases these commercial assets, would REITs end up buying them at bloated valuations?

If returns from such assets neither provide high yield nor easy liquidity, how would they turn out to be lucrative for retail investors?

The truth is that while REITs may be a good idea to open up new sources of funding and resolve myriad problems of the Indian real estate sector, they’re not yet a great proposition for Indian investors.

Where’s my capital gain?

To start with, unlike in Singapore, Hong Kong or other developed nations, Indian investors do not invest in real estate so that they can earn modest regular income.

These investors have plenty of other options to earn that — bank deposits that deliver 9 per cent, small savings schemes that offer 8-9 per cent, and debt mutual funds that offer similar returns with any-time liquidity. So, when an Indian investor buys property, he’s looking for an investment that delivers hefty capital gains and soundly trounces inflation over the long term.

This is quite evident from the segments of the property market which retail buyers flock to — affordable homes for first-time buyers, roomy apartments at good locations for home owners who are keen to upgrade, independent villas and bungalows at the outskirts for high net worth investors.

Commercial property, if it is in the reckoning at all, comes last on this list. And there is good reason for this. Given large unfulfilled demand for residential homes in India, residential property has traditionally delivered far better price appreciation and proved more resilient to economic downturns than commercial property.

Even today, while the residential property market has picked up, the commercial market is yet to revive. It carries a heavy burden of over-supply, precisely why developers such as DLF or Unitech have found it difficult to sell commercial assets.

But REITs, the world over, are designed to earn most of their returns from rental income and that too on commercial property. Indian REITs too are set to faithfully replicate this model. SEBI’s recent regulations make it mandatory for the upcoming REITs to invest at least 80 per cent of their funds in completed income-generating commercial properties and to distribute 90 per cent of their income to investors as dividends, at half yearly intervals.

Clearly, while policymakers are looking at REITs as a fixed-income option that will invest in commercial property, retail investors would prefer to bet on residential property for capital gains. To make retail investors change their mindset, REITs will have to generate returns that are far higher than the fixed income options that are already available to the Indian investor.

Can you beat my bank deposit?

This may prove quite a tall order. The rental yields on good commercial properties in India tend to be in the range of 8-10 per cent. Assuming that the managers of REITs charge a modest fee of 2 per cent, the net returns to the investor by way of dividends will be 6-8 per cent — certainly not what he is used to from his other, less risky, fixed income investments.

Then there’s the tax angle to consider. As per SEBI regulations, REITs are to be listed entities that will hold majority equity stakes either directly in commercial properties or through Special Purpose Vehicles (SPVs). Their income will be earned through dividends distributed by these SPVs or rents from projects. While the REIT itself has been granted pass-through status and will pay no tax on its income, the SPVs may have to pay dividend distribution tax. Similarly, investors who earn returns from REITs too currently have to bear both dividend distribution tax and capital gains tax.

Unless REITs manage to win further tax concessions for investee companies and investors, they will find it quite hard to compete with even traditional fixed income options on returns.

Is the NAV real?

This brings us to the final issue. If Indian investors are to be attracted to REITs, the units must earn not just the above dividends but also see their prices appreciate on the stock exchanges. That will depend on how the REIT’s net asset value (NAV) behaves. SEBI regulations require all REITs to get their portfolios valued twice a year and the NAV to be disclosed to investors.

Now, given the nature of the property market in India where prices can vary wildly even between neighbouring localities, arriving at a true mark-to-market ‘value’ for a REIT portfolio is likely to prove a difficult task. If this is done, fairly sharp swings in the ‘valuation’ every six months cannot be ruled out.

A textbook valuation based on future cash flows will involve several groping-in-the-dark assumptions about the economic cycle, property values and interest rates.

Overall, the NAV may turn out to be just a ballpark figure around which market prices of the REITs swing quite significantly. This may make it difficult for the listed REITs to give an impression of stability to investors.

Shades of grey

Of course, all this does not even take into account the structural grey areas in the Indian real estate market. Most property deals in India today involve a ‘black’ component, which a listed and tightly regulated REIT simply cannot factor in.

Given the many regulatory approvals needed both for building and dealing in properties, corruption is a fact of life in the sector and players in the sector aren’t known for a pristine governance record.

Policymakers, regulators and the developer community are now hoping that REITs will usher in much-needed transparency, best practices and good governance into the sector. But this is putting the cart before the horse. If I were a REIT investor, I wouldn’t invest in REITs until good governance is a given

Smart Cities – A Futuristic Vision Of Urbanization In India

Anuj Puri, Chairman & Country Head, JLL India

Across the world, the stride of migration from rural urban areas is increasing. By 2050, about 70% of the population will be living in cities, and India is no exception. India will need about 500 new cities to accommodate the rapid influx of population into its urban regions.

Interestingly, urbanization in India has for the longest time been viewed as a by-product of failed regional planning. Though this is inevitable, and will only change when the benefits of urbanization overtake the costs involved, it is an opportunity for achieving faster growth.

With increasing urbanization and the load on the land in rural areas, the Indian government has now realized the need for cities that can cope with the inherent challenges of urban living and also be magnets for investment to catalyse the local economies. The announcement of ‘100 smart cities’ falls in line with this vision.

A ‘smart city’ is an urban region that is highly advanced in terms of overall infrastructure, sustainable real estate, communications and market viability. It is a city with information technology as its principal infrastructure and the very basis for providing essential services to its residents. There are many technological platforms involved, including but not limited to automated sensor networks and data centres. Though this may sound futuristic, it is now likely to become a reality as the ‘smart cities’ movement unfolds in India.

A smart city offers a superior way of life to its denizens, and one wherein economic development and activity is sustainable and rationally incremental by virtue of being based on success-oriented market drivers such as supply and demand. They literally benefit everybody, including denizens, businesses, the government and moreover the environment.

Origins Of The ‘Smart City’ Concept

The concept of smart cities originated at the time when the entire world was facing one of the worst economic crises. In 2008, IBM began work on a ‘smarter cities’ concept as part of its Smarter Planet initiative. By the beginning of 2009, the concept had captivated the imagination of various nations across the globe.

Countries like South Korea, the United Arab Emirates and China began to invest heavily into research and the formation of smart cities. Today, there are a number of excellent precedents that India can emulate for its own smart cities programme:

• Smart City Vienna in Austria
• Aarhus Smart City in Denmark
• Amsterdam Smart City
• Cairo Smart Village in Egypt
• Dubai Smart City and Dubai Internet City in the UAE
• Smart City Lyon in France
• Smart City Málaga in Spain
• Malta Smart City
• The Songdo International Business District near Seoul, South Korea
• Yokohama Smart City in Japan
• Verona Smart City in Italy

Smart Cities In India

In India, the cities that have ongoing or proposed smart cities include Kochi in Kerala, Ahmedabad in Gujarat, Aurangabad in Maharashtra, Manesar in Delhi NCR, Khushkera in Rajasthan, Krishnapatnam in Andhra Pradesh, Ponneri in Tamil Nadu and Tumkur in Karnataka. Many of these cities will include special investment regions or special economic zones with modified regulations and tax structures aimed at making is easier and more attractive for foreign companies to invest in them.

This is an essential factor for success for smart cities in India, because much of the funding for these projects will have to come from private developers and from abroad.

Challenges

The smart city concept is not without challenges, especially in a country like India. For instance, the success of such a city depends on its residents, entrepreneurs and visitors to the city becoming actively involved in energy saving and implementation of new technologies. There are many ways to make residential, commercial and public spaces sustainable by ways of technology, but a high percentage of the total energy use is still in the hands of end users and their behaviour. Also, there is the time factor – such cities can potentially take anything between 20-30 years to build

Smart City Dream 2020, By Sudhir Chowdhary, Country Leader, MobileFirst, IBM India/South Asia

India has been talking about the dream of being a developed country by 2020. Few are, however, aware that 

everyday close to 30 people leave rural India to build their future in urban cities. 

Thus there is demanding need to develop India from the grass root level. With the amount of people migrating to the cities, India would have to have more than 100 cities in the coming years to occupy such an outburst. At this point, city and urban development boards will need to use inventive technologies and solutions to accomplish the growing demands on city infrastructures that deliver vital services.

While smart cities are the way forward, mobility is a huge factor for smarter city to become successful as mobility would mean better service and well informed citizens, says Prashant Sharma, country leader, MobileFirst, IBM India/South Asia. “Mobility will help improve connectivity even in emergency situations. Imagine being sent an SMS when there is a Tsunami or an earthquake in or around your area; it would work as an alert system.” In a recent interaction, he discusses with Sudhir Chowdhary how mobile technology will drive the move to smarter cities. Excerpts:

Give us an overview of how mobile technology plays a vital role in smart city?

Modern technology lets us track and observe almost anything in a major urban environment—noise, light, traffic, weather and so on—and use this data to improve people’s living and working conditions. For example, in a country like India, traffic and parking availability is one area of smart city challenges that is leveraging new technology to initiate real change. New technology is emerging all the time that lets us manipulate networks more finely, taking advantage of more sensors, more cameras and more real-time data to improve road traffic.

Mobility will be the key driver of the digital universe. Faster mobile networks are at the core of smart cities and are allowing people to do more on the move. As networks offer more cloud-based services and storage, this in turn leads to more personalised content and apps being accessible to users, which both updates and is updated by ever-smarter mobile devices. Smarter devices, faster networks and the cloud becoming pervasive all combine to power greater intake of digital content—in short, users want more data all the time and want it now.

The Internet of Things (IoT) will also play a crucial role in smart city development. The pure weight of Big Data created by the IoT will have a bearing everywhere, particularly on things like traffic flow—town architects will be able to gather the data, analyse it and use it to adapt future policy and projects.

Let us say, if you have to get a patient in emergency situation from point of accident to the hospital, you may transfer signals to the route of ambulance to turn all lights green and save lives. There are hundreds of used cases where mobility can transform our lives.

How will citizens benefit from a mobile implementation in a smart city?

To improve the quality of life, cities have to realise that smart technologies need to work both ways: not just for citizens but with citizens. A smart city collects and integrates knowledge from the Internet of Things (IoT), the Internet of Services (IoS) and the Internet of People. Citizens are more liberated, more conscious of the surrounding opportunities, and benefit from the integrated services that the city offers. The smart infrastructure is the intelligence of the city, governs its body and reacts to the situations intelligently. A smart city allows new ideas to thrive and new, more effective approaches to be developed in economy, politics, governance, mobility, environment and all the other facets of city life.

Let us imagine a person visiting a city for the first time. She has no idea of what the city has to offer, but she is interested in finding out about museums. With a mobile device on her (phone or tablet) and an Internet connection, she can use this application to retrieve in a few seconds all the surrounding museums. For each of them, she can than request additional details like the entrance cost, opening hours and so on. But the application is not limited to touristic information. Instead, it can display a large variety of objects, to best satisfy the user’s needs in every context.

What other technologies come together to make a smart city?

The purpose of smarter cities is to ensure a more convenient life for citizens by generating various information types from all human behaviours and situations, such as the number of people waiting for the bus at the bus stop, bus numbers they wait for, road traffic conditions that affect the bus arrival time, music they listen to, and many others.

To manage massive amounts of various data types generated rapidly every day, big data technology is essential for the smarter cities environment. Whereas smart sensors and equipment, detecting huge volumes of data, are the sensory organs of the smarter cities environment, big data technology is the brain of smarter cities. Because the sensory organs and brain are closely related, and they function coherently, the combination of smarter cities environment and big data is required to meet the needs of each.

Which are the sectors you see, where there is a high uptake for mobility?

The most common used cases is in the area of retail banking, customer self service app from B2C perspective and relationship management , wealth management, account opening from B2E perspective. In Insurance, most of the companies have launched apps to manage their agency sales force by providing the capability of customer on boarding, illustration, product selection, proposal etc.

What about the healthcare and government verticals?

The health industry can completely transform and using mobility, we can help improve living standards and save life that gets compromised due to mistakes by support staff in hospitals. The app to capture patient complete records and examinations while patients remains in hospital, send alerts to doctors if key parameters like BP, heart beats exceed normal range.

Any client examples highlighting the role of mobile technology?

In the retail segment, we have collaborated with DLF to provide an innovative mobile-phone based solution— BlueZen that channels data insights from customers visiting DLF Promenade, a high end shopping mall serving the metropolitan New Delhi area. In the banking sector, we are working with ING Vysya Bank that has developed a mobile banking app on IBM Worklight. It is a cost effective, secure and scalable mobile banking app.

Stable govt will boost FDI flows into real estate, says report

Mumbai - The formation of new government at the Centre has boosted investor sentiment, especially in the real estate sector that has been going through a tough phase with a drop in sales and debt pile-up, according to a report.

Post-Lok Sabha elections, which threw up a clear mandate, foreign direct investment (FDI) in the country's real estate sector is expected to get a lift, resulting in amplification of fund flows and strengthening of the battered rupee, the joint report by global real estate services firm Jones Lang LaSalle (JLL) and industry body CII said.

"With a clear majority triumph, the incumbent government will enjoy unwavering stability that will in turn improve investor sentiment for the real estate market," it said.

FDI into construction sector - townships, housing and built-up infrastructure - declined to about $1.3 billion between April 2013 and February 2014, data from the Department of Industrial Policy and Promotion (DIPP) showed.

It stood at $3.1 billion during April 2012-March 2013.

"This is primarily because investment sentiment in India dropped significantly given the pre-election political uncertainty and unveiling of scams," JLL said.

The report said that investment inflows reduced in the last couple of years as the sector is battling declining sales and high inventory along with cash crunch and mounting debt.

"Now global investors are optimistic about the Indian economy, which is expected to witness increase in foreign investment inflows via FDI and FII in FY15 from $29 billion during FY14," the report said.

It noted that improving transparency in the country will also act positively for foreign corporates and investors.

"The government and regulatory authorities are working to improve the investment climate through market transparency, albeit at a slow pace. The relaxation of FDI laws, an improvement in the availability of data and strengthening of regulations in the real estate sector will improve FDI in the sector in the near future."

Deepak Parekh asks RBI to raise priority sector housing loan limit

Calling affordable housing the need of the hour, Deepak Parekh, chairman, Housing Development Finance Corporation Ltd (HDFC), has asked the Reserve Bank of India to increase the limit of priority sector housing loans from the current cap of Rs 25 lakh to at least Rs 40 lakh.
“RBI would do well to recognise that priority sector housing loans up to Rs 25 lakh in metropolitan cities and Rs 15 lakh in other centres is unrealistic when inflationary and other cost escalation factors are considered. Priority sector housing loans should be increased to at least Rs 40 lakh per unit,” said Parekh in his Annual Report address to HDFC shareholders. The AGM is scheduled for July 21.
Sensitive to the concerns of the real estate industry and the problems they face, Parekh not only called for an online single window clearance mechanism for affordable housing projects, but also proposed to ease the source of funding for purchase of land by developers. While the regulation does not allow bank’s and HFC’s to fund developer’s for acquiring land, Parekh said that this leads them to resort to high cost funding (18-22 per cent) from NBFC’s, private equity or even the informal sector.
“If regulators feel there is excessive speculation in real estate, it is prudent to prohibit banks and HFCs from lending for land transactions. However, when there is no real estate bubble, as is currently the case, then banks and HFCs should be allowed to fund land transactions,” he said, adding that land cost comprises almost 70 to 80 per cent of total cost.

Industry experts feel that the proposals are very important for the sector. “The definition of affordability in most of the cities has changed and it will help if RBI revises its limit. Also allowing banks and HFC’s to fund for land purchase will bring down the cost of the project and the unit cost,” said Anshuman Magazine, CMD, CB Richard Ellis.

Parekh also urged the developers to stop focussing on high-end luxury segment and focus on developing houses in the price range of Rs 15 to Rs 40 lakh. He took note of the tough environment India Inc faced over the last year as he termed FY’14 as ‘Perhaps one of the most difficult years in recent times’. He, however, enthused optimism and said the ‘worst is behind us’ as he
laid down key issues that the new government needs to focus upon.

Gagan Banga, MD & CEO Indiabulls Housing Finance, said, “To curb real estate prices it is essential to increase supply. If organised players can supply more capital to the sector, it will help add supply rather than creating real estate bubble. I fully endorse the proposals.”

Mumbai’s resale property market headed for correction

Informed property buyers and investors decipher the trends governing the real estate market well before the general public perceives such patterns and movement. Such comprehension of market trends is essential for success, especially in a dynamic real estate market like Mumbai because the Indian real estate market, does not have the benefit of data-based clarity and transparency that forex, bullion, equities and the bond markets offer.

Primary residential market aggressively competitive

Over the last three quarters, there have been more than three dozen new launches by developers in the Mumbai Metropolitan Region.

Over 65 per cent of the stock has already been absorbed there is robust demand for newly-launched properties that score high on the three essential Ps -product, price and positioning regardless of where they are located.

This is significant because in a few cases, location has been a big compromise considering the lack of access to social infrastructure.

These launches have been well-received despite a multitude of challenges, primarily because they are the right product at the right price most of these projects have quoted rates that are between 15-35 per cent cheaper than the current resale properties being traded in the same areas. This is inevitable because Mumbai’s secondary or resale homes market, has always represented a real threat to the city’s developers. However, this scenario is now changing rapidly.

Resale residential market transaction volumes at a record low

Analysis of the registration data for the secondary residential sales in Mumbai, shows that transaction volumes have become increasingly stressed. If we examine this trend closely, we see that prices of resale homes in Mumbai have, in fact, stayed aggressively high, even though actual transaction volumes have failed to justify them.

It is a self-evident market truism that high prices cannot sustain in an environment wherein volumes do not support them. The prices in Mumbai’s secondary sales market will have to come down, so as to sustain buyer interest. Moreover, given the pricing war being waged by the primary sales market, the situation does not call for a mere softening of prices but a full-scale correction in the resale property prices.

Registration data over the last three quarters reveal that an increasing number of Mumbai’s homebuyers and investors, are moving towards new launches. Their objective is to capitalise on the significant price advantage that these projects offer. With discounts hitherto unheard of in Mumbai’s notoriously pricey residential market, the visible shift in the preferences of potential buyers from the resale to the primary market, presents no mystery. The lower pricing of new launches versus resale options, and the excellent response from buyers, is a clear signal to vigilant investors who have been scanning the Mumbai market for the right entry point.

In the first quarter of 2014, Mumbai’s western and central suburbs distinguished themselves with having the most new residential launches. Since demand is extremely high in these belts, absorption was robust in the primary market. In the same period, transaction volumes in the resale market of these precincts, were very minimal.

The scaling demand for new launches shows that price-conscious buyers and investors, are not willing to pay an extra premium for resale properties. The only exception to this phenomenon has been Thane, where both, resale properties and new launches matched momentum as the price difference was not sufficient for good arbitrage.

The flawed rationale behind premium resale property pricing

Resale properties in Mumbai that feature desirable amenities and good locations, are currently being quoted at a hefty premium over pre launches and new launches.

Sellers justify this premium by pointing out that their resale properties attract lower maintenance charges than units in new projects. This is a faulty rationale, at best. Keeping in mind the implementation of the new property tax formula, it is in fact more beneficial to opt for new launches instead of resale units in smaller projects. Also, the lower maintenance charges are often short-lived and wide open to future upward revision, in addition to the significant financial allocation one needs to make towards building repair costs.

Dwindling location premium

The justification behind Mumbai’s locality premium is now becoming illogical in the western suburbs. When we compare the prices of new launches in Parel, Lower Parel, Sewri and Wadala, (areas close to the business district) with resale properties in the Andheri-Goregaon belt, there is absolutely no margin left in terms of the price points. Employees who currently commute for over two hours daily from this belt to the business districts in Bandra-Kurla Complex, Lower Parel and Nariman Point, have begun moving to areas closer to their workplaces. This is because there is no extra stretch of property purchase budget involved any longer. With new infrastructure initiatives like freeways and flyovers being implemented, the stress of commuting has reduced. Also, as the price gap is substantial, now there is increased interest from homebuyers to move to the central suburbs.

In the recent past, fresh residential realty projects launches in areas like Mulund, Chembur, Bhandup, Ghatkopar and Kanjurmarg, have been very attractively priced. With property rates being quoted between 25-35 per cent cheaper than those of resale properties in these areas, the buyer/investor response to these projects is massive. A similar trend is also emerging in the western suburbs specifically the Andheri-Borivli belt. As a result of these dynamics, astute investors in Mumbai’s real estate market, are booking profits on resale properties, moving their investments into the primary sales market and taking advantage of the price arbitrage

Property Market Revival Expected After Modi's Win

New Delhi: Hailing clear majority for Narendra Modi-led BJP in the polls, real estate experts today said a stable government at the Centre will help revive the property market.

Investor sentiment will improve in the realty market leading to rise in housing and office space demand, they said.

"The formation of a stable government not dependent on coalition partners will hopefully mean faster decision making and economic reforms. If GDP growth picks up, one of the early beneficiaries would be the real estate industry," CBRE South Asia Chairman & MD Anshuman Magazine said.

Knight Frank India Chairman & Managing Director Shishir Baijal said the economic and political stability would act as a catalyst for revival of the real estate sector in India.

Hailing the election outcome, realtors apex body CREDAI Chairman Lalit Jain said: "We have a huge expectation from the new government as Modiji has demonstrated good governance in Gujarat".

Mr Jain said the sentiments would immediately improve and that will drive the property market. "We expect efficiency in approval process and easier bank funding which are the two major concerns for the industry."

The realty sector has been facing a huge slowdown in demand over last few years due to high interest rates on home loans and lower economic growth.

Parsvnath Chairman Pradeep Jain said: "We are optimistic about the reform and changes this government will bring in to boost the economy. For the real estate in particular, we firmly believe that the sector will be given industry status this time which will ease all fund inflow."

Mr Magazine said, meanwhile, that "economic fundamentals have to be tackled, infrastructure projects implemented with a sense of urgency and housing mortgage interest rates have to decline before we would see any significant impact on the real estate market".

Global property consultant JLL India Chairman & Country Head Anuj Puri said that in order to boost affordable housing, the new government may look at helping on quicker land acquisition, faster approvals, easy and low cost funding availability and better infrastructure.

Cushman & Wakefield Executive Managing Director (South Asia) Sanjay Dutt said: "A stable government will lift the sentiments of the investor community who form a dominant role which will impact housing and office sales. Hence, both end-users and investors are also expected to increase their investments in the sector and contribute to its growth."

Consultant DTZ Chief Executive Anshul Jain said the demand is expected to pick up in the latter half of this year.

"Next 5-6 quarters are expected to be the game changers. Availability of funds will ease and interest rates are expected to come down as inflation cools. This will have a direct impact on the supply side of the real estate," he added.

Real estate industry awaits policy action from next government

Like most other business sectors, the Indian real estate market holds its breath for a stronger and more determined government. The perception which is currently driving market sentiments is that market momentum can either accelerate, remain unchanged or decelerate depending on which party is voted into power. Speaking purely from the viewpoint of market sentiment, there is some validity to this perception. However, the fact is that the true benefits of political stability and proactive reforms — if these indeed ensue — will not be visible or tangible for quite a while after the new government takes over.

Even if the next government proves to be ‘real estate friendly’, it has its work cut out.

There are vital regulations and initiatives related to real estate that have been gathering dust on bureaucratic tables which need to be fast-tracked and implemented. Though these regulations and initiatives are crucial for the real estate sector’s growth, there are various complexities that must first be sorted out
One of the challenges is impartially attending to the interests of all industry stakeholders. The other challenge is to shore up all loopholes that could remain and be exploited if not identified prior to a regulation’s implementation.

This is especially true of the pending Real Estate Regulatory Bill, which has been hotly contested at every stage. There is no doubt that it must be enacted sooner rather than later so as to make the Indian real estate sector more attractive for foreign investors. However, it does appear that no version of this Bill that emerges after the various objections and arguments from the industry’s stakeholders have been considered will be accepted across the board. If this is the case, it will require a strong and determined government to push it through. This also applies to the regulations pertaining to FDI in multi-brand retail — a subject that has drawn an incredible amount of political flak — which would have a major impact on India’s attractiveness as a destination for foreign retail heavyweights.

Developers have been campaigning for a faster project approval process, and this is justified but by no means easy to do. Again, the government faces the challenge of ensuring that any fast-tracked approval process does not result in misuse and exploitation. While faster approvals would boost the supply pipeline and help bring prices down, the government must also ensure that construction quality norms are not compromised in the process. Also, faster approvals could result in the provision of support infrastructure falling several more laps behind while newer precincts are being developed.
That said, swifter and more determined decision-making than what we have seen so far is definitely of the essence. Many overseas investment funds have so far abstained from the Indian real estate market because of the lack of regulation, political instability and bureaucratic quagmire. The new government will have the opportunity of making Indian real estate more investment-friendly and attractive, and this would go a long way in meeting its considerable capital requirements. Investor-friendly, streamlined policies from the new government can be a game-changer for Indian real estate.

Expectation of Anuj Puri chairman & country head, JLL India

* The industry expects the new ruling government to be less dependent on smaller coalition parties for support.
* A clear electoral mandate will help real estate investors obtain clarity on future policies, which is critical while making future business plans.
* The industry expects real estate investment trusts (REITs) to become operational in India so as to increase liquidity.
* The industry expects the approval and implementation of the pending Real Estate Regulatory Bill

New govt to revive real estate in 3-6 months

A report co-authored by Knight Frank India and Federation of Indian Chambers of Commerce & Industry (FICCI) says the future sentiment score has improved across all zones displaying a strong positive outlook.

If there's one sector eagerly awaiting the election result as much as some of the Prime Ministerial aspirants in the fray, it is real estate. 

Industry experts are hopeful that a stable government will infuse a new lease of life into the comatose sector. A report co-authored by Knight Frank India and Federation of Indian Chambers of Commerce & Industry (FICCI) says the future sentiment score has improved across all zones displaying a strong positive outlook. "Nearly 67 percent of the respondents foresee an improvement in residential project launches and sales over the next six months. 

However, price appreciation is likely to remain sluggish," says the report that adds that financial institutions too are optimistic about the future. Says Dr A Didar Singh, secretary general, FICCI: "As the country waits for the new government to take charge at the centre, future sentiments have improved across all zones in realty sector. 

Majority of the developers and financial institutions are quite bullish about the future of the economy as well as the funding scenario. The stakeholders are cheerful and expect the business environment to be upbeat in the coming six months." Images source: Knight Frank-FICCI report 

Here are the various parameters that suggest a brighter future for the sector: