Indian REITs are expanding rapidly as office demand surges

With a market capitalization of $8 billion, three office REITs collectively own approximately 100 MSF of space, or about 12.5% of the total office stock. 

All metrics of office demand in India are showing positive momentum, and real estate investment trusts are rapidly expanding their portfolios through acquisitions. 

When Embassy Office Parks REIT was launched in 2019, it had slightly more than 24 million square feet. In five years, it has increased its completed area by 47%, adding 12 million to 12 million square feet through acquisitions. It now has over 45 million square feet of gross leasable area. 

The three office REITs- Embassy REIT, Brookfield India Real Estate Trust, and Mindspace Business Parks REIT– collectively own approximately 100 million square feet of office space, accounting for 12.5% of India’s total office stock, with a market capitalization of $8 billion.  

India’s office sector demand is growing by double digits. The monthly rental square foot is approaching the Rs 100 mark. Occupancies have risen to the mid-80s. Most significantly, globally capability centers have focused on India, with approximately 800 GCCs expected to be added over the next 6-7 years, increasing demand for offices. 

Acquisitions 

Embassy REIT acquisitions have primarily come from its sponsor, the Embassy group, based in Bengaluru, and all of its assets are concentrated in India’s IT capital. Last month, it arrived in Chennai with another acquisition from its sponsor, a 5 MSF business park that will take its total portfolio above 50 MSF. It also has a future development area of 2 MSF.

Brookfield REIT increased its operating area by 47% last year, primarily through acquisitions, and another 16% increase is expected following an acquisition announced last week.  

In FY24, it acquired 6.5 million square feet of space in the National Capital Region and Mumbai, and it plans to add another 3.3 million square feet by purchasing Bharti Enterprises’ 50% stake in a joint venture with its parent entity Brookfield. The REIT has the first right to offer the remaining stake, while other properties developed by Bharti Realty in Delhi are potential acquisition targets.  

Its parent, Brookefield, owns 54 million square feet of office space in India, which serves as an opportunity pipeline for the REIT. 

Last year, Mindspace REIT made two small acquisitions in Chennai and Pune, while also developing a mixed-use asset for its sponsor in Mumbai. It also has the right to first offer on other assets that its sponsor owns. Its sponsor, K Raheja Corp, has approximately 15 million square feet of pipeline in the form of completed or in-development assets. This presents a potential growth opportunity for the REIT since it’s also looking into third-party assets. 

According to a recent CREDAI-CRE Matrix report, office demand will exceed 70 million square feet by 2024, due to the government’s emphasis on manufacturing expansion and investing in digital and physical infrastructure. Each of these is expected to boost office absorption and create new opportunities for REITs. 

Fractional ownership is driving a paradigm shift in real estate investment

Fractional Ownership is an investment model aimed at retail investors who can gain access to the high-value commercial segment. 

With the real estate sector expanding across key markets, driven by demand sales, investors are increasingly looking for ways to capitalize on the bullish run. The real estate sector has matured due to regulatory changes, which has sparked investor interest. What truly democratized the industry was the introduction of investment concepts such as Fractional ownership, which allows individual or retail investors to invest in high-value properties while earning fixed returns on rent-generating assets. 

While alternative investment options such as AIFs and REITs are gaining popularity in India as profitable and effective investment vehicles, they are primarily geared toward institutional and high-net-worth investors. On the other hand, investment models such as Fractional Ownership are aimed at retail investors, who can access the high-value commercial segment through this model. The good news is that this model provides new avenues for retail investors yet allows developers to consider various funding options.  

According to a report by a leading real estate consultant, the market for fractional ownership in India was USD 5.4 billion in 2020 and is expected to reach USD 8.9 billion by 2025, growing at a 10.5%  CAGR. This is an unambiguous sign of fractional ownership’s rapid growth as a viable investment opportunity. 

Fractional Ownership became more popular among investors after SEBI proposed various Fractional Ownership Platforms (FOPs) to register with SEBI MSM REITs and made it mandatory to follow some specific registration procedures. According to the proposal published by a leading real estate firm, MSM REITs should include separate and distinct entities serving as trustees, sponsors, and investment managers. SEBI also proposes that MSM REIT be established as a Trust under the Indian Trusts Act, with the ability to create separate schemes for owning real estate assets. This would be accomplished through SPVs (Special Purpose Vehicles) established as companies under the Companies Act of 2013. MSM REIT Scheme shall have complete control and 100% equity share capital in all SPVs. 

These regulatory changes benefited investors because they can now leverage benefits such as fair pricing, transparent transactions, and the flexibility and opportunity to exit or liquidate their investment at any point. 

With the digitization and technological advancement of the real estate industry, investors can also benefit from easy tracking via web-based FOPs, making it easier for them to make data-driven decisions. It also provides visibility previously unavailable when proper real estate investment space was not in place. 

Diversification is another important factor that has redirected investors to fractional ownership, particularly since the pandemic, when the stock and commodity markets have become volatile. The uncertainties caused by global economic headwinds necessitated the exploration of more promising avenues and markets. In contrast, India’s real estate market has continued to show promise, with the commercial segment breaking records for leasing and demand. According to a report, the Indian Commercial Real Estate Market is expected to grow at a CAGR of 21.1% between now and 2028, from USD 33.62 billion to USD 87.57 billion. 

As India’s ease of doing business index ranking improves in the coming years, more global corporations will establish their headquarters here. Global occupiers in sectors IT, manufacturing, BFSI, startups, and the booming service industry will require high-quality workspaces for their employees. These will result in more Global Occupier Centers (GCCs) operating from India’s key cities, thus increasing and accelerating demand for Grade-A office assets. In this scenario, fractional ownership will benefit both developers and investors. As the sector grows, fractional ownership will continue to open up new opportunities for investors in the coming years. 

The survey reveals strong post-COVID growth in the Indian real estate market

According to a recent survey by Shree Katariya & Associates (SKAA), the Indian real estate sector has demonstrated remarkable resilience and growth following the outbreak of the COVID-19 pandemic. The survey, titled “Consumer Outlook on Indian Real Estate Market- Post Covid-19 Growth Analysis,” sought to understand home buyers’ evolving preferences and sentiments in the aftermath of pandemic-induced changes. 

Positive Growth Trends 

Despite global economic uncertainties, the Indian real estate market is expected to reach an all-time high in 2023, with over 2.82 lakh units sold. Forecasts predict that sales will exceed 3,00,000 units by 2024, with annual growth of 10-15%. 

Several factors contribute to this resilience, including government initiatives, consistent economic indicators, and infrastructure projects such as the Smart City initiative. Low unemployment, inflation, and significant wage increases contribute to a positive market outlook. 

Changing Consumer Preferences. 

The survey reveals significant shifts in buyer preferences and budget allocations since COVID-19. The growing demand for larger homes and dedicated office spaces reflects the changing dynamics of remote work culture. Homeownership is increasingly recognized as a tangible asset in investment portfolios. 

Investment Preferences 

Real estate is the preferred asset class for investment in 2024, with 58% of respondents indicating a preference for property. This sentiment stems from the perceived importance of homeownership and the potential for high returns on investment. While stocks and mutual funds receive 26% of the votes, gold and fixed deposits receive only 4% and 12%, respectively. 

Optimistic market outlook 

The vast majority of respondents (71%), see the current period as an ideal opportunity to buy property, citing the importance of homeownership during the pandemic and the promise of higher returns on investment. Only 2% hesitate due to rising property prices and personal circumstances. 

Property Price Expectations

The survey shows widespread optimism about property prices, with 87% expecting further growth. Sixty-nine percent expect a steady increase, while 18% believe they will rise, but not as quickly after COVID-19. 

Ideal property types and budgets. 

Residential plots are the top choice for 41% of respondents, followed by villas/row houses (27%), and flats/apartments (24%). 78% of property seekers prefer properties under Rs 50 lakhs, making affordability a top priority. 

End users vs. Investors 

While 53% of respondents buy property for personal use, 47% are investors, indicating a balanced market dynamic. Surprisingly, 67% of investors are salaried, showing a shift in investment behavior toward long-term property ownership. 

Prefer ready-to-move properties. 

More than 42% of respondents prefer ready-to-move-in properties to avoid delays and ensure immediate occupancy. However, as the pandemic fades, Millennials and Generation X are turning towards properties in their early stages, indicating a shift from end-users to investors. 

Challenges ad Opportunities 

Lack of funds, a limited understanding of financing options, exploring other options, and personal circumstances are all major roadblocks to deciding on a product. However, there is some hope because 37% of respondents are willing to buy if they find the right deal. 

Summary 

Anil Katariya, Founder & CEO of Shree Katariya & Associates, emphasizes the importance of SKAA’s survey, which provides valuable insights into the changing landscape of the Indian real estate market. Despite challenges, the sector is growing due to changing consumer preferences, positive market sentiment, and attractive investment opportunities.  With this information, stakeholders can make more informed decisions about the best way to handle the market’s fluctuations. 

Are you considering investing in real estate? Here’s why non-metro cities are your golden ticket!

Tier 2 cities are outpacing traditional metros in their economic growth, thanks to numerous fields like manufacturing, information technology, education, and healthcare. For example, Nagpur is expanding in manufacturing, logistics, and information technology, whereas  Surat is rising in textiles, petrochemicals, and information technology. 

Real estate markets in non-metros or Tier-2 cities continue to grow swiftly, outperforming many metros in terms of investment and demand. Several factors contribute to the massive increase in real estate investment in non-metros. 

According to a recent analysis by Cushman and Wakefield and the Confederation of Real Estate Developers’ Associations of India (CREDAI), approximately 35% of India’s population currently lives in cities, with projections indicating that this figure will rise to 50% by 2050. 

This population growth is putting a strain on Tier 1 cities, where space is becoming more scarce. As a result, there is a greater emphasis on developing alternative urban areas with the potential to become new economic and real estate hubs. These are classified as Tier-2 cities. According to CREDAI, India’s urbanization rate is expected to exceed 50% by 2050, potentially leading to significant population migration to Tier 2 cities. 

Manaki Parulekar, Co-Founder of Claravest Technologies, shared her insights into the factors driving real estate investment growth in Tier 2 cities. 

According to Parulkar, this rise of integrated townships, which provide a mix of residential and commercial spaces, is helping Tier-2 cities grow. “For example, Panvel in Navi Mumbai is rapidly developing, with townships such as Hiranandani and Godrej, aided by projects such as the Navi Mumbai International Airport and the Atal Setu Bridge (MTHL).” 

The rise of commercial Grade A properties, affordable residential property values, and improved connectivity are driving accelerated growth in other cities like Jaipur, Bhubaneswar, Nagpur, Surat, and Kochi. 

These cities and regions have distinct advantages over traditional metro markets, attracting investors with promising opportunities for Parulekar, the following factors contribute to increased real estate investment in non-metros or Tier 2 cities.  

Diverse economic  development: 

Tier 2 cities are outpacing traditional metros in their economic growth, thanks to many industries such as manufacturing, information technology, education, and healthcare. For example, Nagpur is expanding in manufacturing, logistics, and information technology, whereas Surat is rising in textiles, petrochemicals, and information technology. 

Cost advantages: 

Tier-2 cities are significantly less expensive than Tier-1 cities. Low operational costs in these areas contribute to this advantage, making them appealing to businesses and investors.

Improved Quality of Life: 

Tier-2 cities offer a more relaxed lifestyle than larger metropolitan areas, with less traffic congestion, lower pollution levels, and a generally quieter environment. This improved quality of life appeals to businesses seeking a dedicated workforce and individuals seeking a better work-life balance. 

The government’s initiatives include: 

Government investments in transportation networks, airports, highways, and reliable power and communication systems support the growth of Tier-2 cities. 

Real-estate market growth: 

The real estate market in Tier 2 cities is thriving, particularly in the residential segment. Professionals want to live in larger apartments, remote work is becoming more popular, and there is a growing middle class with more purchasing power. Despite rising property prices, they remain less expensive than those in Tier-1 cities, creating appealing investment opportunities. 

Advancements in education and healthcare: 

Tier 2 cities are increasingly home to reputable educational and healthcare facilities, making them more appealing places to live and work. 

To summarize, these factors make non-metro areas attractive real estate investment destinations, often offering more sustainable growth and profitability than traditional metro areas saturated and high-cost environments.  

Akshaya Tritiya: Five important factors to consider when investing in real estate

Akshaya Tritiya, traditionally a festival of prosperity and success, is becoming a day for strategic investments, particularly in real estate. Fractional ownership of commercial properties is becoming increasingly popular, providing investors with accessibility, diversification, and higher returns. 

We, as Indians, value our traditions and cultural beliefs and find meaning in the rituals that shape our lives. The auspicious festival of Akshaya Tritiya, which falls on the third day of the Hindu month of Vaishakha, sends a sacred message of prosperity and success. As a result, buying gold on this day is expected to yield good long-term returns. Traditionally associated with gold purchases, this festival has become a day for foresightful investments. 

Initially, people turned to gold for financial gain, moving from physical holdings to gold ETFs and bonds. Real estate is currently undergoing a similar transformation. Fractional ownership of commercial real estate is increasingly becoming the preferred option, rather than traditional home purchases. This shift heralds a new era of investment strategies, with the advantages of fractional ownership— accessibility, diversification, and the potential for higher returns— attracting increased investor interest.  

As we honor tradition while embracing innovation, Akshaya Tritiya is recognized as a symbol of progress and an auspicious day to invest in a better future. Here are some things to consider when investing in real estate. 

Residential vs. Commercial Properties 

One of the first decisions investors must make is whether to invest in residential or commercial properties. Residential properties appeal to both homeowners and investors seeking rental income. However, residential properties may present difficulties in tenant management and offer lower rental yields than commercial properties. 

According to a recent industry report, housing prices have risen by 13 to 33 percent in seven major cities over the last three years, while commercial real estate markets have seen a 15 percent increase during the same period.  

Commercial properties, such as grade A office spaces, provide good rental yields of 8-9 percent, compared to 2-3 percent for residential properties. This enables investors to benefit from verified tenants while avoiding certain risks associated with residential properties. 

Opportunities for fractional ownership. 

As we know, Akshaya Tritiya is important for long-term real estate investments. This day seems ideal for purchasing valuable items with the expectation that they will bring prosperity and fortune.  Moreover, India’s real estate investment landscape is evolving similarly to a “mutual fund” moment, with regulators supporting fractional ownership. 

SEBI’s regulatory support for REITs, including establishing standards for Small and Medium REITs (SM REITs), marks a watershed momentum for investors, bolstering their confidence even further. These developments make real estate investment more accessible by allowing retail investors to participate in high-value properties through fractional ownership. With a lower minimum investment threshold of INR 10 lakhs, real estate investment becomes more accessible, aligning with the festival’s theme of prosperity and abundance. 

Benefits of investing through fractional ownership. 

Fractional real estate ownership offers investors several benefits, including regular income, asset security, liquidity, tax breaks, and ease of possession. This is an excellent choice for investors seeking both income and capital appreciation. 

Navigating the regulatory and legal frameworks 

Real estate transactions involve intricate regulatory and legal frameworks that differ depending on the location and type of property. Investors must follow all legal requirements and perform due diligence to ensure the authenticity of property titles, approvals, and ownership records. Seeking professional help from legal experts or real estate advisors can help investors navigate these complexities more easily.  

Tracking long-term growth potential

While short-term gains may be appealing, investors should focus on long-term growth potential when investing in real estate. Assessing infrastructure development, urbanization trends, and demand-supply dynamics can shed light on the property’s future appreciation potential. Investing in emerging markets or growth corridors with strong economic fundamentals can generate significant long-term returns. 

In conclusion, investing in real estate during Akshaya Tritiya is an appealing opportunity for those looking to increase their wealth and secure their financial future. Using these measures, investors can make informed decisions and take advantage of the favorable timing of this opportunity to embark on a successful real estate investment journey. 

A comprehensive analysis of how elections affect Indian real estate

Akash Pharande, managing director of Pharande Spaces, discusses past real estate trends during elections and predicts future trends. 

The political atmosphere in India, as in other countries, has a major effect on the property market, particularly during general election seasons. Election cycles have had a noticeable impact on the real estate market in the last twelve years. What can end users and investors expect following the upcoming general elections? Let us look at the Indian housing market’s behavior before and after the general election. 

Trends before the election

In the past, we have seen that the Indian real estate market slows in the run-up to general elections. Buyers and investors become cautious when there is uncertainty about election results and potential policy changes. Pre-election data usually show a trend of lower transaction volumes and a slower rate of property price increases. 

During the 2014 general elections, for example, sales and new product launches dropped significantly. Home sales in India’s top seven cities fell by nearly 30% in the quarters leading up to the elections. Similar patterns emerged in 2019, with both the primary and secondary markets showing as prospective buyers and investors chose to wait and see. 

Recovery for the following election 

The housing market usually recovers significantly following elections. Clarity in government policy and restored consumer confidence are frequently the driving forces behind this recovery. Following the 2014 elections, which led to the creation of a stable government, the market experienced a substantial rise. According to reports, positive consumer sentiment and increased investment led to a nearly 50% increase in sales in the following months. 

These patterns were repeated in the 2019 elections. Again, the guarantee of political stability aided the market’s recovery. Another factor to consider was that people now had confidence in the Real Estate (Regulation and Development) Act or RERA. By the end of 2019, new investments were flooding the market, not only in the residential space but also in commercial real estate. 

Current market and future outlook 

Despite the tensions surrounding the general elections, the Indian housing market has held up well this year. The current administration has taken several steps to boost housing demand, develop infrastructure, and implement economic reforms. The general belief that this government will remain in power has provided significant protection against the typical pre-election downturn. 

Following the election, the Indian housing sector is expected to remain optimistic. The market will undoubtedly rise if the ruling party can maintain policy and economic stability. There are also industry expectations that the GST on building supplies will be moderated with upcoming regulations. 

Aside from that, there is hope that financing for the housing sector will improve and that affordable housing will once again become a government priority. All of this will undoubtedly contribute to the housing market’s ongoing improvement. 

Investment implications

The post-election period will provide excellent opportunities for buyers and investors in residential real estate. When the government announces additional measures to boost the market and stabilize the economy, real estate will rise and yield significant returns as prices rise and demand rises. Such measures will be very compatible with the growing trend of digitization and transparency in real estate transactions. 

Real estate employment skyrockets

According to recent findings, Sashi Kumar, Head of Sales at Indeed India, stated, “The construction industry provides enormous opportunities for skilled professionals and semi-skilled labor. 

According to Indeed’s recent survey, hiring in the construction and real estate sectors increased by 86% between March 2023 and 2024. This surge in demand has conceded with a 57% increase in job seeker’s interest, with Delhi, Bangalore, and Mumbai leading the way.  

According to Indeed data, the top three cities for construction hiring are Delhi (5.05%), Bangalore (4.68%), and Mumbai (4.13%). A strong business environment, a rise in warehousing and industrial needs, increased commercial housing requirements as migration rises, the opening of manufacturing facilities, and other factors could all contribute to this trend. 

However, smaller cities like Ernakulum (2%), Kochi (1.50%), Lucknow (1.38%), and Calicut (1.25%) are among the top regions attracting job seekers. This trend could be attributed to low living costs or local job opportunities that allow people to work closer to home. Ernakulum, Calicut, and Kochi are the top Tier 2 and 3 cities for job postings.  

Engineers (17.18%), project leads and supervisors (8%), and architects (5%) are the most popular job roles, accounting for the majority of job postings. Engineers (21.31%), project leads and supervisors (9.33%), and architects (4.27%) are also popular among job seekers, which is consistent with the demand. As construction becomes more complex and technical, the industry requires more skilled workers. 

The construction industry remains a key driver of economic growth, offering numerous opportunities for skilled professionals and semi-skilled workers. The significant increase in hiring signals promising opportunities for job seekers and employers, while the increase in job seeker interest reflects the industry’s strong momentum. 

Mumbai’s real estate players predict robust growth within MMR

According to a report released by property consultants Knight and Frank, Mumbai recorded 11,504 property registrations in April 2024. 

With property registrations increasing by 16% in revenue to the exchequer and the state government maintaining the status quo on ready reckoner rates, real estate developers in the Mumbai Metropolitan Region (MMR) predict strong growth in the sector. They are optimistic about larger purchases in areas where connectivity has been resolved through the implementation of infrastructure projects such as the expansion of Mumbai Metro, Mumbai Trans Harbour Link (MTHL), Coastal Road, and others.

Prashant Sharma, President of the National Real Estate Development Council (NAREDCO) Maharashtra, stated, “We are optimistic about the future of the real estate sector in MMR.” Our projections show a strong growth trajectory, driven by several key factors. First, the rising demand for residential properties, particularly in the affordable and mid-segment markets, is a good sign. We also see a resurgence in commercial real estate, fueled by the expanding IT and finance industries.”  

“Moreover, government initiatives such as the relaxation of FDI regulations and the emphasis on infrastructure development, including the expansion of the Mumbai Metro, Coastal Road, and several other projects, making real estate investments even more appealing. We are also aware of the challenges, which include regulatory hurdles and the need for faster project approvals. However, with the state government’s commitment to improving the ease of doing business and our collaborative efforts to advocate for policy reforms, we are confident that MMR will remain a vibrant and dynamic market for real estate investment,” Sharma concluded. 

Manju Yagnik, Vice Chairperson of the Nahar Group and Senior Vice President of NAREDCO, Maharashtra, stated, “The residential real estate segment has demonstrated resilience, making it an appealing investment option for those with medium to low-risk tolerance. Despite numerous challenges, this industry has remained, emerging as an excellent choice for many investors. The higher initial cost of commercial properties frequently attracts investors to the residential segment. The higher initial cost of commercial properties frequently attracts investors to the residential segment. For people with limited funds and maintenance skills, residential real estate is a more accessible and practical option. 

Nitin Singhal, the co-founder of PropFina, stated, “With most micro markets experiencing higher supply than ever before, there will be corrections by highly leveraged players.” Those who have financially engineered their project portfolios and maintain control over their brand will have the least impact. Corrections can range from 10-15% and will be specific to micromarket dynamics. There could be higher offtake in areas where connectivity issues are being resolved. 

Commercial and warehousing sectors are on the rise as real estate trends. 

Singhal said that affordable housing will largely remain the same, and “When it comes to the commercial segment, which includes retail and office spaces, lease rates are going up and vacancies are going down. Introducing small and medium real estate investment trusts (SM REITs) creates a significant secondary market absorption opportunity. “This segment may experience a northwards moment,” he said. 

“Similarly, major warehousing players are quickly acquiring the land parcels, some of which are backed by sovereign funds seeking safe havens with higher-than-inflation returns.” Clear title land parcels ranging from 50 to 100 acres will see a rise in pricing, particularly along Samruddhi Mahamag exits, DMIC Virar-Alibag Multi-Modal Corridor (VAMMC), and so on. Singhal concluded that there will be a new segment of multi-level last-mile connectivity warehousing.  

April 2024 Trends and Consumer Preferences 

According to a report released by property consultants Knight and Frank, Mumbai recorded 11,504 property registrations in April 2024, contributing more than INR 1,043 crore to the state exchequer. According to the Maharashtra Department of Stamps and Registrations, in April 2024, there was an increase in registration of apartments measuring up to 500 square feet, accounting for 45% of all registrations. Of all the properties registered, nearly 86% of the Western suburb buyers and 92% of Central suburb consumers choose to buy within their micro market. This decision is influenced by the familiarity of the area and the availability of products that match their pricing and feature preferences. 

Real estate in Kashmir faces a gloomy downturn amid declining demand

Kashmir’s real estate sector is in turmoil, with demand failing dramatically. Brokers and property developers face a concern: an increasing number of sellers but a shrinking pool of buyers. 

According to real estate firms, the percentage of property buyers in Kashmir is steadily declining, which they attribute to the stress in other sectors. “Kashmir’s real estate market is currently down. People do not have sufficient funds to invest in real estate. Imran Bhat, a property dealer at Zakura, said that very few people are coming to buy plots of land these days. 

He highlighted the unusual situation in which firms have far more sellers than buyers. “Let me give you an example: I received up to ten queries today, six of which were from sellers. People are now selling their properties, but only a small proportion of the buyers are willing to buy,” Bhat added.  Sluggish demand in the real estate sector has put downward pressure on property prices across all segments. “Property prices have fallen. For example, if a seller has a property worth Rs 1 crore, they will only receive offers of Rs Rs 70 lakh. “Purchasing power has decreased significantly in the last few months,” Bhat explained.

Another real estate agent, Javid Ahmad, claimed that the market has declined by more than 30 percent. “Several economic factors have influenced the current state of Kashmir’s real estate market. Potential buyers, deterred by economic uncertainties and a cautious approach to investments, are waiting and seeing, resulting in a supply and demand mismatch,” he said. 

However, property developers remain optimistic about the sector’s revival. “Since it is election season, we hope for a revival of the sector; rates and demand are likely to rise with the start shortly,” Ahmad said optimistically. 

As the Kashmir real estate market faces challenges from dwindling demand and economic uncertainty, industry stakeholders are waiting for a turnaround. The sector’s fortunes are inextricably linked  to the broader economic landscape, and recovery depends on restoring consumer confidence and addressing the root causes of the current slump. 

The rise of offbeat destinations is a paradigm shift in residential real estate

Offbeat real estate destinations are becoming increasingly popular, reflecting a broader trend toward a balanced and enriching lifestyle. 

Over the last few years, the Indian real estate sector has experienced a significant shift, with homebuyers increasingly seeking serene and offbeat destinations far from the hustle and bustle of major cities. Sonipat, Bhiwadi, Panchkula, and Meerut have emerged as top residential investment destinations, offering a combination of natural beauty, cultural richness, and a thriving economy. This transition reflects a desire for a higher quality of life, where serenity and modern amenities coexist in a relaxed setting. 

Neoliv’s founder and CEO, Mohit Malhotra, says, “We envision that new-age cities will become the crucible of future economic dynamism. Their appeal stems from a harmonious combination of affordability, accessibility, and lifestyle amenities, creating new relaxed places to call home. Furthermore, the extended NCR is seeing significant infrastructure improvements, thanks to government initiatives to promote sustainable development. With the emergence of large global-scale industries such as the upcoming Maruti Suzuki plant in the Sonipat belt, these areas are poised to drive demand for mid-income housing projects and plotted developments, transforming into vibrant residential neighborhoods.” 

Offbeat destinations are gaining popularity, indicating a broader trend toward a more balanced and enriching lifestyle. For example, Bhiwadi, once an obscure industrial town in the National Capital Region (NCR), is quickly establishing itself as a new real estate development, with parallels to Sohna Road’s highly sought-after micro-market. Bhiwadi with its strategic location, robust infrastructure, and emerging commercial and residential ventures, is on track for exponential growth, similar to Sohna Road in Gurugram. 

Anil Gupta, President of CREDAI NCR Bhiwai Neemrana, says, “Bhiwadi has enormous growth and investment potential due to its strategic location, robust infrastructure, and burgeoning commercial and residential developments. When the region is connected to the Delhi-Mumbai Expressway, its potential for growth and prosperity increases. As stakeholders in Bhiwadi’s development, we are confident in the town’s potential to become a key destination in the NCR, providing unparalleled opportunities for growth and prosperity. 

More and more families are relocating to these areas, drawn by the prospect of a better lifestyle and excellent investment opportunities. Panchkula, for example, has grown significantly. DLF’s luxurious residential project, The Valley, which debuted in 2010, has seen property values rise from Rs 2,000 per sq ft to an impressive Rs 8,000. This remarkable ascent highlights the tranquil town’s untapped potential, with DLF leading the charge. Their projects, which include The Valley, The Valley Gardens, and their most recent offering, The Valley Orchard, have paved the way for increased demand for homes in these areas. The Valley Gardens spans 34 acres (13.76 hectares) and offers breathtaking views of the Morni Hills and Shivalik Range. DLF unveiled its sample apartment, allowing potential buyers to experience luxury living firsthand. 

These tier-2 cities are expanding rapidly, thanks to improved infrastructure such as better roads, public transportation, and vibrant commercial districts. Most importantly, it provides a peaceful yet connected lifestyle, which tier-1 cities struggle with due to overcrowding and rising property prices. This development includes physical, cultural, and economic growth, creating new opportunities to revitalize local economies. 

Rahul Singla, Director of Mapsko Group, says, “In recent years, tier-2 cities like Sonipat have seen the emergence of the organized real estate market, which has provided unprecedented growth and development opportunities for the developing city. Sonipat offers an enticing combination of affordability and quality of life in an ever-changing landscape, as remote work options gain popularity. Homebuyers prefer spacious homes against a backdrop of lush greenery, which provides a respite from densely populated urban areas. Sonipat’s appeal extends beyond its economic prospects, with buyers prioritizing wellness and sustainability in their investment decisions.

This seismic change in style signals a fundamental reimagining of the Indian residential landscape. It demonstrates a growing desire for a lifestyle that transcends the mundane, promising a future of limitless innovation and steady growth. Indeed, the road ahead in residential real estate is paved with unique destinations where tranquility and modernity meet, beckoning those looking to invest in a lifestyle rather than just bricks and mortar.  

Luxury villas in the sky: Mumbai residents are now upgrading to duplex and triplex apartments

Move over, Jodi Apartments: Duplex and triplex homes are the most popular trend in Mumbai. Experiencing ‘villas in the sky’ rather than combining two apartments into a ‘Jodi unit’ is the new norm, particularly among luxury homebuyers looking to upgrade to larger properties. 

Advertisements promoting ‘the lavish lifestyle with cost-effective duplex  flats in Mumbai’ or a beautifully designed 4 BHK duplex apartment with a private terrace for sale in Bandra.’ It is appropriate for a large family, so do not be surprised. Vertical instead of horizontal spread is the trend, and Mumbai residents are going all out to get a piece of this luxury living. 

Jodi apartments, balconies, and duplex housing units 

If the Jodi apartment concept, or the trend of balconies, gained traction in Mumbai earlier, it is time for duplex and triplex apartments. Jodi apartments combine two or more housing units into one. Jodi apartments and the duplex/triplex units provide more space and privacy for large families living under one roof. Buyers willing to pay a premium are now looking to improve their lifestyle by moving into duplex or triplex apartments. 

Suraj Estate Developers is selling the 42-story Ocean Star Tower built by Prabhadevi.

“We are now offering separate floors for the 50-story project ‘Suraj The Palette’ in Dadar (W). However, we can always change the plan if there is a high demand for duplex units on our upper floors,” said Rahul Thomas, Suraj Estate Developers’ Wholetime Director. 

Ocean Star, Tranquil Bay, and Mangrish are the company’s projects, which offer duplex apartments ranging in size from 2600 to 5000 square feet. 

“The trend among Mumbai buyers to own duplex and triplex apartments reflects a shift in their tastes. Most high-net-worth individuals value spacious living over price,” he told HT Digital. 

Sky bungalows have double-height living spaces.

“We have identified an inclination towards duplex apartments, with individuals desiring ‘sky bungalows’ that feature double height living spaces with a ceiling height of 24 feet in the living room- a feature typically only in villas,” he adds.  

HNIs in Mumbai are considering upgrading their lifestyle to duplex and triplex apartments. According to Parth K Mehta, CMD of Paradigm Realty, these homes are investments and lifestyle statements. Prices range between Rs 12.5 crore and Rs 100 crore. 

Redevelopment projects meeting the demand  for duplex and triplex units 

According to Ritiesh Mehta, Senior Director and Head (North and West), of residential services and developer initiative, JJL India, the trend for duplexes and triplexes is becoming more prevalent in Mumbai, particularly as redevelopment activity increases in the city.

“Many of these redevelopment plots are small land parcels, and there is little room to turn a 1000 sq ft into 3000 sq ft apartment horizontally. Rather than Jodi apartments, demand has shifted to vertical units with greater height and larger floor plans,” he said. 

“Prices for sea-facing duplex and triplex luxury housing units typically range between 10% and 15% higher,” he said. 

Architects believe that Mumbaikars’ design preferences have changed since the pandemic. Many buyers today prefer vertically distributed housing units over horizontally distributed ones. They are currently looking for more floor height. 

“Even if you combine two apartments into one Jodi, the ceiling height remains constant. People want more volume in terms of height; they want double height homes with more space and high ceilings, which may not be possible on a single floor,” said architect Hardik Pandit, director of APICES Studio Pvt Ltd, to HT Digital. 

The number of duplex and triplex units in a building depends on its number of stories and location. “We initially plan for two to three of these units in a building, but we may decide to increase the number on the upper floors based on demand.” 

These units are typically found on the higher floors of a sea-facing building and command a premium in terms of price,” he said. 

Will the duplex replace the Jodi apartment concept? 

When asked if this concept is expected to replace the ‘Jodi trend in Mumbai, he stated that the demand for ‘Jodi apartments’ will continue because it is age-related. “If a family consists of young children, they may prefer to go in for a duplex or triplex for that bungalow experience within an apartment; however, if the buyers are elderly, they may want to go in for a large ‘Jodi apartment.” 

It is also worth noting that duplex and triplex apartments are usually only available in certain areas. “If you have quite a few of these units, sales may slow down due to their high cost.” Furthermore, these will only thrive in certain environments, particularly sea-facing buildings. “Many of these units have design features like viewing decks and terraces,” he says. 

NCR luxury real estate: Capital appreciation takes center stage as wealthy Indians and NRIs increase their investments

Luxury and super-luxury residences at DLF Golf Links, DLF 5 in Gurgaon, including The Camellias, The Magnolia, and The Aralias, have seen a price increase of approximately 125 percent between 2021 and 2024. 

Luxury real estate was once only desirable for opulent living spaces, but it has now become a popular investment vehicle for affluent Indians looking to make significant capital gains. 

According to real estate experts, the rising demand for luxury living in the National Capital Region, particularly in Gurgaon, has led to significant growth in the market capitalization. 

They stated that luxury and super-luxury residences at DLF Golf Links, DLF 5 in Gurgaon, such as The Camellias, The Magnolia, and The Aralias, experienced a 125 percent price increase between 2021 and 2024. 

Demand for high-end luxury properties has increased significantly over the past decade due to homebuyers’ growing desire to invest in a place to live and a high-quality asset with good returns. 

Aakash Ohri,  Joint Managing Director and Chief Business Officer at DLF, stated the rise in wealth creation has expanded the luxury real estate market, driven by economic resilience among the affluent segments, who see real estate as not only an appreciating asset but also one with tangible and intrinsic value. 

“Moreover, the interest of the Indian diaspora in investing back into the country, fueled by emotional ties, favorable currency exchange rates, and simplified investment processes, has further bolstered the demand for luxury properties,” Ohri stated.

Where do HNIs buy? 

In January 2024, Smiti Agarwal, wife of Hemant Agarwal, CMD of retail giant V-Bazaar, paid Rs 95 crore for a 10,813 square-foot unit at DLF The Camellias in Gurgaon. 

Similarly, in October 2023, an 11,000-square-foot apartment at The Camellias sold for Rs 114 crore. The Camellias on upscale Golf Course Road has become a popular residential development for corporate executives and start-up entrepreneurs. According to sources, the founders of at least a dozen startups have purchased luxury residencies at The Camellias. 

Deep Kalra, the founder of MakeMyTrip, Sameer Manchanda of Den Networks, Aman Sharma of Boat, and entrepreneur Ashish Gurnani have all purchased super-luxury flats at DLF The Camellias. 

Vasudha Rohatgi, wife of former Indian Attorney General Mukul Rohatgi, paid Rs 160 crore for an 18,900-square-foot bungalow in Tony Golf Links in February 2023. 

Bhanu Chopra, the founder of RateGain, paid Rs 127.5 crore for a bungalow in Golf Links that month.

According to Shashank Vashishtha, Executive Director of Exp Realty India, the market has seen significant capital appreciation due to the growing demand for luxury living in the NCR. Golf Course Road, DLF 5, and Golf Links are the top choices for HNIs and NRIs seeking luxury and ultra-luxury residencies.”  

Capital Appreciation

Real estate brokers reported that super luxury residencies at DLF Golf Links, such as DLF The Aralias, have increased in price from Rs 12.5 crore in 2021 to Rs 27 crore as of JANUARY 2024. Prices in DLF The Magnilias have risen from Rs 16 crore in 2021 to Rs 35.5 crore in 2024. Similarly, prices for apartments in DLF The Camellias have skyrocketed from Rs 33-35 crore in 2021 to Rs 75 crore in 2024. 

They claim that the story has been similar to other ultra-luxury properties in capital appreciation, making luxury real estate an attractive investment option for HNIs. TARC Tripundra, located opposite Pushpanjali Farms in New Delhi, has seen a 70% increase in the last 18 months, with current rates reaching 26,000 per square foot. 

Siddharth S Sharma, GM of Sales at Elitepro Infra, a real estate consultancy, stated that prices in the luxury segment have skyrocketed in Gurgaon’s prime locations such as Golf Course Road, Golf Course Extension, and Southern Peripheral Road. DLF sold out a luxury housing project in 72 hours, demonstrating the high demand for such residencies. 

“Properties in other micro markets, such as M3M’s Trump Towers, have seen capital appreciation from an initial 10,500 PSF at launch to 30,500 PSF today. Another example is DLF’s The Crest, whose value has risen from 13,000 PSF to between 38,000 and 40,000 PSF today. These figures demonstrate that investing in luxury real estate is still viable,” he said. 

Why do HNIs and NRIs invest in luxury real estate? 

Sankey Prasad, Chairman, MD, India, and CMD Middle East Project Leaders at Collier’s, stated that while the US dollar’s strength against the Indian rupee attracts NRIs, capital appreciation drives HNIs to invest in the luxury residential real estate sector. 

“Approximately  44 percent of high-net-worth individuals are interested in investing in luxury real estate for capital appreciation. This is significant because it encourages them to accumulate assets for future generations and use their luxury properties to generate revenue. Wealthy homebuyers are unconcerned about the 40% increase in luxury  home prices over the last two ears because they believe the Reserve Bank of India (RBI) will lower interest rates in 2024, making it more affordable for them to purchase such properties.” 

Who is investing in Indian real estate, and where? Check this report.

According to a Cushman & Wakefield report, the Indian real estate sector received USD 1.1 billion in investments in Q1 2024, with the residential real estate sector outperforming other asset classes and attracting investments of nearly $693 million. 

In recent quarters, the residential sector has been on an upward trend, driven by strong housing demand and resurgent supply. It has also attracted a great deal of capital from investors in Q1 2024, who are banking on the segment’s bull run, which accounted for more than 63% of total realty investments in the quarter. 

In absolute terms, the Q1 2024 investment inflow into the residential market is twice the quarterly average over the previous eight quarters. 

Furthermore, nearly 48% of investment in the residential sector was concentrated in the early stages of development across the top eight cities, indicating increased investor interest, a steady rise in residential capital values across cities, and a growing share of high-end luxury launches.  

Who is investing the most? 

According to the report, domestic investors maintained a strong investment momentum, accounting for 57% of total quarterly investments. Foreign investors and collaborative (or mixed) deals accounted for 43% of the inflows in Q1 2024. This is consistent with the trend observed in 2023 when domestic investors participated in Indian real estate. 

In terms of city-specific split, Bangalore led the way, accounting for 25.6% of total investments in Q1 2024, with more than half of the share going to the city’s office sector. Pune ranked second in terms of investment volume, accounting for 14%. 

Investment in equity

Equity investments in the real estate sector stood at 58% in Q1 2024, while debt investments increased to double the quarterly average level of the previous eight quarters, with almost all of that going to the residential sector. 

The office sector remained the preferred sector among equity investors, accounting for 43%, closely followed by residential investments (38%). Despite a slowdown from the previous quarter, early-stage deals remained consistent with the average in-flows over the last eight quarters. 

In addition, corporate transaction volumes increased by 65% year on year, reaching INR 12.78 billion (USD 0.15 million). Mumbai continued to drive transaction value, accounting for 57% of the total, followed by Pune at 33%. 

According to Somy Thomas, MD of valuation & advisory and capital markets at Cushman & Wakefield, “Q1 2024 saw another strong quarter of capital inflow into the Indian real estate sector, with residential dominating due to renewed customer and investor confidence. This strong performance has piqued investors’ interest, prompting them to invest in a market that is expected to grow even more. 

“Domestic investors increased their investment in the quarter, providing additional protection against potential global headwinds while strengthening India’s domestic market and investor interests. As we start the new fiscal year, we expect this momentum to continue, with potentially more diverse investments in the future. 

Global investors are shifting to alternative assets; institutional investments in Indian real estate are up 16% since 2021

The COVID019 pandemic, as well as interest rate fluctuations, have had a significant impact on the Asia-Pacific real estate sector. While COVID-19 is no longer considered a global health emergency, interest rate changes continue to play a role in the market’s direction. 

Global volatility has made the real estate market unpredictable. Owners and investors now value consistent yields over capital gains. Furthermore, investors and occupiers are increasingly aware of their ESG credentials. Quantifying the positive impact of green practices on property values requires collaboration among industry stakeholders. In an uncertain world, regular valuation reviews can help manage portfolio risk. 

India’s real estate investments have increased by 16% since 2021, thanks in part to central banks enforcing stricter monetary policies, slowing commercial real estate (CRE) growth in developed countries, and global investors shifting their focus to alternative investments. 

Bengaluru, India’s largest commercial real estate (CRE) market, has seen an increase in foreign and domestic investment. However, no significant cap rate compression has been detected. This lack of compression can be attributed to macroeconomic factors such as inflation, credit conditions, and interest rate policies, which affect asset valuations. 

Bengaluru’s commercial real estate (CRE) sector is expected to expand rapidly in the coming year, with rents rising modestly. These positive trends are influenced by macroeconomic factors, which keep cap rates relatively stable. While retail consumption growth is expected to slow, this will result in more consistent net operating income (NOI) growth and potentially fewer transactions in the retail asset market. Meanwhile, industrial cap rates may be slightly lower due to increased capital exposure and demand. 

Looking at the Mumbai region, there was a noticeable increase in consumption demand following the pandemic. This growth was most visible in average trade densities, which resulted in higher in-place rents for organized retail assets. These retail properties used a model that combined minimum rent with revenue sharing, resulting in higher Net Operating incomes (NOIs) and thus higher valuations.  

This hyper-growth was primarily limited to the luxury and premium market segments, with little benefit to the overall retail market, including high streets. Yields stabilized, maintenance capital expenditures increased, and gross rents remained flat, causing retail capitalization rates to remain range-bound in recent years. Cap rates for retail and commercial real estate (CRE) assets are expected to remain stable, as capital allocations and trades show no significant improvement from an institutional standpoint. 

Continued growth in private consumption, business demand, and supportive policy measures led to significant investments in industrial assets, particularly warehousing and data centers. As a result, asset valuations improved as cap rates fell 150-200 basis points below 2020 levels. Industrial cap rates are expected to decline slightly due to increased capital exposure, strong demand, and supportive incentive programs to encourage investment in this sector.   

Godrej camps cannot compete for six years, except in the real estate industry

Mumbai: Following a split in the 27-year-old locks-to-land development group, the Godrej family has agreed not to compete for six years, except in real estate. After the non-compete period, they can enter each other’s domains, but not under the Godrej name. 

As part of the family settlement agreement, Adi Godrej and his younger brother Nadir will be granted exclusive rights to use the Godrej brand in FMCG (cosmetics, cleaning supplies, toiletries, foods, beverages), financial services, pharmaceuticals, diagnostics, and chemicals businesses. 

Their cousin Jamshyd and his sister Smita Crishna will have exclusive rights to use the Godrej brand in the defense, consumer durables, medical devices, construction materials, interior design, electric mobility, software services, and security product industries. 

However, both groups may use the brand name in the real estate development and marketing industries. Jamshyd and Smita have real estate interests through the unlisted Godrej & Boyce, while Adi and Nadir own the listed Godrej Properties. 

None of the Godrej group companies will have to pay royalties on the brand. The non-compete clause went into effect on April 30. The agreement states that after six years, “a family group can enter  into the exclusive business of the other family group, without the use of the Godrej brand including in their corporate names.” 

Both groups, however, can venture into areas where neither has a presence, leveraging the Godrej brand with group-level differentiators, as these have been designated as shared business spaces.  

For example, medical services, hospitals, hospitality and education. 

Non-compete covenants are common in family settlement agreements. 

In March, the TVS family agreed to avoid competition for a set period. 

From promoters to public shareholders. 

Once the ownership realignment in the Godrej group’s listed entities is completed siblings Jamshyd and Smita Crishna will become public shareholders. 

They are currently part of the promoter group for listed Godrej entities. According to Sebi regulations, if a promoter wishes to be classified as a public shareholder, they cannot own more than 15% of a listed entity. According to the family settlement arrangement, Janshyd and Smita, classified as promoters once the realignment is completed, will apply for it. 

In Jan-March 2024, luxury homes priced above Rs 4 crore saw a 10% year-year increase across the top seven cities

From January to March 2024, sales of luxury housing units priced at Rs 4 crore or higher increased by 10% yearly in even major cities. According to CBRE South Asia’s India Market Monitor Q1 2024 report, the luxury segment accounted for approximately 5% of total residential unit sales. 

According to the data, total sales in this price category were 4,140 units across seven major cities in January-March this year,  up from 3,780 units the previous year.

Between January and March 2024, there was a nearly 64% increase in new luxury segment unit launches yearly.  

Mumbai saw a 15% year-on-year increase in luxury housing unit sales worth Rs 4 crore or more in the most recent quarter. Sales in Delhi-NCR fell from 1,880 to 1,150 units during the review period. 

Sales in Bengaluru fell from 70 to 10 units. Kolkata’s population fell from 110 to 70 units. Sales in Pune increased dramatically, from 150 to 700 units. In Hyderabad, sales increased from 380 to 800 units.  

45% of the luxury housing stock was injected in the last five years.

The resurgence of India’s luxury residential real estate has fueled rapid growth, accounting for approximately 45% of total luxury stock injections in the last five years. Since 2019, the segment has grown at a CAGR of more than 9% in gateway cities. 

In addition, Mumbai dominates the luxury segment, accounting for more than 40% of the country’s total luxury inventory from January to March 2024. The city is a well-known and highly desirable market, attracting many HNIs and UHNIs, including top executives and Bollywood celebrities. 

Mumbai’s premium locations, including Altamont Road, Nepean Sea Road, Worli, Prabhadevi, Juhu, and Bandra (West), have high capital values, with average ticket sizes ranging from Rs 20 to over 60 crores. Occasionally, apartments priced over Rs 100 crore are also recorded. 

Delhi-NCR follows closely, accounting for more than 25% of the country’s luxury inventory between January and March 2024. 

The Delhi-NCR luxury market 

Luxury properties in Delhi, similar to Mumbai, are concentrated in the southern part of the city, with areas such as Amrita Shergill Marg, Golf Links, and Prithviraj Road commanding average ticket sizes ranging from Rs 40 to Rs 60 crore. Gurgaon has recently emerged as the region’s leading luxury market. 

The demand for gated communities increased during the COVID-19 pandemic, enhancing Gurgaon’s reputation as a luxury destination. Average ticket sizes at DLF Phase ½, Golf Course, and Golf Course Extension range from Rs 10 to 20 crore. 

Furthermore, Hyderabad, experiencing remarkable growth thanks to a pro-business environment, ranks third with nearly 10% of the country’s luxury inventory. The city has seen an influx of luxury apartments and a surge in demand for this segment. In Jubilee Hills, Banjara Hills, Hitech City, Raidurg, and Neopolis, average ticket sizes range from Rs 20 to over Rs 40 crore. 

Homes priced between Rs 45 lakh and Rs 1 crore accounted for 47% of total sales. 

Overall residential sales across categories reached nearly 85,000 units from January to March 2024, representing an 8% year-over-year increase. Demand remained strong, prompting development to build 80,000 new housing units in the first quarter of 2024. From January to March 2024, mid-end projects (priced between Rs 45 lakh to Rs 1 crore) accounted for 47% of total sales, followed by high-end (Rs 1 to Rs 2 crore) and affordable (up to Rs 45 lakh). 

Pune, Mumbai, and Bengaluru accounted for approximately 65% of total sales. However, from January to March 2024, unit launches in Mumbai, Pune, and Hyderabad account for nearly 69% of the total. 

“The Indian luxury real estate sector has strong fundamentals for sustained growth, supported by consistent increases in household income and consumer spending power. These factors are expected to create a segment of discerning buyers who value quality, financial prudence, and a desire for an elevated living experience,” said Anshuman Magazine, CBRE’s chairman and CEO for India, South-East Asia, the Middle East, and Africa. 

Get Returns From Real Estate Without Buying Property: Understanding REIT Investment In India

REITs must distribute a significant portion of their earnings as dividends to shareholders, making them appealing to income-seeking investors.  

A Real Estate Investment Trust (REIT) in India is a business that owns, operates, or finances income-producing real estate in one or more property sectors, REITs enable investors to pool their funds and invest in a diverse portfolio of real estate assets. These assets may include office buildings, shopping malls, residential properties, and hotels. 

In India, the Securities and Exchange Board of India (SEBI) introduced  REITs in 2014 to allow investors to invest in the Indian real estate market without directly owning the properties. 

REITs must distribute a significant portion of their earnings as dividends to shareholders, making them appealing to income-seeking investors. 

REITs are organized into three tiers: sponsors, trustees, and managers.

  • The sponsor initiates the formation of the REIT by transferring their owned properties or real estate to the trust. Typically, real estate developers seeking capital act as REIT sponsors. 
  • The sponsor appoints the trustee who holds the assets for unitholders.
  • The trustee appoints a manager to oversee REIT assets and make investment decisions. Typically, the manager is a privately held company closely related to the sponsor. 

How do real estate investment trusts work in India?

Consider a REIT to be a real estate-specific mutual fund. Here’s a sample breakdown: 

  • Investors like you can contribute funds to the REIT.
  • The REIT invests this money in income-producing real estate.
  • The income from rents and other sources is distributed to investors as dividends, typically around 90% of their earnings as mandated by SEBI. 

Can you invest in India’s REITs? 

Yes, REITs are listed on the stock exchange, allowing you to buy and sell units like stock. This makes it an attractive option for individuals looking to invest in real estate without the hassle of directly purchasing and managing properties. To invest in a REIT in India, you must typically purchase REIT units through a stockbroker, just as you would buy stock in a company. REIT units trade on stock exchanges, providing investors with liquidity. However, it is critical to conduct extensive research and understand the risks of investing in REITs, such as market fluctuations, interest rate changes, and property market conditions. 

REITs in India 

According to Sebi’s official website, India currently has five registered REITs. These include Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and One Real Estate Investment Trust. 

Here are some additional points to consider:

  • REITs are a relatively new instrument in India, with the first launched in 2014. 
  • There are various REITs, each with a specific property (office, retail, etc.).
  • Additionally, consider consulting with a financial advisor to determine if REITs align with your investment goals and risk tolerance. 

Mumbai Real Estate Market Records: Property registrations are up 9% this month.

Mumbai real estate update: Real estate buyers in April 2024 were millennials, or people aged 28 to 43, accounting for 37% of the total. 

Property registrations in Mumbai’s real estate market increased by approximately 9% to 14, 149 in April 2024, up from 11,514 the previous year. 

Stamp duty collections from property registrations increased by 16 percent to Rs 1,043 core in April 2024 from Rs 900 crore the previous year, according to Maharashtra government data. 

Every month,  there were 14,149 property registrations in March 2024, with stamp duty collections totaling Rs 1,123 crore. 

According to Knight Frank India, which analyzed the data, residential units accounted for 80% of the properties registered in the Mumbai real estate market as of April 2024. According to data, properties measuring up to 500 square feet were the most purchased size in April 2024, with 45 percent of registrations in this category. 

GenZ and millennials account for the majority of homebuyers. 

According to Knight Frank India, property buyers in April 2024 were millennials (aged 28 to 43), accounting for 37% of the total. Individuals from Generation X, aged 44 to 59, followed closely behind, accounting for 36% of all buyers. 

Furthermore, 6% of homebuyers were Generation Z under age 28, while 18% were between ages  60 and 78. 

“Bountiful market conditions have significantly boosted the state treasury, resulting in its highest-ever revenue collection in April. Property registrations in April increased by 9% over the previous year, highlighting the market’s appeal to prospective buyers,” said  Shishir Baijal, chairman and managing director of Knight Frank India. 

Highest stamp duty collections. 

Over the past 12 years, the Mumbai real estate market has had the second-highest property registrations and the highest stamp duty collections in April. 

Knight Frank reports that rising incomes and positive attitudes towards homeownership contribute to this trend. 

Central and western suburbs accounted for more than 73% of total property registrations, as these areas are hotbeds for new launches with a range of modern amenities and good connectivity.

India’s Commercial Real Estate Is On Track For Successful Growth This Year

India’s real estate shows growth potential for investment opportunities after the pandemic. 

Amid global economic challenges, India’s real estate sector is experiencing a significant resurgence, attracting international investors as the economy recovers. Despite challenges in the US real estate market, India’s real estate landscape thrived in 2023, with significant activity across segments. Institutional investment in Indian real estate totaled USD 5.8 billion, with commercial properties accounting for more than half of that amount. This increase in investment following the pandemic reflects growing market confidence, as evidenced by companies encouraging employees to return to physical workspaces and expanding global operations in India. 

The success and momentum of 2023, marked by high demand, absorption rates, and emerging trends such as the demand for flexible workspaces and sustainability initiatives, paved the way for the real estate industry’s future. Favorable economic conditions and government policies also contribute to strong market sentiment, indicating the possibility of continued growth and investment opportunities in the commercial real estate sector. 

Investment Opportunities 

In the case of commercial real estate in India, investors have several options. Office spaces in major markets, data centers, warehouses, and other commercial properties are in high demand. The rise of technology-driven industries has increased the demand for office space and data centers, making them appealing investment targets. India’s commercial real estate sector is a tempting investment opportunity due to market size, government support, and potential return on investment. 

Forecast for commercial real estate in 2024: 

Commercial real estate is expected to perform well in 2024, thanks to several factors that indicate potential returns for investors. Institutional and foreign direct investments (FDI) boost market confidence and growth. Furthermore, fractional ownership emerges as a compelling investment opportunity, allowing investors to diversify their portfolios while potentially earning high returns. This alternative investment method allows individuals to pool their resources and invest in high-value commercial properties, gaining access to previously unavailable assets. With the potential for high yields and the ability to spread risk across multiple properties, fractional ownership contributes to commercial real estate’s positive outlook in 2024, offering investors appealing opportunities for growth and profitability. 

Rise in NRI Interest:

 The growing interest of NRIs, particularly those from the Middle East, is reshaping India’s commercial real estate market. These NRIs recognize the potential for profitable investments in Indian real estate, which helps to drive the sector’s growth and dynamism. As a result of their participation, the market is stronger and more resilient, as they are also helping to diversify the investor base. As NRIs continue to express interest in Indian commercial real estate, the sector’s outlook for this year and beyond improves, emphasizing its appeal to domestic and international investors. 

Should you consider investing? 

High net-worth individuals (HNIs) can use numerous investment strategies tailored to their financial objectives and risk tolerance. Diversification across asset classes helps to mitigate risk and ensure long-term returns. Asset allocation is critical, with HNIs determining the proportion of their portfolio invested in various assets based on risk tolerance and investment horizon. Dynamic rebalancing entails proactively reviewing and adjusting the portfolio in response to market movements and financial objectives, thereby improving risk management and optimizing returns. Seeking professional advice from wealth advisors and financial experts can help HNIs align their investment decisions with their goals and minimize risks while increasing returns. 

Conclusion

To summarize, India’s commercial real estate sector is on track for a bull market in 2024, building on the momentum gained the previous year. However, investors should conduct due diligence and seek professional advice to make informed decisions consistent with their financial goals. Investors can capitalize on the potential of India’s commercial real estate sector in the coming year by carefully evaluating market dynamics and understanding individual risk tolerance. 

With knowledge and strategic planning, investors can maximize the potential of India’s commercial real estate market in the coming year. 

A study predicts that residential real estate prices in India will increase by 4-6% this year

According to a report released on Tuesday, home prices in India are expected to rise by 4-6% this year, with rising per capita income driving demand. 

CRISIL Ratings believes that moderate inflation, stable commodity prices, lower fiscal deficit, and a drop in global policy rates will pave the way for interest rate cuts to boost housing demand. 

“Range-bound growth in capital values and a likely moderation in interest rates in the second half of this fiscal year will ensure affordability improves after a decline in the previous two fiscal years due to a sharp increase in interest rates and capital values,” it said. 

In terms of sales, the market share of India’s 11 listed real estate developers is expected to double to 30-32 percent this year, up from 15% in the pre-pandemic fiscal year 2018-19. 

DLF Limited, Brigade Enterprise, Godrej Properties, Kolte-Patil Developers, Microtech Developers, Mahindra Lifespace Developers, Prestige Estates Projects, Puravankara, Sobha, Shriram Properties, and Sunteck Realty have a track record of delivering on time and with quality. 

According to CRISIL Ratings, “continuing premiumization,” affordability, and rising per capita income should help large, listed residential developers achieve a 10-12 percent increase in sales volume this year, up from an estimated 14% growth last year. 

“Large developers have already strengthened their credit profiles by deleveraging balance sheets through strong sales and collections over the last two years and focusing more on asset-light models, such as joint ventures and joint development,” said Pallavi Singh, associate director at CRISIL Ratings. 

Real state supply has shifted towards mid-to-high-end and luxury homes, while launches in the affordable segment are expected to remain muted. According to the report, the share of launches in the mid-to-premium and luxury segments is expected to be 55-60% in 2023-24, up from 30-35% before the pandemic. 

What’s in your portfolio for fiscal year 2025? Here are five real estate investment options.

Real estate in India remains a top investment choice in 2023, owing to economic growth and Indian households’ high asset allocation. The article discusses various investment options, including luxury rentals, second homes, ETFs, REITs, and fractional ownership. 

In 2023, the real estate sector demonstrated resilience to various changes in trends. The global economic recovery boosted demand for residential properties in India, thanks to low-interest rates and a preference for smart living and luxurious ownership. With India’s status as one of the world’s fastest-growing economies, fueled by private spending and capital accumulation, the real estate sector remains a popular investment destination. 

Typically, Indian households allocate 77% of their assets to real estate because it provides opportunities for high growth, strong returns, and stable income streams. Furthermore, SEBI’s new directives on fractional ownership and small REITs position the sector for significant growth in 2024. 

However, newcomers may navigate the real estate market and select the best investment opportunities based on current government regulations and interest rates. 

This article examines various real estate investment options, investor profiles, and risk tolerances.

  1. Rental Properties 

The traditional approach entails purchasing residential properties to generate rental income. While simple, this method necessitates significant initial investment and ongoing maintenance costs. Before investing, confirm that the property is free of legal issues. Leasing, outright purchase, and loan financing are all viable acquisition options. 

Notably, there is an increasing trend of investing in luxury rental properties, particularly in major Indian cities like Mumbai, Delhi, and Bangalore. Industry data show that luxury residential real estate in these cities consistently outperforms other traditional assets, with annual price growth ranging from 4% to 7%. 

  1. Vacation homes and house flipping

Affluent buyers are diversifying their property portfolios beyond primary residences, including lucrative second homes. In India, demand for secondary residences has skyrocketed following the pandemic, reaching a staggering $1.394 billion by the end of 2021– an impressive 88.63% increase from pre-COVID levels. 

Combined with strategies such as house flipping, in which properties are renovated for increased resale value, Indians are capitalizing on their second homes by converting them into vacation homes, generating significant tourist interest. 

  1. REIT and ETF 

ETFs and mutual funds offer indirect exposure to real estate by investing in related assets. ETFs focused on real estate stocks, such as publicly-traded builders, or REITs (Real Estate Investment Trusts) are among the options. 

Mutual funds and REITs raise money from investors to buy income-generating assets. These assets generate rental income, which is then paid to investors as dividends. 

REITs offer many advantages, including immediate liquidity, affordability, regulatory protection, and tax breaks. REITs provide a consistent income stream that is often tax-exempt, with dividends accounting for 90% of profits. 

Commercial real estate ownership is in fractions. 

This novel approach entails multiple investors pooling their funds to buy commercial real estate together. This reduces individual investment costs and risk exposure while generating shared rental income. Industry experts predict significant growth in this segment, with India’s fractional ownership properties expected to reach $8.9 billion by 2025, growing at a 10.5% annual rate. 

Commercial properties typically have higher rental yields than residential options. A 25 lakh investment in fractional ownership could generate Rs 2 lakh in annual rental income (8-12 percent rental yield) and at least Rs 1.25 lakh in capital appreciation, resulting in wealth creation and improved monthly cash flow. 

Choosing the correct option 

Several factors influence the best investment option, including available capital, liquidity preferences, preferred cash flow frequency, and risk tolerance. Owning, leasing, and flipping properties typically necessitates a significant investment of money and real estate experience. 

Although ETFs offer high liquidity and low costs, they don’t pay dividends and must be sold to realize returns. 

Despite still being in their infancy, REITs and fractional ownership are giving retail investors access to the lucrative commercial real estate (CRE) sector. Even though CRE offers good returns, it has traditionally required a high level of capital investment. 

Fractional ownership is a lucrative opportunity, with potential annual rental yields ranging from 8 to 12 percent and internal rates of return (IRR) ranging from 13 to 17 percent. Prime properties and retail complexes in business hubs such as Gurugram, which have recently emerged as one of the most promising real estate markets, provide consistent rental income and capital growth opportunities. 

This suggests that fractional ownership of commercial real estate may produce higher and more consistent returns in the long run than other options, making it an important consideration for those looking to diversify their investment portfolios and build long-term wealth. 

Indian Real Estate Market: Over 101 Land Deals Closed in FY24

The Indian real estate market is experiencing a surge in activity, driven by an upsurge in land transactions throughout the country. This trend is due to high residential demand, particularly for luxury living spaces.

Land deals are on the rise. 

During fiscal year 2023-24, developers and other entities closed numerous real estate transactions. This involved 101 separate transactions totaling nearly 2,989 acres of land. This is a significant increase from the previous year, with land transactions up 58% since 2022.  

The growth is even more pronounced in the first quarter of 2024. During this period alone, builders and entities closed at least 29 land transactions totaling 721 acres, indicating a strong appetite for land in the real estate sector. 

Tier 2 and 3 cities are gaining traction. 

Interestingly, land deals are not limited to major metropolitan areas. According to Anarock’s data, while over 83 deals for approximately 1,135 acres were closed in the top seven cities, a significant number of deals (18 deals for more than 1,853 acres) were completed in various tier 2 and 3 cities.  This emphasizes the emerging markets’ growing potential, which is fueled by factors such as improved infrastructure and expanded economic opportunities. 

Luxury Living is Leading the Charge. 

While the global residential sector is experiencing strong demand, one notable trend is the rise in luxury living spaces. This is reflected in the types of land transactions that are closed. Developers are now more focused on acquiring land for projects aimed at this high-end market segment.  

Homebuyers’ changing preferences, such as a desire for spacious and well-equipped living spaces, could be influenced by the COVID-19 pandemic and the rise of remote work arrangements. 

Market Outlook: A Balancing Act. 

The increase in land transactions demonstrates the health of the Indian real estate market, particularly for luxury housing. However, experts warn that focusing solely on this segment risks ignoring the ongoing demand for affordable housing options, particularly among first-time homebuyers in smaller cities. 

Moving forward, the Indian real estate sector must strike a balance between catering to the luxury market and ensuring the availability of affordable housing alternatives. Strategic government policies and incentives can help encourage developers to participate in inclusive development projects, resulting in a more sustainable and equitable growth trajectory for the real estate sector. 

NAREDCO Praises REITs for Changing the Game in Indian Real Estate Investing Accessibility

The National Real Estate Development Council (NAREDCO) and Kedia Corporate Advisors Pvt. Ltd. co-presented a February webinar on Small and Medium Real Estate Investment Trusts (SM REITs). Since the Securities and Exchange Board of India (SEBI) has recently made significant regulatory changes, it is important to grasp the details of SM REITs in light of the importance of the webinar. During the session, CA Amit Kumar Kedia, Director of Kedia Corporate Advisors Pvt. Ltd., explored the advantages and regulatory framework of SM REITs and shared his insights. 

“We discussed in the webinar how important it is for regulatory frameworks to support entrepreneurship and innovation in the real estate industry. By putting a premium on compliance and openness, we strengthen investor confidence and enable SM REITs to reach their full potential as reliable investment options. By introducing SM REITs, the stringent disclosure and compliance requirements aim to align the REIT market with the Indian equity market, fortifying the regulatory framework and projecting India as an appealing destination for local and foreign investors, augmenting our stature as a worldwide investment hub. 

The goal of the launch of SM REITs, based on the “schematization movement” in financial products, is to democratize ownership by making ownership accessible and affordable for a broad spectrum of investors. The objective of India to become a developed nation by 2047 is supported by initiatives such as these. Let us embrace this historic policy change as we all work together to embrace this major policy change as we all work together to build an empowered and developed India,” he stressed. 

Many subjects were covered in the webinar, such as the idea of SM REITs, the regulatory environment, market analysis chances to draw in investors, risk management techniques, potential tax ramifications, and future outlooks. To answer questions from the participants, a lively Q&A session was held. 

“The SM REIT webinar was a game-changer for the real estate industry in India. Delving deeply into creative methods and tackling challenges, served as an impetus to progress. Through this webinar, we aimed to empower the workforce, foster sustained growth, and drive development within the sector, focusing on alternative financing through Real Estate Investment Trusts (REITs), “stated G Hari Babu, National President of NAREDCO. 

“As the world’s fastest-growing major economy, India is expected to see faster real estate market growth in 2024, with all real estate indicators at record highs. An encouraging step to facilitating real estate investment in India is the introduction of small and medium-sized REITs. By attracting more retail and institutional investors and lowering entry barriers, these Real Estate Investment Trusts (REITs) hope to boost market confidence by offering opportunities for diversification. This new regulatory framework is expected to boost investments, liquidity, and the influx of both foreign and domestic capital into the real estate industry, according to NAREDCO Chairman Dr. Niranjan Hiranandani.

“The real estate industry has been going through significant transformations, with increased organization and the entry of new corporate players,” stated NAREDCO Vice Chairman Rajan Bandelkar. The industry benefits from this evolution in several ways, including increased stakeholder faith and trust, which were lacking previously. Moreover, there is now a stronger relationship between the real estate market and the share market, with rises in the former typically having a favorable effect on the latter.  

The March 8, 2024 approval of SM REITs is one noteworthy development. Real estate investment trusts (REITs) offer a fresh approach to real estate investing, facilitating quicker access to funds benefiting individual investors. Even those with smaller savings can invest in real estate thanks to REITs, as they allow for fractional ownership and market participation. The advantages are exclusively available to larger investors and are now available to regular people thanks to the democratization of investment opportunities.” 

Beyond Site Visit: Revealing Revolutionary Real Estate Trends

Emerging consumer preferences, changing economic realities, and technological advancements are driving a significant evolution of the real estate landscape. The real estate market is set to undergo revolutionary changes by 2024, which could completely alter how we interact with real estate— from the purchasing and selling procedures to our daily lives and occupations.  

In the real estate industry, 2024 will see the emergence of sustainable living and smart home technologies as major trends. Modern Internet of Things (IoT) technology makes it simple for homeowners to integrate smart devices, enhancing energy efficiency, convenience, and security. Smart technologies improve home comfort and increase a property’s market appeal. Examples of these technologies include automated lighting systems and smart thermostats.

As more and more people demand environmentally friendly features like solar panels, energy-efficient appliances, and green building materials, sustainability is also experiencing a major renaissance. Buyers are expected to place a higher priority on living sustainably by 2024, which will have an impact on residential building design and construction.  

How prospective buyers view properties is revolutionized by virtual reality (VR) and augmented reality (AR) technologies. These immersive technologies will allow buyers to virtually tour properties from the comfort of their own homes by 2024.

Professionals in real estate are also using AR to improve the visualization of properties. Using AR, purchasers can see their dream home by superimposing virtual furniture and decor on actual spaces using AR glasses or smartphones. 

The global trend toward remote work has had an important effect on real estate trends, and this influence will not decrease in 2024. As more people and businesses accept flexible work schedules, buyers are reconsidering their requirements and searching for homes that fit new work-from-home lifestyles. 

As people strive to create practical and inspiring workspaces, dedicated office spaces, ergonomic designs, and high-speed internet connectivity will become necessary home features. Suburban and rural areas are becoming ever more popular among people looking for larger homes, outdoor spaces, and a calmer environment, which is challenging the allure of urban living. 

Real estate transactions are beginning to use blockchain technology, which promises to increase efficiency, security, and transparency. By 2024, blockchain applications for property transactions, title management, and general real estate process optimization may grow significantly. 

The decentralized structure of blockchain lowers the possibility of fraud and simplifies the whole real estate process. With the help of blockchain technology, smart contracts can automate several transitional processes, such as payments, inspections, and legal paperwork, for all parties concerned. This speeds up and improves the reliability of the process. 

The conventional homeownership model is changing as younger generations value experiences and flexibility more than long-term obligations. Co-living arrangements, in which single people or families share communal living spaces to promote a sense of community and lessen the cost of housing, are predicted to increase in popularity by 2024. 

A growing number of flexible housing options are becoming available to meet the needs of digital nomads and others who value mobility and the freedom to try out different living arrangements without the commitments of long-term ownership. Examples of these options include furnished apartments and short-term rentals. 

Significant changes to the real estate market are expected in 2024 and beyond due to advancements in technology, shifting work environments, and shifting consumer preferences. The real estate market is becoming more responsive, human-centered, and dynamic for buyers and sellers as the industry adjusts to these revolutionary changes. 

Mumbai-The way micro markets are defining real estate

These smaller-scale micro markets cater to particular demographics and present distinctive prospects. They meet the community’s demands of work, connectivity, and way of life. 

Mumbai: The real estate landscape in Mumbai is changing due to micro markets. Developers are finding smaller, niche markets within the metropolis in this space-constrained city. These smaller-scale micro markets cater to particular demographics and present distinctive prospects. These smaller-scale micro markets offer unique opportunities and target specific demographics. They meet the community’s requirements for work, connectivity, and way of life.  

“In the  Mumbai Metropolitan Region (MMR), neighborhoods like Dombivali, Thane Ghodbunder Road, Goregaon, Kandivali, Mulund, Nahur, Kanjurmarg, Vikhroli, and  Chembur are expanding and developing as micro markets. In these markets, improving connectivity and infrastructure are critical components People who want to investigate the walk-to-work concept are finding a lot of commercial and residential buildings in these areas, according to Dominic Romell, director of Romell Group and president of CREDAI MCHI. 

“As more people have options for commuting to work outside local trains, the growth is also primarily driven by the increasing metro connectivity.” According to Romell, these micro-markets offer 2 BHK apartments with a carpeted area ranging from 600-645 square feet and one parking space. They would rather take a comfortable transit option that drives down and exacerbates the traffic jam.”

These apartments range in price from around Rs 1.75 crore and less, though prices will depend on the location and amenities. In response to the issue of whether we can refer to these as “Affordable dwellings,” Romell said that although the size of these apartments is reasonable, the price is not because it is directly tied to the cost of land that the developer bought. 

CEO of Runwali Bliss, Lucy Roychoudhury, stated that Mumbai’s architecture is changing due to the construction of high rises and skyscrapers in areas that were not as popular ten years ago as they are now for home buyers. “Localities like Kanjurmarg, Vikhroli, Dombivli, and Kandivali amongst others have gained momentum in the past few years and are locations much sought-after by home buyers today,” Roychoudhury said. The luxury of gated  communities with expansive green open spaces, first-rate amenities, and improved connectivity is available at these locations.” 

“The younger generation of homebuyers is looking for larger living spaces without sacrificing access to convenient places for their way of life or employment. Recent data indicates a significant demand for homes for ownership and rental purposes, due to the ease of commuting, the availability of projects, and good social infrastructure. These neighborhoods encourage homebuyers to upgrade their lifestyles because they offer the perfect balance of luxury and convenience” Roychoudhury said.

Micromarkets serve a variety of purposes. Young professionals value vibrant nightlife and cultural scenes, while families value proximity to schools, supermarkets, and hospitals. Mumbai’s real estate market changes as micro markets do. Beyond the usual hotspots, homebuyers scour the city for fresh opportunities.