The global sub-prime crisis will this year have the greatest impact on “mature” property markets in the Asia-Pacific region, leading to an overall decline in investments, international property consultant Jones Lang LaSalle predicted Tuesday. Direct commercial real estate investment in Asia Pacific reached a new high of 121 billion dollars in 2007, up 27 per cent on 2006, but prospects for 2008 are less rosy, said Jones Lang LaSalle.
Fallout from the sub-prime crisis, which started in the US, has been most evident during the first quarter of 2008 in more mature markets in the Asia-Pacific, such as Tokyo, Singapore, Sydney and Melbourne, where office capital values appear to have peaked, while a slowing in price growth is also likely for Hong Kong.
“As these markets account for the lion’s share of investment activity, we expect a decline in overall transaction volumes in Asia Pacific this year following the record result in 2007,” said Jane Murray, Head of Research – Asia Pacific at Jones Lang LaSalle.
But the sub-prime crisis will have a varied impact on the region’s property sector this year, said the real estate consultant.
In the office sector, a sharp slowing in rental growth is under way in Tokyo, while Singapore is seeing the beginnings of a softening in pre-let rates, and Shanghai has begun to brace itself for slowing demand in Pudong amongst its vital financial services tenants, said Jones Lang LaSalle.
But on the other end of the spectrum, the Manila office market has seen strong growth in business process outsourcing due to the increased emphasis by multinational corporations (MNCs) on lowering operational costs, it noted.
Another trend noted was that of MNCs moving their offices from central business locations to “cheaper peripheral sites.”
Singapore, for example, is seeing strong enquiry levels for built-to-suit options in business park locations, driving up rental levels in these districts.

Infrastructure firm Gayatri Projects is all set to acquire five smaller infrastructure firms in the country, paving the way for its inorganic expansion. The company plans to fund these acquisitions through divestment of 49% equity in favour of Australian multi billion-dollar wealth management firm AMP.

The latter will bring to the table Rs 200 crore through foreign direct investment (FDI) for the planned expansion of Gayatri Infra Ventures (GIVL), a subsidiary of Hyderabad-based developer Gayatri Projects.

The company plans three acquisitions in the north, giving it access to projects on the north-south corridor, and two acquisitions in the south, including that of the Cyberabad Expressway eight-laning project. Western UP Tollways (WUPTL), Gayatri Jhansi Roadways (GJRL), Gayatri Lalitpur Roadways (GLRL), Hyderabad Expressways (HEL) and Cyberabad Expressways (CEL) special purpose vehicle (SPV) are the other acquisition targets.

WUPTL is a joint venture SPV with Satyam-promoted infrastructure firm Mytas and Nagarjuna Construction Company. The plan is to acquire 40% WUPTL stake while 30% each remains with other two partners for the strengthening, improvement and maintenance of NH 58 in Uttar Pradesh. Gayatri also plans to buy out 49% stake of GJRL and GLRL in their joint ventures with IDFC.

Realty firm Omaxe on 26th may reported consolidate net profit of around four hundred ninety five crore rupees for the year ended 31 Mar 08, a more than two-fold jump over the preceding year.
The company had recorded a consolidated net profit of around two hundred forty four crore rupees in the earlier fiscal, Omaxe said in a statement.
The consolidated revenue rose by 60.26 % at Rs 2,307.75 crore in 2007-08 following solid demand in the property market, it said.
The company also pronounced a dividend of 25 % on equity shares for the FY ended 31 Mar 08.

The real estate sector in Dubai is being driven mainly by overseas investment, with individuals and companies from other countries consist of 60-70 % of the buyers of freehold units.
2 out of 3 of all the new freehold properties in the emirate are bought by overseas companies or persons who live outside the country, says a study, which also divulges that property developers in Dubai have USD 100 billion worth of new development projects in hand.
MAG Group Property Development, which is looking to produce its portfolio of new property projects to more than USD 2.72 billion by 2012, says final home owners currently account for just 30 % of the market and only 5 % of them are UAE nationals.
“Motive for this phenomenon is investing in property in the UAE is seen as safe and rewarding and presently better than investing in bonds or stocks,” said MAG Group CEO Mohammed Nimer.
“Despite of many challenges, for example rising costs and shortage of contractors, the real estate sector in the UAE is still one of the most favored investment areas in the country. The return on the investment can reach as high as 40 %, an unbeatable figure,” he added.
Nimer said foreign investment by both developers and buyers, which represents 60-70 % of investment in freehold property, remains vital for the continued growth of the real estate sector.
Investors from Pakistan, India and China as well as other emerging markets such as South Korea and Brazil are increasingly showing interest in tapping lucrative opportunities in the UAE.

The real estate sector has hogged the attention among favored investment avenues for a host of venture capital funds (VCFs) and foreign venture capital investors (FVCI) during the preceding fiscal. Amongst different sectors, together with IT and telecom, real estate alone attracted twenty percent of the total investments made by both VCFs and FVCIs during previous fiscal.
Of the overall investments of Rs 103,470 crore in 9 dissimilar groups, real estate alone attracted more than Rs 20,000 crore investments during the previous fiscal, followed by the service sector (Rs 9,350 crore), according to data available with the Securities & Exchange Board of India (Sebi).
According to the data available, there has been a sharp raise in investments from both the segments of investors. In the Ist quarter’s (ended 30 Jun 07) investment of Rs 2,788 crore, the sector received a whopping investment of Rs 7,285 crore in the last quarter (ended 31 Mar 08), thereby taking the cumulative investment to over twenty thousand crore rupees during the financial year.
IT, regarded as to be a preferred among the investors till one year ago, lost its shine and ended up in third place after the services sector.

Real estate private equity firm Saffron Group on 25th may said it has chalked out a two-sided plan to become a leading player in the market staying put for a minimum 5 yrs in upcoming properties and buying out properties with assured rental income.
The Group, a brainchild of Ajoy Veer Kapoor and his peers from the banking society, is the promoter of Euronext listed Yatra Capital, an India-focused real estate fund. It has also launched Saffron India Real Estate Fund-1.
“Our plan is to be a foremost player in the field. We don’t have any short-term view. The industry is rising and it will yield better results for another 10-15 years,” Kapoor said.
Yatra Capital has already raised two hundred twenty million euro through two public offers and has invested almost 75 % of that in the Indian real estate market.
The Saffron India Real Estate Fund I, launched in Feb 2008, is raising a USD 350-450 million unlisted fund, with a hard cap of USD 500 million. It has done a first close on 3 Apr 08 with an anchor investment of USD 75 million from Standard Life UK. It is expected to close by the end of 2008.

Many expect a further correction in home prices in India. Since the volumes of property transactions are going down, hence the asking price for property will also go down. Additionally, over-supply of property is posing as a major reason for the slow down in Real Estate prices.Recent media reports have also suggested the same trend. Reports suggest that Real Estate Prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20% in the first quarter of this year. Market-watchers say that this trend will be repeated across the Tier II cities and suburbs too. No wonder property developers are wooing prospective users with all sorts of offers. Some are even offering lower EMIs for flats while some are offering goodies like cars along with property. Still others are wavering off the stamp duty prices.
Are the property prices coming down in your area? Is the property slow down really impacting the end user in a major way? Should the home seekers cheer for some reasons? Is there a possibility of a market dive? Or is this a temporary phase in the housing segment?

There is a severe shortage of houses in Mumbai but, there is no dearth of government agencies wanting to build houses. The Mumbai Metropolitan Region Development Authority (MMRDA), which normally plans and executes infrastructure projects, has proposed to build 5 lakh houses in the Mumbai Metropolitan Region (MMR) over the next 5 years.Maharashtra Housing and Area Development Authority (MHADA) and Slum Rehabilitation Authority (SRA) are other agencies involved in similar activities.

Metropolitan commissioner Ratnakar Gaikwad declared on Friday that MMRDA now plans to offer rental houses of 160 square feet each. MMRDA plans to take up construction of 50000 houses this year itself. The rent for these houses will range between Rs 800 and Rs l500 per month. The rental housing plan has been announced under the Slum Prevention Program (SPP). He pointed out SPP was an improvement over the slum rehabilitation program as it is aimed at providing affordable rental housing to migrants.

Mr. Gaikwad further said that SPP is a mix of several existing or old slum improvement and housing schemes like the old chawls in the island city which took care of early migrants like mill workers, dock workers etc to the city. The proposed rental houses would come with an attached toilet block unlike the chawls. MMRDA has earmarked Rs 100 crore for SPP.

In Mumbai and its suburbs, SPP offers a significant business opportunity to builders as MMRDA plans to take the public-private partnership (PPP) option to build houses. But in the larger metropolitan region which runs much beyond Panvel, Badlapur and Vasai-Virar, Mr Gaikwad said the PPP option may not be feasible.

Mr Gaikwad further said “As in the case of infrastructure projects in Mumbai where project affected persons (PAPs) are rehabilitated by the developer on his own land in lieu of transferable development rights (TDR) for both land and construction, we will be offering TDR to the builder as an incentive to make rental housing stock available”.

Mr. Gaikwad said that in the metropolitan region, MMRDA will develop housing stock on its own. In return, the agency expects the state government to compensate by granting additional floor space index on the site itself. The metropolitan commissioner said the agency would sell the additional FSI at market rate to compensate for the rental housing programme. MMRDA has identified sites at Thane, Dombivli, Ulhasnagar, and Karjat and plans to start construction work on these sites in four to five months.

The number of commercial property loans in default has soared 400% in just 1years, according to a report.
The study of bank lending to the commercial property industry illustrates that while the amount lent continued to rise in 2007, nearly four hundred loans slipped into default, up from fewer than eighty in 2006.
Although the collective value of the loans – at £250m – is somewhat small, it suggests that a increasing number of smaller property investors and developers are failing because of the present financial crisis.
Unexpectedly, the number of commercial property loans that are in breach of financial covenants, but not yet in default, improved over the year. Loan breaches reduced from 1,900 – 1,050, suggesting banks are working harder to resolve debt problems before they move to default.

On 21st many Real Estate TV (RETV), a round the clock channel committed to infrastructure & realty had appointed Prem Kumar Menon as a its CEO
Menon having twenty seven years of prosperous media and marketing experience and prior to joining Real Estate TV, he was working as COO of a media group in Chennai, the channel informed in a release.
In addition Menon, A. Nair has also joined the group as its News Head. Before this appointment A. Nair was working as business journalist in the Indian Express Group.
Real Estate TV is the Ist channel in the country comprehensively engaged in tracking developments in real estate & infrastructure.

Consumer durable major Videocon Group has bought out a housing society off Ashram Road, one of Ahmedabad’s prime business areas, for over Rs 50,000 per sq yard in a Rs 30-crore deal.
The housing society, Lotus Society, is located along the Sabarmati river – where the ambitious Rs 2000-crore riverfront development project is coming up – is spread over 6,000 sq yards. The group plans to come up with a commercial complex and a five-star hotel.

Earlier, a city-based developer had tried to acquire the Lotus Society. Subsequently, a couple of other local developers had jumped into the fray and negotiated for the same property. However, Videocon signed the deal around a month ago.

The deal was struck with the help of local builders. According to industry sources, Videocon has already made part payments to the flat owners, who have signed an MoU with the company as per which they have to vacate their flats within a stipulated time frame.

Videocon Group had identified the land keeping the Sabarmati riverfront project in mind. The group is venturing into grocery and lifestyle retailing space through cash-and-carry format across the country. It has appointed KSA Technopark, Earnst & Young and Price WaterHouseCoopers as advisers for its retail plan.

The group has already appointed Subir Ghosh, former CEO of Essar retail, as head of its Planet M business. At present, the company is looking for suitable land in Ahmedabad, Kolkata, Aurangabad and Ahmednagar. The company intends to set up 40 stores across the country.

Each of these stores would be set up on an area ranging between 75,000 square feet and 1 lakh square feet. The group has plans to spend over Rs 5,000 crore on establishing its retail business in the next five years.

In April end, the London headquartered Barclays bank concluded negotiations to take on lease 15000 square feet of office space in CeeJay House, Worli, at a record-breaking rent of Rs 725 a square feet per month. This is so far the highest ever lease rental for any commercial property in the country.The monthly rent comes to Rs 1.08 crore or over Rs 13 crore annually. However, property experts said this is an exceptional deal and does not reflect the commercial lease rental market in Mumbai, which has been softening because of a steady supply of good office space.

The landlord of CeeJay House, located next to Poonam Chambers, is none other than civil aviation minister Praful Patel, who incidentally occupies a residential duplex spread over 35,000 square feet with a swimming pool in this building.
Sources who monitored the transaction said that Barclays already occupies 60,000 square feet between the 5th and 8th floors of Cee-Jay House since 2006. The bank has now taken an additional 15000 square feet on the 15th floor in order to expand its operations. The over 300-yearold Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services, with presence in Europe , the USA, Africa and Asia.

Among the other tenants in CeeJay House are Lehman Brothers, Societe Generale, KFW, Hypo Bank, Depfa Bank and Credit Suisse. Most of the top tenants in this building were introduced by the global property consultant firm C B Richard Ellis.

One of the biggest commercial lease transactions recorded in 2007 was when ABN Amro Bank renewed its lease for an office on the third floor of Nariman Point’s 12-storey Sakhar Bhavan at the rate of Rs 500 a square feet per month. Pranay Vakil, chairman of Knight Frank India, said about 8 million square feet of commercial premises will be added in the next six months to one year. They are mainly located on the Andheri-Kurla Road, Tulsi Pipe Road, Parel, Bandra-Kurla Complex and Kalina.

Real estate developers in Karnataka have decided to raise home prices by 3-8% from June 10, citing steep increases in the cost of construction materials and higher labour rates.

The price hike was “inevitable” because steel was dearer by 24% compared to its January level and cement prices were up 56% from the beginning of the year, Balakrishna Hegde, the president of the Karnataka unit of the Confederation of Real Estate Developers’ Associations of India said. The revision is the first of what could be a series of increases in the rates of residential properties.

CREDAI’s state chapter groups 124 real estate firms and includes the top property developers in Karnataka.

“Rising input costs have affected the cost of construction very harshly, increasing development costs by 20%-30%, depending on the stage of construction. Our members will increase prices by Rs 75 to Rs 500 per sq ft based on the location and the stage of construction,” Mr Hegde said.

The revision is the first of what could be a series of increases in the rates of residential properties as commodity prices escalate, pushed higher by soaring oil prices.

“What we are passing on is only a small portion of the increased cost of construction. We do not want to pass on the entire burden to at this stage, but will review the situation and take appropriate steps in the coming months,” he said.

The Ahmedabad-based EsVee Group, promoted by Mr Vijay Kumar Gupta, Chairman and Managing Director of Gujarat Ambuja Exports Ltd (GAEL), plans to develop exclusive townships across India. The first of these chain-townships, at Mysore, is scheduled to be completed by 2010, on a 60-acre plot situated 1.5 km from the airport. The township, christened `Highlands’, would offer250 residential flats of three to five bedrooms and 150 villas – all fully furnished and air-conditioned.

After being on the backburner for over 7 yrs, the Securities and Exchange Board of India (SEBI) has released draft rules for mutual funds real estate schemes, bringing a lot of relief to the MF industry. SEBI has given authorization to two types of real estate funds.

While the first group is of real estate MFs (REMF), and the other group is Real estate investment trusts or REITS. REMF will spend in real estate projects and mortgage-backed securities. These will be closed-ended funds, listed on the exchanges. As their net asset values will be declared daily, investors will have the choice to exit any day.

The Bhopal-based Som Distilleries and Breweries, manufacturer of the Hunter beer, has acquired a 50-acre prime plot in Gwalior for Rs 266 crore from the Madhya Pradesh government. The company will develop a retail mall, a theme mall and two hotels — a star hotel and a budget hotel — as well as residential apartments, in the property.

The project, called Thatipur Gandhi Road Project, is a 60:40 collaboration with Patel Engineering and marks the brewing company’s foray into realty business. Sompel, the company in charge of the project, is promoted by Som Distilleries.

Som Distilleries’ chairman and managing director Mr. JR Arora said, “The project is expected to generate a valuation of Rs 2,500 crore in three years. This project will boost the growth of the company further”.
The project is part of the state government’s housing scheme for its employees, wherein the builder is required to construct a certain number of houses.

The cost of the project will be deducted from the amount to be paid to the government, on account of acquisition of the land on a 90-year lease. Mr Arora said that the project will cost around Rs 100 crore, and will be financed through internal accruals, financing from customers, institutional borrowings etc.

The bid comes as a breakthrough for Som Distilleries, which has been looking for opportunities to diversify from the brewing and distilling business. The Rs 200-crore company, which introduced the concept of strong beer in India, has plans to venture into the South Indian beer market.

Though it controls 12% of the country’s premium beer market, the distribution has been limited to the North Indian market up till a few months ago. Now the company is planning to access brewing facilities through bottling contracts, acquisitions and greenfield projects in southern markets.

Knight Frank India, a real estate consultant company, predicts more correction in house prices if the existing slowdown in residential property sales keeps on, Chairman Pranay Vakil said.

“(In) residential, there is a slowdown. The volumes of dealings are low and it is a precursor to prices going down. In a lot of speculative areas, prices have already gone down. If these things continue for further 2-3 months, it is very probable prices will come down for residential segment,” Vakil said, adding sales volumes traditionally drop in June.

His remarks come at a time when there are concerns over a probable slowdown in demand for residential real estate because of high interest rates, oversupply, and funding issues.

Real estate developers for example Brigade Enterprises had said the company observered a 20 % slowdown in house unit demand in south India in January-March.

Media reports also suggested that prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20 % in the first quarter of this calendar year.

Due to mismatch in demand and supply on commercial office space, rentals are likely to remain high for further 6-12 months, Vakil said.

Khaleeji Commercial Bank has collected $163.5 million of equity from investors across GCC for Danat India Investment Company.

Danat will invest in a real estate development project near New Delhi, targeted at the expanding middle class of India.

India, presently one of the foremost rising markets is predicted to be the world’s 3rd biggest economy by 2050, ahead of Japan, the UK and Germany.

In a statement Khaleeji Commercial Bank chief executive officer Ebrahim H Ebrahim said that theyt are extremely delighted with the response to Danat, which is their first foray into the Indian Sub-continent.

“With a target return on investment of 83pc over a 3-year period, Danat wants to fulfill the requirement of middle income residential properties driven by increasing urbanization, rising disposable income and trouble-free financing alternatives. It offers our investors a chance to potentially advantage from the continued growth of the Indian economy, specially the demand from its burgeoning middle class.”

Milestone Capital Advisors will raise a fund of ten billion rupees to invest in the real estate sector in tier-II and tier-III cities of Tamil Nadu (TN).
The amount would be raised from high net worth individuals and financial institutions.

This fund would be primarily used for the construction and development of low-cost and green housing and also large warehousing across Tamil Nadu.

The company had so far floated two funds. The first one was for Rs 2.5 billion and the amount was disbursed for fourteen projects, of which nine were in Chennai.

The second one was for ten billion rupees, which was invested in readily available properties such as warehousing and office complexes.

As the four-year bull run in the Indian market went into a sharp correction early this year, foreign investors quietly withdrew part of their holdings in leading stocks while retail investors bought into them.
Domestic investors(including institutions, MFs and retail investors)were net buyers in those top companies. These entities together bought around 1.1 percentage point stake in these companies, the highest ever in 28 quarters. During the quarter, retail investors too increased their stake by 0.4 percentage points to 14.4%, the first hike in stakes in two years.

On the other hand, FIIs continued to sell these stocks and reduce their stake for a third quarter running, taking it down by 2.6 percentage points from the September 2005 high, the report noted. Interestingly, FII stake in the top 20 holdings were up significantly to 71.3%, compared to 70% as of December 2007.

Retail investors have been buyers of these top companies’ stocks in only seven out of the past 28 quarters, since the ownership data was first disclosed, in contrast to FIIs, which have been buyers in 17 of these 28 quarters.

Apart from reducing their stakes in the 75 top companies, FIIs also continued to churn their portfolios at the individual stock level as well as at the sector level, the Morgan Stanley report said. At the sectoral level, FIIs appear to be overweight in just three sectors — telecom, financials and consumer discretionary.

Mumbai-based firm will invest Rs 18,000 crore in next twelve years. BSEL Infrastructure Realty plans to set up a company in Malaysia to execute its operations in that country.
The Mumbai-based company has signed a memorandum of understanding (MOU) with Malaysia’s Iskandar Regional Development Authority (IRDA) to develop properties in Johar Bharu region of Malaysia. The company has plans to invest Rs 18,000 crore in the next twelve years.
The new company will be either made a supplementary of BSEL Infrastructure Realty, or its UAE subsidiary BSEL Infrastructure Realty FZE.
Dharmendra Raichura, managing director, BSEL, said that the company will use the proceeds from UAE projects to finance the Malaysian projects. The company generated revenues of three hundred crore rupees in 2007-08 from the UAE operations and expects to make seven hundred crore rupees in the recent financial year. BSEL will borrow funds to finance the projects.
The company will develop seventy million sq ft of space in three phases with ten million sq ft in the first phase and double in every subsequent phase. It will invest Rs 2,500 crore in the first phase and Rs 5,000 crore in the next phase.
Raichura said the company expects returns of 35- 40 % from the project. Private equity companies invest in realty projects in India with expectations of 25-30 % rate on investment.
“Johar Bharu is a 25-minute drive from Central Singapore, where property prices are 25 times more than the rest of the country. The authority plans to transform Johar Bharu into the next hot spot after Singapore in five to seven years. That is why we chose that city,” Raichura said.
BSEL will get a tax holiday on land sales and premises sales till 2015 and exemption on rental income till 2020.

MUMBAI: Equities are seen opening flat-to-negative on Tuesday amid quiet global cues. Crude oil’s record high spike to the $127 mark will weigh on sentiment.

Essar Oil’s refinery expansion project at Vadinar may turn out to be the only such upcoming project to be denied a 100% tax holiday available to refinery projects. This follows the finance ministry’s decision which allows refinery projects to enjoy the tax holiday only if they have a joint venture with a public sector company that holds a 49 per cent stake. Shares of Essar Oil ended at Rs 257.75 on the BSE.

Italy is fast turning into a hunting ground for Indian auto companies and more so for Mahindra & Mahindra. The tractor and utility vehicle maker is learnt to have set sights on Italian motorcycle marque brands — Cagiva and MV Agusta — famed for designing high-end, high-performance superbikes that are a rage on the speed motorcycle circuit. Mahindra & Mahindra shares closed at Rs 662 on the BSE.

Parsvnath Developers may bag the development rights for one of India’s biggest infrastructure projects, the Rs 1,850-crore Nanocity to come up in Panchkula near Chandigarh. The project, spread over 11,138 acres, being jointly promoted by Hotmail founder Sabeer Bhatia and the Haryana State Industrial and Infrastructure Development Corporation is modelled on the Silicon Valley and will come up in two phases. Shares of Parsvnath Developers ended at Rs 222.35 on the BSE.

Tech Mahindra has paid British Telecom $110 million as ‘exclusivity fee’ for an impending mega-deal with the UK-based telco. The company is in exclusive negotiations with BT along with a consortium partner that is a large global IT player for a significantly large deal. Tech Mahindra scrip gained 2.42 per cent to Rs 956.05 on the BSE.

Champagne Indage took over assets of UK-based wine supplier, Darlington Wines for an undisclosed amount. This is company’s fourth overseas acquisition and a part of its strategy to strengthen its overseas presence. The stock ended at Rs 530 on the BSE.

BSEL Infrastructure Realty will develop about 70 million square feet in the Iskandar region in southern Malaysia. The company will be investing Rs 18,000 crore over 12 years to develop residential and commercial property in the area. The stock ended at Rs 50.55 on the BSE.

Tata Coffee is eyeing a distribution company in Russia which owns a couple of well-known coffee brands, reports DNA Money. Shares of Tata Coffee climbed 1.35 per cent to end at Rs 228.20.

Peninsula Land and Arrow Webtex will form a joint venture to enter hospitality business. A special purpose vehicle will be created which will be held 50-50 by both the partners to build business hotels. In the first phase, an equity infusion of about Rs 100 crore is envisaged by both the joint venture partners in equal proportion.

Bombay Dyeing is considering demerging its real estate business into a separate company, reports DNA Money. The hiveoff will be followed by an initial public offering. The stock gained 5.35 per cent to close at Rs 973.15 on the BSE.

Stock specific action is likely with a slew of corporate results from the likes of Suzlon Energy, Bharat Forge, GMR Infrastructure and Tata Teleservices Maharashtra.

 After the fresh rise in real estate prices all over India, the reports are coming about rising rental prices in key industrial towns. A current report about rental prices in New Delhi has shown a 13 % rise in rental prices in year 2008.
Global real estate consulting company, Cushman & Wakefield has reported a rise of 7-13% in rental prices during the first quarter of this year. The demand is high and space for further development is limited. While in Gurgaon and Noida, the rentals have grown at 10-12 %.
Rental prices are higher in Bangalore, Mumbai, Chandigarh, Noida and Gurgaon as well. Real estate prices were lower during the first quarter of 2008. The prices had seen a good appreciation and there was a need for correction in the prices of real estate.
Small builders were having problem in selling their existing projects. According to recent reports, many small builders sold stake to real estate majors as they couldn’t bear the diminishing in prices of residential property. Real estate majors have lot of cash and can wait for the prices to stabilize. Home buyers and long term investors were waiting for reduction in prices while speculation based traders have reduced their exposure in most sectors.

The Real estate industry in India has been growing by leaps and bounds in the past few years. However, the country still lacks a credible way to cross-check the price swings (real or reported) in the sector. For example, recent reports of residential prices cooling off in major cities of the country could not be verified.

There was no authentic data to indicate such a trend. Thus, property buyers remain confused, not knowing, for instance, whether Mumbai property prices fell more than that of Delhi in the last quarter?

The same does not happen with equity investors. At the end of the day, anyone wants to know the day’s market trend and for this he could take help of BSE/NSE website or see next day’s newspaper to know the exact rise or fall of Sensex or Nifty. Sensex or Nifty are taken as a barometer of market sentiment. With years of index publishing, a sort of credibility and association has been built with the equity investors by these financial institutions.

NHB made a beginning in this direction in 2005 when it launched a project for preparation of the real estate price indices for the residential housing segment, NHB Residex. To start with, the project envisaged compiling the indices for 10 cities — Greater Mumbai, Kolkata, Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, Kanpur, Jaipur and Patna. It also gave price appreciation figures for major cities at the time of the launch of the index. However, getting data from NHB has been tough for analysts.

With various mutual funds planning to soon launch real estate funds, it is imperative that a reliable index data, preferably from a government body like NHB, is made available to act as a benchmark.

Capturing real estate prices in India has its own challenges. Thanks to different types of housing that are made available by builders, there are large variations in property price in a single locality. It is difficult to put a single price to a locality which has different class of houses, say premium as well as low cost.

However, NHB with its wealth of information on loan disbursements and other crucial figures could do a lot for the industry. Since most financiers would have data on a city-wise basis, it could be shared with NHB for internal index calculation purposes. If NHB cracks the same, it could be one big step towards making the industry more competitive.

Nearly seventy eight million square feet real estate space is expected to be added by 2015 due to forty seven airport modernization and upgrade projects.
The projects cover forty thousand acres across forty existing and seven new airports, according to the Airport Realty Report by global property consultancy Cushman & Wakefield.

The report says if the airports are modernized according to schedule, the non-aeronautical revenues may rise from the current 35- 54% by 2015. It is estimated that rent from retail, office and hospitality will constitute nearly 45 % of the airports’ non-aeronautical revenue by 2015. The rest will come from other non-aeronautical sources like trading concessions, public admission fees and miscellaneous income from advertising, car parking, etc.

Mr. Anurag Mathur, joint managing director, Cushman & Wakefield, said,”Globally, airports derive a large portion of their income from non-aeronautical revenue sources; Heathrow, San Francisco, Vancouver and Brisbane earn as much as 50% from retail and other non-aeronautical resources. With greenfield projects in Hyderabad and Bangalore taking their maiden steps, India is soon to replicate this potential revenue-earning model.”

According to estimates, retail space accounts for 18% of the total real estate space projections for airport projects. Most of this supply is concentrated in tier-III towns and cities as it comprises tourist destinations. The highest supply is, however, expected to be in Hyderabad, which accounts for 1.8 million square feet of the total projected retail space.

The study estimates office space to be more than 50% of the total real estate space projected for airport projects. With nearly forty one million square feet office space planned, the three tier-I locations are expected to add 14 million square feet office space, whereas the five tier-II cities expect 13.5 million square feet by 2015. Tier-III locations, which include over thirty five cities, would account for around 32% of the total office space supply amounting to fourteen million square feet.