Author Archives: supriya

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

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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.   

Understanding Property Types and Investment Opportunities in Real Estate

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Despite a spike in home loan interest rates, the residential real estate market performed well, indicating a positive industry sentiment. 

Investing in the stock market is a game-changer for those who can monitor it regularly, as it requires investors’ full attention from 8:30 a.m. to market close. Because of its volatility, equity is no longer the best investment. People are now turning to real estate because it offers long-term benefits. It is regarded as the correct move, particularly when the sector is at its highest level. 

For example, despite the local water crisis, Gurugram has set all-time highs in property prices. Because of the proximity of offices in the surrounding areas, Delhi/NCR has become the preferred destination for IT professionals. As demand in Noida, Greater Noida West, and New Noida grows, many large projects have relocated there. 

Why do prices increase? 

As the government has announced numerous infrastructure projects in Uttar Pradesh, it is clear that NCR will be a new residential and rental income source for many people. At the E&Y Infrastructure Roundtable, Ajit Krishnan, EY India Partner International Tax and Transaction Services, stated, “Investments in renewable energy and roads drive India’s infrastructure growth, paving the way for sustainable development.” 

On February 8, 2024, Uttar Pradesh Chief Minister Yogi Adityanath announced infrastructure projects and public welfare schemes, including plans for 21 new airports in the city. Tourism in Ayodhya had already peaked with the opening of the Ram Mandir, with 1.12 crore visitors arriving before the temple was open to the public.

This is not the only factor influencing the current state of the real estate market. The geopolitical landscape has exerted significant pressure on the sector. According to Anarock Capital’s Flux report for the first nine months of FY24, PE investments declined by approximately 26%. During this time, foreign and domestic investors saw a decline in activity. 

Despite the presence of many bankrupt builders, Noida and Greater Noida West have attracted several large projects. It demonstrates that the real sector has the potential for regular income and significant lump sum gains. Gurugram has become a dream for those earning between Rs 15 lakh and Rs 20 lakh as property prices skyrocket. To match and reduce the huge price gap within Delhi/NCR, Uttar Pradesh has increased infrastructural development with basic amenities in the region to attract more buyers. 

To better understand this investment opportunity, consider Uttar Pradesh. The fluctuations in property values over the last few years demonstrate how dynamic real estate investing can be, with both growth and risk involved. 

Profitable investments. 

Although single-room sets are no longer as affordable as five years ago, they remain a sound investment.

Rental income is also at an all-time high in 2024. In 2020, two three-bedroom flats generated rental incomes ranging from Rs 10,000 to 12,000. However, they have risen to Rs 19,000 -25,000. 

As an adjacent city to Delhi, people are migrating to make a living and require a place to call home.  Purchasing or renting a home in Delhi has become costly, paving the way for the NCR region. 

Consider the following scenario to comprehend the investment and income: Assume someone invests Rs 10-12 lakh to create a one-bedroom kitchen set. In just seven months, this newly built one-bedroom apartment will begin to generate an average monthly rental income of Rs 15,000-16,000. With an initial investment of Rs 10-12 lakh, the average return on investment (ROI) is 15-18%. 

This example demonstrates the potential profit from investing in single-family homes. Even with modest investments, rental income can generate significant returns, making it an appealing option for real estate investors looking for consistent cash flow and long-term appreciation.

Residential Property: 

During unprecedented times, the real estate sector encountered significant challenges. However, the post-COVID scenario revealed a very different landscape. With many businesses returning to in-office work environments and discontinuing work-from-home arrangements, the residential real estate sector experienced a significant resurgence. 

Despite rising home loan interest rates, the residential market performed well. Recent studies have shown that escalating rental values are one of the key drivers of this demand surge.  Investing in ready-to-move projects is becoming increasingly appealing to buyers. 

A ready-to-move property presents a win-win situation based on past experiences. In contrast to new projects with uncertain possession timelines, ready-to-move projects offer immediate gratification and peace of mind. 

Several examples of this point can be found along the Gurugram-Dwarka Expressway and Greater Noida West, which serve as valuable case studies for investors. 

In 2023, 4.77 lakh residencies were sold in new projects. In pre-pandemic 2019, the share of freshly launched supply sales was substantially smaller, accounting for only 26% of the approximately 2.61 lakh dwellings sold that year. 

According to Anarock real estate research, NCR has the lowest absorption of newly launched homes among the top seven cities, with only 27 percent of the 65,625 units sold in 2023 being launched during the year. The remaining units were sold in projects that opened before 2023. Interestingly, Gurugram outpaced other markets in the NCR region, with at least 35% of the 36,970 units sold in Millennium City in 2023 being freshly launched. 

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

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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. 

This expert believes that the power of real estate is at the heart of India’s transformation

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According to Ankur Gupta of Brookfield Asset Management, local businesses are upgrading office spaces. Indians are looking for higher-quality homes, hotels, restaurants, and vacations, reflecting significant lifestyle changes over the last few decades. 

According to Ankur Gupta, Managing Partner and Head of APAC and ME Real Estate at Brookfield Asset Management, the sector contributes significantly to the economy directly and indirectly and thus is at the heart of India’s recent transformation. 

“Real estate provides that house, that backbone, not only by directly contributing to GDP but also by increasing productivity. A good quality real estate establishment, whether a manufacturing hub, logistics infrastructure, offices, high-quality homes, or hospitality, is the foundation for various industries. Gupta cited steel, cement, paints, and tourism as examples of direct users or secondary contributors to hotels. 

He cited the fact that local businesses are increasingly looking to transform their office spaces, and Indians want to live in higher-quality homes, visit higher-quality hotels and restaurants, and take vacations that were less desirable several decades ago.

Brookfield, he says, is very interested in these shifts in demand, and the next major motivator would be to support the growth of the country’s manufacturing system and the development of logistics and industrial hubs. 

These transformations will necessitate massive amounts of capital, a collaborative approach with the government and various state bodies, and the cooperation of organizations such as Brookfield. 

India’s unique combination of services and manufacturing will propel it to global leadership. It makes no difference if it is second or third. He believes that it is currently the best market in the world to invest in. 

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

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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

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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.

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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

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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

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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. 

India’s ultra-rich are shifting their investment focus to residential real estate

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The ultra-rich in India devote a sizable portion of their wealth to residential properties, which account for 32% of their investment portfolio. 

For some time now, India’s affluent class has been shifting its investment focus to residential real estate, indicating a significant shift in the country’s investment landscape. This transition highlights changing investment preferences and reflects the motivations behind the elite’s decision to invest in residential properties. 

According to a recent Knight Frank report, India’s ultra-rich are allocating a significant portion of their wealth to residential assets, with 32% of their investment portfolio devoted to this sector. A growing number of ultra-high-net-worth individuals (UHNWIs) plan to buy a new home by 2024, indicating an increasing appetite for residential real estate investments in India. 

Parvinder Singh, CEO of Trident Realty, commented, “This growing interest of elites in the residential real estate sector reflects a shift towards quality living spaces that cater to evolving  lifestyle preferences.” 

Elites are drawn to high-quality residential projects that provide sustainable and multifunctional living spaces, which satisfy their desire for exclusivity and modern amenities. The residential sector is expected to grow significantly by 2024, driven by urbanization, rising incomes, and a desire to live in harmony with nature. To appeal to affluent buyers, we designed our projects to offer privacy, space, and connection to nature. Our developments provide a distinct blend of luxury, sustainability, and comfort to meet the discerning tastes of elite homebuyers.” 

Knight Frank’s flagship report, The Wealth Report 2024, predicts a significant increase in the Indian UHNWIs, rising to 19,908 by  2028 from 13,263 in 2023. This equates to a massive 50.1% increase, the fastest growth rate in the number of UHNWIs in any country over the next five years. 

Aman Trehan, Executive Director of Trehan Iris, says, “The surge in residential property investment among India’s elite class represents a remarkable shift in preferences, fueled by a thriving economy and evolving lifestyle choices. According to Knight Frank India’s 2024 Wealth Report, 32% of UHNWIs are considering investing in real estate, with 12% planning to buy new homes in 2024. This report highlights the sector’s unprecedented growth and reveals Delhi’s rise in the real estate sector. With a combination of high demand, favorable mortgage rates, and a strong economy, the allure of luxury properties and alternative assets is likely to persist among high-net-worth individuals and ultra-high-net-worth individuals. This year, 22% of wealthy individuals intend to invest in residential properties and 19% in commercial properties. 

Furthermore, the ongoing expansion of infrastructure and connectivity initiatives, particularly in the National Capital Region, is expected to open up new opportunities for elite investors, promising capital appreciation and improved lifestyles. As we look ahead, the trajectory of India’s real estate market is poised for further evolution, implying a promising outlook for the market in the coming years,” he adds. 

Furthermore, people exhibit a positive economic sentiment, reflecting the Indian economy’s resilience and potential. This shift in sentiment coincides with a broader recognition of real estate’s enduring value and potential for long-term financial growth. Investors are positioning themselves to accumulate wealth and create multigenerational wealth through real estate investment. 

Aman Sharma, Founder & Managing Director of Azrize Group, says, “Seeing India’s super-rich devote 32% of their wealth to housing properties is extremely encouraging. There is a strong belief that real estate is a significant driver of wealth preservation and growth. This data demonstrates our dedication to delivering high-quality projects that appeal to the discerning tastes of affluent buyers. We recognize the importance of providing luxurious yet secure options consistent with this demographic’s investment preferences. Such insights guide our strategic planning, ensuring that we continue to meet the market’s changing demands while maintaining our position as a reliable provider of premium real estate.” 

Aside from economic factors, lifestyle changes are spurring demand for luxury and larger homes among India’s upper classes. The ultra-luxury housing sector’s unprecedented growth in 2023 reflects affluent individuals’ strong desire for premium living experiences. This emphasis on enhancing lifestyle offerings is a major reason the wealthy prefer to invest in residential properties, as they seek to improve their living conditions and indulge in luxurious living experiences. 

“The surge in luxury housing sales among India’s elite is up 130% Y-O-Y, signaling a seismic shift in the industry,” says Ashish Sharma, AVP operations at Brahma Group. According to Knight Frank’s Wealth Report 2024, they allocate 32% of their wealth to residential properties.

A strategic pivot towards tangible assets both luxury and long-term capital appreciation. 

The desire for luxurious urban living, combined with an increasing number of high-net-worth individuals, has prompted wealthy investors to design spaces that embody luxury, comfort, and exclusivity. The decision to invest in luxury real estate has evolved into an important statement of status and intent. Furthermore, in the coming years, the industry can expect to see a rise in participation from India’s elite as it continues to grow. 

According to Ashish Sharma, AVP operations at Brahma Group, “the surge in luxury housing sales among  India’s elite, up 130% year on year, signals a seismic shift in the real estate landscape.” According to Knight Frank’s Wealth Report 2024, they now invest 32% of their wealth in residential properties, up from 20%. This strategic shift toward tangible assets offers both luxury and long-term capital appreciation. Driven by the allure of upscale urban living and a growing population of high-net-worth individuals, affluent investors tend to invest in environments that exude comfort, exclusivity, and status. Luxury real estate has evolved beyond mere acquisition into a profound statement of status and purpose. Furthermore, the sector is expected to experience a surge from India’s elite, with an upward growth curve in the coming years.” 

This trend opens up exciting opportunities for the Indian real estate market. Luxury developers can meet the growing demand for exclusivity, comfort, and long-term value among ultra-high-net-worth individuals seeking prime residential investments. However, stay ahead of the curve by anticipating changing preferences and offering innovative solutions to the elite’s ever-changing needs. 

Investing for the future: The rise of co-working spaces in commercial real estate

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As the commercial real estate market evolves, one key trend that continues to shape the industry is the proliferation of co-working spaces. These shared work environments, which provide flexible lease terms and amenities, have altered how businesses and individuals view workspaces. Incorporating co-working spaces into a real estate investment portfolio can be a strategic move that capitalizes on changing trends while providing financial benefits. 

The expansion of coworking spaces 

Co-working spaces emerged as a solution for freelancers and small businesses seeking flexible, cost-effective work environments. Over time, these spaces have evolved into innovative hubs that cater to a wide range of clients, from startups to multinational corporations. The rapid expansion of remote and hybrid work arrangements has only fueled this trend, making co-working spaces an essential component of modern office culture. 

As companies adopt more flexible work policies, the demand for adaptable and dynamic workspaces increases. Co-working spaces enable businesses to easily scale their operations, whether downsizing or expanding, without being limited by traditional long-term lease agreements. 

The financial appeal of coworking spaces 

Co-working spaces provide significant benefits to real estate investors. One of the primary advantages is the ability to generate multiple income streams from a wide range of tenants. This diversification helps to spread risk across various industries and business sizes. 

Furthermore, co-working spaces tend to have higher occupancy rates than traditional office spaces, maximizing revenue potential per square foot. Moreover, these spaces frequently command high prices due to the extensive amenities and services such as meeting rooms, private offices, and community events. 

Development of real estate investment portfolios. 

Integrating co-working spaces into a real estate investment portfolio can result in significant long-term returns. By incorporating these spaces, investors can position themselves at the forefront of a rapidly changing market and capitalize on shifting preferences in office environments. 

Coworking spaces allow for property appreciation. As the demand for flexible workspaces increases, the value of properties that house co-working operators is expected to rise. This potential for asset appreciation provides additional financial incentives to investors. 

Furthermore, investing in co-working spaces enables a more dynamic and resilient portfolio. Co-working operators’ flexibility can help them weather economic downturns and changing market conditions, as these spaces can quickly adapt to new situations. 

Navigating risk and challenges 

While co-working spaces offer numerous benefits, investors should consider the risks. The success of coworking operators can be influenced by management quality, competition, and market trends. Furthermore, the industry’s rapid growth has resulted in some market saturation in certain areas, potentially affecting the profitability of individual co-working spaces. 

Choosing established co-working brands with a proven track record of success can increase stability and reduce the likelihood of failure. Furthermore, understanding local market dynamics and competition is essential for making sound investment decisions. 

Summary  

Co-working spaces have emerged as a transformative force in the commercial real estate industry, reshaping how businesses and individuals approach workplaces. Co-working spaces can provide significant financial rewards for real estate investors but only if they are mindful of the risks. 

As demand for flexible workspaces rises, investors who believe in this trend will be well-positioned for long-term success. Understanding the benefits and challenges of co-working spaces, and selecting the right partners can help investors to capitalize on this dynamic market and secure a profitable future in commercial real estate.   

Non-resident Indians from the US dominate real estate sales in Bengaluru: 2BHK and 3BHK housing units are the most popular

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Bengaluru continues to attract non-resident Indian buyers, who account for nearly 15% of total housing sales in the city. The demand for real estate in the IT capital is primarily by NRIs from the United States, Singapore, the UAE, Australia, and Saudi Arabia, with the majority preferring to invest in 2 and 3BHK units. 

Regarding requests and transactions, the United States has far outpaced other countries. According to No Broker data, demand has also increased from NRIs in Singapore, the United Arab Emirates, Australia, and Saudi Arabia. 

Preferred Investment Options in Bengaluru

The most popular investment options are  2 and 3 BHK apartments, accounting for 78% of sales. 

North Bengaluru was the most popular investment destination for NRIs, accounting for nearly 39.7%, followed by East Bengaluru (37.7%), South Bengaluru (18.1%), West Bengaluru (3.9%), and Central Bengaluru (18.1%). 

The North has the highest traction of NRI buyers, accounting for nearly 40% of sales, followed by the East (38%), and the South (18%). According to Saurabh Garg, co-founder and chief business officer at Nobroker, the average ticket size varies by region: Rs 1.1 crore in the North, Rs 1.51 crore in the East, and Rs 1.13 crore in the South. 

Sarjapur, Varthpur, Gunjur, and Whitefield are the most popular micro-locations in the East, while the Devanahali and Hebbal micro-markets are in the North.  

The most popular investment options are 2 and 3 BHK apartments, accounting for 78% of sales. According to the data, 2 BHK units account for 41%, 3 BHK units for 37%, and plots and 4  BHK/duplex/ villas contribute 9% each. 

These buyers are primarily working professionals looking for investment properties with high rental income and potential for future appreciation. NRI buyers prefer projects with no premiums, but they will only invest or buy from reputable Grade  A developers. 

According to Garg, NRI buyers actively seek other services, such as management and legal assistance, to smooth their property transactions. 

NRIs account for 15% of the housing sales in Bengaluru. 

Concorde’s chairman, Nesara B S, says NRI buyers account for nearly 15% of, their total sales. “This has risen in the past two years. Previously, this stood at 10%. The highest demand comes from the Gulf countries, followed by the Indian diaspora in Europe, the United States, and Australia. Most of them are three-bedroom apartments and villas,”  he said. 

While NRIs prefer to invest 2, 3, and 4BHKs. They typically target the higher end of the spectrum. In terms of sales, NRI contributions would be around 15% year on year. “The majority of our bookings are either through our GCC office or through trade expos that take place abroad. We occasionally receive inquiries when they visit Bengaluru on vacation,” said Viswa Prthap Desu, COO of Residential, Brigade Group.   

Puravankara’s business is also heavily influenced by NRIs, who prefer larger homes, and gated communities that prioritize amenities, security, and property management services. NRI contributions to our overall business range between 12 and 15%, and we are seeing increased traction in markets such as the GCC, the United States (both East and West Coast), Southeast Asia, and Europe (including the United Kingdom),” said Abhishek Kapoor, Group CEO of Puravankara Ltd.  

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

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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. 

India’s Real Estate Set to Grow by 2030, Pioneering a Trillion-Dollar Transformation

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Historically, growth rates have been determined by industrial, agricultural, and service sector expansion, but the trading market is also an important source of new capital.

According to Dr. (h.c) Tushar Deochakke, real estate has long been the most popular form of investment for those who can afford it. An interest in real estate has meant purchasing private property primarily for self-residence. Cross-country comparisons, individual country studies, and industry and firm-level analyses all point to a positive relationship between financial system sophistication and economic growth. While some gaps exist, the financial system is said to be inextricably linked to economic performance. In 1952, Nobel laureate Joan Robertson stated, “Where enterprise leads, finance follows.” According to this viewpoint, economic development generates demands for various financial arrangements, which the financial system automatically meets. 

 Traditionally, growth rates have been determined by the growth of the industrial, agricultural, and service sectors; however, the trading market is also a significant source of capital formation and plays an important role in the global economy. As a result, the stock market in developing economies such as India is rapidly expanding, and the Indian real estate market is expected to be worth trillions of dollars by 2030. Liquid markets improve capital allocation and long-term economic growth prospects by allowing for longer-term and more profitable investments. Furthermore, by reducing investment risk through Blockchain technology for governance, stock market liquidity can result in more savings and investments. 

Real estate assets are recorded at cost, even though the market value of many properties could be significantly higher. Listing these assets on the platform broadens their trading opportunities by making them available to a wider variety of investors and liquid with cash flow generation potential, increasing market capitalization and having an economic impact on the local and national economies via transactions and taxes. 

The Indian property market is expected to quadruple over the next 6-8 years. New infrastructure development in India will require approximately USD 4.5 trillion for everyone to maintain the pace of growth and become the second-largest economy by 2036. 

The REIT regulations have recently been tweaked to accommodate smaller asset owners. But, it is crucial to understand and accept that Indians are conservative by nature, and real estate investments are used to hedge against capital market volatility. Thus, while the number of dormant accounts registered has tripled in the last five years, the actual investor base is much smaller. REITs were first introduced in the 1960s. But, they still account for less than 2% of global real estate asset valuations. 

Small investors’ ROI from REITs has been low, while real estate developers, asset owners, and managers continue to investigate various funding options for new development assets and their pipelines.  Further banks have sectoral restrictions for lending. On the other hand, Indians invest up to twenty lakh crores per year in bank fixed deposits, where inflation-adjusted returns are negligible, even though the entire economy had around rupees 188 lakh crore in fixed deposits at the end of last year. 

While the Jan-Dhan Yojna (Banking for the Poorest of the Poor), which was previously ridiculed, accumulated Rs. two lakh crore in a short period, this allows users to visualize the impact a middle-class retail investor can have on the economy if given the right opportunity. While global fund managers are allocating larger absolute amounts to their India desk, it remains a small percentage of their entire global portfolio. This comes after the Ministry of Finance established the National Asset Monetisation Pipeline and the National Bank for Infrastructure Development. 

Global pension funds and private equity funds invest in India, but the fact that repatriation for strategic exits takes years, if not decades, discourages them. RERA has significantly changed the perspective of large global fund managers looking to invest in a project’s early stages. Being classified as a promoter entails a slew of RERA obligations, such as regulatory filings, obtaining completion or occupation certificates, ensuring the project, and so on, with failure to comply resulting in severe penalties. While investment documents are typically drafted  to give investors broad rights to protect their investments, it is now worthwhile to structure investments so that an investor can avoid participating in the entity’s day-to-day affairs and management, as  well as project implementation. 

While the rest of the world has gone digital, real estate markets continue to use ancient and archaic methods of asset management, trading, and settlement. This is especially evident in the property markets, which use highly manual and time-consuming methods for administering and trading assets. As, a result, the real estate market is notoriously illiquid and inaccessible. 

HRERA penalizes real estate promoters for misleading ads

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The Haryana Real Estate Regulatory Authority (HRERA), Gurugram, imposed a Rs 50 lakh penalty on a real estate promoter for publishing a misleading advertisement in an English daily about their real estate project Green Oaks. 

According to an HRERA spokesperson, the authority took strong notice of the advertisement published on March 2 and sent a show cause notice to Countrywide Promoters Private Limited, requesting a response. 

According to the spokesperson, the authority observed that, despite mandatory provisions under Sections 11(2) and 13 (1) of the Real Estate (Regulation and Development) Act 2016, the promoter failed to properly describe the details in the advertisement, which is a punishable offense under Section 61 of the act.  

“It is established that the promoter published a misleading advertisement to prevent prospective allottees from making an informed decision. The authority imposes a Rs 50 lakh penalty under Section 61 of the Act 2016, according to an HRERA order. 

According to the HRERA spokesperson, Countrywide Promoters Private Limited is developing an affordable plotted colony, Green Oaks, in Sector 70-A Gurugram, under the Deen Dayal Jan Awas Yojna (DDJAY) Affordable Plotted Housing Policy-2016, and will obtain RERA registration in 2021.  

“It is abundantly clear that the promoter has issued a misleading advertisement for a DDJAY plotted colony, using alluring images to lead prospective investors to believe that the project includes a clubhouse and other amenities that do not exist in the project. This is a violation of section 7(1)(A)(i). According to the order, no details, information, or visuals of the project’s layout or site plan were provided to allow the prospective allottee to make an investment decision. 

In FY-24, Delhi-NCR closed 29 land deals totaling approximately 314 acres, with Gurugram topping the list

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According to Anarock data, 29 land deals spanning 314 acres were closed in Delhi-NCR in FY 2024, compared to 23 land deals covering approximately 273.9 acres in FY 2023.

Among the top cities, NCR had 29 land deals for more than 313 acres, followed by MMR with 19 deals for more than 157 acres. 

In Delhi, a 5-acre residential development deal was completed. In Gurugram, 22 transactions totaling 208.22 acres were closed. These included one deal for educational, residential, and retail purposes, with the remaining 20 deals solely for residential development. In Faridabad, a 150-acre residential land deal was finalized. 

A residential development deal for 8.9 acres in Greater Noida has been secured.  A 62.5-acre township project in Ghaziabad has been signed off on. Noida closed three other deals totaling 13.96 acres for residential and commercial developments.

“About 26 separate land deals, totaling approximately 298 acres, were proposed for residential and township projects to meet the region’s growing demand for housing and urban development, “said Santhosh Kumar, Vice Chairman of the Anarock Group. 

“At least two land transactions involving more than 7 acres each were intended solely for commercial real estate projects.  A separate transaction involving about 8. 61 acres was dedicated to an educational project,” he explained.  

According to data shared by Anarock, real estate developers and entities dealt with approximately 101 separate land transactions in fiscal year 2023-24, totaling nearly 2,989 acres across the country. 

In FY-24, over 83 land deals totaling over 1,135 acres were completed in the top seven cities alone, with the remaining 18 deals totaling 1,853 acres closing in tier 2 and 3 cities as Ahmedabad, Ayodhya, Jaipur, Nagpur, Mysuru, Ludhiana, and Surat. 

Amitabh Bachchan purchased land in Alibaug for Rs 10 crore. What makes a beach town a desirable real estate destination?

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According to sources, Amitabh Bachchan paid Rs 10 crore to The House of Abhinandan Lodha (HoABL) for a 10,000-square-foot land parcel in Alibaug, near Mumbai. The transaction was registered last week. 

According to sources, Bachchan has purchased a plot in the A Alibaug project, a 20-acre plotted development in Alibaug that was launched in April of last year. 

The residence of Abhinandan Lodha did not respond.

Amitabh Bachchan previously purchased a land parcel from the same builder in Ayodhya for its project The Sarayu, a 7-star mixed-use enclave in the temple town. According to real estate industry sources, Bachchan plans to build a home on a 10,000-square-foot plot worth Rs 14.5 crore.  

Alibaug has recently emerged as a popular real estate destination for high-net-worth individuals (HNIs) seeking luxury retreats and investment opportunities. As a result of its proximity to Mumbai, well-developed infrastructure, and coastal landscape, high-end properties have become more in demand. 

In 2023, actor Amitabh Bachchan and his wife, Jaya Bachchan, will leave Pratiksha bungalow, the first of five family homes in Juhu, to their 49-year-old daughter Shweta Nanda as a gift. Pratiksha was the couple’s first bungalow in Juhu, purchased shortly after the success of the blockbuster Sholay in 1975. 

Other properties owned by Amitabh Bachchan’s family in Juhu include the Janak bungalow, which is primarily used as an office, and two other bungalows, Vasta and Ammu, part of which was leased to Citibank and re-leased to State Bank of India in 2021. 

In 2021, Bachchan sold the Sopaan bungalow in Gulmohar Park, New Delhi, for Rs 23 crore to Avni Bader, CEO of the Nezone group of companies. The 2.100-square house was registered in Teji Bachchan’s name, and his parents lived there before moving to Pratiksha. 

Bollywood actors have bought properties in Alibaug. 

Shah Rukh Khan’s daughter Suhana Khan, who made her film debut with the Archies, bought farmland in Thal village in Alibaug for Rs 9.5 crores in February. Last year, she paid Rs 12.91 crore for 1.5 acres of agricultural land in Alibaug, Raigad district, which included three structures. Suhana’s father, Shah Rukh Khan, also has a sea-facing property in Thal with a swimming pool and helipad, and he enjoys hosting parties for his Bollywood friends. 

Several celebrities and industrialists own bungalows in Alibaug, including Navin Agarwal of Vedanta Resources, Gautam Singhania of Raymonds, Prakash Mody of Unichem Labs Ltd, Salil Parekh of Infosys, Sanjay Nayar of KKR, Falguni Nayar of Nyka, and equity investor Deven Mehta, brokers said. 

Alibaug’s coastal villages have long been popular vacation destinations for celebrities and corporate executives. 

In February 2023, Anushka Sharma-Virat Kohli paid Rs 6 crore for a 2,000 sq ft villa in Aditiya Kilachand’s luxury bungalow project, Avas Living, in Awas Village. In September 2022, the couple purchased a 3,350 sqm (36,059 sq ft) farmhouse in Zirad village for Rs 19.24 crore. In 2021, Rohit Sharma bought four acres of land in Mhatroli village.

Is there an investment opportunity? 

Alibaug’s connectivity improved after Ro-Ro and speed boats were established from Mumbai. The Mumbai Trans Harbour Link Sea bridge, which connects Sewri and Nahava Sheva, has also improved road connectivity to Alibaug. 

According to industry reports, Alibaug plans to invest around Rs 3000 crore and develop 250 acres of land in stages to build integrated townships and luxury villas. 

“The Maharashtra government is working to improve Alibaug’s infrastructure, including public transportation, waste management, and water supply.” This is also a part of the ambitious Alibaug Smart City project. Over 40 developers from India’s residential and commercial real estate sectors, financial institutions, and potential buyers, have invested in Alibaug, according to Ritesh Mehta, Senior Director and Head of West and North, Residential Services and Developer Initiatives at JJL. 

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

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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. 

The cost of building real estate in India is predicted to increase by 6% by 2024, with Mumbai being the most expensive city

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JLL’s most recent Construction Cost Guide predicts that in the financial year (2024) across all sectors, the nation’s overall construction costs will rise by an average of 6%. 

With higher prices, Mumbai remains the most expensive city overall, but Chennai is a more cost-effective option. The increased cost of necessary building supplies like cement, structural steel, reinforcement steel, and stones is the cause of Mumbai’s higher prices. 

The handbook offers information on real estate asset construction costs and market trends in important Indian markets. It contains an analysis of market trends for key building materials and a cost matrix representing various styles and quality levels.  

“To maximize expenditure, businesses are currently reevaluating their real estate decisions. The general trend is clear: construction costs are rising, even though the precise impact of the pandemic on these costs is still up for debate, according to Jipu Jose James, Managing Director, Project Development Services  (PDS), JJL, India. 

Customer spending is therefore anticipated to prioritize functions that improve the end-user experience. Cost management is essential to maintaining budget control and completing commercially and qualitatively viable projects. 

An increase in labor costs  

While several factors affect building costs in India, labor is also a key component in the country’s economic expansion. As a result, the supply-demand gap is narrowing as construction shifts to non-metropolitan and rural areas, resulting in a more stable labor market and lower wage inequality, according to the report. 

Labor rates have risen by an average of 6% per year over the last three years, increasing construction costs by about 2%. The industry heavily relies on its workforce, as evidenced by its increase to approximately 71 million employees in FY2023, up from 63.98 million the previous, year, due to urbanization and rising infrastructure demands. 

However, this growth is primarily in unskilled labor, exacerbating the skilled worker shortage. Lack of vocational training institutions impedes skill development, according to the report. 

According to the report, global construction costs will rise in the coming year. 

The US, EU, and UK are potential areas for real estate expansion for Bengaluru-based RMZ Corporation

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RMZ Corporation, a Bengaluru-based company, is headed west. “Indian-founded but global alternative asset owner” is the company’s stated global. In the next 12 to 15 months, it hopes to close free real estate deals in the US, EU, and UK, according to Mihir Menda, RMZ Corporation’s Supervisory Board Member. 

He disclosed to HT Digital that the business intends to grow internationally. “It is undoubtedly rooted in risk management. The tale of India is amazing. However, we aspire to be an Indian-founded, worldwide owner of alternative assets,” he declared.

The business has been “actively examining the UK and the EU.” And moving out of India is a fantastic transition. In the years to come, the US will also be on our minds, especially because the country’s commercial real estate is now experiencing a mini-depression. With the capital-rich structure, now is the perfect moment for someone to enter the picture. There are many options available to you for rapidly recycling your capital. Additionally, he told HT Digital, “There are good opportunities where you can invest for the long term.” 

Mihir Menda is a supervisory board member and a second-generation leader currently based in the US. He is involved in establishing strategic alliances and researching potential new international markets. 

By 2032, RMZ hopes to own $100 billion in value of assets in its portfolio. 

Menda made the following statement regarding the company’s goal: “It is ambitious but achievable.” 

With a shorter investment horizon, he stated that the ‘next generation’ at RMZ “wants to invest in opportunities.” Brownfield sites “where a developer may have defaulted” may fall under this category.

“We could dive in and finish it by contributing our expertise. That eliminates the need for the first two to three years of foundation work, excavation, obtaining permits, and other associated hazards. Furthermore, earning your first dollar takes three years instead of seven.  

The business might also be “happy to consider the acquisition and investment of certain core portfolio opportunities in addition.” And that might be Grade B plus Grade A less any assets we believe have room for additional value.” 

For a $2 billion price, RMZ Corporation sold Brookfield a sizable portion of its commercial portfolio in December 2020, including co-working space and 18% of its commercial assets. Thus far, the business has sold 12.8 million square feet. 

The Menda brothers’ privately held company, RMZ, has chosen to expand into other real estate markets after specializing in building Class-A office buildings. In November 2023, RMZ Corporation announced a significant investment of $7 billion over the following five years to develop $25 billion worth of office, residential, warehousing, hospitality, and mixed-use projects across major cities as part of its business expansion strategy.   

RMZ intends to concentrate on asset classes with higher dollar returns. 

The company is concentrating on asset classes and regions that “give better dollar returns,” according to Mihir Menda.  

“It is that simple. If the residential prices are comparable today, it could be Manhattan or Mumbai, or it could be, you know, one or the other wherever the deal looks sweeter,” he continued. 

RMZ is also examining properties in distress. 

The business is willing to consider distressed assets as well. 

“In general, we are considering investments, assets, and project developments— both green and brownfield—that have the potential to add value. 

You might be able to invest 20 cents to a dollar because the asset itself generates rent, even though the current owner might have, for example, fallen behind on the loan. It could be an opportunistic investment or, occasionally,  a core investment. Simply put, you are investing at the right time to ensure it will be profitable,” he clarified. 

When asked if the business would invest internationally through a subsidiary, he responded that the real estate company is not considering doing business with other entities. 

“…..our goal is to have RMZ, the owner of global alternative assets with funding from India. As a result, RMZ will be handling it rather than a set amount of capital,” he said. 

Mumbai and Manhattan are also being compared in the business’s consideration of an “international foray.” We simply compare the areas where we receive higher returns before investing. He stated, “We are not comparing sources or setting aside any quantum for this. 

Timelines 

According to him, the business is “aggressively pursuing” opportunities for global expansion and should be closing a few deals “within the next 12 to 15 months.” 

Indian versus international real estate  markets 

Contrary to other regions, Menda claimed that commercial real estate in India is relatively shielded from the real estate problems faced by other nations. 

He sated that due ti mismanagement of cash flows, rising finance costs, and asset refinancing difficulties, Class A  commercial assets in Manhattan, for instance, are trading at 25 to 30 cents on the dollar. 

However, none of this takes place in India. And  the beauty of India is that, despite  being on the verge of overtaking the United States as the world’s third-largest economy, it remains relatively immune to the real estate crises plaguing most of the other economies we discuss, particularly those in Europe and the United Kingdom. 

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

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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

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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. 

Pune’s property market data for March 2024 saw a 52% YoY increase in property registrations

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 The Maharashtra government collected Rs 804 crore in stamp duty in Pune in March 2024, a 30% YoY increase from Rs 621 crore in the same month in the previous year.  

In March 2024, 21,744 properties were registered in Pune, a 52% increase from 14,309 the previous year. The Maharashtra government’s Department of Registrations and Stamps (IGR) reports that stamp duty collections during this period amounted to Rs 804 crore, indicating a 30% YoY increase. 

The sum in stamp duty collected as of March 2023 was Rs 621 crore. 

An increase in the number of properties purchased in March 2024 for more than Rs 1 crore 

March 2024 saw the largest residential unit registrations, or 33% of all housing transactions, for units priced between Rs 50 lakh and Rs 1 crore. Comparably, 32% of the market share was accounted for by properties priced between Rs 25 lakh and Rs 50 lakh. According to a Knight Frank analysis, the percentage of properties priced under Rs 25 lakh also increased significantly, rising from 16% in March 2023 to 21% in 2024. 

There was a rise in the market share of the higher value segment, which includes properties priced at Rs 1 crore and above. The proportion of properties in this category increased from 10% in March 2023 to 13% in March 2024, suggesting a growing inclination towards properties within this price range. 

An increase in the desire for larger apartments 

The market share of apartments between 500 and 800 square feet was 40% in March 2024. Comparably, units smaller than 500 square feet also garnered much attention; in March 2024, they accounted for 35% of all transactions, making them the second most popular apartment size. It demonstrated that the market share of larger apartments— those larger than 1000 square feet– stayed steady at 13%. 

“Pune’s real estate market is still growing thanks to a robust demand for homes, reasonable prices, and ideal circumstances. A notable 52% increase in registrations in March 2024 over the same month the previous year set a positive tone for the upcoming quarter, according to Knight Frank India Chairman and Managing Director Shishir Baijal.  

52% of buyers in the 30 to 45 year old range range 

Homebuyers between the ages of thirty and forty-five made up the largest buyer segment in the Pune market, with a sustainable 52% share. Homebuyers between the ages of 45 and 60 made up 18% of the market, while those under 30 made up 24%. 

The analysis revealed that professionals make up a significant portion of the market, especially in the 30-to-45-year-old age range, which is the largest segment. 

The Goa SCPCR calls for the Labour Commissioner and the MD of Ambiance Real Estate Developers

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Several infractions of the 1996 Buildings and Other Construction Workers Act have been brought to the attention of the Commission. 

  • Unsafe Living Conditions: Without basic utilities and in makeshift housing with potentially dangerous materials, the children and their families were discovered to be living in risky conditions. 
  • Lack of Creche Facilities: The location flagrantly disregarded the necessity to provide creche facilities, which is essential for the safety of the kids employed in construction. 
  • General safety violations: There was a compromise to the site’s overall safety because no measures were taken to guarantee basic sanitation or prevent injury. 

The hearing will cover all of these topics in detail. The parties responsible must submit a thorough report and plans to improve the existing circumstances. Serious legal action under applicable statutes will follow noncompliance with these expectations.   

The Goemkapronn desk 

PANAJI: In response to the horrific abuse and death of a 5- 5-year-old girl, the Goa State Commission for Protection of Child Rights (GSCPCR) has taken a strong stance against violations of children’s rights at the New Vaddem Vasco construction site. This incident has exposed the appalling and harsh living conditions that children and their families are subject to at this location. 

The GSCPCR is a legally mandated statutory body tasked with monitoring the protection of children’s rights and examining complaints alleging these rights have been violated. By the law, the Commission has called a crucial hearing for May 2, 2024, including the Chief Labor Commissioner and the Managing Director of Ambiance Real Estate Developers. The purpose of this meeting is to discuss the violations in detail and make sure that thorough corrective action is taken right away. 

Strongly denouncing the abuse and neglect discovered during the inspections was Chairperson Mr. Peter F. Borges. “Defending our children’s rights is more than just an act of kindness; it is ingrained in the legal system and permeates every aspect of our society. We now have a situation where and permeates every aspect of our society. We now have a situation where our kids are fighting for their lives in dangerous living circumstances rather than having fun and learning. 

Mr. Borges said, “Under our supervision, this cannot and will not continue.” 

He continues, saying, “The most defenseless people in our society should not be treated with such flagrant contempt. This Commission will guarantee justice and accountability. 

Chairperson Mr. Peter F. Borges’ visit to the construction site revealed the terrible conditions.  

The grave circumstances were made public when Chairperson Mr. Peter F. Borges visited the construction site. “The victim’s family was found living in extremely inhumane conditions directly at the construction site during an inspection led by the Hon’ble Chairperson of the Goa State Commission for Protection of Child Rights,” reads the official notice. 

The grave circumstances were made public when Chairperson Mr. Peter F. Borges visited the construction site.

In New Delhi and Mumbai, Tesla looks for showroom space in shopping centers, high streets, and commercial districts

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According to people familiar with the situation who spoke with HT Digital, Elon Musk’s Tesla has held preliminary discussions for showroom space in high streets, mall locations, and commercial districts in New Delhi and Mumbai with several real estate developers, including the biggest player DLF and Maker Maxity. 

Musk is anticipated to make a major announcement regarding a major investment in the third-largest automobile market in the world when he visits New Delhi the following week to meet Prime Minister Narendra Modi. 

“They require between 3,000 and 4,000 square feet of showroom space, which they need soon. Rental prices will vary depending on the location,” one of the individuals remarked, requesting anonymity. 

DLF did not reply to HT Digital’s questions. 

It should be noted here that DLF has leased retail space to Porsche in Capitol Point in Connaught Place and to Kia in DLF Cyber Hub, Gurugram. Vehicle dealership rentals are location-specific, according to real estate experts. “In the Connaught Place area, it may be anything above Rs 600 per sq ft. Car showrooms generally can pay higher rentals, often a premium of 25% to 30%. “They frequently become the standard for more expensive commercial rentals in a given area,” they stated. 

Moreover, rumors are circulating that Tesla is reportedly looking for showroom space in the Maker Maxity commercial development in Mumbai’s Bandra-Kurla Complex. 

Tesla and MakerMaxity have received emails from HT Digital. 

How do high-end automakers choose their parking lots? 

According to experts, showroom locations with easy access to the main road are typically sought after by luxury car manufacturers. 

These are frequently found in areas of the city that are easily accessible to wealthy customers. “The showroom ought to be situated somewhere where automobile deliveries are convenient. Better accessibility infrastructure ought to be present. Large hallways, spotless sidewalks, and a layout that enhances visibility were mentioned. 

Several international car brands have showrooms in Gurugram along Golf Course Road. Mercedes and BMW are a couple of these. High net-worth individuals live in this area. According to sources, Maserati is anticipated to open a showroom along this stretch. According to them, the expense of renting a car showroom at this location can reach Rs 600 per square foot. 

According to a different real estate expert, residential clusters home to the wealthy and well-known are the first choice for luxury car showroom spots alongside those with prestigious corporate offices. 

Aralias, Magnolias, and DLF Camellias are a few of the lavish residential developments along Golf Course Road. 

Renting out a luxury car showroom is based on how much room is available for branding, signs, and ads. A real estate expert states that a corner showroom space with two-sided visibility will bring in more money for rentals. 

According to a recent Reuters report, Tesla is making right-hand drive vehicles at its Berlin facility with plans to export them to India later this year. The report claims that Tesla executives started actively looking for locations in March. They have already had initial discussions about it with real estate developers.   

According to the statement, the ideal locations will likely be at possible malls and high street locations. Tesla has declared that it wants to begin building as soon as possible, with an opening date of 2024 likely.