RESEARCH INDIA REAL ESTATE INDIA REAL ESTATE RESIDENTIAL AND OFFICE - JANUARY - JUNE 2017 AHMEDABAD | BENGALURU | CHENNAI | HYDERABAD | KOLKATA | MUMBAI | NCR | PUNE 1 RESEARCH INDIA REAL ESTATE TABLE OF CONTENTS Connecting ALL INDIA 18 AHMEDABAD 28 People BENGALURU 38 CHENNAI 52 & Property, HYDERABAD 68 KOLKATA 80 Perfectly. MUMBAI 94 NCR 110 PUNE 128 2 3 RESEARCH INDIA REAL ESTATE FOREWORD CHURNING POINT it would trigger some momentary sector is an undeniable reality. Indian Rupee has been a top performing disturbances but augur well for the industry currency among its market peers over the There is ample heartburn across the in the long term. Among the various The regulation is set to bring a sea change past couple of years. industry in the wake of the new regulatory economic policies of the Narendra Modi- in the realty landscape of the country by environment. Widespread anxiety whipped led government, this will be one of the most attracting new investors and customers. The strong fundamentals, robust economic up by the implementation of the Real important milestones. growth, political stability, controlled Estate (Regulations and Development) Act, It will give long pending protection to inflation and the lower interest rate regime 2016 and the recently rolled out Goods GST would be extremely beneficial for the interests of the end-consumers and have improved India’s chances of a and Services Act (GST) reflects in the the logistics sector. With a wave of new give a substantial fillip to the confidence sovereign ratings upgrade within the next 2 transaction books. infrastructure taking shape in the forms of of various stakeholders including fund years. Albeit, the recent loan wave-offs can ports, roads and rail networks, the new tax providers such as banks, other financial be a cause of concern. SHISHIR BAIJAL New launches have dried up, home sales regime would draw massive investments institutions and private equity funds. CHAIRMAN AND MANAGING DIRECTOR have slipped and piles of unsold stock are which would potentially transform the look Considering the benign inflation numbers The sector would also transform into a evident. But at the same time there have and feel of the warehousing industry. we hope that the Reserve Bank of India been some positive takeaways which will more organised and transparent place (RBI) to adopt a growth-inducing dovish augur well for the sector in the long-term. The impact of GST on real estate would under this regime. We have seen in the monetary policy. There is an indisputable switch towards be primarily tax neutral but loaded with past that regulators have brought in more building affordable homes. Co-working gains for the affordable housing sector. The efficiency and transparency in telecom, A growing economy would signal healthy n overhaul entrenched deep space providers are emerging as the new finance ministry has made it very clear that insurance and financial sectors. The consumption across all genres of the beneath the usual look and feel of big ticket players in the occupier market. there should be no additional tax burden information pertaining to the real estate Indian real estate. With tamed inflation, imagination is taking shape in the A And, the logistic sector is attracting million- on consumers. It would also add another sector will be available in a systematic uptick in industry sentiments and a good Indian real estate sector. dollar investments. strategic push to affordable housing manner leading to easy accessibility and monsoon forecast the need of the hour is transparency. to embrace a monetary policy that propels Metro cities are bustling with massive which in turn will drive the recovery of the In a nutshell, the Indian real estate growth. beehive-like infrastructure work, affordable residential sector. sector is probably grappling with the The government’s push towards affordable homes shaping a new skyline, investments fear of the unknown. We experienced a The intention of GST is to bring in housing, banks cutting down home worth millions of dollars pouring in similar dilemma in the recent past when efficiency in the entire tax system, the loan interest rates and uptick in buyers’ from sovereign funds and a significant demonetisation crippled growth. But implementation of which will see lot of sentiments would collectively revive the section of fringe players are on the edge six months on, the sector is looking up teething issues. But eventually it will pave much-ailing sector. engulfed by a new order of reforms driving towards a bright future. the way for an extremely efficient tax consolidation in the industry. system for the country. Meanwhile the initial concerns from GOING FORWARD Secondly, the RERA Act has drummed geopolitical uncertainties such as the US TRUMP CARDS up buyers’ confidence back in the sector. India is perhaps the only bright spots polls, BREXIT and other crucial elections in We have already seen the spontaneous among emerging markets in the world Europe have also faded away. First, the much awaited roll out of the action by the Maharashtra regulator or the Goods and Services Tax (GST) would today. The International Monetary Fund’s MahaRERA. Even as other states struggle With all economic indicators in the pink of be the single largest tax reform post- recent World Economic Outlook has to bring out their respective versions of the health the need of the hour is to embrace a independence. Much like the initial predicted an envious growth rate of more central act the new order in the housing monetary policy that propels growth. heartburns caused by demonetisation than 7% for the country. In addition the 4 5 RESEARCH INDIA REAL ESTATE assets like bonds, commercial assets of the currency has appreciated against the investors to invest in this sector. private developers and REITs in emerging U.S. dollar; which further substantiates markets. The increase in interest rates in the the strong macros. In addition to the developed markets has also caused their improving macros, a slew of policy reforms ARE INVESTORS RESPONDING? domestic currency to strengthen and assets taking place in the country have wooed The government’s emphasis on housing in emerging markets have started becoming foreign investors back to its shores. The and its efforts to mitigate the risks in cheaper from the investment perspective. new government has implemented several the real estate sector by introduction As these emerging markets develop and reforms to streamline and formalise the of RERA has not gone unnoticed by grow, over a period of 10-15 years their economy across all sectors. The recent foreign institutional investors and also currency would strengthen against the roll out of the Goods and Services Tax the sovereign and pension funds. A large currencies of developed markets and hence (GST) Act could be the corner stone in this number of these investors and funds have at the time of exit, the long term investors endeavour. made changes to the portfolio allocation would not only gain from appreciation in strategy allowing investment exposure to assets but also gain from movement in Indian real estate. The pension and private exchange rate. The strong fundamentals, robust economic equity funds are investing in commercial growth, political stability, controlled inflation assets (office spaces and malls) and also in and the lower interest rate regime have under-construction residential properties. INDIA: RESURGENCE OF THE GEM OF improved India’s chances of a sovereign Players such as Qatar Holdings, CPPIB, EMERGING MARKETS ratings upgrade within the next 2 years Blackstone, Ivanhoe Cambridge, APG and However, the recent loan wave-offs can be Post the financial crisis in 2008 developing Xander are readying blueprints for long- major cause of concern for deferring the countries like Brazil, Russia, India, China term investments in the realty segment. Not upgrade. and South Africa (BRICS) among others just foreign investors even the domestic played a crucial role in driving the global investors are raising funds to invest in this economy forward. But over the period of sector. INDIAN REAL ESTATE: INDIAN REALTY: time unaddressed structural problems A NEW PARADIGM ON ANVIL coupled with high currency volatility in AN UNDERRATED these markets forced investors to move Real estate has been a key driver for the their money back to developed markets. economy. However, poor transparency While Brazil, Russia and South Africa were in the sector and dwindling consumer GOLDMINE. seriously affected by collapse in commodity confidence had put the industry under strain prices and political instability, weak in the past 3 to 4 years. government, policy paralysis and worsening The recent introduction of the Real Estate fiscal metrics crippled India’s growth story. (Regulation and Development) Act, 2016 As these emerging - BY NIBODH SHETTY has pumped in a new lease of life into markets develop and the sector. The is expected to weed out FLASHBACK The unemployment rate in major But the tables have turned. With a stable unorganised players from the industry grow, over a period of economies, particularly the US, has come government having comfortable majority in After nearly a decade-long era crippled and whip up buyers’ confidence bringing 10-15 years their below to its pre-recession levels and wage parliament, the confidence has returned. with economic and political uncertainty the buoyancy back into the sector. currency would growth has finally started picking up. The India has now become one of the fastest global economy has stabilised and showing improving job prospects accompanied growing economies in the world and would strengthen against the healthy signs of recuperation. A reflection with higher wage growth poses a threat of retain that status for the foreseeable future. currencies of developed of the resurrected economic environment The subsequent stride in re-engineering inflation rising rapidly.