Monthly Archives: December 2013
Year 2014 may pretty well be considered as the year of real estate maturity.
There is an all-pervasive view that after the general election in 2014, REIT, FDI in retail and a number of other funding options for the real estate sector will actually be put in place.
Real estate, after all, is a game of market sentiments and those sentiments can be revived within a few months on the back of sound economic fundamentals and market demand. Even foreign investors maintain that Indian economic fundamentals are worth a look—the worry is policy ambiguity which deters serious investors. Realty expert say that the decline in the number of launches will help property owners firm up their rents and also help new sellers in the resale market to demand more in capital value terms.
In the New Year, for the first six to eight months, growth momentum may not be the same as it used to be during the boom period between 2006 and 2008. However, economic indicators suggest that the market is poised for growth in the second half of the year after the general election in May 2014.
Buyers can be cautiously optimistic about a healthy recovery in the real estate market, as existing conditions favour a long-term investment horizon. While there may not be any corrections, buyers can bargain for some discounts on the quoted rates in new launches.
Investors and buyers continue to chase residential real estate assets, especially those properties which are mid-sized and priced reasonably and offer locational advantage and good infrastructure. While there is demand for affordable housing, premium properties too have attracted buyers in prime cities of the Delhi NCR, Bangalore, and Mumbai. However, most of the demand is in the Rs 3,500-5,500 per sq ft segment.
The depreciation of rupee provided a good opportunity to the NRI and high-value buyers of property in prime locationswhich improved the sale figures—although the bottom lines remained sluggish due to increasing cost of raw materials. Developers and builders expect development authorities like the Noida-Greater Noida authorities and the Yamuna Industrial Development Authority to settle land-acquisition issues of the farmers of Noida, Greater Noida, and Yamuna Expressway peacefully; this would improve the law and order situation in the area considerably and ensure smooth implementation of the projects lined up in these regions.
Rakesh Sharma, director of Antriksh Ideal Group, says: “Going forward, the supply situation will remain subdued due to the deferred completion of a number of new projects and reduction in number of launches across categories. Therefore, residential prices will see marginal increase in 2014. The supply levels are likely to improve in the second half of 2014.”
R K Arora, CMD of Supertech Ltd, says: “Year 2013 was a mixed bag of cheers and tears for the real estate industry. The uncertainties and the potential impact of Real Estate Regulatory Bill and Land Acquisition Bill continue to haunt developers, as these come with stringent penalties for delays, which are beyond the control of developers. The good news is the resolution of the land-acquisition issue in Greater Noida West; resumption of work there is music to the ears of developers and flat buyers. The long-standing demand of real estate industry for the central government to grant it the status of industry, which will help developers avail project funds from authorized sources among other things, needs to be addressed without delay in the New Year.”
Manoj Gaur, MD of Gaursons India Ltd, says: “The right product for the right market is one loud message coming out of Year 2013, and the developers who have done this research are doing well despite the slowdown. I am hopeful that the year ahead will be better than the current one, especially in the second half of 2014, when there will be clarity on the political and economic front after the general election. A lot is expected out of the next budget—the market sentiments will start changing thereafter.” Rakesh Yadav, MD of Antriksh Group, says: “The real estate is moving in the right direction despite a very stressful year. Policy makers will be forced to take cognizance of the contribution
of the sector to the Indian
GDP—it remains to be
seen whether that happens
with the next budget or after the election. But what can be vouchsafed is that managing the shortages is not the solution any more. The government has to take investmentfriendly steps to create surpluses now.”
Ashok Gupta, MD of Ajnara India Ltd, says: “There is growing evidence that though international investors and domestic investors seemed to target commercial property at the beginning of the Indian real estate boom, residential property is now more in demand. There are a number of reasons for this increase in demand for residential property, many elements of which are likely to continue for some time to come.”
Sushant Muttreja, MD of Cosmic Group, says: “While the Indian economy is expected to grow by 5% towards the end of 2013-14, this is well below the mark set during the boom time of recent years. Indeed, the RBI is forecasting that inflation will come down to around 5.3% by end 2014, which seem fairly high, but is certainly a major improvement on the current level of 6.5%. As a consequence, financial institutions are now limiting ready finance for the real estate sector.”
Deepak Kapoor, director of Gulshan Homz, says: “It is no surprise to learn that international and domestic investors are now targeting partiallycompleted developments, which only require additional finance to get them over the finishing line. So, taking account of the lack of new developments and the relatively small number of partially-finished developments, this will likely help maintain real estate prices in the short to medium term.”
Kushagr Ansal, whole-time director of Ansal Housing, says: “The Indian and Chinese economies have performed extremely well over the last five years or so, especially in light of the US mortgage crisis which impacted economies worldwide. Of late, there has been a slowdown in economic growth, which has perhaps caused many economists to rein in their optimistic forecasts from just a few months ago.”
However, the long-term dynamics of the Indian real estate market are still intact—a growing population, an expanding economy, increasing international investment, as well as a humongous middleclass which continues to grow even during these challenging economic times,” Kushagr Ansal says.
Rajesh Goyal, CMD of RG Group, says: “There is pent-up demand for a long-term real estate development in India. The economy is starting to improve again and inflation is set to fall significantly, which should ensure a steady long-term progressive Indian real estate market. There may be issues outside of the control of the Indian authorities but the dynamics required to expand the Indian residential real estate sector, as well as the commercial real estate sector, are certainly in place.” Vijay Jindal, CMD of SVP Group, says: “Though the realty sector made a promising start initially, compared to last year, the sentiment dampened due to rise in construction costs and rising rates of land and labour. Added to these woes were economic factors like plummeting rupee, abnormal rise in inflation and overall financial crunch faced by the end users—all of which made realty growth extremely sluggish. Let us hope the coming year brings a ray of hope that is beneficial for developers and buyers.”
Rahul Gaur, CMD of Brys Group, says: “Looking forward, the first half of the year 2014 may not be much different from 2013, but the second half promises to change the market dynamics. Developers also seem to have learned their lessons in the last four-five years, which saw the market tumble and started hurting our business. I think this will be a turnaround year for all the stakeholders.”
Gaurav Gupta, director of SG Estates, says: “Year 2014 looks to be the year of hope after a dull and average 2013. We hope to get a stable government by the middle of next year and, hopefully, inflation too will ease by March. As the rate of interest is at a peak, from here onwards it is expected to only fall. Also, it is expected that the new government’s policy will be clear on REITs and inflows may start in 2014. This will ease liquidity pressure, especially in commercial real estate.”
Kaushal Jain, MD of Arihant Group, says: “Homebuyers have complained about the high price rates of residential property this year, which is why demand did not take off as expected. This led to huge inventory pileup, which developers had to sell by offering freebies during the festive season. At the same time, realty players have also had to grapple with raw material costs as well as other external and internal development charges. The new government must come up with coherent and sustainable policies which will retain investors’ interest in the sector.”
Vikas Jain, MD of Sarvottam Group, says: “Year 2013 was full of ups and downs for real estate industry; rising inflation brought real estate to a low point while the land acquisition bill deepened the misery. But at the other end, REIT is a ray of hope for the industry to solve the liquidity crunch while the FDI in real estate could well be the biggest pacifier.”
Sanjay Rastogi, director of Saviour Builders, says: “Year 2013 started on a positive note with interesting launches across India and the sector was very much upbeat about a realty boom. But the industry was soon dogged by economic slowdown, falling rupee, escalating property prices, slow progress in infrastructural development and a host of other issues. All these came upon us at once and pulled down all hopes of a revival. Looking at the coming year, we expect some favourable and unbiased policies from the government so that we can bring up affordable housing for homebuyers.”
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With over 24 years of experience in the real estate business, Supertech Limited has already delivered more than 33 million sq ft of residential and commercial entities. In addition to the metro cities, such as Noida, Greater Noida, Gurgaon, Ghaziabad and Bangalore, the developer also has a strong presence in smaller cities such as Meerut, Moradabad, Haridwar and Rudrapur. Currently, Supertech has over 75 million sq ft under construction. In conversation with Magicbricks.com’s Nikunj Joshi, R K Arora, chairman & managing director of Supertech Limited said that owing to infrastructure upgrades announced by Uttar Pradesh government, Noida realty market will continue to grow in 2014.
What are your expectations from the Noida’s real estate market in the year 2014?
Noida has experienced a period of unprecedented growth over the last few years, which is expected to continue in future also. It has emerged as a well-developed micro market having substantial office and retail space, with commercial activity deepening in its various sectors. Rapid commercial development has led to a spillover of housing growth in and around the region. Also, benefitting from metro extensions, expressways, wider highways and release of land parcels, Noida promises to be a great residential destination in the coming year.
Which areas are expected to see maximum real estate development in 2014? Why?
There has been a lot of development across various sectors in Noida, witnessing healthy absorption trends. Yamuna Expressway is becoming a hub for the real estate market. The projects in the area have received overwhelming response and the fact that the land prices are still low as compared to Noida and Greater Noida makes it a perfect location for investment. Greater Noida West will also be in the limelight for progressive growth of residential and commercial hubs. Great infrastructure, good road network and metro connectivity are the prime reasons that have enticed the buyers and investors to this area.
What will be the impact of the upcoming general elections on the real estate sector in Noida?
Certainly, there will be a temporary setback as the industry will face labour shortage, putting more stress on the developers as well as buyers. After the recent elections in four states, the sales have started improving. We are hopeful that the same will repeat in the forthcoming general elections also and once a new government is formed, the market is expected to improve significantly.
Which locations in the city witnessed maximum launches in year 2013? Why?
Owing to the presence of abundant land parcels and competitive affordability, project launches were concentrated in Greater Noida West and Yamuna Expressway in comparison to prime locations of Noida where land is scarce and costly.
Any infrastructural development that had a positive impact on the real estate sector in the city in 2013?
Many infrastructural developments took place during the year but the biggest developmental kick was the announcement of 12 projects worth Rs 3,337 crore by Uttar Pradesh government to develop infrastructure across the state. The projects encompass Noida, Greater Noida and the Yamuna Expressway. Also the proposal of a new metro rail network between Noida and Greater Noida will further boost the area’s realty market.
Did you launch any new projects in 2013? If yes, where? Have you given possession of any of your projects in 2013?
While we launched residential projects Araville and 48 Canvas in Gurgaon, Albaria and King Towers in Greater Noida (West), Golf Village, Disney Inspired Fable Castle in Yamuna Expressway and River Crest in SIDCUL Rudrapur during the year, we gave possession in Supertech Livingston-Ghaziabad, 34 Pavilion – Noida, Palm Greens/Meerut Sports City – Meerut and Czar Suites – Greater Noida.
What includes your wish list for the real estate sector in 2014?
Government agencies should settle the issue of farmers in Noida to ensure smooth implementation of projects; Real estate should be given the status of ‘infrastructure’ by Central Government to avail funds from authorised sources; Clarity on policies concerning special economic zones, land acquisitions and certain taxes and single window clearance to fasten the approval process.
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If you get to choose between buying a beach house in Florida and an apartment in Gurgaon, what would you prefer? While the great American dream may seem like obvious choice to many, the dollar-rich expatriates think other way around.
The reasons are quite simple – higher rate of appreciation, better periodical returns on investment and a consistently-weak rupee. No wonder, the non-resident Indians (NRIs) are preferring to invest in Gurgaon over international destinations. On one hand, most international property markets are still struggling to recover from the impact of recession, on the other Gurgaon has managed to grow consistently over the last decade.
“We were lucky to have invested in a flat in Orchid Petals back in 2003. The property that we had brought for Rs 49 lakh is now worth Rs 1.8 crore. All the property we had brought in the USA has gone through devaluation. If we were to sell anything today, we will not even be able to our original investment back,” said Malay Mondal, an IT professional who works with Apple Inc in Chicago.
Property agents and consultants say calls from NRI clients have shot up again ever since the fall in the value of rupee. “We get three to four genuine calls from Indians living abroad who want to invest in Gurgaon’s upcoming projects every week. We also get calls from those who want to buy apartments to shift back home,” said Ajay Midha of Ray White, a global property management company which has recently set-up shop in Gurgaon.
The advantage of weak rupee, however, is not there for short-term investors. “Even if NRIs buy more property here now, they would have to wait to sell them till the recovery of rupee,” said, Avinash Piplani, a property agent.
The leading property dealers in the city have special teams dedicated to NRI investors.
“For us, it’s almost like managing an investor-portfolio. We provide our clients end-to-end services. It’s not just about selling a property, but also about maintenance, getting tenants and resale. Most of the NRIs showing interest in the Gurgaon properties are living in USA and Australia.
With infrastructure upgrades such as widening of NH-24 and the upcoming metro, the linkages between Delhi, Ghaziabad and Noida are expected to improve leading to real estate growth in these areas.
Infrastructure is the basic physical and organisational formation that is essential to set up a developed and inhabitable society. It is the set of interconnected structures that provide a framework for urban civilisation that helps facilitate smooth functioning of the economy. It comprises of well crafted network of roads, bridges, flyovers and foot-over-bridges (FOB), water supply, sewer system, electrical grid and telecommunication, which has now become synonymous with NH-24.
Infrastructure development at NH-24 has emerged as a quintessential example of modern day, with smart connectivity, wide communication network and growing IT/ITeS for employment, that suits the needs of the urban society. With the advent of authorities such as Ghaziabad Development Authority (GDA), Nodia Authority, NHAI has possibly made connectivity, flyovers and FOB available to a substantial population that seeks homes around Ghaziabad, Noida and Greater Noida. One of the most positive developments along NH-24 has been the plan to widen the 21-km stretch from UP Gate to Dasna, into an eight lane corridor.
Proposed Metro connectivity is another major factor that has the potential of changing the face of infrastructure. It will not just help commuters to travel but also resolve the problem of congestion on roads because of traffic. Once the plan gets a green signal, the metro line will further be connected to the Indira Gandhi International Airport, which will furthermore appreciate the value of property in and around the area.
The proximity to the established residential and industrial corridors of Noida and Ghaziabad and accessibility to Delhi have been major factors that led to real estate developers showing interest here. Such advancement in infrastructure alone has led many developers to come up with a host of residential projects. Thus, there has been a surge in the project launches. From affordable to luxury, areas such as Ghaziabad, Noida, Greater Noida and Greater Noida West have projects to suit varied categories.
With improving connectivity and communication between Delhi, Ghaziabad and Noida, the real estate along the Highway and Expressway has become the latest fad across the region. Since the area has witnessed a number of budding IT, ITeS and other industries providing job opportunities for professionals, these areas have caught the attention of the young work force and entrepreneurs who have to travel far and wide for work. Thus, infrastructure and the improved links between diverse regions are of prime importance for any society to be a livable society.
The Haryana government’s proposal to do away with the restriction on property construction activities in ‘conservation zones’ across the National Capital Region was turned down by the planning committee of the NCR Planning Board on December 20.
Conservation zones cover forests such as Aravalis and water bodies, including the Yamuna bed and natural lakes like Damdama, Badkhal, etc.
Environment activists had opposed to Haryana’s move to delete the clause from regional plan which restricts construction activity to only 0.5% of owned land – that is, only 20 sq m in an acre. TOI has done a series of articles exposing the Haryana government’s move highlighting how this could give a body blow to the ecologically sensitive areas including Aravali and Yamuna riverbed.
Multiple sources confirmed TOI that Haryana’s proposal faced objection from people including officials who attended the planning committee meeting on December 20. It was attended by top officials from Haryana, Uttar Pradesh, Rajasthan and Union urban development ministry. “The deleted clause in the draft regional plan will be brought back since one of the main thrust of revising the plan is to make the region sustainable,” said an official who was present in the meeting.
The original plan 2021 says that recreational activities with no construction exceeding 0.5% of the area are allowed with the permission of the competent authority.
Though officials did not spell out what would be the relaxation for more construction since Haryana has planned a mega tourism complex on 500-acre in Mangar area, sources said that there could be a provision under which the state government has to take statutory forest and environmental clearances from the Central government. “These are tough conditions. The minutes of the meeting will bring more clarity on all these issues,” said an official.
However, those fighting for conservation of Aravali forests opposed any relaxation to allow construction in conservation zones. “Construction and conservation are either-or activities. Even a half acre farmhouse will lead to fragmentation – as construction will lead to roads, electricity and more construction. The revised regional plan 2021 should be unequivocal in zoning the natural conservation zones as no-construction zones, in which change of land use are not issued,” said SS Oberoi of Mission Gurgaon Development.
Earlier documents obtained by Oberoi under RTI had exposed Haryana’s move at the NCR Planning Board meeting on June 4, 2013. According to the minutes of the meeting, “Financial commissioner and principal secretary, town and country planning department, government of Haryana suggested that natural conservation zone [para 17.5.3 (iv)] relating to regional/ recreational activities, restricted constructions of 0.5% may be deleted.”
Locations such as Noida, Greater Noida, Expressway and Delhi NCR, have carved a niche for themselves as locations offering luxury homes above Rs 5 crores. However, do these properties have the scope for appreciation from the investment point of view? “Luxury and ultra-luxury projects yield much higher returns than projects geared towards the affordable and mid-income segments, the luxury segment in India is moving at a pace of 35 per cent per year.”
Are developers also focusing on this segment of housing? “Ultra-luxury projects have a tendency to garner extremely good presale volumes and therefore, their developers are generally able to secure significant fund flows to capitalise on the completion of their projects. While it is true that the input costs for luxury housing are high, the developer stands to benefit from the increased visibility of his brand among highly affluent, top-end clients.”
Offering state-of-the-art amenities such as double height living rooms, private pools and gymnasiums, these homes attract the island city’s well-heeled professionals and businessmen. These homebuyers are willing to pay a high price for luxurious apartments or penthouses, located in the most affluent locations in Noida. In most cases though, the major advantage of paying such a high premium is the freedom that the homebuyers get to customize their homes according to their choices and requirements.
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“The high price tag for luxury homes is justified through facilities such as customization of interiors, wall finishes, flooring, bathroom fittings and concierge services. While there is a standard design of apartments, nearly 80 per cent of the clientele, opts for customization and does not mind paying an added amount for it.”
Of the top eight cities, the National Capital Region (NCR) saw the least number of units being launced, which stood at 38,000 this calendar year. The decline, when compared on an all-India basis was 33 per cent year-on-year.
The mid-segment, in the NCR registered the highest number of units launched at approximately 26,000, followed by the affordable segment which saw launches of approximately 25,000 units. Viewed on a segment-wise basis, both categories saw substantially reduced numbers with the affordable segment slipping by 29 per cent and the mid-segment by 37 per cent over the previous year.
There were no launches in the luxury segment. Also all the launches were divided between Noida and Gurgaon with Delhi not witnessing any new housing unit launches this calendar year.
Following the trend in 2012, more than 90 per cent of the new launches in 2013 were in the affordable and mid segment. While the first half of calendar 2013 saw launches primarily in the affordable and mid segment with marginal (2 per cent) contribution from the high-end segment, the second half on the other hand witnessed 18 per cent of the total launches in high-end segment.
In the current economic scenario both buyers and developers are taking a cautious approach not only towards residential real estate but across all asset classes of real estate. However, given that most aspects of development such as construction cost, development cost, cost of land, time taken for approval and cost of debt all have been on an upward tangent developers have not been able to lower costs.
Over the past year Delhi locations have registered a decline in capital values while Gurgaon and Noida witnessed appreciation due to relatively lower ticket size and new project launches which offered construction linked plans as opposed to ready properties in Delhi locations. The high-end segment in NCR markets of south west, south east and luxury category in Gurgaon all saw a decline in capital values to the tune of 5 7 per cent over the last year mostly on account of achieving already high values which in the current market scenario looked unsustainable.
Due to pile of inventory and cautious buyer sentiments prevailing in the market amidst sluggish sales, the rental and capital values for high-end properties in Gurgaon saw a quarter-on-quarter decline by 3-12 per cent in calendar 2013 over the last quarter. The city saw reduction in investor activity with most enquiries generated by end users due to high gestation period of return and price points.
Demand & Supply
The total estimated demand for housing in top eight cities of India is pegged at 2.9 million square feet of which NCR is expected to generate the highest demand of 7,70,000 units mostly for mid-range and high-end segments in the period of 2013-2017. In the same time frame, the expected cumulative supply is expected to be around 6,00,000 — the demand- supply gap is expected to be approximately 22 per cent over the period. Some of this projected demand in the 2013-14 is expected to be met through the unsold inventory currently existing in the suburban and peripheral locations.
The gap between fresh demand and supply is expected to see an incremental expansion as supply will fall short on account of economic, regulatory and political scenario. However, some of the demand in the next couple of years can be met through the existing vacant stock.
In addition to the fresh supply, The New Delhi Master Plan 2020 is expected to unlock 66,000 hectares of land within New Delhi which is expected to largely cater to the residential sector. Thus new micro markets for residential development are expected to come up, it is yet to be seen in what proportion and configurations will these units will be created. While demand for housing units will grow proportionate to the rise in population, supply is expected to be less aggressive in the short to medium term. New regulations like the Land Acquisition Act and the real estate regulatory bill which are expected to come into force in the next few quarters will affect supply positively.
Real estate developers and property consultants have hailed Reserve Bank of India’s (RBI) decision to not raise the key policy rates, saying that the bold move by the apex bank would infuse positive sentiments in the property market.
RBI surprised the markets by leaving key policy rates unchanged, notwithstanding persistent high inflationary pressure. Developers hoped that RBI would soon be able to cut policy rates as inflation is expected to ease.
Commenting on the policy, DLF Group Executive Director Rajeev Talwar said: “It’s a welcome step. This is the first sign of recovery. If government can release food stocks to contain food-based inflation then possibly in coming time RBI may be able to take more steps for recovery of the economy.
“RBI governor has taken a bold step by keeping the rates flat,” he said.
Jones Lang LaSalle India Chairman and Country Head, Anuj Puri, termed RBI’s decision as good news for the realty sector at the end of the year.
“It is positive for the real estate sector as there was anticipation of increase in the interest rates, which would have been damaging for the sentiments of buyers,” Puri added.
Parsvnath Developers Chairman Pradeep Jain said the RBI has “acted wisely” by keeping the key rates unchanged.
“Though there was pressure to raise the rates due to the recent rise in WPI inflation , still the apex bank managed to handle it and held the rates at 7.75 per cent. This will give a positive signal in the market.”
Jain said he expected RBI to cut the key rates if inflation number comes down.
CREDAI-NCR President Anil Sharma said the RBI has “sweetly surprised” both the experts and industry players with its bold decision.
“We, at CREDAI-NCR, could not have asked for more given the high retail inflation of more than 11 per cent. The bold move by the RBI has infused positive sentiments in not only real estate sector but also other sectors of economy,” Sharma, who is CMD of Amrapali Group, said.
The consistent efforts of the RBI have already stabilised rupee against dollar, besides providing short term liquidity support to push growth simultaneously, he added.
“Experts are already expecting inflation to ease following arrival of winter crop in the wake of normal monsoon. Though the real estate developers’ community will have to wait little longer to see interest rates dipping, but given the right intentions of the RBI, we are confident of flawless run of growth thereafter,” Sharma said.
SARE Homes Executive Director David Walker welcomed the RBI’s step and hoped that the incoming data in the next months would support a moderation in the rate of inflation which could then lead to lower interest rates.
NEW DELHI: Office space absorption in NCR, the largest office market in the country, is slightly higher at 4.9 million sq ft during January-September period of this year despite economic slowdown in India as well as globally, according to property consultant Knight Frank.
In the first nine months of 2012, office space absorption stood at 4.8 million sq ft.
The NCR (national capital region) office market has remained rock solid amidst economic woes. The fact that office space take-up during the first nine months of 2013 has marginally exceeded that of the same period in 2012 clearly indicates strong fundamentals in the NCR office market.”
Gurgaon remains at the forefront of both new office space and absorption in the market, the consultant noted.
“Considering the current run rate of transactions and the level of pre-commitments, total absorption for the current year is likely to be in the range of 6.3-6.8 million sq ft. This is commendable given the weak global and domestic economic scenario,” the report said.
The consultant projected that the total absorption for the current year would marginally exceed the 2012 level.
“NCR is the largest office market in the country with an operational stock of 118 million sq ft of wh ..
The consultant attributed the upward movement in vacancy due to an additional 20 million sq ft of office space in the year 2010 and 2011.
Knight Frank pointed out that even though there has been remarkable improvement in occupiers’ interest this year, absorption levels still fall short by 20 per cent compared to 2011 when nearly 5.8 million sq ft of space was taken up.
A total of 173 transactions were recorded during January- September 2013 as against 163 transactions during the same period in 2012. The weighted average rental value stood at Rs 53/sq ft compared to Rs 56 in the year-ago period.
Majority of these big transactions took place in Gurgaon, clearly showing a preference for the market. Simultaneously, there was a notable rise in the number of smaller transactions with an area less than 5,000 sq ft due to increasing non-IT transactions.
Nearly 30 per cent of the absorption was contributed by the IT/ITeS sector which accounted for 1.5 million sq ft of office space during the first nine months of 2013, which is a substantial dip of 51 per cent compared with the same per iod in 2011.
On future outlook, Knight Frank said that leasing activity is expected to witness moderate improvement as corporates align their real estate strategies towards consolidation and relocation for cost benefits.
“Rental values are expected to move in narrow ranges as demand remains buoyant and supply is constrained especially in select micro-markets of Gurgaon,” the consultant said.
MUMBAI: Welcoming the 0.25 per cent rate cut by two of the biggest home loan financiers SBIBSE 1.24 % and HDFC, realty sector participants today said the move will help revive interest in the gloomy market.
“This is a positive move to boost property sales and spur industry growth. Home buyers who were earlier waiting for rates to come down will now certainly look at buying their dream homes,” industry body Confederation of Real Estate Developers Association of India (Credai) Chairman ..
The home loan rate cuts from certain banks have occurred after nearly a year, and will augur well for investment sentiments in the market,” property consultant CBRE South Asia’s Chairman and Managing Director Anshuman Magazine said.
It may be noted that the residential sector had suffered a major set back due to increasing home loan rates, which had forced buyers to postpone their home buying decision.
Magazine also welcomed Reserve Bank’s move to hold on to its key rates despite the high inflation, which resulted in the rate cut announcement by SBI and HDFCBSE 3.05 % last evening. He said the move is a positive signal for the investment climate.
SBI, the country’s largest lender, first announced a rate cut of 0.25 per cent in its home loan rates yesterday, forcing HDFC, the second biggest home loan financier, to respond.
The move came a day after the Reserve Bank of India kept its key policy rates unchanged. The short-term lending rate was kept unchanged at 7.75 per cent, while the cash reserve ratio ( CRR) remained at 4 per cent.
According to watchers, the lenders were also enjoying a reduction in provisioning for some time, which will now get passed on.
SBI home loans will now be available under two slabs — under Rs 75 lakh and above Rs 75 lakh. SBI loans of up to Rs 75 lakh would now be available to fresh borrowers at 10.15 percent as against HDFC’s 10.25 per cent.
SBI has also given an additional concession of 0.05 per cent to women borrowers, after which the borrowing rate will be 10.10 per cent for home loans of up to Rs 75 lakh.