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I want to assure homebuyers, says Nirmala Sitharaman on govt’s real estate push

12/10/2019 5:08:00 PM

Union finance minister on Saturday assured homebuyers whose houses are stuck in stalled projects that the government understands their problems and is pulling out all the stops to solve them. “I want to assure homebuyers, who have been left in the lurch for a very long time, who have taken EMIs, borrowed from the banks, who are also paying rents. We understand your problems and you are getting the results for your long-pending demands,” she said at the 17th Hindustan Times leadership Summit. “Even as we announced the last-mile connectivity money to be given by an alternative investment mechanism that we brought in, there were more than 150 projects which approached. They have all been vetted for what they are, for how much they would need, they have all been vetted to make sure that RERA compliance and everything else is in right place” she said. On November 6, Sitharaman had announced a plan to set up a Rs 25,000 crore alternative investment fund (AIF) to revive 1,600 housing projects and 458,000 housing units that are stalled to provide relief to distressed homebuyers and boost sentiments in the ailing realty sector. While the government will invest Rs 10,000 crore in the fund, the remaining Rs15,000 crore will come in from State Bank of India, Life Insurance Corporation of India and other institutions. “By December 15, which is ‘T plus 40th day’, T is the time that I announced, money will go to escrow account towards completing these projects,” she said on Saturday. Around 200,000 of the stalled housing units are in the National Capital Region (NCR) alone, around 100,000 in Mumbai and the rest in smaller cities, according to analyst estimates. By February she hopes that the process of channeling funds to distressed housing projects will be comprehensive. “We start with 5, we start with 10 and then we go on. Hopefully, by February and this is not just Delhi and Mumbai we have got list from Hyderabad, Bengaluru, Guwahati and Patna, so all over the country list of incomplete projects are coming,” Sitharaman said. Property developers have been struggling with dwindling sales, piling inventory and falling prices, even as funding for projects has dried up, with banks reluctant to lend to real estate projects fearing defaults. The prospects of the industry have turned worse since demonetization in November 2016 and the implementation of the goods and services tax in July the following year. Source: Hindustan Times Chandigarh

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Indian expats take a shine to commercial realty back home

5/30/2018 2:57:00 PM

When it comes to Indian real estate, the topic of NRI investments is pretty much an evergreen one. The fact that Indian developers had, in the past, launched and marketed projects with an almost exclusive eye on NRI customers is certainly no secret. There were many reasons for this, but the primary one was that NRIs — especially NRIs based in the Gulf and the US — were seen as cash cows with more money than sense. Time has proved this theory erroneous. NRIs are among the savviest property investors on the Indian market today. This is amply demonstrated by how adroitly they gauged the new investment trends on the Indian real estate market. For a long time, the return on investments that NRIs could get on residential assets were extremely rewarding, considering the significant capital appreciation whilst the rental yields have always been low. However, during the last couple of years, the market slowdown resulted in capital appreciation on residential assets no longer being as per NRI investors’ expectations. In the current market conditions, NRIs are now showing a greater preference for investing in Indian commercial properties, which offer good rental yields as well as capital appreciation. This is because there is a continuous rise in demand for commercial spaces in the wake of large-scale requirements and probability of REITs (real estate investment trusts) formation, especially for Grade A offices, IT parks and logistics centers. The preferred cities Mumbai, the NCR (National Capital Region), Bengaluru, Hyderabad, Chennai and Pune are currently the hottest cities for investments into Grade A offices, co-working office spaces and IT parks. The business being generated in these cities induces a constant upward trajectory on the demand for quality office spaces, while supply is not keeping up with this demand. That means that all available high-quality offices spaces are assured of tenancy. Meanwhile, the strong start-up culture unleashed in India is driving up the demand for shared office spaces, also known as co-working spaces. Such spaces are snapped up by start-ups which cannot afford the high cost of conventional high-quality office real estate. Of course, it is only the more experienced NRIs who have been able to gauge the Indian real estate market. Every year gives rise to new NRIs who still need some basic guidance on what they can or cannot do in Indian real estate. Here are some guidelines for NRIs who want to invest in the Indian realty market. NRIs with a valid Indian passport can invest in the Indian realty market, though there are a few pre-conditions: Citizenship: NRIs with a valid Indian passport need no prior approval unless they are citizens of a few neighbouring countries — specifically Pakistan, Bangladesh, Sri Lanka, Iran, Nepal, Bhutan, Afghanistan and China. Property Type: They can buy as many properties (residential or commercial) as they want but are not allowed to buy agricultural land, plantation properties and farmhouses. However, such properties can be gifted to or inherited by NRIs. Transactions: Transactions must be done in rupee through regular banking channels via an existing NRI account. Loans: Just like Indian citizens, NRIs are also eligible to avail of loans to purchase a property in India. The maximum loan amount is generally 80 per cent of the property value. Inherited or gifted properties: The RBI does not have any rule for immovable property which is inherited or gifted. NRIs can lease or rent such properties without any restrictions. Legal aspects for NRIs — Hire a reputed lawyer to vet property documents. — Verify the original title deed documents; ensure that the property title is in the name of the seller. — Do a thorough check to ensure that the seller has cleared all the dues related to the property. — Verify that the seller has not diluted the right to transfer the property to a buyer. — Ensure that the property is not built on agricultural land without requisite government permissions. An NRI may get into legal problems in such transactions. — In case of under-construction property, an NRI has to give a power of attorney the developer or a trusted associate. Source: India

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Investment in realty sector rises 7% in January-March to Rs 17,682 crore: Report

5/3/2019 5:07:00 PM

Indian real estate sector attracted investment of Rs 17,682 crore in the January-March period, highest quarterly funding since 2008, on strong inflows from foreign investors in commercial assets, according to property consultant Cushman & Wakefield. The investment was up by 7 percent from Rs 16,528 crore in the corresponding period last year. Foreign funds investment in Indian real estate rose 81 percent to Rs 11,338 crore in the first quarter of 2019 calendar year from Rs 6,260 crore in the year-ago period, the data showed. "Higher participation of foreign investors this quarter is a signal towards sustained interest in the country's real estate story backed by increasing transparency and friendly investment policies," Cushman & Wakefield (C&W) India Country Head & Managing Director Anshul Jain said in a statement. Office and retail segments continued to attract high investment, he said, adding that warehousing/logistics segment was also providing opportunities for investors. "The first successful REIT (real estate investment trust) listing has opened another avenue for investors to participate in the momentum visible in office markets while also reinforcing the attractiveness of Indian realty," Jain said. Asset-wise, C&W said the housing segment got 57 percent less investment during the January-March quarter of 2019 at Rs 3,697 crore from Rs 8,518 crore in the year-ago period. The funding inflow in residential sector got affected owing to liquidity issues of NBFCs which have been a major source of refinancing and lending to this asset class in last 4-5 years, the consultant said. Investment in office properties rose to Rs 7,925 crore from Rs 6,100 crore during the period under review. Hospitality segment got Rs 3,950 crore in the first quarter of 2019, an over three-fold jump from the year-ago period at Rs 1,200 crore. Investment flow in retail real estate jumped to Rs 1,000 crore from Rs 250 crore, and that of in mixed-use projects to Rs 350 crore from Rs 110 crore. Industrial segment (warehousing and logistics) received Rs 760 crore as against Rs 350 crore during the review period. Source: India

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Market size of co-living segment to double at nearly USD 14bn in 30 major cities by 2025: Report

12/19/2019 10:04:00 AM

Co-living segment in India is growing at a rapid pace and its market size is estimated to double by 2025 at nearly USD 14 billion across top 30 cities, according to a global property consultant Cushman & Wakefield. The demand for co-living in terms of beds is slated to grow to 5.7 million by 2025 from 4.19 million this year. In its report 'Co-living-Redefining urban rental living', Cushman & Wakefield has pegged the market size is USD 6.67 billion in 2019 and, this will grow to USD 13.92 billion by 2025 across top 30 cities. The market will witness a compound annual growth rate (CAGR) of 11.2 per cent. "Co-living is an evolving sector and is expected to grow more than two times by 2025 in the top 30 cities which are the major economic centres in the country. Within India, the co-living model is currently catering to mostly millennials comprising single, young working professionals and student population," said Anshul Jain, Country Head & MD-India, Cushman and Wakefield. Furthermore as the business evolves, co-living would transform the face of the rental housing market in urban centres, similar to what flexible working space has done to the office rental space, he added. "Co-living market in India is evolving at a rapid pace, with investments from national and international institutional investors bringing in much-needed seed capital as well as future rounds of funding thereby allowing a new business model to thrive and aim towards achieving scale," the report said. Co-living operators are tying up with developers for built-to-suit property options, an upcoming trend likely to prevail in the sector. Operators opting for ready to move in properties which are refurbished and renovated as per their requirements are showing preference for properties having at least 50-60 rooms. Pan India capacity of major co-living players as of fourth quarter 2019 stood at over 2 lakh beds and, the same is estimated to reach to 6 lakh beds by 2021. With more millennials entering the workforce and continuing to contribute towards a major proportion of the population, their lifestyle choices will contribute towards a greater need for organised rental housing. Further, limited accommodation capacity within academic institutions for students in higher education is also likely to act as a demand driver for such rent accommodation. However, the consultant said, the concept of shared rental accommodation in cities or locations offering employment and academic opportunities is not a new one. The migrant workforce and students have been availing such shared rental accommodation options for the last 3 to 4 decades. "Millennials moving into new cities for work or education are left to deal with negative perceptions harboured by landlords and home owners' about those who are single or students. "This coupled with the limited availability of quality accommodation that meets the basic requirements, makes the stay in these unorganised set-ups, (PGs/ dorms/hostels) a not so favourable option for millennials, who having higher disposable incomes are even ready to spend a little more to enjoy better lifestyle standards with experience," the report said. Cushman & Wakefield is a leading global real estate services firm with 48,000 employees in about 400 offices and 70 countries. In 2017, the firm had revenue of USD 6.9 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. Source: The Times of India Chandigarh

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Rate boost for global property markets starting to wane: Reuters poll

11/27/2019 1:05:00 PM

The era of rock-bottom interest rates is not yet over, but the powerful boost given to global property prices by easy policy since the financial crisis appears to be ending, according to Reuters polls of over 100 housing market experts. More than a decade of easy money has pushed most asset prices to record highs, including house prices, which have climbed each year at many multiples of consumer price inflation and wage gains, making many markets unaffordable for first-time buyers. The change in sensitivity to interest rates is not universal. But it is particularly notable in the United States, where the Federal Reserve has cut rates three times this year with no major boost to the housing market outlook. The combined findings of the latest Reuters polls, taken this month, have implications for the effectiveness of future monetary policy in one of the most typically rate-sensitive sectors of most developed and developing economies. That may be all the more relevant given many central banks had made scant progress in raising rates back to what would have been considered normal levels before the global financial crisis erupted more than a decade ago. "Monetary policy's ability to stimulate housing demand is far less effective than earlier in the cycle," said Scott Anderson, chief economist at the Bank of the West. Of the seven closely-watched housing markets polled by Reuters - the US, Britain, China, India, Canada, Australia, and Dubai - none were rated by analysts as fairly priced, and particularly in big cities. Broadly speaking, where house prices are rising, analysts expect them to be tame next year and to be more reliant on incomes rather than the cheap cost of borrowing. "I think the issue really in most markets is: we've had a big upward price adjustment over the past 10 years because of ultra-low rates, and that process is sort of hitting its natural limits...what needs to happen is, you need to have prices driven by wage inflation," said Liam Bailey, global head of research at Knight Frank. Analysts expect house prices in the US and the UK to rise over the next two years but at a slower pace than what was predicted three months ago. And Dubai property prices are expected to tumble further until 2021. TRADE FRICTION While each property market is naturally facing its own set of domestic challenges, a common concern is a renewed global slowdown and trade friction stemming from the US-China trade war. Part of the extra froth in property markets since the crisis has been founded in easy cross-border investment. "(Over) the last few months, we've started hearing a lot more from firms about that uncertainty having a negative impact, even if firms aren't dealing directly with China," said Scott Brown, chief economist at Raymond James, referring to how trade friction has hit the US economy. US house price inflation has slowed over the past year and a half, roughly coinciding with the opening salvos of the ongoing US-China trade conflict. Property prices and turnover in the UK have taken a knock, particularly in London, since the shock vote in 2016 to leave the European Union, and any price rises in the coming year are expected to lag inflation. In China and India, which together make up about 40% of the world's population and have some of its fastest growth rates, house prices are expected to rise by about 3% next year - barely above consumer price inflation in one and below it in the other. But the trade war and an ongoing liquidity crisis in India's banking sector will likely drag on those respective property markets. Until recent years, they were booming and made significant contributions to economic growth both through construction and transactions as well as household wealth. Median 2020 house price forecasts for Canada and India were upgraded modestly. Australia was a notable exception, where expectations for next year doubled to 5% over the last three months following a burst of activity thanks in part to Reserve Bank of Australia interest rate cuts. But even analysts there were sceptical about how long the rebound would carry on. Despite the current global economic slowdown affecting most economies, oversupply seems to be an issue largely confined to emerging markets. In advanced economies like the US and Britain, the opposite is true, most notably in the US where a dearth of new homes has been an issue for years and despite strong demand supply is not expected to improve significantly anytime soon. "The US is pretty advanced in its cycle, construction levels are peaking now but demand is pretty robust," said Jeremy Kelly, director of global research at JLL. Source: India