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Future of real estate will be pinned on 3Rs – Relief, Restructure and Resilience

7/29/2021 12:40:00 PM

Broadly based on themes of the 3Rs, it is high time that the industry and the governing agencies work together for the betterment of real estate as well as the economy. The Indian real estate constitutes around ~ 8% of the national GDP. In 2017, the housing market alone was estimated at $180 billion and is expected to reach $650 billion by 2025. In another 5 years, the industry will reach $1 trillion. The importance of the industry is further outlined by the fact that a large workforce (roughly sized ~ 40 million) is directly or indirectly dependent on the sector and around 250 ancillary industries are linked to it. Amid an enormous and wide-reaching role that the industry plays, it is natural that strains in Indian real estate will have a cascading effect on the economy, which is already floundering in the face of the 2nd lockdown. The Indian real estate is both stressed and strained at the moment. While piles of unsold inventories over the years have affected the morale of many developers, the whiplash from the lockdown has created a momentary halt in sales. Although the silver lining in the current circumstances lies in the fact that cases have plunged in most of India and economic revival should follow soon. Rating agencies are bullish on the prospect of India in FY 22, despite a softening stand on the economic growth. Meanwhile, the government and industry bodies must work in tandem and chalk out a sustainable plan. Broadly based on themes of the 3Rs – Relief, Restructure, and Resilience — a term originally coined by the World Bank, it is high time that the industry and the governing agencies work together for the betterment of real estate as well as the economy. Relief to the Industry A relief plan should be formulated for the industry, which should not just have policy impetus but also windows for loan restructuring in stressed and stuck projects. By lowering bad debts, not only breathing space will be given to developers but also financial institutions will be unburdened. GOI should also look for direct policy support such as stamp duty reduction and levy in income tax returns to accelerate sales. The industry has seen how stamp duty cuts in certain states such as Maharashtra and Karnataka have resulted in a jump in sales last year. Similar direct incentives can be a real game-changer. Meanwhile, the industry should take care of their employees, vendors and offer them financial safety. Another important step would be to take initiative and offer vaccine packages to employees. At 360 Realtors, we have taken such steps in a few of our offices. Nothing can be prudent than to be careful of employees’ health, amid a medical crisis of this magnitude. Restructure the Value Chain In the middle to long run, it is essential to restructure the industry value chain with the help of technologies. After remaining demure for the past few years, the Indian real estate started embracing the online medium last year, as the pandemic in its first instalment has driven wider behavioral changes. Now the time has come to move to the next level. The government and industry body should work jointly to not just develop technological innovation but also to scale them fast. Through subsidies, discounts, and other policy incentives, the latest technologies should be developed and deployed – both in construction management as well as transaction cycles. This will help in cohesive backward and forward integration, strengthen unit economics, shorter construction cycles, and optimize the overall operational flow. Likewise, academic institutions should also be roped into Research & Development (R&D). Besides, the industry needs to relook at its product strategy and understand transformations in consumer preferences. Demands are expected to pick up in product categories such as rental homes, plotted developments, affordable units, co-living spaces, and second homes. Industry players should fine-tune their strategy based on emerging product categories. The government should also support these efforts through policies. Finally, Resilience will be the Winning Mantra While relief measures will give breathing space and restructuring will help in adjusting to the new normal, the victory saga will be pinned mainly on one thing – how much resilience do we show in the face of the current crisis. Despite the pandemic-induced fatigue, we have to stay ahead in our game and work with a mindset of continuous evolution. There is no dearth of housing demand in the country. Favorable socio-economic conditions, a young demographic, an unprecedented rate of urbanization & infrastructure enhancement, and the overall rise in household income will help the industry to move on an upward trajectory. However, to tap into the market, we would require extra efforts at all levels – government, organization, and individual. Aggressive sales & marketing planning without incurring incremental costs is the need of the hour. New business strategies have to be deployed that can push the run rate but simultaneously contain CAPEX & OPEX. In this regard, franchises are a good option as they offer a profitable platform for the optimal sharing of resources. Both the parent and franchises can enter new market segments and earn more profits without overheads. Source: Financial Express INDIA

REITs and InvITs raise $9.7 billion in India: EY

7/28/2021 10:47:00 PM

InvITs are expected to play a key role in the monetisation of existing projects in some sectors namely roads and highways, conventional power, renewable energy, airports, railways, and digital infrastructure. Real estate investment trusts (REITs) and Infrastructure investment trusts (InvITs) have raised a capital of over $9.7 billion in India, a report by EY titled REITs and InvITs – financing urbanisation and infrastructure in India has said. With favourable government policies and a long-term investment outlook, many marquee investors including sovereign and pension funds are continuing to invest in such vehicles. Investors are benefiting from receiving regular cash distributions, stable yield and provides the opportunity for sponsor(s) to expand their asset base, it said. The National Infrastructure Pipeline announced by the government has estimated a funding requirement of over $1.4 trillion by 2025. The early trends of performance of REITs/InvITs in India are encouraging with the combined market cap of the three listed REITs in India currently at over $7 billion and over $10 billion for InvITs. REITs and InvITs can be used to attract private investments in the infrastructure and real estate sectors by mitigating challenges such as funding requirement, more long term capital, optimal leverage, limited exit options and corporate governance issues. According to the report, InvITs are expected to play a key role in the monetisation of existing projects in some sectors namely roads and highways, conventional power, renewable energy, airports, railways, and digital infrastructure. This is against the backdrop of conducive regulatory frameworks and cash flow profiles with taxation advantages for such vehicles. For REITs, despite the near to medium term headwinds from COVID-19, the long-term drivers for real estate demand are strong and likely to withstand adversities in the sector. “InvITS and REITs will play a significant role in funding the government’s infrastructure plans as well as assist in meeting its asset monetization plans and at the same time enable deleveraging existing balance sheets which would in turn help meet the capitalization requirements of banks,” said Gaurav Karnik, partner and National Leader – Real Estate, EY India. REITs/InvITs are primarily governed by the SEBI Infrastructure Investment Trusts Regulations, 2014 and SEBI Real Estate Investment Trusts Regulations, 2014 and various circulars issued under these regulations. While InvITs can be public listed, private listed or private unlisted, REITs are required to be publicly listed. Under SEBI regulations, three years of audited combined financial information under IndAS need to be presented. Some of the practical challenges that arise include availability of financial information, different auditors of the investment trust and those of SPVs before acquisition, GAAP conversion from Indian GAAP to Ind AS and the need to have uniform accounting policies. In addition, there are other complex areas related to asset acquisition or business combination, classification of unit capital and appropriate accounting for distributions. “Accounting for REIT/InvITs can be complex with multiple legal entities being involved and the interplay of various regulations. Having the relevant structure in place early and evaluating the relevant tax, accounting and other implications would allow sponsor(s) to make the most of this increasingly popular route to funding,” said Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India. REITs and InvITs are pass-through vehicles under Income tax and hence distributions made by the investment trusts are taxed directly in the hands of investors depending on the nature of such distributions i.e. dividend, interest or capital repayment. There is a beneficial tax regime for dividends received from REITs/ InvITs subject to certain conditions. Source: Money Control.com INDIA

Indian real estate sector to add $800 billion by 2030

7/27/2021 12:05:00 PM

Emphasising the importance of real estate in India’s economy, he pointed out that the sector creates demand for around 270 industries, including cement and steel. India’s real estate sector, which is a $200-billion market, is gradually coming out of the disruptions caused by the Covid-19 pandemic and is on the path to become a $1 trillion industry by 2030, said ministry of housing and urban affairs (MoHUA) secretary, DS Mishra. “The sector is around $200 billion at present, and projections are that it will hit $1 trillion by 2030. In fact, the sector provided employment to 5.5 crore people in 2019, and is expected to provide jobs to 7 crore people in the coming years,” he said at an event organised by industry association, CII. The growth story of real estate is intact, despite the country facing the onslaught of the pandemic, Mishra said, adding that an estimated 88 crore people will be living in urban areas by 2051 as against the current 46 crore, thereby creating huge demand for houses, road, electricity and other infrastructure services. Emphasising the importance of real estate in India’s economy, he pointed out that the sector creates demand for around 270 industries, including cement and steel. The recently introduced Model Tenancy Act would make rent laws more equitable and help unlocking a large number of housing units which could be leased out. Mishra clarified that the law is prospective and would not affect existing rental agreements. K Raheja Group president, Neel Raheja said that despite challenges the sector is on the growth trajectory and new opportunities are emerging from sub-sectors like warehousing, data centres and logistics. He expressed confidence that the industry will reach a size $500 billion within next 3-4 years. Seeking support for the industry, Raheja highlighted the issue of high risk weightage given by RBI to real estate industry which becomes a deterrent in raising affordable finance. There are restrictions on InvITs and REITs financing, land financing, foreign portfolio and ECBs which needs to be looked into to enable the real estate industry to tap-in low cost finance for housing sector. Source: Financial Express India

Aditya Birla Group invests around Rs 1,500 crore in Punjab

7/24/2021 4:23:00 PM

CHANDIGARH: Punjab Chief Minister Amarinder Singh on Friday welcomed the Aditya Birla Group for making an investment of around Rs 1,000 crore in its recent foray into the paints segment and another Rs 500 crore in setting up a cement unit at Rajpura. Speaking on the occasion after handing over a land allotment letter for 61 acres land at a cost of Rs 147 crore in the recently developed Hi-Tech Valley Ludhiana, the chief minister said this investment would further act as a catalyst to boost industrial activity in the region. He also mentioned Punjab offers a congenial climate to the prospective entrepreneurs and industrialists due to peaceful labour coupled with robust infrastructure in terms of excellent road, rail and air connectivity. He said Punjab due to its pro-investor industrial policy and lucrative incentives has now emerged as the most-preferred investment destination in the country. 'Invest Punjab' being one-stop shop has seamlessly facilitated in garnering massive investments worth Rs 91,000 crore in over 2,900 project proposals received during the past four years, as per an official statement here. Out of these investments, nearly 50 per cent have already started commercial production and the state has been able to attract such meaningful investments even during the peak of the COVID-19 pandemic. Expressing gratitude to the chief minister, Aditya Birla Group Chairman Kumar Mangalam Birla, who joined the meeting virtually from Mumbai, affirmed faith in Punjab's industrial ecosystem, forward looking industrial policies and a non-intrusive government interface. He lauded the speed at which the Punjab government moved to attract this investment to the state and also appreciated the facilitation provided by the state at every step. Source: ET Realty Birla further apprised the chief minister that the upcoming paint manufacturing unit is likely to generate a direct employment of over 600 persons and around 1,500 indirect job potential through its operations. He said this upcoming plant would have best-in-class safety and environment protection systems having zero liquid discharge. Looking forward for continued support to set up more such ventures in near future, he said Punjab is now on their priority list. Source: ET Realty PUNJAB

Future real estate outlook remains optimistic, office market sentiment improves: Survey

7/24/2021 10:36:00 AM

The sentiments among various real estate stakeholders have remained optimistic as realtors managed to cope better with the second wave of the Covid19 pandemic. With relatively less stringent lockdown restrictions and learnings from the last year helped developers and other stakeholders weather the situation. The availability of vaccines and aggressive vaccination has further helped the optimistic outlook for the sector. The Current Sentiment score, as per a survey conducted jointly by property consultancy Knight Frank and industry bodies NAREDCO and FICCI, has dropped from 57 in Q1 2021 to 35 in Q2 2021, but the drop is less intense than it was during the first Covid wave (Q2 2020) when the score had hit an alltime low of 22. The Future Sentiment score has inched down marginally from 57 in Q1 2021 to 56 in Q2 2021 continuing to remain in the optimistic zone. Here as well, the outlook of stakeholders reflects more resilience in Q2 2021 than in Q2 2020. Stakeholder outlook on the office market saw an improvement in Q2 2021 especially with respect to leasing activity. In Q2 2021, 40% of survey respondents were of the opinion that office leasing activity would increase over the next six months, up from 34% last quarter. Around 21% of the Q2 2021 survey respondents, up from 15% in Q1 2021, expects office rents to increase in the next six months while 40% expect rents to remain stable. A score of 50 represents a 'neutral' view or 'status quo'. Above 50 demonstrates 'positive' sentiment while below that indicates a ‘negative' outlook. The optimism in the residential market outlook has continued in Q2 2021. More than 50% of the Q2 2021 survey respondents continue to expect an increase in residential launches and sales in the coming six months. “The tragedy of the second wave of pandemic has pushed the overall industry sentiments down in the second quarter of 2021. However, our learning from the first wave, as well as a less stringent lockdown in the second wave, have equipped us well to mitigate the severity of the economic ramification, showing some level of positive outlook among the stakeholders when compared to the dead low sentiment score of 22 during the same period last year. The availability of vaccines, a robust vaccination programme, along with continued economic activities have been the primary reason for the optimistic future sentiment score, as compared to last year,” said Shishir Baijal, CMD, Knight Frank India. According to him, the real estate sector is treading cautiously and acknowledges that there is latent demand for both office and residential sectors, albeit hindered by the prolonged pandemic. Buoyed by the post-second wave resumption of economic activity, Future Sentiments of stakeholders for the next six months have remained in the optimistic zone across most regions. In terms of geography, the West zone saw the sharpest recovery in the Future Sentiment Score. This zone’s Future Sentiment score jumped from 53 in Q1 2021 to 60 in Q2 2021. With the resumption of economic activity, future sentiments (for the next six months) of stakeholders have remained in the optimistic zone, across most regions. North zone’s Future Sentiment score has inched down marginally from 56 in Q1 2021 to 55 in Q2 2021, while for the South zone, the score has fallen from 63 in Q1 2021 to 57 in Q2 2021. The Future Sentiment score of the East region has entered the pessimistic zone with a fall from 53 in Q1 2021 to 48 in Q2 2021. “Despite the debilitating impact of a pandemic, the outlook of the sector is really positive. There are several factors behind the growing positive sentiment. The nationwide vaccination drive has been a tremendous sentiment booster for the sector. The industry is also doing its bit by strengthening health infrastructure to support COVID patients and by initiating vaccination drives to inoculate over 2 crore construction workers. Furthermore, the sector is aggressively adopting digital technologies to streamline the supply chain, attract home buyers, and most importantly, ensure business continuity,” said Getamber Anand, Co-Chair, FICCI Real Estate Committee & CMD, ATS Infrastructure. According to him, in the initial phase of 2021, the sector was gearing for a spirited turn-around, which was disrupted by the second wave. The industry has been capitalising upon certain positive trends and emerging opportunities. Despite lockdowns, developers have completed some major commercial projects and have put them for possession and lease. This shows the stronger confidence of developers in business opportunities in the new normal.” On the macroeconomic front, more than 80% of the Q2 2021 survey respondents continue to have an optimistic outlook for the economy in the coming six months. While on the credit availability front, stakeholder outlook has improved in Q2 2021 with 46% respondents – up from 41% in Q1 2021 – expecting an increase in the coming six months. The future outlook of both developers and non-developers including banks, financial institutions and private equity funds remains in the optimistic zone in Q2 2021, although there has been a significant fall in the sentiment score for non-developers. Source: The Economic Times India

Housing sector drives cement demand for April-May 2021

7/23/2021 11:31:00 AM

Cement production demand and growth was primarily driven by the housing sector during the first two months of the financial year 2021-22. Cement production demand and growth was primarily driven by the housing sector during the first two months of the financial year 2021-22. During the months of April and May, the cement production was recorded at 54 million tonnes, which is almost a 100 per cent increase in the production of cement during April-May 2020. Last year, 27 million tonnes of cement was produced during the months under review, according to a report by Care Ratings. This year, the production started picking up because of demand coming from the housing and real estate sector, accounting for 68 per cent of the overall demand. Many low cost affordable housing were introduced this year which made up for 13 per cent of the cement demand. Apart from this, industrial and Infrastructure sectors contributed to the 10 per cent and 22 per cent of the demand, respectively. “The thrust provided by the government in the form of spending on infrastructure such as construction of roads, railways, highways, rural and low-cost affordable infrastructure augurs well for the industry,” the report noted. However, when compared to the first three months of 2021, the domestic production of cement registered a decline of 12 per cent on a monthly basis in April and this was followed by a de-growth of 17 per cent in May 2021. The decline in production, according to the report, was due to the spike in Covid-19 cases along with the subsequent state-wise restrictions imposed from April 2021 onwards “which affected the demand-supply dynamics for the commodity.” Meanwhile, the prices for cement have increased this year by 5 per cent as the all-India average wholesale and retail prices now stand at Rs 370 and Rs 380 per 50 kg bag, respectively “This growth in prices can be ascribed to the increase in the cost of inputs: power, fuel and freight expenses account for nearly 50-55 per cent of the total expenditure incurred by the cement players,” read the research note. Further, analysts at Care Ratings said that right now, the cement industry players seem to be cautiously optimistic on the impact of the second wave of Covid-19 on the cement industry. Source: Financial Express INDIA

Fractional ownership of real estate mega-projects on the rise post Covid lockdowns

7/22/2021 1:58:00 PM

As a result of consecutive Covid-induced lockdowns, the Indian economy took a nosedive. With it, it took the real estate sector down too. However, a ray of hope has emerged in the realty sector with the rise of fractional ownership of mega-projects. According to data compiled by hBits, a fractional ownership realty firm, fractional ownership has been rising over the last five years with an estimated total transaction of Rs 750 crores. Of this, Rs 350 crores worth of transactions took place in the last one year, i.e., after the first Covid lockdown was imposed. “The idea of fractional ownership provides a fair chance of investment in mega-projects. Common people who are willing to spend on commercial properties like shops and offices but have limited finances and options and are apprehensive about the returns are now opting for fractional ownership. In fractional ownership cases, the realtors provide guaranteed returns. Additionally, every bit of information about the property is available at your fingertips - literally. Investors can track real-time developments in the project on their mobile phones,” said Shiv Parekh, the founder of hBits. ALSO READ: Real estate developers in UP demand 12 more months to complete projects “It is estimated that over the next three years, the fractional ownership market's worth will reach five billion dollars. This is a shot in the arm for the real estate industry,” he continued. According to experts, apartment-dwellers across the national capital region, who are looking to invest in commercial properties like shops and offices to gain a secondary income, are now opting for fractional investment due to its relatively safe procedure in attaining ownership of multi-crore mega-projects. “A common apartment-dweller who is interested in investing in commercial spaces is usually hesitant due to the slump in the market. But since fractional ownership gives an opportunity to invest in more promising mega-projects, it is drawing the attention of such investors. We have received many queries about fractional ownership in recent times. Due to the consecutive lockdowns, investors are looking for safe investment options and fixed assured returns,” said Ujjwal Mishra, a property expert and the owner of Blue House Consultancy. Source: India Today INDIA

Over 7,300 families conferred ownership rights under PM-UDAY: Housing minister

7/21/2021 11:26:00 AM

A total of 4,19,485 people have registered under the PM-UDAY and 7,329 families in unauthorised colonies in Delhi have been conferred ownership rights till date, Puri, the Minister for Housing and Urban Affairs, tweeted in Hindi. More than 7,300 families have been conferred ownership rights while over 4.1 lakh people have registered till date for the PM-Unauthorised Colony in Delhi Awas Adhikar Yojna (PM-UDAY), Union minister Hardeep Puri said on Saturday. PM-UDAY was launched on October 29, 2019, to confer ownership rights to residents of 1,731 unauthorised colonies (UCs) in Delhi. A total of 4,19,485 people have registered under the PM-UDAY and 7,329 families in unauthorised colonies in Delhi have been conferred ownership rights till date, Puri, the Minister for Housing and Urban Affairs, tweeted in Hindi. He also shared a Delhi Development Authority (DDA) video in two parts that offers a step-by-step explanation for people to do the registration online. The registration process for this scheme is totally online. In the video, it is mentioned that if a person is unable to do it at home, then he or she could go to the nearest Common Service Centre (CSC) or contact a registered agency empanelled to assist people in doing the registration, on payment of a nominal fee. The DDA has been made the nodal agency for the scheme, which delineates the boundaries of these UCs with the help of the Survey of India and the Revenue Department of the Delhi government using satellite imageries of 2015. Puri said, "We had made a promise, we kept the promise." "Now, people living in unauthorised colonies, who will get ownership rights, won't have to fear either the bulldozers or have any worry. The registration process is very simple," he said. Under the scheme, the DDA will scrutinise documents and will issue conveyance deed for government lands and authorisation slip for private lands, only for residential purpose. The beneficiaries can get these documents registered with the sub-registrar's office. Source: ET Realty INDIA

Multi-level parking facilities now emerging as real estate asset class

7/20/2021 12:48:00 PM

These vertical developments utilize basements as car parks and the higher storeys for retail development which in turn help generate revenue and realise project costs. Growing urbanisation and the raging pandemic have created opportunities to augment the infrastructure in our cities. Parking is one such asset class that can be leveraged by urban planners and realty players alike. This might come as a surprise to many that car parks annually generate a revenue of more than $20 billion, according to the International Parking Institute. However, in India, little attention has so far been paid towards the growing need for car parks even though millions of cars get sold each month. According to a study by the Centre for Science and Environment (CSE), in India, a car is parked for more than 95% of the time and is driven for less than 5%. If one were to consider the economics, car parks use, at least in the metros, valuable land, which can be monetized through urban planning and architecture. The demand is constantly rising and to accommodate rapid urbanisation, construction of multi-level parking facilities can make development more sustainable and can also have a multiplier impact on the economy. Real estate developers can leverage this opportunity to offer urban India mixed-use complexes to create facilities with multiple benefits for all users. By allocating space for offices or retail, the commercial value of these assets can be multiplied many times. This is creating multiple opportunities for revenue generation from parking facilities. Also, the metro cities of India, sooner or later, will exhaust opportunities for horizontal development, and a multi-level car parking system that can vertically accommodate car parks, while allowing land to be used for other use (commercial, residential, or retail) might become a necessity. Indian metros including Mumbai, Delhi and Bengaluru have been consistently featured in the world’s top 10 most congested cities in the world for traffic. In Indian metros, the land is increasingly becoming a scarce resource. Therefore, through proper urban planning and architecture, car parks can be monetized. The financing of these facilities is not a constraint anymore and funds can be drawn from the private sector to build these structures in a public-private partnership mode. Furthermore, vehicle-free zones are also fast gaining traction with cities across the world successfully implementing them. It also creates a ripple effect on the region’s tourism and boosts commercial activities. Places like Mall Road in Shimla, MG Road in Gangtok, Chandni Chowk or nearby areas of Golden Temple in Amritsar have successfully tried the vehicle-free zone model. That being said, proactive measures taken by the government with respect to the decongestion of cities and monetizing the prime real estate through a public-private partnership model is finding favour with shoppers, businesses and tourists. It validates the business case of a land parcel that can be utilised as a car park vertically (basements), and prime real estate such as retail be developed in the higher storeys to support project costs and generate revenue so as to ensure that the government gets the targeted land value and private participants get their return on investment through project development. A car-centric development with poor parking has only left our cities cluttered and polluted. The Delhi Master Plan 2041 also stresses the need to re-organise parking facilities for maximum utilisation. The multi-level parking facilities demand lesser operational, maintenance, and construction costs and are environment-friendly with open spaces for landscaping. Source: Money Control INDIA

Demand for residential realty bounces back in June 2021: Report

7/12/2021 4:49:00 PM

Notwithstanding the deadly second wave of COVID-19 that led to severe economic repercussions in the months of April and May, signs of recovery for demand in residential real estate were visible in June with a pan-India price growth of 1.7% during the quarter, the latest Magicbricks PropIndex Q2 (April-May-June) 2021 has revealed. Despite the slump during April and May, the demand for housing in June’21 rebounded to the March’21 levels. The intermittent lockdown due to the second wave and the continuance of Work-From-Home (WFH) policies ensured a rise in demand for 3BHKs and above as home buyers are looking to upgrade for the need of an extra room to suit the requirement of home-office. This shift has led to the rise in demand share of 3BHKs and higher configurations in Delhi-NCR, Hyderabad, and Kolkata, reaching an all-time high of more than 65% of the overall demand share in all these markets. Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “Unlike the first wave, the recovery in demand for residential real estate has been faster in the second wave. The residential markets of Bengaluru, Chennai, Thane, Noida-Greater Noida, Kolkata, and Delhi witnessed price corrections ranging from 1%-2.3% during the quarter that also saw rising medical expenses and debt. This rise in price reflects the inherent strength of the housing sector even during these troubled times. The quarter also witnessed a rise in supply across pan-India by almost 8% due to new launches, with Hyderabad seeing a maximum jump of 20%.” “This recovery can be attributed to factors such as a consistent demand in the large sizes properties and a higher flow of global PE funds ensured by good risk-adjusted returns by the sector. This swift recovery signals a revival in stability in the industry,” he said. The maximum impact of the crisis was seen for the middle and low-income buyers who usually look for smaller houses with lower configurations. However, most premium and high-income buyers were relatively less impacted by the crisis in terms of the money flow. This trend has led to the fall in demand for lower configuration, while the demand for bigger houses persisted during Q2 2021. Key takeaways from the Magicbricks’ Propindex Report: Delhi: The residential real estate market in Delhi witnessed a 2% QoQ price growth during Q2 2021. The price growth was primarily on the back of rise in price of under-construction projects, which rose by 10.8% YoY. However, the prices of the ready-to-move property remained stagnant during the same time-period. Change in supply patterns and buyers’ preferences for premium and larger units were a major factor contributing to this trend. Bengaluru: A dip of more than 25% in demand during the second quarter of 2021 was observed. However, the prices of properties continued to show a resilient outlook as they grew slightly over 1% during the same period. The state government has started assisting property taxpayers during the lockdown by extending a 5% property tax rebate till June 30 in the city. Chennai: The demand for residential houses declined by 17.9% in the quarter ended June 2021, compared to-3.7% in the first quarter. The housing prices in the city and its suburbs, however, increased by 1.5% despite the lockdown and business closures. Hyderabad: The city’s residential market witnessed an increase in the launch of new projects, resulting in an upward revision of property prices in both under-construction and ready-to-move segments. The increase in property price resulted from a shift in demand towards bigger homes with better social infrastructure and recreational facilities along with rising construction costs. Mumbai: Mumbai’s real estate market too faced some headwinds, registering some contraction in the residential demand. However, with various supporting steps taken by the developers including easy and affordable payment plans, extension of the 2% stamp duty benefit, and various freebies and offers, among others, helped limit this decline in demand to just 16% QoQ as compared to national demand decline of over 23% QoQ. Pune: Despite the ongoing crises and slowdown in the real estate and infrastructure sector, the residential property prices in Pune registered a marginal QoQ growth of 0.7% during the quarter ended June 2021. The PropIndex also suggests that the momentum gained in the last six months will continue across both supply and demand, especially due to the emerging needs of consumers for large size houses and all-time low interest rates. However, caution is required given the resurgence of COVID cases in the country and threats of another streak of lockdowns. The future of the sector is tied to speedy vaccine drives and completion of infrastructure projects like the metro and major highway projects. Source: Financial Express INDIA

Mumbai real estate showing signs of resurgence

7/11/2021 3:10:00 PM

Being the financial capital of India, professionals, job seekers migrants from all over the country flock to Mumbai to make their careers and realise their dreams giving rise to the sobriquet of ‘City of dreams’. While buying a house in the island of Mumbai was and remains a proposition not for all, however people working in the city always had an option to buy their houses in suburbs and satellite towns of Mumbai where residences were affordable. These peripheries are now fuelling resurgence of the real estate sector in Mumbai. Peripheral areas of Mumbai gaining increased preference A recent ANAROCK study shows that there is a marked preference by new home buyers towards buying housing properties in peripheral areas of major cities in the country. This study which covers seven major cities in the country shows that around 58% of all new projects launched in these cities in FY20 are in their peripheral areas. This trend is on the rise as in FY19, this proportion was 50%. Similarly in Mumbai MMR too, of a total of 34,620 housing units launched, a significant chunk amounting to 67% was in peripheral areas of the city. This is up from 60% in FY19. Key and fast-growing areas with increasing demand which constitute as peripheral areas of Mumbai in today’s time are Dombivali, Panvel, Palghar, Vasai, Virar, Kalyan, Badlapur and Bhiwandi. With work from home being a reality, home buyers are preferring satellite towns of Mumbai for their fulfilling their demand of buying affordable and larger homes. Both the companies and their employees were pleasantly surprised by the success of Work-from-Home experiment and it has paved way for a hybrid model of work, wherein one does not have to go to office every day. Thus consumers are looking to buy bigger houses in the suburbs. Another evolving trend is that of satellite offices, wherein increasingly corporations are setting up offices in the suburbs that are residential hubs. Typically, located in an integrated township project, these offer employees the convenience of walk to work. The supply too has followed the demand with Grade A developers like Lodha, Godrej and Hiranandani among others have come up with self-sustained and integrated townships in the peripheral areas of Mumbai. Consumers are opting to buy their property in self-contained townships as they are self-sustainable and developed to meet the primary requirements of their residents, provide amenities for leisure and have ample open spaces. In addition, the buyers have shown a marked preference for properties developed by grade-A developers and in the process willing to pay a premium over the market price as they are assured of quality and delivery. The looming spectre of real estate price rise While demand supply economics will dictate pricing dynamics, there are clear signs of real estate prices rising soon. The major factor influencing this upward trend in real estate is inflation which has a twin effect on the housing sector affecting both the demand and supply side. First effect is that rising inflation is going to play spoil sport with the prevailing interest rates. While the Government is trying hard to not raise the interest rates given the pandemic conditions, soon the time will come when economic compulsions will force it to take unpopular decisions to boost the country’s economy in the long term. So, home buyers will have to pay higher EMIs as they delay their buying decisions. On the supply front, inflation has taken its toll on the input costs as prices of commodities like iron, cement and steel have gone up by 10-15% in the past year. The developers are already under stress having cut their costs last year during first wave of Covid-19 to hold prices to attract home buyers. So, there is limited scope for developers to absorb the increase in prices for their raw materials. Soon they will have no option but to pass on the increased costs either in part or in full to the home buyer. With prices set to rise, the sooner the home buyer finalises his purchase decision the cheaper it is going to be eventually. Source: Business Standard INDIA

Realty institutional investment tops $1.35 billion in April-June, most active quarter in 5 years

7/10/2021 3:12:00 PM

Strong appetite among Institutional investors for Indian real estate has sustained even during the ongoing pandemic as they continue to invest and look for opportunities to participate in the growth driven by reforms.Institutional investors have deployed over $1.35 billion into the Indian real estate market led by the commercial property segment during the quarter ended June, representing a 9-fold on-year increase, showed data from JLL India. Capital deployments in the April-June period represented the most active second quarter in five years.“Despite the second wave of Covid hitting India in April this year, the first six months of 2021 saw investments of $2.7 billion, which is 53% of the total investments seen in 2020. Investors are showing resilience and are adapting to the uncertain environment. Relaxing lockdowns during the first three months of 2021 also gave investors a first-hand experience of the postpandemic world. This led to risk re-rating and asset allocations witnessed a subsequent change in Q2 2021.” said Radha Dhir, CEO and Country Head, India, JLL. Of the total investments during the quarter, warehousing attracted the most at 55%. Office properties received 17% investments despite the noise around work-from-home model, and 20% funds were infused into retail assets indicating the bright prospects of consumption once the pandemic comes to an end. “The warehousing and logistics sector has been the biggest beneficiary during the pandemic and attracted total investments of over $1 billion during Q2 2021…In addition, the data center industry has been drawing strong operator and investor interest with various funds exploring entry strategies.” said Samantak Das, Chief Economist and Head of Research & REIS, India, JLL. Investments in the warehousing and logistics sectors were attractive due to the increasing shift to online shopping from discretionary to essentials. Major global funds have invested with warehousing developers and operators as scale and regional footprint are the key differentiators in the sector. Some funds are following opportunistic strategies by investing in marquee retail assets and have been selectively investing in well-established malls. The shift in investment strategy from specific assets to platform type investments with marquee developers has led to a shift from asset and region to the portfolio approach. Since most warehousing, as well as retail assets, are also located in tier 2 and 3 cities apart from major metros, the share of panIndia investments are gaining prominence. According to Dhir, the first half of 2021 saw broader investor participation andalthough the economic dent created by the second wave will lead to slower growth in 2021, investments in real estate are expected to maintain momentum. “From where we stand, institutional investors have passed the litmus test of resilience during pandemic resurgence and are expected to commit more capital in 2021,” she said. The series of policy initiatives aimed at reforming the property sector including the introduction of Real Estate Investment Trusts (REITs) in 2014, the Real estate Regulation and Development Act in 2016 (RERA), Benami Transactions (Prohibition) Act and progressive relaxation in foreign direct investment norms have been attributed for the volume of investments over the last few years. Though the economic dent created by the second wave will lead to slower growth in 2021, investments in real estate are expected to stay strong through the year. Defensive sectors like warehousing and data centers are likely to gain center stage, while office assets will gain interest with more visibility on work from office trends. The Real Estate Investment Trusts (REITs) market is expected to get a further boost as the reduction in lot size of REIT units is expected to drive more retail participation. The growth prospects of the data centers are expected to attract capital at the development stage with ambitious expansion plans by the data center players. Source: The Economic Times INDIA

Residential housing sales up 83% in Apr-Jun in seven cities

7/9/2021 10:47:00 AM

Residential sales in Q2 (April-June) 2021 increased by 83% as compared to Q2 2020, across the top seven cities. According to JLL's Residential Market Update - Q2 2021, released on Tuesday, July 6 sales were driven by the low base effect, less stringent lockdowns, and accelerating vaccination drives during Q2 2021, demonstrating improved resilience in the market. By comparison, in Q1 2021, sales of residential units continued an upward trajectory, increasing by 17% on a sequential basis. During the first wave of COVID-19, residential sales dropped by a record 61% quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23% to 19,635 units. Sales of more than 45,000 residential units were recorded in H1 2021 as against 38,204 units in H1 2020, an increase of 18% YoY. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market. The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country. Siva Krishnan, Head - Residential, India, JLL said: "Development focus on mid and affordable segments continued in H1 2021 with 72% of the new launches in the sub Rs 10 million category. Moving ahead, while the focus on these price segments is expected to continue, developers are likely to consider new launches of larger-sized apartments in order to capture changing consumer preferences." Mumbai has consistently been the largest contributor to sales over the past five quarters. In H1 2021, Mumbai accounted for 26% of the total sales. Furthermore, Delhi NCR, Pune, and Hyderabad followed, each contributing 15% or more. Samantak Das, Chief Economist and Head Research & REIS, India, JLL said: "The residential sector displayed improved resilience in Q2 2021 when compared to Q1 2021. There is no denying the fact that the second COVID-19 wave dented the market following a good recovery curve." "However, the impact was muted when compared to the same period last year. Most of the changes observed in the sector have been structural in nature and demand for homes is only expected to increase." If the downward trajectory in COVID-19 cases is sustained, the sector is expected to make a healthy recovery in the second half of 2021, he added. Source: The News Minute INDIA

Housing sales rise by 23% in the first 5 months of 2021: Report

7/5/2021 11:12:00 AM

Housing sales rose by 23% across the top 7 cities in India in the first five months of 2021 to 1,32,818 units versus 1,08,199 units in the first five months of 2020. Housing sales rose by 23% across the top 7 cities in India in the first five months of 2021 to 1,32,818 units versus 1,08,199 units in the first five months of 2020, and a majority of the sales happened till April 15, according to a report released by PropEquity. As per the report, Bengaluru, Chennai, Hyderabad, MMR and Pune are the cities where home sales witnessed a growth in the first five months of 2021 versus the first five months of 2020 at 16%, 40%, 39%, 29% and 34%, respectively. Only Kolkata and NCR witnessed a downfall of 11% and 20%, respectively, in the housing sales during the same period. Sales in NCR were greatly impacted as the National Capital faced a major brunt of the second COVID wave in which the city went to a standstill to tackle the health emergency. This was followed by a stringent lockdown, further impacting the housing sales. The new supply or launches of housing units decreased by 24% in the same period to 86,746 units from 1,13,699 units as developers were clearing the earlier stock, resizing home offerings and waiting for the economy to improve. Chennai and NCR are the cities where new launches witnessed a growth in the first five months of 2021 versus the first five months of 2020 at 20% and 50%, respectively, whereas Bengaluru, Hyderabad, Kolkata, MMR and Pune witnessed a downfall of 35%, 28%, 28%, 31% & 23%, respectively, in home sales during the same period. Commenting on the same, Samir Jasuja, founder and managing director at PropEquity, said, “India witnessed the worst COVID wave in the months of April and May, which drastically stopped almost all real estate activities across the major cities. Fortunately, the worst is behind us as the infection and COVID-related deaths have fallen significantly, leading the major cities to relax Covid-related restrictions. The vaccination drive has also picked up pace and hopefully there will be limited impact from the third wave. We expect home sales to bounce back faster as the COVID recovery has been at a rapid pace.” “2020 was a difficult year for the real estate sector in India. This year, however, began with a solid recovery across segments and markets, but the sudden COVID wave again impacted the momentum due to the lockdown. As restrictions lifted around the beginning of June, we are now again witnessing housing sales, new launches and businesses in general slowly getting back on track. We expect sales to further improve going ahead in the next quarter for projects that are being offered by fundamentally strong developers,” said Ankush Kaul, President (Sales & Marketing), Ambience Group. Cities Snapshot: # Bengaluru: India’s IT capital saw a rise of 16% in home sales in Jan to May 2021 at 15,364. New Launches decreased by 35% at 10,849 units. # Chennai: Chennai saw a 40% increase in home sales in the first five months of 2021 at 6,518 and new launches increased by 20% to 5,338 units. # Hyderabad: Home sales witnessed an increase of 39% in Jan-May 2021 at 14,959 units while new launches fell by 28% to 11630 units. # Kolkata: Surprisingly, Kolkata saw a decrease of 11% in home sales in the first five months of 2021 at 4,673 units with new launches falling by 28% to 2,391 units. # MMR: The City of Dreams saw an increase of 29% in home sales in the first five months of 2021 at 51,040 units, whereas new launches fell by 31% to 30,290 units. # NCR: NCR saw a decrease of 20% in home sales in the first five months of 2021 at 9,106 units with new launches increasing by 50% to 7,815 units. # Pune: Pune witnessed a rise of 34% in sales or absorption and a downfall of 23% in new launches at 18,433 units in the first five months of 2021. Source: Financial Express INDIA

Premium home launches at 36% in Q2 2021, affordable housing share dips to 20%: ANAROCK

7/3/2021 11:31:00 AM

The new launch trends in both the pre and post COVID-19 periods across the top 7 cities indicate that the new affordable supply share has been reducing post the pandemic. The pandemic has significantly altered previously dominant trends in the Indian residential market. Notably, it has dented the overall new affordable housing supply share across the top 7 cities. Latest ANAROCK research indicates that out of the total new launches of approx. 36,260 units across the top 7 cities in Q2 2021, the affordable segment (priced <INR 40 lakh) contributed a mere 20% share (approx. 7,230 units), while the premium segment had the highest share of 36% and the mid segment had a 32% share. Commenting on the same, Anuj Puri, Chairman, ANAROCK Property Consultants, said, “The premium segment (priced between INR 80 lakh to INR 1.5 crore) had the highest launch share of 36% (approx. 13,130 units), followed closely by the mid-segment with a 32% share (approx. 11,760 units).” “The main Southern cities of Hyderabad, Bengaluru and Chennai together accounted for at least 72% of the total new premium supply in the second quarter. Prominent realty hotspots NCR and MMR had the highest share of affordable housing supply at 52% of a total of 7,230 units launched in this category,” he added. The new launch trends in both the pre and post COVID-19 periods across the top 7 cities indicate that the new affordable supply share has been reducing post the pandemic. # In 2018, out of approx. 1.95 lakh units launched in the top 7 cities, affordable housing had the highest share at 40%, followed by 36% in the INR 40-80 lakh budget category and 16% in the premium segment. # Likewise, of the total 2.37 lakh units launched in 2019, the affordable segment accounted for a 40% share, followed by the mid-segment with a 33% share and the premium category with a 16% share. # However, in 2020, of the total 1.28 lakh units launched in the top 7 cities, the affordable segment’s share reduced to 30%. The mid-segment had the highest share in 2020 at 40%, while the premium category saw its share increase to 21%. The dramatic drop in affordable housing’s new launch share was profound from Q2 2020 onwards – the period since the pandemic. # In H1 2021, affordable housing’s share of new launches dropped further to approx. 26% of 98,380 units launched between January and June. The mid-segment had the highest share at 39% while the premium housing segment had a 25% share. Further quarterly trend analysis reveals that in Q1 2021, the affordable housing supply share was at 30% while in Q2 2021, it dropped to just 20%. Factors Impacting Affordable Housing Supply Notwithstanding the incumbent government’s continued focus on affordable housing, private players have changed their strategy on the back of the new pandemic realities. Various factors could be responsible for the drop in affordable housing’s supply share drop: # Abundant new affordable supply was launched in the top 7 cities after the government began incentivizing this segment post-2014 to back the ‘Housing for all by 2022’ scheme. Demand for affordable housing remains high, but there is now a pileup of unsold stock across cities. As per ANAROCK data, of a total of 6.54 lakh unsold units in the top 7 cities as of Q2 2021-end, the affordable segment has the highest share at 33%. # The target audience of the affordable segment (many employed in MSMEs) has been severely impacted by the pandemic in contrast to premium and luxury category buyers. Many affordable housing buyers have had to defer purchase decisions. # Affordable housing developers’ profit margins are wafer-thin. Amid rising inflationary trends of basic input costs (cement, steel, labour, etc.), it has become difficult for them to launch budget homes since increasing prices in this highly cost-sensitive segment is inadvisable at this time. Also, overall sales volumes have declined in the last one year because of the pandemic. # Home loan eligibility for many affordable housing buyers has been impacted by the pandemic due to loss of jobs and many MSMEs being shut down – resulting in significantly lower sales in this category. Source: Financial Express INDIA

Factors Affecting Millennial’s Home Loan Decisions

7/2/2021 11:26:00 AM

Loan-to-value emerged as the biggest determinant for millennial homebuyers while deciding on a lender for buying their first home, a survey by NoBroker.com revealed. It added that other factors that impact millennial homebuyers’ decisions regarding home loans are interest rates, job stability, flexibility of repayment options, and bank policies. The survey included responses from over 1200 homebuyers. As more and more companies have become accustomed to employees working from home and many of them have adopted the hybrid model, millennials are closer than ever to realising the importance of owning a home, the real estate platform said in a statement. “Millennials now make up 63 per cent of the homebuyers, up from 49 per cent a year ago,” it said. According to the survey report, LTV (Loan-to-Value) and foreclosure charges are the most critical factors for deciding the lender bank for home loans. “A higher LTV reduces the down payment amount and lowers (and in some cases nullifies) the foreclosure charges allowing the homebuyer the freedom to repay and finish off the loans earlier than the loan tenure. Historically, it is seen that most people end up repaying the loan amount within 8 years (less than the tenure amount),” NoBroker.com said. Loan-to-Value (LTV) refers to the ratio of loan amount and value of the property. The higher the LTV, the higher is the percentage of the loan amount. This means the lower percent of down-payment is required to be shelled out by the buyer. Another way to understand the advantage of higher LTV is that, for the same amount of money that buyer has to make down- payment, higher LTV allows the buyer to buy a bigger/higher-budget house. Millennials prefer this since it allows them to buy a house of their choice with their comparatively modest savings. The survey also revealed that a home loan tenure of 10-15 years is the most preferred by 31 per cent of respondents, followed by 24 per cent respondents preferring tenure of more than 10 years. About 65 per cent of these millennials are in IT services while the rest are either self-employed or in government services. “In terms of tenure of loan, millennials' preference for the tenure of 10-15 years is driven primarily by two factors: EMI to income ratio and interest payment on the loan amount. Longer tenure means lower absolute EMI for the homebuyers making it more affordable to millennials and gives them the flexibility to maintain a good lifestyle without sacrificing too much in EMIs,” the survey found out. Amit Agarwal, CEO, and Co-Founder of NoBroker.com said the average age of buying a property has reduced and more and more millennials are buying their first homes. “They prefer an LTV on the higher side as it enhances the overall ticket size of the purchase. This is the reason that higher LTV has emerged as the most important factor for millennials in terms of choosing the home loan providers, apart from interest rate. Even if the loan tenure is for 15-20 or 30 years, most people end up paying off much sooner than the tenure. But as they are sensitive about foreclosure charges and EMIs eat into their current expenditures, they prefer a longer tenure to be able to enjoy a better lifestyle. Since they are early on in their careers, with salary increments, they are able to repay their loans faster than the chosen tenure. Therefore, good foreclosure terms are what they look for,” he said. Source: Outlook Money India

PMAY Urban delivered 50 lakh homes to beneficiaries in 5 years, says Hardeep Singh Puri

6/28/2021 10:30:00 AM

In line with the objective of Housing for All 2022, the government’s Pradhan Mantri Awas Yojana-Urban (PMAY-U) has so far sanctioned around 1.13 crore houses for its beneficiaries, out of which over 83 lakh houses are grounded and around 50 lakhs have been completed and delivered to beneficiaries, said Hardeep Singh Puri, Minister of Housing & Urban Affairs. The houses sanctioned so far under this mission involve an investment of Rs 7.35 lakh crore with central government assistance of Rs 1.81 lakh crore. As of now, over Rs 1 lakh crore of central assistance has already been released. “JNNURM (Jawaharlal Nehru National Urban Renewal Mission of previous government) had delivered 8 lakh homes in 10 years and we have already delivered over 6 times and this will continue to grow,” Puri said. “In few months we will be able to turn around and say that we have delivered 1.13 crore houses through four different verticals and that is a fantastic achievement.” Puri attributed the success of the mission to its robust financial model including Direct Benefit Transfer, use of information technology for real time monitoring and technological innovation, additional funding through extra budgetary resources over and above budgetary allocations. For sustained funding support to keep the pace of construction activities, over and above budgetary support, a corpus of Rs 60,000 crore was mobilized under National Urban Housing Fund (NUHF) wherein Rs 43,000 Cr has already been drawn. Affordable Housing Fund of Rs 20,000 crore are also being utilized in the last 3 years. Affordable Rental Housing Complexes The government’s Affordable Rental Housing Complexes (ARHCs) scheme under Pradhan Mantri Awas Yojana - Urban (PMAY- U) has received robust responses with proposals for over 80,000 ARHC from public and private entities in 17 states and union territories (UTs). Under the model 1 of this scheme, a total of 2,588 houses have been made operational in Chandigarh and Surat and request for proposals are issued for 6,649 houses across other States. In response to the reverse migration following the Covid19 outbreak last year, the Union cabinet had approved the ARHCs scheme to provide budget rental accommodation to poor and migrant workers in urban areas. This is estimated to benefit more than 350,000 people. Under the first model of this scheme, existing vacant government-funded housing complexes will be converted into ARHCs, and offered to concessionaires for 25 years to rent out, while through the second model, special incentives will be offered to private and public entities to develop such housing complexes on their own available vacant land. In the second round of this scheme, expression of interest has been issued for shortlisting of additional entities with the last date as June 30. Investment under ARHCs is expected to create 11.74 crore person days of employment with 3.89 crore direct and 7.84 crore indirect in nature. In terms of jobs, it works out to be a total of 4.19 1akh with 1.39 lakh direct and 2.80 lakh indirect jobs. Puri was speaking at a virtual event organised by the Ministry of Housing and Urban Affairs (MoHUA) to commemorate 6 years of the three urban missions including Smart Cities Mission (SCM), Atal Mission for Urban Rejuvenation and Urban Transformation (AMRUT) and Pradhan Mantri Awas Yojana-Urban (PMAY-U). These missions were launched by Prime Minister Narendra Modi on June 25, 2015 SMART CITIES Of the total proposed projects under the Smart Cities Mission (SCM), 5,924 projects worth Rs 1,78,500 crore or 87% by value have been tendered so far. Work orders for 5,236 projects, 101% by number, worth Rs 1,46,125 crore or 71% by value have been issued. Over 2,665 projects worth Rs 45,080 crore have also been fully completed and are operational as on June 23, 2021. A total of 212 projects worth Rs 24,964 crore have been completed with geographical spread across 57 cities. Atal Mission for Rejuvenation & Urban Transformation (AMRUT) Under the Atal Mission for Rejuvenation & Urban Transformation (AMRUT), the first focused national water mission, 105 lakh household water tap connections and 78 lakh sewer connections have been provided so far. Overall fund allocation for this mission is Rs 1 lakh crore including central share of Rs 50,000 crore. State action plans amounting to Rs 77,640 crore for basic infrastructure projects were approved, against which projects worth Rs 79,772 crore have been grounded. So far, work worth Rs 52,477 crores has been carried out. The government has also made the Online Building Permission System (OBPS) with integration with internal and external agencies operational in 2,465 towns including 452 AMRUT cities. India’s rank in Ease of Doing Business (EODB) in construction permits has jumped to 27 in World Bank’s Report (DBR)-2020 from 181 in 2018. Source: The Economic Times INDIA

The future of commercial real estate investment through REITs

6/24/2021 12:42:00 PM

Real estate investment trust (REIT), a popular instrument globally, was introduced in India a few years ago aimed at attracting investment in the real estate sector by monetising rent-yielding assets.. REITs have made a grand entrance into the Indian market at the right moment. Real estate investment trust (REIT), a popular instrument globally, was introduced in India a few years ago aimed at attracting investment in the real estate sector by monetising rent-yielding assets. When ‘Embassy Office Parks’, a joint venture between real estate development firm the Embassy Group and global private equity major Blackstone, listed the country’s first REIT, the industry projected that the investment vehicle would soon be a reality in India. The impact on real estate due to Covid-19 has prevailed for 5 quarters. For seven months in between the first and second wave, there was pronounced demand for pent-up and new commercial properties. REITs to benefit commercial sector With the onset of REITs, the commercial sector could witness better capital appreciation, as compared to the residential sector. The formation of REITs isn’t just a great boon to investors, but an advantage to the developers as well. For developers, it could unlock the value of their commercial assets. They can look at REITs as a vehicle to exit, at an extremely attractive capitalisation rate, thereby, reducing their high-level debts. The investors will get capital appreciation and income from the property without having to essentially purchase and maintain it. It will open real estate to a broader spectrum of investors who are particularly looking to invest in the affordable housing sector. Commercial real estate is expected to do well in India in the coming months. Also Read: Need for safer, bigger homes to drive demand for residential real estate REITs outlook With the pace of improvement driven by the availability and effectiveness of a vaccine, commercial real estate and REITs are likely to begin to recover in 2021. REITs have largely been resilient during the pandemic due to measures they took to strengthen their financial positions. Gradually, the situation improved as stores and businesses reopened. Much of the improvement was in the sectors that had been directly impacted by the shutdowns, lodging/resorts, retail, and diversified REITs. We cannot predict the flow right now due to Covid-19 uncertainty but we can surely say there is demand for commercial office space, despite work from home. One has to admit that the residential market is flat which was further impacted by the second Covid-19 wave in March 2021. It will be important to distinguish between short-term or transitory effects of the pandemic versus long-term or permanent changes to commercial real estate markets. However, the future of office spaces remains bright despite the several hurdles caused by the Covid-19 pandemic. The situation is said to be improved as the worst of the second Covid-19 wave has passed. The immediate confidence for the success of India’s first REIT led to preparations for the launch of the second one in India—Mindspace Business Parks REIT, backed by K Raheja Corp and Blackstone. According to CBRE’s 2020 Global Occupier Sentiment Survey, the importance of physical office space is likely to remain solid. 38% of respondents said that the physical office space will remain as important, if not more. Additionally, 70% of the survey respondents were also confident about setting long-term real estate strategies amid the pandemic. Also Read: Why REITs are a good investment option vis-a-vis direct real estate purchase The sentiment towards office space will remain positive in India, Therefore, investors are likely to continue to consider REITs as a stable income generator even in the long run, given that India’s office sector has traditionally witnessed high occupancies backed by long pre-existing leases and lease extensions from corporates. In the long term, the three REITs are expected to do well in terms of appreciation. In the past, for places like Mumbai, investors received an average return on investment of 6%. The rental yield is subjected to be around 6-7% for commercial space. The data is expected to remain stagnant even in the short-term investments. In recent times, the Indian market has witnessed two successful REIT listings of Embassy Office Parks and Mindspace REIT, totalling Rs 9,250 crore. In the midst of the pandemic, Blackstone and Brookfield also announced the two biggest deals in the Indian real estate market, amounting to around Rs 25,000 crore. The recent Brookfield REIT listing was oversubscribed by a whopping 8 times. With this, the industry witnesses the long-term prospects of this sector. The development has set a foresight of transparency, depth, and liquidity for the commercial real estate marketplace in India. The increased competition and transparency that ought to arise with a dynamic REIT market, will lead to better maintenance and operation of the assets. It is expected that a more developed and professional REIT sector, will significantly contribute to broadening the base of real estate investors, particularly by attracting institutional and retail investors. Over the next few years, the appreciation can be reasonably good for investors. In the last two years, the sector has struggled a lot. However, in the coming years, the real estate sector will pick up at an average of 9-12% appreciation. With no other factor, the real estate (commercial and residential) is expected to bounce back in the next 3-4 months. We examine the positive impact it will have on the commercial real estate landscape in India in the long run. Source: Financial Express India

Need for safer, bigger homes to drive demand for residential real estate

6/21/2021 12:19:00 PM

Increased discounts, freebies and attractive payment terms in addition to benign interest rates and regulatory measures are expected to boost sales for real estate players. While real estate and construction remained the most impacted sectors in India in H1FY21, there was some buoyancy during H2FY21, with the economic activity reviving. Measures such as a reduction in the stamp duty in Maharashtra, lower interest rates, pent up demand and a halt in launches provided some relief to the realty sector. However, the green shoots that had started becoming visible were short-lived as the second wave of the pandemic hit the nation unawares and much harder, according to a research report by Brickwork Ratings. Owing to the accelerated vaccine programme adopted by the government, it is now subsiding, and hopefully the problems inflicted by the pandemic should subside soon. While Q1FY22 is expected to be a near washout for most real estate players, the pace of sales is expected to gain traction in the remaining part of FY22, with launches by various marquee players. Increased discounts, freebies and attractive/flexible payment terms in addition to benign interest rates and regulatory measures are expected to boost sales for real estate players, albeit only H2FY22 onwards. A key role here, expectedly, is going to be played by the affordable housing space. Residential real estate has been facing challenges for some time now and is expected to see some traction going forward. With the extension of the work-from-home and online education culture, there is an increased need for larger homes, especially for families with working couples. Residential project sales, which had picked up towards end-Q2FY21, only to slow down in April and May 2021, are expected to witness recovery from the lower base recorded in H1FY21. While negative sentiments led to reduced discretionary spending, resulting in the postponement of buying decisions, the need for safer and bigger homes could actually result in increased demand for residential real estate. The sector is also expected to witness increased home buying from the final/end user rather than investors. Additionally, with prolonged work-from-home for corporate employees, some reverse migration towards tier-2 and tier-3 cities is expected, which may lead to real estate demand gaining traction in these cities. Notwithstanding the gradual increase in home loans outstanding for banks since FY17, the y-o-y growth rate has seen a declining trend since FY20, partially owing to a weak buyers’ sentiment due to the economic slowdown, followed by the pandemic impact. The same trend was observed in the house price index. However, concerns around weak demand and high inventory levels were offset by renewed interest in the sector from FPIs due to the low interest rate regime and expectations of a near-term revival. Commercial real estate, which was performing well over the years, has come under tremendous stress during the pandemic. It has been witnessing high vacancies and the waiver of lease rentals, which is expected to continue till H1FY22 due to oversupply of office spaces, which is further compounded by numerous expired leases coming up for renewals. For the ailing commercial real estate sector, the antidote (literally) is the vaccine, and the pace at which vaccine administration is accelerated. With this, demand for commercial spaces would hopefully revive, and developers are also expected to witness demand for redesigning/re-doing spaces to meet the increased hygiene- and safety-related norms in the new normal. One aspect of this segment that could gain momentum is the concept of co-working spaces. This, while saving higher upfront capital expenditures and fixed costs, also results in longer lease terms with a lock-in period agreeable to both the lessor and lessee. Another sub-segment of commercial real estate, hospitality, is the worst hit; recovery, while slow, will largely depend on the resumption of tourism activities in the country, especially on the commencement of international travel. In terms of investments and fund raising in the real estate sector, foreign portfolio investors’ assets under custody increased y-o-y by 103% to Rs 41,476 crore in March 2021. Improving investor sentiments were reflected in declining inventories in tier-1 cities. There has been an active participation in the Real Estate Investment Trust (REIT) issuances, with three REITs getting listed in the last two years, and Rs 13,000 crore have been raised cumulatively. It has received a good response from investors, and more such issuances are expected going forward. Given the decrease in Covid-19 cases and the overall expectation of the second wave subsiding soon, the overall macro environment is expected to remain strong, supported by stable (and improved) demand in an era of the lowest interest rates ever witnessed in India. While pent up demand has helped keep the sector afloat amid the pandemic, the launches lined up by real estate developers would actually offer the support required for providing momentum for revival. Source: Financial Express INDIA

‘Commercial Realty to Stay Under Pressure in Near Term’

6/18/2021 11:47:00 AM

The commercial real estate sector will continue to face pressure in the near term because of the Covid-related disruptions in the office and retail leasing segments, a report has forecast. With the second wave peaking in the first quarter of FY22, the sector is expected to confront similar challenges as in the previous financial year, the Icra Ratings report said. While the retail leasing segment prospects are closely linked to the recovery in retail sales and discretionary consumption spending by the urban population, demand recovery in the office leasing segment is influenced by multiple factors as corporates evaluate the challenges and opportunities created by the pandemic on their real estate resource planning, it said. “Though cash flows remained materially unimpacted in FY21, we are seeing increasing vacancy levels in the rated portfolio as the pandemic has resulted in deferment of new leasing transactions by tenants, while the available inventory builds up in line with scheduled completions,” Icra Group Head and Senior Vice President, Corporate Ratings, Shubham Jain said. The delay in the conclusion of new leasing is on account of multiple factors, including restrictions on international travel and deferment of decision making, until there is clarity on employees returning to offices at earlier numbers, he said. To some extent, corporates could also be evaluating the potential for them to reduce their real estate footprint through the implementation of hybrid work models, including work-from- home, flexible-seating, among others, he noted. “While the factors that have supported high level of absorption of office space in the country in the past – including abundant and cost-competitive talent pool – remain intact, the evolving work practices in response to the pandemic may create, at best, a temporary deferment of leasing decisions or, in the worst case, a permanent reduction in the demand for real estate space,” Jain said. According to the report, until the implications of the pandemic on the demand trends become clear over the medium term, portfolios with moderate leverage and a low share of under- construction assets will be better placed to weather the short-term challenges such as a drop in occupancy or lower than anticipated growth in rent rates. A sustained gap in the demand-supply position, which can spill over into reduction of rent rates or occupancies in the broader market, will be a key monitorable, it said. Icra said the cash flow pressures on the retail leasing segment are more evident in the near term as state-level lockdowns and restrictions on mall operations impact the tenants’ revenues and will translate into rent concessions being granted by mall operators. As retail operations eventually recover from the impact of the pandemic, the rental collections are also expected to revert to the earlier levels, the report noted. The timeline will depend on the pace of vaccinations in the target consumer segment for retail malls, as well as the revival in consumer sentiments following the adverse impact that the second wave had on disposable incomes. “The first wave resulted in a reduction in net operating income of malls by up to 50 per cent in FY21. However, the recovery in operating metrics witnessed in the second half of last fiscal would have been heartening for the industry. The prospects for such a steep recovery in FY22 could be dampened by the income shock created by the second wave due to the associated healthcare costs that many families incurred,” Jain noted. In addition, he said, the possibility of subsequent waves will weigh on the decision-making by authorities regarding relaxation of restrictions as well as the propensity for visitors to return for non-essential shopping and leisure. Source: Outlook India India

Peripheral areas are the latest preferred realty destinations in cities

6/17/2021 10:10:00 AM

The pandemic has changed consumer behaviour in the real estate business with the city peripheral areas now emerging as the topmost choice for homebuyers as well as developers. The pattern emerging over the last 12-15 months clearly reveals that the supply is chasing demand. As much as 58% of around 149,000 homes launched in 2020-21 are located in the peripheral areas of the top seven property markets, showed data from Anarock Research. The proportion of these launches in peripheral areas has been rising since the past two years but the pandemic has exacerbated the change. In 2018-19, the share of new launches in the peripheral locations was around 51% of about 229,000 homes launched in these cities. In 2019-20, over 207,000 new units hit these markets and the peripheral areas accounted for a 53% share. “Homebuyer preferences changed perceptibly post the pandemic,” said Anuj Puri, chairman, Anarock Property Consultants. “The previous ‘walk-to-work’ concept no longer leads home buying decisions. Instead, bigger and more affordable properties in greener, less polluted areas found favour, driven by work-from-home and e-schooling compulsions as well as safety concerns.” “Developers have quickly changed track and those with land banks in the peripheries, and even otherwise, saw it an opportune time to launch new projects there,” Puri added. The sales pattern also reveal a rising demand in such locations as around 54% of over 151,000 units sold across the top seven cities in 2020-21 were in the peripheral areas. “The conversion of demand into actual sales due to location and affordable price point has been encouraging,” said Ashok Chhajer, chairman at Arihant Superstructures, which focuses on the affordable housing in Navi Mumbai, Mumbai Metropolitan Region (MMR) and Jodhpur region. “We have sold apartments worth over Rs 125 crore across our 10 ongoing projects and two new launches during the second wave of Covid-19 in the last two months as homebuyers now prefer gated communities.” The listed company has sold over 260 apartments during this period and around 106 houses out of total sales were achieved through digital launches of its projects. Among the top cities, Pune saw the most launches in its peripheral areas—76% of 29,950 units launched in 2020-21, led by Mulshi, Pirangut, Daund, Chakan, Chikhali, Kamshet, and Undri. During this period, MMR had 67%, while Delhi-NCR, Chennai, Bengaluru and Hyderabad saw 45%-57% supply coming from such peripheral locations. Not surprisingly, new supply housing in these cities’ key peripheral micromarkets rose markedly between April 2020 to March 2021. According to Puri, it is very likely that some of the major office occupiers will soon de-centralize and bring their offices closer to their employees’ homes in these peripheries. New developments in the peripheries reduce the stress on the choked citycentres, and they become increasingly viable with ongoing infrastructure projects such as metros and ring roads, which will boost their connectivity to the city centres. Many peripheral micro-markets where demand remained muted before the pandemic are now seeing renewed demand and supply. The previous desire to live in city centres—closer to workspaces, children’s school, etc—has reduced markedly with the advent of WFH and e-schooling options in the post-pandemic world. People now prefer to live in bigger, open and green spaces in peripheries and that too at affordable rates. Source: Naredco INDIA

Flexible workplace operators to offer incentives to tenant

6/16/2021 10:20:00 AM

Flexible workplace operators have started doling out oers to retain tenants as many states have allowed reopening of oices from Monday. “We are currently working closely with our existing clients to oer good deals,” said Amit Ramani, founder & CEO of Aws. “We have restructured deals and allowed delay in payments wherever it was required by the clients to sustain their business in the second wave of the pandemic.” According to international property consultant CBRE, on the back of the hybrid space demand, expansion across cities and sustained funding, India’s exible oice stock is expected to grow by 10-15% (y-o-y) from the current 36 million sq ft in the next three years. “For new customers, we are being extremely exible in our partnerships with them. In our experience, that’s the ideal way to handle the current situation as there is no one-size-ts-all when it comes to oering support to customers,” said Ramani. According to Ankit Gupta, regional director at Realistic Realtors, the space that was earlier available for Rs 15,000 per seat, is now being oered at Rs 10,000 per seat. “Furthermore, premium spaces on MG Road or Golf Course Road (in Gurgaon) that were previously priced at Rs 35,000-40,000 per seat, are now priced at Rs 24,000-25,000 per seat. Flexible oice options with cost optimization are the way to go, and co-working companies are currently oering lucrative deals to entice clients,” Gupta said. Co-working spaces are becoming the rst choice for corporates and startups due to their low cost and no long-term commitment model. The Oice Pass (TOP), which oers spaces close to residential societies, is oering six months free pass to those starting business during the pandemic. “Tenants need some hand holding and these are tough times and businesses are facing loss,” said Nikhil Madan, co-founder of The Oice Pass. “We are oering a free pass for six months to support small and micro businesses. Up to three members can come and work at any of our centres.” Some oice players are coming up with innovative models and restructuring their existing and new deals to suit the client’s demands. “At Skootr, we are encouraging our existing clients to discuss our innovative nancial solutions to reduce their cash ows,” said Rahul Sarin, national business head at Skootr FinSave. “For new clients, under our ‘nsave model’, tout as a service allows them between 15% and 20% savings over traditional capex.” Before the second wave of Covid, the market witnessed an increase of 5% in the rst quarter of 2021 compared to the Q4 of 2020. The requirement is now more driven in the form of exible oice spaces like managed, co-working or serviced oice spaces primarily because companies don't want to spend on the capex, and secondly, they would want to retain exibility in these uncertain times. “These are exceptionally diicult times and we are supporting all of our customers and employees during this unprecedented period,” said Harsh Lambah, country manager India and vice president sales-South Asia at International orkplace Group (IWG). “All of our centres across India remain open operating to the highest international hygiene and safety protocols in accordance with WHO guidelines.” Source: The Economic Times INDIA

RERA protects interests of homebuyers: Know its benefits

6/15/2021 12:18:00 PM

The purpose of the Real Estate (Regulation and Development) Act was to balance the interests of all stakeholders, and to address multiple systemic issues that existed in the sector. With the ever-escalating need for housing and infrastructure, the real estate sector is in more demand than ever. Nevertheless, the second wave of Covid has proven to be deadly and disastrous and real estate industry like several others has been ruthlessly hit by the same, but the demand still seems to be sky-rocketing. Albeit its growing importance, the Real Estate industry in India is considered to be an unorganised sector that lacks transparency and accountability from promoters and developers especially due to the delays in project completion and in pre-decided schedules, thereby, leaving such buyers in a lurch. Additionally, the existence of multiple state laws only makes the relief mechanism to be a grueling path for the consumers to seek. To lessen the plight of the consumers in the real estate sector, the Government introduced RERA in 2016. The purpose of the Real Estate (Regulation and Development) Act was to balance the interests of all stakeholders, and to address multiple systemic issues that existed in the sector. It primarily sought to bring uniformity in various state enactments and sought to ensure that the interests of buyers of commercial and residential real estate units were protected. Further, various relevant authorities were created and vested with the competence for enacting the provisions of the Act, setting up the machinery for administering and adjudicating its provisions and the Authorities were further empowered to make regulations and rules under the Act in a time bound manner. Also, under the Act, resolution of complaints and disputes by the Real Estate Regulatory Authority (RERA) and the real estate appellate tribunals are also time-bound which indicates the intention of the legislators to protect the interest of the consumers. Moreover, the Act contains several provisions that address the lacunae in the sector through strict liabilities for promoter irregularities and a disclosure framework, wherein, they are required to mandatorily register for real estate projects and without the necessary approvals, projects cannot be sold, advertised, or booked. Also, the Act imposes many legal and commercial restrictions on promoters and developers to inflict a sense of accountability upon them. Further, another prominent provision under the Act pertains to delays caused by the promoter while handing over the possession of the property, in such an event, according to the Act, the promoter would be liable to return the amount with interest or compensation and if the consumer does not want to withdraw, they would be entitled for the interest amount during the delay period. Lastly, to ensure that the Act is complied with and that the buyers are not the sole sufferers in the event of delays in the completion of a project, as a deterrent, stringent provisions were introduced and penal provisions are also prescribed for violations committed by buyers or real estate agents. Despite the ambitious provisions of the Act, non-compliance, deviations, and delays in the implementation are seeming and have led to a sluggish rate of progress. There are rampant delays by the States in setting up their relevant authorities, which further wrecked the situation. Such authorities also created rules in deviation from the Act, and failed to present any uniformity in its adjudication, which is against the letter and spirit of the Act. Further, the implementation of the Act is also hampered by the apparent bias towards buyers as though the aim of the Act is to protect buyers and their rights, the Act provided for many strict provisions, but to the dismay of the buyers, the same are perceived as draconian by many real estate promoters and significantly impacted their economic interest as well. Further, various inconsistencies, confusion and discrepancies are prevalent across the country which are persistently escalating due to the lack of dialogue amongst stakeholders and the inability to tap the appropriate machinery to resolve such deficiencies. The same could have been resolved had the Central Government invoked the provisions of Section 91 of the Act which provided for “… incorporation of provisions not inconsistent with the provisions of the Act, for removal of difficulty arising in giving effect to the provisions of the Act, within a period of two years from the date of commencement of the Act.” Moreover, despite the loopholes in the Act, the same cannot be enforced upon states as the Act is a toothless tiger which requires teeth to do the needful. Notwithstanding the emerging urgency of a robust real estate act in today’s pandemic struck country wherein the need for housing and infrastructure is undying, RERA has not been proactively spoken of and adopted in its true spirit and form which if done, would enable a smooth sailing transition from the inconsistent and ambiguous state of the Act to being a beacon of hope for all involved. Source: Financial Express INDIA

Model Tenancy Act expected to help improve rental yields over the medium to long term: ICRA

6/14/2021 10:48:00 AM

Low rental yields remain a key constraint in the development of the rental market in the country and the Model Tenancy Act is expected to support institutionalisation and improvement in rental yields over the medium-to-long term, an analysis by ICRA has said. India has a large vacant housing stock of over 110 lakh units and on the other, it has a huge housing shortage. One of the key reasons behind this paradox is the low rental yield in the country, which is one of the lowest across global markets. While the rental yields in India stand at 2-3%, the same in some key markets can go as high as 7-8%. Moreover, with the high taxation of 30% in India, the net benefit from rental income is low, especially when compared to housing finance costs of around 7-8%, the analysis said. “While capital appreciation used to cover this gap earlier, such appreciation has been muted over the last few years, thereby making the gap between rental yields and interest costs more detrimental. Thus, in order for the rental market to develop, returns would need to increase,” said Mahi Agarwal, Sector Head & Assistant Vice President at ICRA. Indonesia has a rental yield of 8.5%, amongst the highest in the world followed by Cost Rica at around 7%. Ireland and Columbia command a rental yield of around 6% and Bulgaria is around 5%, the analysis said. Other issues that have impacted the development of the Indian rental market include high age and poor maintenance of the vacant stock. Given these concerns, the implementation of the MTA as an effective rental housing framework, with it clearly spelling out the obligations of landlords and tenants with regards to property maintenance and upkeep, would be a crucial step towards aiding the development of the Indian rental market. India’s rental market is poised for a significant change and development, post the approval of the Model Tenancy Act (MTA) by the Union Cabinet last week. The new act replaces the Rent Control Act, 1958 and aims at bringing about a balance of interests between tenants and landlords. Specifically, it attempts to address some of the key conflicting issues between the parties by bringing about certain important changes, including the establishment of a rent authority and the mandatory requirement for a written rent agreement; and registration of the same with the authority. Moreover, it also provides clarification on the premise and process for eviction of tenants, maximum level of security deposit, rent revision and requires the establishment of rent courts for dispute resolution. The successful roll-out of the MTA is expected to have a positive impact on market functioning by creating a balanced legal framework, which would improve transparency and protect the interests of all key stakeholders, it said. Till now, the rental market has remained largely underdeveloped, despite the presence of vacant units in urban areas as well as the existence of a considerable housing shortage, primarily due to trust issues between landlords and tenants, low rental yields and lengthy dispute resolution mechanisms. “With the MTA in place now, housing stock can be used more efficiently, which would, in turn, support greater formalization and institutional of the sector over the medium-to-long term. The consequent development of new business models would aid improvement in return metrics. However, effective and broad-based implementation of the act, along with continued government support and initiatives aimed at reforming the rental market would remain key,” Agarwal said. Source: Money Control INDIA

Over Rs 3.5 lakh crore worth asset monetisation through REITs, InvITs likely in one year: Report

6/12/2021 12:30:00 PM

Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) structures are expected to see healthy traction in the near to medium term, supported by the track record of entities that have already floated such structures, enabling regulatory developments and focus on attracting investments into the infrastructure space. Over 3.5 lakh crore assets likely to get monetised through InvITs and REITs over the next one year. Of this, assets worth over Rs.2.5 lakh crore are expected to be monetized through InvIT while 1 lakh crore worth monetisation is likely to be through REITs, said ratings agency NSE 3.36 % . In the last two years, the InvIT space had witnessed monetisation of assets worth Rs 85,300 crore. During the same period, all three REITs valued at Rs 77,100 crore were listed. With InvITs and REITs now recognised as borrowers under the SARFAESI Act, lenders to these trusts, shall have adequate statutory enforcement options, absence of which was earlier becoming a constraint for bankers to lend directly at trust level. Further, Insurance Regulatory and Development Authority of India (IRDAI) has recently allowed insurers to invest in debt instruments of InvITs and REITs rated AA and above as a part of their approved investments, which evidences growing comfort of lenders as well as investors around such structures. Clarifications on the tax-free nature of dividend distribution from these trusts (subject to certain conditions) have also resulted in them being viewed more favourably. “The supporting regulatory framework for various stakeholders attracted both In the last two years, the InvIT space had witnessed monetisation of assets worth Rs 85,300 crore. Over Rs 3.5 lakh crore worth asset monetisation through REITs, InvITs likely in one year: debt and equity investors towards these trusts. Till date assets worth Rs 2.1 lakh crore have been floated through these platforms – 64% through InvITs and 36% through REITs. Lenders are also increasingly becoming comfortable lending to such structures. InvITs and REITs together raised debt of Rs 70,800 crore so far majorly through NCD route (62%) and term loans (37%),” said Shubham Jain, Group Head & Senior Vice President, Corporate Ratings, ICRA. According to him, the capital raising by these trusts is also aided by the favourable view that investors have taken on the long-term revenue generation potential of such infrastructure and real estate assets in the country. “In the real estate space, there are various developers and asset managers who have steadily built-up large portfolios of REIT-ready assets which can be monetized through this route. Of such portfolios, assets worth over Rs 1 lakh crore are likely to be listed in the near to medium term. Infrastructure assets with 3 to 5 years of operating track record across various segments like, roads, gas pipeline, digital fibre, power transmission and renewables are ideal candidates for monetisation through this platform,” Jain added. With a track record of more than five years for InvITs and two years for REITs, supporting regulatory framework and the increase in comfort levels of various stakeholders on these platforms; the potential remains huge. Source: The Economic Times INDIA

Govt approves construction of 361,000 houses under PMAY-U scheme

6/11/2021 12:55:00 PM

Under Pradhan Mantri Awas Yojana - Urban (PMAY-U), the government has approved 708 proposals for the construction of 3.61 lakh houses. The decision was taken at the 54th meeting of the Central Sanctioning and Monitoring Committee (CSMC) under PMAY-U held in the national capital on Tuesday. According to the press statement by the Ministry of Housing and Urban Affairs, the meeting was attended by 13 states/UTs. These houses are proposed to be constructed across "Beneficiary Led Construction and Affordable Housing in Partnership verticals". In addition, 'PMAY- U Awards 2021 - 100 Days Challenge' was also launched by Durga Shanker Mishra, Secretary, Ministry of Housing and Urban Affairs (MoHUA). "The awards are given to recognize and celebrate the outstanding contribution and performances by states, Union Territories (UTs), urban local bodies (ULBs) and beneficiaries for successful implementation of the mission and create a healthy competition," said the release. This was the first CSMC meeting during the second wave of the Covid-19 pandemic. At the meeting, Durga Shanker Mishra said, "The demand for sanction has saturated in all states/UTs. Utilisation of unused funds and ensuring completion of the projects within the stipulated time is our prime focus now." The states/UTs also put in their proposals for revision of projects due to various issues such as, of land, topographical hazards, inter-city migration, change of preferences of verticals and loss of lives. In its press release, the Ministry of Housing and Urban Affairs said, "With this, as on date, the total number of sanctioned houses under PMAY(U) is now 112.4 lakh and so far, 82.5 lakh have been grounded for construction of which 48.31 lakh have been completed/delivered. Total investment under the mission is Rs 7.35 lakh crore which has central assistance of Rs 1.81 lakh crore of which Rs 96,067 crore of funds have been released." Addressing the participating states/UTs, secretary, MoHUA laid emphasis on Six Light House Projects (LHPs), the foundation stones of which were laid by the Prime Minister in January 2021. The LHPs are being constructed at Agartala, Chennai, Lucknow, Ranchi, Rajkot and Indore. "These LHPs should galvanize all concerned departments involved in construction. Use of cutting edge technology should be replicated and scaled up," he said. Source: Business Standard INDIA

Haryana Chief Minister Manohar Lal Khattar’s big push for development of Panchkula

6/10/2021 12:06:00 PM

Haryana Chief Minister Manohar Lal Khattar today announced the setting up of the Panchkula Metropolitan Development Authority (PMDA) on the lines of the bodies established in Gurugram and Faridabad. He said it would help in executing an integrated development plan. He said Panchkula was a part of the tricity, but lagged behind Mohali. Addressing the media in the presence of Speaker Gian Chand Gupta, the Chief Minister said Panchkula would be developed as a hub of medical, education and tourism facilities and industrial investment. He said to promote Panchkula as a destination for real estate, external development charges (EDC) and infrastructure development charges (IDC) were slashed by almost one-third in Panchkula, bringing these on a par with those in Mohali and Zirakpur. He said there were two sites for big hospitals, one in Sector 32 and the other in Sector 5-C, which would be auctioned soon. He said a food and drug testing lab was being opened in Sector 3 at a cost of Rs22 crore. “At Thapli in Morni, a panchkarma centre is being set up under the Ayush Department. A nursing college is also being planned for the city while the National Institute of Fashion Technology is coming up in Sector 23,” he said. He said efforts were being made to develop Barwala as an industrial township and the IT Park in Panchkula would be operated in collaboration with the Software Technology Parks of India (STPI). He said Morni would be developed as a tourist destination. He said paragliding activities would start at Morni on June 20. Besides, 10 trekking routes had been identified. “We are exploring the possibility of home stay or farmhouse stay facilities for trekkers,” he said. He talked about setting up Nakshatra Vatika, Sugandh Vatika and Rashi Van on 20 acres along the Morni road from Panchkula. Focusing on Pinjore, he said a film city was being planned on 60 acres. “It will comprise indoor studios,” he said. He said the government had decided to shift the Sector 23 dumping ground to Jhuriwala by December 31. He said the work to connect Panchkula with the Chandigarh airport was in progress. He said an air taxi service might start from Pinjore. WHAT’S IN THE OFFING 60-acre film city in Pinjore Two big hospitals in Sec 32 & 5-C Better education & tourism facilities, industrial investment Source: The Tribune INDIA