MONTHLY BULLETIN
MONTHLY BULLETIN May 2016
BANGALORE | CHENNAI | HYDERABAD | KOLKATA | MMR | NCR | PUNE
FOREWARD
The much-awaited Real Estate Regulatory Act is a landmark development in the history of the sector in recent times. While it may be too early to comment on the ‘real’ aftermaths of the Act, it has definitely ushered a new hope in the discerning home buyers. Consumer sentiments have taken a leap forward with nearly 45 per cent prospective buyers willing to invest in property over the next six months, as per QuikrHomes recent survey. Also, commercial activity has picked up in major metros owing to the favorable economic conditions in the country. With REITs getting more clarity, investors are also on their toes. And much to our expectations, the government’s initiatives to boost infrastructure across the country is also a step in the right direction. All these factors augur well for the realty sector in the near future. But what needs to be carefully watched is the inventory pile-up across cities. This doesn’t necessarily
mean that there is no housing demand. If we consider stats then there is a housing shortage of as many as 19 million units in Urban India. Hence, there is a paradox. As such, there is a demand-supply mismatch in the Indian realty market which needs to be addressed. However, realty pundits cite that the environment is now looking very positive and sales are expected to pick up in most metros. In fact, there are signs of sales picking up meagerly in cities like Bangalore and Pune. Moving on, the new launch supply of residential units in May has seen a decline across metros as compared to the previous month. But as they say, it is better to see ‘the glass half full.’ Builders are seen to be essentially focusing on completing their previously launched projects. Construction speed has picked up in several projects that had been delayed for multiple reasons. And ultimately, the
home buyers are set to benefit from this.
Priyanka Kapoor Sr. Manager – Content & Research (Real Estate) QuikrHomes
MARKET OVERVIEW - PAN INDIA Major Deal Of The Month Gurgaon-based real estate developer M3M India has raised ₹1,250 crore from Indiabulls Housing Finance and used ₹700 crore of this money to pay the final installment to Sahara Group, concluding a deal to acquire 185 acres of land in Gurgaon for ₹1,211 crore. The money has been raised by M3M through a structured debt transaction by discounting the cash flows of M3M's high-end Golf Estate project in Gurgaon.
MARKET SENTIMENTS Government approves over ₹5,530 cr for infra boost in 111 cities The Centre has approved an investment of over ₹5,530 cr for providing basic infrastructure in over 110 cities across six states under AMRUT scheme for the current fiscal. For 2016-17, approved investment in 34 mission cities of Madhya Pradesh has been ₹2,074 cr with central assistance of ₹862.80 cr, while ₹1,401 cr investment is approved for 31 cities of Gujarat with central assistance of ₹599.18 cr.
Commercial real estate offers investment opportunity worth ₹2.88 – 3.60 lakh cr Indian commercial real estate offers investment opportunity worth ₹2.88 - 3.60 lakh cr across top eight cities - Bengaluru, New Delhi NCR, Mumbai, Pune, Chennai, Hyderabad, Ahmedabad and Kolkata via REIT-eligible ready stocks as per RICS and Cushman & Wakefield report entitled 'Commercial Real Estate: Steering Growth in Indian Cities'.
Launches reduce, Unsold stock increases • As per our data, the residential market in top cities has witnessed a sharp decline in the new launch supply in May. Overall, there was approximately 60 per cent decline in the new launch supply registered in top 6 cities last month as compared to the preceding month April. This is mainly because builders are now focusing on completing the earlier launched projects rather than launching new ones. Moreover, with the Real Estate and Regulatory Act (RERA) in place, it becomes even more crucial for builders to complete construction of their previous projects so that they can avoid falling under the gambit of the Act, which is yet to become operational in totality. • With approximately 6,00,000 unsold inventory in the primary market in the top 6 cities, the average inventory overhang comes around 35 months. Interestingly, the rental market in top cities continued to witness a stable price movement. • National Capital Region (NCR) was affected the most in terms of unsold stock and low sales velocity, followed by Mumbai Metropolitan Region (MMR) and Bangalore.
TOP TRENDING NEWS
Indian real estate sector on revival The real estate sector is on the revival mode and is showing early signs of growth on the back of expected favourable monsoon and cut in key interest rates. It has a lot to do with the way economy is shaping up by the myriad progressive initiatives taken by Union Government. Moreover, formation of RERA and increased foreign investment pose a brighter picture for the sector which has suffered in the past due to lack of a regulatory authority.
InvITs, REITs likely to be launched in 2017 The much-awaited Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are likely to be launched in the country next year. Currently, the market for REITs and InvITs is relatively nascent in the country. However, with various enabling factors such as the growth of the economy and the middle class, and a concomitant need for housing and infrastructure, the demand for these investment vehicles will see an upswing over the next few years.
Buyers of under construction flats may get tax relief The Delhi High Court has said that home buyers cannot be charged service tax on payments made towards purchase of under construction apartments from builders if the total value of the apartment includes the land value. However, service tax can still be levied on preferential location charges (PLC) that builders charge from buyers. The court also said that if the developer has already collected service tax, buyers would be refunded the amount with 6 per cent rate of interest by the revenue department of the government of India.
PAN-INDIA REAL ESTATE MARKET OVERVIEW - TOP CITIES
DELHI 1,249
₹4,210
KOLKATA
BANGALORE | CHENNAI | HYDERABAD | KOLKATA | MMR | NCR | PUNE
FOREWARD
The much-awaited Real Estate Regulatory Act is a landmark development in the history of the sector in recent times. While it may be too early to comment on the ‘real’ aftermaths of the Act, it has definitely ushered a new hope in the discerning home buyers. Consumer sentiments have taken a leap forward with nearly 45 per cent prospective buyers willing to invest in property over the next six months, as per QuikrHomes recent survey. Also, commercial activity has picked up in major metros owing to the favorable economic conditions in the country. With REITs getting more clarity, investors are also on their toes. And much to our expectations, the government’s initiatives to boost infrastructure across the country is also a step in the right direction. All these factors augur well for the realty sector in the near future. But what needs to be carefully watched is the inventory pile-up across cities. This doesn’t necessarily
mean that there is no housing demand. If we consider stats then there is a housing shortage of as many as 19 million units in Urban India. Hence, there is a paradox. As such, there is a demand-supply mismatch in the Indian realty market which needs to be addressed. However, realty pundits cite that the environment is now looking very positive and sales are expected to pick up in most metros. In fact, there are signs of sales picking up meagerly in cities like Bangalore and Pune. Moving on, the new launch supply of residential units in May has seen a decline across metros as compared to the previous month. But as they say, it is better to see ‘the glass half full.’ Builders are seen to be essentially focusing on completing their previously launched projects. Construction speed has picked up in several projects that had been delayed for multiple reasons. And ultimately, the
home buyers are set to benefit from this.
Priyanka Kapoor Sr. Manager – Content & Research (Real Estate) QuikrHomes
MARKET OVERVIEW - PAN INDIA Major Deal Of The Month Gurgaon-based real estate developer M3M India has raised ₹1,250 crore from Indiabulls Housing Finance and used ₹700 crore of this money to pay the final installment to Sahara Group, concluding a deal to acquire 185 acres of land in Gurgaon for ₹1,211 crore. The money has been raised by M3M through a structured debt transaction by discounting the cash flows of M3M's high-end Golf Estate project in Gurgaon.
MARKET SENTIMENTS Government approves over ₹5,530 cr for infra boost in 111 cities The Centre has approved an investment of over ₹5,530 cr for providing basic infrastructure in over 110 cities across six states under AMRUT scheme for the current fiscal. For 2016-17, approved investment in 34 mission cities of Madhya Pradesh has been ₹2,074 cr with central assistance of ₹862.80 cr, while ₹1,401 cr investment is approved for 31 cities of Gujarat with central assistance of ₹599.18 cr.
Commercial real estate offers investment opportunity worth ₹2.88 – 3.60 lakh cr Indian commercial real estate offers investment opportunity worth ₹2.88 - 3.60 lakh cr across top eight cities - Bengaluru, New Delhi NCR, Mumbai, Pune, Chennai, Hyderabad, Ahmedabad and Kolkata via REIT-eligible ready stocks as per RICS and Cushman & Wakefield report entitled 'Commercial Real Estate: Steering Growth in Indian Cities'.
Launches reduce, Unsold stock increases • As per our data, the residential market in top cities has witnessed a sharp decline in the new launch supply in May. Overall, there was approximately 60 per cent decline in the new launch supply registered in top 6 cities last month as compared to the preceding month April. This is mainly because builders are now focusing on completing the earlier launched projects rather than launching new ones. Moreover, with the Real Estate and Regulatory Act (RERA) in place, it becomes even more crucial for builders to complete construction of their previous projects so that they can avoid falling under the gambit of the Act, which is yet to become operational in totality. • With approximately 6,00,000 unsold inventory in the primary market in the top 6 cities, the average inventory overhang comes around 35 months. Interestingly, the rental market in top cities continued to witness a stable price movement. • National Capital Region (NCR) was affected the most in terms of unsold stock and low sales velocity, followed by Mumbai Metropolitan Region (MMR) and Bangalore.
TOP TRENDING NEWS
Indian real estate sector on revival The real estate sector is on the revival mode and is showing early signs of growth on the back of expected favourable monsoon and cut in key interest rates. It has a lot to do with the way economy is shaping up by the myriad progressive initiatives taken by Union Government. Moreover, formation of RERA and increased foreign investment pose a brighter picture for the sector which has suffered in the past due to lack of a regulatory authority.
InvITs, REITs likely to be launched in 2017 The much-awaited Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are likely to be launched in the country next year. Currently, the market for REITs and InvITs is relatively nascent in the country. However, with various enabling factors such as the growth of the economy and the middle class, and a concomitant need for housing and infrastructure, the demand for these investment vehicles will see an upswing over the next few years.
Buyers of under construction flats may get tax relief The Delhi High Court has said that home buyers cannot be charged service tax on payments made towards purchase of under construction apartments from builders if the total value of the apartment includes the land value. However, service tax can still be levied on preferential location charges (PLC) that builders charge from buyers. The court also said that if the developer has already collected service tax, buyers would be refunded the amount with 6 per cent rate of interest by the revenue department of the government of India.
PAN-INDIA REAL ESTATE MARKET OVERVIEW - TOP CITIES
DELHI 1,249
₹4,210
KOLKATA
