REALTY ROUNDUP: SEPTEMBER 2015 ECONOMIC OVERVIEW WPI-based inflation, as measured by the wholesale price index (WPI), fell 4.95% yearon-year in August 2015, following a 4.05% drop in the previous month, as cost of manufactured products and diesel declined more than in July. The wholesale inflation has been in the negative territory since November 2014. Consumer prices in India increased 3.66% year-on-year in August of 2015, slowing slightly from a revised 3.69% rise in July and in line with market expectations. The inflation rate fell to a fresh record low in August, staying below the central bank s 6% target for the 11th month in a row. The Reserve Bank of India (RBI), in its September 2015 monetary policy review, reduced the policy repo rate by 50 basis points from 7.25% to a 4.5 year low 6.7%, with inflation running at record lows. The Index of Industrial Production (IIP) with base 2004-05 for the month of July 2015 stands at 180.3, which is 4.2% higher as compared to the level in the month of July 2014. The cumulative growth for the period of April-June 2015-16 over the corresponding period of the previous year stands at 3.5%.
The World Bank is in talks with the Indian government to provide some initial funding for the latter's smart cities programme and the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) initiative for urban revitalization. Rising foreign investments into the country's highways sector, which is being seen as a vehicle for a sharp economic turnaround has picked up such as Canada's Brookfield Asset Management shelled out INR 30 Bn to buy nine projects, including the Mumbai-Nashik highway, from Gammon India. The deal is the first of its kind in the highways sector since the Narendra Modi government tweaked rules to spur life into the sector. Companies with foreign direct investment (FDI) in them have been allowed to lease out surplus real estate to other companies within the group, without violating the FDI policy on real estate. Earlier, such sub-letting was considered as real estate business and barred. Waugh Global Realty promoted by former Australian cricketer Steve Waugh has entered the domestic real estate market by launching a portal waughglobal.com that will cater to the housing demands of NRIs. The company currently has properties listed on its portal of developers such as Lodha Group, Godrej, Shapoorji etc. across seven cities - Delhi NCR, Mumbai, Pune, Hyderabad, Bengaluru, Chennai and Kolkata. The government has announced its plans to create a "Green Highways Fund" under its ambitious policy to transform India's 96,000 km network of National Highways under which it will be mandatory to set aside 1% of the total road project cost for plantation. The Road Transport and Highways Ministry is formulating the "Green Highways (Plantation & Maintenance) Policy -2015" to develop eco-friendly National Highways with the participation of community, farmers, NGOs, private sector, government agencies and the Forest Department. Union Urban Development Ministry announced its sanction of a sum of INR 1.92 Bn under Smart City Mission for 96 cities included in the ambitious project. Each of the cities has been given INR 2 cr for preparing Smart City plan. Delhi NCR & North India New York-based private equity major Blackstone's real estate division has agreed to buy 100% equity stake in Gurgaon-based builder Alpha G: Corp for INR 16 Bn. The deal marks the first full buyout of a real estate company by a private equity fund in India. The Noida Authority board has approved a decision to bring abadi land in villages under the purview of its building bylaws. The authority has decided to do so in the wake of the Nepal earthquake and subsequent devastation. The Greater Noida Authority already governs all construction being carried out in village abadi area since 2011.
Ten housing projects which were mired in the legal wrangle of demarcating an ecosensitive zone around the Okhla Bird Sanctuary have received completion certificates from the Noida Authority, paving the way for 7,000 buyers to take possession of their homes. This is the major first set of completion certificates issued since the ecosensitive zone around the park was notified by the Union environment ministry on August 19. Nearly 53 projects coming up in sectors near the peripheries of the park are in various stages of development. Completion certificates for the remaining projects are also being processed. The Noida Authority has started the process of building roads in the newer sectors - sector 75-79, 112-119 and 150, as the developers have either handed over flats to owners, or construction is in full swing in these sectors. Thus, keeping in mind the fact that many people have shifted to these sectors and more are likely to join them soon, the Noida Authority has started the process of the developing the sector roads to avoid any connectivity problem. The Noida Authority reduced the conversion rate from 25% to 10% on popular demand and on the lines of a similar policy being followed in Delhi. Till now, allottees owning residential and industrial property could convert it into mixed land use by paying an 'impact fee' to the Authority, which is 25% of the cost difference between the prevailing residential or industrial sector rate and the reserve price of the commercial rate of the area where the property is located. However, the Noida Authority board has now approved the reduction in the conversion fee to 10%. Mumbai & Pune: Bengaluru-based MRG Hospitality and Infrastructure, which owns a chain of boutique hotels under the Goldfinch brand, has acquired the four-star business hotel Aura Grande in Mumbai from Mumbai-based Annakoot Properties for INR 1 Bn. The 94- room hotel is located in the Andheri suburb of the city. Bengaluru: Larsen & Toubro (L&T) announced its plans to monetise its 67-acre land parcel in one of the plush areas of Bengaluru by developing a residential township there. The plot that used to house L&T and Komatsu joint venture's manufacturing unit for heavy machines has now been vacated by shifting the factory. RESIDENTIAL MARKET - KEY TRENDS CITY Delhi NCR TOP 7 CITIES : RESIDENTIAL KEY TRENDS In Gurgaon micro-market, builders have been offering discount schemes, easy payment plans and buy-backs in order to improve the demand and reduce the unsold inventory. There has been no appreciation in the Sohna micro-market in the last one
year due to high inventory buildup. Dwarka Expressway has not seen much of a change in sentiment with sales staying low in this micro-market. In New Gurgaon, project deliveries have kept the prices stable. Being an end-user driver market, Sohna Road micro-market has seen some traction. Transactions in Noida continue to remain slow with the builders maintaining a cautious stance in launching new projects. Kolkata Kolkata residential real estate markets continued to have subdued sentiments in terms of absorption and new launches. There were no new launches in this market and the number of enquiries also remained low. Capital values remained largely stable but have indirectly declined to some extent as the developers have been offering discounts, free car parks and other freebies to lure buyers and boost sales volumes. Mumbai Mumbai residential real estate prices continue to be stable at current levels with a slowdown in sales reflected by higher number of site visits per customer to close a transaction successfully. While luxury residential market moved slowly, resale transactions seemed to have picked up pace in Mumbai in this period. Customers continued to speculate on interest rate cut and prices offered by developers; thus pushing the buying decision further. Sales in Mumbai and Navi Mumbai witnessed a slowdown as compared to previous month. However, residential market in Thane saw a good momentum particularly in the ticket size of 7.5 10 Mn. Ambernath and Badlapur (in MMR) which are being touted as the affordable residential locations registered good sales volume. There were three new launches by Category A developers in Thane in the month of September. Pune The residential real estate market in Pune witnessed moderate movement in the past month. The low end segment in the ticket size of INR 1.5 4.5 Mn saw a considerable end-user demand in the past month. Affordable options in this ticket size in the peripheral micromarkets of Undri, Wagholi, Bosari, Moshi performed well in the month of September. The mid-income segment in the ticket size of INR 7.5 8.5 Mn saw a moderate uptake. Developers continued to lure customers with heavy discounts and offers, flexible payment and deferred payment schemes. Some developers organized carnivals and various promotional activities in the past month to boost their sales.
Bengaluru The residential real estate market in Bengaluru witnessed an increase in absorption as compared to the previous month. Plotted development in small ticket sizes have seen preference among buyers. While capital values remained stable, discounts and buyback schemes were offered by developers. The market saw a good movement in the resale inventory inventory as well. Hyderabad Sales in the Hyderabad real estate market saw a slow down in sales in the month of September. Price points remained stable; there was only one soft launch by Provident Housing in the month of September. New inventory addition has only increased marginally with the developers focusing on selling the current projects instead of launching new ones. New projects have also faced road blocks due to the developers being at logger heads with the Hyderabad Development Authority over certain approval fees. Demand was seen to be higher for ready-to-move in units and those having possession date within next 12 months. The ready-to-move in inventory also commanded a premium over the under construction properties. Chennai Sluggishness in absorption continued in Chennai residential market in the month of September. There has not been much activity in the residential sales. The price points in the Chennai residential market have remained stable. Real Estate developers in Chennai have resorted to offering discounts and freebies to home buyers, in order to boost the sales volume. However, Chennai residential real estate market is expected to see some positive movement post the recently concluded Tamil Nadu Global Investor meet. The investor meet attracted a lot of government initiatives and is likely to push the investments in this region which can effectively boost the realty market as well. Source: ICICI PSGs Channel Sources KEY RESIDENTIAL PROJECT LAUNCHES: SEPTEMBER 2015 City Projects Developer Location Delhi NCR (Unnamed project) SS Group (Independent Builder floors) Sector 90, Gurgaon Capital Value (INR per sq. ft.) Expected Possession 5,500 Dec-2018
Ireo city extension Ireo Sector 4, Sohna 5,000 Dec-2019 Kolkata Mumbai Pune Bengaluru Hyderabad Chennai There were no new launches in Kolkata in the month of September Serein Courtyard TATA Housing Wadhwa Group Pokhran Road, Thane Pokhran Road, Thane 12,300 Dec-2018 10,800 Dec-2018 Vaikunth Piramal Realty Balkum, Thane 8,060 Dec-2018 Eminence Naiknavare 9,200 Viman Nagar Developers Dec-2018 Cresendo Kalpataru 6,050 Wakad Developers Dec-2018 Code name Kolte Patil Developers Wakad 5,500 Dec-2018 7 Plumeria Namrata Drive Developers Tathawade 5,050 Dec-2018 Citrin Achalare Realtors Marunje 4,200 Dec-2018 Vaastu Viva B. U. Bhandari Wakad 5,100 Dec-2018 Greens Goel & Co. Hennur 4,999 Dec-2018 Palladium(Plots) Mahavir Group Jigani 1,650 Dec-2018 Nikoo Homes Bhartiya City Thanisandra Road 4,690 Dec-2018 Energia Nagwara, Mantri Outer Ring Developers Road 5,690 Dec-2018 Kenworth Raisington Cross way Provident Housing Doshi Housing Ltd. True Value Homes Rajender Nagar 3,400-3,600 Dec-2018 Karapakkam 5,850 Dec-2018 Karapakkam 7,200 Dec-2017 GEOGRPAHY-WISE CAPITAL MARKET WATCH DELHI NCR: Singapore's sovereign wealth funds GIC and DLF Home Developers, a subsidiary of India's largest real estate developer DLF, entered into a joint venture to invest in two upcoming projects in Delhi's Moti Nagar. The INR 20 Bn investment by GIC is part of a larger plan by DLF to raise around INR 75 Bn with talks underway to get investors for some other projects too. The joint venture with GIC will develop over 5 Mn square feet, including 1 Mn square feet in the fifth phase of Captital Greens and 4 Mn square
feet on SIEL land. The money raised by the DLF subsidiary would be utilised partly for debt reduction and partly for capital expenditure. The projects, currently focused on residential development, are expected to be launched in a year and will be developed in phases over a five-year period. Noida-based privately held real estate developer Logix Group has signed an agreement to buy back the stake of Apollo Global Asset Management in one of its key commercial assets Cyber Park. The developer has bought back the 50% stake of the investor through internal accruals. Cyber Park, which is located at Sector 62, Noida, is spread over 44,100 sq metres. The project has four towers of approximately 3,07,260 sq. ft. Of the four towers, three were jointly owned by Logix and the realty arm of Apollo Global Management while the fourth one is held by ICICI Prudential. Delhi-based real estate investment firm Landmark Holdings, a part of Dalmia Group, has invested an undisclosed amount in a project of Mumbai-based private developer Lokhandwala Infrastructure. This is the first known investment by Landmark this year. Landmark has invested in a 2 Mn sq. ft. residential project located at Lower Parel, Mumbai. Christened Minerva, the high-rise project is completed up to 51 storeys and most of the units have been sold. Gurgaon-based real estate developer Orris Infrastructure has raised INR 3.25 Bn ($49 Mn) from non-banking finance company (NBFC) IndoStar Capital Finance Ltd in the form of non-convertible debentures (NCDs). The proceeds will be used to pre-pay debt from Xander Finance (INR 1.70 Bn) and Religare Credit Opportunities Fund (INR 450 Mn). It will use the rest of the capital (INR 1.10 Bn) for construction of its ongoing projects. Religare Credit Opportunities Fund had put in money in 2014 while Xander had invested in 2013. MUMBAI & WEST: Godrej Properties Ltd (GPL) has sold a third of its commercial project Godrej BKC in Mumbai for INR 14.79 Bn($225.4 Mn), to Abbott. This is the biggest end-user commercial realty deal in the country. Godrej BKC is a 1.3 Mn sq ft saleable area property at Bandra-Kurla Complex and is expected to be completed by mid-2016. The firm has sold 4,35,000 sq ft in the deal, or around one-third of it. Mumbai-based Carnival Group has agreed to acquire engineering and construction firm Larsen & Toubro Ltd's commercial real estate projects in Chandigarh for INR 17.95 Bn (around $267 Mn). The deal includes Elante Mall, Hyatt Luxury hotel and office space with a central courtyard. This acquisition will help us to expand our capabilities and allow us to make inroads into newer markets, said Shrikant Bhasi, chairman of Carnival Group.
Piramal Fund Management, part of the Ajay Piramal-owned Piramal Group, entered into an agreement with Mumbai-based Omkar Realtors and Developers to exit from Mumbai luxury residential project Omkar 1973 with an internal rate of return of 24% on its investment. The exit would translate into about INR 5 Bn for Piramal Fund. BENGALURU: Bengaluru-based real estate firm Unishire has raised funding of INR 1.26 Bn through issue of non-convertible debentures to investor Reliance Yeild Maximiser Alternative Investment Fund. The funds raised will be utilised for clearing high cost debt, ongoing projects construction and also for expansion, the company said in a statement. The funds raised will be released in two tranches of INR 900 Mn and INR 360 Mn with maturity periods of 45 months. Unishire currently has an area of 5.6 Mn sq ft under construction and another 6.4 Mn sq ft planned for development in the next 3 to 5 years. DISCLAIMER The information set out in this document has been prepared by ICICI Home Finance Company Ltd. based upon projections which have been determined in good faith by ICICI Home Finance Company Ltd. There can be no assurance that such projections will prove to be accurate. ICICI Home Finance Company Ltd. does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information in this document reflects prevailing conditions and our views as of this date, all of which are subject to change. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. No reliance may be placed for any purpose whatsoever on the information contained in this document or on its completeness. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. This document is being communicated to you solely for the purposes of providing our views on current market trends. This document is being communicated to you on a confidential basis and does not carry any right of publication or disclosure to any third party. By accepting delivery of this document each recipient undertakes not to reproduce or distribute this presentation in whole or in part, nor to disclose any of its contents (except to its professional advisers) without the prior written consent of ICICI Home Finance Company Ltd., who the recipient agrees has the benefit of this undertaking.
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