Author Archives: Rachna Ranjan

REITs opportunity in India estimated to be Rs 1.25 trillion

As much as 229 million sq ft of office space in India is compliant with REIT (Real Estate Investment Trusts). Even if half of this space were to get listed in the next few years, the total REIT listing could be worth Rs 1.25 trillion.

The first REIT listing is expected by June 2017. Well-known private equity funds such as Blackstone, Brookfield, Singapore’s GIC and the Canada Pension Plan Investment Board (CPPIB) are expected to be the first movers in this space. They are also the most likely to be successful in this endeavour, given the fact that they have a good portfolio of superior Grade A office spaces in tier-I cities.

RMZ to buy remaining 50% stake in Essar Group’s Equinox Business Park in Mumbai

In one of the largest real estate transactions of this year, RMZ will acquire the remaining 50 per cent stake in Essar Group’s commercial project Equinox Business Park in Bandra-Kurka Complex, Mumbai, by the end of this year.
The company will pay Rs 2,400 crore for the complete buyout, which will be funded by Qatar Investment Authority (QIA) and some other sovereign funds, said two people having direct knowledge of the development.

Bengaluru-based developer RMZ, which had acquired a 50 per cent stake in the project earlier last year, had entered into an agreement with Essar to buy out the remaining stake.
After the takeover by RMZ, the 1.25-million sq ft business park, which was being operated by Essar’s realty arm Equinox Realty, will be renamed as RMZ Equinox Business Park.

Read more: Economic Times

Bengaluru office space shortage hits absorption

Office space absorption dropped in Bengaluru in the October-December quarter, compared to the same period last year, partly due to limited availability of Grade A office space in the city. Gross absorption fell to 4.6 million sqft in the quarter, from 5.3 million sqft a year earlier, according to data from an independent property consultancy.

But this was much higher than in the second quarter, when it was just 2.3 million. Gross absorption includes net absorption and property under development that will be delivered within 4-6 quarters.

Vacancy has been at an all-time low in prime office spaces of the Outer Ring Road (ORR) stretch, hovering between 2-4% as builders take time to come up with fresh supply. With a constraint in supply, rents in the area are expected to rise in 2017.

Read more: Economic Times

Commercial realty sales rose 9% in 2016

If demonetisation severely impacted the residential real estate segment in 2016 with sales dropping by 9% from 2015, the commercial real estate segment, backed by demand for office space, saw sales climbing 9% in 2016 over the previous year, according to real estate consulting firm.

In a report, the property consultant said the year witnessed the absorption of more than 43 million sq. ft. of commercial real estate. “Supply addition during the year touched 35 million sq. ft. with India’s office stock reaching a milestone of over 0.5 billion sq. ft. higher than several East Asian economies,” said the property consultant in a statement.

RMZ Corp to buy 100% stake in Essar Group’s Equinox Business Park in BKC

In one of the largest real estate transaction of this year, RMZ Corp will acquire 100% stake in Essar Group commercial project Equinox Business Park in Mumbai’s Bandra-Kurla Complex for about Rs 2,400 crore.
“RMZ already hold 50% stake in the project the remaining stake buyout will happen by the end of this year. The acquisition will be funded by QIA and some other sovereign funds,” said two people having direct knowledge of the development.

RMZ Corp will take over the 1.25 million sq ft Equinox Business Park that is located in Mumbai’s prime CBD at Bandra Kurla Complex and was until now operated by Equinox Realty, the realty arm of Essar. The park is being renamed as RMZ Equinox Business Park.

Read more: Economic Times

IT, start-up hub Bengaluru tops dynamic city list

Bringing another feather in the cap of IT and start-up hub Bengaluru, it has been rated as the world’s most dynamic city in the annual report. By doing so, it outranked US cities such as Silicon City (3), Austin (7) and Boston (9). Apart from Bengaluru, Hyderabad (5), Pune (13), Chennai (17), Mumbai (25) and Delhi (23) feature in the top 30 most dynamic cities list.

The ratings were released during the ongoing World Economic Forum meet at Davos, recently. According to a release by a property consultant, the index “tracks the speed of change of a city’s economy and commercial real estate market”. It covers 134 major business hubs and “identifies cities that have the potential to maintain the greatest dynamism over the short and long term.”

Demand for office space to stay strong in 2017

A property consultant expects the demand for office space to stay strong in 2017 on the back of low supply and lack of availability of Grade A office spaces. It also expects more companies using co-working spaces to adopt a flexible working strategy.
According to the agency, while supply in 2017 is expected to remain at 35 million square feet, absorption is being pegged at nearly 42 million sft reflecting a demand-supply mismatch. Even in 2016 and 2015, supply remained at 27.2 million sft and 33 million sft across major eight cities while absorption was 41.6 million sft and 40 million sft respectively.

Read more: Economic Times

E-commerce boom in Bangalore over? Realty share in office space absorption plunges

The e-commerce boom seems to be over as far as real estate space absorption is concerned in Bengaluru. Although Bengaluru witnessed a strong growth in office market transactions in 2016 with the absorption of 11.4 million sq ft, the share of e-commerce in the total office space declined drastically. The share of e-commerce was just around 2% last year from around 5% in 2015 and the total office space leased by the sector was 181,000 sq ft.

According to data available with a property consultant, the e-commerce sector witnessed its lowest office space absorption in Bengaluru in the last few years. There were a handful of transactions, with Snapdeal snapping up 35,000 sq ft, Amazon Internet Services (20,000 sq ft), Groupon (20,000 sq ft), Quikr (8,000 sq ft) and MakeMyTrip among others.

Gurgaon most preferred office market in NCR with 51% leasing share in 2016

Gurgaon remained the preferred choice for opening offices in the National Capital Region (NCR) among companies, grabbing 51% share or 3.88 million square feet of the total office space leased in the region in 2016, according to a property consultancy.

Noida and Delhi accounted for about 36% and 13% share, respectively, out of the total 7.6 million sq ft office space absorbed in the NCR in 2016, at par with 2015 numbers. While the technology sector remained the key driver of office leasing activity in Gurgaon with a 32% share, the share reduced from the last year’s number of 64%.
In Noida, also the technology sector remained the key demand driver with 60% share.

Read more: Economic Times

Indian Realty Expected to Grow by 30% in Next Decade, Will Remain a Good Investment

Globally, real estate is recognized as a sector which has the most economic linkages. In India, realty is the second largest employer after agriculture and is slated to grow at 30% over the next decade as the number of Indians living in urban areas is set to increase from 434 million in 2015 to 600 million by 2031, according to the India Brand Equity foundation.

The real estate sector comprises housing, retail, hospitality, and commercial sub sectors. Demand for office space and urban and semi-urban accommodation will drive the growth in this sector. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.