Author Archives: Rachna Ranjan

Demonetisation Delivers Massive Blow To Real Estate Market, Developers Say Sales Down By Half

Property market, long considered a black money safe haven, seems to have taken a big hit from demonetisation, with developers seeing their sales drop by about 50 per cent in the last three months and now pinning their hopes on buyers coming to market with ‘white money’.

The genuine buyers in the residential market, on the other hand, appear to be holding back their purchase plans on hopes that the interest rates would fall further and the property prices would plunge post demonetisation, which some see as a ‘cleansing’ of a sector infested with illicit funds.

As per industry data, the secondary or resale market, where maximum black money typically gets parked, has been worst-affected as transactions almost dried up, barring some interest in marque properties, due to paucity of cash after scrapping of old Rs 500 and Rs 1,000 notes.

Hiranandani Group looks to boost commercial realty portfolio

Realtor Hiranandani Group is looking to ramp up its commercial portfolio by 10-15% annually over the next five years through new projects. The Mumbai-based developer will be adding five million sq ft in the two years ending December 2017 in Mumbai Metropolitan Region (MMR) and Ahmedabad. The group is also planning to develop a 250-acre industrial township in Talegaon in Pune and a 160-acre park in Chennai.

“We believe in the Prime Minister’s vision of `Make In India’, which will boost both industrial and commercial activity in India and therefore initiating the new industrial space building and growing the commercial footprint from our side. Apart from commercial development, we are also going to focus on industrial townships. We will be deve loping an industrial township on 250-acre land in Pune and 160 acres in Chennai,“ said Niranjan Hiranandani, CMD of Hiranandani Group of companies.

Office space: US policy shift may shake demand in India

The adverse impact of demonetisation on the real estate sector towards the fag end of the year notwithstanding, the year 2016 witnessed a 9 per cent jump in office space leasing. While the information technology-enabled services (ITeS) sector was a big driver for projected growth in the coming months, there could be some challenges ahead, with the biggest concern emanating from possible policy changes by the new US administration following the election of Donald Trump as the President. Trump has clearly outlined a policy of protectionism and if the US were to change its policy on outsourcing, there could be a significant dent to the demand for office space from American companies in India, especially in the IT and ITeS space.

Breaking Ground: Chinese Investment in US Real Estate

Chinese investment around the world surged over the past decade, expanding from an early focus on natural resource extraction and energy in developing countries to broader industries and advanced products and services in developed markets.

In 2014, Chinese outward foreign direct investment (FDI) totaled $116 billion, and approximately $18.1 billion flowed into the United States. In 2015, Chinese outward FDI totaled $118 billion, and $22.3 billion of it went to the United States. Still, China accounts for less than 10 percent of all FDI in the United States.

Bengaluru and Delhi NCR dominate office leasing market with 47% share

Leasing during the 4th quarter was mainly led by Bengaluru and Delhi NCR, accounting for more than 50% of the total traction, followed by Pune and Mumbai. Quarterly leasing almost doubled, with Gurgaon continuing to lead leasing activity in the NCR, constituting a share of 61%. Rents across micro-markets remained stable with the exception of DLF Cyber City and leasing activity occurred mostly in the form of small-to-medium sized transactions (10,000 – 50,000 sq ft), says the report.

Amazon stays ahead of Flipkart, makes space for growth

It may still be trying to catch up with the market leader on sales, but Amazon India has surely outperformed Flipkart on one front: occupying office space. The local unit of the American e-commerce giant occupies 3.1 million sq ft of office space in India, more than four times compared with the 7 lakh sq ft that Flipkart has on rent. Flipkart is also building a campus in India.

This may not be an indication of the sales they post, but it does point to the aggressive expansion being carried out by Amazon, which entered India in 2013, six years after Flipkart started operations. To be sure, the American company also has services here that cater to its global operations, and that require space.

Low office vacancy to boost rent in India

At the end of Q3 2016, India’s total Grade A office stock stood at 472 million square feet with an average vacancy rate of 15.3%. The average vacancy rate has been declining since 2013 amid strong demand from domestic as well as international office occupiers, and this trend is forecast to continue in the medium to long term.

If we look at the vacancy rate in cities, most are well placed except certain sub-markets of the National Capital Region (NCR) and Mumbai, which are skewing up the pan-India average (Figure 1). The NCR alone contributes about 41% to total pan-India vacant stock of 72 million square feet, followed by Mumbai contributing about 28% while Bengaluru, the second biggest office market in size after Mumbai, contributes just 4.2% to pan-India vacant stock.

UK commercial property capital values fall 2.4 pct in 2016

British commercial property capital values fell 2.4 percent in 2016, hurt by changes to stamp duty tax and Britain’s vote to leave the European Union, a real estate firm said on Tuesday. Retail property capital values saw the largest fall, declining 5 percent from a year earlier, while offices dropped 2.5 percent. Industrial property capital values rose 1.5 percent compared with 2015.

Capital value refers to the probable price that would have been paid for a property at the date of valuation. Rental values rose 1.7 percent on the year but remain below pre-Brexit vote levels. The annual total return for UK commercial property investment was 2.7 percent.

Office space leasing up nine per cent in 2016, Bengaluru on top

Led by Bengaluru, office space lease activity rose last year to breach the 40 million-sq ft mark in the country. Much of the demand came from the IT and ITeS sectors and financial services companies in leading cities in India, an independent property consultancy said. Gross space absorption rose 9 per cent to about 43 million sqft in 2016, compared to the previous year. About 13.9 million sq ft of space was leased in the quarter ended December, an increase of 20 per cent sequentially.

InstaOffice raises funds from investors led by Globevestor

InstaOffice, a start-up that offers managed office space on a sharing basis, said on Monday it raised an undisclosed pre-Series A round led by Globevestor, a California, US-based venture capital firm that has backed car-rental service Zoomcar, education portal OnlineTyari and lending platform Rubique.

Angel investors including Toppr co-founder Zishaan Hayath, Karan Chellani, managing partner at SQUE Capital, and Mohit Satyanand, chairman of Teamwork Arts, participated in the round.