REAL ESTATE INDIA IN 2011

News : 31st Dec 2011:

Year 2011 was a mixed bag for the real estate industry in India. If the sector hit a low during the land acquisition row in Greater Noida, the launch of skyscrapers in the Delhi NCR was literally the high point.

Real estate market in 2011 has been both sweet and sour for developers and builders — sweet, in the sense that a number of affordable and luxurious housing projects were launched.

In addition, land-related issues, along with the developers’ and buyers’ rights, and initiatives for amendments to the land acquisition laws and real estate regulation bill have also been taken up. The flip side was the uncertainty over forthcoming projects due to land acquisition rows, especially in Noida and Greater Noida, and that the initiative for a real estate regulator is yet to bear fruit. The apprehension of a worldwide recession has also cast a shadow on the realty market. However, Gurgaon witnessed quite a strong appreciation during the year. Prices in Dwarka Expressway almost doubled from Rs 2,500 per sq ft to around Rs 5,000 sq ft; interestingly, not a single project has been completed yet. In other parts of Gurgaon also, prices have appreciated by 40% to 70% during the year.

Sanjeev Srivastva, the managing director of Assotech Ltd, says: "Year 2011 ushered in a new decade of opportunities for the Indian real estate, which will be a test of sorts for its stakeholders, between these (sweet and sour) two fringes of the fulcrum. And the winners would be the ones who balance caution with diligence evaluating all the potential opportunities with pragmatism."
A report said that commercial real estate market of 2011 would see office rents start appreciating after the middle of this year with more outright purchases by occupiers as well as private equity players. And that IT/ITeS and banking, financial services and insurance (BFSI) would continue to account for 60-70% of office demand. However, the crisis in Eurozone dashed the hopes.

Anil Sharma, the chairman and managing director of Amrapali Group, says: "If we speak about residential real estate market of 2011, there were several launches of premium products and ultralow-cost housing by private developers, especially in Greater Noida and Raj Nagar Extension. To provide ‘housing for all’, a large number of launches would continue to be in the range of Rs 2,000-3,000 per sq ft at the suburban locations. Impact on affordability will influence the price and absorption dynamics." One of the prime locations for affordable range of housing segment, Noida Extension (total area of 3,000 hectares) has now turned into a full-fledged race for affordable and luxury space where top developers and builders are queuing up to build their projects. By mid-2011, more than 40 developers launched their projects. This developing area is set to give a tough fight, primarily in terms of price and location. After the proposal to increase the floor area ratio (FAR) to 3.50, from the current 2.75, it is estimated that 2 lakh houses will be constructed here in future.
In the affordable range of houses, Raj Nagar Extension was one place that defied many myths and perceptions in real estate. Today, it is a hub of affordable homes, at a time when many such options were not even announced in the Delhi NCR. At the end of 2011, 32 developers have taken the job of delivering affordable houses to buyers.

Apart from affordable housing, NCR cities like Noida-Greater Noida and Gurgaon, witnessed an upsurge in demand for luxury homes. With the overall economy showing signs of improvement in early 2011 and with better disposable income, the confidence of buyers and sellers had improved. This led to several builders like Jaypee, Unitech, Antriksh, Chintels, DLF, Assotech, Amrapali, Ansal API, ATS, Raheja, Era, etc, in the NCR to develop better and larger luxurious homes.

Year 2011 also witnessed the emergence of Dwarka Expressway as a major residential destination in Gurgaon. The Haryana government has already awarded the construction of 150meter-wide expressway connecting Dwarka in Delhi to NH-8, creating a corridor of around 27km. This has brought a huge tract of land for the development of residential units.
Ravinder Taneja, the vicechairman of TDI Group, says: "For retail realty, Year 2011 was not bad. Developers believe there are more collaborative models like revenue sharing which are yet to emerge in the sector. Rents are stable except in select prime locations. A large number of malls are to be operational like TDI Mall in Kundli, Anantraj’s Moments malls in Kriti Nagar, etc. Retailers will continue to expand beyond Tier I into Tier II-III cities. After the FDI approval in Indian retail market, more international retailers are planning to venture into India."

Focus on vertical development

Developers are focusing their projects on vertical development and mixed land use, sensing land scarcity, rocketing prices and keeping in view the possible implementation of the land acquisition bill in its present form. Year 2011 was best for initiatives for them. Perhaps it was one of the reasons that construction of highrise buildings like skyscrapers (more than 150 metre) have taken off in Delhi and the NCR towns, like Noida and Gurgaon.
Three such projects have been launched in 2011: Supertech’s Supernova (300 metres) and North Eye (255 metres), and Raheja’s Revanta (195 metres).

R K Arora, the chairman and managing director of Supertech, said that apart from the Noida Extension fiasco, Year 2011 has been good. The Noida Extension matter had hit the sentiments of customers really hard, but with a favourable solution emerging for everyone after the verdict, the market has again started picking momentum, he says. Ashwani Prakash, the executive director of Paramount Group of companies, conceded that 2011 was an eventful one and said the growth in the sector has seen steep curves.

Anuj Choudhary, the director of Panchsheel Buildtech, however, felt that 2011 was very disappointing as there were a lot of issues which troubled the realty sector like the Noida Extension land acquisition imbroglio, increased rate of interest for home loans, steep rise in the building raw material costs and high diesel cost.

But realtors are optimistic about Year 2012. R K Arora says: "We are very optimistic about 2012, as we foresee a lot of demand, be it in the residential or commercial segment. Also, the government being very supportive, with the kind of policies implemented and the regulations formulated in the recent past, has given out a positive signal for the industry as a whole." Ashwani Prakash says: "Year 2012 may provide relief to the industry with the market once again settling down and customers out again to fulfil their residential requirements."

However, Anuj Choudhary is slightly apprehensive: "In the present scenario, developers are going through a very tough phase and the passage of the Real Estate Regulatory Bill in the current winter session will add to it. The government should be flexible in finalizing the norms of this bill and should take a holistic view. However, there is a huge demand for affordable housing and a tremendous scope for developers to prove their role to fulfil this gap. But all this is subject to a positive approach taken by the government." Initiatives for real estate policies in 2011:
The government took an initiative to deal with land-related issues by drafting the National Land Acquisition and Rehabilitation and Resettlement Bill and the Real Estate Regulation Bill, in 2011. Both were set to be placed before Parliament in the ongoing season. The drafts were almost final and were to be sent for the Cabinet’s approval. But due to the Lokpal bill fracas in Parliament, these two bills were put on hold.

The developers and the builders are, however, not happy with the land acquisition bill in its current form. Even the Confederation of Indian Industry believes that the proposed bill would make land cost economically unviable for industries.
The Real Estate Regulation Bill, if implemented, will bring more transparency into the real estate industry. The draft of bill has proposed a two-tier grievance redressal system — a state regulator and an appellate tribunal at the Centre. Real estate developers and builders, however, believe that the bill may not provide any safety and protection to them in case buyers default or create unnecessary litigations in a court of law.

QUICK BITES: IN THE AFFORDABLE RANGE OF HOUSES, RAJ NAGAR EXTENSION WAS ONE PLACE THAT DEFIED MANY MYTHS AND PERCEPTIONS IN REAL ESTATE. TODAY, IT IS A HUB OF AFFORDABLE HOMES, AT A TIME WHEN MANY SUCH OPTIONS WERE NOT EVEN ANNOUNCED IN THE DELHI NCR DEVELOPERS ARE FOCUSING THEIR PROJECTS ON VERTICAL DEVELOPMENT AND MIXED LAND USE, SENSING LAND SCARCITY, THE ROCKETING PRICES AND KEEPING IN VIEW THE POSSIBLE IMPLEMENTATION OF THE LAND ACQUISITION BILL IN ITS PRESENT FORM