What does the new-age buyer want?

Vineet Relia of SARE Homes talks to Lakshmi Krupa about financial innovations, Chennai’s fascination for villa projects, and the city’s changing needs…

Customers almost always come with a checklist these days, especially in suburban areas where we do gated communities. In Chennai, proximity to schools, health facilities and security are of great importance. They are not looking for super luxury but a good lifestyle at a low ticket price.

How different is it being an FDI developer in a traditional market?

In some sense, in the real estate market, we see ourselves as game changers. The real estate market usually has family-run businesses or one-man businesses but being a corporate body with an independent board helps us remain objective. There is no personal agenda and our projects are all from the capital provided by funders such as Morgan Stanley and Goldman Sachs.

You have announced a few financial innovations (such as pay nothing until possession after the initial 20 per cent). Is this your reaction to the current market scenario?

While we continue to believe that the market is as robust as ever, our innovation is an effort to reduce the financial burden on potential homeowners. Consider a typical buyer — a couple with double income, buying a home on loan. They apply for the loan and until possession they have to carry the burden of their rent and the EMI. Sometimes, projects are delayed due to approval issues and in these cases they save a lot of time with this offer.

There has been a marked increase in villa projects along OMR and GST over the last one year. What explains this?

We find that the Chennai customer wants to stay as close to the ground as possible. That’s probably why high-rises don’t catch their fancy as much as villas do. You own your own piece of land and it comes with the option of expansion later. In our projects, we are offering expandable villas that come with a pre-approved plan for expansion. Owners can build another room anytime they want to and not even necessarily through us but any builder.

Infrastructure-wise how does Chennai compare with other markets?

I don’t think a lot of people even know that Chennai has seen the highest amount of FDI in the last two to three years. A lot of activity is happening, especially around the Oragadam area, and a detailed Master Plan with more structure will take the city to a higher platform almost certainly.

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Places you can buy a house in 2013 and gain from price appreciation

If you are looking to buy a house for investment in 2013 and are not sure where you can earn the best returns , don’t worry. We bring you what experts say about real estate destinations that will give good returns over the next three-five years.

New Ground

In the last couple of years, the real estate market has changed remarkably in both metro cities and small towns. Prices have crossed the peaks reached before the 2008 economic slowdown.

However, in 2012, the companies grappled with economic uncertainty, low demand, fund crunch and high inflation. “High inflation and interest rates dealt a double blow to developers by increasing input and debt costs. Sales fell as buyers became wary of rising interest rates,” says Shveta Jain, executive director, residential services, Cushman & Wakefield (C&W) India, a property consultancy firm.

Still, the mid-end residential segment continued to generate buyer interest. This, and increase in prices of raw materials, pushed up prices in most cities.

Realtors will grapple with a lot of inventory and debt in 2013, say experts. “In 2013, developers will price projects more judiciously and offer a lot more pre-launch benefits. Those with large projects and inventory will be under more pressure to give discounts,” says Anuj Puri, chairman and country head, Jones Lang LaSalle India, a property consultancy.

The Union Budget can also be a milestone as the sector looks forward to big policy decisions and reforms, including the grant of industry status.

DELHI-NCR

The Delhi-NCR is the favourite of property consultants. With massive infrastructure works in the pipeline, locations such as Dwarka Expressway, Noida Extension and New Gurgaon are likely to attract a lot of buyers-both investors and end-users.

“The market, once driven by investors, has slowly shifted towards end-users, as the former’s cash position worsens and end-users step in to capitalise on low prices,” says Aniruddh Wahal, co-head, occupier services, DTZ India, a real estate consultancy.

Dwarka Expressway:

Since 2009, developers have started residential development along the upcoming Dwarka Expressway, an eight-lane expressway that will provide an alternative link between Delhi (Dwarka) and Gurgaon. New projects, expected to be ready by 2015, cater to the middle and high-end segments.

“Its proximity to the capital city and the international airport gives it an edge over other emerging destinations such as Noida-Greater Noida Expressway, Yamuna Expressway, Bhiwadi and Dharuhera,” says Wahal.

The area is divided into two parts-the northern region on the side of Dwarka and the southern region closer to Gurgaon. The north (Sectors 103, 106, 109-113) is expected to surpass the south in returns due to proximity to Dwarka and the international airport.

DTZ India says prices in the region will go up by 25-30 per cent per year over the next five years. Knight Frank has forecast an annual return of 16 per cent during the period.

Noida Extension:

Though developers recognise Noida Extension as a separate location, it comprises Sectors 1, 2, 4, 16B, 16C, 16D and Knowledge Park V of Greater Noida. It is close to Noida (10km from Noida City Centre) and 18km from Connaught Place, New Delhi’s prime business location. A proposed metro rail link will improve connectivity between Noida and Delhi.

“It is the most attractive location in the NCR for affordable housing and is expected to see yearly growth of 15-20 per cent in the next five years,” says DTZ’s Wahal. Knight Frank says properties in Noida Extension will give an annual return of 16 per cent over the next few years.

 

Quote:With options ranging from Rs 3,200-15,000 per sq ft and returns of 18-30%, residential real estate looks promising over the next five years.

SAMANTAK DAS Director, Research & Advisory Services, Knight Frank India

Greater Noida:
Situated around 40km from the south-eastern part of New Delhi, Greater Noida is emerging as an industrial region and an educational hub.

It has good infrastructure and is home to several big companies. It is connected to Noida by a six-lane highway operational since 2002. You can drive from Noida to Greater Noida in 15-20 minutes. The Yamuna Expressway, which has also become a property hotspot, connects it with Agra via Mathura. A metro link will connect it with Noida, Ghaziabad and New Delhi.

Greater Noida is an attractive location for mid- and high-end residential segments. “Though there was not much activity in last 15-17 months due to land acquisition and master plan issues, things are expected to pick up. The area may witness a year-on-year price increase of 20-25 per cent,” says Wahal.

MUMBAI

The Mumbai market was subdued in 2012 with prices rising just 2-7 per cent. The demand is expected to pick up in 2013, mainly in the mid-end segment. The eastern suburbs of Mumbai (mainly Chembur, Kurla and Wadala) are expected to provide good returns on account of lower prices compared with areas in central Mumbai and western suburbs.

Ulwe:

Ulwe is an emerging location south of the Panvel creek. It is connected with the Uran Road that connects it with the Thane-Belapur Road as well as the JNPT Road to Jawaharlal Nehru Port. While Ulwe is just 7km from Belapur, a commercial hub, five other office destinations are within the 22km radius. Once the Nerul-Seawood-Uran rail network is ready, Ulwe will be connected with major office locations through a mass rapid transport system. At Rs 4,000 per square foot, one can buy a one-bedroom flat here for Rs 20 lakh. Ulwe is the most attractive destination in the Knight Frank report, which says it may give an annual return of 20 per cent in the next five years.

Quote: In 2013, developers with large projects and inventory will be under more pressure to give discounts than those with smaller projects and limited inventory.

ANUJ PURI Chairman and Country Head, Jones Lang LaSalle India

Chembur:

Located in the Mumbai Metropolitan Region’s central zone, Chembur’s proximity to the Bandra-Kurla Complex and other office destinations will fuel demand for residential properties here, say experts.

The upcoming rail, metro and road networks such as the Eastern Freeway, the Santacruz Chembur Link Road and the Chembur-Wadala-Jacob monorail will boost connectivity to the area.

Limited land availability will limit new construction and keep supply under control here.

Knight Frank says prices here are expected to rise from the current Rs 12,000 per square foot to Rs 27,000 per square foot by 2017. This comes to an annual return of 18 per cent.

Wadala:

Strategically located in the MMR’s central zone, Wadala is at a comfortable distance from the MMR’s main employment centres. The Eastern Expressway connects it with other regions of the central zone as well as business hubs in the island city. It is also connected through the suburban train network. It will also benefit from the under-construction Chembur-Wadala-Jacob monorail project as the Wadala-Chembur part is expected to be ready in 2013.

The regional development authority’s plan to develop Wadala on the lines of the Bandra-Kurla Complex may add to its appeal. Knight Frank says the area may give an annual return of 18 per cent over the next five years.

 

BANGALORE

This information technology (IT) hub saw steady sales in 2012, prompting developers to launch new projects. Prices in under-construction projects in growing submarkets have risen by 10-30 per cent in the past one year.

“The demand for houses is expected to remain stable or grow moderately in 2013,” says Wahal.

Bangalore is expected to offer an annual return of 15 per cent over the next five years.

“The city is the lowest in terms of capital values (compared with Delhi and Mumbai) and has seen moderate price appreciation,” says Jain of C&W.

The international airport and other infrastructure projects have shifted momentum towards the northern and eastern regions.

Kanakpura, Sarjapur Road, Bannerghatta Road, JP Nagar, Jaya Nagar, Whitefield, Varthur, Mahadevapura, CV Raman Nagar, Uttarahalli, KR Puram and Electronic City have emerged as the city’s main residential markets.

Hebbal:

The Bangalore international airport has made Hebbal an important destination. It has also emerged as an IT hub with several technology parks and companies.

Quote: In 2013, the demand for residential units in the top eight cities is expected to be 3.3-3.5 lakh as against the supply of 2.2-2.3 lakh units.

SHVETA JAIN Executive Director, Residential Services, Cushman & Wakefield India

KR Puram:

Closeness to the IT hub of Whitefield and Manyata Tech Park makes it a desired residential destination for IT professionals. KR Puram is located on the National Highway 75. The Baiyappanahalli metro station is just 3km away. The proposed Peripheral Ring Road and widening of the Old Madras Road will improve connectivity.

Office space leasing falls by 26pc in 2012: CBRE

The uncertainty in the global and domestic economic scenario has hit office space leasing as corporates remained cautious on expansion leading to a fall in absorption of office space by 26 per cent during 2012, global property consultant CBRE said today.

The total absorption of prime office space for 2012 was about 26 million sq ft in seven major cities of the country as against 35 million sq ft in 2011, according to CBRE’s latest report ‘India Office Market View Q4, 2012’. These cities are NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

“The decline in absorption across key cities is primarily due to the continuing global and domestic uncertainty in the economy which is a deterrent for corporates in their expansion plans,” CBRE ( South Asia) Chairman and Managing Director Anshuman Magazine said in a statement.

For revival of demand of office space, Magazine felt that the economic reforms in India need to be fast tracked besides global economy has to show some improvement in growth.

The last quarter of 2012 (October to December) witnessed absorption of about 7 million sq ft of office space compared with about 6 million sq ft in the previous quarter. About 70 per cent of the transaction activity was dominated by the NCR (National Capital Region), Mumbai and Bangalore.

“Concerns over cost reduction and a cautious approach by occupiers had a negative impact on leasing activity across key markets in India,” the consultant said, adding that major corporates continued to review expansion plans and focused on improving existing space utilisation to control costs.

The total office space supply in 2012 was about 31 million sq ft compared to about 30 million sq ft in the previous year, despite the fact that a large chunk of the office pipeline lined up for the year was delayed into 2013, CBRE said.

Rental values remained largely stable across most micro markets, the report noted.

“Rents were stable in suburban office markets such as Gurgaon, Noida, Outer Ring Road, Whitefield, Hitec City and Gachibowli, amongst others,” the consultant said.

Most micro markets in Mumbai entered the downward cycle with the likes of Nariman Point, Bandra Kurla Complex and peripheral markets suffering from sluggish demand and increasing vacancy levels.

The consultant anticipates that downward pressures would continue to persist on most markets in the country in a short to medium term.

 

Gréater Noida master plan passed by NCRPB members

GREATER NOIDA: The Noida Extension land row has cleared one more hurdle after chief ministers of NOIDA neighbouring states, who are members of NCR Planning Board, approved the Greater Noida Master Plan 2021 on Wednesday. Uttar Pradesh chief minister, Akhilesh Yadav, urban development minister, Azam Khan, and the chief secretary have also signed the master plan and sent it to Delhi for approval by the planning board.

Sources in NCRPB said there are 21 members in the board and almost half of them have signed on the master plan. “There were two options to pass the master plan after approval by the technical committee. One was through calling a meeting of members of all participating states, while the second option was by issuing a circular. The NCRPB with the consent of its members decided to approve the master plan through a circular,” said a senior planning board official.

“All three key persons in Uttar Pradesh, including chief minister Akhilesh Yadav, urban development minister Azam Khan and the chief secretary, have given their approval. Other chief ministers of participating states Delhi, Haryana and Rajasthan gave their consent on Wednesday to pass the master plan,” the official added.

Developers in the region said that they now see a ray of hope to resolve the long pending crisis. Ajnara India group director, Vinit Gupta, said, “We hope that by August end we will be able to resume construction work on housing projects in Noida Extension.”

“The Greater Noida master plan is very good as it includes an appropriate proportion of everything that makes an ideal city, ranging from greenery, industries, hospitality, etc. The idea of incorporating a provision of keeping 16% of the urbanizable area as a green belt will help make a better, greener and cleaner city for the next generation,” said Supertech director, Mohit Arora.

“This decision will improve the image of Greater Noida and its nearby region. Due to the land row, the property market looked very bleak. Not only can homebuyers breathe a sigh of relief but also the entire real estate industry,” said Orris infrastructures managing director, Amit Gupta.

“The decision taken today has also given farmers a reason to cheer as without the master plan being passed, they cannot get developed plots in lieu of their acquired land,” Vinit Gupta added.

Delhi NCR – A hot spot in the Indian real estate sector

Noida, Greater Noida and Yamuna Expressway are going to be the examples of planned urbanization in the country. Apart from these, the authorities of Ghaziabad and Gautam Budh Nagar are proposing a number of other large planned developments in the NCR.  On the whole, the area is likely to witness an unprecedented growth in the coming times.

The new incumbent’s decision to continue with the proposed developments along Yamuna Expressway and Noida City Centre, and the large townships on NH-24 and Dadri is a clear indication that the model of planned urbanization will continue in the area. The proposed planned developments will not only help in the optimum utilization of land in maximizing growth but will also help in containing the prices of real estate in the region. The huge supply of land in Noida, Greater Noida and Yamuna Expressway is already helping in keeping the real estate prices under check in the region, compared to those in Gurgaon.

Besides Jaypee, a number of developers have been allotted land to develop townships and other housing projects along the Yamuna Expressway. An official of the Yamuna Expressway authority said that Supertech, SDS Infrastructure, Orris, Anushria Realtors, Anova Infracon, Silver Sands Estate, Aminiti Builders, Ajnara, Nimbus and Fab Distributors are the prominent developers allotted land in the area.

The construction of Yamuna Expressway by Jaypee Infra, a real estate arm of Jaiprakash Associates, will go a long way in the urbanization of Greater Noida and the Agra corridor. The 165km-long nonstop Yamuna Expressway, which is likely to become operational soon, is one of the longest access-controlled sixlane rigid pavements in India. It will provide direct access to the Yamuna Economic Zone, the international airport and aviation hub, which have been proposed along the Yamuna Expressway. The Yamuna Expressway was one of the key infrastructural projects of the former Mayawati government in UP, and besides connecting Delhi to Agra through the Noida-Greater Noida Expressway, it will touch 1,182 villages of Gautam Budh Nagar, Bulandshahar, Aligarh, Hathras (Mahamaya Nagar) and Mathura district.

The expressway will also ease traffic on Delhi-Agra NH-2, which is already congested and runs through the heart of cities like Faridabad, Ballabhgarh, Palwal and Mathura. The Yamuna Expressway will reduce the travel time between two cities — New Delhi and Agra — to around 100 minutes from the present nearly 5 hours. Coming up along the proposed Taj Economic Zone and the Taj International Hub Airport and being within easy reach of Delhi, Noida and Greater Noida, the Yamuna Expressway project will accelerate the overall development of the region.

With improved connectivity, a Special Development Zone is being developed between the Yamuna and the GT Road, in three phases. The authority has already acquired land up to Jewar, and has handed it over for development to developers. Out of 35,000 hectare, 35-40% of the area will be developed for main activities like industry, IT, educational institutions, warehousing, transportation, sports facilities and allied services.

The infrastructure along the expressway may also trigger further private development and buttress the plans to set up an international airport on the expressway. However, the state government has cancelled its plan to develop an airport at Jewar — people involved with the development of the area say that the airport is viable at Jewar alone.

The UP government’s decision to widen the NH-24 to eight lanes will provide a huge boost to the supply of real estate in NCR. The NH-24 connects Nizamuddin Bridge on Yamuna to Mayur Vihar Phase II, Patparganj, Indirapuram, Noida, Crossings Republik, townships of Ansal API, and Wave City. This will also improve the connectivity of the proposed mega townships in Noida Extension. The proposed widening of the NH-24 will reduce the travel time of more than one million people living in these urban centres.

The new UP government has also taken keen interest in resolving the land acquisition issues in Noida Extension, which was affecting the construction of around 2,00,000 residential units. It is believed that the final approval of the master plan from the NCR Planning Board is expected any time, which will pave the way for the resumption of construction in the region.

The Noida authority is also learned to be in the process of clearing the building plan of the Noida City Centre. The project is over 160 acres in the heart of Noida in Sectors 25A and 32. This will further enhance the attraction of Noida in the NCR. Out of 160 acres, 152 acres are being developed by Wave City Centre. In the first phase, which will be completed by 2016, Wave Infratech will construct around 1,400 apartments and malls with shopping area of 20 lakh sq ft.

With these kinds of development, Noida, Greater Noida, Yamuna Expressway, and other parts of Ghaziabad and Gautam Budh Nagar will continue to provide a huge opportunity to end users as well as investors. With such huge land banks available at a commutable distance from Delhi and Noida, the region will continue to be the hub of activities in the real estate sector.

Noida, Greater Noida land rates hiked

Noida: The Noida, Greater Noida and Yamuna Expressway authorities today hiked the residential plots rates by 10.41 per cent, industrial plots rates by 7.5 per cent and commercial plots reserved price by 15 per cent at a board meeting held here today.
After the hike, Noida sector-category rates are Rs 54,105 for category A, Rs 37,710 for category B, Rs 27,465 for category C, Rs 22,955 for category D and Rs 19,675 for category E.

The rates are for per square meter land.

Likewise, after the hike Greater Noida residential rates are Rs 18,660 and Yamuna expressway Rs 8,900. Authorities have also hiked the land compensation of farmers by 10.41 per cent.

This is the second board meeting held in a month. Usually only one board meeting is held.

After the last board meeting on July 9, rates were not hiked but district administration had announced new circle rates.

Now administration will have to revise the circle rates again due to the hike in sector rates.

Noida Extn Metro no gimmick; execution in two yrs: Authority CEO

The Noida authority on Tuesday said the two Metro lines—one towards Noida Extension and the other towards Greater Noida—it approved on Monday were “part of the government’s sincere and genuine efforts” to provide better connectivity to residents.  

A year ago, when Bahujan Samaj Party (BSP) was in power in UttaPradesh, the authority had “approved” two similar lines. In the last one year, nothing happened on ground but builders rode the Metro wave and wooed buyers. Even before the last government announced plans to take Metro from Noida to Noida Extension and Greater Noida, builders projected a non-existent Metro plan in their broachers.

Asked if the authority repackaged the old plans to help builders once again when real estate is facing tough times, authority’s chief executive officer (CEO) Sanjeev Saran told Hindustan Times, “We’re not working on behalf of builders. We did not allot land to them in Noida Extension. The last government did. There are no elections round the corner for us to sound populist.”

“We’re pretty serious and are writing to the Delhi Metro Rail Corporation to prepare detailed project reports of these two routes. Work will start very soon and we intend to finish at least the Noida Extension line in two years.”

The authority under the last government approved two Metro lines running into 60 km and needing a budget of Rs. 1,200 crore. But till the assembly elections this year they had 10 months to take the plan forward but they did not. They may have had hidden agenda. I don’t know. But we don’t have any intentions to promote real estate,” the CEO said.

“Within two years, 1.5 lakh families will have occupied these two and three-BHK flats in Noida Extension. These people earn between Rs. 40,000 and Rs. 70,000 per month and 80 per cent of them work in Delhi. These are typical Metro users. As it is, as a development authority, it’s our mandate to provide water, electricity and connectivity to our residents,” he said.

“As for the Noida-Greater Noida project, the traffic today might be less than expected but it will go up with time. We will market our project in such a manner that we never face the low-traffic problem,” he said. “It’s a big project and we’re exploring the possibilities of executing it on PPP basis.”

The new plan

The 7-km Noida-Noida Extension route will cost Rs. 1,400 crore. Till Noida Extension there will be two stations.

The 30-km (approx) Noida-Greater Noida route will cost Rs. 8,000 crore.  This will be built on PPP model.

The old plan

The authority board a year ago approved a line from Noida to Greater Noida via Noida Extension. It never decided length, stations and budget

Even prior to that the authority approved a line from Noida to Greater Noida along the Expressway and pegged the cost at Rs. 5,000 crore. The 23-km route was to have 22 stations.

Current challenges

Construction of Greater Noida and Noida Extension lines would face challenges because of agitations by farmers, non-clearance of Greater Noida’s master plan by the NCR planning board and cash crunch.

Builders rode the Metro wave

Even before the last government announced plans to take Metro from Noida to Noida Extension and Greater Noida, builders rode a non-existent Metro wave. They briefed and lured prospecting house buyers into bookings citing “upcoming Metro links” in the property-potential area of Noida Extension.  Several community portals remained abuzz, “letting residents know” “better connectivity” in Noida Extension in “the days to come.” “The Noida Extension Metro route, mentioned frequently in cyber space, was a product of people’s imagination,” said a senior official. In fact, there is no place called Noida Extension in official records. The area being referred to by builders as Noida Extension for obvious reasons (Noida has Metro connectivity) is actually part of Greater Noida

Noida Extn Metro no gimmick; execution in two yrs: Authority CEO