Realty to be our largest business in 10 years: Godrej Group

Godrej Group, a major player in consumer durables and fast moving consumer goods sector, is investing heavily in the property sector and expects that realty would be the biggest contributor to the company’s business 10 years ahead.

Talking to reporters here, the $3.2 billion Godrej Group’s chairman Adi Godrej said the company had increased its focus on the real estate business in the past few years.

“In the next 10 years, I expect real estate will be the single largest contributor to our business,” Godrej said at a media briefing on the sidelines of the Partnership Summit here.

Godrej Group’s real estate unit Godrej Properties is currently developing several residential and commercial projects in different parts of the country including Mumbai, Bangalore, Kolkata and the National Capital Region.

Godrej said he was expecting good growth in India’s real estate business in the coming years.

“Real estate is the single largest industry in India. There is no player who dominates the business,” Godrej said.

There are seven major companies under Godrej Group with interests in the sectors like FMCG, industrial engineering, appliances, furniture, security and real estate.

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Signs of recovery in real estate but challenges ahead

After a long lull, the year 2013 is expected to bring back hopes of growth to the real estate sector, mainly due to the government’s positive approach towards reforms and moderation of interest rates, experts say.

Land Acquisition and Real Estate Regulation Bills are expected to be passed during the year, while there is a likelihood of Reserve Bank bringing down the interest rates.

“The passage of FDI in multi-brand retail by the government shows its seriousness on introducing reforms. RBI can be expected to lower interest rates in the coming months which will benefit developers as well as consumers. This will boost the sentiments,” Knight Frank India chairman Pranab Datta said.

Residential prices, which have been increasing over the past few years are likely to witness subdued growth in most markets in a short to medium term till the pressures of unsold inventory are eased out, CBRE chairman and managing director Anshuman Magazine said.

Finance Minister P Chidambaram had recently asked the developers to sell their unsold inventory at a lower price.

“Besides, infrastructure initiatives such as Greater Noida metro rail network and proposed metro link in north-west Bangalore are likely to have a positive impact on the residential market of these cities,” Magazine said.

FDI in multi-brand retail will also boost the demand for commercial real estate.

“Apart from the international brands, several domestic brands are also exploring opportunities to increase their foot prints across the country. This anticipated growth in demand is expected to bring some upward movement in retail rentals, particularly along established hubs,” DTZ-India chief executive officer Anshul Jain said.

According to Jones Lang LaSalle, major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 9.5 million sqft of mall space in 2013.

“The primary reason is that a sizable amount of supply that was expected to reach completion in 2012 has been being pushed to 2013,” JLL Chairman and Country Head Anuj Puri said.

While Mumbai, NCR-Delhi, Bangalore and Chennai will together contribute 70 per cent of the total retail space absorption, cities like Pune, Hyderabad and Kolkata will account for the remaining 30 per cent.

Further, the ongoing policy reforms are expected to provide some cushion to corporates who are likely to execute their expansion plans in near future.

“Demand for office space is expected to be broad-based and not restricted to IT-ITeS and banking sectors. However, even as leasing activity performs relatively well, rentals are expected to remain stable owing to large upcoming supply and high vacancy levels across most cities,” Jain said.

According to JLL, cities including Mumbai, Bangalore, Delhi NCR, Chennai, Hyderabad and Pune will witness commercial corporate property transactions focused on their own occupancy needs.

“We expect 2013 to bring a larger-than-usual number of NRI investors into the commercial space arena. This is because NRIs are currently enthused by the prevailing exchange rate benefits and the fact that commercial real estate capital values are still 15-25 percent under their 2007-08 peak levels,” Puri said.

CHANGE OF LAND USE (CLU) IN THE STATE OF HARYANA

 Policy for grant of license and change of land use cases.

After careful consideration of the matter the Governor of Haryana is pleased to convey the policy parameters relating to the grant of licence and permission for change of land use as under

1)      Competent Authority to grant of licenses:- The licenses shall be granted/refused by the DTCP with prior internal concurrence of the State Government at Minister’s Level.  The State Government will however, exercise appellate powers under the Act.

2)       Conformity of the Site of the colony to Development Plan/Sector Plan and minimum area of the colony for grant of license;- The location of the site should be in conformity with the Development Plan proposals in terms of prescribed land use.  The site should also conform to the Sector Plan.  In  order to achieve the objectives of the Act No. 8 of 1975 and to regulate the development of urbanized sector in an harmonious manner, the following minimum area norms for different zones for granting licences outside the Municipal  Council limits of town and outside Municipal Corporation limits of Faridabad are hereby laid down as under: –

(Area Norms)

Category Hyper Potential Zone

Hyper Potential Zone

High Potential Zone

Medium Potential Zone

Low Potential Zone (Rest of State)

Residential Plotted

100 acres

100 acres

50 acres

25 acres

Group Housing

10 acres independent, 5 acres as part of plotted colony.

10 acres independent, 5 acres as part of plotted colony.

5 acres

5 acres

Commercial

2 to 4 acres

2 to 4 acres

2 to 4 acres

1 to 2 acres

Cyber Park

5 to 15 acres

5 to 15 acres

5 to 15 acres

5 to 15 acres

Cyber City

50 acres

50 acres

50 acres

50 acres

Industrial – No minimum area norms has been fixed.

3)        Reservation of area for group housing:- In a particular sector the area under group housing should not exceed 20% of the sector area.

4)       Licences to Cooperative Housing Societies:- Whereas, the Government had discontinued the issuance of licence to Cooperative Housing Societies in High and Medium Potential Zones due to the unhappy experience, the licences to such Societies in Low Potential Zones were being considered.  After careful consideration it has been decided to discontinue this policy and not to grant licences to the Cooperative Housing Societies even in Low Potential Zones.  Such Societies will  however, be allotted developed land by HUDA for construction of Group Housing projects.

5)       Land Acquisition and Licensing:- Where applicants/land owners have applied for license before the issue of acquisition notification under section 4 of the Land Acquisition Act, 1894, release of land could be considered on individual merits of each case.

6)       Development of Pockets:- Approach should be based on sectoral development.  Wherever, small pockets are left out within a licensed area or on the fringes of a colony which the colonizer is not able to acquire through negotiation such pockets may be acquired by HUDA in the interest of planned and harmonious development.  In case, HUDA is in a position and willing to undertake development on its own then these pockets  should be development by HUDA otherwise in the interest of compact development of the colony, the pockets should be allowed to be developed by the colonizer.  However, such area shall not be more than 10% of the licensed area.

 7)       Change of land use:- The change of land use (CLU) applications will be considered in conformity with the land use proposals of the Development Plans and in accordance with the zoning regulations and disposed off at the level of Director, Town and Country Planning where the Development Plans are published. However, where the Development Plans are not published decision shall be taken at the level of Government.  All the cases of grant of CLU for Petrol Pumps will be referred to the Government for approval.

Classification of Controlled Areas/Urban Areas in to potential zones.

 Keeping in view the present potential, the classification of the controlled areas into different zones will be as under:-

  1. Controlled areas in hyper potential zone:- Controlled areas declared under section 4 (1)(a) around municipal town, Gurgaon.
  2.  Controlled areas in high potential zone:-
    1. All the controlled areas in Gurgaon District notified under provision of section 4(1)(b) including controlled areas declared around Sohna town.
    2. Controlled areas around Faridabad-Ballabgarh complex.
    3. Controlled areas of Sonepat-Kundli Multifunctional Urban Complex, Panipat.
    4. Periphery controlled area of Panchkula.
  3.  Controlled areas in medium potential zone:-
    1. Controlled areas of Karnal, Kurukshetra, Ambala City, Ambala Cantt.,Yamuna Nagar-Jagadhari, Bahadurgarh, Hisar, Rohtak, Rewari-Bawal, Dharuhera Complex, Ganaur, Oil Refinery Panipat (Beholi).
    2. Controlled area declared under section 4(1)(b) in Faridabad Distt. And also including around towns like Palwal and Hodel.
  4.  Controlled areas in low potential zone:- All the other controlled areas declared in the State.

NOTE: Above mentioned classification will also be applicable uniformly for the

urban areas to bring parity and unambiguity.

 

Director, Town and Country Planning, Haryana may ensure that these

policy parameters are  adhered to while dealing with the cases of grant of

licence/permission of change of land use.

Victory Valley Carpet Area calculations

VICTORY VALLEY     (Figures in SqFt)  
2BHK 1435 3bhk 2428
Bedroom 1 133.37 Bedroom 1 213.96
Toilet 1 66 Toilet 85.56
Bedroom 2 168 Dress 85.56
Toilet 2 67.47 Bedroom 2 181.25
Kitchen 77 Toilet 2 50.31
Drawing / Dining 211.51 Kitchen 72.67
Bedroom 3 168
Toilet 3 55.73
Dining 143.56
Living 154.89
Servant 49.32
Servant Toilet 33.13
Total 723.35 Total 1293.92
Loading without Balconies 49.59 %   Loading without Balconies 46.71 %
Balcony 1 59.66 Balcony 1 49.8
Balcony 2 40.01 Balcony 2 48
Balcony 3 34.02 balcony 3 48
Total 133.69 Total 145.8
Total with Balconies 857.04 Total with Balconies 1439.72
Loading with Balconies 40.28 %   Loading with Balconies 40.70 %

Spaze AT4 – Carpet Area calculations

Spaze AT4 1708 sqft   2070 sqft
 Master Bedroom 194.45 191.25
Toilet 1 46.61 48.13
Bedroom 2 113.3 135.13
Toilet 2 42.56 40.69
Kitchen 82.4 81.67
Bedroom 3 132 126.5
Toilet 3 47.4 40.69
Dining 130.9 92.5
Living 180.8 199.75
Lobby Entrance 27.31
S Toilet 19.5
S Room 45.25
Lobby 60 51
Study 94.92
Total 1030.42 1194.27
Loading without Balconies 39.67 %   42.31 %
Balcony 1 80 Approx 102
Balcony 2 75 Approx 96
Balcony 3 42 Approx 42
Balcony 4 Approx
Balcony Kitchen 20 Approx 28
Total 217 268
Total with Balconies 1247.42 1462.27
Loading With Balconies 26.97 %   29.36 %

Effective carpet area is 73% and 70% of the advertised super area.  

Apartment Area to Super Area (LOADING) for New Gurgaon Projects

  • Only BSP considered for the calculations; PLC & Other charges are extra
  • Blue font lines are assumptions as the builder have not provided the dimensions in their plans. Also, the calculations does not consider the walls and columns which form part of the apartments area. That could add 3-5% additional area to the apartment.
  • Current prices August’12 considered (both fresh & resale)

Compared the projects in two buckets, one basic appartments and second the so called luxury segment (a/c, modular kitchen etc).

3C Greenopolis to Akme Raaga are under basic category
DLF Regal to ATS Kocoon are under luxury category
As you could see the actual money we pay for the appartment / built up areas is quite higher when compared to the BSP we assume to be paying. This is because of the ratio of builtup to super built up .

However one must not only look at the ratio as a measure but has to consider the actual area one would get for living and the price at which it is available, and cash component / upfront payment for the resale appartments.

Also considerations must be given to the project density. Anything beyond 45 units per acre of the township area should be considered as high density and 40-44 to be low density.

Hope the below information helps the users to make informed decisions
In terms of project density following are best to worst

Best – 3C Greenopolis
Good – ATS, AKME, Spaze, Bestech
Worst – DLF New Town Heights, Orris Carnation, Anantraj

In terms of actual money paid per built up area for basic projects – best to worst are

Best in basic Orris Carnation & Anantraj, however there involves lot of cash component on resale and upfront payment.
Greenopolis – Considering new launch and payment under CLP
Best in Luxury – Winter hills, Assotech and Bestech Ananda

Worst of all – DLF projects

Thanks to Krishna of IREF forum for helping out with this post.