The Indian Real estate capital market has managed to achieve a remarkable growth momentum despite inherited risk, especially in the private equity and debt market said a Deutche Bank reporter. While private debit in form of bank lending to commercial real estate has been fuelling growth levels, both the private equity and private debt markets are also to grow significantly in the coming years, it added. Enumerating the risk presently inherent in the sector, the report highlights liquidity, overall market transparency and macro- economic risk as the five major risk, which are likely to continue for some more time to come. The report also cites difficulty in foreign investment flowing into the sector flowing into the sector following regulatory constraints.
"For the last couple of of months, we are mainly looking to buy lease rental deals. The only ones looking to buy are those who have property to sell and stand to gain from the price rise.But there are hardly any new buyer."
In 2003, a three bedroom flat in the middle-income area of Noida Gurgoan 16-lakh flat fetches Rs. 55 to 60 lakh. Still interested in buying ? Wait till you calculate the interest. Since interest have increased from 7.5%per annum in 2003 to 9.5% at present, EMI on home loan has gone up by 150 to 200%. So, if if you had to pay EMI of Rs. 18,000 for 20 years to buy a flat in 2003, today you would have to shell out minimum Rs. 45,000 per month to repay the increased loan amount at higher interest rate. Rental, on the other hand, has risen marginally by 20-25%. The going rate for two bed room flat is Rs.6,000-8,000 per month while a three bed room one cost Rs. 8,000-10,000. A couple years back property dealers had a little time for rental business; they were too busy with sale-purchase where fees were hefty. But with prices going beyond the reach the middle-class buyer, many are settling for rental homes.What is putting off buyers is not just not the high price tag but also the inflated 'cash element'that comes with it.The demand for the cash has also resen, which is a major dumper. The cost of a average two be room apartment in Noida Gurgaon has gone up to Rs 45-lakh from Rs 15-lakh a couple of year back. So a 40% cash payment amount to around Rs 20-lakh. A salaried professional would find it hard to pay kind of money. So,who's buying up all those fancy new apartment coming up all around the city/ Those in the trade say it's mostly people looking to make investment . That's on reason why rentals are keeping pace with property price. Although heavy demand did see a rise in rates over last one year,supply of 'fresh' apparment has helped reverse the trend in the last couple of months. However, it is not case in city like Calcutta where it's UP-UP a 2 bedroom flat in Silver Spring Cost Rs 50-lakh and rent value around Rs. 25,000 permonth.In BANGALORE It's BUY-BUY 2 bedroom in HSR Layout cost 32-lakh and rent value around Rs 12,000. In MUMBAI it' SELL & RENT, coast of one bed room in Bandra Rs. 60-lakh, the rent value is around Rs.18,000. City HYDERABAD is like ON HOLD 3 bedroom flat in Srinagar Colony cost Rs. 40-lakh and the rent value Rs. 20,000.
Increase in demand for commercial space would continue to drive the realty sector including the residential market says Prabhakar sinha Contrary to the speculation that the real estate market will witness a slow down in the near to medium term, the demand for the commercial space have gone all time high in the first seven months of 2006. The increase demand for commercial space indicates enhancement of business activities and so more job creation. This would lead to demands for residential accommodation. according to a study conducted by leading globe real estate consultancy firm, National capital region , Delhi has recorded the highest ever commercial space absorption in a year. In the first seven months of the current calendar year the city has witnessed an absorption of over 5.1 million sq ft. of office space as against that of 3.5 million sq ft. in the entire 2005 showing a growth of 42%. The office market primarily driven by IT/ITES sector which accounted for about 75% of the total office absorption in NCR, said DTZ Debenbam Tie Leung, India MD Ankur S hrivastva. According to one estimate, for every one thousand square feet office space, 13 new jobs are created. A senior consultant said that around 50% of new employees in Delhi are from out side the city. that means, around 5 out of the 13 new employees that get employment for every 1000 s q. ft. leasing of office would look for residential accommodations in Delhi/NCR. If the total space that leased out in the entire year is 7 million sq ft. in NCR, the total fresh demands for residential units during the year would be around 35,000 which is much more than that supply of the new unit in a year. Besides there are demands from the existing population. Despite such a large expected demand , the consultant said there was no guarantee that the prices would not fall. He said that the demands would translate into transactions only if the prices are within the reach of people. In the last six months the prices have peaked, the number of transaction have come down drastically. Therefore demand would be there but at the lower price point. But, the huge demands of the residential unit would rule out a crash like situation in the real estate market. A senior builder from Noida said that as soon as the price fell by another 10% to 15%,there would be a rise in transactions. Reason for rise in demand According to the report numerous factors have contributed to this increasing commercial demand in the NCR region. NCR has edge over most of Indian cities in demand for commercial property due to its improved connectivity, better infrastructure and availability of skilled human resource. Because of the Commonwealth Games, transportation, hotel accommodation, security and all other supporting infrastructure are getting boos. the market for information technology (IT) is the highest in the city of Delhi. Municipality corporation Delhi demolition drive of commercial properties in residential areas had also added marginally to the con t i n u o sly increasing commercial space demand.
Real estate boom continue in India The real estate sector in india contenue to boom as the economy has shown impressive growth. The high GDP rate growth in the range of 8% in the last three years consecuitively has not only created the large numbers of new job but has also let to a huge increase in the salary of working clas in the country. Consultant and and economist feel if the present trend of high economic growth contenue, the real estate sectoo contenue to boom.multination consultancy firm Ernst and Young in a latest report on India real estate sector says that repid urbanisation would contwnue to fuel the real estat boom in India.The report added it has been projected that the there will be more than 75 cities with one million population or more by 2021.Coupled with this, the demographic change would give a major fillip to the industry. It is projected that 54% of Indian population would be under 25 years of age by 2010. Because of favourable circumstances, the residential sector is experiencing a growth of 30%per annum.The rowth rate in short to medium term will remain high on account of large unmet demand for housing.Inspite of the recent growth in the residential demand supply gap is still widening. According to a Bank, ther was shortage of 19.4 millionunit (12.7million unit in rural area; 6.7 million units in urban area)in 2001, which has rose to 19.8 milliom unit in 2005.
In NOIDA ordinary grade property costs Rs. 2500 to Rs. 3000per sqft. In lifestyle projects with aminities such as a swimming pool, a clubhouse and power backup, the pricing is Rs.3000 to Rs.3500 per sqft. For property that is realy to move in, the pricing may be higher -----around 4000 rupee per sqrft. A few high end properties also sell for Rs. 5000 per sqrft.Such as Pearl Infratructure's airconditinoned apartments in sector 44, or Omex's Foster in sector 92. However rates in NOIDA are still about 500 rupees sqft lower than Gurgaon(for comparable quality location and development). Prices has risen by about 30-35% over last one year. these days property prices in NOIDA are being compared to rate in South Delhi because the connectivity between Noida and south Delhi via DND flyover. The seller argue that the rate in south Delhi are at Rs. 5000 per sqrft and above rate in NOIDA should be marginally less. Another reason why property price have risen very high in Noida is that the price of land has become very high. the boom in the property sector has attracted a large number of new developers into the field. these days whenever an auction is held the competition among bidder is fierce. This pushes the price of land and hence the price of the final project high.for instance,Supertech which is costructing a 600 unit project in sector 93A, bought its land in January 2005 for Rs. 44000 per sqmtr. In a recent deal, Unitech won a bid for 380 acre for Rs. 1,562 crores (which means that the price per crore is above Rs 4 crore).Sector 93 has emerged as a very important residential hub in Noida. Almost 4000 apartments are under construction here. the prevailing rates her is about 3500 reuppes per sqft.One example of a truly high end property being developedm in Noida is Forest which is nearing completion in sector 92. Here avaragesize of apartment is 4000 aqrft, and price in the resale market is above 2 crore. When Unitech develops villas and appartments on the 380 acre it has purchased resently , prices are expected as Rs. 7,000 persqft.
