Track2Realty:

India, which has been the world leader in mass IT processes with presence of most major IT and ITeS companies, has for the second year, remained at the bottom of the list of preferred Data Centre Location, beating only Brazil which ranked the lowest.

While India ranked high on parameters such as Cost of Labour (rank 4) and Sustainability (rank 6), it ranked moderately on the parameters of Political Stability (rank 13) and International Bandwidth (rank 16).

India however failed to score high on crucial parameters with higher weightage in the survey. India scored low on key factors such as Energy Cost (rank 25) and Ease of Doing Business (rank 30). Other factors where India lags behind are Natural Disasters (rank 28), Energy Security (rank 28), Corporation Tax (rank 28) and Education Level (rank 28).

Arvind Nandan, MRICS, Executive Director, Consultancy Services, Cushman & Wakefield said: “Although India ranks low, it should be noted that compared to other countries included in the index, India presents some marked advantages, such as labour cost and high degree of operational sustainability; while it also offers moderately attractive proposition from political stability perspective. India also has scored high on international bandwidth which is crucial for Data Centre operations in any location. Data Centres that value these aspects above others, will definitely find India a viable location.”

“India has a significant scope to improve its rank, in coming years, from the current 29^th position. For this, India will need to build further on its strengths like labour and operational sustainability. However, the key to improving its rank will lie in addressing concerns on energy cost and energy security, in the short term. In the medium to long term, India also needs to aim at providing an improved environment for business and strengthening its macroeconomic aspects,” Arvind added.

The USA maintains its place at the top of the DCRI and is considered the lowest-risk location for building and operating a data centre in the world.  Specifically, it maintains a top-three position across the primary factors of energy cost, international bandwidth and ease of doing business.

UK remains second globally in this year’s ranking. The nation’s high scores relating to international internet bandwidth and ease of doing business helped maintain its place above all other locations surveyed in Europe.

Data centres house business-critical IT systems – any downtime has the potential to threaten an organisation’s viability and impact significantly upon revenues and customer services.  The aim of the DCRI is to help companies make informed investment decisions about where to locate their data centres to increase efficiency, lower costs and to develop strategies to mitigate anticipated risk.

Track2Realty-Agencies:

“The state of West Bengal has absolutely no share in the total value of new investment commitments worth over Rs 42,000 crore made by the domestic and foreign private sources in the real estate sector across India in the last fiscal,” the report which a real estate sector specific analysis and released, said.

“Although total outstanding investments in the real estate sector in West Bengal is worth over Rs 37,000 crore as of March 2013, the state has registered a 100 per cent decline vis-a-vis new investment commitments attracted by the realty sector between 2011-12 and 2012-13,” it said.

In 2011-12, the state attracted new investment commitments in the real estate sector worth over Rs 1,200 crore.

The body said while most of the states have seen a decline in attracting new investment commitments in the realty sector, Gujarat has seen a surge of over 700 per cent as the state has attracted investments worth over Rs 17,000 crore in 2012-13 from just over Rs 2,000 crore a year ago.

Track2Realty:

However, New Delhi achieved more entries compared to other South East Asian markets such as Bagko, Kuala Lumpur and Jakarta andhas been characterised as a maturing/emerging retail market in Asia-Pacific, similar to the likes of Beijing, Shanghai and Ho Chi Minh City.

In tracking new store openings by retailers entering a market for the first time, CBRE, the world’s leading commercial real estate services firm, has found that while established locations witness steady expansion, maturing/emerging markets are seeing a steady increase of activity, especially in tier II cities in China and Southeast Asia.

Anshuman Magazine, CMD, CBRE South Asia says, “International retailers from across the globe are slowly but surely looking at India as a mature and viable market to expand their business. With Asia Pacific continuing to lure international and domestic retail chains, India is poised to witness a retail revolution. With the government permitting FDI in multi-brand retail, we can expect more international retailers to seriously consider the growing consumer base here.”

The Indian market as a whole is anticipated to see the number of new retailer entries increase further following the government’s move to permit foreign direct investment in multi-brand retail, which should herald the entry of foreign supermarket chains.

In examining new entrants by sector, ‘luxury and business’ retailers accounted for the highest portion (26%) in Asia Pacific in 2012. This was followed by ‘mid-range’ fashion accounting for 18%, along with ‘specialist clothing’ (13%), ‘coffee and restaurants’ (13%) and ‘value and denim’ (11%). In overall terms, new store openings for mid-range fashion retailers are now expanding at a faster rate compared to their luxury counterparts.

“Given Asia’s young demographics and propensity to use technology to increase fashion knowledge, along with the growing buying power of its emerging middle class, we are seeing an increased demand for mid-range stylish fashion,” said Sebastian Skiff, Executive Director, CBRE Retail Asia. “This represents a significant opportunity for more affordable brands across the region, especially in China.”

EMEA Retailers were collectively the most active in entering new markets in 2012. At a country level, retailers from the United States led the pack with 70 new entries, almost double those of the next best placed country, France (38).

Despite a lack of new prime retail supply in many established markets, new retailer openings, especially from international mid-range,value and denim retailers, are expected to continue at a steady rate across Asia Pacific for 2013.

Track2Realty:

“The realty sector in India attracted new investments worth over Rs 42,000 crore as of March 2013, which slipped from over Rs 92,600 crore a year ago,” according to a real estate sector specific analysis carried out by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“While most of the States have seen a decline in attracting new investments in the realty sector, Gujarat has seen a surge of over 700 per cent as the State has attracted investments worth over Rs 17,000 crore as of March 2013 from just over Rs 2,000 crore a year ago,” said D.S. Rawat, National Secretary-General, ASSOCHAM, while releasing the analysis.

Kerala has also seen massive growth of over 550 per cent in attracting new investments in real estate, followed by Uttarakhand (400 per cent) and Rajasthan (175 per cent), while most of the States have seen a drop of over 50 per cent in new investments in the realty sector during the period under review.

Apart from Gujarat, Maharashtra (over 17 per cent), Karnataka (10 per cent), Tamil Nadu (eight per cent) and Uttar Pradesh (over six per cent) are the top five States with maximum share in new investments attracted by the real estate sector across India. New investments in the realty sector in Maharashtra have plummeted by over 55 per cent during the last fiscal, from Rs 16,000 crore to Rs 7,000 crore.

“The realty sector accounts for over 11 per cent share in total outstanding investments worth over Rs 122 lakh crore, attracted by different sectors from various public and private sources across India,” said Rawat.

Gujarat, Maharashtra, Haryana, Karnataka and Andhra Pradesh are the top five States with the highest share for attracting maximum outstanding investments in the real estate segment across India. Besides, these five States account for over 70 per cent of the total outstanding investments attracted by the realty sector across India.

The outstanding investments in real estate have risen by over 25 per cent throughout the country during the five-year period from 2008-09 and 2012-13.

“The real estate sector in India has been plagued by serious problems including falling sales, rising construction costs, dampened market sentiment overall, sluggish economic growth, high interest rates, high inflation and poor industrial production (IIP) due to which leading players in the sector had to sell their land to reduce debt, private equity players have trimmed their exposure in the realty sector and a general slowdown in various industries has hit commercial real estate,” he said.

“However, certain positive developments such as Parliament’s approval of foreign direct investment (FDI) in multi-brand retail would help attract foreign investments and give a fillip to the retail industry and simultaneously boost the demand for commercial real estate in the country.”

Track2Realty:

Despite the slowdown, the IT/ITeS sector continues to be the main sector responsible for occupying a major part of the absorption pie in the Bengaluru office market.

The city has observed consistent office space demand across most micro-markets with Whitefield and Outer Ring Road (ORR) being the more preferred office destinations due to considerable new office space supply and competitive rentals here.

Going forward, Bengaluru office market is envisaged to witness an optimistic yet cautious delivery of projects in the short term on account of the present economic uncertainty.

Whitefield and the ORR stretch between Marathalli and Sarjapur Road will dominate as preferred office destinations due to attractive lease rentals, presence of social infrastructure and residential developments in the vicinity of the office projects.

]]> http://www.track2realty.com/bangalore-office-absorption-on-decline/feed/ 0 http://www.track2realty.com/drop-in-residential-launches-in-delhi-ncr/ http://www.track2realty.com/drop-in-residential-launches-in-delhi-ncr/#comments Thu, 18 Apr 2013 06:37:24 +0000 Track2Realty http://www.track2realty.com/?p=8408 Track2Realty: The NCR residential market witnessed a dip in project launches in H2 FY13 compared to H2 FY12. Greater Noida witnessed the highest number of launches in H2 FY13. Majority of these projects are located on the Yamuna Expressway and fall in the affordable segment.

As on March 2013, nearly 5,20,000 units were under various stages of construction in the NCR market. Almost 50% of this is expected to be ready for possession by the end of 2014.

Residential demand has seen a dip of 12% in H2 FY13 compared to H2 FY12.

The NCR market has an estimated 1, 30,000 units of unsold inventory which is approximately 27% of the units under construction. However, this has remained stable and not gone up substantially compared to H1 FY13, despite slight slowdown in the absorption.

Rising construction cost led developers to increase the prices of new launches in most of the micro-markets of Noida and Gurgaon.

RBI’s recent cut in policy rates is expected to have a positive impact on the real estate sector. Both consumer and investor sentiments are expected to improve in the coming quarters.

Track2Realty:

Transaction activity during Q1, 2013 was dominated by Mumbai, Bangalore, Chennai and NCR (National Capital Region), representing about 90% of the total transacted space during the quarter. Occupier focus continued to be on consolidation and more efficient use of existing portfolio. Transactions took much longer to conclude and majority of the demand was for smaller floor plate sizes.

However the q-o-q figures showed a decline of approximately 6% when compared to 7 million sq.ft. absorption in Q4, 2012.

Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia, said, This is a positive sign for the Indian economy reflecting business expansion along with consolidation. This also indicates that the downward trajectory should be plateauing in the near future. However the Indian office market will continue to take cues from the existing economic sentiment globally and within the country and it is too early in the year to take a position on the market performance.”

Rental values continued to witness downward pressures across most micro-markets as occupier expansion faced cost pressures and consolidation continued to be the key theme. Rents were stable in suburban office markets such as Gurgaon, Noida, Outer Ring Road, Whitefield, Hitec City and Gachibowli, among others. It is anticipated that downward pressure will continue to persist in most markets in the country in a short to medium term.

With cost reduction being a primary concern, occupier sentiment remained cautious amidst the present economic outlook, which continued to have a negative impact on leasing activity across most micro-markets. Majority of the corporates continued to review expansion plans and looked at improving existing space utilisation to control costs.

Demand is expected to weaken in most markets and majority of the leasing deals are likely to be for small and medium sized office space. Supply levels should continue to exert pressure on rental movement and market recovery in most micro-markets.

The India Office Market View is a quarterly report which provides a summary of office rents across key cities in India. It includes average rental rates for the coming quarter as well as an outlook for the next quarter. The India Office Market View report also covers Grade A office space rentals across the cities of NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

]]> http://www.track2realty.com/approximately-6-6-million-sq-ft-of-space-absorbed-in-q1-2013-as-compared-to-5-6-million-in-q1-2012-cbre/feed/ 0 http://www.track2realty.com/dtz-annual-office-space-forecast-for-2013-says-21-increase-in-take-up/ http://www.track2realty.com/dtz-annual-office-space-forecast-for-2013-says-21-increase-in-take-up/#comments Thu, 11 Apr 2013 12:34:46 +0000 Track2Realty http://www.track2realty.com/?p=8355 Track2Realty: DTZ annual office space forecast says 21% increase in take-up is expected. Overall take-up stood at 4.80 million sq ft for Q1, a sharp drop of circa 29% from previous quarter. Mumbai witnessed the highest take-up of 1.25 million sq ft, an increase of 3% q-o-q.

This increase can be attributed to broad based transaction activity along with execution of several large size transactions of more than 50,000 sq ft. As a result, while IT/ITES and BFSI accounted for 40% of take-up, healthcare and manufacturing sectors accounted for another 35%. Kolkata continued to witness the sharpest fall of 61% q-o-q.

The demand is expected to pick up pace in next few quarters as most of the Indian markets are approaching the bottom of the rental cycle, there is a short term window for occupiers to lock in lease transactions to take advantage of historically low rentals before they resume their long term growth in 2014.

The total stock of commercial Grade A office space in India’s seven largest cities in Q1 stood at 400.52 million sq ft as compared to 394 million sq ft in the previous quarter, a marginal increase of 1.6%. Chennai witnessed the highest increase (of 3.3%) in stock q-o-q while Hyderabad witnessed the lowest q-o-q increase of 0.3%.

The overall level of new supply increased over the quarter by 13.5%.The total new supply in Q1 stood at 6.47 million sq ft as compared to 5.7 million sq ft in the previous quarter. Most of the new supply comprises projects that had been delayed in the last few quarters.

Out of the seven cities, Pune witnessed the highest increase (of 117.4%) in new supply q-o-q followed by Chennai at 33%. Kolkata witnessed the sharpest fall of 47.4% in new supply for the quarter followed by Hyderabad at 15.3%.

Overall availability increased by circa 3% q-o-q as a result of restrained take-up coupled with infusion of new supply. The total availability stood at circa 83.1 million sq ft in Q1. Chennai witnessed the highest increase of 14% q-o-q whereas Bengaluru witnessed sharpest moderate fall of 2.4% q-o-q with availability ratios at 22% and 13.4% respectively.

Anshul Jain, Chief Executive, DTZ India says, “The wait-and-watch stance continues to be the preferred strategy of the occupiers as they enter 2013. The subdued take-up reported in Q1 is a manifestation of the slow Indian economy coupled with a lacklustre global economy, particularly the Eurozone and the US. We expect the first half of 2013 to be subdued. Our annual forecast for growth in take-up for 2013 is a 12% increase over 2012. Majority of this we expect to come to fruition in the second half of 2013.”

Prime rents across all the seven cities, except for Delhi NCR, remained unchanged throughout the quarter. Delhi NCR witnessed a marginal increase of 1.4% in rents due to the increase in maintenance cost of the buildings as a result of persistently high inflation.

For past one year, the landlords had not passed on the increase in maintenance cost to the occupiers in order to retain as well as attract occupiers given the challenging economic environment. Prime rents across all seven cities except for Mumbai are expected to remain stable in short term and increase thereafter. Mumbai is expected to witness a marginal drop in prime rent due to continued preference of occupiers towards off-CBD and suburban micro markets.

The delivery timelines of new projects continued to revise as a result of economic slowdown and increase in construction cost. The latest development schedule for 2013 indicates approximately 44.6 million sq ft of new supply coming on stream across the seven cities as opposed to 53.3 million sq ft estimated earlier.

The decrease in 2013 development pipeline estimates is due to the rollover of projects slated for completion in 2013 to 2014. The phenomena of extension in delivery timelines is expected to continue in midterm until the economic environment becomes more conducive. Mumbai followed by Bengaluru and Delhi NCR will constitute 25%, 22% and 20% respectively of the total new supply in 2013.

Track2Realty:

Transaction activity during Q1, 2013 was dominated by Mumbai, Bangalore, Chennai and NCR (National Capital Region), representing about 90% of the total transacted space during the quarter. Occupier focus continued to be on consolidation and more efficient use of existing portfolio. Transactions took much longer to conclude and majority of the demand was for smaller floor plate sizes.

However, the q-o-q figures showed a decline of approximately 6% when compared to 7 million sq ft absorption in Q4, 2012.

Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, This is a positive sign for the Indian economy reflecting business expansion along with consolidation. This also indicates that the downward trajectory should be plateauing in the near future. However the Indian office market will continue to take cues from the existing economic sentiment globally and within the country and it is too early in the year to take a position on the market performance.”

Rental values continued to witness downward pressures across most micro-markets as occupier expansion faced cost pressures and consolidation continued to be the key theme. Rents were stable in suburban office markets such as Gurgaon, Noida, Outer Ring Road, Whitefield, Hitec City and Gachibowli, among others. It is anticipated that downward pressure will continue to persist in most markets in the country in a short to medium term.

With cost reduction being a primary concern, occupier sentiment remained cautious amidst the present economic outlook, which continued to have a negative impact on leasing activity across most micro-markets. Majority of the corporates continued to review expansion plans and looked at improving existing space utilisation to control costs.

Demand is expected to weaken in most markets and majority of the leasing deals are likely to be for small and medium sized office space. Supply levels should continue to exert pressure on rental movement and market recovery in most micro-markets.

The India Office Market View is a quarterly report which provides a summary of office rents across key cities in India. It includes average rental rates for the coming quarter as well as an outlook for the next quarter. The India Office Market View report also covers Grade A office space rentals across the cities of NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

Track2Realty:

“Fears of downside risks for the global economy have started to fade, which combined with local economic policy amendments including the opening of 51 per cent FDI in multi- brand retail, climb-down of repo rates by the Reserve Bank of India (RBI) and stronger economic outlook, have resulted in improved market sentiment,” DTZ India CEO Anshul Jain said.

These emerging positive indicators are expected to help stimulate the real estate sector. “Consequently, demand for office space is expected to increase and reach to around 30.5 million sq ft this year, representing an increase of nearly 12 per cent year-on-year,” he said.

Further, companies which had stalled their expansion plans due to poor market sentiment, are expected to recommence the process in the near future as they move out of the ’wait-and-see’ phase observed over the past year, he said.

“Office demand in FY14 is therefore expected to be largely driven by business expansion and we expect to see higher levels of space absorption in 2013 than 2012,” Jain said.

“Rentals are expected to be stable in the near future. At the same time, it is anticipated that rents will increase over the next 12-24 months. This will drive the leasing decision in the short-term,” he said.

Of the estimated 30.5 million sq ft, the IT sector is estimated to take up around 15 million sq ft of space, compared to only 12 million sq ft in 2012, an increase of 24 per cent year-on-year.

According to DTZ, the demand for office space from the BFSI sector will also rise significantly primarily after the passage of the Banking (Amendment) Bill.

“This bill is aimed at attracting foreign investment and paves way for the RBI to issue new banking licenses to the private sector. This move will further increase demand for commercial office space from the BFSI sector and therefore increase its proportionate share of demand in the coming years,” Jain added.