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:

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/approximately-6-6-million-sq-ft-of-space-absorbed-in-q1-2013-as-compared-to-5-6-million-in-q1-2012-cbre/ 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/#comments Fri, 12 Apr 2013 14:30:26 +0000 Track2Realty http://www.track2realty.com/?p=8360 Track2Realty: The prime office space segment across key cities in India are witnessing an improvement in sentiment from last year. According to CBRE’s latest report, India Office Market View Q1 2013, prime office space absorption across key cities in India witnessed approximately 17% increase in Q1, 2013 as compared to Q1, 2012.

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:

“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.

Track2Realty:

Historically, MagicBricks.com held the No 1 position in rankings for Unique visitors, Visits and Daily Visitors, but had lagged behind competition on Page Views. The latest comScore report states in clear terms that MagicBricks.com is now the No 1 on PageViews as well as total time spent and has clearly surpassed competition on all parameters. Magicbicks.com has also grown its lead on visits and daily visitors.

This means that there are more users on MagicBricks.com (Total Unique Visitors), who come more often (Total Visits), spend more time (Total Minutes) and are more engaged by the content (Page Views) than any other Property Portal in India.

The report indicates how MagicBricks.com’s closest competitor, had claimed No 1 status using pageviews as a Metric in the past even though MagicBricks.com was ahead on all other parameters. Now, it is clearly evident that MagicBricks.com is ahead on each and every measure.

“This is a major achievement for MagicBricks.com because this clearly acknowledges the dominance that we have been able to build in Online property classifieds. We would like to thank our users for making us No 1 across every single traffic metric. These results are an outcome of the insight-driven, product and content solutions developed by us that have delivered value to our users. Not just comScore, but Google Trends as well as other sources are showing the same trend that we are now the undisputed leaders in this space” Says Sudhir Pai, Business Head, MagicBricks.com.

MagicBricks.com theme campaign featuring the mascot Rajan is currently running on TV, Print, Radio and Online What is of particular interest to note is that this report pertains to a period before the launch of this Campaign and TV Commercial.

Track2Realty:

The estimated slum population in India is 94.98 million in 2012. As against this, the number of dwelling units sanctioned under JNNURM in seven year Mission period was 1.6 million.

The report further said that by 2031, about 600 million Indians will reside in urban areas, an increase of over 200 million in just 20 years. This change in the socio-economic landscape will have a bearing on several things, housing being the foremost.

The industry facing continued pressure in terms of raising funds for investment, the research report suggests that India must have a Real Estate Investment Trust (REIT). A REIT is a company that directly owns income producing real estate assets and provides a trading mechanism to the investors.

“On one hand an institutional market of REITs can ensure steady supply of capital to real estate development which shall aid in increasing the supply of houses and on the other it shall serve as an investment vehicle for individuals,” said the report.

The depth of the REIT investment vehicle in developed markets can be assessed from the amount of capital raised over the years. For instance, in the US market, REITs have raised $66.8 billion in 2012 (until November) alone and the momentum of fund raising through this investment vehicle has steadily increased since the global financial crisis of 2008, said the report.

India on the other hand has been slow to look into such a mechanism. Securities & Exchange Board of India (SEBI) had issued draft REIT Regulations in 2008. However, things have not moved since that time.

“Reason being that the confusion with another set of guidelines for Real Estate Mutual Funds (REMF) in 2008, which has also not translated in to product offerings yet. This confusion arises from the fact that both would regulate a similar product. Also lack of transparency and uncertainty involved in the conduct of real estate business has delayed the establishment of the REIT investment structure,” pointed the report.

The World Bank report ranks India at 182 out of 185 countries in the ‘dealing with construction permits’ category.

In the absence of REIT guidelines in the country, some real estate developers have already listed their REIT’s overseas. These investment vehicles invest in FDI compliant properties in India and hold both commercial and residential properties mainly at the development stage.

The properties within these schemes are located in top urban centers like Delhi-NCR, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad and Pune. However, these vehicles were floated before the global financial crisis and the investors are yet to see meaningful returns from these.

The reports also suggest that in light of the dwindling interest among investors to invest in Indian real estate, such a mechanism is important.

Institutional finance to the sector has witnessed a slowdown. Bank credit to the sector has slowed down on account of increased risk perception. In the last two years, the growth in banks’ credit exposure to the real estate industry has come down from 19.08 per cent in November 2010 to 5.29 per cent in November 2012.

Similarly, foreign investment in the sector has also witnessed a downtrend , the share of real estate has declined  from 9 per cent in FY12 to 5 per cent in FY13 (until Oct) in the total inflows in the country.

The last two years have contributed less than 1 per cent to the total IPO money raised by the industry in the last seven years highlighting the uncertainty of this source of funds.

Track2Realty: 2012 presented the real estate sector with an array of challenges. Valuable lessons were learnt as the real estate markets dealt with the uncertainties surrounding the local and global economic fundamentals. Many of these uncertainties persist in 2013.

DTZ is now embarking upon a new journey this year and putting risk back into perspective is the war cry. DTZ takes the lead in powering a strategic dialogue through the findings of Outlook 2013 Report.

Key Findings of Outlook 2013 Report:

 Global economic and capital market backdrop

The continuing uncertainty surrounding the European sovereign debt crisis is leading to moderate GDP growth forecasts in the short and medium term. In our interconnected global economy, austerity measures across Europe are hurting European imports from Asia and the US.

Asian growth remains at better levels in the medium term with China leading the way and Japan lagging. Even Europe returns to growth in the medium term under our base case.

With regard to India, even in the downside scenario, the GDP growth looks strong and way above the APAC’s GDP growth rate in the same scenario. Moreover, there is higher probability of the base case emerging as the “more likely” scenario in the medium to longer term which bodes well for the Indian economy and consequently, for the demand for commercial real estate.

This is because a sizable portion of commercial real estate absorption in India is still accounted for by the IT sector. The order books of the IT sector are largely dependent on the US and Euro Zone’s economy which appear to be stabilizing in medium to long term.

APAC occupier outlook

Although still behind North Asia, South Asia’s growth in total occupancy cost per work station has grown at a faster pace than the global average inflation between the fourth quarter of 2011 and third quarter of 2012.

Costs are expected to rise with pace in India as improved economic indicators will filter through to occupier markets. In fact, all markets with the exception of Mumbai are anticipated to see costs grow with a rate above the South Asian average growth of 4.5%. The strongest average annual growth of 8% is expected in Pune. Only Jakarta is set to see stronger growth in this region.

Markets in the Asia Pacific region offer the most affordable workstation costs than markets in our sampling in Europe and the US.

Chennai and Pune could lose their tag of affordable markets – Indian cities currently dominate the list of most affordable markets in Asia Pacific. However, you’ll notice that Chennai and Pune are expected to see strong rental growth going forward and could lose their position in the top five.

Delhi is the most expensive market – Interestingly, Delhi is the most expensive market in the per sq m ranking, whilst Perth slides to number four. Delhi is more affordable on workstation basis due to a low space utilization standard per workstation. Occupiers in Perth allow for more space per employee.

Pune and Hyderabad rentals to see double digit growth – Rents in Pune and Hyderabad all rise at double digit levels. This is something occupiers should be aware of

Indian market update & occupier survey

24% decline in office space absorption in 2012 – the net absorption did not improve measurably over the year. Again, this is a reflection of low job growth, which will continue through H1 of 2013. This also underscores the inter-connected nature of most regional economies of the world having a bearing on the absorption of office space in India. 2011 saw an absorption of 35 mn sq ft whereas the year 2012 saw an absorption of 27 mn sq ft – a drop of 24% y-o-y.

Vacancy levels continue to  remain above historic average levels - Subdued demand owing to economic uncertainty and mismatch between attributes and location of  space offered by landlords and those sought by tenants

IT Sector to dominate office space take-up – IT sector in India has seen a progressive decline in its contribution to total absorption. On the contrary, BFSI has seen its contribution increase progressively. In 2013, IT will continue to be the dominant occupier in total absorption. The recent Banking (Amendment) Bill passed by the Lok Sabha in December 2012 will be another shot in the arm for the BFSI sector. This Bill aims at attracting foreign investment and paves the way for Reserve Bank of India to issue new banking licenses to private sector. This move will further spawn demand for commercial real estate by the BFSI sector and we will see the contribution from this sector increase in the coming years.

Bengaluru is the most content with present rentals - the nature of the commercial real estate scenario in the city with good volumes of supply coming which keeps the rentals on a stable ground

Occupiers in Mumbai who feel that the rentals are not fairly priced – This is possibly because of the nature of the commercial real estate scenario in the city which does not normally see good volumes of supply coming which keeps the rentals on an upward trajectory

Micro-markets to largely witness subdued rental growth – On a micro-market level, Bengaluru PBD – comprising Outer Ring Road, Whitefield, electronic City and Banerghatta Road – is likely to remain a sought-after destination and will have moderate growth in the rentals in 2013. Whereas the other important micro-markets of Bengaluru, Mumbai and Delhi NCR are likely to witness subdued rental growth in 2013. This is a reflection of builders re-aligning their projects and keeping rentals in check to encourage occupiers to take-up office space.

]]> http://www.track2realty.com/dtz-launches-annual-outlook-2013-report-putting-risk-back-into-perspective/feed/ 0 http://www.track2realty.com/approximately-83-drop-in-prime-retail-space-supply-in-2012/ http://www.track2realty.com/approximately-83-drop-in-prime-retail-space-supply-in-2012/#comments Thu, 14 Feb 2013 14:33:02 +0000 Track2Realty http://www.track2realty.com/?p=7997 Track2Realty: Despite an 83% drop in supply of organised retail space across key cities in the country, 2012 continued to witness an increase in transaction activity and retailer expansion. According to the findings of CBRE’s latest report “Indian Retail Market View H2, 2012”, approximately 2.5 million sq.ft. of fresh retail space entered the market in 2012, mainly concentrated in Bangalore, Kolkata and Pune,  as against over 15 million sq.ft. in 2011.

Though this is a significant drop in prime retail supply, the market witnessed leading brands and retailers pursuing expansion plans aggressively and increasing their presence in the Tier I as well as Tier II and III cities of the country.

Developers remained focused on attracting tenants in completed properties and reducing existing vacancy levels, rather than focusing on launching new projects. Most of the supply pipeline is scheduled for completion in 2013; by when the existing vacancy levels might reduce.

Commenting on the findings of the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, “Despite the large dip in prime retail space supply across key cities last year, the good news is that retailers continued with their expansion plans. This positive sentiment is indicative of retailers taking a long term view of the Indian economy despite the short term struggle. The Government’s bold and welcome move of allowing FDI in retail has further contributed to this positive sentiment.”

In all the seven cities presented in this review, the retail real estate market appears to be promising with an increase in retailer enquiries. High street formats continued to dominate the retail landscape, while most luxury retailers preferred to operate from five star hotels and premium malls. New markets are also coming under consideration as international retailers expand their focus beyond the top three cities to include the likes of Hyderabad, Chennai, Kolkata, Pune and Chandigarh.

Major cities continued to witness steady expansion by international apparel and F&B retailers. Several well-established international mass market brands have also entered tier II locations, partly due to the lack of space options in tier I markets. Domestic retailers are expanding steadily in tier I locations but fierce competition with international brands for prime space in core locations is pushing some to tier II cities.

Fashion remains the high growth sector, and leading apparel brands from the US and Europe continue to try and enter or expand in major markets across the country, including some tier II locations. International food and beverage (F&B) outlets are also expanding, both at the fast food and fine dining end of the market.

Luxury retailers are entirely focused on tier I locations but continue to refine their strategy and product offering for India, which in selected cases has seen them consolidate and reduce the size of some stores. Among domestic retailers, home furnishers and supermarkets are expanding in metro cities.