According to DTZ’s latest study ‘Global Occupancy Costs offices’, Surabaya in Indonesia and Qingdao in China were placed in the top two positions of the chart as the most affordable office locations in the world last year.

“While Tier II cities in India and China dominate the list of top 10 most affordable markets globally, Surabaya in Indonesia remains number one,” DTZ said in the report. The consultant said Hong Kong, London, Geneva, Tokyo and Zurich were the five most expensive office markets in 2011.

DTZ said Surabaya and Qingdao saw average rentals of $ 1,680 and $ 2,380 per workstation a year, respectively in 2011. Hyderabad, Chennai and Pune followed the top two places with rentals of $ 2,430, $ 2,570 and $ 2,590 a year per workstation respectively, it added.

The study showed that Hong Kong was costliest office place with an annual rental of $ 25,160 per workstation in 2011, followed by London and Geneva at $ 22,590 and $ 18,740, respectively. DTZ, however, said many cities across the world are likely to witness decline in their rentals during this year.

“Under the downside scenario, 2012 offers occupiers a window of opportunity in which to realise cost savings as rents decline… In the top five least affordable cities of Paris, Tokyo, Geneva, London and Hong Kong, office rents fall in 2012 under the euro break-up scenario,” it added. Occupiers in Rome and Milan are likely to benefit from falling occupancy costs over the next five years as sharp decreases in rents are expected in 2012 and 2013, DTZ said.

It further said office rentals in low-cost Indian cities may see double-digit falls in this year.

“There is not much space left for property developers inside the city. All construction activities are moving towards the suburbs,” said V Subramanian, president, Confederation of Real Estate Developers Association of India (CREDAI), Coimbatore. However, land prices have increased in the outskirts in the past two years. The cost of material and labour is also on the rise. This has seriously affected the middle income group, which is the major segment that invests money to buy property. Property developers have been forced to pass the cost increase burden on the people, which have slowed down the market.

“Land costs have increased four-fold in Coimbatore, which is causing major problems for developers,” Subramanian said. Cement, which was costing Rs 190 a bag a year ago, is now available for Rs 300. Steel prices have increased from Rs 38000 per tonne to Rs 60000 per tonne now. Developers are struggling to control their costs and boost sales. Omkar Sankar, director, Sankar Foundation, said there is huge demand for affordable and low-budget houses in Coimbatore. But the jump in prices of affordable houses is now becoming a cause for concern, he noted.

Flats that were sold for Rs 4500 per sq. ft. in Ramnagar area are now being sold for Rs 6500 per sq. ft. Similarly, in areas like Vilankurichi, Thondamuthur, Vadavalli, which are outside the city, costs have moved from Rs 2300 per sq. ft. to Rs 3500 and more. Though the recent lowering of interest rate by banks may bring some respite, developers are still in a wait and watch mode. The situation in Coimbatore is different from Chennai, which is well connected with infrastructure facilities even in far-off areas.

There is a huge demand for housing in Coimbatore and in the next few years there would be at least a demand for 1 lakh housing units, said P Karthikeyan, Chief Executive Officer, Trishul Shelters Private Limited. However this would require good connectivity and infrastructure development in the suburban areas, which is lacking now, he said. Besides the developers have to look at ways to keep costs down by adopting innovative methods and different technologies, he noted.

The market for commercial space is estimated at 50 mil sq. ft. across the country. The average yearly absorption rates in Bangalore and NCR are about nine mil sq. ft. While six mil sq. ft. is absorbed in Mumbai, the rates are 4 to 5 mil sq. ft. each in Chennai and Hyderabad.

However, last year, Bangalore topped the list with the highest absorption of more than 13 mil sq. ft. of non-captive office space, about 2 mil sq. ft. more than the levels seen in 2010. About 80% of this came from the IT & ITES sector.

“Consolidation of real estate portfolios by Indian and MNC IT companies has boosted the real estate market in Bangalore,” said Karun Varma, MD (Bangalore and Kochi), and Jones Lang LaSalle India. “Demand for back offices and contact centres has resulted in continued strong growth in suburban real estate development, with IT companies lining up their investments for setting up new facilities in the city,” he added.

Experts predict demand for 16 mil sq. ft. of office space in 2012 in India’s Silicon Valley, which will be the highest ever in the country. This will be mostly due to the new SEZ norms and direct tax code (DTC) that will come into play.

About 75% of the 16 mil sq. ft. office space will be in upcoming SEZ regions. Recently, global investment banking firm Goldman Sachs took up 1 mil sq. ft. of office space developed by Kalyani Developers on the outer ring road. “Companies see an opportunity from a tax break perspective; so, many are planning to migrate their future work to SEZ parks,” said Shrinivas Rao, CEO (Asia Pacific), Vestian Global Workplace Services.

In the next three years, an additional 28.8 mil sq. ft. of office space will be available in the region, for which projects are already under way. “We are expecting to see about 6 to 7 mil sq. ft. of this to come up in 2012,” said Rao.

The Indian property market will see more investment from overseas this year as it still remains an attractive investment destination globally.

Of this, one-third would be from home buyers and the balance from investors. This is despite the fact that property prices in India are at an all-time high.

According to a recent National Housing Bank (NHB) survey, property prices in big Indian cities have increased by as much as 43 per cent to 166 per cent in the last four years.

NHB, wholly owned by the Reserve Bank of India, lends to home-mortgage companies. It also regulates and refinances social housing programmes. In its report, the bank said Chennai had seen the highest rise in prices at 166 per cent. Bhopal was second with a hike of 117 per cent and Mumbai was ranked third with an increase of 87 per cent.

What then brings overseas investment to Indian property, when prices are skyrocketing? The answer is simple: Despite the global turmoil because of the financial crisis, the Indian economy has remained robust, largely due to domestic-driven demand.

According to Jones Lang LaSalle, India’s strong economic growth, rapid urbanisation, growing middle-class population, demographic advantage and increased thrust on infrastructure has worked in its favour. Buying property is especially popular among Indians living abroad, who all seem to want a piece of the homeland. That is why Indian property shows are burgeoning around the globe.

Dubai-based Sumansa Exhibitions has been holding Indian property shows across five countries. And every year the number of developers taking part in the shows and the attendees has grown rapidly.

Sumansa Exhibitions’ chief executive officer Sunil Jaiswal says: “We have held shows in the UK, South Africa, Hong Kong, Dubai and Singapore. They have been very well received by both exhibitors and visitors alike.”

This year Sumansa will hold the Indian Property Show in Singapore on April 14 and 15. It will be held at the Suntec Exhibition Centre’s hall 401 and nearly 40 developers from across India will be part of the show.

More than 200 properties will be showcased during the two-day exhibition. Sumansa expects the number of footfalls at the event to be much larger than the 4,000 that turned up at its last year’s event.

This is the fourth award in the last two years conferred upon DLF India:

* Marketer of the Year For Hyde Park Estate at DLF New Chandigarh – Estate World Awards in Association with KPMG & Bloomberg-2011

* Developer of the year – North India – Estate World Awards in association with KPMG & Bloomberg-2011

* Integrated Township of the Year For DLF Valley, Panchkula – Realty Plus Excellence Awards-2010,

Receiving the award, Ananta Singh Raghuvanshi, director sales and marketing at DLF India Ltd said, “It is extremely encouraging to enter new markets and recreate the success and magic of the past. As a group we are extremely excited and committed to our developments in Lucknow, New Chandigarh, Hyderabad, Chennai, Bengaluru, etc. For each market, we are trying our best to think globally and act locally.”

Garden city is DLF’s first residential project, in the city of Nawabs- Lucknow. With almost 40 per cent of the area as open spaces and plot sizes starting from 250 sq. yards and above, the township conforms to very high standards of low density population norms. The facilities at Garden city match the international living standards and give the people of Lucknow their first real taste of an exquisite lifestyle. It boasts of meticulous town planning, eco-friendly infrastructure, wide open roads, its own smart sewage disposal plant, underground cabling and massive green belts running across the township.

Land factor plays such a vital role when affordable housing projects are concerned, it only underlines the importance of planning and provision of substantial portions of land on which such housing projects may be developed. With land prices within Chennai ever on the rise, the Chennai Metropolitan Development Authority (CMDA) had to make a few adjustments to help establish affordable housing in the city.

“While preparing the 2^nd Master Plan, we have taken into consideration the high land value and construction cost. The review of space standards were made and the plot size for residential construction has been brought down from 90 square metres to 80 square metres. For EWS (Economically Weaker Sections) it is retained as 20 square metres in Chennai city and 40 square metres in the rest of the Chennai Metropolitan Area (CMA) “, says Susan Mathew, vice chairman of CMDA.

Cross-subsidization is another strategy adopted by the CMDA to combat land prices and rising costs, which stipulates a minimum of 20-25% of developed lands in housing projects for Economically Weaker Sections and Lower Income Groups. This strategy has takers, as cross-subsidization is being looked upon as an effective method of making land and building material affordable to those belonging to LIG.

While measures like reduction of plot size and cross-subsidization may be encouraging, there are those who believe that land availability is not the only decisive factor of affordable housing, it is infrastructure, at the end of the day that plays the biggest role in affordable housing. Facilities onsite, transport connectivity, sewage and basic amenities can determine whether the land in question is viable enough for the establishment of a housing project.  Investment in infrastructure is a basic and non-negotiable requirement for affordable housing, new sources of power generation, recycling waste water, investing in roads, public transport and social infrastructure like colleges, schools, hospitals and markets facilitates affordable housing.
Chennai is the 4th largest metropolitan city in India and the total population of Chennai Metropolitan Area (CMA) as per 2001 census is 70.41 lakhs and the total number of households as per 2001 census in CMA is 16.19 lakhs and the total number of housing units in CMA is 15.83 lakhs.

The National Urban Housing and Habitat Policy, 2007 stipulates 10-20% of land in every housing project or 20-25% of FAR reserved for EWS/LIG housing. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) launched by the government of India stipulates a minimum 20-25% of developed lands in housing projects for EWS/LIG housing with a system of cross-subsidization.
It is mandatory on the part of the developers to reserve at least 10% of the site area and provide houses for Lower Income Group with dwelling units not exceeding 45 sq m in cases of large-scale developments exceeding 1 hectare. This rule was brought in the SMP to encourage EWS and LIG housing developments.

A business group in the US named Vision India Real Estate is bankrolling a sum total of $5 million in an upcoming residential project in Chennai. The project belongs to Gem Group. This is the first time that the US Company is going for a joint development project. It is proposing an investment of $100 to $200 million (approx. Rs 920 crore) in the coming 3 years.

The company delegates was studying the market for previous 24 months and the entered India 2 years ago.

The company is in colaboration with Chennai-based Gem Group to build a Rs 320-crore project at Padur on Old Mahabalipuram Road. The company is thinking upon to develop logistics parks in Bangalore and Chennai, which will be spread over 47 acres each.

A special purpose vehicle has been floated for the purpose. The plan is proposed in such a manner that the Vision India would develop the residential projects on the land provided by Gem Group.

The concerned authorities said, “We have also initiated talks with retail houses, automobile majors, pharma companies and others”. Vision India Realty is a unified property development and asset management group that manages and also develops the hospitality residential facilities in India. It will also invest in some other projects as well.

Over the upcoming three years, Vision India Real Estate is planning to invest $100 to $200 million, as told by Mr Elad to ET. The company has set a target of $500-700 million (Rs 2,300-3,220 crore) turnover in the next three years.

Since the Chennai Market is much more stable than other cities therefore the initial focus will be on this for housing projects. It will touch the hospitality sector in the next year.

The progress reports by Ilan Elad say that about 40 million sq ft has been developed which includes about 5 million sq ft towards hospitality and about 15 million sq ft has been for residential segment.

A project called Gem Grove is planned to be built on 6.64 acres of land at Padur on the Old Mahabalipuram Road in Chennai. The project is a residential project of about 320 cr. It will accommodate 712 housing units covering a built-up area of approximately 8 lakh sq ft.

The chairperson of Gem Group R Veeramani complemented the decision to partner with Vision India saying that it is to tap their excellence in developing such projects in the US and Europe.
The projects by Gem Group are marketed by Homebay, starting at Rs 2,399 per sq ft.

It will set its 3 blocks ready for  occupancy by July 2012 with the remaining three blocks ready by May 2013.

As researched by Boston Analytics, the Indian realty sector has undergone an increased supply and pace of development activity which brought an improvement in pessimism associated with the realty prices. A low interest rate on home loans driven by Government’s impetus packages have also catalysed the Indian consumers to buy homes.

“Increased supply, improvement in pessimism related to realty sector rates, and low rates of interest on home loans seems to be encouraging Indian consumers to firm up their home purchase decisions” as said by Shirin Bagga, Economist, Boston Analytics.

The data was collected by conducting a monthly survey that targets 10,000 respondents cross 15 Indian cities—Delhi, Mumbai, Hyderabad, Kolkata, Chennai, Bangalore, Chandigarh, Nagpur , Ahmedabad , Kochi, Jaipur, Lucknow, Bhubaneswar, Patna, and Vishakhapatnam.

According to the recent reports the conviction concerned to speed of construction activity conveys more anticipation with regards to observed change in construction activity in Tier II and Tier III cities relative to Tier I cities.

The real estate projects which are in different phases of completion in all levels of towns and cities appear to be introducing optimism about the expected change in construction activity among respondents across Tiers,” the report said.

As brought into light by Economic Survey of 2009-10, the need of the construction and real estate sector in creation of both financial and physical assets has been amplifying over the years. The construction sector now accounts for 8% of GDP at constant prices, hiked from 7.7% in 2004-05.Equivalently, the share of real estate ownership of dwelling and business services in overall GDP as hiked to 9.2% in 2008-09 from 8.9% in 2004-05.

* The hotels would be located in the national capital region (NCR), Kolkata, Chennai, Goa, Mysore, Bangalore, Hyderabad, Chandigarh, Siliguri and Assam.

* Of the total planned hotels, about 50 per cent would be located in Kolkata and the NCR, Chandra said.

“We are not slowing down on any of our projects. Jaipur is rocking, Chennai is doing well, city-based projects such as Faridabad are also doing well,” Mahindra and Mahindra Ltd Executive Mr Arun Nanda said.

Fundamentals of real estate have not changed. Mr Nanda said, there were no funding issues for its projects and the company’s affordable housing projects are not going to disappear.

“We have actually got cash in the bank,” he said, adding there is a huge demand in Rs 30 to 40 lakh apartments segment. He, however, said the housing loan segment is facing problems and investors are not coming forward. “Demand has been put on back-burner and interest rates are hurting people,” he said.

They were assessed on eight parameters necessary for a metro city, such as social infrastructure, infrastructure availability, real estate cost and availability, transportation facility (connectivity), presence of quality educational institutes, employment opportunity, facility of financial services and business environment.

According to the analysis, Pune occupies the first position, though it needs to improve on transportation, social infrastructure and financial services. Ahmedabad is the second city with most potential to be a metro, as it provides good infrastructure facilities and connectivity. The study puts Lucknow in the third place as it needs to pick up on infrastructure, business environment and social infrastructure.
Chandigarh, the smallest of the four in terms of area and population, ranks fourth though it fares well in real estate prices, financial services and business environment. At 9.21%, it is the least employment-generating city among the four emerging metros.

During the period, commercial real estate demand was only at 9.74 million square feet as against the supply of 18.07 million sq.ft, commercial real estate services firm Cushman & Wakefield (C&W) said in a report.

“There has been a slowdown in the real transactions, observed in the period 2008 due to a number of factors, primary amongst which is a general slowdown of the economy,” Cushman & Wakefield Director Kaustuv Roy said.

The IT/IteS sector, which has been one of the biggest consumers of commercial real estate, have deferred their expansion plans, leading to a slowdown in the uptake during the period, he said.

Most corporations, both Indian and multi-national, have been adopting a wait-and-watch policy throughout most of the period, he added.

During April-June quarter rental values across major micro markets in the major cities witnessed rental hikes in the range of 3-5 % over the earlier quarter.

Some peripheral locations in NCR and Chennai also saw a correction in rental values largely because of excessive supply as well as deferred development plans of various proposed projects, it said.

Unitech, the country’s largest listed developer, posted a 15.7 % growth in net profit during the quarter, mainly due to higher realisations the company made in the mid-income segment housing, in the range of Rs 40-45 lakh apartments.The company posted a net profit of Rs 423.31 crore in the first quarter of financial year 2009 as compared to Rs 365.67 crore in the corresponding quarter last year. Total income went up by 17.19 per cent to Rs 1,054.37 in the first quarter of FY09 as compared with Rs 899.67 crore in the corresponding quarter last year.

DLF, which is scheduled to announce its results, also entered into affordable segment in cities such as Chennai, and Kolkata.

Bangalore-based Puravankara Projects posted 40.62% growth in year-on-year profit during the quarter due to higher realisations from the sale of apartments and income tax exemptions on its residential projects under section 80 IB. The company sold 1,000 apartments during the quarter.

The company posted a net profit of Rs 61.89 crore as compared to Rs 44.01 crore recorded in the corresponding quarter last year. The company’s revenues went up by 30.88 % at Rs 157.58 crore as compared with Rs 120.40 crore in the last financial year.

Pune-based property company Kolte Patil’s net fell nearly 7% mainly due to lifting of tax exemption on IT parks under section 80 IA. The company posted a net profit of Rs 31.46 crore in the first quarter of FY09 as compared with Rs 33.87 crore in the comparable period last year. However, the company’s revenues rose 17% at Rs 104 crore from Rs 89 crore due to higher realisation from housing projects.

Hyderabad-based IVRCL Infrastructure posted a 15 % rise during Q1 due to higher realisation from infrastructure projects, on a year-onyear basis. Net profit increased to Rs 43.50 crore from Rs 37.87 crore in the comparable period. Total sales increased by 38% at Rs 948.34 crore (Rs 688 crore).

IVR Prime Urban Developers, the group’s real estate firm, posted a 263% increase in net profit at Rs 5.44 crore during the Q1 period as against Rs 1.5 crore, while the turnover went up by 55 per cent at Rs Rs 32.25 crore.

It is believed to have chosen the stunning backdrop of the Kochi coastline and the posh Boat Club area in Chennai as addresses for the million-dollar residences it will offer in partnership with Nitesh Estates.

Domestic realty major Nitesh is scheduled to bring India’s first Ritz Carlton hotel to Bangalore. Nitesh would extend its association with Ritz Carlton Hotel to a few more markets and unveil Ritz Carlton Residences too. Apartment of 2500 to 4000 square feet are expected to be ensconced within the premises of Ritz Carlton hotels in Kochi and Chennai.

Carrying a price tag in excess of $1 million, they will come with dedicated concierge and house-keeping services, gourmet dining and valet parking. An outright buy could cost Rs 3 to 6 crore and they may also be available on long lease. What has fuelled the speculation is Nitesh’s recent acquisition of land in chennai and kochi.

The domestic real estate company bid seven hundred crore rupees to lease nine acres near the Boat Club for 66 years. It is also believed to have bought four acres next to Bolghatty Palace in Kochi for an undisclosed amount. The land in Kochi is surrounded by water on three sides, with the heritage palace on the fourth.

Nitesh Estates CEO RS Mani said, “We can only confirm that the company is looking at mixed-use developments in both cities. We are looking at iconic developments that will leave a lasting impression” . He declined to comment on speculation about whether the Ritz association would be extended to these markets.

Nitesh has already roped in New York-based architectural consultancy KPF to develop these properties. The mixed-use development in Kochi is estimated to be about five lakh square feet while in Chennai it could be a million square feet. KPF is credited with some of the most acclaimed mixed-use developments in the world, including Tokyo’s four billion dollar Rappongi Hills, built by realty tycoon Minoru Mori.

These include two Ahmedabad-based and one from Baroda. The initiative has been taken by the company to market and sell its international properties to Indian buyers.

“We are proud to have appointed agents in India. Apart from three in Gujarat, we have signed agents in important cities like Mumbai, Delhi, Chennai, Bangalore and Gurgaon. As the potential is high here, we wanted to touch each corner of of the country through a network of experienced agents,” said founder & chairman, DAMAC Holding, Hussain Sajwani. “We will provide our agents all the necessary information and training to sell our properties.”

The company is also considering investment options in the subcontinent along with marketing its current projects. “We are looking at all the major cities in India and we will earmark investments as soon as the feasibility study is over,” said the CEO of DAMAC Properties.

Announcing this progress, PBEL, executive director Anand Reddy said, “The Company has invested twenty crore rupees on a ten acre plot of land at Devanoor village along the ring road in Mysore to build a residential township. This is in tune with our strategy to build a land bank in secondary cities across south India. The company, in addition to Mysore, has short-listed Coimbatore in Tamilnadu and Vizag in Andhra Pradesh for sizeable investments.”

PBEL has invested five hundred crore rupees so far and is actively pursuing more investment opportunities in the real estate sector across south India. It intends to develop and build high quality high-rise apartment buildings with modern amenities in environment friendly surroundings. PBEL will be bringing internationally known high quality products and consultants from abroad who have worked on renowned projects world wide to ensure that international standards are met. The investment has seen the company acquire ten acres of residential land in Mysore. This is in addition to fifty eight acres in two land parcels in Hyderabad and forty two acres in Chennai for a mixed township project.

PBC, a subsidiary of the IDB group, is active in the realty space in three continents: North America, Europe and Asia. The IDB Group is Israel’s largest business conglomerate with global assets in excess of twenty seven billion dollar. PBC is a major participant in the development of the new plaza Las Vegas hotel. ERE is one of the leading real estate companies in Israel, owning over one hundred nine properties and fifty eight hotels in Europe and North America and is a subsidiary of Elco holdings, one of the main business groups in Israel.

The Mumbai-based firm may need cash for developing a planned special economic zone in Maharashtra and townships in the future, but has enough cash for ongoing projects, Vice-Chairman Arun Nanda told analysts late on Tuesday.

The company has developed a 1,400-acre special economic zone (SEZ) in Chennai, while its second SEZ, spread over 3,000 acres at Jaipur, will start operations by July 2008.

“Chennai has started generating cash, while Jaipur is self sufficient. When we go to Maharashtra, we will need to look for funds,” he said.

The company has planned a 3,000-acre multi-product special economic zone at Karla, near Pune. While it has received approvals, land acquisition for the project may only start later this year, Nanda said.

“There is no intention for Mahindra group to dilute equity. At best, we might bring in some private equity,” Nanda told analysts. “We are a zero-debt at company level and currently hold cash reserves of 250 crores (2.5 billion rupees).”

The Mahindra group holds 51 percent equity in the company.

Last month, the company formed a joint venture with private equity fund ARCH Capital to develop a 55-acre township project, within its Chennai SEZ.

Mahindra Lifespace, which on Tuesday outlined an investment of 5 billion rupees for a 25-acre residential project in Nagpur, is also planning four other large integrated township projects. However, Nanda declined to give details of these projects.

NKID is a large infrastructure project near Kolkata being developed by a consortium including Unitech (40%) and Salim Group (40%) and Universal Success (20%) of Indonesia. The project is spread over 37,830 acres of which govt has handed over 13,457 acres (35%) for development, includes the recent, 12,500 acres handed for a Chemical SEZ.

According to the agreement, the joint venture will obtain land, develop the property and manage the assets and will firstly focus on protecting development chances in cities together with Mumbai, Chennai, Delhi, Bangalore, Kolkata and Pune. The joint venture will invest around two thousand three hundred crore for three years.

To start with, the joint venture has obtained twenty seven acres in Loni near Pune. The joint venture is expected to develop 7.5 million square feet in the subsequenty three years and a total of twenty million square feet for the next five years.

The K Raheja Group is also into retail and hospitality sections in addition its centeral business of realty. The group possesses some of the country’s important retail brands such as Shopper’s Stop, Inorbit Mall, HyperCity and Crossword.

The properties developed by ETA Star Properties will be managed by their hospitality subsidiary, ETA Star Hospitality. Speaking exclusively with Hospitality Biz, Riyazur Rahman, Director, ETA Star Hospitality says, “We also plan to adopt properties on lease. The group is open to associations with Indian real estate developers, under management contracts.”