Debating whether the Indian real estate industry is the right place to start a career, Sameer Khanna, Head, Human Resources, Jones Lang Lasalle India, noted that compared to developed countries, the Indian real estate sector still lacks sophistication and transparency. Further Sameer Khanna explained, “However, it is popular for domestic and international investments. This has resulted in the need for better and capable human resources. Though real estate is not nuclear science, there are complexities involved.”

What courses to pick?

While the real estate industry is changing fast, a lot of professionalism is coming in, as many major international players; developers are introducing best practices and higher transparency. “People equipped with the know-how, training and professionalism are in high demand, and are paid correspondingly,” experts revealed.

Why are city students interested?

While many students are choosing the course out of interest, many others enter the trade to see if the industry is challenging. Further, there are the third kind, who has families and forefathers who have been an integral part of the industry and are looking at entering the trade, with a professional course. “I do not know much about this industry but I have enrolled myself for this course because it seems interesting. So far the only role that interests me is one related to analysing the market,” said Shreeti Dey, a student.

Om Ahuja, CEO-residential services, Jones Lang LaSalle (JLL) India, said, “In cities like Surat, the growth is directly related to increased income of people. High income has also spawned more nuclear families.”

Chairman CREDAI, Surat, Tarun Rawal said, “On-going development of mass transport infrastructure and planned town planning schemes in the city has given confidence to people to go to faraway places to live. Hence, small sector projects – 1,500 sq ft houses – have gained a foothold in the city.”

Surat was the only city where people used to buy and sell properties without documents, but now awareness is growing. “Now small units have started to come up in huge numbers,” said Harshil Daliwala of SNS Builders.

The city is estimated to be spread over in an area of 326 sq km. It could further expand by another 200 sq km. “There is a plan to convert Surat-Navsari into twin cities which will together have a population of 1.15 crore people,” Surat Municipal Corporation’s director of planning Jivan Patel said.

Add to that the confusion created by the new DCR (development control rules). Many builders now have to make fresh plans to accommodate the proposed changes about FSI; and the worst affected are those whose projects are already underway. Many of the launches have been put on hold, and construction has been stalled in many places. And for people who have already invested in these projects, the longer the deadlock lasts, the more they have to pay.

Buy or not to buy? Despite a profusion of analyses and research reports on housing prices and their future direction, home buyers remain as confused as ever. So it is little wonder that 37 lakh of flats remain vacant in Maharashtra, of which 4.79 lakh are in Mumbai. The Census Directorate data says that even Thane district has more than 5 lakh vacant flats.

“Why doesn’t the government or RBI (Reserve Bank of India) understand that the more they squeeze liquidity by raising interest rates, it raises returns on black investments even higher. If our country can bring down black element out of property, rents will fall, property prices will fall,” said a commentator.

The home-buyer, however, is at a loss. The Budget came as a flop, and a recent Crisil report says that prices of steel and cement will go up, which will probably be passed down to the end-user. And then, there is the proposal to hike on leave-license, which is going to make rentals expensive. There are some who expect matters to improve.

Pankaj Kapoor, MD, Liases Foras also had echoed similar thoughts. “The high prices are not fault of only the builders. The hike in stamp duty was uncalled for and it is too revenue-centric and indicates a short term vision.” Read Maharashtra Stamp duty hike: “Neither can you afford to own a home, nor take it on rent”

However, as most experts say, one can buy a home any time. “You never know what will happen next. And honestly, there is little evidence to suggest that customers have waited for better home loan or price options when they have to buy a home—because it is a necessity. So if you want to own a home, there is no bad time,” said an analyst.

The Sahara Group is engaged in discussions with Parsvnath to buy its commercial land near Connaught Place in New Delhi, according to sources. ICICI Bank is also among the contenders for the piece of land, it is learnt.

The 1.18-acre plot at Kasturba Gandhi Marg was bought by Parsvnath in 2008 for about Rs 200 crore, with the aim of constructing a retail-cum-office complex. But the realtor is now looking to sell it to cut mounting debt, currently at Rs 1,300 crore.

Although the Parsvnath management is looking for a price of Rs 700 crore, the interested parties are ready to sign a deal at Rs 600 crore, sources said. Property consultant Jones Lang LaSalle is advising Parsvnath on the deal.

Pradeep Jain, chairman, Parsvnath Developers, did not respond to repeated calls and e-mails. Mails to Sahara spokespersons did not elicit any response.

An ICICI Bank spokesperson said, “ICICI Bank has no plans to acquire this property.”

According to sources, ICICI is exploring the possibility of constructing a corporate house in the locality in partnership with Parsvnath, without acquiring the land.

Earlier, as part of its fundraising exercise, the company had entered into various deals with private equity funds.

In January 2011, Parsvnath signed an agreement with SUN-Apollo India Real Estate Fund LLC for an investment of Rs 100 crore in its premium residential project at Ghaziabad—Parsvnath Exotica. SUN-Apollo had acquired 49.9 per cent stake in the project SPV.

Then, the company sold a minority stake in Delhi-based residential project Parsvnath La Tropicana to JP Morgan for about Rs 150 crore. Through the deal, the previous investor, Red Fort Capital, made an exit. The company had plans to construct an office complex at Connaught Place along with the PE firm.

According to realty experts, demand for land at prime localities has risen as corporate houses look to move their headquarters to such locations.

Anuj Nangpal, director-investment advisory, DTZ India, a real estate consultancy, said, “Organisations are increasingly signaling their arrival or resurgence by moving their presence into the centre of metros. The branding benefit of such ownership of prime real estate far outweighs the costs. Further, employees are also increasingly assessing their jobs and future basis of their office infrastructure and the pride in occupying prime real estate clearly impacts long-term retention.”

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.

Announcing this at the ASSOCHAM National Conclave on Threat Before Real Estate Sector – What are Solutions? held here today, Housing & Urban Development Adviser in Planning Commission, Mr. Harish Chandra also informed that the Cabinet Secretary has already convened a meeting of all States to seek solutions to revive stressed sectors including that of real estate, without specifying the date for the meeting. He, however, added that the mid term appraisal of Planning Commission will now take place immediately after conclusion of forthcoming Parliamentary Polls.

The new schemes will be unfolded during the forthcoming mid-term appraisal exercise of the Planning Commission even at the cost of deficit financing for which the Commission will enter into series of consultation with industry association like ASSOCHAM, said Mr. Chandra.

According to him, in its recent exercises, the Planning Commission, the RBI and the Finance Ministry have jointly announced series of measures to rebuild confidence in Indian economy and many more such initiatives could also be announced by the Commission after concluding the proposed mid-term appraisal, hinting at further lowering of interest rates for affordable housing.

In the meanwhile, Chief Executive Officers of Omaxe Ltd., Raheja Developers, Pioneer Urban Land & Infrastructure, Jones Lang LaSalle Mehgraj that participated in ASSOCHAM organized conference on Real Estate sector, collectively raised their voice, opposing foreign direct investments in real estate sector.

CMD, Omaxe Ltd., Mr. Rohtas Goel who heads the ASSOCHAM Real Estate Committee said that FDI’s in real estate would neither increase supply and demand for affordable housing. Their entry into it will enhance and shoot up the prices of land and therefore, real estate FDI’s should be discouraged as this will pose a serious challenge to affordable housing.

He demanded that the present model on which real estate sector currently stands crippled, needs to be changed and sought that in its stimulus packages of Rs.40,000 crore for infrastructure development, Rs.10,000 crore should exclusively be allocated for real estate sector as subsidy so that affordable housing becomes a reality.

Mr. Goel said that he has decided to offer affordable housing to people for which the first site identified is that of Indore and subsequently this initiative will spread in other parts of the country like Chandigarh, Ludhiana, Jaipur etc.

Speaking on the occasion, Mr. Navin Raheja, Managing Director, Raheja Developers and Sr. Member of ASSOCHAM Real Estate Committee also opposed FDI’s entry into real estate as it would lead to shooting up of land prices and hardly provide for affordable housing.

According to him, the real estate which is currently under stressed would come out of it in next 2-3 months as developers would have to build houses for all stake holders to stay and survive in the business.

Among others who spoke on the occasion demanding another Stimulus package for real estate sector include ASSOCHAM Secretary General, Mr. D S Rawat, Ex-CMD HUDCO, Dr. P S Rana, Mr. Pankaj Renjhen, Managing Director- North India, Jones Lang LaSalle Mehraj, Mr. Kuldip Chawla, Vice President, Red Fort Cappital and Mr. Shashikant Arora, President, Association of Certified Realtors of India.

The price cut, if implemented by the country’s builders will also push sales higher, especially of the affordable category, property consultants said.

”Many developers will come down on their asking rates after being saddled with unsold stock beyond their ability to hold on,” added Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM).

Property prices in the key cities have more than doubled in the past few years helped by a boom in the stock market and a spurt in salaries of home buyers. The subsequent measures of the Reserve Bank of India to cool the overheated economy and a sub-prime crisis coupled with a credit crunch, has tempered growth prospects in the country hurting sales of property developers.

The benchmark sensitive index, the Sensex, has dropped more than 60% from the beginning of the year, eroding much of the investors’ wealth and RBI has increased repo rates by 150 basis points till September this year to curb inflation.

“If you take same time next year, there will be better volumes at lower prices than what they are today. Buyers will be tired of waiting and all the developers realise that price cuts are necessary across the board,” said Pranay Vakil, chairman of property consultancy Knight Frank India.

To boost sales, property developers have been forced to cut prices of real estate but buyers are still adopting a “wait and watch” stance as many feel that even the lower rates continue to be unaffordable.

Property prices in Gurgaon, Noida in the National Capital Region (NCR) have fallen by 25-30% while Mumbai’s distant suburbs have seen 15-20% drop in prices. Now property consultants foresee further price correction of 25-30% in 2009.

“By the middle of 2009, developers will loose holding power and cut prices sharply. Cuts will follow big time after elections,” said Ambar Maheshwari, director of DTZ, an investment advisory.

Experts say that developers are likely to focus on sub Rs 20 lakh flats due to huge demand for such flats and the government’s stimulus package for Rs 20 lakh home loans.

“Earlier, developers thought that there is latent demand for premium homes, but in the current slowdown, that perception has changed. There is always demand for Rs 5 lakh-Rs 15 lakh homes and developers will look towards that,” Maheshwari said.

Unitech, the Delhi-based property major, has applied to the Haryana government to develop houses in the Rs 7 lakh to Rs 15 lakh range in Gurgaon. These are high-density, four-storied buildings in the 450 to 800 square feet range.

“Affordable housing is the new mantra for developers now because it is much easier to get loans below Rs 20 lakh,” said Raminder Grover, managing director, Homebay Residential, a subsidiary of Jones Lang LaSalle

India’s central bank counts loans of Rs 30 lakh and below given by lenders to home borrowers as priority sector lending. The classification means that banks can also access refinancing at concessional rates and fulfill norms of directed lending.

The Union government is also expected to promote low-cost housing in its stimulus package for the economy to be announced Saturday. It is expected to give some relief in interest rates for low-cost housing for loans not exceeding Rs 10 lakh.

“The slump in demand in the real estate can be reversed if we provide affordable housing in the range of Rs 20 lakh to Rs 30 lakh. Unitech’s new projects will factor in this and we intend to reduce the ticket size to make the houses more affordable,” said Ramesh Chandra, chairman, Unitech.

The country’s largest listed realtor DLF, on the other hand, is focusing mainly on mid-income, rather than low-income, housing in the Rs 2,700 to Rs 3,000 per square feet bracket, a company official said. The company has sold over 2,600 apartments in this segment in the last six months.

Smaller property companies are not far behind. For instance, Delhi-based property developer Falcon Realty Services has launched apartments priced at Rs 5.5 lakh at its Gulmohar Woods in Global Eco-City near Delhi.

Mumbai-based Matheran Realty launched houses priced between Rs 3 lakh and Rs 7 lakh category in Karjat, nearly 100 km from Mumbai, and is looking to launch similar projects in the central and western suburbs outside Mumbai.

Another Mumbai-based realtor, Sunil Mantri Realty, is launching a housing project in the bracket of Rs 5 lakh to Rs 15 lakh in Gwalior, Madhya Pradesh, in February next year. The developer is also launching projects in the Rs 10 lakh to Rs 15 lakh segment in Sholapur in Maharashtra, Mumbai and the outskirts of Bangalore next year.

Other property majors such as Omaxe and Puravankara have set up separate companies to launch the affordable housing projects. Omaxe has set up National Affordable Housing & Infrastructure Limited (NAFHIL), in which it recently divested a majority stake, and Puravankara has set up Provident Housing.

Matheran Realty saw nearly 66,000 aspiring home-buyers applying for 3,000 apartments to be handed over in mid-2009 in Tanaji Malusare City. The realtor sells houses here at Rs 1,000 to Rs 1,400 per square foot even as it spends Rs 1,200 to Rs 1,300 per square foot on land and construction.

The developer is looking to sell shops and other commercial properties at Rs 5,000 to Rs 6,000 a square foot by way of cross-subsidies on the housing project.

Pravin Banavalikar, chief executive officer, Tanaji Malusare City, Matheran Realty’s Karjat project, said: “There is no dearth of demand for houses below Rs 10 lakh whether it is boom or recession because there is a huge demand-supply mismatch.”

Planning Commission estimates suggest that India has a shortage of 24.7 million homes and economically weaker sections and low income group (LIG) segments account for 99% of that gap. The shortage is expected to touch 26.5 million houses by 2012.

The investment required to bridge the gap at the beginning of the eleventh five year plan was pegged at Rs 1,47,200 crore and is expected to rise to Rs 2,14,100 crore by 2012.

Though margins in low-priced apartments are lower than in mid- and premium housing, companies are eyeing higher volumes to drive the business. Low-cost houses have a margin of 10 to 15%against margins above 25% for higher-priced housing.

In its report titled ‘UK-India Cross-Border Investment’, JLLM, which will market Berkley’s units in India, said that Indians could crack up 20,000-30,000 residential properties in UK over the coming ten years.

The property consultant said this is the correct time to invest in UK as house prices are expected to fall by twelve percent this year and by a further 6-8% in 2009. However, they are likely to go up by 8-9% per annum during 2010-13.

Raminder Grover, managing director, Homebay Residential (a JLLM subsidiary), said, “UK-based developers are highly interested in attracting investors from India. They are aiming not only the high-net individuals, but also the upper-middle segment. The UK represents a very amenable market for Indian investors the British pound is far more stable than the rupee, there is far greater clearness in the UK real estate market.” He said UK tenants sign long leases of up to twenty five years and their long-term income generation capacities are really stable, not to forget the London Olympics in 2012.

The number of Indians with financial assets of more than one million dollar is likely to grow to 400,000 from the current 123,000, with total wealth of $1.7 trillion, the broker forecast.

Their investments in the UK may be limited by India’s $200,000-a-year ceiling on capital outflows for resident Indians, it said.

“Indians could potentially own 20,000-30,000 UK residential properties over a 10 year horizon and UK-India cross border Investment is all set to grow to 10-15 billion pound by 2018,” the latest Jones Lang LaSalle’s report titled ‘UK-India Cross-border Residential Investment’ said.

The report further highlighted the fact that with no restrictions on Indians investing in UK residential property and strong house price growth, the market would continue to see the current investment size of 0.6-1.2 million pound grow exponentially over the next decade.

Indian investors are particularly interested in UK property market as it offers greater transparency, long leases of up to 25 years, long-term income generation capacities are stable, the London Olympics in 2012 being in vicinity.

Beside steel czar Laxmi Mittal, who has bought a number of homes in the past couple of years, there has been a growing tide of lower-profile purchases by Indians.

The combined value of the three properties owned by Mittal family on London’s Kensington Palace Gardens is said to be valued at about 440 million pounds.

The number of such Indians with the propensity to invest in the UK residential market is likely to increase to 583 million by 2025 coupled with another 400,000 High Net Worth Individuals (HNWIs) by 2017.

This has led to the growth of organized retailing, which is changing the way shopping is done, particularly in big cities like Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad among others.

The most visible symbols of organized retailing are the swanky malls, which have mushroomed in most of the large and medium size cities across the country. In cities like Delhi, with extreme weather conditions, malls have become a runaway success.

Even at the height of summer season, when temperature soars up to 42 degree Celsius, shopping is no more an unpleasant exercise. Instead, these malls in various part of the city have made it a pleasurable exercise, in fact, it has become a way to relax and chill out in an air-conditioned environment!

This mall phenomenon had given rise to apprehensions that high street shops were heading for an ignominious death. But, a recent survey done by Jones Lang LaSalle Megharaj, a global real estate consultancy firm, found that despite rise in number of malls in a city, high street shops continue to flourish.
The survey suggests that the presence of new malls within an established high street increase the retail appeal and attractiveness of the entire stretch. It allows malls and high streets to equally benefit from a growing footfall base of consumers flocking to such a street where they can find a combination of both high street retailing and climate controlled shopping in new malls.

The report says, “Though it is early days, the initial evidence does suggest the fact that departmental stores as well as malls and high streets can indeed play to each others strength.”

The report said that the anecdotal evidence of the complementarity of high streets and malls comes from the few instances that were found in Bangalore, Chennai, Hyderabad, Kolkata and Pune where informal feedback from retailers along the shopping high street as well those in the operational malls suggested that both of them are benefiting from the presence of the other.

A senior consultant with the firm Tanaji Chakraborty says that the high street shops, which were facing tough times some time back, have come back with a vengeance. Particularly, in the fully developed area, where further expansion of retail outlets is not possible, the existing high street shops have regained their charm.

In the last couple of years, since consumerism is on the rise, these high street shopping areas are getting revitalized either by the association of shopkeepers or by municipal corporations to enhance the consumer experience.

This results into augmentation of retail attractiveness. The report said that revitalization of streets globally is a very serious issue and often this is linked to the issue of regeneration of entire region. Typically stakeholders of streets, retailers, property owners, mall developers, development authorities, local council, all collaborate to map out a regeneration strategy with a view to improve the economic and image impact of the street.

Report said that this movement is at a very nascent stage, though undoubtedly as economic interest refocuses on prime inner city areas, which typically have superb locations but suffer from run down image , there would in future initiatives regenerate to unlock value.

Connaught Place in Delhi has been regenerated by NDMC. The process to beautify its Central Park has already been completed by the municipal authority. The walk-way and the main building are now also being done up by the concerned authority.

Similarly, Khan Market has been revitalized by the association of shopkeepers. The report said that with the possibility of shopping street revitalization becoming an increasing reality across markets in coming years, the retail pitch of high streets is expected to be enhanced in future, thereby allowing for inclusive growth of retail along these prime corridors in Indian cities.

This is also evident from the fact that rentals of high street shops have doubled in the last couple of years. The rentals in Khan Market, which was quoting at around Rs 650 per square feet per month in 2006, has gone up to Rs 1,300 per square feet per month in the first quarter of 2008.

The report said that the increase in prime shopping street rents have almost doubled across the board, with the rise in rentals ranging between 30% and 100% over the last few years. Rental value growth over the years in other leading cities has been no less impressive.

At such levels, the report said, some of the top-rung Indian shopping streets, especially the likes of Khan Market and Connaught Place in New Delhi, and Linking Road in Mumbai are slowly but steadily creeping into the league of expensive high streets of the world. However, Chakraborty said that this is not a very healthy sign as it suggests the lack of availability of good infrastructure and quality retail space in the country.

Chakraborty said that the development of high street mall takes time as it evolves with the growth in the population in the area. On the other hand, malls are developed on standalone basis. They attract customers from far-flung areas also.

Therefore, in most of the new townships, developers raise malls to provide shopping infrastructure to the inhabitants of the township, while at the same time they attract customers in the nearby catchments to survive in the initial years.

But, over a period of time, the high street shop will also come up and flourish in the same township. Therefore, he said that it is not either mall or high street shopping center but it will be both that will flourish as the economy will grow in the country.

And while the credit crunch took its toll in Europe and North America in the second half of the year, pushing down global transaction value by 8 % from the second half of 2007, investment in Asia surged 22% in the last six months.

Data from Jones Lang LaSalle shows transaction volumes globally in the first five months of 2008 were 40% lower than in the same period last year, dragged down by weaker activity in Europe and the United States.

Aniruddha Joshi, executive director, Hirco Group, concurs, “The real estate sector is expanding beyond the basic bricks and mortar. Demand for real estate in growing segments like retail, hospitality, healthcare, biotech, ITES, etc, is driving the sector. In the same way, SEZs (Special Economic Zones), townships, and IT parks have created demand for skills beyond just the conventional fields of architecture, and civil and electrical engineering, to specialised knowledge on infrastructure and urban planning. People with specialisations in environmental aspects are also preferred as developers and consumers become increasingly aware of ‘green’ issues.”