Photo by nancyarora2020The nationwide poll named ‘Realty Trends 2010’ for metros and Tier II cities across the country, which saw participation from over 4,800 property seekers consisted of Majority of the respondents belonging to the age group of 26- 35 years.

The country capital topped the charts with 34 per cent while Mumbai got 28 percent votes. Bangalore received 11 per cent votes in its favor with particularly south Bangalore being preferred the most.

With the introduction of budget 2010 the economy is improving and property prices are stabilizing, this is attracting the investors who restrained from investing last year to jump into the market with full swing.

The survey showed a large number of people looking to purchase a house want it for self-consumption. The figures tell that 67 per cent of the national property seekers want to buy a house for themselves while only 23 per cent are looking for property options from a long-term investment perspective. Short-term investors have only 10 per cent survey takers.

Surely the Indian Real Estate sector is on a roll.

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.

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.

With the launch of Milestone Ecofirst Advisory Services (MEAS), for the first time in the country, a real estate fund house will be offering its invested companies/projects specialized consultancy services for eco-friendly development.

V. P. Arya, Managing Director Milestone Capital Advisors told“We want to ensure that most of the development (approx. five million sq ft) being funded by Milestone across the country would be eco-friendly and meet global norms in sustainable development,”.

“MEAS will not just offer its services to developers in metros, but for the first time in India offer world class green building consultancy to developers in Tier II and Tier III cities”, Mr. Arya added.

Milestone has invested in over twenty five projects across Tier II and Tier III cities, including residential, commercial, mixed-use projects and townships.

Initially MEAS will provide consultancy to projects being funded by Milestone and later extend the service to third party developers as well.

India has emerged as the hottest new favorite destination for green buildings and ranks fourth after US, Australia and Canada in the amount of area under green construction. As per CII-Indian Green Building Council (IGBC), one hundred forty seven million square feet of green space has been registered in India to date across a total of two hundred thirty nine projects. IGBC is aiming one billion sq ft of green footprint by 2012.

Milestone has so far raised over Rs.2, 400 crore from the domestic market and has the highest deployment ratio in the sector having so far signed investment deals worth Rs.1,800 crore.

Milestone presently is in the process of raising Rs.500 crores for its domestic fund “Milestone Domestic Scheme II”.

From luxury to leisure, real estate companies such as Brigade group, Omaxe Ltd, Prestige group, Sobha Developers Ltd and Value Design build Pvt. Ltd, are entering into the leisure segment to build health resorts and spas in the backwaters of Kerala or amid the plantations of Chikmagalur in Karnataka.
Mr. Vineet Varma, chief executive officer, Brigade Hospitality Services Pvt. Ltd said, “The huge demand and scope of business in the leisure and hospitality segment are the major drivers for builders like us to get into this vertical,” Brigade Hospitality Services Pvt. Ltd is a fully owned subsidiary of Bangalore-based Brigade group. “Also, there’s only so much you can do in the residential and commercial sectors and new verticals like these complete our portfolio.”
Brigade group is coming up with a Rs100 crore premium health spa resort in the quiet coffee plantations of Chikmagalur, about a four-hour drive from Bangalore.
While the group will develop the property, it has teamed up with Singapore-based hospitality brands Banyan Tree and Angsana to operate it.
The leisure segment has attracted not just top-of-the-line developers but also new entrants.
Value Designbuild, a five-year-old real estate company based in Bangalore, is also set to develop a spa along with leisure homes.
Another Bangalore company, Sobha Developers Ltd, has a full-fledged Ayurvedic spa offering the traditional Kerala Ayurvedic massages, herbal baths in its first integrated township Sobha City in Thrissur in Kerala.
“Tier II or smaller cities offer a lot of variety for real estate development and we want to capitalize on the growing demands for our consumers. With the middle class getting richer, it is imperative to give them choices with projects like these,” says J.C. Sharma, executive director of Sobha Developers.

These jewelry chains, mostly in Tamil Nadu and Kerala, have been catching the attention of depositors from smaller investors at interest rates that are 3-5% over bank fixed deposits.

While dozens of cash-hungry companies, especially real estate, have also been offering competitive rates for deposits, investors are cautious of putting money in many of them, as they lack confidence about the safety of these deposits. But these big jewelers, though unregulated, have been able to draw investors to them because of the higher trust in them.

“People perceive investments in deposits of jewelers as ‘safe’ because there is gold involved. Also, this business is all about ‘trust’. While manufacturing companies have defaulted in the past, you would not hear of any defaults from a jeweler,” said a manager at a Kochi-based jewelry chain, which accepts these deposits. There has been no dearth of demand for such deposits because of the amount of unaccounted money present in the system, partly driven by the real estate boom across the country.

The report says if the airports are modernized according to schedule, the non-aeronautical revenues may rise from the current 35- 54% by 2015. It is estimated that rent from retail, office and hospitality will constitute nearly 45 % of the airports’ non-aeronautical revenue by 2015. The rest will come from other non-aeronautical sources like trading concessions, public admission fees and miscellaneous income from advertising, car parking, etc.

Mr. Anurag Mathur, joint managing director, Cushman & Wakefield, said,”Globally, airports derive a large portion of their income from non-aeronautical revenue sources; Heathrow, San Francisco, Vancouver and Brisbane earn as much as 50% from retail and other non-aeronautical resources. With greenfield projects in Hyderabad and Bangalore taking their maiden steps, India is soon to replicate this potential revenue-earning model.”

According to estimates, retail space accounts for 18% of the total real estate space projections for airport projects. Most of this supply is concentrated in tier-III towns and cities as it comprises tourist destinations. The highest supply is, however, expected to be in Hyderabad, which accounts for 1.8 million square feet of the total projected retail space.

The study estimates office space to be more than 50% of the total real estate space projected for airport projects. With nearly forty one million square feet office space planned, the three tier-I locations are expected to add 14 million square feet office space, whereas the five tier-II cities expect 13.5 million square feet by 2015. Tier-III locations, which include over thirty five cities, would account for around 32% of the total office space supply amounting to fourteen million square feet.

The deal is expected to value the tier-II real estate firm at a little over $1 billion. This marks Citigroup’s back-to-back deals in the domestic real estate space in the last fortnight. Early last week, the global financial giant unveiled $160 million play in Delhi-based BPTP.

Golden Gate is primarily into residential market with about 20,000 units under development totaling 23 million sq ft across southern cities such as Bangalore, Chennai and Hyderabad. The company also has substantial land holdings extending into emerging centres like Mysore and Mangalore. Besides, Golden Gate is believed to be foraying into SEZ and mixed use development.

In January this year, Deutche Bank investment unit RREEF closed $70 million transaction picking up under 10% stake in the company. The private equity juggernaut is now increasingly open to investing in tier-II or even in start-up realty firms, as the sectoral transparency issues are clearing up to an extent.

Citi’s fresh investments are coming in when it was expected that the largest banking group in the US, reeling under $18 billion write-offs due to the subprime crisis, may go slow in ploughing more money into the realty sector in India. Several global banks have booked massive losses as the financial crisis that kicked in with the meltdown in the US housing market gained speed in the last two quarters.

However, more realty firms are now opening up to private equity as their fund raising plans in the capital markets have run into trouble. For instance, several firms, including the biggest domestic player DLF, have been eyeing REIT listing on the Singapore Exchange, but are forced to delay the plan in the wake of market turbulence.

The US-based company plans to open one thousand offices through franchisee route. It would also have its own offices at fifty locations in the country to manage the entire operations.

Mr. Ajay Rathore, Century 21 India Country Head, said, “In the next five years, we plan to have 1,000 offices at pan-India level. We expect Rs 1 thousand crore revenue after these sub-franchisees get fully functional”. He told that the company would first start with the metros and the Tier I cities, followed by Tier II and III cities.

Mr. Rathore further said, “We will provide services in purchase of office, retail, residential spaces, land and IT parks. We also plan to have rental and leasing services for our customers. He further added, “To maintain transparencies and give best services to the customers, we will have our own offices. We have already set up five company offices in NCR. To manage all the franchisees, we will have about 50 offices in the country”. He also said that the company has already identified Bangalore, Hyderabad, Goa, Chandigarh and Chennai for setting up company offices.

Century 21 has more than eight thousand independently owned and operated broker offices in more than fifty countries and has more than one lakh sales agents across the globe.