Indian Property News on 'January, 2007'

Property Prices in Navi Mumbai Gets Dearer

Property in Navi Mumbai has been more affordable than in Mumbai, since the City Industrial Development Corporation, (CIDCO), established the world’s first planned city in the 1990s. Residential and commercial development has been steady over the years, offering a pleasant neighborhood and good infrastructure.

Rates in Navi Mumbai range between Rs. 2100 to Rs.3500 per sq. ft in Vashi for residential properties, and Rs. 2800 to 4800 for commercial spaces. Panvel averages between Rs.750 per sq. ft. to Rs. 2100 per sq. ft. for residential apartments, depending on the quality of the project. Commercial property is available between Rs. 1200 and Rs.3200 per sq. ft.

However, with the announcement of the ‘greenfield’ airport in Kharghar and the Navi Mumbai SEZ project extending from Dronagiri, Kalamboli, Ulwe to JNPT, rates are beginning to climb. CIDCO, which owns most of the land in Navi Mumbai, initiated the hike with a sale of property at Rs 70,000 per square metre as against Rs 27,000 a year ago. New Panvel, Kalamboli and Kharghar have seen significant appreciation in the last few weeks too.

Located on 950 acres of land, the airport complex will house hotels, malls, multiplexes and other services. The Navi Mumbai Airport will be developed jointly with private participation. Established builders are expected to make the most of this opportunity, as 470 acres will be dedicated to these services.

Property rates in this satellite city could well overtake Mumbai, given the improved infrastructure and lifestyle it offers.

Real Estate Trends in Ahmedabad

Gujarat’s healthy economy finds expression in all its cities, bustling as they are with activity on all fronts. Ahmedabad, being primus inter pares among other cities in Gujarat is recognized as one of the fastest growing Tier II cities in the country today

The very strong connections of NRI to Ahmedabad, and the Gujarati’s spending power and entrepreneurial skills have encouraged a healthy movement in real estate prices of late.

Though still at a very nascent stage, Ahmedabad is slated for steady growth in the next few years. Residential property ranges between Rs.600 in Ahmedabad North to over Rs.1200 on Ring Road currently. Builders like N.G Developers, Navratna, BGP Builders and Saumya Constructions are catering to the globe-trotting Gujarati with quality residential apartments.

Cashing in on the deep pockets of the local population, major builders have laid out commercial projects for the city to accommodate retail malls and luxury hotels. Niho’s Scottish Mall is coming up on the main Ashram road on 4.5 lakh sq. ft area at a cost of Rs.180 crore. An NRI-funded exhibition-cum-convention centre at Ahmedabad at a cost of $9.2 million will further promote commercial activity in the city.

The State Government’s vision is to develop Ahmedabad into a world-class city through reforms and infrastructure development. Its mission to make the city clean, liveable, productive and self sustaining has translated into the setting up of IT parks in and around Ahmedabad.

DLF has chalked out 30 acres for the city’s IT park, while the road to Gandhinagar will see another IT SEZ project by K.Raheja Corp coming up at a cost of Rs.8,000 million. Three projects have been identified for urban infrastructure development in the city including the Sabarmati riverfront project and integrated public transit system.

With property available at very competitive rates, Ahmedabad is a sound place for real estate investment. The progressive policies of the state government in pushing for SEZs, an organized workforce, considerable investment from NRIs, and the enterprise of the local population will sustain the upward trend the city is experiencing.

The following chart sheds considerable light on the property prices of both the residential as well as commercial units in Ahmedabad:

Ahmedabad Property Rates

** Property Rates are subject to change due to market vagaries and may differ by virtue of location and project, depending and facilities and other factors.

Retail expansion triggers land buying by builders

Real estate builders are on a massive land hunt to accommodate the booming retail market across the country. Mumbai is expecting retail property rates to go up by another 10 to 15% by the end of the fiscal year 2007.

Not to be left out in the race, established real estate developers in land-starved Mumbai are scrambling for commercial space in the suburbs. Nirmal Lifestyle, apart from their expansion project in Mulund, is looking for 7 to 8 lakh sq. ft of space for another outlet in Andheri. The Runwal Group has recently acquired land in Andheri for an ‘RMall’ housing a multiplex as well.

K Raheja Universal is in the process of building a 2 million sq. ft. mall in Vashi and another Mumbai suburb.

Looking beyond Mumbai is KSL Realty and Infrastructure Ltd, for retail projects spread over 5 lakh sq. ft in other towns of Maharashtra, Gujarat, Himachal Paradesh, Dadra and Nagar Haveli.

Real estate heavyweight Hiranadani Constructions is focusing on Mumbai’s suburbs of Mulund and Thane. Property rates in the city stretching from Colaba to the Bandra Kurla Complex are out of reach, so Andheri, Goregaon and Kandivili, where a substantial middle class population resides, are better positioned for retail investment.

Real estate builders are keen to establish a countrywide presence, and are therefore adding to their land assets with speed. Business prospects for these developers are bright, with the WalMart-Airtel tie up, the expansion of Reliance Retail, and perhaps a joint venture of Carrefour with Mukesh Ambani too in the pipeline.  The AV Birla group, the Tatas, the Wadias of Godrej are reported to be drawing up plans for retailing as well. Reliance Retail recently hit the headlines with the purchase of 8 commercial properties at the DDA auction for Rs. 986 crore

The Indian consumer will be spoilt for choice with the advent of trendy supermarkets vying for footfalls in the next couple of years.

Ranchi property to be more affordable soon

Residents of Jharkhand’s state capital Ranchi can look forward to paying less for apartments and offices in the city, once the Ranchi Regional Development Authority (RRDA) clears the 450 proposals for residential and commercial projects piling up on its tables for the last one year.

The RRDA is expected to speed up the approvals, and the Real Estate Developers Association of Jharkhand is hopeful that rates would decline marginally by Rs.100 to Rs.200 per sq. ft. Rates in the city range between Rs. 900 to Rs.1600 per sq. ft.

The city’s periphery is the easiest on the pocket, as areas like Hatia, Booty More, Piska More and Namkum do not fall under the jurisdiction of the RRDA, and real estate developers can get by with a formal consent from the local circle office.

Doranda, Kanke Road, Lalpur Chowk, Burdwan Compound and Hinoo enjoy better rates of approximately Rs. 1500 per sq. ft.

The pricing of flats in Ranchi is far removed from its construction costs, reveal property developers based here. High conversion rates of 40-50% comprise a high component of the total paid by the buyer.

Of course, bribery costs are also embedded in the total cost of the apartment, which is Rs. 20 per sq. ft for residential property, and Rs. 30 per sq. ft. for commercial space.

Ranchi has been the commercial capital of Bihar since independence, and associated with landmark institutes like MECON, HEC and the Birla Institute of Technology. Real estate player Parsvnath Developers Ltd will soon develop a city centre in Ranchi for Rs.400 crore on 10 lakh sq.ft area.

Modern construction of residential projects is on the rise, and RRDA’s much awaited approvals will see an upsurge in construction activity in the city.

Retailing – King Size

India’s metros are in the global race for bigger and bigger retail malls, with Delhi –NCR leading the way. Of the total retail malls under construction in the country today, 30 are over a million sq. ft in area.

India’s real estate developers are chasing the world-wide trend for large malls. India’s largest upcoming malls include the

• DLF’s Mall of India in Gurgaon, on 3.6 million sq. ft. Apart from retail outlets and food courts, entertainment areas and town squares will be embedded in this project
• Omaxe Constructions has a ‘Connaught Place’ coming up in Noida on 1.9 million sq. ft.
• The 1 kilometre long Ambi Mall in Gurgaon , on 1.8 million sq. ft.
• DLF Mall in Sector 18, Noida on 1.5 million sq. ft.
• Unitech’s Great India Place on 1 million sq. ft of retail space
• 3 malls in Vasant Kunj with a combined corridor, totaling 1 million sq. ft
• TDI’s 10 lakh sq. ft retail space in Mohali
• TDI’s 5.5 lakh sq. ft. in Sonepat and,
• SVP’s 4 lakh sq. ft mall in Mohan Nagar, Ghaziabad.

DLF has plans for larger malls on the anvil even in Tier II cities like Ahmedabad, Baroda and Jalandhar. Mumbai has 8 upcoming projects for large malls, covering 1 million sq. ft. Thane, Dahisar and Ghatkopar will see these malls coming up in their neighborhood.

Retailing is slated to be the next sunrise industry. Standing at only 3% today, its prospects for further expansion are very bright. However, these large format malls need to be located close to high catchment zones to be more viable, and encompass more services to attract visitors. The entry of hypermarkets like Wal-Mart and Reliance has necessitate the need for expansive outlets springing up in India, and it is these stores with wide buyer appeal that will sustain footfall in the malls.

Limited FSI adds to land scarcity

If India’s skyline sans skyscrapers reflects a growing economy, it has also at the same time added a few limitations as it is by the low Floor Space Index (FSI) restrictions imposed by municipal authorities of major metros.

With land already scarce, and acquisition quite an issue, the low FSI is compounding matters for real estate builders across India.

The Floor Space Index (FSI) is the ratio of the total floor area of buildings to the area occupied on the ground. On an average, most Indian cities maintain the FSI between 1.33 and 3.75, but this is sadly inadequate, complain builders, as it does not allow them to spread their costs on the plot of land.

Land prices in India constitute almost 50% of the cost of the property, whereas it accounts for only 15 -20% of project cost overseas. In New York where land rates are steep, the government allows a high FSI, enabling real estate developers to cover their costs and maintain their profits.

India needs to revise its FSI policy in view of steep land costs, and the commercial and residential needs of a growing economy. Restricting vertical growth directs all construction activity towards luxury projects, such as hotels, to cover the land cost. A trend towards multipurpose use of luxury construction to work around the FSI restrictions has been observed.

More mixed land use in Indian real estate has recently been noticed as fallout of the low FSI and high land cost. Hotel complexes in Bangalore and Noida are found to be housing retail outlets under the same roof to cover their costs.

Hyderabad recently hiked its FSI to 5 to accommodate the severe space crunch felt by real estate builders. In Mumbai, the FSI is the lowest in the world, considering its size and population. This has led to stretching of the city to far flung suburbs, straining the infrastructure further.

The FSI policy also needs to look into bringing in variations within the city, rather than maintaining a flat ratio throughout. The crunch is more acute in the commercial space category, and a higher FSI would definitely give a boost to the Indian real estate industry.

50 lakhs additional housing units in Delhi Master Plan

The congested living conditions in many areas of Delhi may have made many people to sit up, and think about relocating to the adjoining NCR cities of NOIDA and Gurgaon. However, the proposed amendments in the Delhi Master Plan – 2021 may make you think otherwise. The capital city is in for a vertical expansion if the new provisions in the draft Delhi Master Plan are approved.

The draft recommends a revision of height restriction on buildings to 15 meters from the existing 11.5 meters. The FAR, which is the ratio of gross floor area permitted for construction on a site to its area on the ground, expressed in number of housing units, is also likely to be raised .The draft MPD 2021 aims to increase the FAR to 350 for plot sizes of 175 to 200 sq meters.

This is likely to ease the housing shortage the city is facing today. 15 lakhs additional units will be available if 1,500 illegal colonies are regularized with revised building norms.

Envisaging a total population of 2.3 crore in Delhi by 2021, city planners are gearing up to provide for 90 lakhs more homes. Half of these are proposed to be accommodated in the already developed areas of the city, while the rest would move towards new localities in rural northwest and southwest Delhi.

Old Delhi, Karol Bagh and about 600 unauthorised colonies are under the scanner for re-modelling. If the FAR is increased to 400 in these areas, 33.33 % of the plot would be utilized. Multi-storied construction is being considered for these localities.

The draft MPD allows for 20 floors if 20% of the land is being used, with real estate builders providing for adequate infrastructure like roads, water and sewage treatment plants and parking space.

High rises by private builders in new pockets of Delhi in Dwarka, Najafgarh, Asola and Narela would also be permitted, provided they meet clearance from air safety regulations, fire safety and traffic movement norms.

If the Master plan does get notified with these recommendations by the end of the month, the satellite townships of Gurgaon and Noida could be in for stiff competition from the capital for real estate investment.

Is your Home Vaastu-compliant?

You are emotionally disturbed, with illness and financial problems at home. At work, you’re losing out on opportunities, and your efforts are not taking your career to where it should be.

Ever thought of VAASTU? Applying vaastu principles to your home could just about bring greater equilibrium into your life.
A complete vaastu solution can be provided only by an expert. Visit one with the right credentials and references. Here’s a basic guide however, which you can follow to derive the maximum benefits from India’s ancient science of design and architecture.
To make your home vaastu-compliant, do check out the following:

• The main entrance to a house is an active area and believed to allow life energy to enter into the premises which is further known as ‘Prana’in Vaastu. ‘Prana’ or life flows into a home from the main entrance –maximise the positive flow by having the main door in the North-East, East or North direction.
• The perfect shape for rooms as per vaastu is the square, symbolizing a strong and stable unit, and protecting it from external influences.
• ‘Agni’ symbolizes to source of heat in Vaastu that resides in the South East, so the kitchen ought to be located in this corner for maximum benefit.
• Signifying calmness and quietude, the South West is ideal for the master bedroom.
• The North Eastern corner is reserved for the prayer room as this direction is the source of power.
• Living Room or the dining room is best in East, North & North-east directions.

Furthermore, do not have:

• Any kind of obstruction like a beam, pillar or a wall in the ‘Brahmasthan’ or the central space of the home. It negates energy flow.
• Bedrooms in the south-eastern and north-eastern corners of the house.
• The children’s bedrooms in the southwest or south.
• Dark colors in the study room. Ideally, they should be yellow or white or pink
• Arched doors and windows –they distort the flow of energy in a house.
• Pictures depicting scenes of war, negativities of life like sorrow, struggle, violence (including that of wild beasts), tragedy and of calamities.

If it’s a fresh start you want to make with a new home or office, keep in mind that

• South-West, South and West directions are vaastu-perfect for a plot
• The ‘Gaumukhi” plot is an ideal form which means a plot which is wider in back than the front (like a face of a cow).
• The square or rectangular shape which has the main entrance in the mid-west or north is just right.
  A plot facing the road from all sides is propitious.

A flawless, vaastu-compliant example of architecture is the famous Balaji temple at Tirupati, and its prosperity is testimony to the tenets of vaastu. Experiment with a few principles of the science – it could change your life, for the better.

Vasant Vihar Rentals Touch New High

New Delhi’s Vasant Vihar, the choice residential area for diplomats and expatriates, set a new record in rentals, with its latest deal at Rs.114 per sq. ft. The independent bungalow stands on 14,400 sq.ft and has been leased by an African consulate in India

Though current rates are Rs.45-70 per sq. ft in the neighborhood, this bungalow fetched more than twice the rate. The rent for the month works out to Rs.16.5 lakh, and Rs. 1.98 crore for the year. The deal also includes an advance of 2 years’ rent at the time the deal was signed.

Vasant Vihar is an up market locality located in South Delhi and is relatively close to the international airport. The diplomatic enclave in Chanakyapuri is conveniently located for the diplomats, and Connaught Place, the nucleus of the city, is a 20 minute drive from here. The Basant Lok market is a popular hangout with youngsters and expatriates with its multi-national chain stores, restaurants and newly-opened lounges

Rental rates in Delhi average between Rs. 2 lakh to Rs. 6 lakh a month, depending on the location of the bungalow. In Mumbai, rents per sq. ft for bungalows are higher, but the time duration of the lease is only for a few weeks, as they are generally hired for film shoots by producers.

This rent deal brings to light the shortage of independent bungalows available for expatriates and diplomats in the capital. They prefer to live in independent bungalows instead of single floors for security reasons, and homes to suit their lifestyle are hard to come by. Well, till an alternative is found, Vasant Vihar landlords can make hay while the sun shines!

Commercial Real Estate on the Fast Track

India’s premier IT city Bangalore continues to occupy the most commercial space amongst all other metros in the country. According to real estate consultant Cushman and Wakefield, of the 40 million sq. ft commercial space absorbed in the country, Bangalore accounts for 33.75%, or 13.5 million sq. ft.

Chennai takes second position with 6.5 million sq. ft commercial space absorbed in 2006.
Close on its heels at 6.4 million sq. ft. in 2006, as against just 3.2 million in 2005, the NCR recorded the maximum growth – in fact the area doubled in a year’s time. In 2007, 3.5 million sq. ft commercial space will be added, taking the total to 9.9 million sq. ft. Rental values increased with this increased space, going up by as much as 60%. The IT and ITES sector have led the growth in Delhi, Noida and Gurgaon..

The country’s financial capital Mumbai occupies cramped commercial space on 5 million sq. ft. area, followed by Hyderabad at 3 million sq. ft., Pune at 2.6 million sq. ft. and Kolkata at 1.5million sq.ft.

Bangalore has the largest number of real estate developers, which partly is the reason for more commercial space being created and let out. Commercial spaces include the IT and ITES corporate office segment and the non-IT and ITES corporate segment. The latter comprises insurance, banking and corporate houses.

New commercial spaces are driven by the expansion in the IT industry, and the booming retail market. The total retail space in India is set to go up to 90 million sq ft in 2007, according to a report ‘Malls of India’. More hypermarkets, more franchises, and a spreading out to Tier II cities, as per the report on retail markets in India by Ernst and Young, will see the retail space segment leading the way for commercial property in 2007.