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Monday, 13 Feb 2012
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Healthy Demand for
Realty Sector in 2012
Sukhraj_Nahar Group_ProjectsToday

 

Major driving factor for the Indian Realty sector is of course, the strong fundamentals of the country's economy, making it one of the fastest growing economies in the world. India is already rated as the third largest country in terms of purchasing power parity. The accelerated economic growth has brought about greater prosperity and improved living standards, and as reported India's gross national income per capita has seen astonishing growth rates since 2002, which has tripled from $423 in 2002- 03 to $1219 in 2010-11, averaging 14.4 per cent growth over these eight years. With liberalised business regulations and robust consumer growth, India has been attracting significant foreign investments in almost every sector of its economy, and Realty is not an exception.

 

On the housing front, the country is already facing an estimated deficit of about 26 million units predominantly in low-income segments. Increasing population would no doubt widen the gap between its demand and supply. The housing sector has been growing at an average of 34 per cent annually. In addition to people's aspiration to own second homes and vacation houses, there is also a significant increase in demand for premium and luxury homes from corporate executives, younger generation from HNI families, businessmen and NRIs.

 

As reported by an industry expert, the commercial real estate segment is growing in tandem with the country's booming economy. The demand for office space is driven by the influx of multinational companies and growth in services sector. Overall, on pan-India basis, the demand for office space is expected to be 180 million sq ft by 2013, with seven major cities (Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, the NCR and Pune) catering to 75 per cent of the total demand.

 

Retail sector is already buzzing with activity in urban cities and even smaller towns, which is now accelerating because of the possibilities of government allowing FDI in retail. First step in this direction has been taken on in January 2012 by a notification to allow 100 per cent FDI in single-brand retail. India has already over 200 malls with a total retail space of about 56 million sq ft. Of these, NCR accounts for almost 30 per cent. The top seven cities across India have been driving demand in the commercial retail segment with a share of over 57 per cent. NCR, Mumbai and Bangalore account for 37 per cent. The rapid growing demand for retail malls in smaller towns is also being taken into account by retailers in their expansion plans. Yet another important segment of Realty, Hospitality, has experienced a growth of 10-15 per cent last year. These developments augur well for Indian Realty.

 

Market Conditions and Realty Sector

 

Vagaries in the market place have impacted every sector of the economy at one time or the other and the Indian Real estate sector is no stranger to this phenomenon. In fact, such downturns have helped the Realty sector to do introspection, become more disciplined and get ready to meet such eventualities in future. If all risk factors are taken into account while formulating business plans, it would go a long way in minimizing any adverse impact caused by market conditions. Our plans for this year alone include launching new projects not only in Mumbai but in Pune and Chennai. In the 2nd week of January 2012, we announced in Dubai, the launch of 'YVONNE' a luxurious residential tower at Nahar's Amrit Shakti, Chandivali near Powai, Mumbai. The USP of this project is the colossal size of its apartments that not only offer a home but a lifestyle well deserved by customers. In February, we will be launching 'YVONNE' in India.

 

 

 

Sukhraj Babulal Nahar is the Founder and Chairman of Nahar Group. It is his vision that has enabled him to take a stance that is beyond bricks and mortar, which is to build homes as well as to contribute to the welfare of society with passion. Born in Bhinmal in Jallore District, Rajasthan, Sukhraj came to Mumbai at the impressionable age of 16 with a dream to create landmark structures and to fulfill his earnest desire to serve humanity. Under his able and vigilant leadership, the Group has earned significant prestigious awards and honors for its domain expertise, sound management practices and in fulfilling corporate social responsibilities. These include the Township Award at Pan-India level in 2007 instituted by Times Glory, Award for the Best Garden by Municipal Corporation of Greater Mumbai, Excellence in Innovative Marketing Award from MCHI and Project of the Year Award from Accommodation Times, Best Residential Project of the Year by CSI Awards 2010 amongst others.

 

 

'Burberry' of 20 storeys and 'Bryony' of 18 storeys are the two super luxury residential towers that would be launched at Nahar's Amrit Shakti within the next three months. Each apartment, two to a floor, will be a paean to perfection, offering a lifestyle as extravagant as its surroundings. While we have planned for our pan-India presence, we have already firmed up two luxurious residential projects, one each in Pune and Chennai, which would be launched in 2012. Our JV project of a township of 1,000 houses in the affordable housing segment at Ambernath will be completed during the year.We are focused on completing and commissioning two major projects at Nahar's Amrit Shakti by mid-2012.

 

The first one is Nahar ICSE School and the other being Medical Centre, both bringing immense benefits to the residents of our township. Similarly construction activity is in full swing at this township. Other major amenities like a Jain Temple, a Mall, a Multiplex, a Business Center, Service Apartments and Office Complex are at various stages of construction at Nahar's Amrit Shakti.

 

Views on Real Estate Bill

 

There is no doubt that the objectives of Real Estate Bill such as bringing in regulated and orderly growth through efficiency, professionalism, standardization and consumer protection, would go a long way in weeding out the unscrupulous elements. However, the bill in its current form seems to be directed solely at the developers and not at others connected closely with the sector. To cite one example, the delay in completing projects on time has solely been placed at the doors of a developer, and authorities who give permissions and approvals to the projects remain free of any such time bound process.

 

This is totally unfair. MCHI has already stated that the Bill requires in-depth study and intense interaction between the government and all project proponents, who are concerned in respect of scope of the Bill, which should include all tenants / stakeholders like promoters, developers, consumers, bankers, consultants and professionals, including lawyers, architects and engineers and government agencies. A re-look of this bill will make it really meaningful. both.

 

Outlook 2012

 

I foresee, a promising 2012 for the Indian Realty sector. My optimism stems from the increasing demand growth in all Real estate segments, attractive option for NRI and FDI investments due to unstable market conditions in UK and Europe, strengthening of dollar and other currencies in 2011 that would increase NRI and FDI investments, significant rise in the lending to housing segment by Indian Banks and tremendous improvement in infrastructure that is creating new destinations. While on the housing front alone, the estimated shortfall of 26.53 million units during the country 11th Five Year Plan (2007-2012) remains to be fulfilled to a great extent, the demand for commercial and retail spaces is expected to surge significantly. Several housing projects have already been launched and a significant number of land deals have been executed.

 

The Real estate experts, based on improved performance in commercial and retail space segments in the third quarter of 2011, have predicted the continuance of healthy demand in these segments in 2012. Retail sector is already buzzing with activity in urban cities and even smaller towns, which is now accelerating because of the possibilities of Union Government allowing FDI in retail. Hence, the demand for all real estate segments in India would continue to outstrip supply in the years to come. Property values would increase in most of the metro and key cities that have restricted availability and high costs of land creating pressures on pricing. And, therefore, an increase in property values in those cities can not be ruled out in 2012 especially due to growing demand for premium and luxury homes. Equally significant are Government’s various initiatives, both at the Central and State level, on increasing transparency in real estate, which hopefully would come in to operation in 2012. Such processes when implemented would strengthen the Indian realty, protecting consumers and developers while weeding out the unscrupulous elements. The recent amendment in Development Control rules in Maharashtra is a case in point.

 

Budget and Realty sector

 

As for the forthcoming budget, we continue to pin our hopes on receiving the Industry status for India's Real estate sector which is playing a major role as the second largest employer in the country. Such a status would enable the sector to have access to bank financing easier and cheaper. Also, such a position would bring in a much deserved discipline in this sector, especially while implementing affordable and mass housing projects. We sincerely hope that this long pending plea by the sector is accepted in the interest of common man. It is equally important that the Budget gives a fresh look at the current scheme under Section 80-IB (10) of the Income Tax Act that provides income tax exemption to developers for housing projects approved prior to 31st March 2008 and comes to an end in 31st March 2013. Amending this Section to provide full deduction under this section would act as incentive to developers to participate in increasing the housing supply.

 


 

 

 
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