Realtors find promised land in commercial space
Dec 03, 2013
Source : The Hindu


DELHI: Commercial real estate seems to be an attractive mid-to-long-term revenue proposition for listed players despite lacklustre market sentiments and a funding crunch.

Most developers are renewing their focus on commercial properties with a clear eye on the lease revenue potential.

DLF, Parsvnath Developers and Unitech are among the realtors who see prospects in the commercial space.

Several players which had planned to sell land tracts to monetise assets are now looking at developing them as commercial projects.

DLF Executive Director-Marketing Ananta Singh Raghuvanshi noted that commercial projects are showing signs of buoyancy not just in metros but also in tier-I cities, such as Lucknow and Bhubaneswar, as there is a significant pent-up demand.

“Commercial realty is fluid and rentals in commercial projects were giving a return of 7-8 per cent annually with rents starting at Rs 75 per sq ft,” Raghuvanshi said.


Similarly, realty firm Unitech recently inked two lease deeds in the commercial real estate space, making it among the largest deals in recent times in the realty market in the North.

These include an Rs 800-crore deal with Aon Hewitt at an IT SEZ in Gurgoan and a Rs 1,000-crore deal with Accenture. The company expects to earn rental incomes over a 15-year period.

Unitech MD Sanjay Chandra said in the company’s result announcement: “Demand for office space is a good lead indicator of employment generation and residential demand in that area. We, therefore, expect the healthy growth in office space leasing in our projects to lead to an increase in demand for our residential projects in the neighbourhood.”

Parsvnath dropped its earlier plan to sell its prime land in Connaught Place, New Delhi, and instead developed a commercial project at an estimated cost of Rs 70 crore.

The company said its upcoming two commercial projects in Delhi will add to its revenue, and also help the company be debt-free by 2014-15. Its net debt stands at Rs 1,300 crore now.

Parsvnath Chairman Pradeep Jain said the development of this project will help in achieving higher sales realisation of over Rs 1,000 crore, compared with an outright sale of plot, and also lead to enhancement of the company's brand value globally.

According to RICS India Commercial Survey Q3 2013, sentiment in the Indian occupier and investment real estate markets has been hit by the economic slowdown.

Sachin Sandhir, MD, RICS South Asia, said: “From the occupier’s point of view, commercial spaces often involve more capital.

“Problems such as lower sales, cash flow crunch, expensive loans, high cost of labour and inflation have made occupiers cautious about their investments.

“Even investors — considered a good source of funds for developers — now prefer residential over commercial.”

modest impact

However, in comparison with Brazil, which has also suffered a markdown in its economic outlook, the knock-on-effect on expectations for rent and capital values in India has so far been quite modest.

The survey notes that for the next 12 months, rental expectations remain more upbeat and capital valuation expectations are still positive.

It is expected that the investment scenario will improve over the course of 2014.







Latest Realty News

Global brands entering the uber-luxury homes in NCR
Dec 03, 2013
DELHI: The National Capital Region (NCR) has seen a slew of luxury apartment launches.A number of such high-end projects with world-class specifications were launched in the last one-year; these come with the promise of high-quality after-sale services and, in some cases, with an assured provision of 5-star living experience.
Inventory piles up in Mumbai residential realty on muted demand
Dec 03, 2013
MUMBAI: Mumbai’s residential real estate market is perhaps going through its worst phase. Almost 45% of MMR's (Mumbai Metropolitan Region’s) ready and under-construction projects are lying unsold due to weak demand and high prices, according to a report by international property consultant Knight Frank.
How to find the perfect location for real estate investment
Dec 03, 2013
DELHI: When it comes to profitable investment, property is one of the most lucrative avenues. Profitability is not a given, however – property investment must make sense from a returns-on-investment point of view. In that respect, one must carefully pick from available options.
Does real estate give spectacular returns
Dec 02, 2013
DELHI: A client called me for advice on a real estate investment. He had recently sold some old family property and wanted to invest his share of the proceeds in a commercial property. Real estate dominated his portfolio, so I told him not to put all eggs in one basket. The client shared his inherited piece of wisdom that since time immemorial, real estate has given great returns: "Invest in thousands and reap in lakhs."
Realtors want control of more Gurgaon roads from MCG
Dec 02, 2013
DELHI: Real estate developers have urged the Municipal Corporation of Gurgaon to hand them control of roads that connect city areas to villages, eyeing a revenue windfall as the urban sprawl expands. There are hundreds of revenue roads, as the streets in gentrified areas are known, across Gurgaon as villages surround the city’s urban boom. The civic body has so far received 35 applications from several builders and isn’t averse to the idea of a handover, which will entrust private developers wit
Mixed land use approved by Noida Authority
Dec 02, 2013
DELHI: Mixed land use will soon be a reality in Noida wherein certain commercial activities can be carried out from within sectors earmarked for other uses. In its 180th board meeting on November 29, Noida Authority provided in-principle approval of mixed land use policy for specific areas within industrial and residential sectors.
Noida offers amnesty to defaulting plot allottees
Dec 02, 2013
DELHI: An amnesty scheme has been launched by Noida Authority to waive penalties on investors defaulting in paying regular instalments against plots allotted to them. The scheme is expected to benefit hundreds of outstation and overseas investors.
Builder area residents won’t pay property tax until MCG takes over
Nov 30, 2013
DELHI: Even as the MCG has extended the deadline for payment of property tax, DLF and other private builder area residents have refused to pay up. Residents say they will not budge till the Municipal Corporation of Gurgaon (MCG) takes over these areas from private builders.
PEs open up new avenues
Nov 29, 2013
DELHI:The real estate sector witnessed most of the transformation in the last nine years after the Government allowed foreign players to invest in 2005.
Finance firms bring home for everyone
Nov 29, 2013
DELHI: The housing finance industry has grown significantly both in terms of size and numbers in the last 20 years.

Latest Realty News Of State

Realty Talk's