“UAE investors” seek “exposure in India real-estate” | by: Cleofe Maceda | Gulf News

” Property funds generate growing interest from affluent clients in a market with growth potential “…

Investors from the UAE are increasingly looking to put their money in India’s real estate in view of the country’s positive environment and long-term growth potential, a financial services company told Gulf News.

ASK Group, which earlier launched funds that are focused on residential real estate in India, has received encouraging response and is bullish to attract a large interest from investors, especially high networth clients, in the UAE.

The company focuses on institutional investments, such as fund of funds, sovereign funds, endowment funds and family offices, which are advisory firms that serve affluent households. It currently seeks to raise $200 million (Dh735 million) offshore fund to be able to invest in housing developments in India…

“Family offices currently are more proactive in participating in India growth story and we hope the process of institutional investors has begun. [We’ve] got encouraging response from family offices and could able to close more than 50 % of the fund from UAE currently,” said Managing Director and CEO of ASK Group.

Rohokale said both non-resident Indians and citizens in the UAE, including institutions and ultra high-net worth residents, are looking for diversification and are actively seeking India’s real estate as a “de-risking strategy”.

He said the introduction of Real Estate Investment Trusts (REITs) in India and regulations such as the Land Acquisition Bill and Real Estate Regulatory Bill, coupled with a stable currency and “ healthy macro-financial numbers”, have helped renewed investor confidence…!!

“ Of late, we have seen many [Indian] developers coming to Dubai, setting up their offices and doing road shows to which investors have reacted positively because of currency gains. The property prices in India have bottomed out and in the past, many investors have made money in Indian real estate and hence are more comfortable,” Rohokale added.

ASK Group is a diversified financial services company that has been operating in India for over 30 years. Its asset management business covers equity, private equity and real estate private equity. The company considers UAE as a “very strategic market”…

Investors from the UAE are not just focused on real estate funds. Private wealth is spread across a wide range of vehicles, including mutual funds, traditional savings and long-term investment plans, among others.

A new survey commissioned by Standard Life suggested that investment flows from the UAE are likely to increase, with two thirds of NRIs saying they are optimistic that India will be more investor-friendly after the general elections…

In its report on private equity (PE) investments in real estate, it said the healthy increase was due to increasing investments in leased office assets by both foreign and domestic funds, given the potential for stable yields and attractive capital values.

Residential assets also witnessed stable investments as developers are increasingly using private equity funds to raise capital. Despite stagnant sales, the high coupon rates offered by developers is attracting capital. Fund houses have tried to mitigate some of these risks by investing through structured mezzanine deals guaranteeing fixed returns.

Executive Managing Director South Asia, Cushman & Wakefield, in a statement said, “A number of funds have committed funds towards investment in Indian real estate. This is expected to translate into increasing transactions in the sector, especially in income-yielding assets. With expected growth in capital requirements, we see a number of fund houses raising additional capital to invest in the sector.”

He said, “Investments in real estate by domestic companies have witnessed a significant increase during the first quarter of the year. This was due to companies acquiring land and office assets required to execute growth strategies ahead of the anticipated recovery of the economy in the second half of the year.”

The office and residential segments recorded Rs1,435 crore and Rs1,065 crore investments respectively; contributing close to 51% and 38 % respectively to the total private equity investments in the real estate sector in India during the quarter.

One transaction in the retail segment in Bangalore was worth Rs300 crore. Investor interest in the commercial office sector has been steadily increasing, with investments doubling in Q1 2014 from the first quarter of 2013 (Rs700 crore).

Healthy valuation of commercial developments, stable yields and the potential for rising capital values has led to investors actively evaluating and investing in prime office assets across the top cities.

The total number of deals in the first quarter of 2014 was recorded at 18, one deal lower than the previous quarter, thus indicating an increase in average deal size by nearly 35 % to Rs.156 crore.

Bangalore topped with investments of Rs1,905 crore, an increase of 45 % compared to the previous quarter. The transaction volume in Mumbai was up 22 %  over the previous quarter at Rs470 crore. NCR and Pune registered investments of Rs345 crore and Rs80 crore respectively…

“Time For Retailers To Re-Evaluate” their Store Footprint : “One Size Does Not Fit All” | by: Laura Pomerantz | Forbes

“As digitally savvy shoppers continue to drive today’s retail environment, companies are being forced to strategically re-think their store footprint to be more relevant with these consumers”…

Increasingly, these important decisions have been moved into the boardroom, as real estate can be the most critical factor in a retailer’s operating and growth strategy and a key driver in unlocking value…Investors are demanding that retailers reassess their real estate to maximize their space, and we’re finding that as they do so, there is no longer a one size fits all model..

While in the past, a retailer’s needs might have consistently been a 1,500 square foot store in an “A” mall, today, there is a lot more to consider. Every retailer needs to address their real estate strategy in each of the markets they serve, and identify the right size space that makes sense for their business. This means smaller spaces for some, and larger spaces for others.

We’ve seen big box retailers like Best Buy and Staples move to smaller spaces to better serve the digitally savvy consumer, while others, such as leading men’s big and tall apparel retailer Destination XL, is catering to its customer with larger format stores to showcase its premium brand merchandise in wider aisles, with larger fitting rooms, sofas, chairs and flat-screen televisions.

Photo courtesy of: Pioneer Press Best Buy Mobile store in Mall of America -- Best Buy will continue to emphasize e-commerce and smaller stores to reshape its future

Further, as demand for  Michael Kors  products continues to grow, it is capitalizing on its strong opportunities with aggressive expansion in the  U.S., as well as in Europe and China. Having successfully expanded beyond apparel into handbags, small leather goods, eyewear, jewelry, watches, and footwear, the renowned global lifestyle brand has been moving to larger store formats to accommodate its growing number of product categories. Constantly delivering new innovation to its customers, the brand continues to grow its global footprint.

Conversely, some retailers are redesigning their stores to occupy a smaller footprint in order to greater utilize their space. Contemporary apparel retailer Scoop, for example, has begun moving to smaller spaces to provide a more exclusive experience for its customers. With less duplicative product, and a more intimate environment, Scoop is enhancing its customer shopping experience, while lowering overhead cost and increasing sales.

We are also seeing companies re-think their footprint, as they expand with new retail concepts. In an effort to reach different segments of the population, J. Crew is speculated to be developing a new store format aimed at budget-conscious shoppers, according to a recent Wall Street Journal article. If so, you can expect the retailer will look for appropriate locations, markets, and store sizes to attract this target customer.

So how should retailers evaluate their square footage ?

There are a number of factors to consider when assessing a retailer’s footprint, and each neighborhood needs to be addressed individually.  Importantly, a retailer will want to know the market potential in the given area. What is the population threshold, and could this location present further opportunities?  A retailer will also want to seek out any competition and determine if there is already over-saturation in its market niche or if it is strong enough to carry another retailer in that space. Further, who are the co-tenancies? Is the retailer’s customer already there? After a thorough evaluation, a retailer can appropriately determine its ideal square footage.

As retailers remain committed to driving shoppers back into the store, they have a lot to consider in terms of re-thinking their store footprint to align with today’s sophisticated consumers…!! 

At the same time, rental costs have risen dramatically in the last few years as new developments have slowed, which is forcing retailers to refocus their real estate strategies to maximize square footage and sales.

While this is driving some retailers to reduce their number of stores and relocate to smaller spaces, it is driving others to increase square footage and open additional stores. Clearly, there is not a one-size fits all approach.

Retailers need to develop the optimal strategies in the appropriate markets, location and space that make sense for their business..

“Evolution of Real Estate Landscape in India”; from “Un-organised to Professional” | Realty Plus

 

” The Real-estate sector, whose contribution to the country’s GDP is “second only to Agriculture”, has been witnessing “growth with quadrupled property values” over the past decade”…

However, this un-organised sector bears the brunt of the economic slowdown leading to subdued sales, piles of unsold inventory and builders going bankrupt.

In the past decade, un-organised realtors could thrive and even flourish due to the high appreciation of property and a steady rising demand. This growth however, attracted a large number of players, both professional organisations as well as smaller outfits.

This spike in real estate development has the buyer spoilt for choice. Realising this, realtors (big or small) are trying to move up the totem pole by streamlining their operations. 

Deserve Builders and Developer Ltd., a realtor based in Mumbai, recognised the need for the development of a leadership pipeline and streamlined processes. The company assessed and identified key competencies that their people need to imbibe, along with the company values and culture.

Deserve has partnered with a Business Consulting, a management consulting firm in Mumbai, for a large scale change intervention to restructure their entire systems and processes.. This will include intensive sessions where their managers will be assessed on and then trained to improve their leadership competencies.

Another noteworthy case is that of The Wadhwa Group, a leading real estate developer, who is recognized for their excellence in design and quality.

The realtor realized that by delivering an exceptional customer experience, they could differentiate themselves from other builders. With this goal in mind, The Wadhwa Group partnered with Acumen to help them articulate and develop a world-class customer experience. Acumen first designed and conducted a customer experience survey with the current, past and potential customers of The Wadhwa Group. The survey helped understand their needs and perceptions and identify possible solutions aimed towards enhancing the customers’ overall experience. With these insights Acumen went about designing a customer experience and rolling it out at the various customer touch-points of The Wadhwa Group.

“This partnership with Acumen intends to ensure that customers experience the quality of service delivered by iconic brands across the world. Though the real estate industry is gradually gaining acceptance, important aspects of customer service like transparency and governance have been overshadowed. By taking this step, we want to redefine service parameters for the real estate industry. It is our endeavor to create every engagement with our brand, a lasting experience for an individual”, said Srinivasan Gopalan, COO, TheWadhwa Group.

“The average Age of Home-buyers has reduced. Moreover, the Indian customer is exposed to elevated levels of customer experience in all product categories and has a larger selection to choose from, especially in the real estate sector. Intent is to bring about a sea change in the way real estate is sold…” 

“Prospects of Luxury Housing”, a segment which “continues to witness unabated demand” in Indian Real Estate space | Realty Plus

 

The country’s real estate market may not be in the pink of health, yet the current sluggish phase has not cast an ominous shadow over the prospects of luxury housing, a segment which continues to witness unabated demand, riding on rising number of high net worth individuals with enhanced lifestyle aspirations, coupled with the promise of high return on investment.

From designer homes to intelligent living spaces to sports and entertainment-centric living to homes with world-class concierge and allied services, developers today are raising the bar to come up with product and service offerings, to redefine the luxury real estate market in India. Mumbai, Pune, Bengaluru, Kolkata, Delhi-NCR and to a certain extent Chennai are the most responsive markets for luxury housing in the country. The changing demographics and the rising aspirations have given luxury living a new identity altogether.

Rise in the number of high net worth individuals, rapid pace of urbanisation, influx of global lifestyle trends and an increase in the number of non-resident Indians have contributed significantly towards increasing demand for luxury housing in India.

In cities like Mumbai, Delhi-NCR and Bengaluru, luxury and ultra-luxury residential projects have witnessed ten-fold appreciation over their launch prices in the last decade, implying more than 100 per cent annual returns on investment, claims Santhosh Kumar, CEO, Jones Lang LaSalle India. Most of these projects saw encouraging pre-sale activity and were sold out swiftly, he adds.

In fact, demand for luxury homes in cities like Gurgaon has always outpaced supply, which has encouraged developers to increasingly shift their focus on this segment.“In the last few years Gurgaon has become synonymous with luxury housing owing to the launch of a plethora of high-end projects. Sales have gone up with end-users and foreign nationals not averse to paying a steeper price for world-class features that most of these projects boast. Demand has spiked along with appreciation in their value,” says Ashish Jerath, VP-Sales, Emaar MGF.

Noida, recently, has also seen an increase in demand for luxurious projects. Prateek Group, for instance, tasted success for their maiden luxurious project ‘Prateek Stylome’ in Sector-45. The project had all the ingredients of a luxurious project and it changed the perception of Noida as a destination for affordable housing only. The group’s second offering in this space is ‘Prateek Edifice’.

“Luxury villas and farm house culture have become the latest trends in the Indian real estate market and Delhi-NCR is no exception to this. Luxury housing and premium villa projects coming all over the region have become a massive game changer in this part of the realty market,” says Anil Kumar Sharma, CMD, Amrapali Group and President, CREDAI-NCR. Amrapali has a host of luxury projects including Amrapali Sapphire in Noida and Amrapali Leisure Valley and Amrapali Dream Valley in Greater Noida West.

Although definition of luxury can vary from city to city and locality to locality, over 1.5 crore price tag is usually referred to as the start of luxury segment. Developers, on their part, are trying to outdo each other in breaking fresh ground in luxury. From a typical golf-based to spa-based, wellness or destination-based project, they are now experimenting with various global themes. For instance, Emaar MGF’s Marbella in Gurgaon is an impeccably planned ultra-lavish Spanish style villa community with 4 & 5-bedroom villas. Spread over 110 acres, the villas measure 267, 350 and 500 sq yds. Emaar The Palm Springs, located on Golf Course Road, Gurgaon, is another gated community spread over 19 acres and comprises approximately 230 high-end apartments and 80 luxury villas.

Why luxury works ? :

Ultra-luxury projects have a tendency to garner extremely good pre-sale volumes, hence their developers are generally able to secure significant fund flows to capitalize the completion of their projects. “Luxury and ultra-luxury projects yield much higher returns to developers than projects geared towards the affordable and mid-income segments,” says Arjun Shivshankar of Suvilas Properties.

However, Kamal Sagar of Bengaluru-based Total Environment has a different opinion. “High quality homes require an exponentially higher degree of effort and cost. And, at the current level of maturity in the real estate market, developers end up with much lower returns to developers, since several customers continue to look at ‘cost per square foot’ instead of value-for-money.”

While it is also true that input costs for luxury homes are much higher, developers stand to benefit from the increased visibility of their brands among highly affluent, top-end clients. This means that the company can uniquely position itself on the basis of good quality luxury projects. This increased visibility and superior construction is automatically attributed to all other projects by the company. In other words, even mid-income housing projects launched by the developer get benefitted, and will invariably see higher sales compared to projects by developers who have not ventured into luxury housing.

“Almost 75 per cent of the established builders across India have taken up luxury segment very seriously and the competition is quite intense. It does involve huge amount of risk as well.  So, if developers are not sure of the projected returns, they would not invest in this segment,” says Sanjay Raj, ED& CEO, Golden Gate Properties.

Buyers for luxury projects have very high expectations and want their homes to both offer and reflect a high lifestyle quotient. There is very little tolerance for flaws in design, construction and amenities. Thus, a botched luxury project can have significant repercussions on the developer’s credibility and future success.

Investment wise :

Experts reason that luxury is a recession-proof segment. According to Manju Yagnik, Vice Chairperson, Nahar Group, as most of the buyers in this category are the C-Suite of the corporate world, successful entrepreneurs and business tycoons, their financial appetite is not limited to or governed by the economic considerations that give the middle-class sleepless nights. A significant percentage of buyers for such projects are able to self-finance their savings from their earnings.

Recession might take a toll on the response generated and time taken in selling project at the targeted price points. However, the kind of hit that luxury projects take in times of economic uncertainty is significantly lower when compared to residential projects aimed at other categories.

A case in point is DLF which says that despite the current economic slowdown they have received fairly good response from a sales point of view.  “We have been receiving fairly good response when it comes to our overall  luxury project sales,” says Ananta Raghuvanshi, Executive Director-Sales & Marketing, DLF Universal Ltd. DLF has several offerings under luxury segment. To name a few, the company has  Kings Court in New Delhi, Samavana in Kasauli, Samatara in Shimla, Bella Greens, New Town in Bengaluru and Riverside in Kochi.

“From an investment perspective, luxury housing is far better than other segments as it will always yield better returns. The demand is at niche level where one decides on quality and amenities and not on cost,” states Sushant Muttreja, MD, Cosmic Group.

“Luxury projects have witnessed over tenfold increase in prices in the last decade, pointing at huge return on investment on these projects,” adds Ravi Saund, COO, CHD Developers. Rajesh Vardhan, MD, Vardhman Group also affirms that luxury housing produces superior returns for the developers. Vardhman Group has luxury projects – Vardhman Flora and Vardhman Height at Byculla, Mumbai.

However, Deepak Kapoor, Director, Gulshan Homz says, “The luxury segment is all about lifestyle and status and so this segment is not good for short term investment. However, for medium and long term, luxury segment provides great returns.”  Under this segment, Gulshan Homz has its projects — Vivante Select and Gulshan Ikebana, both situated on Noida Expressway.

Elaborates Girish Shah, Executive Vice President (Marketing & Sales), Godrej Properties, “The most important and prime variable in luxury homes – be it a first home or a second home – is its location. Almost all luxury properties claim to insulate you from the hustle and bustle of city life. But the ideal location could be within the heart of the city, not on its periphery, which will eventually result in good investment.”

Several projects in this segment, in time, become much sought-after ‘brands’ in their own right. This pushes up their re-sale and rental value. Over the long term, luxury projects provide excellent investment opportunity and offer quick exit options, feels Neville Vaswani, MD, Vaswani Group.

However, Bijay Agarwal, MD, Salarpuria Sattva Group has a different take, “While the segment may be recession-proof, however homes in this segment are not moving ahead as second homes.  So, even if people invest in luxury homes, the return would be less.”

Intelligent Homes :

While location continues to be a key factor, branded residences are an emerging concept that offers not just a premium address with large spaces but evolved amenities with artificial intelligence, branded fittings such as Roca, Kohler, Grohe etc. and in many cases superior project management.

For instance, Delhi-based CHD Developers plan to launch luxurious studio apartments in their commercial tower CHD Sky One at Sector 109, Dwarka Expressway. With an ‘intelligent’ design, the tower will be energy efficient with optimal utilisation of space. The Group also launched a luxury tower Tee 9 within 106 Golf Avenue on Dwarka Expressway. It has a world-class golf community of exquisite 6-hole chip and putt. Above all, it includes exclusive Golf Concierge.

Developers are also increasingly focussing on creating intelligent living spaces through latest gadgets and technology. Digital locks, electronic surveillance systems, temperature control, wireless communication for Internet and in-house entertainment are common in most luxury homes.

Developers are using systems with sensors to enable residents to control ambience, light and temperature, among other things, through pre-programmed machines. These homes are intelligent enough to sense human presence and accordingly adjust light and temperature. Mantri Developers recently collaborated with networking provider Cisco to deploy information and communications technologies in its projects – Mantri Espana and Mantri DSK Pinnacle.

Sunteck Realty, a Mumbai-focused developer, has tied up with luxury mobile phone manufacturer Vertu to provide concierge services in a residential project aimed at top corporate executives. Each apartment will have a handset through which the residents will be able to call a dedicated concierge desk.

Raheja Developers’ Revanta in Gurgaon has restaurants, cafes, spas, lounges, common swimming pools, valet parking, automated car-wash and helipads.

“Luxury today has evolved and has moved several notches up and includes various lifestyle aspects such as theme-based developments – entertainment -centric living, golf/sports living in which projects are developed with a certain theme in mind. Leading lifestyle brands such as Versace & Armani are now being roped in to take care of flooring, wall designs, fittings as well as sanitary ware,” says Harinder Dhillon, Sr. VP, Raheja Developers. The Group is also coming up with another iconic project – Raheja Oma on NH-8, Dharuhera.

Spacious luxury apartments and villas invariably come with top-quality interiors, bathroom fittings and kitchen decors, often imported from abroad. For instance, One Avighna Park at Lower Parel in Mumbai promises to be amongst the most-sought-after residential addresses globally. Its material selection is based on quality, durability and service. For instance, imported switchgears from France, windows from Germany, water-proofing products from Malaysia, fire-fighting systems and pipes from UK, etc. The project is already 51 storeys up with delivery scheduled in 2014.

Pricing trends :

By virtue, luxury and ultra-luxury comes with a price tag. Pricing largely depends on the location of the project. In addition, amenities, type of construction and interiors also determine the pricing of the project. Opulent interiors with superior quality fittings in living spaces is a mark of luxury housing. External lifestyle amenities also add to the overall living experience of the residents. Today, many developers are associating with international architects and landscape designers to provide the best in class product to their customers. All these factors add to the premium charged by the developer.

According to Ashok Gupta, MD, Ajnara India, “The pricing is 25-50 per cent more than the mid-segment rates prevailing in the same area, depending upon the kind of amenities and the quality being provided.” The group is coming up with Grand Ajnara Heritage, a luxurious project located in Sector-74, Noida.

Prices differ city-wise as well. In Bengaluru, anything above 6000 per sq ft could be considered luxury. But it may not be the same in Mumbai where prices above 15,000 per sq ft come under this bracket. On an average, the pricing of a luxury home would be over 1.5 crore, while a super luxury apartment would be from 5 crore onwards. Whereas in tier-II cities houses above 3 crore come under the ultra-luxury segment while in a tier -III city anything upwards of 1 crore will be considered super luxury.

According to Ravi Gurav, Vice President – Marketing, Dheeraj Realty, “in luxury housing there is no particular pricing trend. It all depends on certain factors – location, brand value and amenities and facilities provided.”

Future Outlook :

Innovations and evolving lifestyle aspirations will drive the luxury housing market in India. Technological advancement coupled with design innovations are evolving fast and continuously raising the bar of luxury offerings.  What is important to note is that these luxury offerings need to be in sync with local culture, demography and residential density components to provide an optimum impact and the real luxury experience. “As we see it, this segment promises great growth potential in the near future,” says Devang Varma, Director, Omkar Realtors & Developers.

However, Anshuman Magazine, CMD, CBRE South Asia, sounds a note of caution, “The short-term outlook is difficult for the segment, considering subdued demand levels and supply-demand mismatch. At present, developers are focused on clearing off existing inventory before launching any fresh projects. A silver lining, however, has been the increasing trend of non-resident Indians (NRIs) purchasing housing property to leverage the depreciating value of the rupee.”

In Gurgaon, demand for luxury segment is expected to soar further in the coming four years. The entry of newer players in NCR, mainly connected with the IT, services and industrial sectors, has contributed to the hike in housing demand, which is expected to go up further with the influx. “Gurgaon will continue to see significant rise in luxury housing as the infrastructure is improving significantly and the city has witnessed a rapid pace of urbanisation over the last one and a half decade,” claims David Walker, ED of SARE Homes.

While Mumbai real estate market may see prices dip temporarily in certain micro markets, yet over the long term, real estate prices here will certainly see an upswing. There is definite lack of delivery but not supply. States Nishant Agarwal, MD, One Avighna Park, As a wise man once said, don’t wait to buy real estate, buy real estate and wait.”