Home » News » Real Estate

Presents

Co-Sponsored by

In Association With

Source: Jones Lang LaSalle

A Review of India Real Estate in 2012

2012 was a sluggish year in terms of economic growth, largely because of high interest rates and poor industrial production.

- THE ECONOMY IN 2012

2012 was a sluggish year in terms of economic growth, largely  because of high interest rates and poor industrial production. Indeed, the index of industrial production rose by just 0.4% in April-August 2012, as compared to 5.6% in the same period of 2011. Manufacturing activity, which contributes significantly to India's GDP, also took a big hit in 2012. Inflation remained high, impacting sentiments and investor interest across businesses - including real estate.
 

- RESIDENTIAL REAL ESTATE IN 2012

As has been the case in the past, the larger cities of Mumbai and NCR-Delhi recorded healthy absorption of residential units during 2012,  with a 60% contribution to the overall absorption. Chennai and Pune were among the other two cities that increased their share of absorption during 2012 to 26% from the 23% recorded a year ago.

At a country level, a total of 160,622 residential units were launched in 2012, as compared to 154,701 units for the corresponding period of 2011. From the pricing perspective, the average residential capital values in 2012 appreciated in the range of 1-3% y-o-y.

Among the top 7 cities of India, the capital value growth in Pune and NCR-Delhi was the highest, while Hyderabad and Bangalore saw a slower rate of capital value growth. There is still no price correction on the cards, but the quantum of appreciation definitely reduced significantly in all the top seven cities of India in 2012.

 

 

 

 

 

 

 

 

 

 

- Although demand showed signs of improvement with the approach of the festive season, developers are still struggling with rising inventories and have attempted to sell off their existing stock via out-of-the-box marketing techniques and pricing mechanisms to attract end users and investors.

- Infrastructure deficit continues to be a key restraint for the growth of residential markets across India.

- Overpricing has been an issue in Pune, Hyderabad and Kolkata, resulting in a relatively smaller share of absorption from these cities during 2012.

- From a supply perspective, Hyderabad and Kolkata saw a decline in the number of residential units launched, accounting for less than 2% respectively of the total in 2012YTD.

- COMMERCIAL REAL ESTATE IN 2012

The secondary business districts (SBDs) of Mumbai, Bangalore and Pune, followed by central business districts (CBDs) of Bangalore and Gachibowli in Hyderabad, began emerging as landlord markets. This is primarily because these areas have a lower-than-average vacancy levels from a national perspective, and also because of the relatively higher rental value change in these submarkets as compared  to the corresponding trough levels in the past.

The CBDs of NCR-Delhi, Mumbai, Pune and Hyderabad remained neutral markets because of negligible vacancies (5-10%) as compared to the national average of 19%. Also, these locations saw persistent market stagnation because of negligible rental growth and lower vibrancy.

The suburban business districts of NCR-Delhi, Mumbai, Chennai and Kolkata, which have higher-than-average vacancies, remained occupier friendly markets. Higher vacancy expectations continues to exert short-term pressure on their rental value growth.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- In 2012, the cautious occupier sentiment that resulted from the on-going global uncertainties was one of the key reasons behind slow commercial property leasing activity in the major cities of India.

- With domestic office occupiers going slow on expansion, MNC occupiers have been delaying deal closures as they have to go through multiple levels of approvals to execute expansion plans amid sustained cost pressures.

- Among the top seven cities, Mumbai and NCR-Delhi recorded a y-o-y absorption drop of around 47% and 26% respectively during 2012.


2012 was defined by a notable decline in absorption of office space across most of the cities in India from the 2011 levels. However, the larger cities of Mumbai, NCR-Delhi, Bangalore and Chennai contributed to a healthy 72.5% of the country’s net absorption of commercial real estate. In fact, the share of pre-commitments to absorption in 2012 was more than recorded during the previous year.

- RETAIL REAL ESTATE IN 2012

- With an operational stock of close to 65 million sq ft during 2012 YTD, the retail mall supply across the top seven cities of India slowed considerably as compared to the supply recorded in 2011.

- With a drop in supply of over 65%, new completions in 2012YTD were at a new low when we consider the trend of the past five years (since 2007). Barring Hyderabad, all cities recorded completions during 2012, albeit at a slower pace than witnessed in 2011.

- Mumbai, NCR-Delhi, Bangalore and Chennai together absorbed 81% of the total retail space in 2012. This is significant, considering their consolidated contribution of 70% in total retail space absorption in 2011.

 

 

 

 

 

 

 

 

 

 

Retailers in cities like NCR-Delhi, Mumbai and Bangalore continued to actively lease space in superior quality malls due to the limited availability of new space and the low vacancy rates in existing prime malls. The total net absorption of retail space across India projected for 2012 was 4.4 million square feet, led by NCR-Delhi and Bangalore (which together absorbed 2.6 million square feet). They were followed by Mumbai, Pune and Kolkata, where absorption was around 0.8, 0.5 and 0.4 million square feet respectively.

ADS BY GOOGLE

Ask the Experts

Get your Personal Finance queries answered

  • Q

    If I put Rs 2 lakh in PPF, how much tax rebate I will get?

    A

    As per the existing guidelines and rules a person cannot deposit more than 1.5 lacs in one PPF account. However you can deposit money in the...

  • Q

    Interest rates are going to go down. And all my fixed deposits will be maturing next year. I will have to renew my fixed deposits next year at lower rate of interest. What is the way out?

    A

    Interest rates keep fluctuating due to various micro- and macro- economic factors. There is never an ideal rate of interest. In a high inter...

  • Q

    I want to buy online term life insuance plan. Which is the best one? Should I go for single premium or regular premium policy?

    A

    Single premium term insurance policies don?t make much sense. Why pay such a large amount at one go when you have the option of paying in sm...

  • Q

    I want to invest some money with at least ten years view. I dont want share market risk. Can I invest in NSC? Is there any other investment option?

    A

    NSC or National Savings Certificate is a safe investment scheme offered by the Central Government. It is an ideal option for investors with ...

  • Q

    Is it a good idea to invest in asset allocation funds? if yes, please suggest some good fund to invest money. I am 35 years old and can invest Rs 10000 per month.

    A

    Asset Allocation Funds are for those investors who want to take an exposure into different asset classes but do not wish to create their own...

  • Q

    My CA says that I have to pay tax on interest accrued on my FD of Rs 20 lakh. I have submitted form 15H in all banks. Is it necessary to pay tax in this case?

    A

    In case of interest on fixed deposits which is taxable under the head ?Income from other Sources? a taxpayer has two choices. Either you can...

  • Q

    Please suggest a good investment option of land in South India. I want to buy a land parcel of around 2 acres.

    A

    If you take a look at the South Indian real estate market, Bangalore has emerged as a clear winner. Due to the strong presence of IT/ITeS an...

  • Q

    I want to invest Rs 20000 per month. I have identified Reliance Small Cap Fund and DSPBR Micro cap fund for investment. I can hold to investments for two years. Is it a good idea to invest in these schemes? How much returns I will be getting?

    A

    If you are an aggressive investor, you can consider investing in either of the 2 funds.DSPBR Micro Cap My suggestion is that if you are inve...

  • Q

    I want to save my money for retirment Please suggest a good insurance policy

    A

    For retirement it is advisable to use multiple investment instruments and not just life insurance policies. If you have 15 years or so for r...

  • Q

    IS IT a Good time to invest in GOLD ?

    A

    Currently the outlook for gold is bearish/negative. However if you are planning for a long-term investment in gold it is ideal to invest the...

  • Q

    I have retired from my job in November. I have got Rs 48 lakh from my employers, by way of epf, gratuity and other benefits. Should i invest in senior citizen scheme of LIC? How about pension plans from LIC?

    A

    1. You can invest Post office Senior Citizen Scheme. 2. You also should invest lumpsome in MIP in post office and get monthly interest. 3. K...

  • Q

    I want to save Rs 1 crore for my retirement when i turn 60. Now I am 42 years old and have fixed deposits worth Rs 18 lakh.What should I do to reach Rs 1 cr mark?

    A

    start investing a minimum 5000 per month in mutual fund and increase 10% to 20% every year....

  • Q

    I want to save on my utility bills and fuel expenses.Please suggest a good credit card for me.

    A

    Yes, you will be able to save on Utility bills and fuel expenses through the cash back schemes offered by some of the credit card companies....

  • Q

    Suggest couple of equity mutual funds for me. I am keen to invest Rs 25000 per month for next couple of years. I can remain invested for at least five years?

    A

    Asset Allocation Funds are for those investors who want to take an exposure into different asset classes but do not wish to create their own...

  • Q

    I am a senior citizen.I received interest of Rs .1,70,000/- on FD.I have duly filled 15G form.I have NO other source of income.Have I to pay Income tax on this interest or can it be excempted?

    A

    Sir, please note if you are less than 80 years but more than 60 years of age, your total income upto Rs 3,00,000 is exempt from tax, you are...

  • Q

    Please suggest a good money back policy for me. I am 27 years old and want to accumulate Rs 10lakh over 10 years.

    A

    If you are a fan of traditional money back policies, go in for the LIC New Money Back Policy of 20 or 25 years. I would suggest you go in fo...

  • Q

    I want to buy a life insurance for my brother Please suggest a good policy. He is 19 years old. he should get Rs 5 lakh when he turns 25 years.

    A

    Best to go in for a ULIP in case he is looking to grow the money also. Go in for a ULIP like HDFC Click 2 Invest which is very low on charge...

  • Q

    In 2013, I bought an Endowment policy from LIC. Premium for that is around 35K per year. Now i understand, this was a big mistake and i want to go for a term insurance policy. I have already paid two premiums in 2013 and 2014 and I want to make this policy paid-up. Can i pay one more premium this year and make that endowment policy paid-up ? Or is there any better alternative ? Please suggest.

    A

    Yes, you can convert to a paid-up policy after 3 years premiums have been paid. I would recommend that you surrender the plan and take back ...

  • Q

    Is zero depreciation cover a good option under auto insurance? I have plans to buy honda city in January

    A

    Zero depreciation is a good option to along with the standard car insurance plan. By paying a slightly increased premium you can ensure that...

  • Q

    I am 20 years old,I am getting 17+ % or returns from share in my portfolio consistently for the last 6 months.should i think about a career in stockbroking?

    A

    Its nice to note that your portfolio has been gaining such high returns, however it might be too early to take a call and make stockbroking ...

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.