Expected office uptake indicates realty boom in Gujarat

The property market in Gujarat is on a boom and the main focus is mainly on the residential apartments. However, office space is becoming a silent contributor and is acting like a catalyst in accelerating the pace of the market. Office space, though, lesser in transaction volume has a higher contribution in terms of its value and overall market sentiments of the state. More importantly, in terms of quality spaces, Return on Investment (ROI) and overall transactions, the Gujarat office market has performed better than the national average.

Office market in any given city is a true indicator of the potential of that property market. It is indicative of the fact that more jobs are emerging and thus, leading to retail growth. These two factors also have the potential to drive the residential property demand. The questions which arise here are: Has the Gujarat property market reflected on the fact that office uptake has been responsible for the booming property market across the state? More importantly, in future, whether the office market will be the prime demand driver of real estate in Gujarat?

Fact speaks for itself. Even though, there has been a decline in net absorption, it has been far better than other parts of the country. As per Cushman & Wakefield report, overall net absorption in Ahmedabad for the first three quarters of 2013 was recorded at 0.35 million sq ft, a decline of 37 per cent compared to the same period in 2012. Net absorption among all grades of offices for the third quarter stood at 76,000 sq ft, registering a marginal decline of 6 per cent from the previous quarter while grade A net absorption recorded an increase of 26 per cent quarter-on-quarter (q-o-q).

In terms of absorption and leasing activity, the city has been among the top eight cities during the year. Though, most of this absorption was concentrated primarily in the suburban submarkets of Prahladnagar and S G Highway, the existing high vacancy levels in these submarkets have led to a 6 per cent decline in quoted rentals at S G Highway and Prahladnagar. Low levels of pre-commitments in upcoming projects are expected to result in an increase of vacancies, thereby inflicting additional pressure on rentals in these two submarkets.

The city witnessed no new supply in the last two quarters. This has led to a decline in vacancies compared to a year ago despite the low transaction activity. Grade A vacancies have declined by 1.7 percentage points q-o-q to 31.3 per cent while all grade vacancies have dropped by 0.5 percentage points in the quarter to 14.2 per cent.

Rentals in the CBD declined by 8 per cent during the quarter, due to increasing vacancy in the sub-market. Most of the companies are opting for suburban areas due to non-availability of Grade A spaces in CBD. Rentals were stable at Ashram Road due to low vacancy and low transaction activity. Strata sales of office spaces continue to be the norm for most developments in the city and some projects have up to 60 per cent of their space sold to end-users.

Dhaval Ajmera, director, Ajmera Realty & Infra, says, “The current momentum for investment in Ahmedabad and Vadodara may be stable, but it is temporary as the state’s potential is strong and is based on real and concrete growth. It is heading towards a progressive path. Looking at the current scenario for the cities of Gujarat, as compared to other cities, the future yield will be high, making investors compliment their investment. Various industries in and around the city are fuelling the demand in state. Further, the property rates here are still realistic as compared to other cities which is a positive sign for investors and developers.

He adds further, “Real estate sector in Gujarat has shown tremendous developments in the last few years. It has proven to be one of the most sought-after locations when it comes to commercial properties, mainly due to its excellent infrastructure facility and being a trade hub. With the growth of varied sectors and industries,

Gujarat has turned out to be the home for many important IT companies, industrial and manufacturing units, corporations, KPO, BPO and ITeS firms. Hence, there has been a considerable rise in demand for commercial spaces to set up their offices.”

Manan Choksi, regional director, RE/MAX MGM, however, feels that since the beginning of the year 2014, there has been a contrasting change in the outlook and net absorption. According to him, the vacancy of commercial office space is reducing very fast and rental deals are more since 2013. New projects are picking up slowly but market looks positive in 2014.

“The focus is shifting from large offices to small offices with quality infrastructure. As far as Gujarat office market with respect to the other states is concerned, small and medium enterprise are ruling the office space consumption in Gujarat, while in other major cities, MNCs, banks, IT companies, and BPOs are the prime consumers of real estate. The next boom is expected in the office space of Gujarat realty as the empty buildings are occupied and new projects are soon to be launched. So, for the medium term, shortage in office space market is expected,” says Choksi.

The main purpose to move into quality office space is high quality physical infrastructure and keeping in mind the array of basic facilities like electricity, water, gas, district cooling, roads, telecoms and broadband. Further, today, modern hi-tech office spaces inculcate integrated townships, an entertainment zone, hotels, a convention centre, shopping malls, stock exchanges and service units. Gujarat is witnessing many such developments, hence, the percentage of people moving into quality office spaces is increasing at a faster pace. One such example is Gujarat International Finance Tec-City.

Analysts maintain that Gujarat has emerged as a forerunner due to all the improvements and progress displayed in terms of the activities to supplement the process of development. From real estate point of view, there is not one but many demand drivers for commercial properties in Gujarat like the infrastructure capacity, well maintained roads, flyovers and bridges.

Factors Which Influence Price Appreciation Of An Area

Property prices in an area are governed by various factors, some of which are intrinsic to that particular area while others are dependent on the current economic, social or political situation. Some of the general factors influencing property price appreciation in an area are Population growth, Demand and supply dynamics of the area, Inflationary trend, Home loan rates and Realty drivers in the area.

Population Growth

Growth in the population of an area directly influences the demand for residential accommodation in an area. This is not alone related to the local population of that area but also to the migratory population who relocate for education or employment.

Demand and Supply Dynamics

Property prices in an area generally go up due to the increase in demand for residences in that area. Moreover, if there is a mismatch between the demand and supply due to which supply of residential units is not consistent with the demand in that area, then there will be price appreciation. Also, demand for residences in an area is higher if buyers feel that living in that particular area has considerable benefits. The long-term prospects that the area holds also has a bearing on the demand for property in an area, which indirectly results in price appreciation.

Inflation

Inflation has a direct influence on price appreciation. Inflationary trends generally exist when there is an excessive amount of money in circulation, which results in a fall in its value. This results in the rise in prices of various commodities associated with the real estate sector. They include land prices, prices of construction materials, labour charges, legal building charges as well as various other charges related to the sector. However, inflation cannot be solely responsible for the appreciation of realty prices in an area. This is dependent on various other factors like the accessibility, the connectivity, the social and physical infrastructure and the availability of residential projects in the area.

Home loan rates

The interest rates on home loan also have a direct bearing on the demand for residential property in an area, and thereby on the price appreciation. Where there is an increase in the interest rates charged by banks on home loans, the demand for residential property decreases due to the increase in the total amount that buyers will have to pay. Similarly, if there is a decrease in the interest rate on home loans, the demand for residential property will be higher as home buyers will need to pay only a lower amount.

Realty market drivers

They are various other factors that increase the liveability quotient of a particular area and hence in overall price appreciation. They include factors such as:

·  Employment opportunities in the area. Good presence of office space including reputed companies.

·  Overall connectivity to other areas across the city.

·  Accessibility to various transportation facilities that include road, rail and air.

·  Social infrastructure facilities like schools, colleges, hospitals, shopping centers, entertainment facilities etc. being in the vicinity.

·  Physical infrastructure features like good roads, bridges, flyovers, dedicated water and electricity supply, playgrounds, parks and gardens being present

·  Zoning regulations being applicable to the area, whereby permission is not granted for constructing too many projects. This facilitates the presence of more open spaces and greenery in the area, which promotes healthy living.

Spaces That Drives Residential Market Of Pune

Pune

Pune’s property market remains buoyant and expectant about the upcoming year, despite the economic slowdown and the general mood in the market. Given its performance last year, of being the second highest office space growth market after Mumbai, Pune’s realty sector is all set to get a boost this year. Infrastructure has always remained one of the leading factors for driving this growth. Great connectivity to Mumbai and a slew of projects on the anvil, such as the metro rail and Bus Rapid Transit System (BRTS), will augment this growth in the future.

Most cities have witnessed a decline in net absorption in the range of 20-40 per cent during the year 2013, except Pune, where incremental new space take-up increased by 15 per cent in 2013, according to a Cushman & Wakefield report. “Investments in office assets have been concentrated in the cities of Bengaluru and Pune. Large investment funds have also invested majorly in office assets in Pune, primarily in the micro-markets of Hinjewadi and Kharadi. According to the year-end realty report from DTZ, this decrease in vacancy reflects an increase in the office space demand, primarily in Delhi-NCR, Pune and Mumbai, in the fourth quarter. Pune reported the highest growth in office demand at 26 per cent, quarter-on-quarter. At the end of 2013, the total take-up for the entire year stood at 27 million sq ft – in line with but slightly lower than the 27.3 million sq ft recorded in 2012. Pune and Mumbai witnessed the highest growth in take-up of 52 and 17 per cent, as compared to their take-up in 2012, according to the DTZ property report.

“The absorption of office space in the year 2013, stagnated to 27 million sq ft, showing no growth over the previous year. The net absorption or new demand was even lower as bulk of the above demand came from relocation/consolidation into better buildings or location. The year 2014, will continue to be challenging for the commercial realty market. Although the global economy is expected to improve, the uncertain political and business climate in India will continue to create uncertainty in the business houses, which is likely to result in low uptake of fresh space,” opines Anshul Jain, chief executive officer, DTZ Realty.

“Investors have taken a keen interest in office spaces, especially in future highgrowth locations. Of the total investment in the commercial real estate market, majority has been in the Hinjewadi region, which is expected to see the majority of office leasing activities. These markets will remain tight, with a balance in office absorption and supply and will see the highest quantum of leasing activities at competitive pricing in the next 12-24 months,” adds Dutt.

According to the Cushman & Wakefield report, the commercial real estate market of Pune witnessed total net absorption of 3.5 million sq ft, recording an overall increase of 15 per cent, nearly 78 per cent of which was in Grade A spaces. This significant rise in net absorption of Grade A spaces can be attributed to the growing preference amongst occupiers for quality developments.

The city witnessed a total supply of 3.5 million sq ft, of which 3.2 million sq ft was contributed by Grade A development. The total supply increased by nearly 66 per cent as compared to 2012, with the majority spread across locations like Viman Nagar, Kharadi, Hinjewadi, Airport Road and Kalyani Nagar. This led to a rise in vacancy levels from 21 per cent in 2012, to 23.5 per cent in 2013. Approximately, 5.7 million sq ft of office space is expected to come into the market in 2014, of which Grade A spaces are expected to contribute nearly 65 per cent. Most of this supply will be concentrated in areas like Airport Road, Yerwada and in the suburban and peripheral areas of Kharadi, Viman Nagar, Nagar Road, Hinjewadi, Baner and Balewadi. This inflow of supply is expected to drive up the vacancies across sub-markets, as transaction activity is expected to remain stable.

Driving residential growth

The city’s rising clout as a preferred destination in the country and its growth story of having the distinction of being the only city that recorded a positive growth of 15 per cent in net absorption in 2013, makes it ideal for investment in residential units. “In 2013, mid-segment (Rs 40-80 lakh) apartments accounted for 50 per cent of the new launches in Pune. Demand for the mid-segment housing category has been observed in Hinjewadi, Wakad, Thathawade, Ravet, Kharadi, Wagholi and Talegaon,” says Shrinivas Rao, CEO-Asia Pacific, Vestian. “Neighbourhoods in west and east Pune, like Hinjewadi, Hadapsar and Kharadi, are steadily witnessing high residential activities due to the presence of IT/ITeS clusters. Capital values in these locations are likely to witness appreciation in the short-to-medium term due to its proximity to IT/ITeS hubs and the Mumbai-Pune Expressway,” adds Rao. The demand for housing close to these belts, has given rise to the development of many residential units and the rise of social infrastructure such as retail outlets, schools and hospitals to cater to the workforce living here.

According to Ganesh Vasudevan, CEO, IndiaProperty.com, “The demand in the mid-segment is still there but buyers are more inclined to buy flats which are already constructed, as against those in the planning stages. The reason for this has been attributed to the slowdown in the economy and thus, buyers are not willing to take a chance on whether the builder will be able to complete the project or not. A marginal price hike is expected in this segment by the end of the year.” With many auto giants, IT and manufacturing companies located in these localities, employees prefer to live close to their offices.

“Over the last two years, Pune has prevailed as one of the country’s best-performing residential real estate markets and will not witness a price correction across the range of housing categories. Owing to its strong end-user driven market, this city is likely to witness demand for mid-range housing in the short-to-medium term. The primary contenders for residential space, chiefly comprise of employees from the IT/ITeS, automobile, manufacturing sectors and investors from Mumbai,” concludes Rao.

Realty Sector to Witness Healthy Growth in 2014

After a long period of slump in the country’s real estate sector, the markets are slowly making a come-back this year. While some macro markets performed poorly last year, others outperformed expectations. Most of these markets included tier-II and III cities. Overall the real estate market across the country remained stable in 2013. With the union budget coming up this year and other supporting factors, the real estate market may start showing signs of full recovery.

Reality sector has a positive outlook

There are several positive indicators that show a possible recovery of the real estate sector. One of these are the projects that are nearing completion this year and the availability of the most sought-after ready-to-move-in apartments across the country. There are various cities that are attracting buyers as well as developers due to the ongoing development of the infrastructure such as monorail, metro, flyovers and ring roads. Some of these real estate markets include Bengaluru, NCR, Ahmedabad, Chennai and smaller cities such as Lucknow, Chandigarhand Indore.

Interestingly, despite the sky-rocketing prices in Mumbai and Delhi and rising property prices by at least 50% by last year, the markets saw either slightly negative or stable growth. These markets did, however, perform lesser than other cities such as Bengaluru, Kolkata and Chennai.

Predictions for 2014

Real estate consultants and experts opine that overall, residential markets across the country will witness stable capital values except for those that are over leveraged and are unable to attract sales. These markets may expect some price corrections or slow movement. Some of these localities include micro-markets of Mumbai and NCR. Though the first half of the year is expected to have negligible improvements, the real estate market is expected to significantly improve post elections, during the second half of 2014.

Important factors that are keeping the hopes high for the real estate players include anticipation of a stable government, favourable government policies after the general elections and reasonably priced projects focused on the middle-class segment in good locations. Apart from location, good connectivity, social infrastructure and reasonable prices will be key points a buyer will be focusing on. The previous year taught several developers and buyers to be more realistic about property prices, owing to the huge inventory pile up. Hence, one can look forward to more reasonably priced projects in the coming times.

Areas that attract buyers

Several areas are expected to attract end-users as well as investors. These include some already well performing markets as well as newly emerging markets in the tier-II and tier-III cities. For example, Bengaluru remains a favourite amongst investors in the present conditions. A consistently growing infrastructure and decently high inventory level in the city will help buyers secure attractive deals. Kolkata, Chennai and Pune are other cities that are doing well in terms of absorption of projects. Emerging markets include cities such as New Chandigarh,Coimbatore, Indore and Kochi. These cities attract investors majorly due to the low property values compared to the tier-I cities, improving infrastructure and good connectivity to tier-I cities.

In the end, the verdict from the real estate experts is simple. Housing projects that are launched in good locations with good infrastructure and are reasonably priced will help in improving the real estate sector across the country. Since, several macro-markets are emerging that will cater to the buyer needs, the year ahead may look at positive trends in the realty sector.

Pune: 6 reasons to invest in Sinhagad Road

With ever-increasing property values in Pune’s city centre, peripheral areas have started grabbing the eyeballs of many home buyers. Sinhagad Road is one such stretch that has shown tremendous growth in the last five years.

Here’s why.

Connectivity

“Located in North-West side of Pune, Sinhagad Road provides good connectivity to Mumbai-Bangalore highway and IT hubs such as Baner and Hinjewadi,” says Sanket Mungad, a city based realtor, Preet Properties.

Infrastructure updates

To reduce the traffic snarls on this stretch, a nine kilometre road is planned directly leading to the Sinhagad Fort. In addition, one of the four corridors planned by the Pune Municiapal Corporation (PMC) for the Bus Rapid Transit System (BRTS) is Dhayari to Hadapsar that will pass through Sinhagad Road.

Capital appreciation

Not only haven for end-users, Sinhagad Road is also a potential option for investors. As per the data with us , the area has recorded an appreciation of about 38 per cent in the last one year. Thus, if you had purchased an apartment in Sinhagad Road for Rs 44 lakh in Dec 2012, you may well be able to encash it for Rs 61 lakh by now – an appreciation of Rs 17 lakh in a mere one year.

New projects

Owing to well-built connectivity and sound infrastructure, several developers have launched their projects on Sinhagad Road. Some of them are D S Kulkarni Developers, Shree Saikrupa Developers, Rohan Developers, Hemant Group, Saarrthi Group, and Shree Malhar Associates, among others.

From multi-storey apartments to villas, there is an array of housing options available. As per data with Magicbricks.com, the capital values of newly launched projects are in the range of Rs 60 lakh to Rs 3 crore. These projects offer all kinds of BHK configurations; however, buyers’ preference is mainly inclined towards 2BHK units.

Nanded city

Nanded City, a 700 acre mega township is another reason fuelling demand in Sinhagad Road. Launched by Magarpatta City, this township will have several corporate houses, IT companies, and animation and gaming companies. This will not only create ample job opportunities, but will also enhance the housing demand in the area.

Social and physical infrastructure

“Sinhagad Road has all the amenities required by the residents. Hospitals, banks, schools, restaurants and entertainment centers are all within the radius of 5km,” says Seema, Seema Group.

Due to proximity to Khadakwasla Dam (1.2km), Sinhagad Road does not face any water woes. Hence, the area is also sought for rental accommodation. The prevailing rates for 1BHK unfurnished apartments are Rs 5,000-10,000 per month and a furnished or semi-furnished are available for Rs 10,000-15,000 per month. For 2BHK apartments, it varies from Rs 15,000-20,000 per month

Four Reasons To Invest in Manjri, Pune

Pune’s Manjri is seeing high demand for housing owing to several favourable factors. Located close to Mundhwa in South-East Pune, the locality has swift connectivity through NH-9, proximity to developed localities and availability of basic facilities nearby. Let’s have a detailed look on what it has to offer to a real estate buyer.

Connectivity and infrastructure: It is located close to Pune – Solapur Highway, which makes it well connected to other parts of the city. Localities such as Viman Nagar, Magarpatta, Hadapsar and Kharadi are located within 8 kms from Manjri. Also, the International airport at Lohegaon is about 15 km away whereas railway station is about 13 km away. The area also boosts schools, hospitals and restaurants in the vicinity.

Price appreciation: The data with Magicbricks states that the capital value of apartment ranges from Rs 4,000 to 4,500 per sq ft. “Manjri was a rural area about 4-5 years back, however, from the past couple of years the area is witnessing new real estate developments,” says Ashok Mane of Shree Sai Consultancy. The data also reveals that the area has seen about 10 per cent increase in propertyvalues in the last one year. Also, many new projects are coming up which are still affordable when compared to nearby areas such as Viman Nagar and Kharadi.

View Larger Map

Proximity to IT hubs: Due to its proximity to IT hubs such as Kharadi and Magarpatta, the area is seeing high demand or properties that are compact. “Young professionals who are bachelors or have small families look for smaller units. The smaller units are mostly in demand as these are easily maintained,” says Suresh Agrawal, owner of Laxmi Construction, a local development firm.

Small apartments in demand: Magicbricks data reveals that in Oct-Dec 2013 quarter, against the 67 per cent demand for 2BHK units; the supply constitutes about 65 per cent for the same property type. The supply of one BHK stands at 19 per cent out the total against the 25 per cent of the demand. However, against 7 per cent of demand for 3BHK units, the supply is about 19 per cent for such property type. This indicates that the area is seeing high demand for small and compact units.

So, if you are looking to buy small apartments within your budget, Manjri can be a best bet to opt for!

10 Tips for buying ready to assemble kitchen cabinets

The ready to assemble kitchen cabinets offer multiple advantages compared to traditional kitchen cabinets and are spreading their wings. There are so many options and variants when it comes to selecting the right kitchen cabinet for one’s home.

Here are the top ten tips one must keep in mind before buying a ready to assemble (RTA) kitchen cabinet.

Short-list the required kitchen cabinet: Before embarking on any decision to buy ready to assemble kitchen cabinets, it is essential to short-list the kind of cabinet for one’s specific requirements. There are several cabinet variants available in the market today. From wood based cabinets to laminated ones and cabinets made up of stainless steel, the options are endless. The key is to finalize a budget and choose the desired type as per the space available in one’s kitchen.

Focus on Material: Choosing the right material is another important point to consider before finalizing your cabinet purchase. While most kitchen cabinets are made up of different variants of wood like pine wood, oak wood and even bamboo, there are other options available in the market as well. Laminate and Thermofoil are gaining popularity owing to their extreme durability and value for money. The downside of stainless steel or laminate based cabinets is that it is heavier compared to traditional wood cabinets.

Know Your Dimensions: Knowing your cabinet dimensions before making any purchase related decision. The standard sizes available in the market may not necessarily fit into your kitchen space. The best way is to get the approximate dimensions of the cabinet and explore other sizes until you find the perfect kitchen cabinet. People having an open kitchen, for example, would need a broader than usual cabinet that can be customized according to personal requirements.

Compare Installation Price: Different ready to assemble kitchen cabinets have different installation charges. Enquire with the kitchen cabinet dealer about this before finalizing the purchase.

Don’t Ignore Customer Service: Purchasing a kitchen cabinet is just a one off thing, but having to deal with its customer service mechanism is quite another. Even the most well oriented product with a bad customer service loses its significance in the long run.

Focus on the Layout: Ready to assemble kitchen cabinets comes in various designs. The key is to short-list the design best suited for your personalized requirement depending on the size of the kitchen.

Domestic Vs International Brands: Many domestic and international companies are offering ready to assemble kitchen cabinet modules today. Rather than saving money with a new company, it is better to go in with a well established brand with a good dealer network.

Eco-Friendly Designs: There are a lot of eco-friendly kitchen cabinet modules available in the market today. If you are designing an eco-friendly kitchen, having an eco-friendly kitchen cabinet can add the perfect touch to your kitchen design and ambiance.

Embrace Cabinets High On Technology: Just like most kitchen accessories, kitchen cabinets have also evolved over the years. A lot of modern day kitchen cabinets use technologically advanced in designs to offer the best of convenience. Rather than going in for a traditional kitchen cabinet, one is better off looking at modern day kitchen cabinets.

Finishing and Features: Whether one chooses a rustic style kitchen cabinet or a modern day kitchen cabinet, focus on the finishing and features before selecting one design over the other. What may work for one home may not be necessarily good for another. If for example, your interiors design is made up of wood, then having a stainless steel designed kitchen cabinet in your open kitchen may just act as an eyesore. Remember, kitchen cabinets play a very important role in enhancing the overall beautification of the home’s interior design and decor.