Mumbai attracts 40% private equity investment in Indian real estate

Mumbai: The city attracted 40% of the $2.4 billion (around Rs 15,500 crore) private equity (PE) investments in the Indian real estate between January and September 2015. 

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Global real estate consultant Cushman & Wakefield, which released its report on Wednesday, said the total PE investment this year was the highest since 2008. The investments come when the office absorption across top eight cities is estimated at 158 million sq ft during 2015-19, it added. The PE investment this year is an increase of 84% over the corresponding period in 2014. 

The figures were released in the annual real estate investment publication, '`India Real Estate-Resurgence on the Anvil' in association with the Global Real Estate Institute. 

Delhi-NCR and Mumbai remained the top contributors in attracting PE investments this year. Mumbai attracted the highest PE investment volume with over Rs 7,000 crore, followed by Delhi-NCR, which garnered a 24% share. 

"The increase in momentum may be attributed to a few large deals in Mumbai and Delhi-NCR. With Indian banks shying away from lending to developers, developers are becoming more reasonable in pricing to attract investors,'' said the report. 

The residential sector attracted majority (77%) of the PE investment volume between January and September 2015. "This year appears to be heralding a revival of interests of private equity investors in real estate,'' said Sanjay Dutt, MD, India, Cushman & Wakefield. "There has also been a return of some blue chip investors who had withdrawn a few years ago, re-entering the Indian real estate market with direct investments. A number of Chinese investors have also been showing strong interest,'' he said. 

Robert Marten, MD, Global Real Estate Institute, said global investors were looking for four key pillars for investment, mainly market demand, governance, transparency and liquidity. "None of the rival real estate markets can boast as much progress as India,'' he said. 

The report said overall urban housing demand in India is expected to grow by nearly 15 million units by 2019-end. The top eight cities will contribute 3.4 million units to this overall demand. Within the top eight cities, the middle-income group will be the primary demand driver, accounting for 41% or 1.4 million units. "Demand is expected to outstrip supply by roughly 2.5 times. At least a quarter of this demand will be contributed by Delhi NCR,'' it said. 

In the commercial side, Thane-Belapur Road is expected to be the most sought after destination for back-office grade A office space. 

Source - TOI

Indian real estate aggregator Square Yards opens office in Qatar

CHENNAI: Square Yards, a real estate startup focussed on the NRI segment, has opened its office in Doha, Qatar. This is the startup's third office in the Gulf Co-operation Council (GCC region) after Dubai and Abu Dhabi.

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 The Gurgaon-based company sees massive potential in Qatar which it claims has over 500,000 Indians with nearly 30% qualifying in the Middle/ Upper-Middle Income category. Through the new office, Square Yards aims at serving the NRI clientele better who want to invest in India but lack sufficient knowledge.

Founded in 2013, Square Yards is a technology-enabled transaction and aggregation platform for global real estate. Square Yards currently transacts over 300 transactions with GTV crossing $400mn a year. 

Commenting on this new office opening, Kanika Shori, COO of Square Yards, said, "The opening up of this office is an integral part of the Square Yards' strategy to capitalise on penetrating further into the NRI section living in the GCC nations. It will enable the company to focus more squarely on the NRI populace living in Qatar and introduce well-structured real estate investment deals from India, GCC and other parts of the globe to the prospective investors and home buyers." 

Anupam Rastogi, head of Square Yards in the GCC and Africa region, said, "Qatar's aggressive economic expansion plans in conjunction with its preparation for Soccer World Cup 2022 is expected to bring in more qualified Indians to join the nation in the near future- indicating more opportunities." 

Since its inception, Square Yards has been catering to the NRI clientele spread across the globe, through its international offices in seven countries, allowing the real estate aggregator to breakeven in 22 months. 

As part of its future expansion internationally, Square Yards will soon open offices in Canada and Australia. It is also planning to open offices in Kenya, South Africa and the US. 

Source - TOI

India will need 76.5 million skilled workforce in Building, Construction and Real Estate By 2022

According to a report by National Skill Development Corporation (NSDC), India will need around 76.5 million strong workforce in the India’s booming Building, Construction and Real Estate sector. Out of the 24 sectors studied by NSDC, this sector will have the maximum incremental human resource requirement from 2013-2022.

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According to the findings of the report the demand of skilled employment in the sector arises due to demand for affordable housing which is expected to increase to 38 million from 29 million (present) by 2030, rapid growth in IT and financial services into Tier-II and Tier-III cities, investments in key infrastructure segments’ including power, road, railways, ports and civil aviation is expected to reach $1 trillion during the 12th Plan period, demand for warehousing space (ambient and cold chain) in the country in major Tier-I and Tier-II cities is expected to surge as industrial parks are being setup and food trends shifting to more processed food.

Commenting on the report, Dilip Chenoy, MD & CEO, NSDC said, “Our Hon’ble Prime Minister has already shared his vision for building Smart Cities in India. There is a huge need that the industry has to cater to. We need manpower, proficient with excellent skills on technical abilities. The industry and the government need to pay a special focus on this segment of workforce.”

“Over the last 5 years, under NSDC, more than 5 million (cumulatively) have been skilled and more than 15, 37, 657 (cumulatively) placed,” he further added.

The report also states that the construction sector is one of the largest seasonal employment providers in India next only to agriculture and is also highly unorganised, principle industry employing short duration out-migrant. It also states that of the total estimated 15.2 million short duration out-migrants, more than 36.2 percent are employed in the construction industry alone and more than 80% of the employment in Building and Construction sector is minimally skilled workforce.

The Construction sector specifically is projected to grow to INR 11,954 billion by 2017. It is the largest contributor to central exchequer and second largest employer in the country. It creates more than 45 million jobs either directly or indirectly among various classes of individuals in the country.  Shortage of talent in the construction centre is a long term problem and will continue to push up project costs and risks. The education and training capacity offered through various schemes currently are inadequate to meet the demand of the large percentage of unskilled workers in the Indian labour market. The education system is often not delivering the required number of specialists across project management, engineering, surveying, contract management and the skilled/semi-skilled labour. It is imperative that the industry and the government.

Between 2000 and 2013, the sector attracted USD 40399 million as foreign direct investment. It is expected to attract FDI of USD 180 billion by 2020. The sector grew at a CAGR of 9.42% between 2003-04 and 2012-13. Capital investments in the sector is anticipated to rise from USD 651 billion in 2012-13 to USD 1181 billion in 2019-20.

In terms of employment, technicians/foremen have had the maximum growth of 95% between 2005 and 2011 followed by unskilled workforce (34%). The report highlights the fact that only a meagre 9.8 million construction workers of the total 32 million workers are registered in the country. Tripura, Manipur and Lakshadweep are the states/UT that employ the highest number of registered workers in construction sector.

The NSSO findings also reconfirmed that over 97% of individuals between 15 and 65 have no exposure to any training. So the imminent need is to expand the reach of training providers, set up models and institutes with the capability to scale.

Pvt equity investors fund realty sector amidst slowdown fears

PUNE: Property exhibitions, limited period offers and discounted sales are some of the desperate efforts real estate developers have made in the last few months that make us believe that all is not well on the realty front. But private equity investors have not lost faith in the potential this sector holds as they continued to pump in money through the last year and have almost doubled their investments during January-March (first quarter) this year.

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The latest report on Private Equity investments in Real Estate (PERE) by global real estate consultancy Cushman & Wakefield shows that total inflows in the sector for the first quarter of 2015 was Rs 5,168 crore - higher by 85% from Rs 2,800 crore during the same quarter a year ago.

 

The increase in private equity investments during the first quarter (Q1) could be attributed to improved market sentiments thanks to a very strong push from the government in creating a more conducive business environment and higher investments in residential and commercial office assets, which increased by 158% and 68% respectively compared to the same period last fiscal, the report has highlighted.

 

The residential sector attracted the highest transaction volumes during the quarter with a 53% share in total investment activity, the rest 47% going to the commercial/office sector.

 

Amid liquidity issues faced by residential developers due to subdued demand and restricted access to debt funding, private equity funds have emerged as an important alternative source to meet the funding requirements, the report said, adding that investments continue in the residential sector at the project level rather than at the entity level to protect their investments.

 

At the national level, Chennai recorded the highest level of transaction volume in the first quarter with investments of Rs 2,881 crore, nearly six times the investments in the same period of last fiscal. Investments in Chennai were primarily in residential assets (84%) and remaining (16%) were in commercial office assets. Delhi-NCR followed Chennai with second highest investments at Rs 926 crore. Investments in Bengaluru more than doubled (Rs 902 crore) from the previous quarter.

 

In the first quarter of this fiscal, residential assets recorded the second highest private equity investment since 2008. The total value of investments in the residential sector was 2.5 times more than the first quarter of last fiscal and was recorded at Rs 2,752 crore. Relatively attractive return on investments and easy exits increased focus on housing from the Narendra Modi-led BJP government and high funding needs are likely to sustain the high investments in residential assets, the report added. 

Source: The Times Of India

Modi government faces opposition test on GST and Real Estate Bills

NEW DELHI: The government's legislative agenda may suffer a setback as the Congress-led opposition looks set to demand that the Constitution amendment bill on Goods and Services Tax and the Real Estate Bill be sent to select committees of the Lok Sabha and Rajya Sabha, respectively. 

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The hurdle the Real Estate (Regulation and Development) Bill, 2013 — slated to be taken up for consideration and passage on Tuesday — faces is evident with many Opposition parties rushing with notices to Chairman Hamid Ansari on Monday evening. These parties are demanding that the bill be referred to a select committee of the House for scrutinising 'contentious amendments' which were dubbed by Congress vicepresident Rahul as "pro-builder and anti-home buyer." The notices, given by Leader of the Opposition in the Rajya Sabha, Ghulam Nabi Azad, and JD(U) chief Sharad Yadav, have the support of Congress, Janata Parivar parties, DMK, CPM and CPI, according to sources. 

 

Congress' demand that the GST Bill — to be moved for debate and passage by Finance Minister Arun Jaitley in the Lok Sabha on Tuesday — should be referred to a House committee makes its chances of clearing the Rajya Sabha test difficult. Government managers, however, are hopeful of getting it passed in the Lok Sabha, where it has the requisite two-thirds majority for a Constitution amendment bill. 

 

The government is also trying to win the support of AIADMK, BJD and Trinamool Congress. Ever since AIADMK and BJD demanded the bill be referred to a standing committee when it is taken up in the House last week, Jaitley has been talking to Jayalalithaa and Naveen Patnaik for their parties' support. While sections in the government are hoping to get JD(U) on board on the GST bill, party president Sharad Yadav struck an ambiguous note on Sunday: "GST bill is something that concerns state governments. Therefore, it would be better if the Centre holds discussions with the state governments on the pending issues to arrive at a consensus before pushing the bill," Yadav said. 

 

Rahul Gandhi made Congress' opposition to the real estate bill when he called it "pro-builder". The government is keen on getting the bill that seeks to establish regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building in an efficient and transparent manner passed in this session of Parliament. TMC supports the bill while some other opposition parties are ambiguous about their support.

Source: The Economics Times