Commercial development opens up residential realty

Proximity to the IT hub of Whitefield, upgradation of Old Madras Road and affordably-priced residential options are bringing the Hoskote Road belt into focus.

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The emergence of Whitefield as a self sustaining township has had an impact on locations along roads connecting to the IT node of the east. One such location on the outer limits of the city is Hoskote. Access to Hoskote is through Whitefield Main Road via Kadugodi as well as through Old Madras Road via K R Puram.

Old Madras Road has witnessed significant development from its origin in the city at Ulsoor, traversing C V Raman Nagar on to K R Puram, leading to Whitefield and Hoskote. The upgraded highway has brought Hoskote closer to Whitefield, bringing with it the advantage of large land parcels available at comparatively affordable prices. This has led to increasing residential activity on the stretches connecting these two locations.

Farook Mahmood, Managing Director, Silverline Realty Pvt Ltd, elaborates on developments taking off here. "Located around 28 km from the city centre, the Karnataka Industrial Areas Development Board has a major presence here with an industrial park. There is an industrial zone being developed here and many industries are coming up on the main road. The Hoskote Road belt is turning into a hub for auto and ancillary sectors with two auto majors here. Moreover, it is accessible from Whitefield and Marathahalli. This has opened up demand here from corporate employees too."

According to research by Cushman and Wakefield, Hoskote Road has two bedroom and three-bedroom configurations in apartments. Size ranges are 900-1,200 sqft and 1,200-1,500 sqft respectively with prices ranging between Rs 35-75 lakhs.

Development focus around Budigere Cross

Budigere Cross is a fast-growing corridor with access to IT companies in Whitefield on one side, and the hardware aerospace park and the international airport on the other. The area has also witnessed industrial investments from Japanese firms.

Hoskote is just three km from Budigere Cross.

A S Sivaramakrishnan, Head Residential Services, CBRE South Asia, elaborates, "Currently, multiple Grade-A residential developments from reputed developers are coming up near Budigere Cross. There are plot development options between Rs 1,200-2,000 per sqft in and around Hoskote while the rate at Budigere Cross is Rs 4,000-5,000 per sqft. There are some residential developments in Hoskote in the range of Rs 40 lakhs for two and three-bedroom apartments."

Farook says, "Budigere Cross has emerged as a major residential location here. Apartments are available here in the price range of Rs 3,000-4,500 per sqft. Sites are available in the Hoskote Road belt in 40x60 ft and 30x40 ft dimensions, price averaging Rs 1,500 per sqft."

Striking a price comparison between residential options around Budigere Cross and neighbouring Whitefield, Ilyas Rajjan, Managing Director, Trend Shelters, explains, "A two-bedroom apartment in a good location in Whitefield, say around Hope Farm Circle, near ITPB or 1-2 km from a prominent mall on Whitefield Main Road towards Varthur, will cost around Rs 80 lakhs. Just 8-10 km away at Budigere Cross, you can get it for around Rs 50 lakhs. Affordable housing options are available here too. This has led to homebuyers in the 23-29 years age bracket investing here."

Source - TOI 

Lodha Group eyes growth in commercial realty space

MUMBAI: Lodha Group, the country's largest realty developer by sales, is now carving out a new vertical with strategic focus on commercial property developments. The group that has so far concentrated on residential development is looking to increase its presence in office space as well.

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"We have been working on office projects, but in the next five years it will be a significant part of our growth strategy given the size and scale we are planning for. We are aiming at around $3 billion worth equity valuation for our commercial business itself by 2020," Abhishek Lodha, Managing Director, Lodha Group, told ET.

 So far, Lodha has developed total 5million sq ft of offices across ten projects in Mumbai Metropolitan Region. Currently, the group has 3 million sq ft office space under construction and in planning stage at Palava City near Mumbai and its project New Cuffe Parade in Wadala. The company will start construction on the planned portion of this office space in the next 6 months.

The developer will be investing around Rs 500 crore each for the next two years on its commercial projects. Lodha clocked revenues of Rs 8,000 crore in 2014-15 (April-March) and currently derives revenues worth around Rs 600 crore from its commercial projects.

"The market is getting more organised and we can clearly see the rise in institutional investors like pension and sovereign funds' interest in yield generating commercial assets. The demand for office spaces is increasing, while quality projects are running into shortage," Lodha said while reasoning the group's interest in office projects.

In the last few months, commercial realty market across the country has witnessed large transactions indicating a revival in space pick up. Robust deal momentum and data points are making green shoots in office space absorption visible. 

After over three years of weakness, total purchases and leases of office space in the top eight property markets rose to 35 million square feet during 2015. This is the second-highest absorption figure in the country's history after 2011. Net commercial real estate transactions by companies rose 17.1 per cent from a year ago, according to a recent JLL India report.

Recently, Lodha Group also formed a separate business vertical to develop super-luxury projects, starting with Mumbai and London. Following the launch of the luxury vertical, the company has now identified commercial real estate as the next area of strategic focus. In the next five years, Lodha is planning to start developing total 10 million sq ft in Mumbai Metropolitan Region and Pune. The new vertical will be overlooked by the company's current team and no new structure is expected to be set up for the same.

From the year 2020, Lodha is looking at delivering 3 million sq ft commercial space every year. "Apart from our ongoing projects sites, we are scouting for land parcels in suburban areas of Mumbai for our proposed commercial projects with potential of 1 million sq ft each," Lodha said.

 At New Cuffe Parade and Palava, the group is currently developing 9 lakh sq ft and 2.1 million sq ft saleable office space, respectively. Office spaces at New Cuffe Parade and Palava are expected to be completely delivered by September 2017 and March 2020.

Source - ET

Investors turn pessimistic on commercial real estate

The Indian commercial property monitor also indicated that more number of respondents – investors and tenants – in the previous quarter felt that market valuation of the commercial properties were expensive compared to the quarter before.

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In contrast, the percentage of those who had previously felt that office spaces were fairly priced dipped in the third quarter ended September 30 compared with the earlier quarter.

In terms of the property price cycle of the commercial segment in the real estate sector, a large percentage – 38.3% – feel that it was in stabilization phase. The percentage, which believed it was in an early uptrend, was also high at 27.2%. An almost equal percentage of 24.7% felt the commercial property segment was in mid-downturn. Only 6.2% felt it was in mid-upturn and a small 1.2% felt it had peaked.

Devina Ghildial, managing director, South Asia, RICS, said the Indian commercial property market was on the upswing as demand was outstripping supply but growth in rentals was modest compared with earlier expectations.

"There is a dearth of available supply of grade A office or commercial spaces across major cities in India. Many new MNCs are looking to come into the country while existing large corporate are also ramping up their operations at a solid pace, but supply of grade A office space is not able to match up to this demand, leading to healthy appreciation," she said.

According to the report, there was a spurt in the demand for commercial property in the sector as auto, banking financial services and insurance (BFSI), telecom, fast moving consumer goods (FMCG), consumer durables, IT and e-commerce start-ups in the national capital region (NCR), Bangalore and Mumbai, which remained upbeat with closures of several large-sized transactions during the quarter.

Ashutosh Limaye, head – research & real estate intelligence service, JLL India, said commercial properties in India were most affordable when compared to other global markets with rentals having bottomed out and making its way up.

He said the rise in rental was "gentle" but the direction was definitely up.

"The rentals in the commercial segment of real estate is currently fair and competitive as it is still below the previous peak (in 2008)," said Limaye.

According to him, Bangalore was the only market that had reached its peak of 2008 while most others remained more than 10% below it.

Limaye said Chennai was 2% below its peak, Pune 10% while the rest were over 10% lower than their peak.

He said Mumbai and Delhi had reached a high of Rs400 per square feet (sq ft) per month in 2008.

"Today, Nariman Point is 30% below that (2008 commercial property rentals) while suburbs like Andheri, Kurla and others were 20% lower," he said.

J C Sharma, managing director of Sobha Developers, said India offered arbitrage in two things – wages and salaries and office rentals. He said MNCs came to India because of these two arbitrages available to them to be competitive in the global market.

"If you, exclude markets like Mumbai, Bandra Kurla Complex (BKC) and Delhi, 90-95% of the transactions in the Indian commercial property sector were less than $1 per sq ft, which is very cheap compared to markets in other emerging markets and some of the Southeast Asian countries like Malaysia, Bangkok, Jakarta, etc," he said.

Sharma said high absorption rate in the commercial sector over the past few quarters in markets like Chennai, Kochi and others had resulted in better realisation in rentals.

Source - DNA 

BKC emerging as a top commercial destination

Mumbai

Over the last decade, Bandra­Kurla Complex (BKC) has emerged as an important business district of Mumbai and a base for financial services firms in India, backed by a robust infrastructure development in the region and incentives such as higher Floor Space Index (FSI). It has succeeded in steadily replacing the maximum city's traditional 

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Central Business District (CBD) of Nariman Point over the years. According to CBRE's semi-annual Global Prime Office Occupancy Costs survey, Mumbai's BKC ranked 15th on the `top 50 rankings for global prime office properties'. This has been largely because of its attractiveness as a prime commercial hub for corporate firms from the financial sector. In the last 10 years, commercial office stock has grown by more than 300 per cent in BKC.

The concept of BKC was first formulated in 1977 when the Mumbai Metropolitan Regional Development Authority (MMRDA) was appointed as the Special Planning Authority (SPA) to conceptualise and promote the location as a hub for financial and other ancillary services. Currently, BKC has approximately 9 million sq ft of Grade A office stock spread across more than 35 buildings. Along with various multi-tenanted projects, the micro-market is also home to a substantial number of built-to-suit office developments of domestic banks such as ICICI Bank, Bank of Baroda, and the State Bank of India, as well as financial sector stakeholders such as the Securities and Exchange Board of India (SEBI) and the National Stock Exchange (NSE). Such an unparalleled presence of Banking and Financial Services Institutions (BFSI) in the region is only comparable to global prime office districts such as Hong Kong Central, London's West End and Midtown Manhattan in New York.

Recent development timeline and ease of accessibility drive demand

Leading architects such as Skidmore Owings and Merrill, RSP India Ltd and Kohn Pederson Fox, are actively engaged in the area, which has led to the development of investment-grade office buildings with large floor plates and international specifications. This has prompted various Indian and multi-national companies (both public and private), to set up their India head quarters in this office district. Consulates of various countries such as the UK, the US, Australia and New Zealand, among others, have also established their presence in the region. In the recent past, an increasing number of companies have preferred the micro-market to consolidate their operations in the city. Large sized office space taken up by companies such as Pfizer, Deutsche Bank, Citibank and Royal Bank of Scotland, has led to an increase in demand for office space in the region.

This has led to a significant increase in office developments, with BKC witnessing a nearly tenfold increase in office stock between 2005 and 2014. BKC is also home to the world's largest diamond bourse the Bharat Diamond Bourse spread across approximately 2 million sq ft. All these developments are located in a radius of approximately four sq km, which is unique in comparison to other office districts in Mumbai. This growth can also be accredited to the location advantage that BKC enjoys. It is easily accessible by rail and road from the central and western suburbs, as well as from Thane and Navi Mumbai.

Source - ET 

Commercial realty activity set to take off

Bangalore

Over the next couple of years, north Bengaluru is set to host many more corporates. Efficient civic infrastructure, upcoming Grade-A office spaces, relatively affordable office rentals and emerging residential locations are drawing occupier interest here.

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The focus has shifted to Bengaluru north as the next hub of growth, with the availability of large land parcels and government initiatives to facilitate the next phase of corporate and industrial expansion in the city. With the airport acting as the nodal point, development will radiate outwards towards locations such as Doddaballapur Road, Yelahanka, IVC Road and beyond Devanahalli towards Chikkaballapur. The developments around the airport are categorised into ITITeS and biotechnology, Special Economic Zone (SEZ), residential complexes, hospitality and entertainment, aero industry, medical hub, and finance and business districts.

Trivita Roy, Associate Director Research and Real Estate Intelligence Service, JLL India, elaborates on reasons why the north is looking attractive to corporates. "Locations in north Bengaluru offer easy access to the airport and good connectivity to the core city. This region has existing and upcoming residential precincts, which are helping in drawing and retaining a good talent pool in this part of the city. The north has relatively lower office space rents when compared with other well-connected locations."

Commercial market ­ an overview

According to research by Cushman and Wakefield, the peripheral north location in Bengaluru has 1.68 million sqft of Grade-A office space, primarily along Bellary Road, Thanisandra Road and Tumkur Road. In the first half of 2015, approximately 0.37 million sqft of leasing was witnessed primarily from the ITITeS sector as part of expansion activities.

Naveen Nandwani, Executive Director, Cushman and Wakefield, explains, "Yelahanka, Devanahalli and Doddaballapur comprise several industrial areas such as the Karnataka Industrial Areas Development Board (KIADB) Industrial Area and Apparel Park in Doddaballapur, KIADB Hardware Park in Devanahalli and Karnataka Housing Board (KHB) Industrial Area in Yelahanka. Within these locations, a key Grade-A office space development of approximately three lakh sqft is operational and is located in Yelahanka."

Source - TOI