Why Indian Real Estate Is In Need Of Foreign Funding?

By Shobhit Agarwal (Guest Writer)

While banks have aided most real estate development in the past, the cost of debt is getting higher by the day. The strict guidelines introduced by the RBI have made real estate lending even more expensive and cumbersome.

Currently, the costs of key inputs for real estate development are up by at least 7%. This is over and above a rise of about 25% last year. Labour cost is up 10-15% and the costs of steel and cement by about 7%. To add to this, funding costs have headed north. If we look at a city like Mumbai, the recent DCR amendments would add to developers’ costs by about 15%, which includes the fungible premium payable if the builder opts to take the additional 35% (floor space index) FSI option.

WHY IS BRANDING IMPORTANT IN 'REALITY' BUSINESS?

By M H Ahssan / Hyderabad

INN analyses the importance of being brand conscious in real estate. Prompt delivery, financial discipline, customized spaces is key. Both investors and buyers need to see builders walk the talk.

Sandeep Sadh, the CEO of a property portal, shariing branding nuances states, "The developers could be having a project in certain pockets of the city or he might have his presence in other cities as well. However, as compared to a consumer durable brand, there can't be a clear-cut market leader in the real estate sector.” A builders differentiating factor is vital, but that is based on his ability to deliver and also financially manage the project first.

Celebrity Endorsements: Poster Boys & Divas Of Real Estate

Celebrity endorsement, as a marketing strategy, has gone viral amongst Indian real estate companies today. From master blaster Sachin Tendulkar to Bollywood diva Sonam Kapoor – celebrities can be seen endorsing a whole lot of real estate entities and their projects. But does it really work to the point of boosting sales? 

What is so common among cricketing icons like Sachin Tendulkar, M S Dhoni, Yuvraj Singh, and Bollywood beauties like Deepika Padukone, Sonam Kapoor, Kajol and their male counterparts like Akshay Kumar, Ajay Devgan, Mohanlal and Mammootty? 
Well, these — and many more — celebrities from sports, Bollywood and glamour world are today the poster boys and divas of different realty firms, which are keen to encash upon their pan-Indian appeal and familiarity. From selling fast moving consumer goods to dream homes, the concept of brand ambassadors has become a rage in the country. It has emerged as a lowest common denominator item in advertising, to act as a kind of warrantor as well as differentiator in an uncertain and ‘me-too’ market. 

So much so that real estate companies are roping in brand ambassadors to improve their brand connect, even if celebrities have no brand fit. For, the immediate objective of these developers is celeb-linked awareness building. They feel the endorsement news reaches the customers at a much faster pace than any other communication modes and creates an instant impact. 

While film actress Sushmita Sen happens to be the brand icon of Assotech Ltd, it is Mahendra Singh Dhoni in the case of Amrapali Group. Former actress Twinkle Khanna aka Tina, has joined the Supertech bandwagon to endorse their ORB project — a circular shaped 40-storeyed luxury homes development at Sector 74, Noida. After quitting her film career more than a decade ago, Twinkle has taken upon herself the design of this 50-acre property. 

The reigning diva of Hindi film industry, Kangna Ranaut, has been roped in by Ajnara India to endorse its projects and in the case of Prateek Group, not one but two celebs are enhancing its brand image — Rajeev Khandelwal and Prachi Desai. Another real estate entity, Krrish Group has roped in dusky damsel Bipasha Basu to endorse its recently launched first project — Provence Estate in Gurgaon with apartments of an average area of 5,800 sq ft. 

Some developers have chosen to pick regional celebrities for adding zing to their advertisement campaigns. Of late, two Kolkata-based real estate companies have roped in Bong celebrities — Konkona Sen Sharma in the case of the Eden Group projects and celebrated musician Bickram Ghosh and his actor wife Jaya Seal for Paharpur Pragnya Realty to endorse its upcoming project in Barrackpore. Significantly, the Ghosh couple happens to have also invested in a property in the company’s first project, Genxx Valley in Behala, located on the southern fringes of Kolkata. Well, the list of popular icons endorsing real estate companies is long-drawn, with newer faces being added to it, frequently.

Brand Versus Icon 
It seems to have become difficult to market a real estate project without the endorsement of celebrities these days. With property prices touching the roof, real estate developers are pulling out all stops to lure customers. However, is selling a property costing `1 crore, as easy as selling a beauty product costing `50? Aren’t the basic parameters of transparency, credibility and honest delivery getting undermined in this process? 

Says Ambi M G Parameswaran, executive director & CEO, Draftfcb+Ulka, “Real estate companies are trying the last trick in the book. In a parity market with a lot of clutter, a well-known celebrity can, of course, help a brand get recall and recognition. FMCG brands have been resorting to this trickery for many years. The big difference is the fact that FMCG products are, by and large, low involvement purchases. Apartments, on the other hand, are very high involvement purchases, so using celebrities for selling homes is at best a risky exercise.” 

India being a celebrity-obsessed nation, celebrities can work in the realty sector just like in any other space. The main reason for more realty players to opt for celebrities is the expected rise in real estate prices. While an educated or savvy buyer may not be influenced by such exercises, but even in that circle, a buyer inclined towards films or sports wouldn’t mind getting swayed away by the star power. 

Anil Kumar Sharma, CMD, Amrapali Group disagrees that that real estate firms bank more on celebrity endorsement than the important parameters of good quality, value for money and timely delivery. “I strongly believe that brand ambassador and company’s goodwill are intertwined. As Dhoni has to keep performing well as the captain of Indian cricket team, in the same way, we have to keep alive our customers’ trust by providing them properties in a given time-frame, fulfilling all parameters,” says Sharma. 

So, do consumers really get influenced by the presence of brand ambassadors, while finalising their property purchase decision? “Frankly, we won’t buy a flat simply by seeing a celebrity as its ambassador. Of course, homes are a lifetime investment and there are many other factors that one has to look into before investing one’s hard earned money. We would want to invest with a credible developer who has a clean balance sheet and track-record. We adore Sachin Tendulkar, but that doesn’t mean that we will blindly buy a home endorsed by him,” say Hanoosh Kodakkat and Fariha H, an NRI couple living in UAE. 

Likewise, Realty Plus quizzed over 50 customers looking to invest in real estate across India. Majority of them said that it would make little impact if a project is endorsed by a celebrity or not. They said that real estate is purely a different ball game and it is not advisable to invest lakhs or crores of rupees, simply charmed by brand ambassadors, when it is a known fact that they are paid for their job. 

Disregarding Brand Fit 
At another level, more often than not, the celebrity is remembered, while the brand is forgotten. “One must find out whether the brand positioning fits the usage of a celebrity or is it a forced affair? Sometimes, the credibility factor also is diminished by using an incongruous star. If the project has many USPs and salient features, spend the budget to communicate these features rather than wasting it on paying some star,” says Kunal Banerji, president marketing at M3M. 

But, celebrity endorsement has started to fit in, as far as real estate industry is concerned, claims RK Arora, CMD, Supertech Ltd. “In my view, such endorsements help you gain the required attention of customers in the face of cut-throat competition, but still, the desired credibility comes from quality construction, good value for money and timely delivery of the project. We were more than satisfied with the response we received for ORB, which was endorsed by Twinkle Khanna.” Ananta Singh Raghuvanshi, director, DLF Homes strikes a balanced view, saying, “Irrespective of the industry, the power of celebrities in influencing the consumer’s purchase decision cannot be underestimated. It is an accepted fact that celebrity endorsement can bestow special attributes upon a product. However, if a celebrity can enhance the merits of a brand, in changing times, a reverse has been seen too. Moreover, the aspirational PR coverage and instant brand recall can invest a developer with a temporary credibility only.” 

A Selling Proposition? 
It is a moot question whether in today’s real estate market, cluttered with celebrity brand ambassadors, the buzz created by them ultimately helps clear up piling inventories and boosting sales. 

Says Prashant Tiwari, MD, Prateek Group, “The so-called marketing mania works only for a new company which is little, or not at all, recognised. For creating a buzz about themselves or any new project which they might be planning to launch, these kinds of players suddenly hire the services of a brand ambassador. But the growth in sales can never be achieved by simply hiring famous faces.” 

Agrees Pranav Ansal, chairman, Ansal API, “Roping in a celeb can help a company to grab the initial attention but ultimately it’s the 4P’s (price, product, place, positioning) that help to boost property sales. When a buyer makes a decision to invest in a project — quality, price and delivery top his list and if the product doesn’t meet these yardsticks, no amount of celeb value can influence the buyer’s decision.” 

Good Strategy For Expansion 
Once a nascent concept, celebrity endorsement has today become the trendsetter in the country’s real estate market. In Delhi-NCR alone, there are over 20 firms which rely upon celebrities to market their properties. While the trend is quite prevalent in Western and Northern parts of the country, Southern and Eastern regions have just a few celebrity-endorsed real estate firms and projects. 

These variations apart, big real estate players have deep pockets and a face with pan-India appeal may help them when they expand their footprints. 

Says Honey Katiyal, CEO, Investors Clinic, “Delhi–NCR based real estate developers are enrolling celebrities as their brand ambassadors for encashing their national status. With the expansion of real estate sector, the customer base has grown manifold, which has underlined the need to reach out to customers in a way that they become confident enough to buy houses, which normally cost a lifetime’s savings.” Katiyal’s company has ace cricketer Yuvraj Singh, now also an epitome of a courageous battle against disease, as its brand ambassador. 

Pune-based company Amit Housing has recently signed master blaster Sachin Tendulkar as brand ambassador in a high-ticket deal, reportedly running into several crores. Does the company — with projects mostly in Pune or surrounding areas — really need Sachin’s iconic stature to sell projects regionally? 

Reasons out Katiyal, “Celebrities choose the brand they promote very carefully. They bring in their rapport and goodwill to the company and help in giving initial boost to its services/products. Beyond that, however, what matters is the strength and performance of the company.” 

Affordable Versus Luxury Segment 
Though high net worth individuals (HNIs) love to flaunt the luxury status of their homes, buying a home is an important investment that a middle-class family makes, which hinges upon value for money, appreciation potential and location of the property. While the concept of brand ambassadors does enjoy a degree of traction in ultra-luxury residential projects, there has been a “lack of success” when it comes to promoting mid-income housing projects through brand ambassadors in regional markets. 

In southern India, where there is a greater fan following for film stars than other regions, there are just a few companies which have roped in a celebrity to sell their projects. 

Bengaluru-based Oceanus Group has Mollywood star Mohanlal to endorse its projects. The company, which has several projects in Kerala, recently offered special discounts to celebrate the star’s birthday. Another Mollywood star Mammootty endorses Kochi-based real estate firm Pearl Infra, while cricketer S Sreesanth is the face of Mather Projects. 

Avers Dr JMA Bruno-Mascarenhas, author of medical books, based in Chennai, “Here, I don’t think the trend is so prevalent. If I see a celebrity endorsing a project I would think that it will be overpriced because of the endorsement and may not further consider it. In South, people are more concerned about the basic parameters of realty development.” 

Says Jim Phillip, assistant regional manager, ICICI Prudential Insurance, Kochi, looking to invest in residential real estate in the city, “Celebrity endorsement would definitely enhance the brand recall of a project. But when it comes to buying it, celebrity factor will have little influence over buyers like me.” 

In the Eastern region of the country too, the market is extremely conservative where purchases are made by common sense, irrespective of brand ambassadors. 

Glamour’s Grey Spots 
Recently, well-known singer Yesudas was in a soup for allegedly promoting a Kochi-based real estate company called ‘Apple A Day Properties’ whose promoters are presently evading the arm of law after misappropriating investors’ money. 

This is one of the grey areas of celebrity endorsement: fraudulent advertisements endorsed by celebrities. Shouldn’t the so-called brand ambassadors be held liable for issues like cheating in real estate or financial products? 

This is what Bollywood actress Genelia D’Souza had to face when she was recently summoned by the Andhra Pradesh High Court to explain her role as brand ambassador in the controversial real estate project called ‘Anjaniputra.’ 

The episode points to the vexatious issue of dealing with cases of cheating involving a real estate project endorsed by a brand ambassador. While there are no easy answers to these questions, consumers must tread a cautious path while firming up their property purchase decisions. 

Passing On The Cost? 
While the celebs are fuelling a new trend in the realty space, their endorsements — be it at project level or company level — won’t come for cheap. Is the huge endorsement fee again a burden on the customer’s pocket? What will a customer get, if the project has or not been endorsed by a celebrity? Of course, only a home to live! 

“Be it realty or any other segment, the fees charged by brand icons generally do not vary much. The cost depends on the type of celeb a company chooses. An SRK, Amitabh or Dhoni will cost more than someone like Neil Nitin Mukesh or Kailash Kher. One may get a reasonable rate from brand ambassadors for good, recognised national brands as compared to brands that aren’t very popular where the celeb may charge a premium,” says Das Blah, managing director, KWAN Entertainment. At times, says he, compensations are made in terms of property packages. “If an icon that has charged `5 crore, is offered a property worth `2 crore, I don’t think he will decline, given the ever-rising real estate prices.” 

Interestingly, few listed companies are keen about doing promotional activities using celebrities. 

Behind The Veil 
While having celebrities to endorse a product might lead to an increase in property costs, another debatable issue pertains to the use of real estate endorsements by celebrities as a channel to route and park their unaccounted wealth. 

“Today, many real estate companies are associated with people who have black money and other benami operations. Unlike Swiss Banks these days, properties are the best place to park your unaccounted wealth away from the glare of income tax sleuths. Yes, when a celebrity is roped in, there is obviously a brand connect but more than it, there are other hidden aspects to the deal as well,” explains a Delhi-based police official, who did not wish to be named. But, none of the developers we interviewed shared any financial details regarding their particular deal with their celebrity icon. 

Anil Kumar Sharma of the Amrapali Group strongly denies the possibility of any behind-the-scenes transactions. “It’s an irrelevant question, there is nothing dubious involved in any of our deals with a celebrity. We spend money on marketing where these costs are included. The price of property remains the same and there are less chances of price appreciation because of brand ambassador.” “The ambassadors are chosen at the company level to boost its brand equity rather than selling just one project. It is done because a brand has to be associated with the overall vision of the company, which is always kept in mind in all the projects,” observes Katiyal, declining to share his company’s deal size with Yuvraj Singh. 

Rakesh Mahajan, director, Nirala Developers, voices a similar view, “We are using our brand ambassador at the corporate level as we want to register ourselves in the mind of consumer as a brand rather than promoting a single project. Brand endorsement at the company level works better because once you have registered your brand then it becomes comparatively easier to promote respective projects.” 

Explains Prashant Tiwari of Prateek, “Whenever we hire a celebrity we only pay them their fees. We don’t offer them any stake in our project. In our company, the fund for celebrity endorsement is a part of the budget which we allocate for media promotions and advertisements. This spend is 1-2 per cent of our turnover.” 

Rounding Off 
As for the overall efficacy of celebrity endorsement as a marketing strategy, no amount of it can help resolve a credibility issue like a negative image on delivery, quality and consistency of a real estate offering. The developer community has to steadfastly follow the basic rule of transparency, credibility and honest delivery as branding helps only when these parameters are ensured. In the ultimate analysis, a real estate entity’s brand name plays the most significant role, besides other aspects. The consumers have come of age and no amount of celebrity endorsement can woo them if the product lacks substance. 

Real Estate Blues: What If The 'Builder' Disappears? The Biggest Risk Of Investing In 'Real Estate'!

In real estate we doesn't know how the situation becomes worst? Or when the economy plunges and investors goes in dark? When somebody dupes or when the fraud happens? We doesn't know. But how to combat the situation. INNLIVE takes you to get informed on preventive measures, techniques and more related information.

Trends in the Indian Real Estate Market

By M H Ahssan

When Ram Kumar, a Non-Resident Indian brought a 1000 sq feet flat in Delhi, India for Rs 30 Lakhs in 2004, he thought he was over-paying for it. Today, not only has the value of the flat more than doubled, but Ram, who is based in Austin, Texas, is truly estatic, that for the first time, his real estate investments are giving him such a return. He has not only brought into upcoming projects but is also scouting for more. Says Ram “ This market have not even reached 20% of it’s potential. Any investment in real estate here is bound to be profitable.” That statement clearly sums up the Indian Real Estate Market. Going by recent trends the India properties market, is not only booming, but growing by leaps and bounds. Research data estimates that the Indian Real Estate Market is expected to grow from the current 14 billion dollars to a whopping 102 billion dollars in the next 10 years.

Since the September 11th attack in the US, investments in Indian markets have gathered pace. India has encouraged Non Resident Indians (NRIs) and Foreign Investors with tax incentives and relaxation of foreign direct investments (FDI) rules. The dramatic change in sentiments is clearly visible in India’s bulging foreign exchange reserves, which are at a record high of over 120 billion US dollars. And the Reserve bank of India has further relaxed the rules for NRIs with respect to repatriation of foreign exchange on real estate investments. Besides being a safe destination, India offers 15 to 25 per cent returns, perhaps the highest in the world. 30 per cent of all high major real estate transactions in Mumbai are accounted by NRIs.

Moreover, with increasing volatility in stock markets and falling interest rates, many investors have started considering investment in commercial and residential properties. The bottom-line is that this is the time to go shopping for property; as the market has started firming up already. As the organised market develops, real estate as an investment is one of the better options available today. In fact the main growth thrust is happening due to faourable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and favourable reforms initiated by government to attract global investors.

So which would be the potential growth areas to look for? The main growth sectors include residential real estate, commercial real estate, retail sector, industrial sector hospitality and healthcare sectors. The commercial real estate sector is led by the booming information technology and information technology enabled services industry. Estimated demand from this sector alone is estimated to be 150 million sq feet of space in cities throughout India by 2010.

In residential real estate there is a shortage of almost 20 million units, of which 7 million are in urban India. The increasingly organized retail sector is also a magnet for growth. With Mukesh Ambani controlled Reliance Industries and many other top industrial houses entering into organized retail in a big way, the growth potential is enormous. There has been a mushrooming of retail projects all over the country. The real estate investment sector has never had it so good. But it was not always like this.

Ever since India started liberalizing its economy, the international property investors' refrain has been that though the country opened up its most crucial infrastructure sectors to foreign investments, it is still reluctant to allow FDI in the property market. The government justified this by citing political and security compulsions. However, realizing the huge investment potential in India, Chesterton Meghraj estimates that the country will require investments of $24 billion over the next five years and that development of the real estate segment is crucial for its economic growth. The same belief led the erstwhile National Democratic Alliance government to permit as a part of the budget proposal, FDI in township development, information technology parks, special economic zones and hospitality sectors.

But many feel the liberalization was half-hearted. For instance, though the new policy allows a 100% FDI stake in a venture - which, incidentally, is allowed in few sectors - there are stumbling blocks in the form of clauses, such as a minimum lock-in period of three years before original investment can be repatriated, and a project completion mandate that a minimum of 50% must be completed within five years of possession of land. This is why there were few proposals in the initial years. But over the last six months, a slew of foreign construction groups have been seeking government clearance to invest in the country. A few major FDI proposals that have taken place include :

• Dubai-based Emaar Group has invested $100 million in a township project in Hyderabad that includes a hotel and a golf course.

• Jakarta-based Salim Group is to invest over $100 million in a 309-acre (124 hectares) township project in Kolkata. This Rs500 million ($11 million) project will be developed as a joint venture between Salim Group and the Kolkata Municipal Development Authority.

• High Point Rendel of UK, US-Based Edaw Ltd and Kikken Sekkel of Tokyo have teamed up to work on a township development project in Jharkhand.

• Canada-based Royal Indian Raj International Corporation is coming up with $791 million for Royal Garden City, a fully integrated township in Bangalore. The total development will include 35,000 residential units with an investment of approximately $2.9 billion and is scheduled to be completed by 2015 in various phases. This is the highest FDI investment till date.

• CESMA International Pvt Ltd, a subsidiary of the Singapore government's housing agency, along with the Andhra Pradesh state government, is promoting a township in Hyderabad.

• Lee Kim Tah Holdings (a Singapore-based company) with an investment of $115 million is developing a 100-acre mega township along with commercial complex and related social infrastructure near Mumbai.

• The Andhra Pradesh Housing Board has approved a 50-acre township in Vijaywada. CESMA International will construct houses and apartment blocks here.

• Malaysian developer IJM is working on a township spread across 35 acres in Hyderabad near Hi-tech City.

• Ho-Hup Construction Company Berhad is coming up with a 125-acre development project at Shamshabad in Hyderabad along with the Andhra Pradesh Housing Board.

• SembCorp Engineers and Constructors Pte Ltd, Singapore, is working on eight projects in Mumbai, Pune and Bangalore. The company has invested $50 million.

• Universal Success Enterprise Limited of Indonesia has signed a memorandum with Delhi-based developer Unitech Ltd for a $155-million information technology park and housing project in Kolkata.

• Singapore's fifth-biggest property group, Keppel Land Ltd, made its first foray into India after buying land in India's software capital Bangalore for $13 million. Keppel Land, which is partnering Puravankara Projects Ltd, is developing the first phase of a condominium project located in an area known for high-tech campuses. It will be launched in early 2006.

• Singapore-based Evan Lim & Co Pte Ltd is associated with a township development project in Visakhapatnam, Andhra Pradesh.

More over, land in India is mostly freehold land. In fact certain important markets like Mumbai in Maharashtra are seeing a dramatic increase in land availability as textile mills lands in the heart of the city are opened up to redevelopment.

The other big opportunity, say industry sources, is the involvement of state governments in large-scale government projects like development of the surplus land of Mumbai Port Trust or that of sick public sector firms. State governments have realized that they can make more money if they get into joint ventures with private developers than just selling the land. This is an ideal opportunity for foreign investors because such arrangements reduce entry-level costs.

But not all real estate investments are so easy. In India, it is very difficult to find large plots near big cities. Foreign investors prefer to stick to larger cities because returns there are more lucrative.

Moreover, a minimum lock-in period of three years from completion of a project is mandated, which nullifies an investor's flexibility to play around with the time frame or phasing the project when circumstances get beyond control. The other problem that acts as a dampener for foreign investors is the insistence of local financial institutions on a personal guarantee from property developers over and above the land as collateral. Another problem is that local banks and financial institutions also tend to loosen their purse strings when property prices are rising because that raises the value of their collateral, but when prices fall, they pull out, triggering a bust.

Still, all agree that the potential of India's real estate sector is huge. It is one of the most attractive markets for two reasons. One, with a billion-plus population, the opportunity is huge; no other market is going to witness this kind of growth both in commercial as well as residential and retail markets. Two, the industry has an average rate of return on capital in excess of 30% and it is not unusual for local developers to achieve IRR of as much as 50%. Clearly, India rocks in real estate. You cannot disagree.

Trends in the Indian Real Estate Market

By M H Ahssan

When Ram Kumar, a Non-Resident Indian brought a 1000 sq feet flat in Delhi, India for Rs 30 Lakhs in 2004, he thought he was over-paying for it. Today, not only has the value of the flat more than doubled, but Ram, who is based in Austin, Texas, is truly estatic, that for the first time, his real estate investments are giving him such a return. He has not only brought into upcoming projects but is also scouting for more. Says Ram “ This market have not even reached 20% of it’s potential. Any investment in real estate here is bound to be profitable.” That statement clearly sums up the Indian Real Estate Market. Going by recent trends the India properties market, is not only booming, but growing by leaps and bounds. Research data estimates that the Indian Real Estate Market is expected to grow from the current 14 billion dollars to a whopping 102 billion dollars in the next 10 years.

Since the September 11th attack in the US, investments in Indian markets have gathered pace. India has encouraged Non Resident Indians (NRIs) and Foreign Investors with tax incentives and relaxation of foreign direct investments (FDI) rules. The dramatic change in sentiments is clearly visible in India’s bulging foreign exchange reserves, which are at a record high of over 120 billion US dollars. And the Reserve bank of India has further relaxed the rules for NRIs with respect to repatriation of foreign exchange on real estate investments. Besides being a safe destination, India offers 15 to 25 per cent returns, perhaps the highest in the world. 30 per cent of all high major real estate transactions in Mumbai are accounted by NRIs.

Moreover, with increasing volatility in stock markets and falling interest rates, many investors have started considering investment in commercial and residential properties. The bottom-line is that this is the time to go shopping for property; as the market has started firming up already. As the organised market develops, real estate as an investment is one of the better options available today. In fact the main growth thrust is happening due to faourable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and favourable reforms initiated by government to attract global investors.

So which would be the potential growth areas to look for? The main growth sectors include residential real estate, commercial real estate, retail sector, industrial sector hospitality and healthcare sectors. The commercial real estate sector is led by the booming information technology and information technology enabled services industry. Estimated demand from this sector alone is estimated to be 150 million sq feet of space in cities throughout India by 2010.

In residential real estate there is a shortage of almost 20 million units, of which 7 million are in urban India. The increasingly organized retail sector is also a magnet for growth. With Mukesh Ambani controlled Reliance Industries and many other top industrial houses entering into organized retail in a big way, the growth potential is enormous. There has been a mushrooming of retail projects all over the country. The real estate investment sector has never had it so good. But it was not always like this.

Ever since India started liberalizing its economy, the international property investors' refrain has been that though the country opened up its most crucial infrastructure sectors to foreign investments, it is still reluctant to allow FDI in the property market. The government justified this by citing political and security compulsions. However, realizing the huge investment potential in India, Chesterton Meghraj estimates that the country will require investments of $24 billion over the next five years and that development of the real estate segment is crucial for its economic growth. The same belief led the erstwhile National Democratic Alliance government to permit as a part of the budget proposal, FDI in township development, information technology parks, special economic zones and hospitality sectors.

But many feel the liberalization was half-hearted. For instance, though the new policy allows a 100% FDI stake in a venture - which, incidentally, is allowed in few sectors - there are stumbling blocks in the form of clauses, such as a minimum lock-in period of three years before original investment can be repatriated, and a project completion mandate that a minimum of 50% must be completed within five years of possession of land. This is why there were few proposals in the initial years. But over the last six months, a slew of foreign construction groups have been seeking government clearance to invest in the country. A few major FDI proposals that have taken place include :

• Dubai-based Emaar Group has invested $100 million in a township project in Hyderabad that includes a hotel and a golf course.

• Jakarta-based Salim Group is to invest over $100 million in a 309-acre (124 hectares) township project in Kolkata. This Rs500 million ($11 million) project will be developed as a joint venture between Salim Group and the Kolkata Municipal Development Authority.

• High Point Rendel of UK, US-Based Edaw Ltd and Kikken Sekkel of Tokyo have teamed up to work on a township development project in Jharkhand.

• Canada-based Royal Indian Raj International Corporation is coming up with $791 million for Royal Garden City, a fully integrated township in Bangalore. The total development will include 35,000 residential units with an investment of approximately $2.9 billion and is scheduled to be completed by 2015 in various phases. This is the highest FDI investment till date.

• CESMA International Pvt Ltd, a subsidiary of the Singapore government's housing agency, along with the Andhra Pradesh state government, is promoting a township in Hyderabad.

• Lee Kim Tah Holdings (a Singapore-based company) with an investment of $115 million is developing a 100-acre mega township along with commercial complex and related social infrastructure near Mumbai.

• The Andhra Pradesh Housing Board has approved a 50-acre township in Vijaywada. CESMA International will construct houses and apartment blocks here.

• Malaysian developer IJM is working on a township spread across 35 acres in Hyderabad near Hi-tech City.

• Ho-Hup Construction Company Berhad is coming up with a 125-acre development project at Shamshabad in Hyderabad along with the Andhra Pradesh Housing Board.

• SembCorp Engineers and Constructors Pte Ltd, Singapore, is working on eight projects in Mumbai, Pune and Bangalore. The company has invested $50 million.

• Universal Success Enterprise Limited of Indonesia has signed a memorandum with Delhi-based developer Unitech Ltd for a $155-million information technology park and housing project in Kolkata.

• Singapore's fifth-biggest property group, Keppel Land Ltd, made its first foray into India after buying land in India's software capital Bangalore for $13 million. Keppel Land, which is partnering Puravankara Projects Ltd, is developing the first phase of a condominium project located in an area known for high-tech campuses. It will be launched in early 2006.

• Singapore-based Evan Lim & Co Pte Ltd is associated with a township development project in Visakhapatnam, Andhra Pradesh.

More over, land in India is mostly freehold land. In fact certain important markets like Mumbai in Maharashtra are seeing a dramatic increase in land availability as textile mills lands in the heart of the city are opened up to redevelopment.

The other big opportunity, say industry sources, is the involvement of state governments in large-scale government projects like development of the surplus land of Mumbai Port Trust or that of sick public sector firms. State governments have realized that they can make more money if they get into joint ventures with private developers than just selling the land. This is an ideal opportunity for foreign investors because such arrangements reduce entry-level costs.

But not all real estate investments are so easy. In India, it is very difficult to find large plots near big cities. Foreign investors prefer to stick to larger cities because returns there are more lucrative.

Moreover, a minimum lock-in period of three years from completion of a project is mandated, which nullifies an investor's flexibility to play around with the time frame or phasing the project when circumstances get beyond control. The other problem that acts as a dampener for foreign investors is the insistence of local financial institutions on a personal guarantee from property developers over and above the land as collateral. Another problem is that local banks and financial institutions also tend to loosen their purse strings when property prices are rising because that raises the value of their collateral, but when prices fall, they pull out, triggering a bust.

Still, all agree that the potential of India's real estate sector is huge. It is one of the most attractive markets for two reasons. One, with a billion-plus population, the opportunity is huge; no other market is going to witness this kind of growth both in commercial as well as residential and retail markets. Two, the industry has an average rate of return on capital in excess of 30% and it is not unusual for local developers to achieve IRR of as much as 50%. Clearly, India rocks in real estate. You cannot disagree.

Trends in the Indian Real Estate Market

By M H Ahssan

When Ram Kumar, a Non-Resident Indian brought a 1000 sq feet flat in Delhi, India for Rs 30 Lakhs in 2004, he thought he was over-paying for it. Today, not only has the value of the flat more than doubled, but Ram, who is based in Austin, Texas, is truly estatic, that for the first time, his real estate investments are giving him such a return. He has not only brought into upcoming projects but is also scouting for more. Says Ram “ This market have not even reached 20% of it’s potential. Any investment in real estate here is bound to be profitable.” That statement clearly sums up the Indian Real Estate Market. Going by recent trends the India properties market, is not only booming, but growing by leaps and bounds. Research data estimates that the Indian Real Estate Market is expected to grow from the current 14 billion dollars to a whopping 102 billion dollars in the next 10 years.

Since the September 11th attack in the US, investments in Indian markets have gathered pace. India has encouraged Non Resident Indians (NRIs) and Foreign Investors with tax incentives and relaxation of foreign direct investments (FDI) rules. The dramatic change in sentiments is clearly visible in India’s bulging foreign exchange reserves, which are at a record high of over 120 billion US dollars. And the Reserve bank of India has further relaxed the rules for NRIs with respect to repatriation of foreign exchange on real estate investments. Besides being a safe destination, India offers 15 to 25 per cent returns, perhaps the highest in the world. 30 per cent of all high major real estate transactions in Mumbai are accounted by NRIs.

Moreover, with increasing volatility in stock markets and falling interest rates, many investors have started considering investment in commercial and residential properties. The bottom-line is that this is the time to go shopping for property; as the market has started firming up already. As the organised market develops, real estate as an investment is one of the better options available today. In fact the main growth thrust is happening due to faourable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and favourable reforms initiated by government to attract global investors.

So which would be the potential growth areas to look for? The main growth sectors include residential real estate, commercial real estate, retail sector, industrial sector hospitality and healthcare sectors. The commercial real estate sector is led by the booming information technology and information technology enabled services industry. Estimated demand from this sector alone is estimated to be 150 million sq feet of space in cities throughout India by 2010.

In residential real estate there is a shortage of almost 20 million units, of which 7 million are in urban India. The increasingly organized retail sector is also a magnet for growth. With Mukesh Ambani controlled Reliance Industries and many other top industrial houses entering into organized retail in a big way, the growth potential is enormous. There has been a mushrooming of retail projects all over the country. The real estate investment sector has never had it so good. But it was not always like this.

Ever since India started liberalizing its economy, the international property investors' refrain has been that though the country opened up its most crucial infrastructure sectors to foreign investments, it is still reluctant to allow FDI in the property market. The government justified this by citing political and security compulsions. However, realizing the huge investment potential in India, Chesterton Meghraj estimates that the country will require investments of $24 billion over the next five years and that development of the real estate segment is crucial for its economic growth. The same belief led the erstwhile National Democratic Alliance government to permit as a part of the budget proposal, FDI in township development, information technology parks, special economic zones and hospitality sectors.

But many feel the liberalization was half-hearted. For instance, though the new policy allows a 100% FDI stake in a venture - which, incidentally, is allowed in few sectors - there are stumbling blocks in the form of clauses, such as a minimum lock-in period of three years before original investment can be repatriated, and a project completion mandate that a minimum of 50% must be completed within five years of possession of land. This is why there were few proposals in the initial years. But over the last six months, a slew of foreign construction groups have been seeking government clearance to invest in the country. A few major FDI proposals that have taken place include :

• Dubai-based Emaar Group has invested $100 million in a township project in Hyderabad that includes a hotel and a golf course.

• Jakarta-based Salim Group is to invest over $100 million in a 309-acre (124 hectares) township project in Kolkata. This Rs500 million ($11 million) project will be developed as a joint venture between Salim Group and the Kolkata Municipal Development Authority.

• High Point Rendel of UK, US-Based Edaw Ltd and Kikken Sekkel of Tokyo have teamed up to work on a township development project in Jharkhand.

• Canada-based Royal Indian Raj International Corporation is coming up with $791 million for Royal Garden City, a fully integrated township in Bangalore. The total development will include 35,000 residential units with an investment of approximately $2.9 billion and is scheduled to be completed by 2015 in various phases. This is the highest FDI investment till date.

• CESMA International Pvt Ltd, a subsidiary of the Singapore government's housing agency, along with the Andhra Pradesh state government, is promoting a township in Hyderabad.

• Lee Kim Tah Holdings (a Singapore-based company) with an investment of $115 million is developing a 100-acre mega township along with commercial complex and related social infrastructure near Mumbai.

• The Andhra Pradesh Housing Board has approved a 50-acre township in Vijaywada. CESMA International will construct houses and apartment blocks here.

• Malaysian developer IJM is working on a township spread across 35 acres in Hyderabad near Hi-tech City.

• Ho-Hup Construction Company Berhad is coming up with a 125-acre development project at Shamshabad in Hyderabad along with the Andhra Pradesh Housing Board.

• SembCorp Engineers and Constructors Pte Ltd, Singapore, is working on eight projects in Mumbai, Pune and Bangalore. The company has invested $50 million.

• Universal Success Enterprise Limited of Indonesia has signed a memorandum with Delhi-based developer Unitech Ltd for a $155-million information technology park and housing project in Kolkata.

• Singapore's fifth-biggest property group, Keppel Land Ltd, made its first foray into India after buying land in India's software capital Bangalore for $13 million. Keppel Land, which is partnering Puravankara Projects Ltd, is developing the first phase of a condominium project located in an area known for high-tech campuses. It will be launched in early 2006.

• Singapore-based Evan Lim & Co Pte Ltd is associated with a township development project in Visakhapatnam, Andhra Pradesh.

More over, land in India is mostly freehold land. In fact certain important markets like Mumbai in Maharashtra are seeing a dramatic increase in land availability as textile mills lands in the heart of the city are opened up to redevelopment.

The other big opportunity, say industry sources, is the involvement of state governments in large-scale government projects like development of the surplus land of Mumbai Port Trust or that of sick public sector firms. State governments have realized that they can make more money if they get into joint ventures with private developers than just selling the land. This is an ideal opportunity for foreign investors because such arrangements reduce entry-level costs.

But not all real estate investments are so easy. In India, it is very difficult to find large plots near big cities. Foreign investors prefer to stick to larger cities because returns there are more lucrative.

Moreover, a minimum lock-in period of three years from completion of a project is mandated, which nullifies an investor's flexibility to play around with the time frame or phasing the project when circumstances get beyond control. The other problem that acts as a dampener for foreign investors is the insistence of local financial institutions on a personal guarantee from property developers over and above the land as collateral. Another problem is that local banks and financial institutions also tend to loosen their purse strings when property prices are rising because that raises the value of their collateral, but when prices fall, they pull out, triggering a bust.

Still, all agree that the potential of India's real estate sector is huge. It is one of the most attractive markets for two reasons. One, with a billion-plus population, the opportunity is huge; no other market is going to witness this kind of growth both in commercial as well as residential and retail markets. Two, the industry has an average rate of return on capital in excess of 30% and it is not unusual for local developers to achieve IRR of as much as 50%. Clearly, India rocks in real estate. You cannot disagree.

Trends in the Indian Real Estate Market

By M H Ahssan

When Ram Kumar, a Non-Resident Indian brought a 1000 sq feet flat in Delhi, India for Rs 30 Lakhs in 2004, he thought he was over-paying for it. Today, not only has the value of the flat more than doubled, but Ram, who is based in Austin, Texas, is truly estatic, that for the first time, his real estate investments are giving him such a return. He has not only brought into upcoming projects but is also scouting for more. Says Ram “ This market have not even reached 20% of it’s potential. Any investment in real estate here is bound to be profitable.” That statement clearly sums up the Indian Real Estate Market. Going by recent trends the India properties market, is not only booming, but growing by leaps and bounds. Research data estimates that the Indian Real Estate Market is expected to grow from the current 14 billion dollars to a whopping 102 billion dollars in the next 10 years.

Since the September 11th attack in the US, investments in Indian markets have gathered pace. India has encouraged Non Resident Indians (NRIs) and Foreign Investors with tax incentives and relaxation of foreign direct investments (FDI) rules. The dramatic change in sentiments is clearly visible in India’s bulging foreign exchange reserves, which are at a record high of over 120 billion US dollars. And the Reserve bank of India has further relaxed the rules for NRIs with respect to repatriation of foreign exchange on real estate investments. Besides being a safe destination, India offers 15 to 25 per cent returns, perhaps the highest in the world. 30 per cent of all high major real estate transactions in Mumbai are accounted by NRIs.

Moreover, with increasing volatility in stock markets and falling interest rates, many investors have started considering investment in commercial and residential properties. The bottom-line is that this is the time to go shopping for property; as the market has started firming up already. As the organised market develops, real estate as an investment is one of the better options available today. In fact the main growth thrust is happening due to faourable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and favourable reforms initiated by government to attract global investors.

So which would be the potential growth areas to look for? The main growth sectors include residential real estate, commercial real estate, retail sector, industrial sector hospitality and healthcare sectors. The commercial real estate sector is led by the booming information technology and information technology enabled services industry. Estimated demand from this sector alone is estimated to be 150 million sq feet of space in cities throughout India by 2010.

In residential real estate there is a shortage of almost 20 million units, of which 7 million are in urban India. The increasingly organized retail sector is also a magnet for growth. With Mukesh Ambani controlled Reliance Industries and many other top industrial houses entering into organized retail in a big way, the growth potential is enormous. There has been a mushrooming of retail projects all over the country. The real estate investment sector has never had it so good. But it was not always like this.

Ever since India started liberalizing its economy, the international property investors' refrain has been that though the country opened up its most crucial infrastructure sectors to foreign investments, it is still reluctant to allow FDI in the property market. The government justified this by citing political and security compulsions. However, realizing the huge investment potential in India, Chesterton Meghraj estimates that the country will require investments of $24 billion over the next five years and that development of the real estate segment is crucial for its economic growth. The same belief led the erstwhile National Democratic Alliance government to permit as a part of the budget proposal, FDI in township development, information technology parks, special economic zones and hospitality sectors.

But many feel the liberalization was half-hearted. For instance, though the new policy allows a 100% FDI stake in a venture - which, incidentally, is allowed in few sectors - there are stumbling blocks in the form of clauses, such as a minimum lock-in period of three years before original investment can be repatriated, and a project completion mandate that a minimum of 50% must be completed within five years of possession of land. This is why there were few proposals in the initial years. But over the last six months, a slew of foreign construction groups have been seeking government clearance to invest in the country. A few major FDI proposals that have taken place include :

• Dubai-based Emaar Group has invested $100 million in a township project in Hyderabad that includes a hotel and a golf course.

• Jakarta-based Salim Group is to invest over $100 million in a 309-acre (124 hectares) township project in Kolkata. This Rs500 million ($11 million) project will be developed as a joint venture between Salim Group and the Kolkata Municipal Development Authority.

• High Point Rendel of UK, US-Based Edaw Ltd and Kikken Sekkel of Tokyo have teamed up to work on a township development project in Jharkhand.

• Canada-based Royal Indian Raj International Corporation is coming up with $791 million for Royal Garden City, a fully integrated township in Bangalore. The total development will include 35,000 residential units with an investment of approximately $2.9 billion and is scheduled to be completed by 2015 in various phases. This is the highest FDI investment till date.

• CESMA International Pvt Ltd, a subsidiary of the Singapore government's housing agency, along with the Andhra Pradesh state government, is promoting a township in Hyderabad.

• Lee Kim Tah Holdings (a Singapore-based company) with an investment of $115 million is developing a 100-acre mega township along with commercial complex and related social infrastructure near Mumbai.

• The Andhra Pradesh Housing Board has approved a 50-acre township in Vijaywada. CESMA International will construct houses and apartment blocks here.

• Malaysian developer IJM is working on a township spread across 35 acres in Hyderabad near Hi-tech City.

• Ho-Hup Construction Company Berhad is coming up with a 125-acre development project at Shamshabad in Hyderabad along with the Andhra Pradesh Housing Board.

• SembCorp Engineers and Constructors Pte Ltd, Singapore, is working on eight projects in Mumbai, Pune and Bangalore. The company has invested $50 million.

• Universal Success Enterprise Limited of Indonesia has signed a memorandum with Delhi-based developer Unitech Ltd for a $155-million information technology park and housing project in Kolkata.

• Singapore's fifth-biggest property group, Keppel Land Ltd, made its first foray into India after buying land in India's software capital Bangalore for $13 million. Keppel Land, which is partnering Puravankara Projects Ltd, is developing the first phase of a condominium project located in an area known for high-tech campuses. It will be launched in early 2006.

• Singapore-based Evan Lim & Co Pte Ltd is associated with a township development project in Visakhapatnam, Andhra Pradesh.

More over, land in India is mostly freehold land. In fact certain important markets like Mumbai in Maharashtra are seeing a dramatic increase in land availability as textile mills lands in the heart of the city are opened up to redevelopment.

The other big opportunity, say industry sources, is the involvement of state governments in large-scale government projects like development of the surplus land of Mumbai Port Trust or that of sick public sector firms. State governments have realized that they can make more money if they get into joint ventures with private developers than just selling the land. This is an ideal opportunity for foreign investors because such arrangements reduce entry-level costs.

But not all real estate investments are so easy. In India, it is very difficult to find large plots near big cities. Foreign investors prefer to stick to larger cities because returns there are more lucrative.

Moreover, a minimum lock-in period of three years from completion of a project is mandated, which nullifies an investor's flexibility to play around with the time frame or phasing the project when circumstances get beyond control. The other problem that acts as a dampener for foreign investors is the insistence of local financial institutions on a personal guarantee from property developers over and above the land as collateral. Another problem is that local banks and financial institutions also tend to loosen their purse strings when property prices are rising because that raises the value of their collateral, but when prices fall, they pull out, triggering a bust.

Still, all agree that the potential of India's real estate sector is huge. It is one of the most attractive markets for two reasons. One, with a billion-plus population, the opportunity is huge; no other market is going to witness this kind of growth both in commercial as well as residential and retail markets. Two, the industry has an average rate of return on capital in excess of 30% and it is not unusual for local developers to achieve IRR of as much as 50%. Clearly, India rocks in real estate. You cannot disagree.

Hyderabad reality on high rise

By M H AHSAN

Hyderabad is India's 6th largest metropolis and the 40th largest metropolitan area in the world, with more than 6.1 million people making it a happening place. The IT sector of Hyderabad had spelled bound investors and realtors and not for nothing, the 1500 acre IT Park at Secunderabad has made almost 50% IT buyers in the real estate boom.



Hyderabad has never had it so good. Its real estate prices in fact have never been this high in the last decade. If there is one indication that a city is growing and boasts of a booming economy with promise of more to come, it is in the demand for real estate and the price it commands.

Along with the boom in the number of IT and ITES companies in Hyderabad, the city is also witnessing a corresponding boom in its realty prices. Real estate prices generally fluctuate as per three parameters: demand-supply ratio, site location and the perception of the prime purchaser.

Real estate in Hyderabad has fared positively on all three counts. For the last two or three years, Hyderabad has seen an unprecedented demand for land,spurred by the arrival of IT and ITES companies. The growth of the IT industry has not only increased demand for both office spaces for the companies and residences for their employees , but has also catalyzed the growth of the retail space segment.

Demand for land has clearly far outstripped the supply, thus pushing up land values in pockets earmarked as the IT corridor and the nearest developed areas. Besides, with plans for the International Airport , Fab City, Outer Ring Road and Greater Hyderabad all gradually taking concrete shape, the perception that Hyderabad is happening is gaining currency nationwide, among multinational companies as well as developers.

As a natural corollary, land values in areas close to these are which figure high in plans for Greater Hyderabad have seen a sharp rise in prices.

This price rise is not completely new. Traditionally investing in land at Hyderabad has always been an attractive proposition, with an annual growth rate of about 15-25 percent. However, over the last three years, the rate has increased to a more robust 30-40 per cent. Experts cite several reasons for this above average growth rate.

M L Rao, Equate Consultants says political stability and an industry-friendly environment are the biggest drivers for real estate growth anywhere; the State has been fortunate on both counts, despite the change in the Government. So strong has the positive sentiment been that real estate prices that had been rising steadily till the N Chandrababu Naidu government fell, did not dip but merely stabilized after the Y S Rajasekhara Reddy government came to power.

With the fall of the N Chandrababu Naidu government and the emergence of the TRS as a popular entity, and the farmer friendly image the Congress government rode to power , real estate rates in the city plummeted by nearly15-20 percent.

Hyderabad wouldn't be a `happening' place, people feared. However, most developers adopted a wait and watch policy and simply sat on their land banks, refusing to sell at the low rates that consumers demanded. Developers were quick to admit that very few transactions actually took place during that time.

Land prices on the Srisailam, Warangal and Vijayawada highways suffered the worst dropping as much as 20-25 percent, on fears that Telangana would take Hyderabad with it. But not for long. Those who dared to wait have did actually tide over the crisis and are now catching the wave on the rise.

The decimation of the TRS in the municipal polls, coupled with healthy monsoons , reinforced the feel good factor and was immediately reflected in the land rates surging by as much as 25-30 per cent between September and December 2005.

Besides a stable government and excellent infrastructure, Hyderabad boasts of a reasonably comfortable power position and of development plans initiated by the Government that can only improve infrastructure facilities in a planned manner.

In addition to the increasing number of high net worth individuals and double income families, profits from the booming stock market and real estate business are being pumped into real estate industry itself. Sources also reveal that a large chunk of funds, to the tune of Rs 10,000 crores, that were allotted to contractors as advances for irrigation projects in the State are also making way into the real estate market.

With so much cash freely flowing in,it is clearly a sellers market, leading to unprecedented rates. In fact though the market has seen a 100 per cent rise in prices in the last 18 months, realtors say this is only the tip of the iceberg.

They say that by 2008, certain pockets of the city such as lands close to ORR Phase 1, Gachibowli, Vattinagulapally , Khajaguda, Manikonda, Nadagulla and Tellapur could well see another 100 percent hike. Other parts of the city such as Kukatpally , Kompally, Vijayawada and Mumbai Highways which have so far witnessed 30 per cent increase in the last 18 months, will see at least 40-60 percent increase in the next year and a half.

There will be no dip, experts predict. That must be music to those who have already invested, and is a wake up call to all those who havent, so far.
Private companies, foreign investors, domestic investors and even the state government are all realizing the immense potential in Hyderabad's real estate market. Thanks to the state government, the city has become a favored destination for foreign investors and large corporate houses. The Hyderabad realty market has never been so good in Hyderabad for real estate investors The state government must step in to check such cases so that the benefits of the real estate market can be shared by all.

Hyderabad reality on high rise

By M H AHSAN

Hyderabad is India's 6th largest metropolis and the 40th largest metropolitan area in the world, with more than 6.1 million people making it a happening place. The IT sector of Hyderabad had spelled bound investors and realtors and not for nothing, the 1500 acre IT Park at Secunderabad has made almost 50% IT buyers in the real estate boom.



Hyderabad has never had it so good. Its real estate prices in fact have never been this high in the last decade. If there is one indication that a city is growing and boasts of a booming economy with promise of more to come, it is in the demand for real estate and the price it commands.

Along with the boom in the number of IT and ITES companies in Hyderabad, the city is also witnessing a corresponding boom in its realty prices. Real estate prices generally fluctuate as per three parameters: demand-supply ratio, site location and the perception of the prime purchaser.

Real estate in Hyderabad has fared positively on all three counts. For the last two or three years, Hyderabad has seen an unprecedented demand for land,spurred by the arrival of IT and ITES companies. The growth of the IT industry has not only increased demand for both office spaces for the companies and residences for their employees , but has also catalyzed the growth of the retail space segment.

Demand for land has clearly far outstripped the supply, thus pushing up land values in pockets earmarked as the IT corridor and the nearest developed areas. Besides, with plans for the International Airport , Fab City, Outer Ring Road and Greater Hyderabad all gradually taking concrete shape, the perception that Hyderabad is happening is gaining currency nationwide, among multinational companies as well as developers.

As a natural corollary, land values in areas close to these are which figure high in plans for Greater Hyderabad have seen a sharp rise in prices.

This price rise is not completely new. Traditionally investing in land at Hyderabad has always been an attractive proposition, with an annual growth rate of about 15-25 percent. However, over the last three years, the rate has increased to a more robust 30-40 per cent. Experts cite several reasons for this above average growth rate.

M L Rao, Equate Consultants says political stability and an industry-friendly environment are the biggest drivers for real estate growth anywhere; the State has been fortunate on both counts, despite the change in the Government. So strong has the positive sentiment been that real estate prices that had been rising steadily till the N Chandrababu Naidu government fell, did not dip but merely stabilized after the Y S Rajasekhara Reddy government came to power.

With the fall of the N Chandrababu Naidu government and the emergence of the TRS as a popular entity, and the farmer friendly image the Congress government rode to power , real estate rates in the city plummeted by nearly15-20 percent.

Hyderabad wouldn't be a `happening' place, people feared. However, most developers adopted a wait and watch policy and simply sat on their land banks, refusing to sell at the low rates that consumers demanded. Developers were quick to admit that very few transactions actually took place during that time.

Land prices on the Srisailam, Warangal and Vijayawada highways suffered the worst dropping as much as 20-25 percent, on fears that Telangana would take Hyderabad with it. But not for long. Those who dared to wait have did actually tide over the crisis and are now catching the wave on the rise.

The decimation of the TRS in the municipal polls, coupled with healthy monsoons , reinforced the feel good factor and was immediately reflected in the land rates surging by as much as 25-30 per cent between September and December 2005.

Besides a stable government and excellent infrastructure, Hyderabad boasts of a reasonably comfortable power position and of development plans initiated by the Government that can only improve infrastructure facilities in a planned manner.

In addition to the increasing number of high net worth individuals and double income families, profits from the booming stock market and real estate business are being pumped into real estate industry itself. Sources also reveal that a large chunk of funds, to the tune of Rs 10,000 crores, that were allotted to contractors as advances for irrigation projects in the State are also making way into the real estate market.

With so much cash freely flowing in,it is clearly a sellers market, leading to unprecedented rates. In fact though the market has seen a 100 per cent rise in prices in the last 18 months, realtors say this is only the tip of the iceberg.

They say that by 2008, certain pockets of the city such as lands close to ORR Phase 1, Gachibowli, Vattinagulapally , Khajaguda, Manikonda, Nadagulla and Tellapur could well see another 100 percent hike. Other parts of the city such as Kukatpally , Kompally, Vijayawada and Mumbai Highways which have so far witnessed 30 per cent increase in the last 18 months, will see at least 40-60 percent increase in the next year and a half.

There will be no dip, experts predict. That must be music to those who have already invested, and is a wake up call to all those who havent, so far.
Private companies, foreign investors, domestic investors and even the state government are all realizing the immense potential in Hyderabad's real estate market. Thanks to the state government, the city has become a favored destination for foreign investors and large corporate houses. The Hyderabad realty market has never been so good in Hyderabad for real estate investors The state government must step in to check such cases so that the benefits of the real estate market can be shared by all.

The Best And Profitable Option Is 'Investing In Real Estate'

Having a home or office space that one can call his “own” is utmost important, not only because it saves one from huge monthly rental bills, but also because it ensures a life of security and respect, a life devoid of constant vexation by the landlords.

For a common Indian man, investing in Indian real estate market is, thus, equivalent to securing a comfortable and respectable position for oneself and one’s family in the society and, so, the question of whether such investment will generate profits becomes secondary.

SEBI's Real Estate Investment Trust, A Welcome Move

By Vibha Jhol / Kolkata

SEBI (Securities and Exchange Board of India) is redrafting the guidelines for REITs (Real Estate Investment Trust). They plan to release the guidelines ahead of the 2014 general elections. REITs fall under the ambit of Alternative Investments category. REITs are real estate investment companies or trusts which invest in real estate. Equity REITs invest in shopping malls and healthcare avenues and offices and commercial real estate. They rent out the commercial space they own and whatever rental income is generated is the income of the Equity REIT. An equity REIT is required under the US laws to distribute at least 90% of its rental income as dividends to the unitholders. 

Telangana: Brace For A Rise In Hyderabad Property Prices

By Nirmala Mohan / Hyderabad

Now that the creation of a separate Telangana state is announced, real estate developers in Hyderabad can heave a sigh of relief. Despite competitive capital values compared with other metros, the Hyderabad real estate market was down in the dumps for the last couple of years with builders holding back projects and property buyers holding out on purchase decisions due to political instability over the bifurcation issue.

While other cities entered a resurgence phase after the 2008 slump, recovery in Hyderabad was marred by political uncertainty and characterised by fewer launches and declining capital values. Since the residential sector is highly sentiment driven, the Hyderabad market failed to attract buyers.

How 3,00,000 Crore Vanished From 'BSE Reality Index'?

By Pramod Kamle | INNLIVE

INVESTIGATION That great gurgling noise you have been hearing over the last few years is the sound of Rs 3,00,000 crore of investor money in realty shares going down the drain.

Where did the money go? After all, even drains empty out into the sea. In the case of real estate, we know roughly where it went – into the pockets of politicians and their cronies - but cannot quite prove it.

The real estate business is simply not kosher and any commonsense understanding of visible signals can tell you that. For example, as the Sensex is hitting new highs, the BSE Realty Index is barely off its all-time lows.

Telangana: Brace For Rise Of Hyderabad Reality Costs

By Sunainaa Chadha (Guest Writer)

Now that the creation of a separate Telangana state is announced, real estate developers in Hyderabad can heave a sigh of relief. Despite competitive capital values compared with other metros, the Hyderabad real estate market was down in the dumps for the last couple of years with builders holding back projects and property buyers holding out on purchase decisions due to political instability over the bifurcation issue.

While other cities entered a resurgence phase after the 2008 slump, recovery in Hyderabad was marred by political uncertainty and characterised by fewer launches and declining capital values.

Real Estate Market: Now, Time For The 'Bubble To Burst'?

By M H Ahssan / INN Live

It is a frequent motto used to emphasize the importance that a location has on the value of a real estate property. The heart of the message is clear -- if you pick the right spot to invest your property in, you can be rewarded with a handsome return on investment.

'NRI Enquiries Rising In 'Realty' And faith Is Falling'

By M H Ahssan / Hyderabad

One lot who should be happy about the rupee’s crash against the dollar is non-resident Indians. But are they really celebrating the current sharp decline in the Indian currency? Probably not, at least when it comes to real estate.

Non-resident Indians (NRI) enquiries for buying Indian property have risen 15  percent in a month and is likely to go higher if the rupee touches 60 to the dollar as the currency plunge and subdued sales in India  have made property prices cheaper by at least 20 percent for these overseas buyers.