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KEY NOTES
November 2015
Positive Light and Hope
this Festive Season
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The last quarter, replete with festive sentiments and a positive outlook, saw the emergence of a number of reasons that allay fears and give scope to celebrate.
listicon Gross Domestic Product (GDP): Data released by the Central Statistics Office (CSO) on 31st August 2015, estimated growth rate of GDP at constant (2011-12) market prices for the first quarter (Q1) (April-June) of 2015-16 at 7.0 per cent as compared to the growth of 6.7 per cent in Q1 2015-16.
listicon Inflation: CPI Inflation was at 5% (Oct 2015) and is expected to remain within bounds.
listicon Interest Rate: While there were no further cuts in bank rates post the September 29 cut of 50 bps, expectations of a Fed rate hike, kept the markets guessing on which way bank rates would move.
listicon In case the Fed were to hike rates following a healthy pick up of US Economy (strong October jobs report with unemployment rate standing at 5 percent, or what normally is considered “full employment” by the Fed and many private economists) the emerging economies may decide to keep rates steady for fear of capital outflow towards the US.
listicon Or RBI, could take its own internal view on interest rates, balancing growth concerns with inflationary trends.
 
Table 1: Key Macroeconomic Indicators
Indicator Value
Repo Rate 6.75% (23 Nov 2015)
Base Rate 9.3-9.7% (Nov 2015)
Exchange Rate INR/1 USD: 66.09 (23 Nov 2015)
INR/Euro: 70.85 (23 Nov 2015)
INR/Pound: 101.03 (23 Nov 2015)
GDP 7% (Q1 FY 2015-16)
Inflation (CPI) 5% (Oct-2015)
Govt Bond 8.4% GS 2024: 7.88% (Last auction cut off)
Source: RBI , Ministry of Statistics & Programme Implementation
 
 
listicon Forecasts for Correction in Markets: “With no price increase in the last two years, residential real estate has seen a price correction”, said Keki Mistry, Vice Chairman and CEO, HDFC, recently. He added that banks and housing finance companies will pass on cut in interest rates in next few months.
listicon Y-0-Y Sales Figures positive: Sales across eight major cities in India improved by 17%, from 57.8 mn sqft. in Q2 2014-15 to 67.9 mn sqft. in Q2 2015-16 according to our latest estimates. That’s reason to celebrate.
listicon All 8 cities cumulatively clocked highest sales in the cost range of Rs. 50 lakh-1 Cr, with sales of 22.4 mn. sqft (33%),followed by cost range of Rs. 25-50 lakh.
 
 
TABLE 2: Residential Sales in Major Cities
City Sales (Mn Sq.ft)   YOY QOQ
  Q2 14-15 Q1 15-16 Q2 15-16    
Ahmedabad 5.8 6.1 5.5 -5% -10%
Bangalore 10.2 16.3 13.7 34% -16%
Chennai 3.9 6.4 7.4 90% 16%
Hyderabad 4.2 4 4.8 14% 20%
Kolkata 2.8 2.5 2.7 -4% 8%
MMR 10.2 12.2 10.1 -1% -17%
NCR 11.5 15.4 16.9 47% 10%
Pune 9 9.4 6.8 -24% -28%
8 Cities 57.8 72.3 67.9 17% -6%
Source: Liases Foras
 
 
 
 
listicon Decline in commodity prices: A decline in commodity prices has favoured the developers by bringing down their cost of construction.This in turn, has arrested rise in prices and kept the end user's interest intact.
 
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  Key Notes - Flickers of Hope and Light this Festive Season
 
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listicon RBI Policy measures: To boost demand for low-cost housing, the Reserve Bank of India (RBI) in October reduced the risk weight for individual housing loans of up to Rs. 75 lakh.
listicon The minimum risk weight for individual housing loans has been reduced from 50 per cent to 35 per cent.

This will help banks reduce the capital requirements and as capital costs come down, it will translate into lending rate cuts by banks.
listicon For loans of up to Rs. 30 lakh, the central bank has increased the loan-to-value (LTV) ratio to 90. LTV is the highest loan amount a bank can disburse, as a proportion of the property price.
 
 
TABLE 3 : New Risk Weights for Housing Loans
Loan Amount & Loan To Value(LTV) Risk weight(%)
Up To Rs 30 Lakh
LTV < 80% 35
LTV > 80% To < 90% 50
BETWEEN Rs 30 LAKH TO Rs 75 LAKH
LTV < 75% 35
LTV > 75% To < 80% 50
ABOVE Rs 75 LAKH
LTV < 75% 75
Source: RBI
 
 
 
listicon E- Realty set to Revive Sector: Online marketplace Snapdeal launched a home shopping festival offering discounts on purchase of flats in over 200 projects across major cities.
listicon The online 'Diwali Home Buying Fest' was organised from November 3-9, in order to propel sales during the festive season.

Here customers could avail exclusive festive offers at the Home Buying Fest like price saving deals of up to Rs. 500 off per sq. ft. on base selling price.This provided good incentive to home buyers.

Further, there were deals like jewellery worth Rs. 1 lakh, waiver of car park reservation charges, free Modular Kitchen and ACs in bedrooms on offer.
 
listicon Tata Housing sold 250 flats in Goa on a five-acre project, worth Rs. 100 crore. The company is developing 600 apartments in this project , which was launched recently on Facebook. The prices are in the range of Rs 30-70 lakh.
listicon Affordable Housing Turns the Key: Across geographies affordable housing showed growth and promise of a revival in the market.

Not surprising, considering India’s rapid urbanization and a shortfall of urban housing within an affordable range.
listicon India’s urban housing shortage was estimated at nearly 18.78 million households in 2012. Besides those living in obsolescent houses, 80 percent of these households are living in congested houses and are in requirement of new houses.
 
 
Chart 1: Urbannization growth in india
Source: Census of India 2011
 
listicon Prices across all cities were stagnant with the maximum change of only 4%. Maximum increase in weighted average price was 3% in Ahmedabad, while highest decline was only 4% in NCR market.

With hardly any upward movement in prices we see a future where affordability will improve and the market will slowly revive.
 
signiture
Pankaj Kapoor
 
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listicon Market Trend: The market showed stagnancy in pricing, but demand was witnessed in the affordable segments across micro-markets. Improvement in construction progress has been observed throughout MMR
listicon In the western suburbs, discounts were offered at the time of booking in projects like Acme Bouleward, Akruti Hillcrest etc. Many developers are focusing on the strategy, of achieving maximum sales during the prelaunch phase of the project and closing the booking as early as possible, in order to restrict the customers from getting any time to look into competitors’ projects. The role of the intermediary in such bookings has gone up substantially.
listicon Micromarkets: Project launches were seen in the distant suburbs of Mira-Bhayander, Thane, Palghar and Boisar West. Incentives like Nano cars were on offer by some developers to attract buyers.
listicon In Gokhivare, Vasai (E), a cluster of 10 – 15 new projects have been observed. Developers (Rajhans Group, Vasai) also came up with exciting offers like ‘Buy and Fly Scheme’- trips to various countries as a token of appreciation.
listicon New redevelopment projects were seen in Borivali (W). Thane saw marginal upward movement in rates in some projects largely on account of the revival in commercial markets.
listicon In the extended suburbs of Boisar (W) activity was witnessed in areas closer to the station and on the whole, in regions where there was easy local transport available.
 
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TABLE 4: New Launches in MMR
Developer Project Location Price (Rs/psf)
Oberoi Oberoi Sky City Borivali East 12,500
Godrej Properties Godrej Vihaa Badlapur 3,000
7/11 Construction Apna Ghar Mira Road 5,500
Sanghvi Eco City Phase II Mira-Bhayander 7,300
Reliable Tarang Nalasopara 2,875
Tata Serein Thane 12,300
Kalpataru Bayer Phase II Thane 8,862
Lodha Platino Thane 7,300
Rajesh Lifespaces Raj Spectrum Sion 15,900
Ahuja O2 Sion 13,999
Peninsula Land Ashok Serenity Byculla 25,000
Ahuja Altus Parel 23,999
Source: Liases Foras
 
 
 
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listicon Market Trend: Overall market has remained stagnant, more or less the same as the last month. However, activity was observed in Ghaziabad in Siddtharth Vihar – NH 24. Noida was seen to perform slightly better than Gurgaon in terms of sales. In Noida activity continued to be centered close to the F1 Tracks.
listicon Micromarkets: In the affordable segment (Rs. 25-30 Lakh), areas such as Bhiwadi, where new launches were seen in every quarter, there were no signs of launches in this month. In other affordable areas such as Rajnagar Extension, where projects are almost nearing the delivery stage, sales were observed.
listicon Crossing Republic area has been completely occupied, with hardly any stock left. In Noida Extension (Rs. 30 -35 Lakh), a cluster of 180 – 200 projects were rated poorly due to delay in deliveries. New launches were observed in areas like Sector 150 Noida and Yamuna Expressway, in the range of Rs. 30 – 35 lakh.
listicon However, more than 50% projects showed absolutely no incremental sales. No major improvement was seen in the high end luxury segment, while slight improvement was seen in low end luxury segment. Projects nearing completion have contributed maximum to sales.
 
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TABLE 5: Projects where Sales Witnessed
Developer Project Location Price (Rs/psf)
Parkwood Meadows Parkwood Meadows Greens Sector -67 Gurgaon 4,250
Gaur Developers Gaur city-2 Greater Noida 9,000
CHD Developers CHD Resortico Sohna Road Sector-34 Gurgaon 4,650
Amrapali Hemisphere Group Hemisphere Greater Noida 3,600
Source: Liases Foras
 
 
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listicon Market Trends: Overall, market remained the same as in the previous month, with no major movement in prices. Sales have remained more or less stagnant and more of under construction projects were seen than ready to occupy ones. Many projects have come up with 20 – 80 schemes.
On the policy level, reports stated that the floor area ratio (FAR), is expected to be brought down in Bengaluru. Currently at 3.25 in almost 50% of the city, the proposal is to bring it down to just 2.
This is to accommodate the concept of Transfer of Development Rights (TDR ).
listicon Micromarkets: Activity continued to remain concentrated in the affordable markets of Whitefield and Sarjapur.

The weighted average price across markets was at Rs. 5,404 psf (Q2 2015-16) marginally up from Rs. 5,222 psf in Q1, 2015-16. An upward trend in months inventory was also witnessed in the city.

Considerable number of new launches were witnessed in the mid market segment.
 
BENGALURU
 
 
TABLE 6: NEW LAUNCHES IN BENGALURU
Developer Project Location Price (Rs/psf)
The Adress Maker Group Lake View Villas Electronic City Phase 1 6,490
BSCPL Infastructure Ltd. Bollineni Serene Kogilu Cross, Yelahanka 5,500
CMRS Group Lotus Whitefield 4,300
DS Max Properties Starline Electronic City Phase 2 3,000
DS Max Properties Smart Nest Abbigere 2,800
The Fortune Group Fortune Hestia Dommasandra 5,500
Keerthi Estates Pvt. Ltd. Keerthi Krishna Viva Sarjapur Road 6,000
Mana Projects Mana Foliage Sarjapur Road 4,300
IGCL Developers United Towers Marathalli 6,250
Malibu Projects Rising City Hope Farm Junction 3,500
Malibu Projects Sparkling Wings ITPL, Doddanakundi 3,500
Source: Liases Foras
 
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listicon Market Trends: Overall, the market is witnessing a slowdown. No significant new launches were witnessed last month. Festive season offers were introduced by various developers, such as free stamp duty, registration, no service tax, VAT on ready property, no EMI till possession. Approximately 20% of the new stock added was in the Rs. 30 lakh category.
listicon Micromarkets: Kondhwa and Kharadi witnessed construction movement. Peripheral areas like Moshi, Talegaon, Chakan and Chahroli observed sales.

The maximum new launches were witnessed in the Rs. 25-50 lakh category (3.8 mn. sq.ft.) followed by the Rs. 50 lakh-1 Cr. category (2.7 mn. sq.ft.).
 
 
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TABLE 7: PROJECTS WHERE SALES WITNESSED
Developer Project Location Price (Rs/psf)
Guardian Developer

Eastern Meadow

Wagholi 5,350
Vastushodh Projects Urbangram Urawade Pirangut Road 3,150
Vastushodh Projects Urbangram Urawade Pirangut Road 3,150
Guardian Developer Guardian Westshire Kiwale 4,300
Yuvraj Dhamale Corp Raigurushi Residency Kondhwa 8,500
Rama Group Melange Hinjewadi 4,850
Source: Liases Foras
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listicon Market Trends: The real estate markets have shown some positive signs in Hyderabad. As there is stability on the political front, investors see Hyderabad as a prospective market for investment. Developers such as Purvankara, Prestige, Pacifica, Lansun, Muppa, Aparna, Raja Pushpa, North Star are the key developers who launched projects here recently.
listicon Micromarkets: New launches were noticed mainly in North West Hyderabad, in the financial district of Gachibowli. Developers have improved their construction activities and price have increased marginally. Occupancy levels showed marginal increase in ready to occupy properties.
 
HYDERABAD
 
 
TABLE 8: NEW LAUNCHES IN HYDERABAD
Developer Project Location Price (Rs/psf)
Pacifica Hill Crest Gachibowli 3,500
Lansun Group Lansun Etania Nanakramguda 4,500
Purvankara Kenworth Rajendra Nagar 3,390
Muppa Project Akshaja Crown Kokapet 3,900
Lodha Aphrodite Sanatnagar 4,290
Source: Liases Foras
 
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This document is being communicated to you solely for the purposes of providing our views on current market trends on a confidential basis and does not entitle the receiver to any right of publication or disclosure to any third party. Nothing in this document is intended to constitute legal, tax, securities or investment advice. The use of any information set out in this document is entirely at the recipient's own risk.
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