FDI in retail will boost Real Estate Sector

The recent announcement by the RBI of strong growth in the service sector in 2011-12 has brought cheer to the real estate developers, as it may sustain the present high demand of commercial real estate in the near future. The projected slowdown in overall economic growth globally, and particularly in India, to 6.5% in 2011-12 , as against 8.4% in 2010-11 , has affected the sentiment in the market place. The recent decision of the government to allow foreign direct investment (FDI) in the multi-brand retail sector will also help the real estate sector in the country. This will also increase the demand for commercial space in the market. At the same time, as the demand for office space will continue to be strong, fresh jobs creation in the country will also see a strong growth. Normally, when a company takes 1,000 sq feet of office space on rent, it employs around seven people to fully utilize that space. That means, at least seven new people will enter the job market and, on average , five out them will buy residential apartments. Therefore, a consultant said that according to the thumb rule, the requirement of residential space increases five times that of the commercial space used. Therefore, if the demand for the commercial space remains strong, it will also continue to give a fillip to the residential real estate. Pankaj Renjhen, the managing director (retail services) of Jones Lang LaSalle, says: "The real estate retail industry will benefit immensely due to increase in demand and increased investor confidence. We can also expect increased transparency in the retail real estate sector. Additionally, the country will flourish in terms of quality standards and consumer expectations, since the inflow of FDI into the retail sector is bound to pull up the quality standards and costcompetitiveness of Indian producers in all the segments." The government has taken an important step with this decision , Renjhen says. From a retail real estate point of view, this decision will open up immense opportunities in the medium and long term, as the demand for quality real estate will rise. Currently, some retailers are cash-strapped and this will provide a sort of bailout option to them, he says. Overall, the investment by local and new international retailers that are likely to come into the sector will definitely also take the form of investments into real estate at the front end in terms of retail store spaces and of the back end, in terms of better quality warehouses. The new international entrants will be willing to take longer-term bets and invest in stores which will be sustainable over the long haul. Competition will increase as Indian retailers shape up and intensify their expansion plans, which had been fairly low over the past few years. Also, it will increase the interest and confidence level of real estate developers to set up quality shopping centres. They now have reason to set behind them their experiences post-2008 , and can once again consider investing in this asset class with a clear vision on long-term profit, Renjhen says. Subash Bhola of Jones Lang LaSalle India, the global consultant in real estate sector, says: "The economy's service sector has experienced strong growth and is advancing at a rate of 8.5% in financial year 2012. This indicates that a major slowdown in office real estate demand is not likely to occur - the service sector generates the highest demand for office space in the country." Bhola says that recently, the annual GDP of 6.5% growth during April 2011-March 2012 released by the Reserve Bank of India resulted in a negative sentiment throughout the real estate industry . Consistent with this, in the first half of 2012, the demand for commercial real estate moderated on the back of office occupiers that remained cautious about their expansion plans. However, over the years, the service sector has been the growth engine of the Indian economy. Its growth rate has outperformed the overall growth rate of the country's GDP, which includes the service, agricultural and industrial sectors - the three major sectors of the economy. In a report, Bhola says the slowdown in GDP growth in 2011-12 can mainly be attributed to high interest rates, inflation and a significant contraction in industrial production. However, the growth in the service industry , at 8.5%, has been robust enough to support overall GDP and the sector itself. The IT-ITeS sector, which is one of the major constituents of the service industry, recorded a growth rate of 13% in 2011-12 and is expected to grow at a similar rate during the next financial year. Additionally, the banking, financial services and insurance industries (BFSI) registered a robust growth rate of 10% in 2011-12 . Although the manufacturing and industrial sector is performing poorly now, the continued health of the service sector is likely to compensate for it by contributing a larger share. The RBI projected that the Indian economy would grow at 6.5% in financial year 2013. Compared to many major world economies, this growth rate is fairly healthy; in addition, an established service sector should help India resist any slowdown in office real estate demand. The service sector comprising BFSI, information technology, consulting , trade, and communication is the major driver of demand for commercial real estate in the country. The service sector has also been one of the country's core sectors over the past decade, as its contribution to GDP has significantly increased from 50% in financial year 1996, to 63% in financial year 2012. In financial year 2012, when all the other sectors, including industrial and agricultural, performed very poorly, at an average of 3.1%, the service sector recorded a healthy growth rate of 8.5%. It is estimated that in 2011, the service sector accounted for about 70% of the demand for commercial office space in seven major Indian cities - Mumbai, the Delhi-NCR , Bangalore, Chennai, Hyderabad, Pune and Kolkata - with the remaining 30% coming from manufacturing and other industries. In the service sector, the IT-ITeS and BFSI industries contributed the most, at 35% and 16% respectively. However, another global consultancy firm Cushman and Wakefield says that given the current global economic uncertainty, IT-ITeS companies have been somewhat conservative in their expansion plans and are focussing more on consolidation. As a result, companies from other sectors like consulting, BFSI, manufacturing, etc, seem to have been garnering more shares in the fresh absorption pie for commercial office spaces this year. BFSI companies are most active in Mumbai and Pune, compared to other cities. The share of the BFSI sector in the total absorption for Mumbai has increased to 55% in the third quarter, up from the 22% in the previous quarter, while the share has been around 15% in Pune; the same has been around 3-5 % in other cities. Bhola says consulting services have shown strong office space demand over the years, which has grown from nearly 3.8% of the total demand in 2009 to 13% in 2011. Therefore, the growth of commercial real estate demand depends principally on the growth of the service sector. Cushman and Wakefield also feel similarly.

Tax holiday for commercial vehicles on e-way over

The tax holiday is over for commercial vehicles plying between Delhi and Gurgaon. Making it clear that private vehicles travelling on the expressway can still enjoy free rides, the Punjab and Haryana High Court today directed the charging of toll tax from the commercial vehicles from 6 this evening.

The court also gave Delhi-Gurgaon Super Connectivity Limited (DGSCL), the toll plaza operator, two days to increase the number of toll lanes from 32 to 53.

As the case came up for hearing this morning, the Division Bench of Acting Chief Justice Jasbir Singh and Justice R K Jain also appointed Punjab and Haryana High Court’s former Chief Justice Mukul Mudgal as local commissioner to inspect the area and submit its report by Monday. Justice Mudgal will report to the High Court, if the concessionaire has implemented the decongestion plan submitted by it.

The Bench also directed DGSCL to implement the proposals submitted by it to decongest the expressway by Sunday.

The case will come up for further hearing on Tuesday.

The Delhi Municipal Corporation had earlier moved the High Court, seeking directions for imposing toll tax on commercial heavy vehicles. The corporation asserted that commercial vehicles were entering Delhi from the Gurgaon side to avoid toll tax. As a result, the rush had increased on the expressway and its effect could be felt right up to Dhaula Kuan in Delhi. It added that a dedicated lane could be earmarked for commercial vehicles for the purpose of collecting the toll tax.

Property Updates : Gurgaon

Golf Course Extension Road is going to be the next destination for luxurious residential projects in Gurgaon. This developing stretch has carved a niche for itself in a very short period, as it is on a 30-minute drive from the Indira Gandhi International Airport and has easy accessibility to NH-8 and South Delhi through the Gurgaon-Faridabad Expressway. Relatively, Golf Course Extension Road is a new locality . During the slowdown, the number of transactions dropped considerably, but with improving infrastructure and a growing demand for premier lifestyle housing segments, the realty scenario on this stretch has now changed. Developers and prompters are now raising golfthemed apartments and luxury villas. Top realty players like DLF have already launched several premium projects like Aralias and Belaire on this road. While projects like these have done their bit in promoting the area, the area turned into an end users destination with the development of Road No. 9 from Sikandarpur to Golf Course Road. The extension of this road to connect to Sohna Road further opened up the area to development. Apart from DLF's projects, the other launches along this stretch are Ansal API's Esencia, M3M's Golf Estate, Pioneer Group's Pioneer Park, Emaar MGF's Emerald Hills, Tata's Raisina Residency and IREO's Grand Arch. Sectors like 55 and 56 along the Golf Course Extension Road already have a large number of cooperative group-housing societies, which have created a critical mass of population on this stretch. The new stock coming up here is 3- or 4BHK luxury apartments of 1,500-2 ,500 sq ft, quoting at a base rate of Rs 11,000 sq ft. Commercial projects like Global Business Foyer, Paras Twin Towers, Suncity Business Park, and Ninex Time Tower have already been handed over for possession. The availability of commercial space has increased by approximately 30%. In the retail segment on the Golf Course Extension Road, Emaar MGF has launched the Emerald Plaza mall. Unitech has launched two office space projects - Unitech Business Park and Silvertone. M3M is coming up with Golf Estate duplex apartment on 75 acres in Sector 66. Golf Estate has three parts: Fairway West, Fairway East and Fairway Polo Suites. Fairway West is expected to be completed in 2014, while the entire project, including Fairway East and M3M Polo Suites, are likely to be completed within the next three years. Fairway East and M3M Polo Suites offer 3BHK units of 3,655 sq ft, 4BHK units of 4,465 sq ft, 4BHK duplex of 5,465 sq ft and 5BHK Simplex of 5,600 sq ft at Rs 11,000 per sq ft. - Dharmendra Kumar

Michael Schumacher Tower Gurgaon

Dream home where luxury has no limit....

Inspired by the concept of unique “Human Architecture”, planned by Michael Schumacher “The legend” himself and this project MSWCT (Michael Schumacher World Champion Tower) is been presented by Homestead (United Kingdom).

Some of the fantastic Specifications are as under:-

Project Name	Michael Schumacher World Champion Tower in Gurgaon, India
Project Land	5 Acres
Location	Sector-109 (Best Residential Sector in Gurgaon)
Total Flats	85 (One tower & rest open green area with hi-tech club and swimming pool)
High Rise Floors	34

Michael Schumacher himself will inaugurate the project launching on 16 September 2012 and the construction will be started on 16 October 2012

Completion of project will be done within 3 Years. There is a Helipad on the top floor of the Tower. In this whole world there are only 7 such towers. Club and swimming pool is free for the persons booking the flats during this launch. There is a swimming pool and gym in each flat of this project.

Persons holding flats in this project- Michael Schumacher himself own a flat in this project and will stay have whenever he will visit India .Some of popular Bollywood and Hollywood actors will own a few flats Great sports persons of this particular time will also be involved in the ownership of few flats.

Area 3750sq.ft Area 5500sq.ft

BHK 4 BHK 5

BSP 10500/- BSP 10500/-

NDMC To Recover Property Tax

Facing a serious financial crunch, the North Delhi Municipal Corporation has decided to recover all the property tax dues. For this, the corporation has decided to publish the names of tax defaulters in newspapers. Officials say that defaulters will be given a month’s time to settle the dues after which the corporation will initiate legal action against them.

“We have been trying to avoid this for long, but now we are left with no option. We will take stringent action against the defaulters if they don’t pay up,” Yogender Chandolia, chairman, standing committee, North Corporation, said.

The corporation will publish the list of people who have dues more than Rs 5 lakh pending against them.

As per official records, there are 1,070 defaulters and the total amount to be recovered is Rs 120 crore. “This is a huge amount for our corporation. Our annual property tax collection target is Rs 350 crore. Post-trifurcation, our financial condition has deteriorated. We had to cut down on our expenses. We are now struggling to boost our revenue, but the options are limited,” said Chandolia.

The erstwhile MCD, too, had published the names and addresses of 4,816 defaulters last year. Councillors say that the embarrassment faced by people will help ensure faster payment. The amount due was Rs 637 crore. Officials say that a good sum was recovered by the corporation. “The previous exercise had yielded good results. We are hopeful that this time too we will be able to get a good response,” said Chandolia.