Image credits : DNA

Two major Indian cities; Mumbai and Delhi have made their entry into the top 30 list of the world’s most productive, powerful and well connected cities.

Global Top 30 List:

According to research report of JLL India, the international real estate consultancy, Mumbai which is also the financial capital of country has been ranked 22^nd whereas; our national capital Delhi has been ranked on the 24^th spot in the list of 30 super cities of the world. However; in the list the top five cities were; Tokyo, New York, London and Paris. The Tokyo, New York, London and Paris are the cities which are the destination of more than 50 per cent of all foreign capital investment, says Global Top 30 list of JLL India. According to JLL, “All top 30 cities account for 64 per cent of the total cross-border investment as their common interest are commercial attraction or economic attraction and real estate power and status.

List of Improvers:

Apart from that Mumbai is also ranked in the top 10 list of “Improvers” that needs more development and past one year has increased the commercial attraction. However; the other cities which have increased the commercial attraction includes; Tehran (Iran), Madrid (Spain), Riyadh (Saudi Arabia), Milan (Italy), Jeddah (Saudi Arabia), Lagos (Nigeria), Cairo (Egypt), Jeddah (Saudi Arabia), Istanbul (Turkey) and Jakarta (Indonesia).

.According to the reports of JLL India, with growth of more than 7 percent in the cities over past three years, it is no wonder that Mumbai and Delhi has made its entry into the Global Top 30 list with strong presence. The more they added that these reforms are undertaken by the government and it is boosting the confidence in the economy of nation. According to reports, the Mumbai is making its strong presence into the hub for global corporations with the help of firms which are among the world’s 2,000 largest companies and they all have headquartered in the city by rising 50 per cent over the last 10 years. The index of commercial attraction is the primary benchmark of JLL in terms of size and strength of the city’s real estate market and economy development.  As per the statement of Anuj Puri, Chairman and Country Head of JLL, “In Mumbai construction levels are high and it is increasing the Grade-A stock by 26 percent in last three years and it is expected that in next three years it will add more 22 percent. Apart from that Mumbai is also enhancing its position as a hub of global corporations because here you can easily find the headquarters of world’s 2,000 largest companies.

List of Global 300 Cities:

In context of the Global 300 cities, Mr. Puri stated that cities which make up the Global 300 are the world’s most productive¸ connected and powerful. Their 1.3 billion citizen’s account for nearly 40 percent of global economic activity, more than Europe and North America combined. These cities have hosted that more than 88 percent of the headquarters of the world’s 2,000 largest listed companies, which are able to generate the 40 percent of the world’s finance as well as business employment. In this list you can see the overwhelming focus of international corporations, hotel brands, real estate investors and retailers. The Global 300 cities are representing the bulk of commercial real estate market activity.

L & T Realty is looking for the investors and partners in Navi Mumbai and Bengaluru

Larsen and Toubro Ltd’s real estate development arm L & T Realty Ltd is now seeking for the real estate investors and development partners for few projects which are about to come in the Bengaluru and Navi Mumbai as L & T Realty is planning to monetize its retail mall portfolio with an aim to use its land for the construction of offices. We all know that L & T Realty Ltd has huge real estate development portfolio and it is about 50 million sqft, and it includes both upcoming and ongoing real estate projects.

Projects of L & T Realty in Navi Mumbai and Bengaluru:

L & T Realty is the four year old firm from Larsen and Toubro and now its planning to bring developer partner for its Hebbal projects which is coming up in Bengaluru and in this project L & T Realty is developing residential apartments on the area of 45 acres, apart from that company is also planning to develop remaining 20 acre area with the help of joint venture partner. However; when it comes to Mumbai, so TOD (transit-oriented development) project which is coming up in Seawoods, Navi Mumbai, so here L & T Realty is looking for the strategic investor for the development of 1 million sqft retail space. However; the TOD project is coming around the railway station of Seawoods— Darave. Apart from that this developer is also coming up with 4 million sqft of office space as a part of 40 acre contiguous development under the Seawoods Grand Central project.

Recent transactions of L & T Realty:

Recently, L & T Realty has sold its commercial real estate project to Carnival Group in Rs.1, 785 crore and it was located in Chandigarh. This commercial real estate project includes a Hyatt hotel, office premises with a central courtyard and Elante mall. With the transaction of Chandigarh, L & T Realty exited from its real estate business in northern India and now its planning to focus on the projects which  are coming up in Chennai, Hyderabad, Mumbai, Bengaluru and Navi Mumbai. According to Shrikant Joshi, CEO of L & T Realty, “It’s not our policy to run malls and due to that we want to monetize them as we continue to build them in our projects. At this point of time in the Hebbal project, our company is planning to bring a joint venture partner for the development of office space. We are hoping to conclude all these transactions next year”. The more he added that In Seawoods, we are seeking for the investor partners, but we want someone who can be the worthy successor.

There are few developers which are showing their interest for Hebbal project and they are; Assetz Property Group, RMZ Corp. and some other developers and investors from Singapore. It is expected that by 2016, the L & T Realty will start to deliver the home in its projects which are in Seawoods and Powai in suburban Mumbai. Last year, the real estate market has under gone the number of challenges and due to that now buyers want to move with bigger and branded developers. According to Joshi, “Our strategy is to continue construct the projects which we have and on the same time we are looking for the joint venture partnerships with outstanding partners.

Due to brand value there are several branded developers such as; Godrej Properties, which have done well in the period when most of the developers where struggling. According to real estate experts, home buyers always shows a lot of faith in the larger brand association because they assure them with delivery capability, brand equity and goodwill.

Indian-Real-Estate

With more than 6, 00,000 units of inventory in India’s top cities, the situation is alarming. One in three houses constructed is unsold, despite builders, agents, online broking houses and now even e-commerce websites trying to allure consumers with lucrative schemes and offers.

Urbanization as a trend has just touched the tip of the iceberg and India has a huge demand for houses. Industry experts anticipate this number at 50 million houses in next 10 years. Strangely, over supply of inventory in the second most populous country in the world is an irony.

Unlike some European countries where the population growth is in the red, India is experiencing a very high rate of population growth and selling of ready houses really should not be a problem. More people are getting more liquid money to invest and a good number of immigrants moving in and out of major cities are some of the factors that drive real estate demand in the country. It is indeed paradoxical that there is supply and there is demand, yet no transactions.

What is driving this ironic situation is a market that is going through a transition – from high-growth expectations of the past to a mature market that will see rational returns.

Builders are still reminiscing on the hay days which were driven by a high growth rate economy where projects used to get sold in a jiffy and give big returns in a short time. Some ambitious developers still working on similar lines; they launch one project, and use the capital from initial sale to start a second project, then use the proceeds from the second project to start a third and then a fourth and sometimes even a fifth. They entwine cash-flows and spread themselves thin. However, they fail to realize that this strategy would not work in a slow economy; projects do not sell as fast, spelling doom on all subsequent projects.

Developers must focus on delivering as delays not only impact returns but also impinge on the investor sentiment in general. On the whole, the market experiences a downward curve and gets caught in the cycle of price stagnation, rising unsold inventory, incomplete projects, resulting in poorer returns on investment.

Builders, in their enthusiasm have gone way outwards than currently supported by the market. Moreover, with inadequate and restricted alternatives of structured financing, they raise funds from small time real estate investors who demand quick and hefty returns. Developers have no option but to artificially inflate the basic cost of the property. The markets have reached a point where these prices have gone beyond the affordability of end consumers. They would however, not reduce the prices as this will break their investor network. Whether the inventory remains unsold or is in the hands of speculative real estate investors, there is a desperate search for end-customers and real users – who remain elusive.

The Indian real estate industry is transitioning from a “pre-launch” to a “build and sell” model like developed markets which are the signs of a maturing industry. From traditionally a seller’s market, real estate in India is now a buyer’s market. Each buyer has lots of similar options to choose from. If buyers start dictating the markets, ask for transparency in the real estate pricing, a paradigm shift is bound to take place. Existing online players will struggle and will be forced to reinvent themselves. We’ll see transaction-oriented models vs simple listing-based models that will bring transparency that consumers so want today.