India’s most cosmopolitan city – Mumbai

As per Knight Frank’s Wealth Report 2016, released on Wednesday, Maximum City- Mumbai has the maximum number of ultra-high-net worth individuals at 1094, followed by Delhi at 545. This number is going to increase to 2,243 in Mumbai and 1,128 in Delhi over the next decade.

UHNWI are defined as individuals with net assets, excluding primary residence, of over $30 million (around Rs.204 crore). The data in the 2016 report by New World Wealth, wealth intelligence company, shows that there are 1,87,500 UHNWIs across the world.

As against a global growth of 68% to 1919 billionaires, the number of billionaires has increased exponentially by 333% to 78 over the last decade. It is expected that in the next decade, 6% of the world’s billionaire population will be from India.

Places rich people prefer to stay

As per the Attitudes Survey of Knight Frank’s Wealth Report, London for the second consecutive time has beaten New York to win the title of most important city to UHNWIs.

The survey, the latest from the stable of the ultra-wealth intelligence consultancy Wealth-X, has incorporated the views and opinions of approximately 400 of the world’s leading private bankers and wealth advisers.  Pooled wealth amounting to over half a trillion dollars for around 45,000 UHNWIs is managed between these 400 bankers and wealth advisers.

According to the survey, while investments on commercial property only constitute 11%, residential real estate constitute almost a quarter of the average UHNWI’s investable wealth. On exploring the distinct factor or reason for UHNWIs to buy residential property, 55% of the respondents indicated the ability to sell in future.

The report says, “Over the past 10 years, 54% of the respondents said their clients had increased their allocation to residential property. Just over 40% expected it to increase further over the next 10 years, with 30% of clients likely to consider a residential purchase in 2016.”

Increasing Demand in real estate

According to report of Bain, real estate consulting firm, “The demand in Indian real estate market for organized segment can reach up to 1.35 billion sq ft by 2020, however; currently, it is around 880 million sq ft and out of this 85 percent is for the residential real estate”.

As per report of Bain which was titled with “Residential Real Estate in India: A new paradigm for success” finds that in present the sales of home is slow because of low consumer demand and high price. However; while going to forward, the business of Indian real estate sector will have to things very differently in an order to be successful with positive growth.  As per the statement of Parijat Jain, who work for Principal Infrastructure and Real Estate Practice at Bain and Co-author of the report, “The current business model of real estate is changing and it will continue to change more rapidly over the next few years. All the value that was attributable to a real estate firm was in land acquisition, agglomeration and managing approvals”.  The more he added that now people are building concrete businesses with sustainable and value addition inputs very good process and very good execution skills to manage real estate market.

In present, the real estate industry is seeing shift because of dynamics and competitive forces, which are giving rise to different business models in the market and regulatory environment are becoming more complex and apart from that the shift in profit is increasing and awareness among consumers are also increasing. However; the inventory level is increasing due to slow growth in real estate market, but still its challenges to sale the older inventory in market. Apart from that the newer projects are doing well in the market. According to Gopal Sarma, the Head Real Estate and Infrastructure at Bain for India Unit and lead Author of the Report, “It is combination where come part of sector are doing very well whereas; other segment is facing rough response from customers”. The more he added that there has never been value attached to discipline in the process to provide quality and best price to customer.

To be successful in the real estate market, real estate builder should keep themselves on three key aspects in mind; first, the real estate builder needs to select the business model with right processes in an order to deliver best service because with well defined processes and valuable chain from the pre-construction through the construction cycle, handover and beyond, can create alignment and increased ROI for companies. Second; real estate builder should decide that in which market they want to play in terms of geography and market segment because real estate is the business of local market, it is not the business of national and regional scale. Third; In most of the real estate market, customers are neither on front nor on centre, which means now onwards builders should think for customers.

10 Indian cities having affordable realty markets – JLL

In a recent report by JLL India, Navi Mumbai, Ahmedabad, Pune and Hyderabad have been listed in the 10 affordable property markets of India among other cities like Kochi, Ghaziabad, Jaipur, Nagpur, Surat and Coimbatore. According to the consultancy, these cities offer great low-budget properties between Rs. 30 – 50 lakh.

“These ten cities offer ample choices for investment in real estate with reasonable property price levels as well as opportunities for future capital appreciation and healthy returns,” says Anuj Puri, Chairman and Country Head, JLL India.

On Hyderabad, The report stated that after the end of political turbulence and prolonged slump, the real estate market in this city is all set for an upswing. Puri said Hyderabad is conceivably one of the most affordable cities among all tier 1 cities of India. Even the well-developed residential localities like Manikonda, Kukatpally, Miyapur and Sainikpuri present homes in the budget of Rs 30-50 lakh.

While Mumbai is increasingly becoming unreasonable for the common man, Navi Mumbai still presents affordable choices in similar price range. “The proposed SEZs at Dronagiri, Ulwe and Kalamboli, and the impending international airport at Panvel are expected to generate employment and drive demand for commercial as well as residential real estate,” Puri said.

About Pune, the report said that this Tier II city has documented substantial growth in the affordable housing segment over the last couple of years. These projects offer small 1-2 BHK flats with basic amenities and are located in the periphery of Pune.

“Well connected via metro and roads to the job markets of Delhi-NCR, Gaziabad mainly gratifies the mid-segment home buyers. With a very good supply of ready-to-move-in apartments offered by reputed developers in the affordable range of 30 – 50 lakh, the city is emerging as a residential neighbourhood of Delhi,” Jll said in the report.

On Kochi, the report observed that the residential real estate market of the city is dominated by affordable housing segment, which accounts to about 60 per cent of the total housing projects.