Realty set for real good times ahead

The Hindu  May 29, 2014

With the ‘T’ issue resolved and a new govt. in place, construction is expected to shrug off the inertia of the past 4 years and look to better days ahead

It is a new optimism that the real estate sector breathes. Construction activity that had taken a hit in the city and its surroundings is set to pick up and witness steady, healthy growth in the next one year. The gloom of the past four years, industry insiders say, may well have run its course.

From a boom to a nosedive, and to the subsequent piling up of unsold stocks, the construction sector underwent a roller-coaster ride in the last six years. One of the primary reasons for the fall in property interests here was attributed to the protracted separate Telangana agitation.

“We look forward to a new dawn, for stable growth and a healthy, upwardly curve,” says P. Dasharath Reddy, president of the A.P. Real Estate Developers’ Association (APREDA). After the ‘terrible’ times of the last five years, a lot now depends on the new government: its governance would propel construction activity, he feels.

Estimates put housing needs in the city and suburbs at 25,000 new units a year. Most builders say there is very little unsold stock.

“The boom had the inventory going up high and consumption failing to match it. Hence, stocks piled up for a while but it got cleared,” he claims.

Since, there were not many major project launches last year, there could be a shortage of housing units next year, say some.

“Fresh supply (of housing units) in good numbers can be expected in 2016 as we can look forward to a rush for new launches,” says Anand Reddy, executive director of PBEL Property Development. He forecasts a revival by the year-end and also a robust 2015.

“Give six months for the new government to settle down and then the positive momentum will start building up,” Mr. Reddy says.

Telangana Builders Federation president C. Prabhakara Rao rules out the possibility of capital flight from Hyderabad to the new capital to be set up for A.P.

“Speculation has already driven land prices high in cities and towns being suggested as the new capital and those from here will not be keen on investing such amounts,” he argues.

Developers see a possibility of prices rising by the year-end.

“Property prices in Hyderabad are still in the reasonable range when compared to Chennai and Bangalore. Even if there is some appreciation, it will continue to remain affordable,” reasons C. Sekhar Reddy, president of Confederation of Real Estate Developers Association of India.

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Hyderabad poised for new avatar

Source: TOI  May 26, 2014

The city of Hyderabad is poised to acquire a new avatar next week as the common capital of Telangana and residuary state of Andhra Pradesh for a stipulated period of 10 years. 

Hyderabad, founded by Sultan Mohammed Quli Qutub Shah in 1591, has seen vicissitudes of fortune over its 423 years of existence. The city has witnessed the rise and fall of Qutub Shahi Sultanate, brief rule of the Mughals, reign of Asaf Jahi Nizams, the Police Action and aftermath, and the formation and bifurcation of Andhra Pradesh. 

Hyderabad has grown exponentially over the last century, in the wake of the great floods in the Musi in September 1908 that wholly devastated the town, necessitating a massive reconstruction of its civic infrastructure under the Nizams during the 1920s and 1930s. The modern Hyderabad was, thus, born out of the ruins of Musi floods. The formation of AP in 1956 catalysed the growth of the city with the influx of people from other regions of Andhra which were merged with Telugu-speaking areas of erstwhile Hyderabad State. 

Even as early as in 1933, Hyderabad was made a municipal corporation with the enactment of the HMC Act by the Nizam's government. After the formation of AP, the Hyderabad and Secunderabad municipal corporations were merged to form MCH in 1960. Thereafter, in 2007, the Greater Hyderabad Municipal Corporation was constituted by merging erstwhile MCH and 12 adjoining municipalities in Rangareddy and Medak districts. 

Since the 1980s, the city and its environs have witnessed a population explosion, largely due to immigration. Today, Hyderabad ranks as the sixth largest metropolitan city in the country, after Mumbai, Delhi, Kolkata, Chennai and Bengaluru. 

GHMC is the fourth biggest municipal corporation in the country, after Greater Mumbai, Delhi and Bengaluru, with an area of 625 sq kms and population of 80 lakh. However, compared to other metropolitan corporations, GHMC has modest revenues of Rs 2,000 crore annually. To make it a world-class metropolis, Hyderabad would require an annual outlay of Rs 20,000 crore to Rs 25,000 crore. 

The cash-strapped GHMC, however, has projected an ambitious budget for 2014-15, with a total outlay of Rs 4,599 crore, including revenue expenditure of Rs 1,887 crore and capital expenditure of Rs 2,712 crore. 

Many new schemes and initiatives have been envisaged in the budget to give a boost to civic amenities in the twin cities, without raising the tax rates. To balance its budget, GHMC is seeking more funds from the Central Government. 

Since Telangana and residuary AP Governments would be using the civic amenities in the city, which serves as common capital, the GHMC wants liberal grants from both the states. 

Though the current financial year commenced on 1st April 2014, the GHMC could not launch many of its new initiatives and projects since the Model Code of Conduct had been in force in the city from 1st March on account of municipal polls in the state and the general elections. 

Only the routine works were attended to during the last three months, since civic officials were busy with general elections in the twin cities. The food scheme for providing meals at Rs 5 to the poor was launched on a pilot basis on the eve of elections. Now, the GHMC would need to operationalise this scheme fully so that 50 centres are set up across the city limits to provide meals to 10,000 persons a day. 

For provision of safe drinking water in slums and poor localities, about 400 Reverse Osmosis (RO) plants have to be set up quickly so that the residents are insulated from water-borne diseases during the ensuing monsoon. Opening of more night shelters at the main hospitals and other locations needs to be expedited. 

Apart from the new schemes and projects, GHMC would have to continue its focus on improvement of basic civic amenities, particularly, maintenance of roads, parks, playgrounds, street-lighting, storm water drains, sanitation and garbage clearance. Works on new flyovers, roads, parks, community halls and 1,000 public toilets among others need to be launched immediately. GHMC also has to coordinate with the Hyderabad Metro Rail authorities to ensure that the work on HMR goes on apace because the city cannot bear traffic chaos indefinitely. 

Hyderabad MMTS 2nd phase work starts

Eenadu May26,2014

Split boosts Telangana, Andhra Pradesh real estate sector

Source: DC,  May 24, 2014

Real estate transactions in coastal Andhra and Rayalaseema regions, which had been sluggish for the past year, have picked up since March 2014, after the AP Reorganisation Bill was passed in Parliament.  

In the Telangana region, where the business has been moderate for the past 18 months, it has begun to pick up fast in Hyderabad, Ranga Reddy and Nizamabad districts.

Figures from the Seemandhra stamps and registrations department indicate that the highest number of real estate and property transactions was registered in Vijayawada and Guntur, where there is  talk of the new capital being situated.

Growth in the stamps and registration figures was highest in Guntur, at 118.78 per cent, with a total revenue of Rs 1,818.74 lakh in April 2014, against Rs 831.32 lakh in April  2013.

Next are Vijayawada (East) and Vijayawada with 81.29 and 92.09 per cent growth in real estate, with revenue of Rs 1,593.23 and Rs 1,428.04 lakh respectively in April 2014, against Rs 878 and Rs 743.42 respectively in April 2013.

(Read: Realtors predict increased sales, prices in both regions)

Visakhapatnam came next (64.38 per cent), followed by Bhimavaram (60.86), and Kakinada (59 per cent).

In Telangana, though the growth rate was just above moderate, investments were higher. Overall investment in April 2014 in Telangana was Rs 2,828.46 lakh (58.48 per cent growth), while in Seemandhra investment was Rs 2,007.84 lakh with 41.52 per cent growth.

The highest revenue for the stamps and registration department in the undivided state came from Ranga Reddy and Hyderabad (south) districts at Rs 5,827.34 lakh and Rs 2,574.91 lakh respectively.

“Despite political clarity, investors and potential buyers are focusing more on Hyderabad for the reason that the city is in the phase where it’s gradually developing. With major players entering the market, infrastructure in these regions has seen  considerable change and similar attention would be given to its other districts as well,” said Ganesh Vasudevan, CEO, of the website Indiaproperty.com

Hyderabad metro gets rail coaches from Hyundai-Rotem

L&T Hyderabad metro gets rail coaches from Hyundai-Rotem

Source: Business Line  may 21, 2014

L&T Metro Rail Hyderabad Ltd (LTMRHL) has announced the arrival of the first metro train for the project at the Uppal depot here from South Korea made in Hyundai-Rotem plant.

SN Subrahmanyam, Whole-time Director and Senior Executive Vice-President, Construction and Infrastructure, L&T, was a part of the team which welcomed the rolling stock in Uppal depot in Hyderabad.

After review of the project, he emphasised on the completion of the project within the scheduled time, cost and quality.

‘New era begins’

NVS Reddy, Managing Director, HMRL, in a statement, said “It is the beginning of a new era in the transportation history of Hyderabad.”

VB Gadgil, Chief Executive and Managing Director, L&T Metro Rail (Hyderabad), said, “It is a significant milestone for the project and an indication that we are ahead of time in bringing the trains to Hyderabad.”

Subsequent to the rollout ceremony of the first train at the Hyundai-Rotem’s Changwon factory, it was shipped to India in April 2014 after successful completion of all factory acceptance tests.

The train cars were moved from Changwon to Masan Port, Korea and loaded into a ship.

The journey

After travelling for about two weeks by sea in Hyundai Glovis Ship, they arrived at Chennai port on May 9. After clearances, all the three train cars of first train of Hyderabad Metro Rail, were unloaded from the ship and were transported to Hyderabad by road. They were then moved through three individual trailers from Chennai to Hyderabad by road. All the cars reached here today.

The train cars are being unloaded on the depot track and later assembled to carry out the required testing.

The metro authorities expect to commence trial runs on the phase one stretch of 8 km shortly and operations early next year.

Hyderabad Real Estate Market Overview

Source: Briefing wire   15/5/2014

Since the Telangana bill there have been many reviews on how it will impact the economy and real estate sector. Despite being one of the most developed cities in India, Hyderabad went through a general period of uncertainty in the political front. Impact was clearly seen in many industries in the state of Andhra Pradesh. 2014 saw the rise of Telangana and Seemandhra, the twin states after years of political struggle. The bifurcation coupled with the general election further created an ambiguity and in the realty sector. In spite of the different conditions, Hyderabad has emerged as a strong hold of the realty sector today.

2014 will see the real estate industry flourish in the city with many deals and offers for prospective home buyers. The buyers will capitalize on the low prices, pushing sales in the city. The unsold inventory in the city is seen to be sold at competitive prices making way to new projects in Hyderabad. The residential real estate market for now seems to be a buyer centric market. Affordable housing options are many to choose from, improving buyer sentiments. Compared to other metros like Mumbai, Delhi and Chennai where prices are sky-high, Hyderabad with affordable pricing in the market is a refreshing change. One can avail apartments in Hyderabad with a reasonable price band in areas of Miyapur, Gachibowli, Lingampally, Kukatpally etc. These localities boasts of close proximity to the IT hub of the city.

Rentals is also said to improve in Hyderabad with the development of good office spaces. Demand for organized commercial real estate has been stagnant for now, but this will change in the next six to eight months. If buyers are looking to rent or buy a flats in Hyderabad, this is the right time as everything is readily available in good prices, favourable the buyer and the tenant. Currently one can rent a 3BHK apartment or individual house in HITEC city or neighbouring areas like Kompally for as low as INR 16,000 per month. This is very low when compared to other metros in India namely Mumbai, Delhi, Bangalore and Chennai. Kolkata can be considered to be in par with Hyderabad when it comes to low property prices.

HITEC city is the biggest driver of employment and real estate in Hyderabad. IT/ITes sector is said to further grow in the region and the builders are sure to benefit greatly from this. The commercial real estate market is also said to revive with investors gaining confidence after the finalization of the bifurcation.

The Hyderabad realty sector is in its nascent stage if experts are to be believed. Its development is not only because of low prices or political uncertainty. But also because the city offers good infrastructure facilities for its residents. Buses run by APSRTC have mapped the city very well. The upcoming Hyderabad metro rail project will also give the city a five star status. In the next 5 years, we are ready to see a shift in the Hyderabad real estate market. This upward trend is going to greatly benefit the state’s economy and real estate.

Sulabha is an expert in India real estate. She has also authored many studies for builders in Hyderabad and real estate experts.

Hyderabad Metro Rail

Gated Community Apartments near Metro Rail Sation

Metro Work in Progress - L&T Hyderabad Metro Rail

Gated Community Apartments at Nagole near Metro Rail Station

Metro coaches en route

Source:  May 13, 2014

The first of Hyderabad Metro Rail’s coaches are en route to the city from Chennai.

The train had arrived from Hyundai-Rotterdam’s South Korean plant by sea few days ago.

The rolling stock had also obtained the customs clearance to be brought here by road.

Trial runs next month

When contacted, Hyderabad Metro Rail Managing Director N.V.S. Reddy said the trial runs were likely to commence next month at the Uppal-Nagole depot.

Property Prices Likely to Increase After Elections: Survey

Source: PTI  May 13, 2014.

Property prices in India are likely to increase only after six months when the country will get a new government, a survey said in Mumbai on Monday.

The Housing Sentiment Index (HSI) assessed by IIM Bangalore and Magicbricks.com forecasts that home buyers across 8 of 10 cities surveyed expect real estate prices to go up over the next six months.

Cities like Ahmedabad, Kolkata, Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore and Chennai were surveyed.

"Indian real estate is bound to remain attractive in the medium term with faster growth expected in the Tier II cities. Competitively priced urban pockets such as Noida, where robust supply is backed with a promise of better infrastructure, received a thumbs-up from end users," Magicbricks.com business head Sudhir Pai said in a statement.

"However, active interest will take another six to nine months, since consumers expect prices to go up only after six months, post the 2014 elections," he said in a statement.

The national HSI remained positive at 108. An HIS score of 100 suggests that prices would remain static.

According to the survey, Mumbai posted a housing sentiment index of 106, turning positive for the first time.

"Healthy demand from Navi Mumbai and Thane resulted in this gain. Infrastructure developments in Navi Mumbai including Trans-Harbour Link and the proposed international airport are turning this location into an attractive investment option."

Bangalore topped the list of cities with an HSI of 140, witnessing a further 15 per cent jump in HSI from the previous quarter.

Strong demand from the infotech sector and comparatively affordable prices make this city an attractive option, the survey said.

Hyderabad, with an HSI of 97, witnessed a 4 per cent drop this quarter, after the Telangana issue weighed down sentiments in this city, it said.

"While the average waiting time has dropped to a little over eight months this quarter, the range-bound increase witnessed across cities and sectors indicate that people are awaiting election results to make real estate decisions."

"Clarity will set in, based on election results and well after the new government takes charge," IIMB-Century Real Estate Research Initiative lead researcher Uma Sitaraman said.

'Influence zones' proposed near metro rail stations in Hyderabad

Source: Times of India  Dt: May 7, 2014.

If Hyderabad Metropolitan Development Authority's plans materialise, only high-rise buildings with minimum 40 metre height will be encouraged in 'influence zones' (an area in a radius of 300 to 800 metres) around metro rail and MMTS stations soon. Also, mixed land use, where property developers can exploit real estate for commercial, residential, recreational and other purposes, will be allowed in these zones.

The HMDA has prepared development regulations (building rules) for 19 proposed influence zones in the city. The authority has already decided to promote Transit Oriented Development (TOD) around the metro rail stations. To take it further, the development regulations have been formulated by the HMDA.

Officials said the influence zones would focus on all-round development. In the influence zones, commercial space, budget hotels, coffee shops, day-care facilities, restaurants, service apartments, hospitals, cyber cafes, health clubs, entertainment centres apart from residential purpose would be allowed. Banquet halls, car showrooms, bus depots, electrical sub-station and automobile repair shops would not be permitted in the zones.

"The authority will encourage minimum 2.5 hectares plot area with 40-metre height (10 to 12 floors) buildings in the area. The developers will be given concessions. For instance, instead of 12-metre setback, only eight metre will be insisted upon. Parking space requirement will be reduced in the development regulations," a senior HMDA, who is involved in preparation of rules, told TOI.

Since open spaces were not available in many areas in the city, the authorities would encourage plot owners to go for amalgamation of plots and redevelopment. "Building permission in below one acre will also be given, but the builders and owners have to follow the guidelines in the influence zones. If the owners want to exploit their space, they can go in for redevelopment on the lines of Road No. 36, Jubilee Hills," the official said.

Officials said the aim of TOD and influence zones was to make use of public transport and discourage personal vehicles. People should walk to the nearest station and take the public transport like citizens do in some developed countries. Over a period of time, the initiative would result in less usage of personal vehicles and reduce pollution to a great extent. "Pedestrian-friendly environment is being created like the frontage of buildings (six-metre setback) will be used for footpaths," sources said.

To create a model for the influence zone development, the HMDA has asked a consultant to prepare a concept plan for its 18.5 acre land at Moosapet, where the Authority plans to construct multi-storied structures. "The draft development control regulations will be approved by the HMDA at its meeting on May 9. The draft regulations will then be sent to the government for approval. Later, a notification will be issued seeking objections and suggestions from the public before notifying the rules," a senior consultant of the authority said.

INFORGRAPH:

Proposed Influence Zones: Miyapur, Kukatpally, Balanagar, Moosapet, Bharatnagar, Ameerpet, Punjagutta, Erramanzil, Khairatabad, Nampally, Nagole/Uppal, Tarnaka, Mettuguda, Parade Grounds, Rasoolpura, Hi-Tec City, Raidurg, LB Nagar and Moosarambagh

*Locations have been tentatively finalized based on parameters like densification, scope for redevelopment, pedestrian facility, parking space, access to transit stations and multi-modal transportation

20 big, 87 smaller malls on anvil in Hyderabad

Source : Financial Deccan Chronicle Dt: May 4th, 2014.

The mall scenario in Andhra Pradesh, particularly in Hyderabad, is evolving. Four malls are getting ready to be launched within three years and more are in construction or planning stage.

“There are 20 big and 87 smaller malls coming up in Hyderabad, varying with their classification. Some of them are nearing completion while some are stuck because of the slowdown in real estate and retail markets,” according to Anand Sundaram, chief executive officer, Pioneer Property Zone, a firm that specialises in mall management and allied activities.

Typically, malls takes upwards of 60 to 70 months for achieving break even. Many prefer to sell the retail space outright instead of creating an annuity-based asset, he said.
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In Singapore and other places, the mall space ratio is about 30 sqft per person. In India, it is two-sqft mall space per person and in Hyderabad it is about one sqft mall space per person, Sundaram said.

PPZ now manages 13 assets in multiple cities and has added five more projects in Hyderabad recently, for which it will be involved in concept and design, finding anchor and other tenants, deciding on the shop sizes and domains, maintenance of the mall, enhancing foot falls and others.

The projects include the Secunderabad Central Mall at Patny (gross building area of 3,50,000 sqft for retail and entertainment) and Odean Mall (2,10,000 sqft) at RTC X Road in Hyderabad, both by Shanta Sriram Constructions, Youdan Plaza (1,05,600 sqft of gross building area at Abids) by Youdan Infrastructure Projects and one more project, the Kompally Mall.

“Shopping has been traditionally done only in the high streets. The Secunderabad Central Mall hopes to change the shopping experience and range of offerings,” he said, adding that it is likely to take a year or so for completion.

The Odean Mall will be a mid-segment one with a mix of junior departmental anchors, fashion anchors and F&B. The other two malls too are likely to be open to public in 2017.

It already is managing Manjeera Mall at Kukatpally, operational since 2013. Spread across 4.7 lakh sqft, Manjeera Mall has four floors of shopping options in a mix of international and local brands, F&B chains and multiplexes. It will relaunch this after making some changes in about six months.

New malls are coming up in Vijayawada and Visakhapatnam and other areas, Sundaram said.

Demand for office space in Hyderabad to remain subdued in short-term: CBRE

Business Line, May 2,2014. 

The demand for office space is projected to be subdued in the metropolitan area of Hyderabad but relatively buoyant in the IT hubs and corridors, according to real estate consultancy CBRE.

Anshuman Magazine, Chairman and Managing Director of CBRE South Asia, in his analysis states that the demand for office space in Hyderabad is likely to remain subdued in the short-term as corporate occupiers are expected to maintain a cautious outlook amid an uncertain economic and political environment.

Commercial leasing

The IT and extended IT corridor are likely to remain the most active micro-markets for commercial leasing activity in the city. From a supply perspective, around 2.8 million sq. ft. of IT/IT SEZ supply is likely to reach completion in these micro-markets by the first half of 2014.

This significant supply pipeline, coupled with subdued demand levels, is likely to push up vacancy rates, keeping rental values range-bound in the short to medium term.

During 2013, the commercial office market of Hyderabad witnessed leasing activity of 3 million sq. ft., primarily driven by corporate occupiers from the IT/ITeS sector.

The western micro-markets of the IT corridor (Madhapur, Kondapur, HITEC City and Gachibowli) and the extended IT corridor (Raidurg, Manikonda, and Nanakramguda) remained the most active commercial hubs.

IT corridor

The IT corridor continued to attract greater interest from corporate clients in the first quarter of 2014, with significant under-construction developments being pre-committed for space take-up by corporate clients at Madhapur and Kondapur.

While rentals remained stable in the commercial and IT office space segments of this micro-market, it appreciated marginally by 2-3 per cent for select IT SEZs on a quarter-on-quarter (q-o-q) basis. Rentals in the micro-market remained stable.

In the first quarter of 2014, the central business district of Begumpet, Punjagutta, Somajiguda and parts of Banjara Hills saw sluggish office space transactions.

Rental values and vacancy rates remained stable because of limited demand and the absence of any fresh space addition.

Peripheral areas of Shamshabad, Uppal and Pocharam saw sluggish leasing activity during Q1 2014.