JLLM - Impact of RBI's credit policy / Slowdown? / The Sector's Future

- by Anuj Puri, Chairman & Country Head, Jones Lang Lasalle Meghraj

IMPACT OF RBI'S CREDIT POLICY ON THE SECTOR

• Sentiments in the sector will continue to be muted, especially in the residential sector, which has seen the highest price appreciations and is the most sensitive to non-amenable lending norms.
• Major developers who are flush with private equity and IPO-based money, further bulwarked by pre-sale monies and land banks, will not be as seriously affected as smaller players. They will not offer substantially reduced rates as they have prolonged holding capacities.
• Some smaller development concerns who have projects under construction will have difficulties in bringing these to completion.
• Some developers in certain areas may sell their products at lower rates, or choose to sell to speculative investors in bulk, at marginally discounted rates.
• Many buyers who were in wait-and-watch mode may continue to postpone their intended property purchases.
• Residential developers will begin to look more seriously at incentivized formats such as townships, while office space developers will consider the SEZ option. The extension of the STPI scheme by one year is not significant enough to make much of an impact.

SLOWDOWN ON THE REAL ESTATE MARKET

• There has been a slowdown in domestic transactions because an amalgam of reasons - overheating of prices in certain Northern regions, reduced liquidity among developers because of the credit crunch and a watch-and-wait stance among property buyers as they anticipate a blanket correction in the sector. This cannot be attributed solely to the credit crunch and the US recession. Interest rates were inflated to begin with.
• Certainly, the previously hoped-for sales volumes for 2008 will not materialize. However, lack of growth does not equal a setback – only a period of stagnancy.

US SUBPRIME CRISIS / REDUCTION IN FOREIGN INVESTORS

• As of now, foreign investors affected by the economic adjustments in the West see India's strong economic fundamentals and the continued strength of the real estate market as a desirable investment alternative.
• Nevertheless, many of them are taking a more calculated approach now, opting to wait until the present market fluctuations have been resolved and the scheduled infrastructure enhancement projects are launched.
• India - and for that matter China - represent an economic scenario that has evolved separately and on very different parameters from the economies in most developed countries. It is an emerging economy, with an emerging and maturing real estate market. There will be a fall, but it will not be of a magnitude comparable to that of other countries.
• Foreign investors are now justifiably awaiting greater transparency and stability.

FUTURE PROSPECTS FOR THE SECTOR

• India continues to be a boom country, but the boom is now assuming the properties of a controlled and focused explosion rather than the free-for-all market mayhem it previously stood for.
• Prices are stagnating and there may be a correction in many areas over the next one year. This, again, is not a blanket evaluation, and factors like specific location sector and property typology will play a significant role.
• Certain locations and properties and properties will continue to be in great demand.

Contributed By : Arun Chitnis

Jones Lang LaSalle and Colonial First State Property Management Launch ‘Sandalwood’ in India

India Retail Witnesses Advent of Highly Specialized Mall and Asset Management Services

Jones Lang LaSalle and Colonial First State Property Management Launch ‘Sandalwood’ in India

Mumbai, 22 April 2008 - Riding on Asia’s robust retail growth and India’s unprecedented retail boom, Jones Lang LaSalle Incorporated (NYSE: JLL), and Colonial First State Property Management today announced a joint venture partnership to form Asia’s first integrated retail development and management service provider – Sandalwood. The 50:50 joint venture company will help Asian and Indian developers and retailers to capitalize on premium retail opportunities as well as creating long term value for retail assets.

Colonial First State Property Management is one of Australia’s largest full service property development, management and leasing specialists. Since its inception in 1983, the firm has undertaken more than 25 major shopping centre developments and now manages 36 centres on behalf of third party clients in every state of Australia, including iconic Chadstone Shopping Centre in Victoria, Chatswood Chase in Sydney and Queens Plaza in Brisbane.

India's retail sector is evolving at a swift pace and is set to grow by 35% by 2010. This growth has been fuelled by a strong economy, favourable demographics, rising wealth levels as well as rapidly changing lifestyles and consumer aspirations of an ever burgeoning middle class. The real estate sector has responded well to this retail growth. The total retail mall stock has been doubling every year, from a meagre one million sq ft in 2002 to a staggering 40 million sq ft in 2007 and an estimated 60 million sq ft by the end of 2008.

There are over 100 malls operating in India and more than 300 being developed and of this total, more than 90% have yet to achieve global benchmarks. In order to be globally successful, mall owners and developers in India need to focus on vision, scalability and processes and create a distinct proposition for themselves in this emerging market. Sandalwood, with its specialist property management skills and development expertise will ensure that retail owners and developers are strategically positioned for long term growth and success

Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj says, “As retail in India grows at a rapid pace, this is indeed an opportune moment for us to introduce specialized retail and intensive asset management services. Sandalwood will seek to create long term value for India’s mall owners through its globally benchmarked practices, proven expertise in property development and intensive asset management.”

Darren Steinberg, Head of Colonial First State Property Management says, “Asian economies are amongst the fastest growing in the world with real GDP compound average growth of approximately 9% per annum over the last five years, and their retail management and property development markets have grown at a compound average growth rate of more than 20% in the same period. Colonial First State Property Management’s specialist retail property management skills enable property owners to receive the benefit of master planning and development expertise which is critical to ensuring assets are enhanced and strategically positioned for long-term growth and success."

Stewart Hutcheon has been appointed as the new Chief Executive Officer of Sandalwood Asia. Mr Hutcheon is well known and highly regarded by the retail management and property development community in Australia. His impressive career includes over 18 years experience in the retail property sector. His most recent appointment was as Director of Leasing and Deputy Managing Director of AMP Capital Shopping Centres Pty Ltd, with shopping centre assets under management of approximately A$9 billion. Prior to that, he spent over seven years at Westfield, Australia.

In India, Sandalwood’s operations will be spearheaded by Ms Gagan Singh, who has over 28 years of experience across the apparel, exports and hospitality sectors. In addition to performing her new role, she holds the position of Deputy CEO of Jones Lang LaSalle Meghraj.

Ms Singh says, “I am delighted to be heading up this new and exciting company. Sandalwood will draw upon global expertise and local knowledge to bring our clients’ visions to highly profitable retail environment that is based on strong differentiation for their retail assets. Sandalwood seeks to help create space not just to shop in, but to ‘live’ in.”

Mr Puri concludes, “We are excited by the opportunities that lie ahead for Sandalwood India. The retail business in India is growing and the pace is expected to accelerate. The market and business outlook is extremely positive and Sandalwood is well-positioned to be an industry leader in the active retail sector in India.”

About Jones Lang LaSalle

Jones Lang LaSalle (NYSE:JLL) is a professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2007 global revenue of USD 2.7 billion, Jones Lang LaSalle has approximately 170 offices worldwide and operates in more than 700 cities in 60 countries. The firm is an industry leader in property and corporate facility management services, with a global portfolio of approximately 1.2 billion square feet. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately USD 49.7 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.

Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 16,000 employees operating in more than 70 offices in 13 countries across the region.


About Jones Lang LaSalle Meghraj

Jones Lang LaSalle Meghraj, the Indian operations of Jones Lang LaSalle, is the premiere and largest real estate professional services firm in India. With an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and a staff strength of over 3300, the firm provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory. For further information, please visit www.jllm.co.in

About Colonial First State Property Management

Established in 1983, Colonial First State Property Management (CFSPM), is today one of Australia’s largest full service property development, management and leasing specialists.
CFSPM has acquired more than two decades of intelligence on Australia’s retail property markets, with the iconic Chadstone Shopping Centre in Victoria remaining as one of its outstanding achievements. Since inception, CFSPM has undertaken more than 25 major shopping centre developments and now manages 36 centres on behalf of third party clients in every state of Australia.

As a member of Colonial First State Global Asset Management, the largest manager of Australian-sourced funds, CFSPM provides critical services to a range of assets held within Colonial First State Global Asset Management’s suite of listed and unlisted property funds and mandates. These services, covering the gamut of retail and office property requirements, are also provided to other third party clients outside the Colonial family of companies. Ultimately, CFSPM’s key point of difference in the market place is the fact it has 700 professionals on the ground at any given time. This means CFSPM is close to the issues at hand and able to react quickly and strategically in every situation.

CFSPM has expanded its capabilities beyond the retail sector and is steadily growing its operations in the office sector. The business is committed to growing both parts of the business. With a core focus on maximising investors’ returns on an asset by asset basis, CFSPM is a critical component of our property investment management offering.

Contributed By : Arun Chitnis

PROPERTY 2008 : The Largest Property Super Market

2nd April 2008

Property 2008 an exhibitive extravaganza is all set to become a one-stop destination for potential property buyers in Mumbai

Maharashtra Chamber of Housing Industry – MCHI’s Property 2008 – 12th Real Estate & Housing Finance exhibition will be held at the Bandra Kurla Complex, MMRDA Grounds, Opp. Citibank from 17th to 20th April 2008, from 11.00 am to 8.00 pm. The exhibition is organized by MCHI and co-organized by LIC Housing Finance & SBI. The Gold Partners are HDFC & ICICI & Silver Partners, DHFL & AXIS BANK.

Spread over an area of 25,000 sq. metres consisting 3 A/c halls, Property 2008 will have leading property developers and Housing Finance Institutions (HFI) participating from Mumbai, Navi Mumbai, Thane and rest of India along with International property developers.

Mr. Mayur Shah, Convenor, Exhibitions MCHI said, “This being home buying season, buyers want to settle in their new homes before school starts in June, this Property Exhibition will ideal opportunity to select property of choice & budget. As summer vacations commences many home buyers find this a perfect time to buy a new home and shift during the vacations as well.”
As many as a 100 + Real Estate Developers including Global Corporations and pan-India project-developers will be here to share the platform and negotiate interpersonally with around 1,00,000 buyers. In the Residential Property category, on display will be 1-5 BHK Flats, Duplex, Apartments, Penthouses, Bungalows, Row Houses and more. The Commercial Properties will display Retail outlets in Malls ,Multiplexes, Commercial Shops, Industrial Galas, Office Premises, Corporate Parks, IT Parks, SEZ. The Financial Products section, around 15 HFI’s & Banks, will offer spot home loans at competitive rates as well as home loan insurance.

The participants at this Mega Exhibition will display their properties from Mumbai, Thane, Navi Mumbai, Pune, Goa, Bangalore, Chennai, Delhi, Hyderabad, Kolkatta, Jaipur, Kochi, Lucknow, Nagpur, Nasik, Panchgani, Karjat, Neral, Sangli, Lonavala, Murbad etc. To add International color there would be participation from locations such as Dubai, Australia etc.

A JOB Fair again with a differenceThis time, Property 2008 will also play host to a unique 3rd Job Fair specially designed for the Real Estate Industry: The rapid growth in Retail and Infrastructure has created such an opportunity for specialization in quality manpower in the real estate industry that it will seek to provide professionals a well honed platform for growth and advancement in their respective careers. The Realty Industry will be looking at Professionals such as Designers Engineers Technical Experts Accounts Finance Customer Service Administration Purchase Management Marketing.

MCHI has constantly endeavored to bringing innovative ideas and concepts to the markets. Even globally, it is relied upon by the entire housing industry, in bringing together participants from India as well as abroad, giving it a clear edge in the minds and hearts of Mumbai’s home buying public.

Maharashtra Chamber of Housing Industry (MCHI)MCHI, formed in 1982 has now become the most prominent body of real estate builders and developers bringing together members dealing in real estate and construction industry on a common platform to address issues facing the industry. Members of MCHI account for providing more than 80% to 90% of residential accommodation in Mumbai and its vicinity, and helps both the Central and State governments in meeting their constitutional obligations – providing shelter to the shelter less. MCHI works towards raising awareness among the general public, real estate and construction industry while providing them with exhaustive information on projects and new developments in and around Mumbai. With over 400 well-recognized and reputed member builders, MCHI is affiliated with leading industry associations like FICCI, IMC and CREDAI.

Highlights of Property 2008

1. The only official and largest real estate exhibition of India being organised by the Official Real Estate Body MCHI.
2. 100 plus developers showcasing more than 1500 projects
3. 15 housing finance companies & banks participating
4. MCHI Job Fair being organised concurrently.
5. Exhibition covers an area of approx. 2,50,000 sq ft.
6. Over one lac footprints expected at the exhibition.
7. Air conditioned aisles, registration areas, coffee lounge, food courts & comfortable A/C business lounges for one to one discussion in the exhibition.
8. Free drinking water facility for visitors will be available.
9. Free shuttle buses running to and fro from venue and main railway stations, Bandra (E) & Kurla (W).
10. Ample Car Parking facilities with Valet Service.
11. Entry is free for the exhibition.
12. Legal advice on Real Estate & Home Loan counseling will also be given at no cost to the visitors.

For Further Information please contact Prakash Mondkar Sobhagya PR – Sobhagya Advertising ServiceHand Held – 9820669034Land – Line 22661286/22662979 Email- sobhagyapr@rediffmail.com


Contributed By : Minal Arora

Is buying home abroad a fashion or it really makes sense for an Indian?

Well, two years before when I moved from London to India, I always thought buying home in India was cheaper and made more sense and those who invest abroad mostly do it for flaunting…but two years living here and seeing the entire lifecycle of real estate development and growth, I am not so sure if its for the snob value alone that people are investing abroad.

During the last quarter of 2007, I did visit a few exhibitions in Delhi and Mumbai, where the most exotic real estate was showcased from across India with very fashionable tags attached to them. When I saw developers like DAMAC, Al Fara, Dubai Properties, Kuala Lumpur Metro Group and many other foreign developers wooing buyers in the Indian market to invest in Dubai and Malaysia, my first reaction was….nah…it isn’t going to work.

I thought Indians are traditionally not the people who would buy houses abroad, but I was most certainly wrong.

I actually have discussed this with executives from leading developers from these countries and found out that its pretty interesting but not only do their investments give better returns but it also comes coupled with lucrative bonuses like holidays, lucky draws to win cars, luxury apartments, sometimes maybe even jets.

Typically, Dubai, Malaysia and Singapore are the few attractive destinations where Indian residents are looking at investing or have been investing for a while now. Due to the slowdown in US and the falling property prices, a lot of US developers are seen moving to India…expecting to attract them to invest in various parts of US.

With Indian residents having the flexibility to invest $100,000 per head every year in foreign property, it makes a lot of sense for foreign developers to get to India since their investments now only offer better rental incomes but in Dubai and Malaysia they come with tax holiday on any money you make out of the property appreciation, which sure is a big bonus. Dubai goes one step further and offers a citizenship also on investing in a property there, which has proved to be a major plus when it comes to the Dubai based groups winning over the investment game.

Contributed By : Rahul Gandhi

Will a ‘firang’ broker be the one to sell u a home

At the last Cityscape Real Estate exhibition held in Mumbai, a stall of an IT SEJ in Hyderabad was 'manned' by a 'consultant' from the UK. He was sharp, knew what was happening not just in the project he was selling, but also trends in the city/state/India/SE Asia; was very clear about the legal issues involved, had finance details on his finger tips, was incredibly polite and courteous, and was 'aggressively helpful' in potential leasers' decision making. A visiting card meant three calls across the next month plus e-mails that were friendly, packed with information with polite requests to get back in case any other details were required. Vinod Thakkar, CEO of real estate firm Square Feet is at his Mulund office, recounting the experience. "Unless Indian real estate brokers wake up to the reality that they need to adapt to the changing times, such guys will take over the" broking function altogether," he muses. "Let us face the reality - these global consultants as of now are only at the tip of the pyramid - branded, high-end real estate. But they are moving to other segments of the pyramid and this is a wake-up call for all in Indian real estate marketing and sales," he points out. Thakkar has just completed a re-branding exercise of the various 'estate agency' offices his company controls. A training session currently aims at standardising the experience for a customer coming to any of his offices while an IT back up will make data sharing a reality – with prices updated being reflected in real time.

Thakkar says he's got miles to go - 'the scenario is changing, we have to be ready for today's customer with tomorrow's service levels'.

With global real estate agents operating in the Indian scenario, local builders will be able to easily market their products at better prices as these realty firms would be organised, 'presentable marketing agencies' on lines of HDFC Realty, which is already operational, says Venkatesh lyer of the Chembur-based Siddhivinayak Estates. "This may enhance the cost of property due to the involvement of global firms, but ultimately, these firms have to will rope in local small-time brokers to run the show," he feels.

Andheri-resident estate agent Rajesh Bijiani feels it is pertinent that the government of India should mandate a license for such 'global consultants' who intend to deal in real estate. This, he feels, will stop the proliferation of 'misleading businesses' in real estate sector. "Half a decade back, finding a real estate agent in the interior areas was nearly impossible. Now, there are dozens of local and foreign real estate consultants in all sorts of locations all over the country. Most operate without a license and many of those that have them do not operate in the manner as we would have thought a real estate agent would in the so-called 'first world countries'. With no proper control, it is every man for himself; wheeling and dealing for his own best interest, and not that of the seller or the buyer."

Branding is the future of Indian real estate, says Bakshi. "As we have seen in other industries in India, the market will move to the branded players. For examples, the coffee business transitioned from the Rs. 5 coffee seller on the road side, to the Café Coffee Days and Baristas. The grocery business moved from the neighbourhood 'bania' to Reliance Fresh and Big Bazaars. Why should it be any different in the realty management sector? Lakhs of independent players will morph into (say) a dozen branded players in the future. As in any other industry, branded players will cater to the mass consumers, while the more traditional brokers will cater to niche markets."'

Sangeet H Kumar is CEO, ACBD Global Asset Corp., a new set-up which covers more than just real estate deals - it looks at real estate as an asset class, for one. He's back from a 'hard-sell' visit to the UK and UAE, and he is hard at work getting responses across to potential buyers he’s met while in two countries. “Buyers expectation are similar, whether they are resident Indians buying real estate at home, NRIs or PIOs buying Indian real estate from an Indian realtor, or an Indian in a foreign country dealing with a global real estate firm in that country. Transparency in terms of details and information, safety and security of their investment and a professional way of working," he says.

"When one says a 'professional way of working', it basically means quick response to the customers' queries, and the replies should be correct and complete," says Gurpal Singh Sethi, real estate personality who's recently returned from brokering a hotel deal in Seychelles. It has been his work in a previous hotel deal in the UAE which got him the enquiry from Seychelles, but he is quite clear that clinching the assignment required him being conversant with 'global best practices'. He is brokering a deal which seeks to convert a slew of 'ready possession residential towers' into serviced apartments at Vikhroli, and says times are changing. "In India, almost all real estate business happens because of word-of-mouth publicity and referrals. It is mostly verbal communication that drives deals at home. When you deal with an international clientele, this does not work. You have to quote from research reports, give price trends over a time frame and generally be a research / analyst- cum-finance expert-cum-legal eagle at the very least, apart from being a real estate agent who follows 'global best practices'. Otherwise, you don't stand a ghost of a chance," he adds.

Realtor Ramprasad Padhi has been handling realty requirements of expatriates in Mumbai since the last few years and says that their initial mind-set is that Indian real estate is full of cheats. "You have to be a true 'realtor', show them that your work is as good as the realtor they deal with in, say, the USA or UK. Once the barriers are down, you have a customer who doesn't do any further deals without you," he adds. An MBA with online selling portals galore, Padhi, like Thakkar, Sangeet and Gurpal represents the new face of Indian real estate selling. "The phase when you had a 'paan walla' or a 'kirana' shop seller doubling up as a 'broker' is over," muses Padhi. "These days, buyers are savvy, have done their homework, know their fiscal options and expect professionalism from their 'consultants' and unless the Indian real estate selling set-up measures up to these expectations, it will lose customers to developers' direct sales set-ups and also to the new development of organised, global firms that are setting up shop in India," he smiles. "Global players coming in will only ensure all players in the Indian real estate's sales and marketing will shape up. Else, they will have to ship out," he concludes.

Published in: TIMES OF INDIA (PROPERTY PLUS ) Friday, March 28, 2008



Contributed By : Ramprasad Padhi
Pinnacle Realty (http://www.mumbaiproperties.com/) Suite # 24, Royal Tower, I.C.Colony, Borivli West, Mumbai 400 103 Board Nos: 2893 3333, 2892 5252, Cell : 9820 1515 00 Email : ram@pinnaclerealty.in