The Maharashtra government has decided to help resolve the issues that have stalled nearly 550 housing redevelopment projects in the country’s commercial capital Mumbai for the past five years through its intervention as a facilitator.
The state government’s Ministry of Housing will act as a mediator to guarantee that these issues are handled and that the projects can resume construction.
The measure is also likely to enable financial institutions to release their direct equity, structured debt, and construction-linked financial commitments to these projects.
The ministry has already begun issuing letters to housing societies and their respective developers to assess the problems that have stalled projects.
“The government is taking this initiative to create a win-win situation for all three elements facing the current impasse – residents, developers and bankers,” Jitendra Awhad, Minister for Housing, Maharashtra, told ET. “We want those eagerly awaiting a new roof over their heads to get it sooner, developers to give impetus to the economy and job creation, and banks to breathe a sigh of relief as their locked funds become productive. I think it’s incumbent upon the government to play the role of a facilitator.”
Real estate projects involving redevelopment and rehabilitation are the mainstay of Mumbai’s property market as the land-starved city has few vacant land parcels.
For the past few years, successive governments have pushed redevelopment projects in an effort to provide better options to residents living in unsafe and dilapidated structures, increase housing supply to combat exorbitant property prices, and support the city’s infrastructure revamp.
Redevelopment projects frequently get stuck due to financial problems or disagreements between housing society members and the developer.
The government’s decision to intervene and assist in the resolution of the challenges should help these projects get back on track.
In August, there was a separate government proposal to take over more than 550 slum rehabilitation projects in Mumbai that were stuck for a long time due to various issues and to undertake development of those through the Slum Rehabilitation Authority.
Realty developers have raised over INR 50,000 to 70,000 crore from financial institutions to support these slum rehabilitation projects. However, this investment is also locked in given that the projects have been stalled.
This decision was taken after it was found that developers of these slum rehabilitation projects had borrowed funds from financial institutions and nonbanking finance companies based on mere Letters of Intent (LoIs). Several of these developers have even abandoned the projects halfway through after raising these funds. With the proposed induction of new developers, these slum rehabilitation projects are also expected to be put back on track, offering relief to affected slum dwellers and financial institutions that have investment exposure to such projects.
Outlook for residential real estate in the post-pandemic era
Published by – Free Press Journal
written by Sandeep Raheja
Despite the COVID-19 pandemic’s recurring ups and downs, the Indian real estate market has proven mostly resilient. On the back of India’s strong position as a global economic driver, as well as attractive growth prospects across areas such as office, I&L, residential, and alternative real estate, it is now exhibiting indications of resurgence.
The pandemic’s second wave had a negative impact on the Indian economy and by implication on the real estate market too. Since then, we’ve come a long way. Leasing activity has increased in the last six months across all industries and segments and we expect this trend to continue through 2022. In fact, in terms of leasing and supply addition, the industry is likely to exceed pre-pandemic levels.
What is driving commercial real estate again?
Financial Express | Written by Sanjeev Sinha
Hit hard by the pandemic, commercial real estate seems to be back on track. What is driving the growth of this segment?
Having overcome the blip of the past two years, the commercial real estate (CRE) segment is back in the reckoning. All CRE segments, including office, retail, industrial, logistics and hospitality, are doing well now and attracting increased investor interest. Taking a host of factors into account and based on data collated by various research agencies, the outlook for the segment, too, seems bright by all counts.
With long drawn-out closure of offices and the pandemic making working from home (WFH) the new way of working, new office space requirement was severely impacted. According to a JLL India report, new supply of office space across seven major cities in India declined 30% to 36.34 mn sq ft in 2020 from 51.62 mn sq ft in the previous year. However, the recovery began last year itself and the absorption of Grade-A office space is estimated to spurt in 2022, with Delhi-NCR accounting for the majority of the demand in this segment. In fact, office gross absorption across the top six cities has already seen almost a 3-fold rise to 14.7 million sq feet during Q2 2022 as compared to the same period last year, according to Colliers.
An additional factor that has been driving the demand for more office space is the requirement of maintaining a distance of 5-6 feet between workstations in offices, in keeping with the social distancing norms. Besides, the overall normalcy and the withdrawal of most pandemic-related curbs have brought the footfalls back to pre-Covid levels in markets, malls and restaurants, and that has led to a significant boost in the demand for these segments. Here again, with new norms in place, developers are going for retail spaces with touch-free and voice-controlled features to ensure the maximum possible safety.
The recent growth in the co-working sector and an increased demand for data centres are yet another reason for the commercial sector getting a big push. A phenomenal rise in digital transactions post-pandemic has necessitated the setting up of data centres across the country with regular rise in e-commerce activities, online education, data consumption and payment gateway. With this, the demand for data centres is set to rise by 25-35 per cent in the next two years, according to reports and that is obviously a big plus for the commercial segment.
Attributing the growth in the commercial segment largely to Government initiatives, Akshay Taneja, MD, TDI Infrastructure Ltd, said, “The Make in India campaign coupled with reforms like RERA and GST have come as a boon for the industry. Despite their initial reluctance, developers and buyers are moving to the commercial real estate sector due to the transparency and competence of the sector. The overall economic growth is also driving demand for commercial property.”
According to the latest Outlook 2022 report by Knight Frank India, the commercial real estate sectors would experience stable and sustainable growth in 2022. Also, a joint report by Colliers and Qdesq says that the absorption of office space will cross 60 million square feet in metro and non-metro cities by 2023. The tepid demand for the last two years has converted into an agile and flexible work model and this is what is driving the commercial real estate demand. Large businesses dealing in IT-Business Process Management, e-commerce and consulting would be the leading occupiers.
Since commercial spaces offer much higher rental yields, investors are obviously drawn more towards this segment. Attractive appreciation potential, recurrent rental income and tangible nature of the sector have resulted in renewed interest from them. Besides, with the investment process in the commercial real estate becoming more stable, transparent and efficient with the advent of REITs, the funding in the segment has grown manifold.
The investment by millennial NRI investors is of particular significance in this regard. According to a MYRE Capital survey, 53% of the NRI investors choose commercial real estate as their favourite investment vehicle over ETFs (21%) and mutual funds (19%), with the average ticket size for an NRI being higher, at Rs 38 lakh, as compared to a resident CRE investor.
LC Mittal, Director, Motia Developers is of the view that the lockdown has offered new innovative concepts to the commercial real estate sector and increased the demand for rental properties with great amenities. He said, “Commercial real estate is expected to flourish in the next few months at a faster pace. Both rental and capital value for commercial property will rise in the market. The corporate world has begun to show active participation in expanding its ventures; and that’s a healthy portent for the commercial realty sector.”
“The commercial sector,” said Kunal Bhalla, Founder and CEO, CRC Group, “has seen a massive turnaround as a result of the multiple business-friendly initiatives announced by the government.” “Moreover, commercial assets, such as offices, shops, warehouses, and other commercial properties, are considered the most secure investments because they generate recurring rental revenue. This view has only been strengthened post-pandemic and it is going to remain the driving factor for investment in times to come,” he added.
Greater Noida development body razes buildings on floodplains of Hindon River
According to the Authority, it has also filed a complaint with the police for lodging FIR and taking legal action against the offenders involved in encroachment of the land.
NOIDA: The Greater Noida Industrial Development Authority (GNIDA) on Monday said it has demolished illegal constructions that had come up on a 26,620 sq metre area on the floodplains of the Hindon river.
According to the Authority, it has also filed a complaint with the police for lodging FIR and taking legal action against the offenders involved in encroachment of the land. “Illegal constructions had come up in a 26,620 sq metre area in the Hindon floodplains near Bisrakh area. Illegal colonizers had taken over the land but they have been removed after a two-hour long operation,” the GNIDA said in a statement.
Sachin Kumar Singh, the officer on duty (OSD) of the Greater Noida Industrial Development Authority, said after the demolition of the constructions, a complaint has also been given to register a case against unknown people.
The additional chief executive officer (ACEO) of GNIDA Deep Chandra has warned that strict action will be taken against those who illegally occupied the land in the notified area of the Authority.
Chandra further appealed to the people not to get trapped by putting their hard earned money in illegal projects of such colonizers.
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