After years of record-setting prices, the GTA’s real estate market increasingly appears to be leveling off, analysts and statistics suggest, although experts remain relatively optimistic about the health of the region’s market. Since April, the number of properties to exchange hands has dropped each month, compared to the records set in the same months last year. In June, for example, there were 18% fewer sales than in 2007. Numbers released this week for the first half of July show the trend continues, with a drop of 11% over the same period in 2007. Meanwhile, the price of an average house in the GTA continues to rise, albeit at a slower rate than last year. “This is very common in the real estate cycle, that prices are going up but not so much, and volume goes down,” said William Strange, a professor of real estate and urban economics at the University of Toronto’s Rotman School of Management. He called the GTA a “leveling” market.The Canadian Real Estate Association announced this week the first drop in housing prices nationally in almost a decade, but characterized it as a one month blip that is not likely a sign of things to come. That news was followed by the Toronto Real Estate Board’s (TREB) latest figures, which showed that the average price of a home in the GTA during the first half of July was $379,072, which is a 1% increase from the $374,254 recorded in the first two weeks of July 2007 and a 9% increase from $346,267 recorded during the same period in July 2006. The board has emphasized comparisons to 2006 in order to “present a more accurate perspective” of this year’s resale housing market, since 2007 was an overheated year. Up until July, monthly sales in the region had increased by about 4% from 2007 to 2008.
Sunday, July 20, 2008
Record-Setting Prices
After years of record-setting prices, the GTA’s real estate market increasingly appears to be leveling off, analysts and statistics suggest, although experts remain relatively optimistic about the health of the region’s market. Since April, the number of properties to exchange hands has dropped each month, compared to the records set in the same months last year. In June, for example, there were 18% fewer sales than in 2007. Numbers released this week for the first half of July show the trend continues, with a drop of 11% over the same period in 2007. Meanwhile, the price of an average house in the GTA continues to rise, albeit at a slower rate than last year. “This is very common in the real estate cycle, that prices are going up but not so much, and volume goes down,” said William Strange, a professor of real estate and urban economics at the University of Toronto’s Rotman School of Management. He called the GTA a “leveling” market.The Canadian Real Estate Association announced this week the first drop in housing prices nationally in almost a decade, but characterized it as a one month blip that is not likely a sign of things to come. That news was followed by the Toronto Real Estate Board’s (TREB) latest figures, which showed that the average price of a home in the GTA during the first half of July was $379,072, which is a 1% increase from the $374,254 recorded in the first two weeks of July 2007 and a 9% increase from $346,267 recorded during the same period in July 2006. The board has emphasized comparisons to 2006 in order to “present a more accurate perspective” of this year’s resale housing market, since 2007 was an overheated year. Up until July, monthly sales in the region had increased by about 4% from 2007 to 2008.
Saturday, July 19, 2008
Indian real estate boom of 2006 to further roll in 2007
New Delhi, January 03, 2006 - The real estate boom of 2006 is set to multiply itself in 2007 to get India a foreign capital of over Rs. 8000 crore with leading international investors establishing their presence in its richly rewarding real estate development, providing new employment opportunities for over 2 lakh skilled and unskilled workforce, according to estimates made by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
According to ASSOCHAM, overseas real estate giants such as Royal Indian Raj International, Blackstone Group, Goldman Sachs, Emmar Properties, Pegasus Realty, Citigroup Property Investors, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are likely to bring in a collective capital of US $ 80 billion investments to suitably reward them benefits with India’s opening up of its real estate sector to 100% FDIs.
The ASSOCHAM estimates point out that the US-headquartered investment bank Morgan Stanley already forayed into India's booming real estate sector in March 2006 through its real estate investment arm Morgan Stanley Real Estate investing Rs 300 crore (around $68 million) in Mantri Developers Pvt Ltd, a Bangalore-based real estate developer. Morgan Stanley plans to invest more than $1 billion over the next 4-5 years in the Indian real estate sector.
It also points out that Tishman Speyer's tied up with ICICI Bank to invest $1 billion in the country, while Kotak India Real Estate Fund closed its domestic tranche raising $100 million and this trend will continue to lure many more such investors to retain their interests in domestic real estate business.
The Chamber is of the view that as the government allowed 100 per cent Foreign Direct Investment in real estate, an efficient regulatory framework, simpler tax regime and proper regulations are imperative to boost public-private participation and bring in managerial and technical expertise.
According to findings, the biggest US pension fund, CalPERS, hedge fund Farallon Capital Management, US-based developer Tishman Speyer and NRI fund Trikona Capital too have drawn plans to invest in the booming market. Domestic funds including Kotak Realty Fund, HDFC India Real Estate Fund, Pantaloon Retail's Kshitij Real Estate Fund and UTI Venture Fund were also very active.
The two most active investor segments were High Net Worth Individuals (HNIs) and Financial Institutions. Both these segments were particularly active in commercial real estate. With the rules related to investing and repatriation relaxed to a large extent, an estimated 25 million Non Resident Indians (NRIs) living across 125 countries are investing in immovable property in India. NRIs have been keener in investing in residential properties than commercial Properties.
Strong economic growth, rising income levels, growing middle class, increasing urbanization and improving transparency brought resurgence for the Indian real estate sector in 2006 which will continue to grow further in 2007 with easy availability of financing facilities growing still further.
The Chamber forecasts that real estate growth will go from $12 billion in 2005 to $90 billion by 2015. Greater integration with the global economy and the increase of domestic as well as foreign investments are encouraging demand for real estate. Despite ill found doubts of a bubble, foreign investors are lining up.
While HDFC introduced real estate mutual fund in its sector specific mutual funds, Industry major Parasvnath Developers Limited came up with Initial Public Offer, DLF decided to bring IPO, Global big names such as Morgan Stanley, Lehman Brothers, HSBC and ABN Amro queued up to pick up stake in local realty firms, Year 2006 truly belonged to Realty.
Though criticized as an opportunity for the builders to grab land, Special Economic Zones offered tremendous opportunity for the Industry both for the commercial sector as well as for the industrial and logistics sector. The government finalized the guidelines for the development of social infrastructure, besides setting criteria for developers. The Reserve Bank of India directed commercial banks to treat exposure to Special Economic Zones as lending to commercial real estate sector. “However, there is case for relaxing the guidelines for the sector”, stated ASSOCHAM President, Mr. Anil K Agarwal.
According to Chamber, emergence of IT and ITES sector and organized retail are the major growth drivers. Growth of IT and ITES created vast demand of office space and appearance of malls all over the country tendered huge scope for land development. Analysts peg the total demand for commercial office real estate in Bangalore, Chennai, Delhi-NCR, Mumbai, Pune, Hyderabad and Kolkata alone to be over 25 million sq ft in 2006.
According to ASSOCHAM, overseas real estate giants such as Royal Indian Raj International, Blackstone Group, Goldman Sachs, Emmar Properties, Pegasus Realty, Citigroup Property Investors, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are likely to bring in a collective capital of US $ 80 billion investments to suitably reward them benefits with India’s opening up of its real estate sector to 100% FDIs.
The ASSOCHAM estimates point out that the US-headquartered investment bank Morgan Stanley already forayed into India's booming real estate sector in March 2006 through its real estate investment arm Morgan Stanley Real Estate investing Rs 300 crore (around $68 million) in Mantri Developers Pvt Ltd, a Bangalore-based real estate developer. Morgan Stanley plans to invest more than $1 billion over the next 4-5 years in the Indian real estate sector.
It also points out that Tishman Speyer's tied up with ICICI Bank to invest $1 billion in the country, while Kotak India Real Estate Fund closed its domestic tranche raising $100 million and this trend will continue to lure many more such investors to retain their interests in domestic real estate business.
The Chamber is of the view that as the government allowed 100 per cent Foreign Direct Investment in real estate, an efficient regulatory framework, simpler tax regime and proper regulations are imperative to boost public-private participation and bring in managerial and technical expertise.
According to findings, the biggest US pension fund, CalPERS, hedge fund Farallon Capital Management, US-based developer Tishman Speyer and NRI fund Trikona Capital too have drawn plans to invest in the booming market. Domestic funds including Kotak Realty Fund, HDFC India Real Estate Fund, Pantaloon Retail's Kshitij Real Estate Fund and UTI Venture Fund were also very active.
The two most active investor segments were High Net Worth Individuals (HNIs) and Financial Institutions. Both these segments were particularly active in commercial real estate. With the rules related to investing and repatriation relaxed to a large extent, an estimated 25 million Non Resident Indians (NRIs) living across 125 countries are investing in immovable property in India. NRIs have been keener in investing in residential properties than commercial Properties.
Strong economic growth, rising income levels, growing middle class, increasing urbanization and improving transparency brought resurgence for the Indian real estate sector in 2006 which will continue to grow further in 2007 with easy availability of financing facilities growing still further.
The Chamber forecasts that real estate growth will go from $12 billion in 2005 to $90 billion by 2015. Greater integration with the global economy and the increase of domestic as well as foreign investments are encouraging demand for real estate. Despite ill found doubts of a bubble, foreign investors are lining up.
While HDFC introduced real estate mutual fund in its sector specific mutual funds, Industry major Parasvnath Developers Limited came up with Initial Public Offer, DLF decided to bring IPO, Global big names such as Morgan Stanley, Lehman Brothers, HSBC and ABN Amro queued up to pick up stake in local realty firms, Year 2006 truly belonged to Realty.
Though criticized as an opportunity for the builders to grab land, Special Economic Zones offered tremendous opportunity for the Industry both for the commercial sector as well as for the industrial and logistics sector. The government finalized the guidelines for the development of social infrastructure, besides setting criteria for developers. The Reserve Bank of India directed commercial banks to treat exposure to Special Economic Zones as lending to commercial real estate sector. “However, there is case for relaxing the guidelines for the sector”, stated ASSOCHAM President, Mr. Anil K Agarwal.
According to Chamber, emergence of IT and ITES sector and organized retail are the major growth drivers. Growth of IT and ITES created vast demand of office space and appearance of malls all over the country tendered huge scope for land development. Analysts peg the total demand for commercial office real estate in Bangalore, Chennai, Delhi-NCR, Mumbai, Pune, Hyderabad and Kolkata alone to be over 25 million sq ft in 2006.
Real trends: The boom continues
Real estate has always been about location . But over the years, it’s becoming more about reputation . Driven by positive growth in the economy, real estate in India is booming. Year 2006 started on a promising note when the Government of India provided fresh impetus to the construction and development sector by allowing 100% foreign direct investment (FDI) under the ‘automatic route’ in order to spur investment in the vital infrastructure sector. The relaxation of the FDI ceiling saw big names like Dubai-based Emmar Properties — the largest listed real estate developer in the world — joining hands with the Delhi-based MGF Developments to announce India’s largest FDI in the realty sector , amounting to over $500 million in projects with a capital outlay of $4 billion. Groups showing interest in India include insurance company American International Group (AIG), High Point Rendel of the UK, Edaw-US , Japan’s Kikken Sekkel, Lee Kim Tah Holdings and Cesma International from Singapore. Real estate development in India focusses on two primary areas: retail and residential . The global real-estate consulting group Knight Frank has ranked India 5th in the list of 30 emerging retail markets and predicted an impressive 20% growth rate for the organised retail segment by 2010. The organised segment is expected to grow from a mere 2% to 20% by the end of the decade, it said. The boom is also attracting interest from foreign players. Vancouver-based Royal Indian Raj International Corporation (RIRIC) will invest a staggering $2.9 billion in a single real-estate project named Royal Garden City in Bangalore over a period of 10 years. The retail value of the project is estimated at $8.9 billion. Morgan Stanley Real Estate announced that it has invested around $68 million in Mantri Developers Private Ltd, a private Bangalore-based real estate developer. Key trends of the real estate boom: A report on real estate trends by Merrill Lynch said that the number of malls in Mumbai, Bangalore , New Delhi, Hyderabad and Pune was expected to grow to about 250 by 2010 as against 40 now. In terms of total area, there was 12.40 million square feet of mall space available in these cities, the report said quoting a survey by Knight Frank India. As the competition in the market is intense, builders are going out of their way to be different. Specialised malls have become the order of the day. Gurgaon, on the suburbs of New Delhi will soon have an auto mall, while Bangalore is about to get an exclusive furniture mall. DLF Universal is developing the biggest mall of the world in Gurgaon with an area of four million sq ft. It will be known as the Mall of India. Similarly in the home segment , which is driven by the availability of easy home finance , most builders are trying to woo investors with interesting features, each more tempting than the other. Closed-circuit television and earthquake proofing are expected as standard features in most upmarket blocks. Evershine Builders, for instance , is providing a range of facilities from modular kitchens to piped gas and Internet connections. Some of its flats are even fully furnished. Taking its cue from hotels, the commercial real-estate industry is getting more focused on branding. The marketing of buildings as products that can provide experiences and maintain customer loyalty is becoming increasingly important. Besides lifting a building’s reputation , good branding also can increase its owner’s ability to charge higher rents. On the investment side, the once-fragmented and clubby industry that was once open strictly to professionals has become more open to all. Reams of information on real-estate companies , funds, property markets and investment opportunities are readily available. The realestate industry is also beginning to join the high-tech crowd in ways that affect not only how building owners run their properties , but also how tenants interact with landlords. Two big tech trends in the industry are the concepts of automated transactions and “smart” buildings . Automated rent payments have been catching on the most in the apartment sector, and some owners are experimenting with technology that allows an apartment hunter to find a place and sign a lease for it all online.
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