REGION FOCUS
According to a Knight Frank report, Southern residential and commercial market continues to lead the recovery in the Indian real estate sector with both average residential price and office rental seeing an upward trend. The analysts point at number of factors that favoured the three Southern cities Bengaluru, Chennai and Hyderabad fast recovery despite high price declines. The strong IT jobs eco-system, reasonable land prices, developers product fitment as per consumer demand and focus on completion of projects were the key. Bijay Agarwal, Managing Director, Salarpuria Sattva group said, “In India, real estate in the Southern cities is experiencing a boom and will further witness the growing demand curve due to the favourable investment climate compared to the rest of the country with respect to the pandemic. The markets of Hyderabad, Chennai, and Pune specifically are expected to have relatively good inventory management in terms of the average construction period and YTS (Years to Sell). However, revival signs are showing first, in the southern markets of Bengaluru and Chennai.” THE SOUTHERN CITIES OF BENGALURU, CHENNAI AND HYDERABAD, IN LAST 3 MONTHS HAVE SEEN INCREASING NUMBER OF BUYERS COMING BACK TO THE MARKET. THE ATTRACTIVE DEALS AND CONFIDENCE IN THE DEVELOPERS ARE THE PRIMARY FACTORS FOR THE ROBUST PERFORMANCE OF SOUTH INDIAN REAL ESTATE. Ashish R. Puravankara, Managing Director, Puravankara Limited added, “The real estate market of South India has always been an attractive destination for investments and post lockdown, we have witnessed a steady recovery for these markets. Southern market is known for its organised reputed builders with good track of meeting the timelines, and mainly catering to the end-user. Also, there is relative viability in the price of land leading to higher yield in the future. Additionally, robust infrastructure present in these markets make it attractive for home buyers. Another reason is that, the Southern cities have attracted a huge influx of white-collar migration due to IT/ITes. Most NRIs invest in home-buying near IT parks or opt for gated communities which offer amenities and space which they would have experienced overseas as well. Due to the conducive investment environment, we can further expect this market to witness additional demand and growth,. This has also been the case with investments from NRIs in regions like Hyderabad and Bangalore. The properties bought by them are long term investments that will yield them rental returns.” As per a recent report, Bangalore and Hyderabad should be Asia’s fastest and third fastest-growing cities, respectively, over 2020-24. Bangalore should also achieve average annual real GDP growth of 9.9% over 2020-2024 – far above aggregate growth for India of 6.8%and average growth for Asian cities of 3.9% over the same period. NEW CONSUMER DEMANDS FOR RESIDENTIAL DEVELOPMENTS Keeping in mind the pandemic situation, developers are rigorously providing online booking facilities, digital signatures, virtual tours and video conferencing to drive sales. Owning a home has become a priority for people during these difficult times of lockdown and they prefer bigger homes for the family. More and more people are looking for affordable properties, especially towards the city peripheries. Pavitra Shankar, Executive Director, Brigade Enterprises Limited expressed, “Consumers are looking for extra space within their own apartments to accommodate multiple family members working from home and/or children taking online classes. This is manifested either in demand for larger apartments overall, or floor plans with a study or additional bedroom in a more efficiently sized apartment. The pandemic has only underscored the importance of choosing spaces that are well designed and well executed, both within the apartment and in the larger community. Gated communities have always had the advantage of a multitude of amenities, better community support, open spaces and infrastructure.” Darshan Govindaraju, Director, Vaishnavi Group stated, “Consumers today have a marked preference for a completed project. In fact, today, they are more comfortable with an investment in a completed project or a project nearing completion. Their expectations are higher carpet area efficiency, enhanced value proposition of the project, right pricing, right location, proximity to social infrastructure and lower maintenance cost (by way of efficient planning). A key consideration is the builder's reputation in the deliverance of the project. Also, there will be a significant portion of the residential market that will move towards gated communities. We have seen that Southern real estate markets have been the most resilient over the past 2 - 3 years too due to many positive factors such as project quality and timely delivery. Bangalore and Chennai have seen appreciable sales velocity in the last quarter. Further, there are good number of quality prospects which can convert into sales in the coming quarter and beyond. The rising interest in finished products coupled with many projects in the near completion stage has led to a boost in sales. A lot of developers are offering interesting benefits too, in terms of staggered payments etc.” • In the last 3 months, enquiries for larger homes have increased up to 40% with property seekers predominantly scouting for 3BHKs (avg. 1,800 sqft. built-up area) as against the previously-preferred 2 BHKs. • The current buyers are largely working couples with children, most currently pursuing the WFH and e-learning options. Most of these buyers will settle for peripheral locations to secure bigger homes and a better lifestyle at more affordable prices. • Most buyers prefer gated communities with all amenities. Ajay Singh, Assistant Vice President – Sales, Century Real Estate Holdings added, “Right now, the demand supply ratio in Bengaluru is very optimistic. In fact, the given inventory overhang has reduced from 40 months during COVID to 32 -34 months which is definitely a good sign for holding prices for developers. At the same time, this also ensures aggressive new launches in near future giving new options for buyers to look forward to. In addition to this pent up demand, lower interest rates, loan restructuring options and customized payment plans are driving recovery here. Gated community homes were a preferred choice for buyers even pre-COVID. However, the new norm of remote working and social distancing has given it another boost. During lockdown, people living in these communities had access to all basic essentials making it easier for them to stay at home. Societies, and especially the gated developments - not only mandated but also drove social distancing protocols, with all safety measures being taken, as a matter of process. These processes made gated developments a more secure option over standalone developments. Consequently, customers (irrespective of whether they are looking at apartments, villas or plots) are now more inclined towards gated communities.” According to Reeza Sebastian Karimpanal, President, Residential Business, Embassy Group, the checklist of features, facilities and amenities that home buyers are looking for in the project reveal the importance they place on community, neighbourhood and hospitality services. “Homebuyers prefer projects from reputed developers that assures minimal execution risk and developments that offer multiple features that cater to consumer preferences across age groups and interests. Evolution of Design - Projects which reflect attributes like smaller footprints/open plan, outdoor spaces, light & air quality, natural finishes, flexible layouts, sustainability features, low maintenance, smart technology, etc would be preferred. Managed residences or services rendered by the developers would also be critical criteria while buying a new home. The demand for integrated housing societies would witness an unprecedented rise. Given the infrastructure constraints and challenges such as persistent traffic, congestion and pollution, being faced by the urban dwellers today, integrated townships bring value propositions such as space, convenience, affordability and a relaxing lifestyle in one package. Considering the unprecedented crisis faced by businesses across the world soon these will become the new face of integrated townships.” As per the analysis by E & Y, the disruption caused by COVID-19 has pushed demand for gated communities with a self-sustainable ecosystem. The need for living within proximity so that one can ‘walk from home’ to workplace and essential services to avoid dependency on public transport has witnessed significant demand. INVESTMENT TRENDS OF NRIS Due to COVID 19 Indians living abroad are looking at their home country to return or as an option to settle in the future. These sentiments have given an impetus to NRI’s investing in residential real estate during pandemic. With various reform measures, NRI buyers have gained confidence in investing in India, mostly with trustworthy developers and RERA registered properties. Neha Hiranandani, Director, House of Hiranandani explained, “Owing to the vast presence of physical and social infrastructure, the on-time completion of real estate projects and good track record of developers, NRIs are attracted to invest in South India. The overall NRI investment in the primary real estate market in India is estimated to grow to nearly $25 billion by 2022 and a good portion of this is expected to be invested in South India. Quick and high capital appreciation too makes the region an attractive destination for real estate investment. Also, the rupee hovers at levels that inspire NRIs to stick with their investment.” “With home loans rates being at its decadal low and several regions announcing a reduction in the stamp duty, it has caught the attention of NRIs and HNIs which positive traction in the immediate future. These deductions impact the final costing of these projects, making them more appealing and lucrative investments for homebuyers and investors who are not living in the country,’ shared Ashish Puravankara. “The real estate industry in India is witnessing a transitional phase and is gaining favourable attention from NRIs. The combination of lowest home loan rates, the falling rate of the Indian rupee, home buying options with availability of ready-to-move-in flats and considerate pricing, makes it an ideal opportunity for potential NRI home buyers’ to invest in Indian real estate. Amongst other parts of the country, the Southern part of India has always been an attractive real estate market due to the availability of land, housing across segments, higher rental yields, ontime completion of projects, and good track record of developers. Keeping in view the promising investment climate, a dynamic professional class and a well-developed corporate ecosystem, the south has always been attractive to the NRI segment, added Bijay Agarwal. OFFICE SPACE SEGMENT AND RETAIL REALTY The latest consumer sentiment suggest that the buying intent in Hyderabad, Bengaluru and Chennai were less impacted compared to other cities during Covid. Occupiers are looking at office space usage more strategically along with preparedness for future contingencies. The recent success of REITs are an indicator of long – term confidence of investors for office space especially in IT hubs of India. “We expect that the office and retail office segment while showing some initial signs of recovery as we speak will bounce back between Q2 & Q3 of 2021 when the pandemic is brought under control,” stated Darshan Govindaraju. “The Southern India, especially cities like Bangalore, Chennai and Hyderabad have emerged as the main arm of the outsourcing business for the US, UK and Europe. With more foreign investors looking to establish their IT back offices in the prime locations of South India, the scope for corporate real estate is immensely high. Start-ups too have emerged very strongly in this region with Bangalore becoming the start-up capital of India. Bangalore, Chennai and Hyderabad are among top 10 cities for start-ups in the country, which now has over 20,000 registered start-ups. Metros in South India have also seen a sharp rise in retail and commercial growth. A slew of supermarkets, malls and leading retail chains has emerged to cater to the rising demand. Millennial have been the driving force behind this change as they seek a superior lifestyle,” added Neha Hiranandani. According to Pavitra Shankar the office sector was not as badly affected as retail. “Collections were at 95% in the first quarter post lockdown and improved further in the last quarter. Leasing enquiries dropped off during lockdown but are recovering now. Work from home, while more predominant of late, has its own challenges especially in our country where connectivity and social/ family structure do not support WFH as well as in other countries. We foresee that most companies will require office space as before, since they will need to plan for de-densified utilization and partial WFH and reduced hotdesking. Retail will take more time to recover but we are already seeing green shoots with increased footfalls at malls and with cinema halls being allowed to open. Covid has accelerated e-commerce trends but there will always be value for well-designed and well located retail that offers the right mix of shopping, entertainment and dining options.” Bijay Agarwal said, “The impact of the lockdown on office spaces, has been rather restricted, and comprises only a portion of global firms’ overheads. However, this unprecedented time has somehow prompted firms to go back to their drawing board, to re-strategize their approach to the conventional work place. Firms that are flexible enough to reinvent themselves and conceive out-of-the box solutions to stay connected with their target audience, will be the successful ones in the post COVID era. For the retail segment, there has been re-negotiations; as tenants are seeking relief from their owners. The industry is also experiencing contract restructuring, where newer revenuesharing models have set in. If landlords settle to this format in time to come, there can be a retail boom. In COVID times, retailers require the impetus from mall developers and retail space owners to ensure normalcy, and as per recent market trends, things are moving in that direction. I feel, we can foresee a relatively upbeat retail market sooner than expected.” “Riding on strong baseline factors such as large IT sector tenant base, long term contracts, steady cash flow models coupled with emerging trends in workplace design optimization, utilization based efficiency transformations, and innovative cost management models, the commercial real estate sector is expected to bounce back in a renewed avatar over the coming 12-18 months. In our outlook, consumer confidence will stabilize as health and economic concerns diminish over the medium to long term. Footfalls will gradually return to pre-COVID-19 levels driven by the need for interactive and immersive experiences delivered by offline shopping venues. With the transmission levels flattening and/or breakthrough cure is discovered, steeper recovery is expected for organized retail real estate segment,” said Reeza Sebastian Karimpanal. PROJECTS & SALES STRATEGIES Ashish Puravankara: Being pioneers in the adoption of technology, we have taken pride in several innovative technologies implemented in our construction, customer service and marketing strategies. With over 45 years of experience in the business, we have understood the evolving needs of our homebuyers and have streamlined our sales and marketing strategies accordingly. From being the first real estate player to virtually launch three projects (Purva Atmosphere, Purva Aspire and Provident Woodfield) to now hosting our own Virtual Home-Expo(by Provident Housing), we are making it convenient for our buyers to access our projects at the comfort of their couch. Our next project, Emerald Bay in Mundhwa, Pune will spread across 0.77 million sq. ft and will house a total of 611 units out of which, we will soon launch 280 Units for sale. Our customer outreach has always been a mixed bag of digital, print and in-house campaigns. We also have an exclusive customer outreach program which is run for our existing customers, who will always be the brand’s most vocal ambassadors. Every year, we have our ongoing marquee campaigns customised for the customer. After extensive R&D and market assessment, we have had successful offerings like Home Habba – a one of its kind home exhibition, and Big 72-hour sale – home fest with an initiative to sell homes online and offline. We were also the first to introduce ‘Purva Cash’, the concept of virtual Real Estate Currency, in our recent campaigns. Some of our key initiatives: • India’s first integrated virtual realty expo by Provident Housing started from 16th – 25th October, where the customers can not only visit the projects online but can also book it online. Along with that, one can avail various offers like savings up to 12 lakhs, exclusive price, no hidden charges etc. • Similarly brand Puravankara is running a campaign “Smart Festive Homecoming’ for its ready to move in inventories. The offers includes smart homes worth 5 lakhs, saving upto 20 lakhs and some exciting on spot offers. • ‘The Purva Zenium show’- India's first Real Estate broadcast series that is available on our YouTube channel. Through this show, we have tried to uplift consumer sentiments by sharing information with home buyers in the most entertaining way possible. Industry experts speak on various topics like design, location and technology etc. The first season of the web series got over in the 1st week of August • We are also running a web-series in partnership with a reputed media firm. ‘UrbaNext: The Future of Living’ aims to decode and discuss key issues influencing the future of living in Indian urban zones, through insights from experts in technology, urban planning, and real estate. The series recently launched its 6th and final episode. • Our online booking platform, ‘BookMyHome’ by Provident Housing, has revolutionized the way people search and buy properties. It gives a seamless experience and utmost transparency to home buyers, without any human intervention. The process is almost similar and as easy as booking a movie ticket online. Through 'BookMyHome', home-buyers can access all the intricate details such as the available flats, interior layout, project location etc. They can search, access and book a home at the click of a button. The customers will also get additional benefits if they choose to book their home through this platform. Pavitra Shankar: Brigade is launching the first phase of a 2 mn sft residential project in Hyderabad shortly. This is our second project in the city and we expect it to be well received. We have also launched subsequent phases in our integrated township projects like Brigade Cornerstone Utopia, Brigade El Dorado, Brigade Xanadu, where we have already established good demand from customers. Our sales strategy is always driven by the micromarket regardless of region/city. We are very particular about location, good access and good social infrastructure around our projects. We invest in good design and good construction quality. Given all of this, our sales strategy is to design the right product for each micromarket, and price it in accordance with the excellent value proposition and brand name behind each project. Bijay Agarwal: The group has plans of foraying into affordable housing under PMAY in Bidadi. We also have plans of launching a plotted development project in Nelamangala, a project on Sarjapur Main Road and a plotted development project at Mandya. In Bengaluru’s commercial arena, Sattva is launching several projects and has signed on new projects as well to the tune of 15 million sq ft. In Hyderabad, the Group has 25 million sq. ft. of completed and under construction projects. Our largest mega project is there and will be 100% complete in the first quarter of 2021. Salarpuria Sattva currently has interesting schemes that offer partial payment plans for customer bookings. We are also initiating attractive promotions during the festive season across all our ready to move in projects and under construction homes and plots. Darshan Govindaraju: Amongst others, Vaishnavi is currently working on an interesting integrated, mixed use development in North Bangalore. This is a strategically located land parcel with a build potential of over 2 million sq.ft. The project will feature commercial office spaces with all support services, compact luxury homes, senior living and allied services and a school. What will set this project apart is the integration of a metro station as a part of the project. Reeza Sebastian Karimpanal: Embassy’s upcoming projects include; • Embassy forays into Senior Living – Our first project in collaboration with Columbia Pacific Communities will be launched in Embassy Springs, North Bengaluru • Embassy Edge 2.0 – Ultra-modern smart homes to cater to the mindset of millennials • Olive by Embassy – Co-living spaces for students and working professionals that offer custom-made & well-equipped modern facilities in a safe and secure environment. We saw an overwhelming response to our product offering- Embassy Edge @Embassy Springs that witnessed 200+ units sold in less than 45 days. With the festive quarter approaching, we have seen interest in buyers and to ensure support in planning finances, we will be coming up with various offers and schemes with relaxed payment terms, assistance on assured rental yields. All this in addition to no GST benefit on our Ready-to-move-in projects. With excellent support from our channel partner’s network across the nation, we will be reaching out to various markets & micro-markets with our offering. With the combination of an excellent Brand Value + RTMI futuristic homes, we will be able to leverage good response with the introduction of customer-friendly schemes and offers in this quarter. Ajay Singh: Century Real estate is marking the aggressive way out to change the real estate skyline, especially North Bengaluru, the newest hotspot for real estate investment and end use. Coming up with new plotted developments and large format mid-range apartment projects at prime locations, right product mix at expected ticket size, Century Real Estate is ensuring value and volume to set a new benchmark. We are aligned with what our customers want today - plotted developments in a gated community with all amenities or RTMI apartments. In all our deals, we have always built confidence with our customers through apt pricing, assured product delivery, seamless pre and post sales customer service, and transparency. In addition, we have adopted a consultation based selling approach instead of a push sales strategy to help the buyers understand the real estate landscape and then make an informed purchase. Customized payment plans, faster documentation process and an online purchase platform are some of the aggressive additions to our sales strategy. South Indian cities like Bangalore, Chennai and Hyderabad are growing at a fast pace with specific micro-markets like Hebbal and Bannerghatta in Bangalore, OMR in Chennai and Shankarapally in Hyderabad performing very well. A conducive investment climate, the presence of a dynamic professional class, a welldeveloped corporate ecosystem and the rapid rise of co-working spaces have all brought sheen to real estate in South India which will experience further boom in the coming years. The next few years look promising for the real estate industry in South India, especially for those firms who have the expertise to add value and capitalize on these opportunities.
Tags : EXPERT ZONE residential Real Estate Investment Bengaluru Builders Hyderabad Chennai Office space House of Hiranandani Vaishnavi Group Embassy Group Ashish R. Puravankara Bijay Agarwal Puravankara Limited Pavitra Shankar Century Real Estate Holdings commercial Reeza Sebastian Karimpanal Salapuria Sattva Group Developments Brigade Enterprises Limited Darshan Govindaraju Ajay Singh Neha Hiranandani Retail Realty