Indian Real Estate Analysis of 2016 & concentration into 2017

1
Indian Real Estate An analysis of 2016
Concentration into 2017
2
Introduction

• Its time to study what happened in 2016 and
  what is to be expected in 2017. The real estate
  industry in 2016 saw major changes , mainly on
  the policy front.

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Breakup Of City-level Investments

• Residential and office investments were a
  majority in 2016, retail is expected to start
  seeing better traction. Investors will remain
  focused on the top seven cities.

4
Residential Real Estate

• Capital Values (CVs) across cities, especially in
  Hyderabad, Pune and Bengaluru, saw gentle
  appreciation in 2016 and this trend is expected
  to continue in 2017.
• The 3 biggest markets in terms of volumes of
  unsold units (including under-construction) are
  NCR, Mumbai and Bangalore. By volume, NCR stands
  37, Which is more than a third of Indias unsold
  (including under-construction) residential
  inventory.
• Less than 5 units among the total unsold
  inventory across the three metros are ready for
  possession. Bengaluru, a largely end-user-driven
  market, has the lowest unsold inventory in
  project launches up to the year 2010.
• In Mumbai, the percentage is higher, but if we
  discount the longer timelines it takes for large
  projects to complete, it would fall under 5.

5
Real Estate Investment Trusts (REITs)

• Budget 2016-17 exempted dividend distribution tax
  on special purpose vehicles. Rules for REITs were
  relaxed, and the investment cap in
  under-construction projects was raised from 10
  to 20. SPVs are now allowed to have holdings in
  other SPV structures, and the limit on number of
  sponsors has also been removed. Currently, around
  229 million sft of office space can be seen as
  REIT-compliant. If even 50 of this were to get
  listed, we are looking at a total REITs listing
  worth USD 18.5 bn.

6
Advantages

• REITs assure to open up the real estate market to
  smaller investors in the next year.
• International banks and financial institutions
  are under better cost and compliance pressures
  and are therefore estimated to outsource more
  jobs to India.
• For various companies, especially in
  non-technology area, money saved through leasing
  is reinvested in business.
• Requirement for office space is evolving, and
  other corporates across industries will take on
  innovative workplaces in the near future.

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