What appears to be the bane of retail, whether organised or neighbourhood, has been spotted by some innovative entrepreneurs, of late. They are the tech savvy smart players in the segment who have realised that instead of getting into “dog eats dog” competition, it is better to spot the gaps that the upwardly mobile discerning consumers are finding and bridge the trust deficit in retailing to cater to this segment.
Since the hospitality sector was previously considered a part of Commercial Real Estate (CRE) and was subject to the same risk exposure, the cost of such debt was high. In September 2009, new guidelines on CRE released by the Reserve Bank of India, asserted that the hospitality sector would no longer be treated as a part of CRE and risk exposure would be based on the profile of the borrower and the nature of the project.
The emergence of the secondary and tertiary cities led to an aggressive increase in hotel development and provided avenues for expansion of hotel brands, which were previously dependent on new opportunities in just the five main cities.
Over the last one year, capital values rose by more than 30-35% in Gurgaon’s residential sector. Developers are now going slow on execution of real estate projects, resulting in a drop in supply of residential apartments in most prime markets. Emerging residential areas are still not able to meet the huge housing demand.
The rate at which economy is growing our urban centers shall add at least 100 million people by year 2020 merely on the account of urbanization. To provide housing to so many people India needs to invest a trillion dollars over the next 10 years. This is equivalent to 80 times our education budget allocation for year 2011-12.
The PE players have expressed concern about difficulty in exits, governance issues in investee companies and certain taxes such as the Dividend Distribution Tax which are excessive and do not conform with global standards.
The Confederation of Real Estate Developers’ Associations of India (CREDAI), Gujarat organised a seven-day technical tour for its members in mid-January. The 60-member delegation, that included developers from Ahmedabad, Mehsana, Rajkot, Surat, Palanpur, Navsari, Unjha, Bharuch and other centres, visited Israel, Jordan and Oman.
The demand for holiday homes in India is as wired into the country’s overall economic performance as every other segment of residential real estate.
Indian developers will borrow about $1 billion from private equity funds this fiscal year at rates higher than banks, which are cutting loans to builders, Knight Frank assessment suggests.
Analysts believe that further price correction may not happen in the metros and suburbs due to the holding capacity of the bigger developers, but lack of funding options may force some standalone local builders to drop prices.