In Bangalore, the cap rates for the logistics & warehousing assets continue to remain flat Q-o-Q with significant volume registered in lease transactions. Similarly, rental rates and capital values for Grade A commercial office segment have been flat with no significant change. Though interest rate regime is stable, the impact on the cap rate movement is limited due to transaction volumes and perceived risk not changing much.
As the Finance Minister Ms Nirmala Sitharaman announced to lower the LTCG (Long Term Capital Gains) from 20% to 12.5%, the stock market took a hit. The analysts across the financial spectrum immediately swung into analysis that the LTCG hike would adversely affect the stock market in the short term but big pocket investors won’t be affected as much as presumed. A section of financial wizards who understand the nuances of personal finance across the asset classes had even bigger a worry – Real Estate. Prima facie what looked like the LTCG being lowered from 20% to now at 12.5%, has in fact hurt the property market the most. Reason: the indexation benefit under Section 48 that is presently available for property, gold, and other unlisted assets have been now proposed to be removed.
Between April and June 2024, residential supply witnessed the highest growth rate in the last 24 months, driven by the increasing availability of under-construction properties, shared the recently published PropIndex Report (April-June 2024) by Magicbricks, India’s leading real estate platform. According to the report, the supply of under-construction properties has increased by 11.7% QoQ, while prices have risen by 15.2% QoQ between April-June 2024. This surge has resulted in prices of under-construction properties surpassing those of ready-to-move properties in several cities such as Gurugram, Mumbai, Noida and Thane.
According to the report’s findings, Q1 2024 marked a discernible shift towards high-end properties among homebuyers. Notably, the share of properties priced at INR 1 crore and above in sales surged to 37%, a significant increase from the pre-pandemic levels of 2019, more than doubling in magnitude. During this period, there was substantial growth (50-55%) in demand observed within the INR 1-5 crore price bracket, closely followed by the INR 5-10 crore range, particularly evident in cities like Mumbai, Gurugram, and Bengaluru. This transition signifies a departure from purely budget-driven decisions towards properties that better resonate with buyers’ lifestyle preferences.
Owing to rapid industrial growth and the emergence of one of the fastest growing real estate segments in the country, India’s warehousing sector is set to cross the 300 million square feet (MSF) mark by 2025, according to a report jointly launched by CREDAI and CRE Matrix. Currently, the overall Grade A warehousing stock stands at 216.2 MSF. In Q1 CY ’24, India witnessed a 5% increase in rentals – reflecting how India’s warehousing demand continues to surpass supply – with the absorption to supply ratio standing at 1.4 in the quarter.
Of the eight major cities, Pune witnessed the steepest drop in unsold inventory levels. The 10% YoY decline in unsold units, highlights strong housing demand across the city. The reduction in unsold units coincides with a major 13% annual rise in average housing prices. This price growth was driven by substantial launches in the high-end and luxury segments. Key localities like Camp and Baner witnessed significant YoY price increases, ranging between 20-23%.
Mother’s Day & property market! The topic has been debated the world over and it has mostly revolved around whether a house could be a perfect Mother’s Day gift. Or else whether one should buy a house near mother’s place. However, mother as a factor in the property world is not just confined to a limited scope of her being a recipient or just an emotional comforting factor. In fact, she has always been an influencer and with economic independence is fast emerging as a catalyst to property buying. On this Mother’s Day Track2Realty explores as to how much the mom factor is “the factor” in the property market.
No one has got a clear answer to the core of the problems and every industry stakeholder has his own point of view. However, the economies of scale suggests it definitely helps the developers to undertake cost-effective measures since material procurement happens at a group level. This gives large developers an advantage over other smaller developers and projects. Also, the duration of construction has an impact on the cost. The developers must ensure the completion of projects on time, which could help us sell the properties at a faster pace and keep the cost under control.
The question is what needs to be done. Or in other words, how could real estate consume more out of ‘Make in India’ manufacturing? The question in itself is flawed, if not in sync with the larger eco system issues. Setting up and making a manufacturing unit in India comes with its own challenges. Cheap labour alone would not give India any edge or cost arbitrage over the export items. ‘Make in India’ has to move beyond the rhetoric of nationalism and reforms have to be introduced at each and every level, ranging from lower corporate tax to labour laws and making the country a happy hunting ground for the manufacturers of the world.
Fractional Ownership is an evolving concept, on the lines of REIT but very different from REIT. Unlike REIT, which is a listed entity owning income producing real estate, Fractional Ownership is coming together of investors to pool their funds and jointly purchase real estate. Though in its very essence, the idea is to rent it out and earn the equitable rentals, many ‘office for a limited purpose’ investors are also getting into Fractional Ownership for convenience. A Track2Realty analysis.