The last few months have seen a lot of mid-sized office and mixed-use buildings in Mumbai going under the hammer. Not very surprising, considering the wave of real estate redevelopment that has swept the city. What is so unusual about these buildings is the fact that they are going to be redeveloped into stand-alone retail formats.
First generation of commercial realty saw sales model and then the Indian developers learnt the global pattern of lease model.
Fitch Ratings’ outlook for 2012 for the Indian real estate sector is negative due to weak overall demand and higher construction costs, which are likely to continue to squeeze margins.
The ever-increasing housing needs in urban centers have caused home prices to shoot up to extremely unaffordable levels.
The Indian real estate sector has grown rapidly over the last few years, with its stakeholder profile evolving from locally-focused, privately-owned enterprises to increasingly corporatized, professional organizations funded with public capital and having multiple market and product strategies.
According to the 2011 census, the Mumbai Metropolitan Region has over 23.5 million people. To house this population on the ground floor, assuming a household size of 4 and dwelling units of 900 sq ft per family which are laid wall to wall, we would need 121,384 acres of contiguous land.
One of the biggest problems afflicting the sector is its high level of debt. The debt load of 11 listed real estate companies stands at Rs.38,500 crore.
The real estate sector in Punjab is likely to witness sluggishness in the run up to Assembly elections in the state next month.
Emaar Properties has used Dubai Mall, one of the world’s largest shopping centres, as collateral to secure Dh3.6 billion (US$980 million) of financing from a trio of UAE banks.
Though a depreciating rupee has its fall out on all other economic activity, it is rather helping the Indian property market.