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REITS could help discipline Indian real estate market

Posted by Tushar Mathur on November 11th, 2008

Indian trade experts are calling for the introduction of real estate investment trusts (REITs) to attract institutional property investment firms.

The Associated Chambers of Commerce and Industry of India (Assocham) also said the move would help to “discipline” the domestic real estate market.

The group said it had written to the Securities and Exchange Board of India backing the introduction of REITs.

REITS sell like a stock on exchanges and invest in real estate on behalf of share holders, usually enjoying tax breaks.

Assocham said:

“Since the purchase and sale of real estate assets would form part of the activity of REITs, the presence of a large number of REITs can enhance liquidity in the secondary market for commercial real estate.”

The group added REITs can also offer better investment opportunities as they normally include “a better spread of risks as compared to a regional developer who offers mortgages on a few similar properties often located in the same market space.”

In the US REITs are still outperforming the broader property market, the National Association of REITS (NAREIT) has said.

The organisation also said REITs in the US have seen their equity market capitalisation soar from $90 billion to more than $300 billion in the last 10 years.

India Real Estate News, November 2008

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Office rentals fall up to 14 pc in Q3

Posted by Tushar Mathur on November 9th, 2008

Office rentals in key markets of the country witnessed a decline of up to 14 per cent during July-September period in the current year owing to supply outpassing demand by almost double, say a latest report.

“Third quarter saw a total supply of 18.41 million sq ft across major cities in India
while the total absorption was registered at 9.21 million sq ft.

However, marginal corrections in values were recorded in peripheral locations with high concentration of IT and ITeS office space,” global real estate consultant Cushman & Wakefield (C&W) said in its quarterly report on Indian office space.

The rentals, primarily IT spaces, in Noida in National Capital Region (NCR) during Q3 dipped by 14 per cent compared to the previous quarter, it said.

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Residential property prices in cities down by upto 5%: C&M

Posted by Tushar Mathur on November 9th, 2008

With the ongoing slowdown in real estate industry and correction in secondary markets, some of the country’s major cities have witnessed up to 5 per cent fall in capital values in residential properties, a Cushman & Wakefield (C&W) report said.

According to the global realty consultant C&W, the high -end residential market of Pune has seen a decrease of 5 per cent in capital values during July-September period, while it fell by 1 per cent in the mid-range category.

Other prominent markets, like Mumbai and Bangalore, witnessed a fall of 4 and 3 per cent respectively in the mid-range housing sector, it added.

However, few locations in Chennai witnessed appreciation in capital values up to 8 per cent.

“Most markets are predicted to continue to have stable capital values with a softening bias in the last quarter of 2008, with the exception of Chennai which may see some further strengthening in key micro markets. A lacklustre festive season, along with sharp drop in the stock markets have further aggravated the situation for the developers, who are also battling conditions such as high rates of servicing debt and liquidity issues,” C&W India Director (Residential Services) Aditi Vijayakar said.

Such conditions have led many developers to re-align their strategies and several developers may be now looking at targeting the middle-income groups, where the demand is high and mostly driven by end-users, she said.

“Correction in value in the secondary sales market has impacted the overall values of residential properties in certain micro-markets and is expected to further affect the capital values in the next quarter,” the report stated.

Property Investment News, November 2008

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