As negative factors impacting the commercial realty segment fade away, it could well be an indication that the sector is set for renewed growth. If we consider that fewer negative factors implies a positive scenario, then, the commercial real estate sector in the country could well be on the verge of a comeback. It is widely believed that 2010 will be the year, when commercial real estate bounces back.
While stocks and bonds have held their position as traditional investment instruments, investors are increasingly looking for alternate investments such real estate, hedge funds, private equity and exchange-traded funds (ETFs) to engineer an overall enhanced performance of their portfolios. Improving construction quality, enhanced market transparency, and availability of suitable options have made real estate a good asset class to invest in. It provides a stable and predictable income yield along with a possibility of capital appreciation. While residential markets in India have already witnessed a rapid bounce back, commercial markets had touched a cyclical low and are expected to recover.
The market value of investment-grade real estate in India under construction has increased from USD 69.4 billion at end-2006 to USD 101.3 billion by end-June 2010, which is 8.2 percent of India’s nominal GDP for 2009. A significant portion of this market value is costs of construction and development of these real estate assets. The costs have been assessed to be USD 48.5 billion over a period of 2-3 years.
The government today eased the foreign direct investment norms for sectors like wholesale cash-and-carry trading, non-banking finance companies (NBFCs) and certain segments of animal husbandry, besides bringing about procedural simplifications. There was, however, bad news for foreign tobacco product manufacturers and the real estate sector. The Consolidated Foreign Direct Investment (FDI) Policy, which would be effective from October 1, has been formally included in the list of activities in which FDI is prohibited. The move follows controversy around Japan Tobacco’s entry into the Indian market.
With property prices soaring to dizzying heights in the country\’s financial capital, aspiring home-buyers have to be much more than a crorepati to buy a flat in Mumbai, where the average cost of a roof over one’s head is now at an all-time high of Rs 1.91 crore.
According to figures put together by the real estate research agency Liases Foras, the weighted average cost of a flat in Mumbai at 1.91 crore has leapt by 49 percent over the last one year. The weighted average cost is the total capital value of all flats divided by the total inventory in each city. In comparison, five other cities like Bangalore, Hyderabad, Chennai, Pune and the National Capital Region (NCR) have witnessed either a drop in rates or a negligible increase. An average flat in these places is relatively affordable at Rs 35 to Rs 50 lakh.
A domestic helps agent doubles as a property dealer. One fine day, a ration shopkeeper switches jobs to become a property dealer as there is a ‘huge’ profit involved in this sector as opposed to his earlier calling.
The Indian Registration Act 1902 and the Transfer of Property Act 1882 contain relevant provisions specifying documents that are compulsorily registrable, and those exempted from being registered.