Indian realty industry to almost double to $140B by FY17

BY  Pooja Sarkar, VCCircle

The industry, which had been growing at around 8 per cent annually during 2009-11, saws a 6.5 per cent deceleration in 2012-13.

The Indian real estate industry is expected to grow to approximately $140 billion by FY17, said a research report on real estate released by advisory firm Ernst $ Young and industry body FICCI. The report said, according to industry estimates, the size of the Indian real estate market was close to $78.5 billion in FY13.

Niranjan Hiranandani, chairman of FICCI’s real estate committee and managing director, Hiranandani Constructions Pvt. Ltd, said, “Mumbai urgently needs change of infrastructure with the support of government and also reforms in taxation, with 34 per cent of cost of an affordable house going out as taxes.”

The realty industry, which had been growing at around 8 per cent during 2009-11, saw a 6.5 per cent deceleration in 2012-13 primarily due to the sluggish domestic growth, rising input costs and negative global economic sentiments.

The sector’s major growth driver has been the pumping of capital through foreign direct investment (FDI) route. Between April 2011and July 2013, the sector attracted FDI of close to Rs 100,000 crore. The report, however, said the volume of FDI into the sector has been declining.

Even for private equity funding, the sector saw its peak in 2007 when $6.8 billion came in. In 2012, the industry attracted $1.7 billion from limited partners in realty projects across the country, as per the report.

For the first half of the current calendar year, the realty industry has seen investment of close to $1.4 billion and industry experts indicate that this year would be one of the better years compared to last four years.

With negligible sales and developers’ reluctance to bring down prices of properties, even banks’ credit exposure to the real estate and housing sector declined from 10 per cent as a percentage of gross bank credit in FY10 to 7.9 per cent in FY13. While bank construction finance continues to be the cheapest source of funding, another instrument which has caught attention of developers is raising money through non-convertible debentures (NCDs). Reflecting this trend, NCDs worth $4.2 billion were issued in 2012 compared with $3.8 billion in 2011.

The realty industry recently witnessed a few big-ticked buyout transactions in commercial office space by private equity funds. Over the last three years, it has attracted investment of $1.14 billion in commercial office space portfolio development.

(Edited by Joby Puthuparampil Johnson)

SMR’s Flagship Gated Community Project Getting Ready in Hyderabad

SMR Vinay Fountain Head, the flagship gated community of real estate developers SMR Group, would be ready by February next year. SMR would give possession of the dwelling units then. In all, it has about 975 units in 10-acre project coming up at Hydernagar, near the Miyapur to Ga-chibowli road in Hyderabad. The project is situated near the IT hub of Hyderabad. According to SMR chairman and managing director, S Ram Reddy, who is also the chief architect of the project, the Fountain Head focused on the layout to ensure that it would not be ‘crowded’. It would have four towers, each 19 floors and a lot of landscaping. 

The project is a combination of two BHK averaging 1,200 sq ft and three BHK measuring around 1,800 sq ft. The company claimed it has sold about 50 per cent of the units at an average price of Rs 2,900 per sq ft. The project cost is estimated to be Rs 350 crore, of which Rs 75 crore came from promoters, Rs 70 crore as loans from financial institutions and about Rs 150 crore from the owners- to-be.

“The total area of construction is about 20 per cent. We have left the remaining open. The structure is designed to withstand seismic loads,” he said. Based on customer feedback, it designed the living room for multiple uses. The units would have sit-outs offering a view of the surroundings, said Reddy, adding that the project has a 50 ft setback including 30 ft road and 20 ft greenery. About 75,000 sq ft has been earmarked for various amenities. For health freaks, Fountain Head would have a jogging track and separate gyms for men and women.

The terrace garden turns into a venue for get-togethers and celebrations with music. And for the pumped up ones, there is a dance floor, too. For leisure, swimming pool, reading room, coffee shop and tennis court are lined up. The gated community, where the apartments would not have common walls, would also provide wi-fi connectivity, a three-level parking including for guests, children play area, an amphitheatre and multiple banquet halls.
 

SMR has other residential projects — such as Sky City with 120 apartments in 13 floors at Uppal and Symphony with 190 units at Gachibowli — which are already partly occupied.