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So what are the predictions for real estate growth in India in 2013? These are excerpts from an Interview with Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India
Real Estate Recap for 2012
Among the top 7 cities of India, the capital value growth in Pune and
NCR-Delhi was the highest, while Hyderabad and Bangalore saw a slower
rate of capital value growth. There is still no price correction on the
cards, but the quantum of appreciation definitely reduced significantly
in all the top seven cities of India in 2012. Infrastructure deficit continues to be a key restraint for the growth of residential markets across India.
Overpricing has been an issue in Pune, Hyderabad and Kolkata, resulting in a relatively smaller share of absorption from these cities during 2012. For Commercial Real Estate, 2012 was defined by a notable decline in absorption of office space across most of the cities in India from the 2011 levels. However, the larger cities of Mumbai, NCR-Delhi, Bangalore and Chennai contributed to a healthy 72.5% of the country’s net absorption of commercial real estate.
Retailers in cities like NCR-Delhi, Mumbai and Bangalore continued to actively lease space in superior quality malls due to the limited availability of new space and the low vacancy rates in existing prime malls. The total net absorption of retail space across India projected for 2012 was 4.4 million square feet, led by NCR-Delhi and Bangalore (which together absorbed 2.6 million square feet).
RESIDENTIAL REAL ESTATE IN 2013
Although most of the cities of India will see an increase in residential launches in 2013, the southern cities of Bangalore and Chennai will witness a decline in launches as compared to 2012YTD. It is important to note that these two cities recorded a historical high in terms of the number of launches during 2012.
To illustrate - Pune has recorded an average of close to 6000 units per quarter over the past three years (2010 to 2012YTD). This is more than twice the average quarterly launches recorded during the period 2007-2009. As a market that has grown too fast in such a short time, launches in Pune will be moderate in the near term.
Although most of the cities of India will see an increase in residential launches in 2013, the southern cities of Bangalore and Chennai will witness a decline in launches as compared to 2012YTD. It is important to note that these two cities recorded a historical high in terms of the number of launches during 2012.
To illustrate - Pune has recorded an average of close to 6000 units per quarter over the past three years (2010 to 2012YTD). This is more than twice the average quarterly launches recorded during the period 2007-2009. As a market that has grown too fast in such a short time, launches in Pune will be moderate in the near term.
COMMERCIAL REAL ESTATE IN 2013
The fact that the major cities of Mumbai, NCR-Delhi, Bangalore and Chennai saw 72.5% of the total commercial space absorption in 2012 is a telling one, and indicates the forward path. These cities will grab the lion’s share of contribution in total commercial space absorption in 2013, certainly within the range of 74-76%.
We expect 2013 to bring a larger-than-usual number of NRI investors into the commercial space arena. This is because NRIs are currently enthused by the prevailing exchange rate benefits and the fact that commercial real estate capital values are still 15-25% under their 2007-08 peak levels
RETAIL REAL ESTATE IN 2013
The Government`s nod to FDI in multi-brand retail will be a major driving factor for increased activity in 2013. This, in turn, will positively impact the absorption of retail space over the next 12 to 24 months. The absorption is forecast to touch 6.8 million square feet and 7.1 million square feet in 2013 and 2014.
India`s major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 9.5 million square feet of mall space in 2013. Mumbai, NCR-Delhi, Bangalore and Chennai will together contribute 70% of the total retail space absorption.
The fact that the major cities of Mumbai, NCR-Delhi, Bangalore and Chennai saw 72.5% of the total commercial space absorption in 2012 is a telling one, and indicates the forward path. These cities will grab the lion’s share of contribution in total commercial space absorption in 2013, certainly within the range of 74-76%.
We expect 2013 to bring a larger-than-usual number of NRI investors into the commercial space arena. This is because NRIs are currently enthused by the prevailing exchange rate benefits and the fact that commercial real estate capital values are still 15-25% under their 2007-08 peak levels
RETAIL REAL ESTATE IN 2013
The Government`s nod to FDI in multi-brand retail will be a major driving factor for increased activity in 2013. This, in turn, will positively impact the absorption of retail space over the next 12 to 24 months. The absorption is forecast to touch 6.8 million square feet and 7.1 million square feet in 2013 and 2014.
India`s major cities like Mumbai, NCR-Delhi, Bangalore, Chennai, Pune, Hyderabad and Kolkata will see the addition of close to 9.5 million square feet of mall space in 2013. Mumbai, NCR-Delhi, Bangalore and Chennai will together contribute 70% of the total retail space absorption.
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