Real estate recnor
1) DLF asks Competition Appellate Tribunal (COMPAT) to set aside the Competition Commission of India (CCI) supplementary order that modifies the realty giant's buyer agreements.
2) These are busy days for Blackstone, sources say it has agreed to buy into a business park in Bangalore along with two other companies for USD 367 million. Blackstone is also to make its maiden profit in Indian realty by exiting an investment in a luxury residential project again in Bangalore.
3) Realty Index down 2.66 percent for the week. IVRCL Assets is the biggest gainer up 3.28 percent. The biggest loser is Kolte-Patil, down by 13.45 percent.
Pulse check on rentals:
With the Indian economy slowing to its lowest growth rate in a decade India's consumption story is in question, but at 5 percent plus we are still one of the fastest growing markets in the world and an attractive investment destination for global retailers.
Adding to the cheer is the government's decision to liberalise the Foreign direct investment (FDI) regime paving the way for the likes of Swedish furniture giant Ingvar Kamprad Elmtaryd Agunnaryd (IKEA) to open shop. So on price-o-meter this week we do a pulse check of rentals in malls and high streets.
In Delhi:
High streets in Delhi like Khan Market and Greater Kailash are doing well as there is limited inventory in malls and rentals are expected to see an uptick.
Jaideep Wahi, Director-Retail, Cushman & Wakefield India said, "I expect an increase in rentals in key high streets and established malls and this is primarily due to an increased demand for apparel, and food and beverage."
In Mumbai:
Similar story in the commercial capital Mumbai as retailers look for space in South Mumbai and new shopping hotspots like Lower Parel and Malad.
Wahi added, "In Mumbai, I would expect Colaba and Linking Road established high streets for rent, for retail pick up. Shopping centres definitely Lower Parel and Malad would be the hotspots for the retail."
In Bangalore
Bangalore is in the top three cities for retailers, but they seem to be avoiding the prime Vittal Mallya Road. Rentals in this prime location are under pressure. So here is where you could invest.
" I expect an increase in rental of key micro markets like commercial street, shopping centers like 1MG and Garuda mall primarily due to the construction activity there is going to begin," said Wahi
In Chennai
Rentals are expected to remain stable. So if you want to invest this is where cash tills are ringing.
"Definitely look at Anna Nagar, 2nd Avenue and KNK Road," added Wahi
Whereas, Kotkata doesn't really make it to retailers shopping list, but Ahmedabad is seeing positive action with shoppers opting for high streets.
In Ahmedabad,
Wahi added, In Ahmedabad, I would see an upward trend in rentals in CG Road which is established high street and quality malls like in Vastrapur."
What are retailers looking for?
We catch up with a coveted tenant, the master franchise of Domino's and Dunkin' Donuts. Despite poor consumer sentiment eating into sales and margins Jubilant FoodWorks will open 110 new Domino's stores and 10 new outlets with Dunkin' Donuts.
Ravi Gupta, CFO, Jubilant FoodWorks said "Real estate somehow is having still an inflation in the market. The rentals are on upswing. This year specifically we observed that the rentals are going positive further despite the sluggishness in the economy and the reason is very clear as it is a temporary phase of the economy and everybody believes that going forward the good times will definitely come back. So in this point of time you should not withhold your investments rather it is time to make a killing because real estate we have seen in bad times it can go very high."
Mall versus high street debate
When asked to commend on malls versus high street debate Gupta said, "Mall, it is a different ball game completely because mall owner typically likes to make a killing by selling the space at a very high cost and the investor who comes and buy the space also looks at maybe 8-9 percent kind of return."
He added, "In that scenario it becomes very difficult to generate 8-9 percent kind of return if he has bought the property at very high rental. For a mall owner if he buys a pre-rented property it is always better because typically in malls if you have a variable deal you are not sure about what kind of rental you will be getting.
Whereas with regards to high street Gupta, added, "High street is comparatively easier. High street landlord typically looks at stability of the revenue. He believes that bigger tenants like us, who can have stability where typically we have a tenure ranging upto 15-20 years. This kind of stability, which we can guarantee in the revenue for our landlords, is what typically he looks at. We are able to negotiate with the high street very easily and he is also very comfortable in reducing the rental for us."
Are food courts worth the money?
Commenting on food courts, Gupta believes, you will have a percentage rental. In these kinds of deals for an owner to make a killing out of it becomes very difficult. He needs to understand saying how much rental he can generate. How much income and what is internal rate of return (IRR) he is looking at. Looking at all those aspects only he should invest in that.
Launchpad
The world trade centre makes its debut in the National Capital Region (NCR), but unlike most of the other countries it operates in. In India the world trade centre will come up in Manesar on the outskirts of the Gurgaon suburb and not a city centre. The World Trade Centre is looking to extend its relationship with its global clients to include India and is offering a rate of Rs 30-40 per square feet that's one third of the current asking price in Gurgaon, but brokers say even this maybe too steep.
Deal Street
1) Global giant American International Group (AIG) has bought Bangalore-based RMZ's 50 percent stake in the stalled JV mall project for an undisclosed sum ending its year long dispute.
2) Blackstone is set to make its maiden profit in Indian real estate by exiting Lakeside Terraces a luxury residential joint venture project with South India's Embassy Properties. Located in Hebbal, 30 minutes from the new Bangalore Airport, apartments here were priced between Rs 3-10 crore.
3) Britannia bought three floors or 90,000 square feet for Rs 45 crore in Prestige Shantiniketan, a project at Bangalore's Whitefield area. The company may relocate all its operations here.
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