In - Indias Real Estate Milestones A 20 Year Narrative PDF

India’s Real Estate
Milestones
- A 20 Year Narrative
History cannot give us a programme
for the future, but it can give us a fuller
understanding of ourselves, and of our
common humanity, so that we can better
face the future.
Robert Penn Warren - Famous American poet
and novelist
The 20-year journey of India’s Real Estate post

the country’s tryst with liberalisation is no less
than an epic as it transforms from a fragmented,
irregular market to a mature growth engine for
the Indian economy. The narrative itself is full of
economic upheavals, fiscal challenges, monetary
and developmental reforms, including policy
changes which resulted in much volatility.
The book chronicles the landmark developments

in the real estate sector over the last two decades
(1997 - 2017) drawing key learnings that have
shaped the sector today and will influence
our future. The journey begins with economic
liberalisation in 1991 as the country opened its
doors to a number of foreign companies and
investors to set-up operations at investment
levels markedly lower than that of developed
economies.
Triggered by economic freedom, Indian

businesses were also advancing. However, the
economy was not ready for a tectonic shift, yet.
After three successive years of over 7% growth
since 1994, growth slowed, yet remained around
5% in FY 1997-98. Cyclical factors and a decline
in investments were the reasons for the drop.
However, sectors such as Information Technology
(IT) and other firms seeking to set base in the
region were quick to respond.
Domestically, the real estate sector was also up

for change. Thus, came the first generation IT
Parks and Office Hubs, which led to an increased
4 India’s Real Estate Milestones – A 20 Year Narrative

demand for quality office space and concomitant This book celebrates the resilience of the sector
housing for the tech-savvy, quality demanding over the past 20 years, during which time it
millennials; the movement panning out from witnessed two real estate cycles (1994 – 1998 and
cities with IT hubs, changing landscapes and 2004 – 2008), adapted to changing regulatory
landmarks. This provided an impetus for the norms, embraced technology and matured
housing segment to start expanding across the into a sector with strong fundamentals. The
mega-cities opening horizons for Occupiers, transformation of the markets with reforms like
Investors and end-users. liberalisation in the first phase and later with the
Real Estate (Regulation and Development) Act
With increasing integration of the Indian economy and Goods and Services Tax (GST) amongst others
with the global one, there was a steadily growing evolved the way of doing business, increasing
demand for commercial real estate. The country’s transparency and investor confidence.
famed ‘middle-class’ arrived with its growing
aspirations, which led to the demand for new It is a testimony to the stability and resilience
leisure infrastructure and entertainment options. within the market, the maturity of consumers,
Thus, malls and multiplexes started emerging development firms, the investors and the lenders
along with infrastructure upgrade across the in the system. The complete implementation of
country, the Real Estate (Regulation and Development)
Act in May 2017, establishes this fact. Along with
Reforms like opening up of Foreign Direct Goods and Services Tax (GST), the market is now
Investments (FDI) across sectors (including the increasingly transparent and consolidated.
real estate sector much later in 2005) resulted
in the country emerging as one of the favoured It is worth mentioning that with this journey, JLL
destinations for FDI, making the economy has also completed 20 years of its operations
stronger. Investments in the real estate sector in India. As leaders within the realty consulting
have journeyed northwards buoyed by both segment, we believe that presenting a report
foreign inflows and domestic confidence. Private offering a glimpse of the sector’s dynamic history
equity investments have also increased and will be indeed a valuable study. JLL’s own journey
Real Estate Investment Trusts (REITs) present a in the country itself reflects the professionalism and
further opportunity for investors to make gains as transparency of the market.
urbanisation expands.
The movement forward is now with a defined policy
India’s economy has been progressing, framework, which addresses the key issue of trust
encouraging strong consumer spending and deficit, accumulated over the past several years.
borrowing. This also means that investors’ The year 2018 will show us the first visible impacts
confidence has been rising exponentially over the of the recent reforms. With consumer and investor
past two decades. Not to mention remaining firm, confidence touching new heights, the coming years
despite the external and domestic mega events only portend to greater advancement.
such as the Dotcom Burst, the Asian financial
crisis and the global financial crisis. While India Regards,
was not immune to the global downturn, the Ramesh Nair
lack of a substantial financial crisis enabled it to CEO & Country Head
recover faster. These lessons helped in shaping JLL India
the real estate market of today, which is looking ramesh.nair@ap.jll.com
attractive for investments.
India’s Real Estate Milestones – A 20 Year Narrative 5
2003
Residential
Markets Start the
Six-Year Bull Run
PAGE 33
2006
1998 Infrastructure
Push Across
India Reports its 2004 Cities and
First Property Cycle
Post Economic 2000 2002 Home Loans Modernisation
Chennai’s Grand Multiplexes Grow Touch Historical of Delhi and
Liberalisation on the Lines of Lows Mumbai
Entry into the IT
PAGE 13 Entertainment Airports
Race-Tidel Park PAGE 37
PAGE 21
Centres 2005 PAGE45
PAGE 29 Real Estate
1997 Sector Opens Up
Bengaluru’s First
1999 2001 for Foreign Direct
Investment (FDI)
IT Park becomes Dotcom Crash
Rise of the
the Blueprint for Impacts India’s PAGE 41
Mall Era
Success Office Space
PAGE 17
PAGE 9 Demand
PAGE 25

2017
2013 Property Market
Policy Paralysis, Regularised, Real
Scams Weaken Estate Regulatory
Global Capital Authority (RERA)
2008 Flows
2014 Enacted
Speculative 2010 PAGE 73
Securities and
PAGE 89
Property Markets Residential Exchange Board
Trigger Global Markets of India (SEBI)
Financial Crisis
(GFC)
Rebound Post
Global Financial
2012 Notifies REIT 2016
First Disruption in Guidelines in Demonetisation
PAGE 53 Crisis (GFC) India
Property Broking and its Impact
PAGE 61 with E-broking PAGE 77 on Real Estate
Portals
2009 2011 PAGE 69 2015 PAGE 85
Aftermath of Office Real

Further
2007 Global Financial
Crisis (GFC) -
Estate Sector
Revives
Relaxation of
DLF Lists Itself Foreign Direct
on the Stock Property Markets Post Global
Investment
Exchange Hit the Bottom Financial
(FDI) Norms
PAGE 57 Crisis (GFC)
PAGE 49
PAGE 81
PAGE 65
2018 and Beyond

PAGE 92

1997
Bengaluru’s First IT Park Becomes the
Blueprint for Success Author Trivita Roy

Bengaluru Develops as Silicon Valley
of India
In the last two decades, Bengaluru established

itself as the Silicon Valley of India with
international IT giants and education institutes
are setting up shop here. Additionally, it became
the Mecca for start-ups in India with its pool of
talent and entrepreneurs along with cutting-edge
technology.
ITPL – A Game Changer
The opening of ITPL in 1997, the country’s first

The year 1997 saw the emergence of Age of IT Dawns with Liberalisation
IT Park developed by Ascendas Singbridge,
the concept, ‘Work-Live-Play’ with the was a harbinger of change. Now known as the
“No power on Earth can stop an idea whose
establishment of India’s first IT Park, time has come,” said Dr Manmohan Singh, ex- International Tech Park Bangalore (ITPB), it is
the International Technology Park Prime Minister of India quoting Victor Hugo while spread over 69 acres. The IT Park was designed
presenting the Union Budget on 24 July 1991, with the concept of ‘Work-Live-Play’ and ushered
Limited (ITPL) in Bengaluru. It set off
and freeing the country to economic reforms. in a new concept, a new vision, and an exciting
a chain of changes in the skyline of new work culture. The unique concept offered
commercial office spaces across the And truly the time had come for India as it recreation (like food courts, hotel, open-air
opened up to a global economy. The services theatre and cricket fields) and living facilities (like
country. The superior quality glass
sector with IT as its torchbearer took the lead ATMs, banks, etc.) along with office space leading
façade exteriors, hi-tech work stations in the growth of the economy. IT and business to a self-contained community environment.
with integrated retail malls became the became inextricably woven and changed the
way of doing business. This concept soon spread across the country as
blueprint for successful office spaces.
focus on work-life balance came into being. It is
for this very reason that offices in India now have
ITPB turned out to be a game amenities such as crèches, fine-dining restaurants
and entertainment options. So what started as a
changer for office spaces and
concept in IT ended as a game changer.
culture in India.
Changing Fortunes of Real Estate
The emergence of the IT sector changed the

history of commercial real estate in India in the
late 1990s. After the establishment of ITPB,
Whitefield gradually transformed from a quiet
residential settlement into a vibrant IT hub
and micro-market. From hitherto standalone

buildings in Whitefield, Bengaluru, emerged Impact of ITPB on Bengaluru
a new landscape—that of big, sprawling, as a
mixed-use spaces in IT parks.
Grade A office stock in Bengaluru increased Enables Enables

Sets trend for Whitefield Bengaluru to
over the last two decades from a mn sq. ft. in state-of-art to emerge develop as India’s
1997 (when ITPB started operations) to 109 mn spaces as IT Hub Silicon Valley
sq. ft. (excluding the IT campuses). Whitefield,
itself has more than 25 mn sq. ft. of office space
(excluding the IT campuses) and all major
developers have IT parks here.
Social and civic infrastructure developed in The growth of technology services firms and
tandem in Whitefield, leading to residential global connectivity helped drive growth of
and retail projects. Some of Bengaluru’s key International Integrated IT
real estate significantly in the city, leading to
malls – Phoenix Market City, VR Mall and Bengaluru topping the JLL City Momentum Park: ITPL, created as a result of
Inorbit Mall – are located in this micro-market. Index (CMI) for the first time in 2017. a joint venture between India and
Growth of Whitefield was also spurred by easy
connectivity with other parts of the city and
Singapore, has some interesting
the airport with constant improvement of good buildings named Discoverer,
quality roads and metro rail. Innovator, Creator, Aviator,
Pioneer amongst others. The
1
JLL CMI 2018 identifies cities that have the strongest short-term socio-economic and commercial real names were representative of the
estate momentum, and those that have the future-proofing capacity for longer-term success.
kind of innovation and creation
that architects and developers
of these spaces believed would
take place in their park. With
its innovative creation, ITPB
set a benchmark in not only
architectural design for IT Parks
in India but a revolution in office
space.

1998
India Reports its First Property Cycle
Post Economic Liberalisation Author Sumedh Gadgil

The year 1998 was a historic one for real
estate markets in India as it saw the
completion of a four-year property cycle
– the country’s first, post the economic
liberalisation. It resulted in price stability
for a few years.
Boom with Liberalisation estate sector for the first time and it resulted a others led to a decline in property prices. Thus,
surge in investments. This surge in the property post-1995, the best phase in realty markets began.
The liberalisation of the Indian economy cycle was concurrent with the broader financial
from 1991 onwards led to the first property cycle, which saw exponential growth in equity Interestingly, the peak as well as the trough in
cycle in India. Cycles are important because markets from 1991 onwards, establishing a close the property cycle mimicked movements in the
of their impact on real estate returns, risks, linkage between the two cycles. equity markets, albeit with a time lag. Those who
and investments. In the summer of 1991, as a witnessed this cycle ploughed the gains from equity
beleaguered India battled against a looming The period 1992 – 1995 witnessed a massive markets into property markets.
fiscal deficit, the economic reforms ushered in rise in property prices backed by a favourable
modernisation as markets opened to foreign investor and policy climate.
investments in hitherto restricted sectors.
Slow Down
Liberalisation led to the creation of new job
opportunities and gave consumers access to While the stock markets peaked in 1994, the
many products and services for the first time. property markets did so in 1995, by which time
It also saw the entry of many multi-national their inherent inefficiencies surfaced. The sector
corporations, who brought a new type of demand was highly unorganised and issues such as
for contemporary world class office spaces. Non- opacity and lack of relevant market information,
Resident Indians (NRIs) and Persons of Indian scarcity of labour with requisite skills and limited
Origins (PIOs) were allowed to invest in the real sources of financing for home buyers amongst

The role that policy reforms play
on real estate markets was first
observed during 1994 – 1998
when when post liberalisation
property markets rose sky high.
Yet, the truth that a policy push
can only take a sector thus
far and no further was also
established, as the markets
crashed in a few years due to
inherent deficiencies.
The Bubble Bursts followed by a period of stability for a few years,

after which the second realty cycle began in 2004
In 1997, the Asian Financial Crisis (AFC) saw and ended in 2009. In the second cycle too, policy
a crash in the stock markets of many of the reforms acted as the key push factor.
East Asian economies along with a drastic
devaluation of their currencies after posting Effect of Policy Reforms in 1991 on Property Prices and Sensex
some of the most impressive growth rates in
the world at that time.
This affected India, too, as the overall investor

sentiment weakened leading to a steep
decline in foreign investments, which had been
inflating the real estate bubble. The tremors
from the Asian Financial Crisis along with
inherent deficiencies of the real estate market
such as lack of transparency and regulations
led to a crash in the realty market. The phase
of price correction continued till 1998-99.
By the end of 1999, the macroeconomic

situation stabilised relatively, which led to
the property prices bottoming out. This was
Sources: JLL REIS, BSE & Secondary Sources, *AFC- Asian Financial Crisis

1999
Rise of the Mall Era Author Raghunathan Vasanth

The year 1999 witnessed organised
retail shaping up in India, supported by
exponential growth in the services sector
of the economy. Pioneering the mall
brigade was Spencer Plaza in Chennai,
which was reborn in the early nineties
after the original store was gutted in a fire
in 1983.
Rise of Malls Tracing the Journey
Economic liberalisation gave a tremendous boost Spencer Plaza, built during 1863 – 1864, at music to branded apparels, footwear and
to trade and commerce, encouraging foreign Mount Road (now Anna Salai), Chennai was jewellery. All these products were displayed in
investments in India. The growth of the highly the country’s first and only mall for well over an inviting centralised air-conditioned space
remunerative services sector and the emergence a hundred years. The century-old Spencer’s with interconnected walkways, escalators and
of the famed ‘middle-classes’ occurred with department was destroyed in a fire accident in lifts augmenting mobility.
their increasing disposable income and lifestyle 1983 and at its site the first modern mall in India
The pioneering malls witnessed massive
changes. This fuelled the growth of organised came up in 1991. Crossroads, now Sobo Central
success during their initial years and other
retail in the late 1990s and encouraged private Mall in Mumbai, Ansal Plaza in South Delhi and
malls steadily developed within a span of two
players to develop modern malls that echoed the second phase of Spencer Plaza in Chennai
decades. In 2017, the total mall space stood
western architecture and culture. began their operations in 1999 heralding the mall
at 86 mn sq. ft. However, with approximately
culture in India.
10 mn sq. ft. of mall space now shut down,
They offered shoppers an array of products under the mall stock in the country stands at
a single roof. The goods ranged from electronics, approximately 76 mn sq. ft.

Malls Usher in Leisure Cumulative Mall Stock in India
Most of the early malls enhanced shopping

experience and became hang-out destinations 76
for the younger generation. In crowded cities
lacking social spaces, they evolved as meeting
points for families and friends to spend quality
leisure time.
However, the older malls were conceptualised
mn sq ft
in an era that did not face any competition
from online retailers, had no multiplexes, and
lacked elements of experiential retail.
‘Experiential retailing’ is where experiences

are created for the consumer in order to
amplify emotional connections as a means
of differentiation from the traditional sales
focus on merely product and services. Thus,
the older malls were forced to re-invent
themselves. Those with the scope to provide
Years Source: JLL Research
experiences and unique product offerings
continue to sustain, while those unable to
evolve, struggle to survive.
Rise of the Mall Era:

Malls have transformed as
destinations beyond retail.
From an organised structure
of multiple retail outlets under
one roof they have become
high-end retail destinations that
also serve as entertainment
and leisure hotspots for their
respective cities.

2000
Chennai’s Grand Entry into the
IT Race-Tidel Park Author Raghunathan Vasanth

With Information Technology (IT) taking
prominence over other sectors, the year
2000 saw the emergence of IT companies
across various cities. Chennai made its
mark with its state-of-art development,
Tidel Park that changed the image of
the city from an industrial hub to an IT
destination.
Chennai Enters IT Age was inaugurated in July 2000 and on the Tidel Park Unleashes New Energy
inauguration day itself, 60% of the building was
Buoyed by the winds of liberalisation, the IT pre-committed to 28 companies including TCS, Tidel Park made headlines across the country and
sector received a fillip with the government’s Satyam, and Cognizant Technology. inspired many aspiring youngsters to pick a career
liberal policies. Tamil Nadu government, too, in the IT sector and become part of the workforce
looked towards leveraging its potential to herald This building hosted facilities such as a 16,000 in this swanky futuristic office premise.
prosperity in the state through the IT Policy in sq.ft. multi-cuisine food court, swimming pool,
1997. It envisioned the IT sector as an engine of aerobic centre, gymnasium and ATMs. For the Despite being a late entrant in the IT domain, the
growth and the perfect platform for employing first time in the country, advanced technology city’s abundant tech savvy workforce and their
its fast growing highly skilled labour force. involving thermal energy storage system for entrepreneurial spirit helped Tidel Park grow into
air-conditioning was used in a building. The IT the second-largest exporter of IT services today.
Tidel Park Changes the Tide Park set not only new standards for office space Moreover, it withstood the test of time, surviving
development in the country but also ushered in the dotcom bubble and the Global Financial Crisis.
The result was the INR 340 crore, state-of- a new age of services driven economy. It also Today, it is completely occupied and is still one of
art Tidel Park, a joint venture of Tamil Nadu changed the image of the city from an industrial the most sought after addresses for start-ups.
Industrial Development Corporation (TIDCO) one to a modern knowledge-based one.
and Electronics Corporation of Tamil Nadu
(ELCOT). Offering 1.3 mn sq. ft. of space, it

Waves of Development Spread
The success of Tidel Park induced the state

government to move ahead with its plan to
develop the Old Mahabalipuram Road (OMR) as
an IT Corridor on a fast track mode. While IT office
infrastructure developed at a fast pace along
OMR, the neighbourhoods also witnessed growth
of abundant residential supply, reinforcing the
magnetic pull of OMR. Thus, Tidel Park—looked
upon as a modern day monument and the pride of
Chennai—acted as a key catalyst for the IT Sector to
flourish in the city.
Development of the IT Corridor encouraged Indian

software majors based out of other cities to expand
their operations to Chennai. Growth in the IT sector
in turn increased the city’s propensity to spend on
retail and real estate, eventually increasing the real
estate value of the city.
Cumulative Office Stock in Chennai
57.5
Landmark Buildings Pay
Tribute to their Times:
Every structure has its own
story and Tidel Park was one of
mn sq ft
the first such glitzy, glass façade

buildings which marked the
arrival of a new age.
2.8
Years Source: JLL Research, Note: Only speculative stock

2001
Dotcom Crash Impacts India’s Office
Space Demand Authors Sushma Vemuri & Kartheek Babu

In the early 1990s, the Internet industry
exploded and the ‘dotcom era’ marked
by success with anything to do with the
World Wide Web commenced. India,
too, underwent a boom. However, the
joy was short-lived for when the bubble
burst, though cushioned it was in India,
it left its mark. The Commercial market,
especially Mumbai saw a negative net
absorption of approximately 2 mn sq. ft.
in 2001.
The Build-up severe losses and sold off stock putting the
market into a precipitous fall and thousands lost
During the late 20th century, the Internet became their jobs.
the holy grail of dreams and opportunities as
companies mushroomed with expanding access Impact of Dotcom Crash on India
and the increasingly important role that it played
in people’s lives. With the excitement, stocks While the lack of excessive government
grew, venture capital flowed into the ‘dotcom’ interference expedited the growth of free trade
companies, and investors took large equity and globalisation across the developed world,
positions in firms that were already overvalued. Indian companies were cushioned due to
expansionary fiscal and monetary policies and
The Burst conducive macroeconomic conditions. Also, the
Indian IT companies were not wholly based on
However, many of these firms lacked a viable the US market model and many of them had
business model and strong fundamentals. They sound business principles and a viable business
went public mostly for the profit of investment model. Hence, the Indian economy faced lesser
banks and the ‘get big fast’ philosophy. And, trouble from the dotcom bubble burst and was
soon the bubble burst with many firms going able to recover more easily.
belly-up the world over; investors suffered

Impact on Commercial Markets Rental Growth during Dotcom Crash INR/ sq ft/ month
The build-up period saw a surge in artificial demand fuelled by the

insatiable appetite for growth of these companies. The burst saw much
of the office space, which included data centres, left vacant leading to an
increase in inventory over a short time span. A case in point is Mumbai,
Percentage (%)
which saw a negative net absorption of approximately 2 mn sq. ft. in
2001. The increased inventory facilitated new tenants to enjoy Grade A
space at reduced prices.
Impact on Residential Markets
Residential markets, on the other hand, were largely untouched on an

average by the dotcom crash as the economy continued to perform well.
As per the National Housing Bank (NHB), Bengaluru showed a marginal
downward movement in prices while Delhi showed an increase; Mumbai
remained more or less stable. Years
Source: National Housing Bank
Despite job cuts and instability in the IT sector, home loans grew by
15-20% y-o-y as per Central Bank data as people in other sectors took
advantage of the slowdown and invested in residential markets. Growth in Residential Capital Values (%)
Percentage (%)
The Bubble Burst but Laid the Seed

for Future Innovations: Technologies like
unmetered Internet access, web TV, cloud
computing, and mobile web were born during
the boom, but came of age in recent years only
as they were too futuristic.
Years
However, the burst facilitiated an increase in Source: National Housing Bank
Grade A office inventory in India.

2002
Multiplexes Grow on the Lines of
Entertainment Centres Author Ajay Barve

Family Entertainment Centres (FECs), Rise of Multiplexes more attractive to international investment as
a fallout of liberalisation. And, multiplexes were
sometimes called family fun centres,
An increase in disposable income and viewed as transforming the spatial environment
have been around for decades. The first consumption patterns resulting from the towards the needs of international capital.
FEC gained popularity in the early 1970s liberalisation of India’s economy, even as the Hence, multiplexes that began operations in
as arcades and miniature golf facilities middle-class and their aspirations grew, led the year 2001-02 got 100% tax exemption on
to the demand for new leisure infrastructure entertainment duty and 75% tax exemption in the
spread expeditiously across the nation. and entertainment options. Thus, multiplexes subsequent three-year period.
On similar lines, multiplexes saw healthy started emerging with the dawn of the new
growth in 2002, with rising disposable millennium especially as single-screen cinemas
began to lose their lustre.
incomes and friendly state government
policies. Moreover, many state government policies No. of Multiplexes as of 2002 in India
offered entertainment tax holidays and benefits Cities Brands No. of Multiplexes
to multiplexes that encouraged conversion of Pune Inox, City Pride 2
single-screen theatres to multiplexes. The state Vadodara Inox 1
governments vied to make their jurisdictions Delhi PVR, Satyam 2
Source: Media sources

Lure of the Multiplexes
Single-screen cinema lost out due to limited In Search of Quality Time:

movie options along with limited space that
Multiplexes and Family
permitted screening of only one movie at
a time. For cinema owners, revenues were Entertainment Centres are
greater as multiplexes were built on the same playing an increasingly vital
land where single-screen cinemas used to run.
role in fuelling the retail real
And for the public, multiplexes represented
the new lifestyle, an extension of the mall estate sector in India. All of
culture. They had better amenities like this is a result of the nuclear
comfortable seating, multiple cinema options family’s pursuit of quality time.
at different intervals catering to flexible timing
of the new generation and were embedded
with retail options.
Today, multiplexes provide new experiences

to people in terms of 2D, 3D, 4D movies,
sitting chairs, and dining provided by the
food counters/outlets situated within the been integrating screens at the rate of 8-9%
lobby area. In this sector, PVR is the market annually. Trends denote that the industry
leader in India. Besides, there are other major is likely to grow at a similar pace of 150-200
players like Adlabs, Waves, Inox Leisures, screens a year.
Cinemax, Fame etc. Multi-screen theatres have
also expanded other facilities for customers Multiplexes are embedded in FECs, which
giving rise to a plethora of services like online play a vital role in fortifying the real estate
ticket booking, home delivery of tickets, SMS sector in India. In an age where life is fast and
booking, toll- free calling services etc. As time zones melt, they offer friends and family
globalisation spread so did the multiplexes, entertainment options of spending quality
rejuvenating markets with upscale projects. time together.
Spread of Multiplexes
According to EY-FICCI March 2018 Report,

there were around 6,780 single screens and
2,750 multiplexes in India at the end of 2017.
While 3-4% of single screens have been
closing down every year, multiplexes have
2
EY-FICCI, Reimagining India’s media entertainment sector. March 2018

2003
Residential Markets Start the Six-Year
Bull Run Author Srija Banerjee

The country’s residential sector
underwent rapid growth and
transformation from 2003 to 2008.
The number of residential launches,
units sold, rise in capital values and
growth in housing finance points to a
high growth phase of the residential
sector. This was largely due to a
positive macroeconomic situation,
India’s demographic dividend, and the
government’s push to housing finance.
Dream Run of Indian Economy The boom was aided by the easy availability of Housing Bank (NHB), which regulates the Housing
housing finance. Finance Companies (HFCs), made financing easier
From 2003, the Indian economy enjoyed a boom
with the result:
for five years. It grew at a rate close to 9% per This came at a time when the demand for
year till the financial crisis of 2008. It tapped into housing increased by the middle class as well • Housing finance recorded a high growth rate of
an exceptional rise in world trade leading to a as prior efforts made by the government and 76.15% in 2002-03 as compared to the previous
services-led economy. Phenomenal growth in the Reserve Bank of India (RBI) in the 1990s to year. Though the rate dipped in 2003-04, it rose
sectors like retail, Information Technology (IT), encourage housing ripened. again to 41.47% in 2004-05 (Source: RBI & NHB).
IT enabled Services (ITeS) and business process Key Determinants of Growth • Outstanding housing loans by HFCs registered
outsourcing (BPO) led to growth in retail and with NHB across the country increased from
commercial markets. The reasons for this growth may be summarised
INR 33,250 cr (in March 2001) to INR 86,155 cr (in
as below:
Boom for Real Estate March 2006).
Lending Institutions and Housing Finance –
Inflowing foreign direct investment (FDI) and • Refinance by NHB itself to HFCs increased
external markets reinforced one another to Banks with surplus liquidity and low credit off- substantially from INR 1,008 cr in 2000-01 to
grab new market opportunities created by the take fuelled the boom keeping low interest rates INR 5,632 cr in 2005-06.
technological revolution and deregulation of the and inflation with high property prices.
• Due to the multiplier effect of investment in
economy. The real estate industry expanded to Flexible policies of the lending institutions and housing, the proportion of housing loans as a
meet the needs of the economy and had a bull contributions of the two regulatory bodies i.e. the percentage of GDP increased from 4.55% in 2006
run, in urban areas mainly, from 2003 onwards. RBI, which regulates the banks, and the National to 4.70% in 2008.

Demand – The demand for housing was augmented by the emergence of
a young workforce in the age bracket of 25-35 years and decrease in the
average size of households due to growth of nuclear families.
Government – The government cautiously strengthened measures under
various schemes to address the housing shortage, eased regulations,
released land for housing purposes and provisioned more supply of
affordable housing for the masses, especially the weaker sections of the
society.
Regional Players Emerge
Regional players played a dominant role in different parts of the country.
In the initial years (2003 – 2005), Delhi-NCR, Mumbai, and Chennai formed
the kernel of residential development. Some of the popular names in Delhi
were DLF, Parsvnath, Omaxe, Ansal API, Vipul Group, Unitech, and Mahagun.
Mumbai had its own set of developers with Hiranandani, Raheja Group, and
Kukreja Constructions, while Chennai had Firm Foundations, GR Natarajan
& Co. and Vijay Shanti Builders.
The year 2006 marked the spread of this residential boom to other cities
with their own developers, for example Bengaluru (Sobha Developers
and Puravankara Projects), Hyderabad (Aditya Constructions and Aparna
Constructions), Pune (Marvel Realtors and Clover Homes), and Kolkata
(Bengal Peerless and Shrachi Group).
Trend in Residential Capital Values, 2002 – 2008 A Bubble in the Making: The
exponential growth of the market led to
fears of a housing bubble in the making.
INR per sq. ft.
Concerted efforts were made in 2006

after some fears were expressed that the
developing housing bubble could burst.
Inspite of this, the bubble burst with the
global financial crisis as the fortunes
Years of the real estate sector are intimately
linked with the economy.
Source: REIS, JLL
Note:Due to opacity and highly fragmented nature of real estate market during those years (2002-2006),
this data is gathered and analysed on best effort basis

2004
Home Loans Touch Historical Lows Author Niharika Bisaria

While the Bull Run in residential markets
commenced in 2003, the year 2004 gave
it a further fillip with home loan rates
touching a low of 7.25%. Those who
locked into a fixed rate loans in that year,
benefited the most.
Macroeconomic Backdrop
India’s real GDP grew at an impressive 8.2%

during 2003-04. The overall strengthening
of the balance of payments was reflected in
an unprecedented growth in India’s foreign
exchange reserves, which reached USD113
billion by March 2004 from a humble USD 5.8 loans, to keep pace with fluctuating economic environment, enabled
billion in March 1991. The monetary policy in people to see both highs and lows during the long tenure of the loan
2003-04 encouraged adequate liquidity to meet and not end up paying higher amount throughout the entire tenure.
credit growth for investment demand. Banks The popular debate during that period was whether to take a fixed or a
took advantage of easy liquidity conditions to floating rate loan, with the latter being marginally lower.
cut deposit rates and lending rates. This was
also the year when banks switched over from
HDFC Floating Rate
Tenor-linked Prime Lending Rates (TPLRs) to
Benchmark PLRs (BPLRs) in order to improve The year 2004 was a
transparency and ensure appropriate pricing of year of joy for home
loans by removing multiplicity and complexity loan borrowers, as
in the former. As of March 2004, BPLRs were loan rates dipped to a
lower by 25-200 basis points compared to the historical low of 7.25%!
PLRs that prevailed a year ago. 7.25 Comfortable liquidity
conditions on account
Fluctuating Rates
of large capital inflows
Rates moved up post 2004 with monetary enabled a general
tightening and those who bought their homes reduction in market
that year, especially at fixed rates, were lucky interest rates. A benign
as loan rates never touched 7.25% levels again. inflation environment
In fact, they moved up till 9% in 2006. Floating also softened the
interest rates.
Note: These rates are for loans above INR 10 lakh and above, for over 10-year loan tenure
Source:HDFC

RESIDEX Index for 5 Indian Cities Drivers of Home Loans
Bankers summarised four defining factors or
‘Four Stars’ driving home loans.
Post 2004, capital
Low Property Prices that fell to 4.3
values also went
Capital Values
times the annual income from 5.9 times

upwards.
in 2000, and improving affordability.
Increased Job security and stability

as new jobs in the IT/BPO sector were
created.
Low Interest Ratesfor housing loans,

Years which saw a nadir of 7.25-7.50 %
Source: National Housing Bank (fixed).
Tax Benefits on both interest

payments and principal repayment.
Exuberant Markets companies encouraged exhibitions, promoting

specific locations and developers to showcase
Growth of the IT sector played a key role as their offerings. Interesting Fact: Those who
several new IT hubs came up in Bengaluru, Pune, availed of a home loan of
Hyderabad, Chennai, and NCR. Google, Microsoft The real estate market flourished as integrated
residential townships came up bestowed with
INR 16 lac in 2004-05, at
and other major IT companies were setting up
large office complexes. With increase in stable international class amenities to cater to the a median rate of 7.75%
jobs, there was greater confidence in the market, demand of the new age; Nahar’s Amrit Shakti per annum, would today
which along with easy lending translated into in Chandavali, Mumbai was one of the first such
be serving an EMI of
housing as a strong investment. township projects. Other landmark projects
include Ashok Towers, Lodha Bellissimo, and approximately INR 15,000 pm.
The financial sector, too, was performing well. Godrej at Saat Rasta.
Equity markets were robust and investors were
happy to put in some amount of wealth into In Mumbai, the opening up of mill lands gave
housing. rise to residential complexes in city centres.
Freeing of import restrictions led to the usage
For the bankers, selling a loan became easier of better building materials resulting in superior
as the dream of a house became ‘realistic’. Loan construction.

2005
Real Estate Sector Opens Up for
Foreign Direct Investment (FDI) Author Sumedh Gadgil

As India’s economy Strong Demand time, though post liberalisation it was, the Indian
market allowed only Non-resident Indians (NRIs)
continued its march towards
The Indian economy was growing at a healthy and Persons of Indian Origin (PIOs) to invest
liberalisation, real estate pace maintaining GDP growth close to 9% during in the real estate sector. There were several
received a massive impetus 2005 – 2008. Its strong performance translated restrictions on other foreign investors. Thus,
with the government’s historic into a high growth in services as well as there was a well-acknowledged need for foreign
manufacturing sectors resulting in high demand investments into this sector because of the sheer
move to allow FDI into real for commercial and industrial real estate. There demand.
estate in 2005. was a healthy growth in new jobs, opportunities,
and urbanisation with the arrival of a new middle Curious Case of Global Investors
class and its aspirations for quality living that
globalisation had opened the doors to. Global investors were beginning to closely track
India as a growing economy with immense
However, investments were needed to match potential. There was a positive sentiment to
the increasing demand for quality real estate enter this booming market as higher returns
and infrastructure in the country. And, at that were expected in comparison to more mature
economies.
Foreign Direct Investment (FDI) Allowed in FDI Inflows to Real Estate and Infrastructure
Real Estate
The Government of India in March 2005 amended existing

norms to allow 100% FDI in the construction business with
an objective to boost the real estate and infrastructure
sectors. This was, however, subject to specific restrictions
like entity level as well as project level restrictions
intended to curb speculative trading in real estate.
This cleared the path for foreign investment to meet

the demand into development of the commercial
and residential real estate sectors. Investments were
allowed under the automatic route (not requiring prior
approvals from government or RBI) in townships, housing,
built-up infrastructure and construction-development
projects (including hotels, resorts, hospitals, educational
institutions, recreational facilities and so on). Massive
investments followed in the real estate and infrastructure
sector with inflows in the former growing by over 150%
Source: Department of Industrial Policy and Promotion (DIPP)
y-o-y on an average till FY 2009-10.
Booming Demand for Need to finance

Positive
sentiment FDI in
Fast Forward – How FDI
quality real growth
Economy
estate in real estate
in global real Estate changed: The composition
investors
of inflows into real estate
witnessed a change post GFC
with equity having dipped and
Related Developments Institutional investments were seen in many
investors shifting to the safer
commercial projects and funding was not a
Relaxation of various government permissions challenge for developers in the residential option of structured equity.
like those from the Foreign Investment Promotion segment, owing to healthy cash flows from pre-
Board (FIPB), mandatory under the approval construction bookings. Expansion in the tier I and
route, further attracted investors. Several large tier II cities spurred the boom across the country
financial firms and private equity funds launched in commercial as well as residential segments,
exclusive funds targeting the Indian real estate the latter was fuelled by low interest rates for
sector. home loans.

2006
Infrastructure Push Across Cities and Modernisation
of Delhi and Mumbai Airports Author Trivita Roy

In 2006, the modernisation of Delhi and
Mumbai airports led to many new trends
in the development of infrastructure
and real estate. Airport driven real estate
activity was witnessed with participation
from private players and airports soon
became brand ambassadors for the city.
Demand for Modernisation consistent demand for quality aviation services

and improved passenger and cargo handling • Development of airports created a brand
Opening up of the country to liberalisation capacities was felt. identity for the city
impacted development of major sectors in • Participation of private sector developers
India and there was an increase in inbound The airports in Delhi and Mumbai in particular to modernise and manage airports led to a
and outbound travel. The overall economy also handled twice as many aircraft movements as successful PPP model
began to restructure and gained much growth they were originally designed for resulting in
• Formation of consortium of Indian and
after FDI. congestion for both aircrafts and passengers
international developers to build airports
while they generated one-third of all revenues
became the standard
The aviation industry in India was liberalised in earned by the Airport Authority of India (AAI).
a phased manner that saw a decrease in state Hence, their modernisation, initiated in 2006, was • Allocation of land for landside developments
owned monopoly and increase in private players. imperative.
Deregulation and opening of the sector to foreign
However, at that time 100% FDI was allowed
PPP – A Runaway Success
airlines led to further growth.
through the automatic route forgreenfield
Both, Indira Gandhi International Airport (IGIA) in
While the sector was soaring to success on the airports in the country. FDI in existing airports had
Delhi and Chhatrapati Shivaji International Airport
wings of low-cost airlines and foreign airlines, a a sectoral cap of 49%. Hence, private participation
(CSIA) in Mumbai, were transformed into world–
need for better air connectivity and frequency of was invited for modernisation of the Delhi and
class facilities that sported architectural features
flights was felt. There was also drastic increase Mumbai airports.
reflecting the culture of the city and country.
in domestic air travel as lifestyles changed and a
The terminals attracted large international

and national retail brands. The two airports Strong growth dynamics within the aviation Andheri-Kurla Corridor and the Bandra Kurla
command one of the highest rentals for retail industry, a result of increased air travel Complex due to good connectivity with the
space in the country. (both leisure and business), attracted many airport has been the result of this upgrade.
international investors towards greenfield as well
The upgrade of these airports was possible as brownfield development. Airport development led to boom in real
through the consortium model. IGIA is estate in its vicinity.
managed by Delhi International Airport Limited Real Estate at Airport Takes off
(DIAL)—a public private consortium led by
the GMR Group, AAI, Fraport AG and Eraman The airport upgrade surged real estate
Malaysia—since May 2006. Similarly, CSIA is development in and around their vicinity, giving a Aerocities – The Brand
managed by Mumbai International Airport strong boost to the office and hospitality sectors. Ambassadors of Change: As
Limited (MIAL)—a consortium of GVK and DIAL, with 250 acres of land for commercial
development led to the creation of Aerocity, a
airports modernised, the newly
Airports Authority of India—since 2006.
mixed-use realty project with 11 hotels of luxury designed spaces became brand
The PPP model in development and and budget segment, high-street fashion, and ambassadors for a modern India,
management of airports was a runaway food courts. Aerocity has rentals higher than that
strengthening retail and commercial
success to be replicated; Kempegowda of Delhi’s SBD.
International Airport (KIA) in Bengaluru and markets.
Rajiv Gandhi International Airport (RGIA) in Similarly, Mumbai witnessed development of
Hyderabad followed. hotel rooms and increased occupancy after the
airport upgrade. Commercial activity along the

2007
DLF Lists itself on the Stock
Exchange Author Niharika Bisaria and Dr. Subash Bhola

Euphoria ruled the markets in The Economy’s Bull Run The DLF stock shot up 36% in debut trade on July
5, 2007, before settling about 8% higher on the
2007, which was stellar as far as
Initiated in 2003, the Indian economy was in BSE. With this listing, it displaced Unitech as the
equity markets were concerned. the midst of a multi-year bull run in 2007, led by biggest listed real estate developer at that time.
DLF, India’s largest real estate inflow of foreign funds and liquidity. Due to it A few months later, the listing made promoter
company by volumes, got listed being a little fish in the global pond, India rose KP Singh the second-wealthiest Indian after
much faster than a few larger economies, which billionaire, Mukesh Ambani. In terms of market
on the Bombay Stock Exchange also saw their own markets touch new heights. capitalisation, DLF had become the eighth most
taking the Realty Index to 13,000 valuable company on the listing day itself.
points by year-end. DLF Gets Listed
Impact of DLF’s Listing on Realty
DLF, India’s largest real estate company by
volumes, got listed in 2007 on the stock exchange DLF’s listing took the share of real estate market
with great fanfare. The over INR 9,187.50 crore IPO capitalisation of the Bombay Stock Exchange
came at a time when the benchmark indices were (BSE) up from 1.9% to 3.9%. This was almost
headed northwards for an all-time high on the double that of Brazil and one and a half times
Sensex. Real estate stocks were soaring like there that of China. This increased weightage attracted
was no tomorrow. the attention of global foreign investors who were
queuing up to get a share of the booming real
estate market. The Realty Index on BSE rose from
6,700 in August 2007 to 13,000 in December of
2007 with active trading after July 2007.

BSE Realty Index
The Poster Boy of Land

Banking: DLF was known to have
slowly acquired massive land
Index
banks, especially in North India,

which heralded the era of land
acquisition and construction. In
the developer fraternity, DLF’s
land banks soon became the
standards against which the
Months Source: Bombay Stock Exchange
land holding of others were
Impact on Private Equity (PE) benchmarked.
As the Sensex took flight, similar widespread optimism was witnessed in private
equity (PE) markets as well with a surge in volume and value. Investments rose
to USD 8.2 bn, which were way higher than the previous year’s USD 1.8 bn.
While domestic investments rose from less than USD 800 mn to USD 3.4 bn, FDI
rose from less than USD 1 bn to USD 4.8 bn.
The investors were riding on blue sky estimates and funding reached as many
as 27 cities. With India’s galloping GDP growth rate, investors had found a new
destination with untapped value ingrained in every kind of business supported
by economic reforms that attracted inflows of capital. The rising investments
raised equity valuations and the sensex peaked in the fourth quarter of 2007.
PE in Real Estate
Source: JLL Capital Markets Research

2008
Speculative Property Markets Trigger Global
Financial Crisis (GFC) Author Niharika Bisaria and Dr. Subash Bhola

After the euphoria of 2007, the The Global Financial Crisis Impact on India
asset bubble created in the
The GFC in the US, believed to have occurred While the real estate markets in the US were
past across some developed in mid-2007, was precipitated by the housing grappling with a subprime mortgage crisis, India
economies and speculation led bubble and a credit crunch as US investors lost had itself become a speculator’s delight even
to a sharp drop in rates by 2008. confidence in the value of sub-prime mortgages as end-user demand was contracting. With the
causing a liquidity crisis. The US Federal Bank property prices soaring to new heights, even
The Global Financial Crisis (GFC) tried to stop the problem by injecting a large investors found it difficult to find an exit.
was real. Post GFC, the Realty amount of funds into financial markets.
However, the bubble burst by the second-half
Index fell by as much as 83%
By September 2008, the crisis worsened as of the year precipitated by the Lehman Crash
from the peak in the first week of stock markets around the globe became highly when the fallout of financial markets that rocked
the year itself. volatile and crashed. The tipping point came developed economies caught up with India, too.
with the Lehman Brothers Crash or bankruptcy Various real estate investors and individuals,
of a leading 158-year-old US investment bank suffered heavy losses on their investments and
in September 2008, which triggered a financial the focus shifted from Internal Rate of Returns
tsunami around the world and a credit freeze. (IRRs) to safety of capital!

The Gains of Pain: The year
2008 brought with it a lot of pain
PE in Real
Estate
but it taught investors the lesson
of keeping expectations in check
for many years after that. For the
first time, India’s linkages with the
global real estate markets were
studied and the repercussions of
a global event on a liberalising
PE in Real Estate the PE investments took more than six years to economy understood.
surpass the 2008 levels.
PE investments in Indian companies turned
cautious reflecting the panic-driven sentiment While private equity managed to rebound after
with a 55% degrowth compared to the previous 2014, public equity never rose back to satisfactory
year. The second-half of the year saw lesser levels, despite a few large cap companies getting
investments than the first. Investors, who were listed post that. In 2008 itself, investors started
still active, started to focus on only the top three to become cautious and the Realty Index fell by
cities of Mumbai, NCR and Bengaluru and added as much as 83% from the peak attained in the
the other four metros later to their portfolio. The first week of the year itself. This changed the
impact of this crisis was so deep rooted that investment climate for PE investors in India who
became ‘cautiously optimistic’.
BSE
Index
Realty
Index
Years Source: Bombay Stock Exchange

2009
Aftermath of Global Financial Crisis – Property
Markets Hit the bottom Author Ketan Bhingarde and Sumedh Gadgil

The year 2009 was a watershed Aftermath of GFC had to contend with substantial capital erosion
during this period.
one in Indian real estate as it After the Lehman Crash and GFC in 2008, the
marked the first full year post the financial markets went into a tailspin and an Rise of Structured Investment
era of fiscal tightfistedness and flailing financial Products
Global Financial Crisis (GFC). The
institutions came about. Reverberations were
sector, which had been growing felt across all segments of real estate with the With the decline in appetite for equity
at a tremendous pace since 2007, maximum impact in the high-flying Commercial investments, which fell from a peak of over 82%
sector even a year later. Commercial space in 2007 to around 58% in 2008 and just over
went into a tailspin with abrupt 50% in 2009, structured investment instruments
demand, which was led by the offshoring
brakes. The impact on the overall industry, immediately saw a hold on space take- dominated in the Indian real estate space. With
economy was far reaching. up plans and expansion strategies. embedded options and swaps, they typically
limited losses by investing in risk-free bonds
There was a significant decline in investment while allowing unlimited growth of the principal
flows, with foreign-denominated institutional through exposure to equities. The residential
funds reducing to a trickle. The fall in INR asset class emerged as the new darling of fund
against the US Dollar in subsequent years also managers even as the Commercial sector started
compounded the issue for fund managers, who limping towards recovery.
Residential Retail Office

Price of premium residenial Retail net absorption Average net absorption
projects ↓ 8-12% y-o-y ↓ 37.0% y-o-y space ↓33.0% y-o-y
Activity in mass housing ↑ Annual mall supply Average gross rent

↓ 24.2% y-o-y ↓32.0% y-o-y
Annual launch ↑ 55% and
sales ↑ 6% y-o-y Average rates for retail Average capital values
centre ↓ 39.0% y-o-y ↓30.7% y-o-y
Sales ↑ NCR and Mumbai

Market-shaking and Shaping Events due to fastest recovery in the aftermath of
GFC
Office: Correction in office space and The Year Between Two
decline in rents • Attract developers and investors with
Investment Phases—2009
its self-liquidating nature and ability to
• Correction in major CBDs such as Mumbai
address the urgent need of housing in —marks the transition
and Delhi and key office corridors e.g. DLF
larger cities. period between the phase of
Cybercity, Gurgaon (40-50% correction
reaching pre-2007 levels). • Witness higher investment flow in this ‘opportunistic equity capital’
sector over the next five-six years’ which during 2006 – 2008 and ‘patient
• Correction of 17-22% in relatively affordable
led to a bull phase
office markets such as Bengaluru, Chennai investments through structured
and Pune. Investments: Domestic Funds Gain instruments’ from 2010 onwards
• Rent decline started slowing towards the More Prominence
second half of 2009 and reversed by 2010, • Foreign capital took a couple of years to
after which the growth was more tempered once again increase exposure to emerging
and rational. economies.
• Bengaluru, Chennai and Pune, which saw • Foreign fund managers used this period to
lowest rental decline, managed to surpass take stock and emerge cautiously, setting
their previous rent peaks by 2017. up INR denominated funding structures
to adequately mitigate risk while ensuring
Retailers re-strategising growth plans
healthy investment exposure to the asset
• Phase out of poorly designed strata and class that picked up the slack – mass
retail centres that reached the end of their residential housing.
lifecycle
• Learnings of 2009 with funds of 2005-06
• Emergence of prime retail centres with good vintage exiting with significant capital
design parameters and professional mall erosion paved the way for more complex
management financial structures protecting the
investment and further to patient capital
Residential: Slow down in overall demand
which is now geared towards quality both
momentum followed by growth of residential
at an asset and partner level.
asset class
• Emergence of mid-housing segment with
price correction in premium housing
• Attract commercial developers who enter the
residential space
• Emerge as the investment vehicle of choice

2010
Residential Markets Rebound Post Global
Financial Crisis (GFC) Author Srija Banerjee

While property prices dipped after the global Growth Trends – Supply Parameters
crisis in 2009, they were also amongst the first
to recover in 2010 showing a unique resilience.
A dive into the data shows that property prices
No. of units
in cities like Mumbai, Chennai, Kolkata and

Pune even surpassed 2007 levels.
GFC Impacts Residential Markets
GFC slowed the residential real estate market which

had been on a bull run from 2003 to 2008. It slowed
the overall demand momentum resulting in stability
or decrease in capital values of residential properties
Source: REIS, JLL
during 2008-09.

Trend in Capital Values, 2007 – 2010 House Price Index across Cities, 2007 – 2010
Capital Value in INR
Index
Years
Source: REIS, JLL Source: NHB & JLL REIS
Recovery of Markets Developers Go for Mid-Income Projects

%
RESIDEX,
The Indian economy emerged much faster from Initiatives by developers to attract buyers also RESIDEX, change in
2007
GFC than other economies driven as it was supported the revival within the residential Cities Q1 2010- RESIDEX
(base
by proactive fiscal and monetary stimuli and sector. Developers re-positioned and re-packaged 2011 2007-Q1
year)
backed by robust consumption, though growth their projects in order to maintain buyer interest 2010-2011
rates decelerated. India also continued to be in residential markets. Eldeco, which initially Delhi-NCR 100 95 -5
a preferred outsourcing destination as well as launched Olympia as a luxury project with high- Bengaluru 100 90 -10
investment destination given its huge labour base end apartments and penthouses (on the Noida Mumbai 100 180 80
and strong macroeconomic fundamentals. Expressway), re-branded the second phase as a Chennai 100 185 85
mid-income project and named it Utopia. Luxury, Hyderabad 100 85 -15
With the economy showing signs of recovery, high-end projects took a back seat, while mid- Kolkata 100 190 90
the residential real estate market, too, reflected segment projects continued to succeed due to the
Pune 100 140 40
a sharp growth in 2009-10 led by domestic ever growing middle-class population in India.
consumption. New launches and units sold Source: NHB RESIDEX
moved along an upward trajectory since 2009-10,

peaking in 2010. Residential capital values also The Year of Resilience:
started picking up again in 2010. It is interesting to note that not only did
Residential property markets
property prices pick up again, but in some
The rebound in residential real estate was faster showed a quick recovery on
cities—Mumbai, Chennai, Pune, and Kolkata—
since the buyer’s sentiment and interest were the back of positive buyer crossed the peaks of 2007. However, in Delhi-
quite positive in terms of investment due to the
sentiment and new offerings NCR, Bengaluru and Hyderabad the prices
prior massive growth and the need for housing.
remained at or below the 2007 level.
from developers to suit the need
of the hour.

2011
Office Real Estate Sector Revives
Post Global Financial Crisis (GFC) Author Alok Jha

Post GFC, the commercial Indian Economy Improves After peaking in 2008, office property rents fell
for two consecutive years after GFC and settled
markets rebounded in 2011.
Robust growth and steady fiscal consolidation at 22% below the peak in 2011. Decreased rents
The year was interesting marked the Indian economy in 2010-11. paved the way for leasing of a record 37 mn sq. ft.
because close to 37 mn. sq. ft. Manufacturing and Services sectors registered of office space, surpassing the previous peak of 33
space was absorbed across key impressive gains. Savings, investment and private mn sq. ft. in 2008. Net absorption of office space
consumption rose along with improvement also increased by 43.0% in 2010 and 71.0% in
cities surpassing 33 mn sq.ft. in balance of payment due to surge in capital 2011 as compared to 2009 numbers.
in 2008. flows and foreign exchange reserves, which were
accompanied by rupee appreciation. Major Indian cities witnessed strong pre-
leasing activity in under construction projects.
Demand and Supply Increase for Construction activity accelerated in 2010, leading
Office Markets to increased supply at 10.0% y-o-y higher
completions in 2011.
The office market rebounded in 2011 with
steady economic growth and renewed corporate Expansion plans of corporates saw consolidation
confidence, especially amongst e-commerce and of office space by relocation from multiple small
IT companies willing to consolidate or relocate. spaces in the CBDs to larger areas in secondary
This propelled leasing volumes and drove overall and suburban districts. However, by no means did
demand in the country especially in IT SEZs and this period match the boom period in 2007 when
IT buildings in peripheral districts. the pan-India vacancy rate stood at just 6.4%.
While tier I cities of Bengaluru, Mumbai, Delhi

and Gurgaon witnessed the bulk of gross rent
appreciation during 4Q10 to 4Q11, tier II cities
of Chennai, Hyderabad, Pune and Kolkata saw
appreciation in the range of 3-6.5%.
Million sq. ft.
Commercial
Space Absorption
Trend The impact of the global economic
slowdown steadily weakened with renewed
corporate confidence and expansion plans.
2005 2006 2007 2008 2009 2010 2011 2012 Office property rents fell, leasing increased
Months with net absorption of office space.
Source: JLL Research

Transaction Volumes Increase
Capital values recovered ahead of rents, as The Year of

investment activity strengthened during this
India remains Gap between
Managing
recovery phase. In the post GFC era, the gap
between expectations of buyers and sellers
attractive destination ‘buyers and sellers’ and Expectations:
for Foreign Capital ‘occupiers and landlords’
narrowed, and a number of investment Inflow expectation Despite the
transactions occurred. decreases post shock of GFC,
GFC
commercial markets
There was a marked increase in the sale of small
Increase in rebounded in 2011
units to professionals, High Net-worth Individuals
Transactions
(HNIs), and smaller businesses. In fact, HNI with buyers and
investors realised that extremely good deals were
sellers readjusting
available and that it would be prudent to re-enter Sale of units to
the market in a big way. professionals and HNIs invest
expectations to new
small businesses market realities. Let’s
With global investors preferring growing as a distinct sub-
asset class take a leaf out of the
economies following the global financial crisis,
foreign capital inflow into the Indian real estate 2011 book and learn
market increased significantly. how expectations
need to be managed
Office Rental Value Index to match market
reality.
Market Indicators Relative to Commercial

Space Absorption Trend
2011
Market % change
relative to
Indicators from 4Q09
2009
Stock 37.60%
Net
71.30%
Absorption
Vacancy 90bps
Rent 5.00%
Source: JLL Research
Source: JLL REIS

2012
First Disruption in Property Broking with
E-broking Portals Authors Sushma Vemuri and Kartheek Babu

As technology continued its sway, However, portals with their live heat maps, data Some Current Offerings of Portals
science lab, auto termination of unwanted/
the broking community witnessed its
duplicate/completed transactions etc. shifted Customer Assistance
biggest disruption with the birth of tech the game to a real time display of properties and
savvy e-broking portals in 2012. For its surrounding neighbourhood with a chatbot • EMI calculations
the first time, buyers were presented assisting detailed customer queries. The shift to • Property/ rental agreements
interactive portals indicated the readiness of the • 24x7 online interactive chats
with heat maps, real time micro-market
market for the next level of technology adoption.
updates, virtual home tours, assistance Customer Intelligence
with purchase agreements et. al. All this In the new, knowledge-driven world that
India was opening to such platform-based • Blogs by experts
changed the experience of purchasing a intermediaries were an instant hit with the
• Reports
home for ever. consumers. Some of the prominent property
• Forum Interactions
portals of Indian real estate include Housing.
com, MagicBricks.com, Common Floor, 99acres • Data crunching for market
and India Property. They came into existence dynamics and comparative
analysis between projects,
as an attempt to resolve existing gaps in the
locations and cities
Technology Ups Business Level unorganised real estate sector. They eliminated
the extra costs associated with brokerage
Look and Feel for Buyer
India’s first map-based portal was launched charges and nullified the information ambiguity,
Confidence
in 2012, that changed the housing business. connecting buyers and sellers and tenants and
Until then, technology backed broking services lessors directly. With the enactment of RERA
• Showcase agent-verified
offered static data on flats availability, pricing, across states, e-portals can also derive greater
properties
images and contacts of brokers, who played a synergies, as they now have a ready data base
• Virtual home/ neighbourhood
critical role in the buying cycle of a consumer. and reference point for cross-checking their own tours
data on sales and supply across various markets.
Basic Features Offered by Portals

• Rental properties
• Sale properties
• Enquiries for flat mates
Advanced Features
Each portal has its USP to represent
data, for example a slice view feature
and a 360-degree view feature of the
properties.

There may be a time soon when web portals details of real property owners, transparency on
would get integrated with other data driven property titles, and information on all the support
websites like Just Dial, Zomato, Swiggy etc. services and products required like newspaper Homing in on Integrated
to guide migrants to the city with appropriate vendors, maids, car wash help, water supplies, Technology: While 2012
information. etc. This would help customers access such saw the birth of a large-scale
information through a single window.
Challenges of E-broking technology interface for booking
Macro Effect of Technology in Real homes, the future holds even
While e-broking in real estate has come of age in Estate greater promise. We see an
many ways, it still has its own limitations. Real
time tracking and booking of flats is still not PropTech or the use of technology in property increase in sales through
completely error free as the status of property markets is playing an important role today. India portals and following this,
shown on the website is not true quite often. has reported 77 deals amounting to USD 928
increased foreign and domestic
Though an arduous task, well-trained algorithms million in property technology space since 2013,
are now emerging to nullify such gaps. the maximum by any country in Asia Pacific investment in these companies.
Controlling the booking process online will also region. An increase in sales has been seen Integration with other services
help reduce errors. through portals and following this, increased will definitely provide a big fillip
foreign and domestic investment in these
Housing portals, too, can evolve further by for transactions.
companies.
providing greater clarity on previous rents,

2013
Policy Paralysis, Scams Weaken
Global Capital Flows Author Dr. Subash Bhola

State of the Economy In the year 2013, real estate investor’s and
end user’s sentiment dipped on account
India’s Gross Domestic product (GDP) grew
at just 4.5% during the financial year 2012-13, of scams and lack of transparency. While
which was probably the lowest growth rate the environment had begun to get tainted
the economy had seen after the industrial as early as 2010, it was this year when the
slowdown of 2001 - 2003. The country’s overall
economic growth was stagnant on account of
impact was felt the most. Office absorption
the policy paralysis at the centre, compounded space came down from 37 mn sq. ft. in 2011
by multiple scams like the AgustaWestland to 26.8 mn sq. ft. in 2013 along with private
Chopper Scam and Coal Scam amongst others.
equity exits of about USD 280 mn.
Slowdown in Real Estate
Poor governance, corruption, multiple scams,

and lack of transparency in the market
impacted investor sentiments adversely. It led
to another round of slowdown in real estate
during 2013 after the crash of 2008. The healthy
Major Corruption Scams During 2010 – 2013
recovery during the second half of 2010 and
2011 was short lived. Office absorption came
Commonwealth Games (CWG) Coal Scam, 2012
down from the highest of 37 mn sq. ft. in 2011 to
Scam, 2010 Involved: Officials and politicians of the
26.8 mn sq. ft. in 2013. Office rents grew at 2% in
2013 compared to 5% and 6% in 2012 and 2011, Involved: Officials of the Indian Olympic government.
respectively. Association.
Deal: Government officials awarded a contract Deal: Irregular and illegal auctioning of 194 coal
Global capital inflows into real estate declined blocks, not in production plan, to public and
to install Timing, Scoring and Results (TSR)
with overall FDI dropping to USD 1.2 bn in 2013 private enterprises allowing them to make major
system for the 2010 CWG to Swiss Timing at
from USD 3.1 bn in 2011. Rating agencies such gains. Loss of INR 1.86 lac crore to government.
inflated rates causing a loss of over INR 90 cr to
as Standard & Poor’s (S&P) and Fitch scaled
the exchequer.
down India’s credit rating outlook from ‘Stable’ AgustaWestland Chopper Scam, 2013
(BBB plus) to ‘Negative’ (BBB minus) during Involved: Politicians and senior officials of the
mid-2012 with a warning to downgrade the government and AgustaWestland, the helicopter
rating further to ‘Junk’ if the government did not manufacturer.
act proactively on reforms and controlling fiscal
deficits. JLL’s Global Transparency Index also Deal: AgustaWestland gave bribes amounting
showed a decline in India’s transparency in the to INR 350 cr to get a contract for supplying 12
year 2012 as compared to 2010. helicopters worth INR 3,500 cr.

Private Equity (PE) Inflows to Indian Real Estate
Scams hit the

markets hard:
The scam tainted
environment in 2013
led to private equity
exits and general loss
of confidence amongst
Indian buyers. Given
a choice between
Policy Paralysis and
Scams in the history
of Real Estate, which
would the industry
choose? Neither, yet
Source: REIS, JLL the industry faced both
and survived.
Residential Market Declines
Residential Quarterly Sales Rate Unsold Inventory PE Exits

Launches for Units
Decline of 3% y-o-y Declined to 11% at Rose to 27 months as With slowdown in real

by end 2013 from an a pan-India level, compared to 15 months estate and failure of
increase in 2012 equivalent to that in 2010, when highest governance, private
observed during the sales were recorded. equity exits of about
global financial USD 280 mn took place
crisis. during 2013.
Recovery 2014 Onwards
In 2014, with a new government at the centre, sentiment improved, and this was clearly reflected in the
robust recovery of the real estate sector in general and the office markets in particular. Office absorption in
2015 and 2016 increased to 30 mn sq. ft. and 36.6 mn sq. ft., respectively. The overall office vacancy rate at the
national level increased from 17.5% in 2012 to 18.4% in 2013, thereafter it recorded a continuous decline to
touch 14.4% in 3Q, 2017. Office Vacancy levels in 2Q18 stood at 14%.

2014
Securities and Exchange Board of India (SEBI)
Notifies REIT Guidelines in India Author Ketan Bhingarde and Sumedh Gadgil

In 2014, SEBI notified the much awaited
guidelines for the establishment of 2013
SEBI puts
REITs in India. With one major roadblock out a draft
March 2014
consultation
removed, India should have by now, 2009-2012 paper
Budget 2014
No progress re-introduces
seen the first REIT in place. But issues draft guidelines
on REITs
surrounding Dividend Distribution Tax,
Related Party Transactions and Structure
of the holding company have proved to
September
be the bottlenecks. 2008 The stop-start journey of REITs 2014
SEBI drafts
guidelines on
in India SEBI
notifies REIT
REITs guidelines
REITs for India
Realising that political and business corruption

Advantage of REITs However, REITs in India have had a chequered past.
in India hindered economic development, There have been more misfires than actual on-
continuous changes were made to the regulatory REIT can help both developers and investors. It ground movement.
framework to attract both the global and can help cash-strapped developers to monetise
domestic investor. Increasing participation by their existing properties. It pools the money
foreign investors who had been quite active in Advantages
from all investors across the country and Diversification
picking up marquee, income-yielding assets of REIT
subsequently invests in commercial properties
in commercial markets, propelled the need for to generate income. Some advantages include:
greater transparency and a broad-based public Investment Security
market through exchange traded units. This Diversification as retail investors can invest
need was further augmented by the increasing in large quality commercial properties with an
institutional investor presence in the real estate investment of just INR 2 lac. Regular Income
sector. India, thus, became the 31st country to
enact REIT legislation in 2014. Investment Security as REITs have to invest
80% of their corpus in completed and leased Transparency
A REIT or real estate investment trust is a out properties, which are safer than under-
company that owns, operates or finances construction properties.
income-producing real estate. REITs are globally
Key Drivers for REIT Listings
accepted instruments that bring in established Regular income as REITs have to distribute • Global fund manager, Blackstone is the biggest
benchmarks for property valuation and a minimum 90% of their income earned to owner of commercial real estate in the country
investments, thus allowing for greater access to investors on a half-yearly basis. Moreover, any and is a frontrunner in helping make REITs a
liquidity and funding while also creating a more appreciation in the rental and capital value of reality.
sustainable and rational environment. Since they the underlying property is likely to reflect in the • Private equity inflows in commercial markets
help curb speculation, the introduction of REIT Net Asset Value (NAV) of the unit listed on the for 2014 – 2017 YTD are 150% higher than the
in India is expected to enhance the transparency exchange. previous seven years combined.
and governance of the property market.
Higher transparency as REITs would operate • More than 61% of total Grade A office stock
under strict regulations and guidelines across the top seven cities held under single
framed by SEBI, thereby ensuring increased ownership/lease only model; it is about 306 mn
transparency for an investor sq ft of speculative Grade A office stock.

The Evolution of REITs in India
Progress Made (2014 Budget and 2014

Key Issues Initial Rules in Earlier Drafts (2008-2013) Current Status (2015 till date)
Notified Guidelines)
• 9 0% of investment corpus in income

• 80% in income generating assets
generating assets ( 2013 draft)
• 80% in investment generating assets (2014 • 20% in under-construction property
Investment • Remaining 10% in development property,
notified regulations) • Allowed to invest in unlisted shares
Criteria unlisted debt of companies
• 10% in under-construction property • Hospitality, hospitals also considered
• Assets holding ‘infrastructure’ status not
under REITs
considered
• Two-tier structure with concept of Holdco
(Holding Company) introduced in 2016
• Only through Special Purpose Vehicle
• Crossholdings of REIT in HoldCo and SPV
Investment (SPVs) or REITs holding properties directly
• SPVs and properties only in HoldCo to the extent of 50% each; but
Vehicles • Minimum two assets needed to set up a
in line with safeguards under the existing
REIT
regulations
• Single asset REITs allowed
• Qualified Institutional Placement (QIP)
Public
• Mandatory with INR 1000 cr of assets under • Minimum size of assets under REIT - INR allowed to enable meeting minimum
Market
REIT; 25% public float 500 cr; 25% public float public float norms of 25%
Listing
• Allowed to issue debt securities too
Restrictions
• FEMA not adequately changed; foreign • F DI only for Venture Capital Funds; FDI can • F EMA rules relaxed to allow for FII/QIP
on Foreign
investment not allowed invest in SPV level participation
Investors
• Sponsor to hold 15% of REIT assets value
Rules for • Sponsor net worth of INR 20 cr and
at all times; 25% for first three years and
Sponsor experience of 5 years • Concept of ‘Sponsor Group’ removing the
have a net worth of INR 20 cr
and REIT • Manager net worth of INR 5 cr and limit on number of sponsors
• REIT Manager to have 5 years’ experience
Manager experience of 5 years
and INR 10 cr net worth
• Restrictive covenants allowing only 20% • Restrictive covenants allowing only 20%
Related Party of REIT assets to be of related parties; of REIT assets to be of related parties; • Rationalisation of shareholder consent for
Transactions high threshold of unit holder approval for high threshold of unit holder approval for related party transactions
related party transactions after initial offer related party transactions after initial offer
• Budget 2014 relaxed capital gains

treatment on par with listed shares norms
for unit holders
• Capital gains and stamp duty payable as • Transfer of shares of the SPV into a REIT
per ready reckoner on transfer of assets exempt from capital gains tax under the
Taxation Income Tax Act • Full pass through status for income,
from SPV to REIT even in case of buying
Matters dividend distribution
listed shares • Dividend Distribution Tax @ 15%
• Dividend Distribution Tax @ 30% • Withholding tax also introduced
• 30% marginal tax rate on income where
REITs hold assets directly
• Capital gains payable by REIT on share sale

2015
Further Relaxation of Foreign Direct
Investment (FDI) Norms Author Alok Jha

The trend towards encouraging FDI
inflows into the sector which started
in 2005, received a further impetus
in 2015 with government removing
PE Investments in Real Estate
minimum area and capitalisation
requirements while easing exits. PE
Sum of investment (USD million)
investments in real estate witnessed

111% y-o-y increase in 2015.
FDI Norms Relaxation Boosts

Real Estate
In an effort to boost the slowdown that

the real estate sector had been facing,
the government eased FDI norms for the
construction sector in 2014 and 2015. This
provided a substantial boost to the sector
in terms of increased foreign capital inflows
and traction amongst the country’s real Revisions to FDI Policy
estate players. Reforms initiated in 2005
permitting 100% FDI under the automatic
Revisions to FDI Policy
route for completed assets were further No Minimum Easy Exit No Minimum Multiple FDI for Completed
eased in 2015 with removal of minimum Area Options Capitalisation Phases Projects
area and capitalisation requirements. Along
Smaller Can opt out Previous Each phase of 100% FDI was
with other changes in the norms, this policy
projects now after lock-in minimum cap invesment in allowed for
revision increased FDI inflows significantly. also qualify for period of of USD 5 mn same project completed
The adjacent graph shows the Private FDI 3 years removed considered projects for
Equity (PE) investments in real estate from different operation and
2010 to to 2Q18. development

Removal of Minimum Area the construction of farmhouses, trading in Other Changes
Requirement transferable development rights, and dealing in
land or immovable property. FDI Allowed for Completed Projects: With
Previous Policy: Predominantly large projects changed norms in 2015, developers were also
with development size of more than 20,000 sq. m. Removal of Minimum Capitalisation allowed to sell completed malls and integrated
were eligible. Requirement townships to foreign investors. This significantly
increased the volume of the retail real estate
Revised Policy: Removal of minimum floor area, Previous Policy: A minimum capital of USD 5 mn business. In addition, with a lot more projects
thus, qualifying relatively smaller projects also for was required to be brought in within six months qualified under FDI funding, the refinancing
FDI. of commencement of the project. business saw a significant boost.
Advantage: Extremely beneficial for small Revised Policy: No minimum capitalisation Income on Leased Property: Real estate
projects and FDI flows grew significantly. required any more. business was defined as dealing in land and
immovable property with a view to earning profit.
Easy Exit Options Advantage: Extremely beneficial for smaller
It was clarified that rent earnings /income on
projects and a major factor for increasing FDI flow
lease of the property not amounting to ‘transfer’
Previous FDI Policy: Foreign investor permitted significantly.
will not be considered as ‘Real Estate Business’.
to exit from the investment upon development of
Multiple phases – Each Phase a Hence, FDI was permitted in completed projects
trunk infrastructure or completion of project.
Separate Project where intention was to earn rental income.
Revised Policy: Foreign investor permitted to exit
either three years from date of each tranche of Previous Policy: No such clarification
foreign investment or completion of the project
Revised Policy: Each phase of the project was Did too much Capital
or completion of support infrastructure in the
project such as internal/ approach roads, water considered as separate and foreign investors Spoil the Party: While 2015
supply, street lights, and sewerage. Foreign permitted to exit from their investments phase celebrated the influx of huge
investors who ran out of money to develop trunk wise. This meant that a major construction
capital to the real estate sector,
infrastructure could exit post the expiry of the development could be broken down into
smaller phases and investments relating to a a question we ask today is
three-year lock in period.
particular stage of a project could be repatriated whether the floodgates of FDI
Advantage: While opening the gateway for FDI even if the entire project continued to be under
were opened too wide? Did easy
funds from previously cautious investors, it also construction.
access to funding lead to an
created pressure on developers for acceleration
of project completion as funds could exit at any Advantage: The impact was significant for larger oversupply situation?
favourable time. This was definitely the most developments like townships. It insulated foreign
notable modification of the FDI policy. investors from the risk of delays in overall project
completion.
However, the three year lock-in period was
not applicable for FDI in hotels, resorts,
hospitals, SEZs, educational institutions, and
old age homes. FDI was not permitted for

2016
Demonetisation and its
Impact on Real Estate Author Dr. Subash Bhola

The year 2016 will be remembered for was not taxed, or monitored by the government Construction firms, which dealt in cash,
or included in the GDP. It was the high usage suddenly found themselves unable to meet their
banning of INR 500 and 1000 currency
of cash in transactions, which prevented the operational expenses like wages and purchase of
notes from circulation. It brought a evolution of a digital economy that has an audit raw materials. Wages were mostly paid in cash as
sweeping change in the manner in trail. construction workers generally did not have bank
which business was conducted in accounts. Developers were reluctant to borrow
Demonetised currency constituted a total of 85% money due to the uncertainty in the market.
the country, and builders faced an of the total money circulated in India at that time. Consequently, most of the under-construction
unanticipated cash crunch. However, To fight against corruption and black money projects came to a standstill. Due to the overall
it was a huge step to curb black money and reduce tax evasion, the Modi government pessimism and caution among developers, new
introduced demonetisation of all INR 500 and launches across cities fell substantially during
in the economy and bring increased 1000 currency notes in November 2016. It was 4Q16 though they stabilised later. New project
transparency in real estate markets. one of the landmark announcements in the announcements fell by about 45% y-o-y.
history of Indian economy.
Demand Rises Again
Demonetisation Demonetisation Hits Real Estate
The immediate effect of demonetisation was an
A robust economic growth since 2014 Post demonetisation, there was a severe increase in cash deposits with banks. The next
accompanied by a rapid decline in inflation unanticipated cash crunch as liquid cash became problem for banks was how to dispense this
and current account deficit marked 2016. The dearer. People were forced to deposit the high excess cash? To encourage loans, the RBI cut
government’s favourable policy regime and denomination notes in their bank accounts and, interest rates on home loans to attract the masses
robust business environment ensured flow of thus, the number of cash transactions reduced, towards real estate investment.
foreign capital. However, the Indian economy had which impacted purchase of property. On a
competition from a ‘shadow economy’ – one that pan-India level, purchase of new property fell by
about 30% y-o-y.

Trend of Residential Sales and New Launches During Demonetisation of 4Q16
The NCR market, which faced a demand slowdown
and huge delays in project completion, saw
maximum fall of about 60% y-o-y in housing sales
during 4Q16.
Sharp fall in sales and new
Interestingly, Bengaluru witnessed steady sales in launches post demonetisation
No. of Units
4Q16 as compared to the same quarter of 2015.
Moreover, property prices which were skyrocketing

earlier stabilised considerably. These factors
gradually resulted in an increase in demand for
homes. The lower interest rates also benefited
property builders and a number of them resumed
projects that had earlier been discontinued due to
lack of funds.
Quarters
One of the key positive outcomes of demonetisation
Source: Real Estate Intelligence Service, JLL
was increased transparency in the purchase of
property. Demonetisation and the successive
reform - Real Estate Regulation Act (RERA) - have
attracted more genuine buyers rather than investors
Decline in property Banks flush with funds
to the residential market. Going forward, in the Demonetisation
market activity as people deposit cash
foreseeable future up to 2020, the sector is expected
to see more traction in residential demand and an
No cash with people New propert purchase Banks reduce interest
increase in announcement of new projects as well.
No cash with ↓ 30% y-o-y rates on home loans to
developers New launches encourage borrowing
↓ 45% y-o-y
A Short Term Pain for a Property prices stabilise
Regulatory Gain: Whilst the
Gradually, demand rises with lower interest rates and stabilisation of property prices
real estate markets struggled
and are still experiencing
some amount of pain due
to demonetisation, we hope
that the sector will be better
regulated and more transparent
in the long term.
2017
Property Market Regularised, Real Estate
Regulatory Authority (RERA) Enacted Author Ketan Bhingarde

The year 2017 saw the biggest Markets Favoured Developers changes, coming into effect on 1 May 2016
real estate reform – RERA, coming (with 69 of 92 sections notified). Remaining
While the real estate market saw a stable rise provisions came into full force on 1 May 2017. The
into force. RERA aims for greater over the years, instances of project delays and government set 31 July 2017 as the deadline for
transparency and a better overheads led to the general sentiment that all states to put the infrastructure in place for the
regulatory framework. It needs real estate transactions were skewed heavily implementation of RERA rules.
in favour of developers. Rising consumer
state governments to ensure that complaints and the overburdened judiciary While RERA was a Central Act, individual states
the spirit of the act is implemented demanded that an independent regulator be had to formulate their own Acts, which had to
completely for it to fulfill the aims. set up with an oversight for the sector, thereby follow the central legislation closely in spirit and
creating a mechanism for quick redressal of implementation. The Union Housing Ministry
grievances. The need for an umbrella body to notified the Act for the Union Territories. The
regulate the sector with its myriad participants states had to create the technology infrastructure
and dimensions was felt so that there would be and appoint office bearers of the state body.
more accountability and transparency in the
system. Under the new rule, all new projects that are to
be offered to the public for sale and to be built on
Real Estate Regulatory Authority a plot area of more than 500 sq m (with at least 8
(RERA) units for sale) need to be mandatorily registered
with RERA. Older projects that had not been
In a bid to boost investments in the real estate completed till the date of RERA implementation,
sector and protect home buyers, the RERA Act too, had to get registered. All such projects and
came into full force on 1 May 2017. It was first their details along with details of the promoters
drafted in 2011 and underwent subsequent had to be hosted on a website for public access.
Key Highlights of RERA achievement of project milestones and Transparency

certified by accountants and engineers.
Grievance Redressal • Website to host detailed information related
This will be used exclusively for that specific
to profile and track record of promoters,
• Real estate disputes between buyer and project, speeding up work and ensuring
details of litigations, project prospectus,
builder to be settled within 120 days. timely completion.
details of apartments, plots and garages,
• Penalties for delays in promised construction Accountability registered agents and consultants,
timelines and penal provisions for development plan, financial details of the
• Structural defect liability period of five years
continuous default. promoters, status of approvals and projects
from handover of project.
Timely Possession etc.
• Along with developers and project
• 70% of the money collected from buyers to registrations, brokers will also need to be • All sales on carpet area basis with clear
be put in a separate account to meet project registered with specific projects to undertake definition of carpet area included within the
cost requirements and to be accessed upon project marketing and sales activities. Act.

RERA Today, Tomorrow… RERA at a Glance
However, the ground reality today

is that many states have missed the Grievance Redressal Accountability Timely Possession Transparency
implementation deadline and are still
lagging behind in setting up the processes • Disputes to be • Structural defect • 70% money • Online
and support infrastructure. settled within liability period collected from information
120 days of 5 years from buyers to be about project
It is expected that in the future RERA will
• Penalties to have handover of used specifically • Tracking of
ensure flow of institutional funds, making
penal provisions project for completion project
the individual buyer the end winner
• Brokers also to of project within
and protecting them. Furthermore, it is • Sales on a clearly
be registered announced
expected to ensure that the market is defined Carpet
online with timelines
driven by the end users. area
projects
Case Study: MahaRERA

Maharashtra Real Estate Regulatory Authority A Guide to a Mature Market:
Number of (MahaRERA) came into effect from 8 March
The spirit of implementing RERA
Apartments 2017. MahaRERA data shows the impact
Launched of transparent and publicly available is to ensure that the real estate
information. market moves into a transparent,
Division-wise number of launched mature, well regulated phase.
apartments and number of booked Getting the RERA registration stamp
apartments:
has become a matter of pride for
• Konkan region (which includes Mumbai, developers and is acting as their
Mumbai Suburban, Thane, Palghar,
Raigad, Ratnagiri and Sindhudurg
biggest marketing tool.
districts) clearly leads the race, with
Number of maximum number of residential
Apartments apartments launched and booked (63%
Booked share across both).
• Pune region (which includes Pune,
Kolhapur, Sangli, Satara, Solapur
districts) follows with a share of 29%
Source: MahaRERA website
and JLL Research) (As of in launched apartments and 26% in
Oct 4, 2017
booked apartments.

We expect interesting times ahead with
increase in transactions, PE investments,
rise in both office and residential
markets. Increasing transparency through
reforms and technology will add to
investor confidence.
Impact of Reforms
Due to demonetisation, the prices of property

Residential Market Rises
stabilised. At the same time, banks were flush
with funds and decreased interest rates on New Residential launches have progressively
home loans. This worked in the interest of the increased on a pan-India level across the top seven
home buyer along with RERA, which aimed at cities in India. These cities were Mumbai (including
greater transparency and accountability. Thus, Thane and Navi Mumbai), NCR (Delhi, Gurgaon,
the resilient real estate sector continued to NOIDA, Faridabad, and Ghaziabad), Bengaluru,
resurface. The impact of the Goods and Services Chennai, Hyderabad, Kolkata and Pune. The
Tax (GST) has also been understood, though numbers of new launches increased from a total of
some grey areas still need to be addressed. Along 34,834 in 4Q17 to 42,975 in 2Q18.
with demonetisation and GST, RERA will help in
improving compliance and transparency levels in
the industry, increasing confidence of the buyer Quarter New Launches Units Sold
and further boosting the market.
3Q17 23,370 21,332
Investments on the Rise 4Q17 34,834 23,888

1Q18 39,318 30,265
The year 2017 saw some large deals between 2Q18 42,975 32,819
institutional investors and Indian companies. PE
investments in real estate touched USD 44 bn
and we anticipate investment flows to continue
on a healthy course. This has been substantiated
by the H1 data of 2018 with cumulative PE
investments crossing USD 45 bn.

Sales increased in most of the cities with a Office Market Rises
total of 23,888 units sold across the seven cities Increasing Transparency
during 4Q17, a rise of 11% as compared to the • Diversification of occupier base will
2012 2014 2016 2018
previous quarter. This has been on an uptrend increase with Non-IT space absorption in
India Rank 48 40 36 35
with 2Q2018 recording 32,819 units sold. As future years; this is likely to minimise the
Source: JLL Global Transparency Index (2018)
more and more developers register with RERA, risk in real estate. In the future, we will see
we anticipate residential markets to pick up more opportunities for single assets and
pace. RERA data indicates that in Maharashtra with developers who have smaller and
a total of 16,000 projects have already been localised portfolios. The opportunity in our
registered as of June 2018. opinion will also move towards platforms for
brownfield/greenfield development. • Listing of REITs in India is expected to spur
Return to favourable debt equity ratios is
• Vacancy levels are anticipated to stabilise commercial space investment with greater
anticipated with RERA compliance, though
with growth in demand meeting new space availability of funds from investors looking at
currently debt structures dominate the fund
completions of equal scale. Vacancy is completed commercial assets. REITs provide
inflows in residential developments. Investors
anticipated to hover around 15%during liquidity in commercial assets, enabling
will increasingly look at affordable housing as
2018-19. developers to raise funds by selling buildings
the sector is witnessing maximum traction.
• Total investments in the office asset class that have been completed to investors. As
Demand is high for this segment with increasing
show clearly an improving trend since per JLL Research, close to 313 mn sq.ft. of
urbanisation and nuclear families. Supply, too,
2013. Private equity inflows in Office and IT office space in India is REITable. The seven
is high with launches within the price range of
for 2014 to date were 150% higher than the cities collectively have more than 900 REIT-
INR 40 lac category highest during 2017 and in
previous seven years’ inflows combined. worthy properties.
first half of 2018 across the country.
Most of the core asset portfolios have already
Opportunities will open for new sectors been invested into.
like Student Housing, Senior Living, and
Warehousing, which will see continued growth Net Absorption↑ Diversification of Investments ↑
momentum. Warehousing, which has started Occupier Base
seeing big-ticket investments, had the biggest ↑ Across 7 cities PE high
investment deal so far in the country’s logistics Non-IT space ↑
space, brokered by JLL. As part of the USD Expected growth REITable office space -
500 million deal, the Canada Pension Plan 30 mn sq ft - 2018 and Opportunities for 313 mn sq ft
Investment Board (CPPIB) acquired a majority 33.5 mn sq ft - 2019 greenfield/ brownfield;
stake in IndoSpace, the warehousing and smaller portfolios REIT worthy properties
logistics real estate arm of Everstone Group. - 900

Growth Prospects Investors will look to put in money in technology- data points to a history of increased transparency
enabled companies in the real estate transactions over the years.
Retail investors are increasingly focusing on space. Proptech—the convergence of property
emerging retail destinations (Tier II & III) over and technology—is picking up steam in 2018. JLL’s biennial survey Global Real Estate
metros, due to better growth prospects. These Rapid urbanisation, presence of a large section Transparency Index (GRETI) 2018 has ranked India
cities have witnessed a much higher investment of middle income population, upscaling of on the 35th position. This is an improvement of
(USD 6,192 mn) as compared to Tier I metro technology and presence of a strong secondary 5 positions since 2014. India’s good performance
cities (USD 1,296 mn) from 2006 to 2017. With and rental market along with over- served does not stop there; it emerged as one of the
high urbanisation, a rising young population primary market will add to the growth of top ten countries that have shown maximum
base, increasing disposable income levels, PropTech in the country. Proptech will also aid improvement in transparency in real estate
rising aspirations and increasing proportion of the industry in selling, managing, purchasing and over the last two years. If we assess India’s
nuclear families, we expect new opportunities to investing. performance over last two cycles of JLL’s GRETI,
continue in Tier II and III cities. India improved its rank by five places since
Transparency Underlies Growth 2014. Improved market fundamentals, policy
Technology will continue to play an increasingly reforms (LARR Act, liberalisation of FDI into realty
integral role across all asset classes; it will also Apart from increased use of technology, real sector) and strengthening of information in
increase transparency in to the sector. Whether estate markets are becoming increasingly public domain were main influencers along with
it be in the construction of real estate spaces regulated and more and more transparent. While digitisation of land records and opening up of
or facilities management or data analytics, regulatory changes (specially the implementation REITs.
technology- driven changes will transform the of RERA in 2017) have hastened transparency,
way real estate business is conducted.

Private equity investments into realty sector
are often considered as an indicator of the
confidence of the investor community and the
confidence is closely linked with the transparency
of the property markets. In India’s case,
improvement of ranking by five places in the last
two editions of GRETI has been accompanied by
rise in private equity over these years.
Structured reforms, regular push on the

development of infrastructure and key policy
changes such as the Benami Transactions
(Prohibition) Act, 1988 - amended in 2016 have
already made India an investment-friendly
destination. As a result, India moved up 30 ranks
to the 100th position on the World Bank’s scale
of 190 countries in the ease of doing business for
2018. And, as we traverse the next twenty years,
we will see a strong, well-regulated, transparent
sector emerging resilient, despite its current pain.
Certainly, interesting times lie ahead for India’s

realty sector!

2018 marks the completion of 20 glorious years for JLL in
the county. These 20 have defined our DNA and enabled
us to deliver, grow and emerge as a winner in everything
we do. What started as a mere ripple is now causing
waves in India Realty and beyond.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate research, strategic advisory and consultancy, capital markets, transaction management,
and investment management. A Fortune 500 company, JLL helps real estate owners, project and development services, integrated facilities management, property and
occupiers and investors achieve their business ambitions. In 2017, JLL had revenue asset management. These services cover various asset classes such as commercial,
of $7.9 billion; managed 4.6 billion square feet, or 423 million square meters; and residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior
completed investment sales, acquisitions and finance transactions of approximately living and education.
$170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations
in over 80 countries and a global workforce of 82,000. As of December 31, 2017, JLL India won the Five-Star Award for Best Property Consultancy at the International
LaSalle had $58.1 billion of real estate assets under management. JLL is the brand Property Awards Asia Pacific 2018 -19. The firm is recognised amongst the top 100
name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further Best Places to Work in India for two consecutive years in 2017 and 2018 in the annual
information, visit www.jll.com survey of ‘India’s Best Companies to Work For’ - a joint study conducted by Great
Place to Work® and The Economic Times. It has also been acknowledged as ‘Property
JLL has over 50 years of experience in Asia Pacific, with over 37,000 employees Consultant of the Decade’ at the 10th CNBC-Awaaz Real Estate Awards 2015. For further
operating in 96 offices in 16 countries across the region. The firm won 23 awards information, please visit www.jll.co.in
at the International Property Awards Asia Pacific in 2017 and was named number
one real estate investment advisory firm in Asia Pacific for the seventh consecutive
year by Real Capital Analytics and ranked among Fortune Magazine’s World’s Most
Admired Companies list third year in a row. www.ap.jll.com. Authors
Research and Real Estate Intelligence Services,
About JLL India
JLL is India’s premier and largest professional services firm specializing in real
JLL India
estate. With estimated revenue for FY 2017-18 expected to be ~INR 3,200 crores,
the firm is growing from strength to strength in India for over the past 20 years. JLL
has an extensive geographic footprint across 10 cities (Ahmedabad, Delhi, Mumbai,
Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Kochi and Coimbatore) and a staff
Business Enquiries
strength of over 10,000. The firm provides investors, developers, local corporates Ramesh.Nair@ap.jll.com
and multinational companies with a comprehensive range of services. This includes Marketing.India@ap.jll.com
Jones Lang LaSalle Property Consultant (India) Pvt Limited © 2018. All rights reserved. All information contained herein is
from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.


In - Indias Real Estate Milestones A 20 Year Narrative PDF

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

In - Indias Real Estate Milestones A 20 Year Narrative PDF

Enviado por

Direitos autorais:

Formatos disponíveis

India’s Real Estate

The 20-year journey of India’s Real Estate post

The book chronicles the landmark developments

Triggered by economic freedom, Indian

Domestically, the real estate sector was also up

4 India’s Real Estate Milestones – A 20 Year Narrative

6 India’s Real Estate Milestones – A 20 Year Narrative

Aftermath of Office Real

2018 and Beyond

India’s Real Estate Milestones – A 20 Year Narrative 7

India’s Real Estate Milestones – A 20 Year Narrative 9

In the last two decades, Bengaluru established

ITPL – A Game Changer

The opening of ITPL in 1997, the country’s first

The emergence of the IT sector changed the

10 India’s Real Estate Milestones – A 20 Year Narrative

Grade A office stock in Bengaluru increased Enables Enables

India’s Real Estate Milestones – A 20 Year Narrative 11

India’s Real Estate Milestones – A 20 Year Narrative 13

14 India’s Real Estate Milestones – A 20 Year Narrative

The Bubble Bursts followed by a period of stability for a few years,

This affected India, too, as the overall investor

By the end of 1999, the macroeconomic

India’s Real Estate Milestones – A 20 Year Narrative 15

India’s Real Estate Milestones – A 20 Year Narrative 17

Rise of Malls Tracing the Journey

18 India’s Real Estate Milestones – A 20 Year Narrative

Most of the early malls enhanced shopping

However, the older malls were conceptualised

‘Experiential retailing’ is where experiences

Rise of the Mall Era:

India’s Real Estate Milestones – A 20 Year Narrative 19

India’s Real Estate Milestones – A 20 Year Narrative 21

22 India’s Real Estate Milestones – A 20 Year Narrative

The success of Tidel Park induced the state

Development of the IT Corridor encouraged Indian

Cumulative Office Stock in Chennai

the first such glitzy, glass façade

India’s Real Estate Milestones – A 20 Year Narrative 23

India’s Real Estate Milestones – A 20 Year Narrative 25

26 India’s Real Estate Milestones – A 20 Year Narrative

The build-up period saw a surge in artificial demand fuelled by the

Impact on Residential Markets

Residential markets, on the other hand, were largely untouched on an

The Bubble Burst but Laid the Seed

Grade A office inventory in India.

India’s Real Estate Milestones – A 20 Year Narrative 27

India’s Real Estate Milestones – A 20 Year Narrative 29

Source: Media sources

30 India’s Real Estate Milestones – A 20 Year Narrative

Single-screen cinema lost out due to limited In Search of Quality Time:

Today, multiplexes provide new experiences

According to EY-FICCI March 2018 Report,

India’s Real Estate Milestones – A 20 Year Narrative 31

India’s Real Estate Milestones – A 20 Year Narrative 33

34 India’s Real Estate Milestones – A 20 Year Narrative

Concerted efforts were made in 2006

India’s Real Estate Milestones – A 20 Year Narrative 35

India’s Real Estate Milestones – A 20 Year Narrative 37

India’s real GDP grew at an impressive 8.2%

38 India’s Real Estate Milestones – A 20 Year Narrative

times the annual income from 5.9 times

Increased Job security and stability