Published on 12/10/2021 11:47:54 AM | Source: JM Financial Ltd

Real Estate Sector Update By JM Financial

Posted in Broking Firm Views - Sector Report| #Real Estate Sector #JM Financials #Sector Report

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We highlight this week’s top real estate news:

* Mumbai property registrations at a 10-year high in September 2021: The registrations of property in Mumbai, has yet again witnessed a 10-year high in the month of September led by record-low home loan interest rates and incentives offered by developers. As per the data available from the Government’s Department of Registration and Stamps, the month of September 2021 saw 7,799 properties being registered in Mumbai, up 15% from the previous month of August 2021 which saw sales of 6784 units and 39% from a year ago where September 2020 saw sales of 5597 units in spite of the stamp duty cut announced by the Maharashtra Government during that period. The September registrations fetched the state government over INR 5.25bn in stamp duty collections. Realty developers anticipate the pace of both sales and launches to improve further in the upcoming festive season. (Source)


* JM View: Total Mumbai registrations for Sep’21 came in at 7,799 units (+87% over Sep’19 on a low base; +35% YoY on a low base due to Covid and +15% MoM). 94% of these 7,799 units sold are fresh sales wherein buyers have paid normal / higher stamp duty (Source: Knight Frank). With improving business environment and wealth effect, INR 10mn and above segment is witnessing higher traction as share of units sold increased to 49% in Sep’21 (30% in Apr’21; 40% in Jun’21). However, registrations across Maharashtra have declined to 97,868.


* Ashiana Housing to develop senior living housing project in Chennai, buys 16-acre land from Mahindra Lifespaces: Realty firm Ashiana has acquired a 16-acre land in Chennai from Mahindra Lifespaces to develop a senior living housing project there. The land parcel falls within the township of Mahindra World City at Chennai. The company informed the same to exchanges but did not disclose the value of the deal. However, a top official of the company told news agency PTI that they expect the project will garner around INR 6bn in revenue sales in six years. The company expects to launch the project in the third or fourth quarter of next financial year after getting all regulatory approvals. (Source)


* JM View:: Mahindra Lifespaces has been able to monetise c.16 acres of residential in MWC Chennai (out of 116acres). While the price remains undisclosed the land at MWC Chennai sells at c.INR 35mn per acre. It would help Mahindra Lifespaces reduce land inventory and for Ashiana it would create a sizeable senior living project having INR 6bn of revenue.


* Godrej Properties to redevelop a residential project in Mumbai: Godrej Properties has entered into an agreement to redevelop a land parcel in Wadala, Mumbai. Spread across 7.5 acres, this project will offer about 1.6 million sq ft of saleable area comprising of residential apartments, the company said in a BSE filing. (Source)


* You will see a fair amount of growth happening in the retail business: Sriram Khattar, CEO, DLF Rental Business: So it is not possible to look at a percentage of land bank going into retail. It is always a question of strategically identifying the best geographic location where you can get footfalls. We are very aggressive; we used the second wave to strategise our growth and while I am not at liberty to share the details but I believe that in the next few years you will see a fair amount of growth happening in the retail business. It will predominantly be in the NCR region and it could also be in some of of the other areas where we have land banks.


* 20% circle rate rebate to go on till December 31, says Delhi CM Arvind Kejriwal: The Delhi government’s current scheme of 20% reduced circle rates for all categories of properties, which was to be in effect till September 30, was on Thursday extended till December 31, said chief minister Arvind Kejriwal. He said in a tweet, “The 20% rebate on circle rates would continue. We will not let Delhi residents suffer during the pandemic. We stand with them.”

Circle rates are the minimum price at which a property can be bought or sold. The move is aimed at boosting the real estate market and increasing government revenue. Earlier in the day, state revenue minister Kailash Gahlot shared a copy of the order extending the scheme till December 31, and said: “With the city slowly recovering from the aftermath of Covid-19, here is another good news for Delhiites: We have further extended the 20% slash in circle rates till December 31, 2021.” (Source)


* Airtel unit Nxtra to invest Rs 5,000 cr to expand data centre business: Bharti Airtel on Thursday announced that its subsidiary Nxtra will invest INR 50bn by 2025 to scale up its data centre business. Nxtra By Airtel plans to build seven hyperscale data centres that will treble its capacities, attract business from neighbouring countries, and help India become a regional hub for data centres. The investment will be made through a mix of internal accruals, equity infusion, and debt, said Ajay Chitkara, director and chief executive officer, Airtel Business.

Private equity firm Carlyle holds a 25 per cent stake in Nxtra Data. The expansion has been announced amid growing digital penetration and adoption of Cloud. Introduction of 5G services is expected to increase data consumption further and give a boost to the business. Currently, Airtel has 10 large data centres and 120 small data centres with coverage in 70 cities. Chitkara said the company has around 400 Indian and global customers, and its revenue has trebled since 2017-18. (Source)


* Panchsheel Group gets INR 2.49bn from centre's stress fund to complete project: Real estate developer Panchsheel Group has received INR 2.49bn from the Centre's stress fund to complete a group housing project in Greater Noida, where flats of around 1,300 buyers are stuck. Panchsheel Greens II is the second project in Greater Noida which has got financial assistance from the stress fund. Earlier, INR 1.65bn was sanctioned to the Capital Athena project, Greater Noida Industrial Development Authority (GNIDA) said. (Source)


* Noida Authority orders sealing of unsold units in ATS & Supertech projects: The Noida Authority on Friday initiated action against developers who are yet to act on complaints related to handover of maintenance to apartment owners’ associations, among other things. In a meeting in August, the Authority had given developers a September 30 deadline. The most common complaint was interest-free maintenance charges not being transferred to the AOAs after the handover. (Source)


* Green signal for Coastal Zone Mgmt Plans: The Union Ministry of Environment, Forest and Climate Change has approved the Coastal Zone Management Plans (CZMPs) for Mumbai and its suburbs with riders. Now, developmental projects falling within 500m from the high tide under the Coastal Regulation Zone will be benefited from the ministry’s approval. The ministry, however, said that the CZMPs shall include eco-sensitive zones (ESZ). It shall be revised accordingly, if required, after due approval. The activities or projects prohibited in the notified ESZ falling within approved CZMPs shall remain prohibited in that area. (Source)


* MahaRERA grants extension to developer under 'force majeure': The Maharashtra Real Estate Regulatory Authority (MahaRERA) has provided major relief to the developer of 'Sheth Midori' by giving them another six months extension till December 2021 under the force majeure (unforeseeable circumstances that prevent someone from fulfilling a contract). However, the order has affected the homebuyers in the project who have been opposing the same. (Source)


* 41% respondents foresee moderate outlook for real estate: 360 Realtors’ Survey: ndian real estate is set for recovery, as suggested by the 360 Realtors’ survey. The survey reveals that 41% of the respondents believe in a moderate outlook for the industry. 19.4% of respondents have suggested a promising outlook for Indian real estate. While 7.7% and 14.3% have suggested a Poor and Very Poor outlook, respectively. 360 Realtors, which is one of the largest Institutional Channel Partners (ICP) in the country, has conducted a consumer sentiment survey of 1,200 discerning & potential homebuyers to evaluate market viewpoint in the face of opening of the economy after lockdown 2.0. The survey has been conducted with the help of an online questionnaire. (Source)


* Walton invests in two projects: Walton Street BlackSoil Real Estate Debt Fund II has closed two transactions and deployed INR 1.1bn of debt in two housing projects in Chennai and Hyderabad. The fund has deployed INR 0.65bn in Krishnaiah Projects Pvt Ltd’s project Zion in Chennai and INR 0.45bn in Jain Housing Constructions Ltd’s Salzburg in Hyderabad. Both projects are in the mid-income housing segment. (Source)


* Ajmera Realty will be launching four projects this year: Dhaval Ajmera, Director: As far as project launch is concerned then at the start of the year, we launched three projects in January 2021 two in Bombay and one in Bangalore. They will make a contribution of around INR 5bn to our topline. We have seen quite a positive response towards those including the project that was launched in Bangalore and I have earlier informed that 50% plus project has been sold in Bombay.

We also did a project for commercial offices and we have made bookings of around 30% of the same. Going forward, we will be launching four projects this year whose total area will be 1.5 million square feet. We will get a topline of around INR 20-25bn in the next three to four years from these projects. Out of these four projects, two projects are based in Bombay and one each in Bangalore and Pune. So, this is our breakup and primarily the major revenue of INR 22bn will come from Bombay. (Source)


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