Monday, March 23, 2009
No hasty conclusions, please
No hasty conclusions, please
The Economic Times, March 21, 2009, Page 10
Deflation Is More A Statistical Construct
WITH the wholesale price index (WPI) for the week ended March 7 falling to 0.44%, prima facie the spectre of deflation seems to have replaced that of inflation. Note the words, prima facie. In reality, as government spokesmen have been quick to point out, deflation, defined as a sustained decrease in the general price of goods and services, is highly unlikely in the Indian context where supply, rather than demand, is the constraint. The sharp fall in the latest WPI number is more the consequence of the high base effect — inflation in the corresponding period last year was a high 7.78% — than a sustained, absolute decline in prices. Going forward, we are likely to see a continued fall in the inflation rate, or disinflation, thanks to the sustained increase in the comparable figure till August last year when inflation peaked at close to 13%. It is quite possible the inflation rate, as measured by the WPI, may even dip below zero for some weeks. But it would be wrong to read that as the onset of deflation. Indeed, as the consumer price index (CPI) shows, the inflation rate in consumer prices, which is what the man-on-the-street experiences, is still in double digits (10.45% for January).
So perish the thought of deflation. It is not just a question of semantics. A correct reading of the numbers is critical to ensuring the right policy response. Just as high inflation reduces the real value of money and has negative welfare implications apart from affecting investment decisions adversely, deflation, though it might seem to increase the real value of money, is just as avoidable from the larger economy perspective. Most economists agree that between inflation and deflation the latter is the worse evil. The effects of modest, long-term inflation are less damaging than deflation. This is because when prices are falling, consumers tend to delay their purchases in the hope they will be able to buy later at still lower prices. This reduces overall demand and economic activity. Deflation also raises real wages at a time when falling demand is gnawing at companies’ profits, resulting in layoffs and rising unemployment.
Not a case of deflation
Not a case of deflation
Business Standard, March 23, 2009, page 13
With the year-on-year inflation rate measured by the Wholesale Price Index (WPI) dropping to near-zero, concerns about the Indian economy heading into a deflationary phase have begun to spread. It is almost certain that the WPI inflation rate will turn negative in the next few weeks and stay that way for several weeks after. If deflation is defined simply as a negative rate of inflation, then the economy is indeed headed for deflation. However, the concerns stem from something deeper than a mere numerical definition. It is important to understand the malaise before deciding whether India and, for that matter, the rest of the world, is in impending danger of being afflicted by it.
When the prices of commodities begin to drop, the logical response of consumers is to postpone whatever purchase decisions they can, under the expectation that they will be able to buy things cheaper a little later on. Deferment of purchases results in an excessive build-up of inventories, which in turn causes producers to cut back on production. Thus, the signal from falling prices is transmitted to production decisions, setting a downward spiral in motion. The larger the share of products whose consumption can be deferred and which can be held as inventory in the aggregate consumption basket, the stronger this force will be. Reinforcing the problem is the fact that producers typically have contractual arrangements with workers and other input suppliers, which prevent them from reducing their costs in a hurry, even as their revenues are falling. This puts pressure on margins, causing further distress which could result in layoffs and termination of supply contracts. On this line of reasoning, the critical symptom of deflation is a rapid decline in the prices of products such as garments, consumer durables, automobiles and so on, which is not commensurate with a decline in the costs of production of these items.
This is not the case in India and elsewhere, at least for now. The zero and negative inflation rates are largely the result of the dramatic decline in energy and commodity prices over the past year. A year ago, crude oil prices were in the region of $100/barrel, from which level they climbed to almost $150 in July. Along with this, the prices of several commodities, including food items, were also climbing rapidly. For the most part, these prices have crashed, allowing producers to reduce costs. Sluggish demand across the board has, of course, forced producers to reduce their selling prices. However, the weekly WPI data suggest that the main reason for the fall in the inflation rate is lower energy prices. The prices of manufactured goods, in general, do not appear to be declining; if they are, the drop is certainly not as sharp as to indicate the kind of spiral described above. In fact, in the January numbers for the Index of Industrial Production, consumer durables showed an increase in output, however small, a pattern inconsistent with the deflation hypothesis. Finally, since the process is significantly dependent on expectations of prices continuing to fall, the large increases in liquidity induced by monetary actions over the past few months cannot but spur expectations of a return to positive rates of inflation in the not too distant future. In sum, the mere fact of negative inflation rates does not amount to deflation.
Business Standard, March 23, 2009, page 13
With the year-on-year inflation rate measured by the Wholesale Price Index (WPI) dropping to near-zero, concerns about the Indian economy heading into a deflationary phase have begun to spread. It is almost certain that the WPI inflation rate will turn negative in the next few weeks and stay that way for several weeks after. If deflation is defined simply as a negative rate of inflation, then the economy is indeed headed for deflation. However, the concerns stem from something deeper than a mere numerical definition. It is important to understand the malaise before deciding whether India and, for that matter, the rest of the world, is in impending danger of being afflicted by it.
When the prices of commodities begin to drop, the logical response of consumers is to postpone whatever purchase decisions they can, under the expectation that they will be able to buy things cheaper a little later on. Deferment of purchases results in an excessive build-up of inventories, which in turn causes producers to cut back on production. Thus, the signal from falling prices is transmitted to production decisions, setting a downward spiral in motion. The larger the share of products whose consumption can be deferred and which can be held as inventory in the aggregate consumption basket, the stronger this force will be. Reinforcing the problem is the fact that producers typically have contractual arrangements with workers and other input suppliers, which prevent them from reducing their costs in a hurry, even as their revenues are falling. This puts pressure on margins, causing further distress which could result in layoffs and termination of supply contracts. On this line of reasoning, the critical symptom of deflation is a rapid decline in the prices of products such as garments, consumer durables, automobiles and so on, which is not commensurate with a decline in the costs of production of these items.
This is not the case in India and elsewhere, at least for now. The zero and negative inflation rates are largely the result of the dramatic decline in energy and commodity prices over the past year. A year ago, crude oil prices were in the region of $100/barrel, from which level they climbed to almost $150 in July. Along with this, the prices of several commodities, including food items, were also climbing rapidly. For the most part, these prices have crashed, allowing producers to reduce costs. Sluggish demand across the board has, of course, forced producers to reduce their selling prices. However, the weekly WPI data suggest that the main reason for the fall in the inflation rate is lower energy prices. The prices of manufactured goods, in general, do not appear to be declining; if they are, the drop is certainly not as sharp as to indicate the kind of spiral described above. In fact, in the January numbers for the Index of Industrial Production, consumer durables showed an increase in output, however small, a pattern inconsistent with the deflation hypothesis. Finally, since the process is significantly dependent on expectations of prices continuing to fall, the large increases in liquidity induced by monetary actions over the past few months cannot but spur expectations of a return to positive rates of inflation in the not too distant future. In sum, the mere fact of negative inflation rates does not amount to deflation.
The ground’s perking up
The ground’s perking up
The Hindu Business Line, March 22, 2009, page 15
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Unlike the last few months, there are signs of interest in real-estate picking up in March. Even if these may not indicate a revival, they give hope of better times ahead.
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R. Balaji
Buyers are interested…
Walk-ins are on the increase…
I have had some bookings happening over the last few days…
Things are not as bad in February-March as they were in the previous months…
These are some of the observations of real-estate developers of residential and IT space, officials at a housing finance company and property consultants. Compared to the last few months, March seems to show some signs of activity in the market in Chennai and some other cities. Even if these are not signs of a revival they definitely indicate enough to give hope of better things to come, they believe.
An official at a leading housing finance institution says developers are definitely reporting an increase in sales across a range of segments. A major IT space developer has, in the last three months, got bookings for a few lakh sq ft in his project. Housing loan enquiries are also more in number than a couple of months ago.
The reason? Possibly, buyers — specifically the end-users — have reconciled to the latest market conditions; maybe they realise that there is value at current price levels and interest rates, as banks have dropped home loan rates. Maybe the price cuts by developers also helped. Why look a gift-horse in the mouth? After the doldrums in December and January, any sign of movement is welcome, say real estate players.
At least, developers’ interest has perked up enough for them to look at launching projects. Take, for instance, Provident Housing’s project launched last weekend — according to a company official handling the project coming up on Old Mahabalipuram Road, buyers have lapped up nearly all of the 518 apartments announced in the first phase. Only about 30 units are left in the project that has been priced in the affordable range — about Rs 18 lakh for a three-bedroom unit. Construction is to start next month.
According to Mr M. Murali, Managing Director, Shriram Properties Ltd, which is promoting a 60-lakh sq ft IT SEZ, Gateway, at Tambaram on the outskirts of Chennai, the company has decided to promote a 600-apartment residential project in the non-SEZ area. It has cut back on the IT and commercial space. Give the buyers value and advantage — location and pricing — and properties will sell, he says.
Across cities
Buyers’ interest is not just restricted to Chennai but also to small cities and other urban centres where properties had not been overvalued and the markets not flooded with projects. Kolkata is the other metropolitan city that continues to see movement of residential space.
Coimbatore and Visakhapatnam also offer potential even under current market conditions, he says.
This is the reason why Shriram Properties is promoting its Smart Homes projects of value housing of 700-1,400 sq ft apartments in these cities, apart from Bangalore, Mr Murali said.
Of the projects planned in four locations in Bangalore, approvals for one with 600 apartments are in place and the project is to be launched on Sunday (March 22). Over the last three months, a soft launch of the projects has seen sales that are nothing to complain about — 360 units have been booked at the Bangalore project; in Visakhapatnam 337 of the 600 units have been sold with the units priced at Rs 2,800 a sq.ft.
Mr Murali attributes the activity in Visakhapatnam to the low supply of quality housing, also the city is seen as the next major option to the State capital. Hyderabad itself is saturated, he said.
In Kolkata, the company has planned over a million sq.ft of residential development. The approvals are in place and marketing plans are being finalised.
Mr T. S. S. Krishnan, COO, Appaswamy Real Estates, attributes the perk-up to the belief that buyers in Chennai realise that prices are not likely to drop further in projects within the city. At one of the company’s project on 100 Feet Road near Koyambedu, bookings are on the increase for a project priced at Rs 5,000 a sq ft. Compared to December and January — months he would like to forget as a bad dream — there is life in the market, he says.
Mr Ajit Chordia, Managing Director, Khivraj Tech Park, a leading developer of IT and residential space, who is promoting Opaline, a residential project on Old Mahabalipuram Road, says customer walk-in is on the increase – 15-20 on weekdays and 30 on weekends. Last year-end it was down to single digits on weekends and even less on weekdays. Sales have also perked up, he said.
Some life in IT
Mr Chordia, who has also promoted the 1.8 million sq.ft Olympia Tech Park, one of the largest IT developments in Chennai, said there is a definite increase in enquiries for IT space. Leading MNCs in IT and telecom are looking for quality space, he said.
According to Mr S. Salaikumaran, Director and COO, India Land and Properties Ltd, the project has seen over 6 lakh sq ft being leased out over the last three months.
Enquiries have been up in the last couple of months as compared to the previous months.
There are mixed reactions to the movement seen in IT space leasing. According to market sources, the movement seen in IT space is largely driven by companies taking advantage of the drop in lease rates. Not necessarily, said Mr R. Murugesan, Chief Operating Officer, Shriram Properties.
At the Gateway SEZ, in February, the facility saw enquiries for two “large-scale leasing” though the names cannot be divulged, he said. IT leasing is not an “everyday affair” like residential sales.
But definitely, enquiries are up and they are a mix of companies expanding and new space requirement and those exiting high-lease rents to take advantage of competitive rates, he said.
The Hindu Business Line, March 22, 2009, page 15
--------------------------------------------------------------------------------
Unlike the last few months, there are signs of interest in real-estate picking up in March. Even if these may not indicate a revival, they give hope of better times ahead.
--------------------------------------------------------------------------------
R. Balaji
Buyers are interested…
Walk-ins are on the increase…
I have had some bookings happening over the last few days…
Things are not as bad in February-March as they were in the previous months…
These are some of the observations of real-estate developers of residential and IT space, officials at a housing finance company and property consultants. Compared to the last few months, March seems to show some signs of activity in the market in Chennai and some other cities. Even if these are not signs of a revival they definitely indicate enough to give hope of better things to come, they believe.
An official at a leading housing finance institution says developers are definitely reporting an increase in sales across a range of segments. A major IT space developer has, in the last three months, got bookings for a few lakh sq ft in his project. Housing loan enquiries are also more in number than a couple of months ago.
The reason? Possibly, buyers — specifically the end-users — have reconciled to the latest market conditions; maybe they realise that there is value at current price levels and interest rates, as banks have dropped home loan rates. Maybe the price cuts by developers also helped. Why look a gift-horse in the mouth? After the doldrums in December and January, any sign of movement is welcome, say real estate players.
At least, developers’ interest has perked up enough for them to look at launching projects. Take, for instance, Provident Housing’s project launched last weekend — according to a company official handling the project coming up on Old Mahabalipuram Road, buyers have lapped up nearly all of the 518 apartments announced in the first phase. Only about 30 units are left in the project that has been priced in the affordable range — about Rs 18 lakh for a three-bedroom unit. Construction is to start next month.
According to Mr M. Murali, Managing Director, Shriram Properties Ltd, which is promoting a 60-lakh sq ft IT SEZ, Gateway, at Tambaram on the outskirts of Chennai, the company has decided to promote a 600-apartment residential project in the non-SEZ area. It has cut back on the IT and commercial space. Give the buyers value and advantage — location and pricing — and properties will sell, he says.
Across cities
Buyers’ interest is not just restricted to Chennai but also to small cities and other urban centres where properties had not been overvalued and the markets not flooded with projects. Kolkata is the other metropolitan city that continues to see movement of residential space.
Coimbatore and Visakhapatnam also offer potential even under current market conditions, he says.
This is the reason why Shriram Properties is promoting its Smart Homes projects of value housing of 700-1,400 sq ft apartments in these cities, apart from Bangalore, Mr Murali said.
Of the projects planned in four locations in Bangalore, approvals for one with 600 apartments are in place and the project is to be launched on Sunday (March 22). Over the last three months, a soft launch of the projects has seen sales that are nothing to complain about — 360 units have been booked at the Bangalore project; in Visakhapatnam 337 of the 600 units have been sold with the units priced at Rs 2,800 a sq.ft.
Mr Murali attributes the activity in Visakhapatnam to the low supply of quality housing, also the city is seen as the next major option to the State capital. Hyderabad itself is saturated, he said.
In Kolkata, the company has planned over a million sq.ft of residential development. The approvals are in place and marketing plans are being finalised.
Mr T. S. S. Krishnan, COO, Appaswamy Real Estates, attributes the perk-up to the belief that buyers in Chennai realise that prices are not likely to drop further in projects within the city. At one of the company’s project on 100 Feet Road near Koyambedu, bookings are on the increase for a project priced at Rs 5,000 a sq ft. Compared to December and January — months he would like to forget as a bad dream — there is life in the market, he says.
Mr Ajit Chordia, Managing Director, Khivraj Tech Park, a leading developer of IT and residential space, who is promoting Opaline, a residential project on Old Mahabalipuram Road, says customer walk-in is on the increase – 15-20 on weekdays and 30 on weekends. Last year-end it was down to single digits on weekends and even less on weekdays. Sales have also perked up, he said.
Some life in IT
Mr Chordia, who has also promoted the 1.8 million sq.ft Olympia Tech Park, one of the largest IT developments in Chennai, said there is a definite increase in enquiries for IT space. Leading MNCs in IT and telecom are looking for quality space, he said.
According to Mr S. Salaikumaran, Director and COO, India Land and Properties Ltd, the project has seen over 6 lakh sq ft being leased out over the last three months.
Enquiries have been up in the last couple of months as compared to the previous months.
There are mixed reactions to the movement seen in IT space leasing. According to market sources, the movement seen in IT space is largely driven by companies taking advantage of the drop in lease rates. Not necessarily, said Mr R. Murugesan, Chief Operating Officer, Shriram Properties.
At the Gateway SEZ, in February, the facility saw enquiries for two “large-scale leasing” though the names cannot be divulged, he said. IT leasing is not an “everyday affair” like residential sales.
But definitely, enquiries are up and they are a mix of companies expanding and new space requirement and those exiting high-lease rents to take advantage of competitive rates, he said.
Home RUN
Home RUN
The Economic Times, March 22, 2009, Page 9
With developers offering major discounts and agreeing to attractive price negotiations, this is perhaps the right opportunity for first-time home buyers to take the plunge. And things are only getting better, say Neha Dewan & Raja Awasthi
PLANNING to buy a house? If you are worried that this is not the right time, you may be mistaken. While market sentiments may still take some time to perk up, there are a whole lot of benefits in store for the first-time buyer, who decides to take the plunge. Be it in terms of deep discount offers, scope for attractive price negotiations and developers promising timely completion of the projects — the time is right for the buyer looking at owning a dream house for the first time. But should you opt for a new house or an existing property?
Mona Chhabra, associate director, real estate practice, Ernst & Young, feels developers across the country are not only adopting typical marketing tools such as discount schemes/limited period offers but are also coming out with unique schemes attracting new home buyers. “Among the most outrageous discount offers we have seen is the ‘one house free on purchase of one house’. Other offers include 25% discount on price for a specific period, premium cars such as BMW and Mercedes with purchase of an apartment. Some are offering discounts in the form of sharing interest cost of customers by bearing their home loan EMIs till possession,” she says.
Dwindling demand and falling property prices appear to have created a platform for buyers to negotiate prices with developers, which till a year ago was unheard of. And with more price cuts in the offing, buyers seem to be having the upper hand. The slowdown in sales and cash crunch delaying real estate projects had made some developers adopt the new marketing mantra of on-time completion as their USP — a commitment that until recently was taken for granted. Experts feels that sentiments are improving, albeit slowly.
Many in the industry feel that when the market was booming, completing projects on time was taken for granted. Now with funds drying up and projects getting stalled, real estate buyers are already feeling the heat — for some, possession has been delayed by over one year. So developers are now hoping to differentiate themselves from the rest, by meeting project deadlines.
Global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) says they have been able to secure advantageous deals for a number of clients in projects that would otherwise have been unattainable previously. “The primary advantage would lie in the current pricing — which is, in many locations, the most favourable in many years. Today, first-time buyers account for roughly 60% of the overall residential market. The remaining 40% consists of second and third-time buyers, who may or may not be investors. This derives from the fact that the currently rationalised property rates regimen is causing the highest amount of activity among first timers,” says Raminder Grover, CEO, Homebay Residential, JLLM.
But what is the kind of property purchase that a new buyer should opt for right now — a new property or an existing one? The answer to that may depend on the buyer’s budget and location choice as well. But the trend is more tilted towards the primary sales market, feels Grover. Others feel that the first-time buyer is essentially looking for the cheapest deal, whether it is an existing property or a new house. “Buying an existing house could be more beneficial right now as it will offer him the best deal in terms of a greater resale value,” says Kamal Taneja, MD, TDI. The developer recently launched a Rs 9 lakh down payment scheme for an older project, Kingsbury Terraces which is now sold out. The scheme being that customers had to pay Rs 9 lakh now and nothing for the next 24 months, till the time of possession.
But even if you plan to buy right now, keep a few dos and don’ts in mind. Conducting a due diligence on the property’s title, looking at the financial backing of the company and choosing locations with a future appreciation potential are some pointers that will help.
Rajeev Rai, V-P of Assotech, however, feels that even though the choice between the two would vary on a case-to-case basis, buying a new house is always beneficial to the buyer as he gets most of the things of choice in a new project. Assotech has incentives such as helipad on rooftop, flexi home etc for first-time home buyers.
Besides all these measures, the developers might also come up with more freebies with the discounts. In fact, falling sales and rising inventory over the last two years have forced developers to admit that they are looking to offer more discounts, in the coming few months.
Says Rohtas Goel, president, Naredco & CMD, Omaxe Group: “Today’s smart buyer knows his needs and enters the real estate market only after doing thorough market analysis. He is fully aware of the financial implications of such freebies. These days the buyer is more keen on the delivery and how he can prolong the payment schedule. The buyer wants to get value for money in the present market conditions.”
ROOM FOR MORE
A lot of benefits in store for the first time buyer
Dwindling demand and falling property prices have created platform for buyers to negotiate prices with developers
Among the most outrageous discount offers has been the one house free on purchase of one
Other Offers include 25% off for a specific period. Discounts in the form of sharing interest costs of customers by bearing their home loan EMIs till possession
Developers might come up with more freebies. Falling sales and rising inventory over last two years may make developers offer more discounts in the coming few months.
Apartment glut forces builders to slash prices
Apartment glut forces builders to slash prices
Hindustan Times – Business, March 21, 2009, Page 23
More than half the residential apartments already built or under construction in key markets across India remain unsold, according to a report by a Mumbai based real estate research agency Liases Foras.
This is due to high realty prices which forced buyers to stay away from the market over the last two years. According to the report, 53 per cent of all flats in fully constructed buildings or under construction stage are vacant due the absence of buyers — 20 per cent of them are fully built and waiting for buyers.
This high inventory of flats has now forced developers to offer heavy discounts.
“Our survey found that there is an inventory of 60-70 months,” said Pankaj Kapoor, CEO, Liases Foras. “Buyers will come if residential apartment prices drop by 40-45 per cent from their peaks. Prices have already dropped by 25-30 per cent due to liquidity crunch faced by developers. One can expect further correction of 5 to 10 per cent.”
The firm conducted a survey of all projects just completed or to be completed by end of 2010 in six cities including NCR, Delhi and Mumbai Metropolitan region and found that 4.35 lakh out of 8.21 lakh houses have not been sold.
In the Mumbai region more than 8 crore sq ft area is unsold. Similarly, there is an inventory of more than 15 crore sq ft in the NCR (60 per cent in Ghaziabad, 20 per cent in Gurgaon and the rest in Noida and Faridabad).
In the Mumbai region most of the unsold property is in Navi Mumbai, Thane, extended suburbs of Kalyan-Dombivali and Mira-Bahayander, said Kapoor. He said 50 crore sq ft of residential space out of 94.5 crore is lying vacant in six cities, the least being in Chennai.
“There is no doubt that prices have corrected by 10-35 per cent and this has created a demand,” said Niranjan Hiranandani, managing director, Hiranandani Construction, a developer of premium houses. “Most newly launched projects are getting sold out and we are expecting the recovery faster than expected.”
Hindustan Times – Business, March 21, 2009, Page 23
More than half the residential apartments already built or under construction in key markets across India remain unsold, according to a report by a Mumbai based real estate research agency Liases Foras.
This is due to high realty prices which forced buyers to stay away from the market over the last two years. According to the report, 53 per cent of all flats in fully constructed buildings or under construction stage are vacant due the absence of buyers — 20 per cent of them are fully built and waiting for buyers.
This high inventory of flats has now forced developers to offer heavy discounts.
“Our survey found that there is an inventory of 60-70 months,” said Pankaj Kapoor, CEO, Liases Foras. “Buyers will come if residential apartment prices drop by 40-45 per cent from their peaks. Prices have already dropped by 25-30 per cent due to liquidity crunch faced by developers. One can expect further correction of 5 to 10 per cent.”
The firm conducted a survey of all projects just completed or to be completed by end of 2010 in six cities including NCR, Delhi and Mumbai Metropolitan region and found that 4.35 lakh out of 8.21 lakh houses have not been sold.
In the Mumbai region more than 8 crore sq ft area is unsold. Similarly, there is an inventory of more than 15 crore sq ft in the NCR (60 per cent in Ghaziabad, 20 per cent in Gurgaon and the rest in Noida and Faridabad).
In the Mumbai region most of the unsold property is in Navi Mumbai, Thane, extended suburbs of Kalyan-Dombivali and Mira-Bahayander, said Kapoor. He said 50 crore sq ft of residential space out of 94.5 crore is lying vacant in six cities, the least being in Chennai.
“There is no doubt that prices have corrected by 10-35 per cent and this has created a demand,” said Niranjan Hiranandani, managing director, Hiranandani Construction, a developer of premium houses. “Most newly launched projects are getting sold out and we are expecting the recovery faster than expected.”
LIFE in the ’BURBS
LIFE in the ’BURBS
The Economic Times, March 22, 2009, Page 8
With core city areas becoming increasingly unaffordable, suburban living is attracting more and more young Indian professionals. So which is the best suburb and which could do better? Neha Dewan finds out
They are increasingly being touted as the most liveable residential hubs of India. Offering the luxury of sprawling greens, spacious developments and ‘value for money’ homes — suburbs are emerging as a popular buyer preference like never before. What has also helped in their success saga over the last few years has been the skyrocketing real estate prices in core city areas coupled with low supply. Suburban living is fast catching up as the preference among a host of home buyers, and these satellite towns are being touted as the future growth drivers of real estate in India.
But are suburbs as promising as they are made out to be? While many of them boast of offering wide-ranging facilities, not all have well-planned infrastructure and accessibility. So which are the most liveable of the lot?
SundayET commissioned a survey to global real estate consultancy Cushman and Wakefield (C&W) and spoke to industry experts and developers to find out the best suburbs in the top six cities. And here’s what we got.
While Gurgaon and Noida around Delhi came up as the most liveable of the lot, it was Navi Mumbai and Thane which have grown tremendously over the years. Rajarhat’s convenient proximity to the airport makes it a sought after suburb of Kolkata while it is the significant commercial developments in Whitefield and the Outer Ring Road stretch of Bangalore that have made these locations well-desired by a host of business professionals. The diverse availability of residential units catering to low, mid as well as high-income population has made Hyderabad’s Kukatpally-Miyapur stretch a huge success. Whereas it has been a fast pace of development on the Grand Southern Trunk Road (GST Road) on the outskirts of Chennai that makes it an attractive bet.
From a consumer’s perspective, these suburbs have become a better option due to availability of quality housing, more affordable pricing, larger spaces, value for money and a decent living standard. Says Shveta Jain,national head, residential services, Cushman & Wakefield India, “In the last five years, the satellite towns have witnessed an increase in real estate activity. And given the development of new office destinations in close proxmity as well as the unaffordable property prices prevalent in the cities, they have become an apparent choice of end-users.”
DELHI Gurgaon & Noida
Take the case of Gurgaon in Delhi NCR. One of the major destinations for IT/ITES, BPOs, KPOs and corporate offices, it has nearly become a residential haven due to easy proximity to workplaces. The growth across sectors has led to a demographic shift towards a younger, more cosmopolitan and affluent population driving the demand for newly constructed residential apartments and condominiums. The suburb is also famous for pioneering the shopping mall concept in NCR and continues to offer high retail development possibilities. However, the main challenge limiting Gurgaon is the connectivity to other parts of NCR. Lack of proper infrastructure planning and inadequate public transportation are some of the constraints here.
The New Okhla Industrial Development Authority, better known as Noida, on the other hand, is considered to be one of the better planned suburbs as it is one of the best
connected NCR towns of Delhi. Excellent infrastructure and connectivity to Delhi makes it an attractive location.
Even though demand is subdued right now owing to the market sentiments, developers feel that these suburbs are the best options that an end-user can avail of. “They have better infrastructure than the main city areas. Noida and Gurgaon are the most established ones of the lot. They are both destination of the NRIs. The demand right now in these areas is slow but firm. However, these are the areas which will grow the most once sentiments perk up,” feels Rohtas Goel, CMD, Omaxe. The developer has existing projects in Noida where they are offering reduced rates. While Grandwood in Noida is priced at Rs 4,200/ sq ft, Twin Towers are available for Rs 5,000/ sq ft.
MUMBAI Navi Mumbai/Thane
If Noida and Gurgaon are seen as NRI destinations, Navi Mumbai and Thane near Mumbai are not far behind in emerging as profitable destinations, most of the developers and consultants who we spoke to confirmed. While Thane ranks high on general infrastructure, affordability and workplace catchment, Navi Mumbai is coming up in a big way due to its planning, a distinct culture as well as lifestyle. “Property rates in Navi Mumbai are favourable, and there is a good range to choose from as well,” says Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM). Narendra Lodha, senior veep, sales, Kalpataru, however, is of the view that the central suburb of Ghatkopar has a stronger potential to grow in the days to come as there is an influx of real estate, retail, IT parks, availability of more office-space and better connectivity to different parts of Mumbai. Powai in the northern suburb of Mumbai has also grown tremendously in the past decade.
KOLKATA Rajarhat & Narendrapur
More than the infrastructure and commercial activities, it is the convenient locations of the suburbs of Kolkata — Rajarhat and Garia & Narendrapur which makes them viable residential spots. While Rajarhat is located near the NSC Bose International Airport, Garia and Narendrapur located on the southern fringes of Kolkata city are close to thee Eastern Metropolitan Bypass. Rajarhat, however, is yet to have basic infrastructure in place. Real estate majors such as DLF, Unitech, Shapoorji Pallonji have major residential and commercial developments lined up here. Notable new projects include Ujjwala, Rosedale and Symphony among others with prices ranging from Rs 2,700-Rs 3,300/ sq ft. Garia and Narendrapur, on the other hand, have basic infrastructure facilities, notable among them being the Metro Railway extension which is underway and will extend from Tollygunge to Garia. Presently the location boasts of significant residential projects such as Sherwood Estates, Mayfair Greens and Sunny Dew among others with prices ranging from Rs 1,500-Rs 2,000 per sq ft. Developers feel that people are choosing to move away from conventional residential options. “People are moving to organised, suburban developments where their money is able to buy them much more and have every urban convenience with greater lifestyle. Inner city options are far more expensive and have little to offer by way of a lifestyle,” says Riverbank Holdings’ MD Sumit Dabriwala. Others such as Pradip Kumar Chopra, PS Group chairman & managing director, are of the view that developers are increasingly looking to offer value for money services at their residential complexes in suburbs.
BANGALORE Whitefield/Outer Ring Road
Moving on to south, suburbs of Bangalore such as Whitefield and Outer Ring Road (Marathahalli - Sarjapur stretch) have witnessed significant commercial developments, making them lucrative locations. However while public transport facilities in the micro-market offer excellent connectivity with the rest of the city, accessibility remains a concern. Like Whitefield, the Outer Ring Road (Marathahalli - Sarjapur stretch) has ongoing initiatives to improve the physical infrastructure. This micro market is dominated by apartments with developers such as Sobha Developers, Mantri and Purvankara offering affordable prices after the recent corrections.
CHENNAI GST/OMR
Unlike the suburbs of Bangalore, the Grand Southern Trunk (GST) Road and Old Mahabalipuram Road (OMR) of Chennai are high on the accessibility factor. The Industrial belts such as Maraimalai Nagar, Padappai and Oragadam makes living along the GST road convenient. The major advantage is the road and rail transport which connects Chengalpettu to the Port. IT professionals experiencing pay cuts have also now started taking interest in the area because of relatively affordable rentals with better connectivity. Appaswamy Real Estates COO T S S Krishnan, feels that the GST corridor, in particular, is excellent in terms of infrastructure whether it be road or rail network. The other emerging suburb is OMR, a 35-km IT corridor running south from Adyar in Chennai. The frenetic development on the OMR has so far been office space for the IT/ITES sectors. With the IT corridor expected to generate over 30,000 new jobs annually, the need to offer retail and entertainment facilities in the vicinity is kicking off. Disadvantages, however, do exist. Water has been a problem on this stretch with metro water not available. The road is also not well-connected by rail with only MTC buses and rickshaws being the alternatives for public transport. Says Akshaya Homes chairman Chitty Babu, “GST and OMR are two suburban corridors, where there is considerable interest among home buyers. With the Mahindra City fully operational, customers are evaluating these locations seriously. At GST, prices would go up from Rs 3,000/sq ft to Rs 3,500/sq ft while at OMR, they are expected to rise from the current Rs 3,500/ sq ft to Rs 4,000/sq ft.”
HYDERABAD Kukatpally-Miyapur
But it is the diversity of residential units catering to the low income group (LIG), middle income group (MIG) as well as high income group (HIG) population which makes the Kukatpally-Miyapur stretch of Hyderabad well known. The Kukatpally and Miyapur region stretching 4 to 5 kilometres along the NH-9 have gained prominence due to overall real estate activities. This stretch is also a retail high street with presence of various apparel, food and grocery retailers. However, commercial office and hospitality infrastructure availability is very minimal in these localities. Connectivity will remain a future growth driver for this location with the proposed Mass Rapid Transit Systems (MRTS) with its depot in Miyapur. George Johnson, city head, JLLM, says that Kukatpally is one of the dominant suburbs existent. “The supply pipeline is good here, which indicates that this area will grow consistently in attractiveness and locational value. The property rates here were on the high side until recently –however, both affordable and high-end housing is now available. The rates in Kukatpalli range roughly between Rs 2,000-Rs 3,500/sq ft.”
GLOBAL PERSPECTIVE
Internationally, the concept of suburban living stands in sharp contrast to that of India. These locations are formed and defined on the basis of road-travel time from the inner city. The concept of a parent city that spawns satellite cities is very distinct, with such cities located anywhere between 25-50 kilometres from the parent city. Says Puri of JLLM, “Typically, such satellite cities are self–sufficient in almost all respects pertaining to lifestyle and social amenities. This cannot be said for Indian suburbs, which cannot be segregated from the parent city. Indian suburbs are extensions of the parent city.” There is also a clear segregation of residential spaces from the commercial in international suburbs unlike in India. But here too, the peripheries are evolving as major residential destinations. And even though many of these established suburbs have challenges ahead, the journey to better living has just begun.
With inputs from Anuradha Himatsingka in Kolkata, Hemamalini Venkatraman in Chennai, Trushna Udgirkar in Hyderabad & Nandini Raghavendra in Mumbai
Suburbs are the growth avenues
Suburbs are the growth avenues
The Economic Times, March 22, 2009, Page 8
SUBURBS are a major avenue for growth opportunities in India. In the last decade, as incomes and businesses increased, all opportunities were found to be primarily in the suburbs.
The old towns were designed in a compact format keeping a small population in mind. At the time of Independence, only 10% of the population was in the cities while the rest was in rural areas.
But now the reality is that 90% of growth is centred around the new areas and the younger population is staying in these upcoming areas. As for India’s suburbs, the pros and cons are many. New and improved infrastructure and viable locations coming up, is the obvious advantage of these areas. But the cost of developing the infrastructure could pose a deterrent.
India never really thought of infrastructure as a requisite in earlier times. Only recently the government has started the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) where it encourages states to step up efforts and create better and improved cities. Such initiatives have been a very recent 4-5 year old story.
Over the years though, these suburbs have evolved in scale and quality. Earlier they were looked upon as broad extensions of cities. But now they are considered small cities, wellequipped in themselves. But challenges regarding law and order, security, healthcare, medical aid or any other aspect do exist. However, these can be tackled with various initiatives on the part of the government as well as the developers. The government must focus on infrastructure, electricity, water, road, sewage and other external services. Building airports, roads etc should be managed by the government. On the other hand, the internal infrastructure should be left for developers to manage — be it public or private developers. Everyone has their own expertise in the respective fields. At times, a joint partnership between private developers and the government can also work well.
Infrastructure development, in fact, needs to be given special attention as it is rather weak in these locations. Delhi, perhaps, is the only exception to that with the Metro and other forms of direct connectivity in place. Infrastructure should come first, before any other development takes place. In India, the infrastructure follows only later. Internationally, these bottlenecks are well taken care of. The general quality of suburban locations and the infrastructural development is quite well-matched abroad.
Unlike in foreign destinations, the pricing in suburban areas in India tends to be much less than that in core city areas. The reason for this is simple. The supply here has not come up in comparison to the demand being seen. Also, the land is cheaper in these areas thus scaling down the costs here.
We have upcoming projects in Thane and Panwel in Mumbai as well as the suburbs of Chennai and Pune. There has been an overall 15-20% drop in the prices of real estate projects in suburbs. But, I foresee a great demand ahead. I feel there will be unlimited demand for these locations June onwards.
(As told to Neha Dewan)
The Economic Times, March 22, 2009, Page 8
SUBURBS are a major avenue for growth opportunities in India. In the last decade, as incomes and businesses increased, all opportunities were found to be primarily in the suburbs.
The old towns were designed in a compact format keeping a small population in mind. At the time of Independence, only 10% of the population was in the cities while the rest was in rural areas.
But now the reality is that 90% of growth is centred around the new areas and the younger population is staying in these upcoming areas. As for India’s suburbs, the pros and cons are many. New and improved infrastructure and viable locations coming up, is the obvious advantage of these areas. But the cost of developing the infrastructure could pose a deterrent.
India never really thought of infrastructure as a requisite in earlier times. Only recently the government has started the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) where it encourages states to step up efforts and create better and improved cities. Such initiatives have been a very recent 4-5 year old story.
Over the years though, these suburbs have evolved in scale and quality. Earlier they were looked upon as broad extensions of cities. But now they are considered small cities, wellequipped in themselves. But challenges regarding law and order, security, healthcare, medical aid or any other aspect do exist. However, these can be tackled with various initiatives on the part of the government as well as the developers. The government must focus on infrastructure, electricity, water, road, sewage and other external services. Building airports, roads etc should be managed by the government. On the other hand, the internal infrastructure should be left for developers to manage — be it public or private developers. Everyone has their own expertise in the respective fields. At times, a joint partnership between private developers and the government can also work well.
Infrastructure development, in fact, needs to be given special attention as it is rather weak in these locations. Delhi, perhaps, is the only exception to that with the Metro and other forms of direct connectivity in place. Infrastructure should come first, before any other development takes place. In India, the infrastructure follows only later. Internationally, these bottlenecks are well taken care of. The general quality of suburban locations and the infrastructural development is quite well-matched abroad.
Unlike in foreign destinations, the pricing in suburban areas in India tends to be much less than that in core city areas. The reason for this is simple. The supply here has not come up in comparison to the demand being seen. Also, the land is cheaper in these areas thus scaling down the costs here.
We have upcoming projects in Thane and Panwel in Mumbai as well as the suburbs of Chennai and Pune. There has been an overall 15-20% drop in the prices of real estate projects in suburbs. But, I foresee a great demand ahead. I feel there will be unlimited demand for these locations June onwards.
(As told to Neha Dewan)
Recession heat now on retail, commercial segments
Recession heat now on retail, commercial segments
The Economic Times, March 22, 2009, page 6
NEARLY 90 MILLION SQFT GRADE-A COMMERCIAL SPACE IS BLOCKED ACROSS TOP SEVEN CITIES
Raja Awasthi NEW DELHI
THE meltdown in the residential segment of real estate is known but the situation is no better in the retail and commercial space as well. Many projects across the country have been badly hit and industry analysts feel that there is a huge over supply of retail and commercial space.
In fact, there's nearly 90 million sq ft of grade A commercial space that is blocked (lying unconstructed) across the top seven cities and more than 25 million sq ft of retail space that is similarly blocked. In the star category hotel segment, 3,000 rooms were expected to be opened for the market in the first six months of 2009, but only 1,000 of these will actually come up.
Says Sanjay Dutt, CEO, Jones Lang LaSalle Meghraj:" The reasons for so much property lying unconstructed is a drop in overall demand, a severe liquidity crunch, generalised uncertainty in the market and the non-viability of many projects, deriving from the fact that some developers bought land at high prices and now are unable to sell at cheaper prices and are now stuck. In the hotel segment, 3,000 rooms were expected to be opened for the market - however only about 1,000 of these will actually materialize. Residential projects, though not actually stalled, are in goslow mode as developers are re-working their original plans to make these projects more affordable."
There are at least 15 million sq ft of commercial real estate blocked across Mumbai and Thane district. While in NCR region more than 12 million sq ft of space has been blocked and one million sq ft each in Chennai and Kolkata markets. There were about 0.5 million housing units that came up in Q4 of 2008 in the same period in 2007 0.8 million housing units came up. Now many projects will be shelved or will face delayed completion. The possibility of projects being shelved is the lowest in the residential asset class as compared to commercial and retail space. In many cases the residential projects might undergo some construction changes in terms of configuration, pricing and size.
Many in the industry believe that there has been an over supply of retail and commercial space. This has resulted in many developers, who till sometime back were not ready to even negotiate prices, now offering discounts and freebies to attract tenants. Majority of the developers across the country have lowered the common area maintenance charges that include facilities like air-conditioning, toilets and general space upkeep. In fact, this itself constitutes almost half of the rentals paid.
Says Kishore Biyani, CEO of Future Group:" It is just a mis-match of demand and supply in the real estate business. We feel that now is the time where the developers should rework the entire gambit of the business. Till such time the retail market does not pick up it would be very difficult to absorb such kind of space. In the near future the market has to stabilise as far as the rentals are concerned. Productivity is a key factor for any retailer to operate efficiently in a mall, in case of a leased deal."
However, in certain micro-markets many retail spaces saw conversion into office space for quick revenue returns due to continued and increasing demand for office space in certain micro markets. This particular trend is expected to continue in the coming few quarters too.
The Economic Times, March 22, 2009, page 6
NEARLY 90 MILLION SQFT GRADE-A COMMERCIAL SPACE IS BLOCKED ACROSS TOP SEVEN CITIES
Raja Awasthi NEW DELHI
THE meltdown in the residential segment of real estate is known but the situation is no better in the retail and commercial space as well. Many projects across the country have been badly hit and industry analysts feel that there is a huge over supply of retail and commercial space.
In fact, there's nearly 90 million sq ft of grade A commercial space that is blocked (lying unconstructed) across the top seven cities and more than 25 million sq ft of retail space that is similarly blocked. In the star category hotel segment, 3,000 rooms were expected to be opened for the market in the first six months of 2009, but only 1,000 of these will actually come up.
Says Sanjay Dutt, CEO, Jones Lang LaSalle Meghraj:" The reasons for so much property lying unconstructed is a drop in overall demand, a severe liquidity crunch, generalised uncertainty in the market and the non-viability of many projects, deriving from the fact that some developers bought land at high prices and now are unable to sell at cheaper prices and are now stuck. In the hotel segment, 3,000 rooms were expected to be opened for the market - however only about 1,000 of these will actually materialize. Residential projects, though not actually stalled, are in goslow mode as developers are re-working their original plans to make these projects more affordable."
There are at least 15 million sq ft of commercial real estate blocked across Mumbai and Thane district. While in NCR region more than 12 million sq ft of space has been blocked and one million sq ft each in Chennai and Kolkata markets. There were about 0.5 million housing units that came up in Q4 of 2008 in the same period in 2007 0.8 million housing units came up. Now many projects will be shelved or will face delayed completion. The possibility of projects being shelved is the lowest in the residential asset class as compared to commercial and retail space. In many cases the residential projects might undergo some construction changes in terms of configuration, pricing and size.
Many in the industry believe that there has been an over supply of retail and commercial space. This has resulted in many developers, who till sometime back were not ready to even negotiate prices, now offering discounts and freebies to attract tenants. Majority of the developers across the country have lowered the common area maintenance charges that include facilities like air-conditioning, toilets and general space upkeep. In fact, this itself constitutes almost half of the rentals paid.
Says Kishore Biyani, CEO of Future Group:" It is just a mis-match of demand and supply in the real estate business. We feel that now is the time where the developers should rework the entire gambit of the business. Till such time the retail market does not pick up it would be very difficult to absorb such kind of space. In the near future the market has to stabilise as far as the rentals are concerned. Productivity is a key factor for any retailer to operate efficiently in a mall, in case of a leased deal."
However, in certain micro-markets many retail spaces saw conversion into office space for quick revenue returns due to continued and increasing demand for office space in certain micro markets. This particular trend is expected to continue in the coming few quarters too.
Global pharma's India shift to shore up realty
Global pharma's India shift to shore up realty
Sunday Business Standard, March 22, 2009, Page 3
Nivedita Bhaduri & Margaret Williams / Kolkata
The pharmaceutical sector may emerge as a major buyer of real estate in the country, bucking the current economic slowdown.
Based on information from 10 pharmaceutical companies based in North America and Europe, a recent Jones Lang LaSalle Meghraj (JLLM) report said these were keen to set up their manufacturing units in India or expand their existing units.
Taken together, these would need about 15,000 acres over the next seven years to set up research and development centres, new units and to expand the existing units. “There will be demand for about 15,000 acres for manufacturing plants, laboratories, testing facilities and offices,” said Nirav Kothary, vice-president, JLLM.
Kothary said the factors attracting these companies to India included low production cost, 50-55 per cent saving in cost of production of basic pharmaceutical products, 100 per cent foreign direct investment in the pharmaceutical industry, low import duty (7.5 per cent) on medical equipment, exemption of clinical trials for new drugs from service tax, intellectual property protection, and incentives to companies setting up facilities in pharma special economic zones (SEZs).
India was fast emerging as the most favoured destination for contract research and manufacturing services due to its large pool of patients, low manpower cost, and availability of talent and infrastructure for research & development (R&D), claimed Kothary.
To date, 13 pharmaceutical SEZs, covering 3,400 acres, have been notified. Another 15,000 acres will be required to accommodate pharmaceutical units as their number could double from around 5,050 at present to 10,200 over the next seven to eight years.
Andhra Pradesh, Maharashtra and Gujarat were the most favoured destinations for companies planning to open new units due to their proximity to ports and presence of SEZs. Andhra Pradesh and Maharashtra have four notified pharma SEZs each.
The Jawaharlal Nehru Pharma City, covering about 2,500 acres, has the largest notified Indian pharma SEZ in Andhra Pradesh. It is being developed by Ramky Pharma City India Limited (RPCIL), a special purpose joint venture between the Ramky Group and the Andhra Pradesh Industrial Infrastructure Ltd. Of the 2,143 acres, 661 acres have been earmarked for the pharma SEZ. The Rs 630 crore pharma park had 75 domestic and international companies, which had taken up 1,000 acres, said Eswar Reddy, chief operating officer, RPCIL.
Around 25 more investors had evinced interest in setting up manufacturing units in the Pharma City and more deals were expected soon, said G Parameshwar, general manager for business development at RPCIL.
The park was expected to attract investments of around Rs 10,000 crore from about 100 units, providing employment to more than 30,000 people.
Companies such as Vasudha Pharma, Glochem Industries, Auctus Pharma and Aptuit Laurus in the non-SEZ area have already started commercial production, while Eisai Pharma from Japan has started construction. Shasun Chemicals and Orchid Chemicals have got unit approval to start construction.
Another developer, Inspira Infrastructure Limited (IIL), through its special purpose vehicle, Ajanta Projects Infrastructure Ltd, will be setting up a pharma SEZ over about 250 acres and a biotech SEZ over 25 acres at Aurangabad.
R Agrawal, director of IIL, said while planning and detailed engineering work was under progress, ground work was expected to commence from May. “The project is on schedule and we are hopeful that the ground work will start from May”, said Agrawal. Around 10 companies, both domestic and international, had evinced interest, he added. The ground work for the biotech SEZ will start in three-four months. He said he could not reveal any “investment figure” as of now.
The Maharashtra Industrial Development Corporation (MIDC) is also setting up a pharma SEZ, spread across 371 acres, at Nanded.
MIDC sources said the project was on track. The work to build boundary walls and getting approvals for plots was on, they added. The source confirmed that the project at Aurangabad, executed by Wockhardt Infrastructure Development Limited (WIDL) in association with the MIDC, was also on track.
A mail forwarded to the Wockhardt group was not answered. WIDL is also setting up a state-of-the-art pharmaceutical and biopharmaceutical manufacturing and research facility at the SEZ.
The 302-acre bio-pharma SEZ in Gujarat, being developed by CPL Infrastructure Private Limited, was in final legs of completion, after which it would be marketed from this year, said a top official of the company.
Sunday Business Standard, March 22, 2009, Page 3
Nivedita Bhaduri & Margaret Williams / Kolkata
The pharmaceutical sector may emerge as a major buyer of real estate in the country, bucking the current economic slowdown.
Based on information from 10 pharmaceutical companies based in North America and Europe, a recent Jones Lang LaSalle Meghraj (JLLM) report said these were keen to set up their manufacturing units in India or expand their existing units.
Taken together, these would need about 15,000 acres over the next seven years to set up research and development centres, new units and to expand the existing units. “There will be demand for about 15,000 acres for manufacturing plants, laboratories, testing facilities and offices,” said Nirav Kothary, vice-president, JLLM.
Kothary said the factors attracting these companies to India included low production cost, 50-55 per cent saving in cost of production of basic pharmaceutical products, 100 per cent foreign direct investment in the pharmaceutical industry, low import duty (7.5 per cent) on medical equipment, exemption of clinical trials for new drugs from service tax, intellectual property protection, and incentives to companies setting up facilities in pharma special economic zones (SEZs).
India was fast emerging as the most favoured destination for contract research and manufacturing services due to its large pool of patients, low manpower cost, and availability of talent and infrastructure for research & development (R&D), claimed Kothary.
To date, 13 pharmaceutical SEZs, covering 3,400 acres, have been notified. Another 15,000 acres will be required to accommodate pharmaceutical units as their number could double from around 5,050 at present to 10,200 over the next seven to eight years.
Andhra Pradesh, Maharashtra and Gujarat were the most favoured destinations for companies planning to open new units due to their proximity to ports and presence of SEZs. Andhra Pradesh and Maharashtra have four notified pharma SEZs each.
The Jawaharlal Nehru Pharma City, covering about 2,500 acres, has the largest notified Indian pharma SEZ in Andhra Pradesh. It is being developed by Ramky Pharma City India Limited (RPCIL), a special purpose joint venture between the Ramky Group and the Andhra Pradesh Industrial Infrastructure Ltd. Of the 2,143 acres, 661 acres have been earmarked for the pharma SEZ. The Rs 630 crore pharma park had 75 domestic and international companies, which had taken up 1,000 acres, said Eswar Reddy, chief operating officer, RPCIL.
Around 25 more investors had evinced interest in setting up manufacturing units in the Pharma City and more deals were expected soon, said G Parameshwar, general manager for business development at RPCIL.
The park was expected to attract investments of around Rs 10,000 crore from about 100 units, providing employment to more than 30,000 people.
Companies such as Vasudha Pharma, Glochem Industries, Auctus Pharma and Aptuit Laurus in the non-SEZ area have already started commercial production, while Eisai Pharma from Japan has started construction. Shasun Chemicals and Orchid Chemicals have got unit approval to start construction.
Another developer, Inspira Infrastructure Limited (IIL), through its special purpose vehicle, Ajanta Projects Infrastructure Ltd, will be setting up a pharma SEZ over about 250 acres and a biotech SEZ over 25 acres at Aurangabad.
R Agrawal, director of IIL, said while planning and detailed engineering work was under progress, ground work was expected to commence from May. “The project is on schedule and we are hopeful that the ground work will start from May”, said Agrawal. Around 10 companies, both domestic and international, had evinced interest, he added. The ground work for the biotech SEZ will start in three-four months. He said he could not reveal any “investment figure” as of now.
The Maharashtra Industrial Development Corporation (MIDC) is also setting up a pharma SEZ, spread across 371 acres, at Nanded.
MIDC sources said the project was on track. The work to build boundary walls and getting approvals for plots was on, they added. The source confirmed that the project at Aurangabad, executed by Wockhardt Infrastructure Development Limited (WIDL) in association with the MIDC, was also on track.
A mail forwarded to the Wockhardt group was not answered. WIDL is also setting up a state-of-the-art pharmaceutical and biopharmaceutical manufacturing and research facility at the SEZ.
The 302-acre bio-pharma SEZ in Gujarat, being developed by CPL Infrastructure Private Limited, was in final legs of completion, after which it would be marketed from this year, said a top official of the company.
"we are working on it, we plan to make it operational within this financial year," the source said.
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