The Monetary Policy Committee’s 3-day session seems to have taken into account the challenging global environment as well as the consumer inflation which is also well above the comfort levels for the central bank. The vote for a hike could also have been aided by the increased crude oil prices. Though the govt. has been passing on the hikes to date, a further hike may be very difficult to pass on which may have put additional pressure on the govt.

The hike may seem to dampen sentiments in the market but in terms of real estate may have little or no impact. As almost all home loans these days are on floating rates, the rise and fall in home loan rates does not impact the performance of residential real estate sector much and tends to balance each other out over long term. As buying decisions are generally not taken based on fluctuations in home loan rates, there will be very little effect on the real estate market. Though for some home buyers looking towards making a very low ticket size purchase decision, there may be some tentativeness in the decision making, overall we will see minimal impact on the end-user in the housing sector.

Ramesh Nair is CEO & Country Head at JLL India

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Discussing the impact of GST on real estate sector, Kunal Wadhwa, Partner -Indirect Tax, PwC India said, “The impact on real estate sector has always been part of the limelight for any major reform. The implementation of the Goods and Services Tax is of no exception. While the change brings in more transparency and maturity to the sector, the requirements under the anti-profiteering law has been a contentious issue for this sector.”

Abhishek Goenka, Partner and Tax Leader – Real Estate, PwC India said, “The benefit to the end customer would be seen primarily in projects executed post implementation of GST, but the benefit may not be as significant as the Government’s expectation. The Government should engage with stakeholders to address their concerns. This would help the market gain the needed momentum as anything related to the sector significantly impacts the sentiments of the economy.”

 Ramesh Nair, CEO and Country Head, JLL India said, “Goods and Services Tax (GST) has been a matter of discussion for both the demand and supply side of the real estate community. While a transparent uniform taxation system is good, the exact nitty-gritties of ‘how’ to implement this needs to be addressed swiftly. The government has issued certain circulars to set clarity in this sector, however, the need of the hour is to set up discussion forums across locations and engage with tax authorities and developers at different levels. This alone can address the concerns of this sector which plays a significant role in impacting the overall sentiment of the economy.”

Ramesh further added “GST which represents unified and simplified taxation policies of the country, will add to India’s attractiveness as an investment destination in the long run. It will further help in ease of doing business and creating transparency in processes. The benefit for the real estate sector in the future will be significant on account of growth of business and commerce in the country.”

Highlights:

• Currently there is lack of clarity among developers on the exact implications of GST. Developers feel that the exact impact will be understood only after a thorough analysis of the implications on each input cost (in form of labour and raw material, namely steel, cement, bricks, etc.)
• Further, with regard to such raw material inputs — the challenge lies in estimating the cost of these commodities over the entire life cycle of the project. Since the purchase of these supplies is linked to construction progress it is difficult for developers to estimate upfront the costs and input tax credit received for the same.
• There is the complexity of being on the right side of the NAA (National Anti-profiteering Authority) by passing on the benefit of input tax credit to the customer, despite an increase in any other costs. There is no specific mechanism provided for offsetting any other increase in costs against the benefits of input tax credit.
• Tax treatment of ongoing projects which were earlier under the VAT and service tax regime and will now migrate to GST is complex. It is not just a simple change in an excel formula and involves a much deeper understanding of how input tax credit is to be calculated.

The report summarises that the end consumers may be technically entitled to some amount of relief though not significant, whereas the builders would be better off explaining the rationale of passing on or not passing on this benefit depending on their fact pattern.

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Impact of Technology

The survey also shows that only a small number of CEOs (11.2%) think automation and AI will affect entire jobs, while 41.6% think only specific tasks within jobs will be affected. 47.2% expect automation and AI to affect certain jobs entirely and specific tasks within other jobs.

What this means is that business leaders understand that the impacts of automation and AI are complex; companies need to continuously train and retrain their employees, and business leaders play an important role in making sure that their companies provide the best environment for their employees in the face of disruption.

An overwhelming 81.1% of CEOs claim that they would lead by example and gladly automate parts of their job if AI was better at doing them than they are. To encourage their employees to embrace automation and AI as realities of tomorrow’s workplace, CEOs must equip themselves with up-to-date knowledge and skills that will enable them to work side-by-side with machines.

In the long term, to successfully leverage technology to transform the workplace, more CEOs will have to personally embrace the change that comes with technology. Instead of clinging to old behavioural patterns and be reactive, they must move beyond simply tackling and softening the impacts of technology to actually accelerating technology adoption so that they get to lead the transformation – if not broadly, at least in their companies.

Impact on real estate

 Technology has transformed many aspects of our lives – from how we communicate, to how we buy things and the way we work. It won’t be long before it transforms the real estate world. Data analytics, artificial intelligence, the Internet of Things, virtual reality, blockchain – all of these will have significant repercussions for how we invest in and occupy real estate.

 In a future, with an increasingly mobile and flexible workforce, the way in which companies utilize their leased office space will change drastically. With more and more processes being digitalized, it’s vital that real estate advisors, brokers, investors and start-ups recognize the changes and opportunities ahead.

 We are already seeing a range of business models disrupting the traditional real estate world, including the rapid adoption of co-working and ready to move in office spaces to support both entrepreneurs and corporations. Similarly, developers are beginning to offer amenities within their buildings to provide their tenants with greater flexibility of space options beyond traditional office spaces.

 Already at JLL, we’re integrating automation and AI into the services we provide to our clients. We are partnering with various investors to help them define these flexible spaces so that the buildings become more human-centric destinations rather than a just a fancy structure with no activation.

Ramesh Nair is CEO & Country Head at JLL India

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For the real estate industry, 2017 was a watershed year, with the roll-out of game-changing policies such as GST and RERA. Demonetization’s impact started to taper off slightly, while real estate investment trusts (REITs) did not take off this year as expected. Affordable housing came out of the shadows and affordably-priced units have been selling like hot cakes in most cities.

REITs are set to provide investment opportunities to smaller investors next year. India’s real estate markets are poised for growth in the medium-to-long term on the back of higher transparency and further consolidation. India’s Tier 1 cities are expected to move up from their current 36th rank in JLL’s 2018 Global Real Estate Transparency Index (GRETI) on the back of continued improvements in structural reforms, implementation of RERA and GST aimed at making India a modern economy.

Let’s revisit the top trends in real estate in 2017 and examine what can transpire in 2018.

Office asset class

Vacancy levels remained largely unchanged through 2017, hovering at around 14% pan India. Select markets saw lower vacancy levels and are expected to see a further decline in 2018. Overall vacancy levels will likely hover around 15% during 2018. Very low vacancy rate and continued demand in the prominent office corridors of Bengaluru, Gurgaon, Hyderabad and Pune will help better rental appreciation in 2018.

Rents in these markets are expected to rise faster into the range of 6-8% (y-o-y), while select sub-markets such as suburbs of Mumbai, NH-8 in NCR and the SBDs of Chennai will also see similar rental movement. Attractive rents and healthy demand will positively influence rental appreciation in these markets. Pune and Chennai crossed their historic rental peaks in 2017 – and, given its market dynamics, Hyderabad will cross it in 2018.

The net office space absorption for 2017 will be at around 32 million square feet if all supply expected to come in this year actually enters the market. In 2018-19, Bengaluru is likely to see highest absorption of office space, followed by NCR, Mumbai and Hyderabad. The future supply is expected to be higher in 2018-19 in NCR and healthy in Hyderabad and Mumbai, while it will be lower than expected in Chennai and Kolkata.

At a pan-India level, total office stock across the seven major cities is forecast to reach around 600 million square feet by end of 2019. In alternate office (or co-working) spaces, around 1.2 million square feet got absorbed across major Indian cities in 2017. Co-working involves various individuals or start-ups sharing a common workplace environment. Companies can save as much as 15-20% by working in a co-working space, which provides an ultra-modern workplace along with plug-and-play amenities at par with those at Grade A offices.

Retail asset class

New retail space of 6.4 million square feet got completed in 2017 – making this year the second-best after 2011 in terms of net absorption (i.e. after withdrawal of 4.7 million square feet from failed malls). Shopping mall stock is projected to grow strongly in next 3-4 years in these seven cities of India, as around 20 million square feet of supply is expected to come up by end of 2019. Out of this, around 11 million square feet of supply is expected in 2018 if completion delays are not accounted for.

As of now, the majority of stock is concentrated in Delhi NCR, Mumbai and Bangalore. However, the percentage share of other cities is expected to rise in next few years. The supply-side analysis is critical for retail real estate investment, as it ensures that there is a pool of properties that can be considered for expanding portfolios, and also apprises about the prospective competitors in the long run.

Delhi-NCR saw eight malls being withdrawn in 2017 after 2016 when negative supply was first recorded in the history of Indian retail real estate. Prominent high street locations across India have limited availability of space, similar to premium malls. Fast fashion, F&B and entertainment operators again dominated leasing, with premium malls the main target for space. F&B operators remained the most active retailer category in India’s major high streets, followed by apparel.

International brands have been entering the country and expanding in the past couple of years, and more are expected to look for quality space across the country. In the past few months, increased private equity interest in key leasehold retail assets has been observed across the country. The upcoming REITs platform has attracted the attention of private equity players, who are now gearing up to expand their retail portfolio across Indian cities. While rental values have seen marginal appreciation, numerous retailers have started preferring the revenue-sharing model over the fixed-rent model in the last few years.

Residential asset class

If anything, 2017 will go down in history as one of the most difficult years for residential real estate developers, who faced several challenges ranging from realigning their businesses to comply with the GST rollout to changing business models in the wake of RERA – and then, post-demonetization, investors disappearing from the market. Though demand in end-user-driven markets was not affected as much, the more speculative markets saw buying activity reduce to a trickle – more so in the luxury segment.

GST applicable to the purchase of homes in under-construction projects caused home buyers to either buy into completed projects or hold onto their purchase decisions. Also, developers halted sales in projects not registered under RERA across major cities. These combined factors led a quarterly sales decline in five of the top seven cities to an all-time low of 4.8% in 3Q17. This led to developers offering higher discounts to genuine buyers.

In 2017, capital values in cities such as Pune, Kolkata and Hyderabad grew at a comparatively faster rate, thanks to their lower price base compared to the Tier 1 cities. New launches were slower in 2017, and are likely maintain the slow pace as developers assess market sentiment in the RERA-era. Prices are expected to remain stable in 2018 too.

The residential asset class cornered a large share of the total investments (a combination of debt and equity) through most of 2017, thanks to the growing confidence in this asset class. Implementation of major reforms such as RERA, GST, the Benami Property Act and demonetisation promise to make Indian residential real estate more transparent than ever before. Steady investments will continue to be seen in this asset class in 2018.

Warehousing and industrial asset class

The warehousing and industrial asset class, which has been seeing big-ticket investments in India, had also seen the biggest-ever investment deal in the country’s logistics space in 2017. With JLL India as transaction partner, the Canada Pension Plan Investment Board (CPPIB) acquired a majority stake in IndoSpace, the warehousing and logistics real estate arm of Everstone Group. As part of the USD 500 million deal, CPPIB will acquire 13 industrial and logistics parks totalling 14 million square feet.

 It is pertinent to note here that even though CPPIB is the biggest deal in this space so far, investors from other nations – especially Asian countries like China, Japan and Korea – have shown considerable interest in developing industrial projects in India. In the GST era, warehousing is emerging as an attractive asset class for investors and private equity players. The stock of modern and better-managed warehouses is increasing, and the trend is set to continue in 2018 as well.

Ramesh Nair is CEO & Country Head at JLL India

The post A 2017 review of Indian real estate and peering into 2018 appeared first on International Finance.

This will have decidedly positive implications, making the sector a sought-after asset class for investments:

Investments to rise

Taking a long-term perspective, the most encouraging impact of the development will be on the investments coming into the logistics sector. The new status makes it easier for companies operating within these segments to raise long-term credit from banks and other financial institutions at lower rates, and also attract foreign investments.

According to the government’s notification, the inclusion also makes it easier for logistics companies to:

1. Access larger amounts of funds as External Commercial Borrowings (ECB)
2. Access longer-tenure funds from insurance companies and pension funds, and
3. Be eligible to borrow from India Infrastructure Financing Company Limited (IIFCL).

Warehousing is already seeing big-ticket investments in the country. In one of the biggest investment deals so far in the country, JLL India facilitated the Canada Pension Plan Investment Board (CPPIB) in acquiring a majority stake in IndoSpace, the warehousing and logistics real estate arm of Everstone Group. As part of this deal, CPPIB will acquire 13 industrial and logistics parks totalling 14 million sq.ft. of space.

The Government plans to work with the state governments and the private sector to set up 34 mega logistics parks across the country. It has already allocated INR 100,000 crore for such targeted development.

Supply of logistics facilities to increase

There is now more clarity on the minimum land requirement for setting up logistics facilities. To get the infrastructure tag, minimum investment and area requirements for each category of logistic facilities have been spelt out:

• A Multi-modal Logistics Park comprising Inland Container Depot (ICD) need to have a minimum investment of INR 50 crore along with a minimum area of 10 acres
• A Cold Chain Facility must have a minimum investment of INR 15 crore and cover a minimum area of 20,000 sq.ft.
• Warehousing Facilities must have a minimum INR 25 crore investment and a minimum area of 100,000 sq.ft.

This also means that development firms with larger land parcels can utilise their excess land holdings to develop more such facilities, thereby boosting the supply of warehousing facilities.

Logistics-dependent sectors to benefit

India is already home to leading industries such as automotive components, pharmaceuticals, cement, textiles, FMCG, and e-commerce. Private sector companies across these sectors, whose operations depend hugely on warehousing and logistics, are now likely to register tremendous growth in tier 2 and 3 cities. These companies will need a stronger network of warehouses and logistics facilities in smaller cities for growth. The changed status, in turn, will boost the viability of opening up businesses in different regions, translating into more demand and growth.

Tier 2 and 3 cities will become growth centres: According to a recently published JLL report ‘The Dawn of India’s Future Cities,’ India’s logistics and warehousing sector is already destined for a quantum jump with the advent of the unified Goods and Services Tax (GST) and associated infrastructure push to improve surface and air connectivity across the country.

India is ranked 35 out of 160 countries on the World Bank’s Logistics Performance Index (LPI). Between 2014 and 2017, the country’s ranking has moved up by 19 spots – evidence to the solid performance of the sector so far. The LPI measures the state of trade and logistics based on parameters like customs, infrastructure, international shipments, logistics quality and competence, tracking and tracing, and timeliness.

In the future, warehousing and logistics are likely to find good a foothold in emerging urban and semi-urban centres. Developers and several foreign private equity players are now foraying into warehouse developments across Indian cities, coming up with large-scale, high-tech warehousing/logistics spaces with state-of-the-art facilities. The relatively easier availability of land in Tier 2 and 3 cities compared to the larger metros, along with improving connectivity through infrastructure developments, make for a winning combination in these cities.

Ongoing impediments

While there are growth opportunities for the industry, some existing challenges must be addressed. Immediate problems, such as an inadequate road network and losses that occur during transportation, must be resolved. Improvement of India’s road infrastructure at a much faster pace is critical to minimize losses, both economic and environmental. Only when this happens on the right scale will the logistics sector achieve optimal growth.

 Ramesh Nair is CEO & Country Head at JLL India

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In this year’s edition of the report, the top cities of the world once again contend for being the most successful and the results yield important insights into the new world order.

In 2017, London and New York lead the pack among the Big Seven, followed by Tokyo, Paris, Hong Kong, Singapore and the newest entrant – Seoul. These top tier cities score highest on over 300 performance metrics. Indian cities are notably absent even among the ‘10 Contenders’ which follow closely on the heels of the big seven. This year, the cities identified in this category are China’s alpha cities Beijing and Shanghai, the New World Cities of Amsterdam, San Francisco, Toronto, Madrid and Sydney, and the U.S. alpha cities of Los Angeles, Chicago and Washington DC.

Four Asian cities do appear on the list – but the stark fact remains that not a single Indian city makes the cut. India doesn’t even feature in the top 30 of the list. In fact, only two cities from the BRICS nations are on the list – and both are from China.

The underlying fundamentals of the report are the performance metrics – the parameters used to rank and rate theses cities to compete with each other. So, why does the world’s fastest-growing economy, which has the second-largest workforce of 513.7 million and is the second-most favoured outsourcing destination in the world, not have a single city in the top world order?

The key lies in the city indices used to benchmark almost every aspect of urban life – and therein lie potential learnings for India to up its ante and eventually feature on this list:

Fostering Innovation – As the digital economy dominates, cities with robust technology and innovation-centered economies will stand the highest chance of succeeding. Real estate in India must adapt to this new reality, where technology firms with more flexible workforces, substantial digital requirements and ‘asset-light’ strategies are becoming drivers of absorption. Indian developers must attend more to the diverse types of commercial space requirements in this rapidly-changing world – including laboratories, accelerators, incubators, co-working spaces and flexible workspaces.

Nurturing Talent – Real estate is being used explicitly as a draw for talent. Strong talent attraction and development provides a solid basis for future progress, and India is way behind on the curve. The key is improving on education systems, student environments and expatriate talent attraction. Businesses now display an unprecedented focus on talent. India Inc. must concentrate harder on talent attraction – and the equally important aspect of talent retention – by ways of innovative workplace designs and amenity provision.

Investing in Infrastructure – Infrastructure investments are key to unlocking new areas of opportunity for the real estate sector, as they transform the attractiveness of locations by improving connectivity to other important hubs. Infrastructure not only encompasses transport, utilities, telecoms and logistics but also digital connectivity – a critical determinant of how a city can accommodate future growth.

Cities that have under-invested in their metropolitan infrastructure are now falling behind. With Metro deployment, its Smart City projects and the Digital India initiative, India’s has taken significant steps. However, we have a long way to go to get to the top.

Future-proofing and Sustainability – A city’s governance is a critical factor in its ability to manage growth and create new opportunities for development and investment. The real estate market is significantly influenced by cities’ ability and appetite to build long-term vision, develop clear planning frameworks, rational management and coordination of land use, preparation of investable sites, and willingness to act as development partners.

Among real estate investors, the conversation is increasingly shifting to future-proofed, resilient and sustainable cities. Long-term investors like sovereign wealth funds, institutions and pension funds see these qualities as keys to preserving capital over the course of 10-20 years.

This is a very clear signal here for India. Our top cities need to get smart, and the upcoming Smart Cities need to be smarter by achieving environmental sustainability and resilience, and becoming clean, green and future proof.

Transparency – Transparency and real estate seldom go hand-in-hand in India, and therein lies our biggest problem. It is a globally accepted maxim that a transparent real estate sector not only facilitates new investments and business activity, but also contributes to community wellbeing and inclusiveness.

The recent steps taken in India to overcome this problem are significant. With the demonetization exercise of last year as well as the introduction of the Real Estate Regulatory Act, India has begun navigating out of the murky waters of its real estate market. In fact, the country is all set to improve on its current rank of 36 on JLL’s global real estate transparency index. However, the cumulative effects of these reforms have yet to materialize into visible benefits which can help Indian cities rank among the world’s best-rated ones.

Affordability – India is home to the world’s second-most expensive real estate market of Mumbai, which is not something to celebrate. According to a RBI report, Mumbai’s housing price-to-monthly-income ratio is the highest among major Indian cities – a staggering 67 times. This obviously makes Mumbai unaffordable for most of its inhabitants.

We must factor in here the potential tipping point at which the lack of affordable housing outweighs the potential benefits of being in a city, effectively restricting its talent pool. The affordability of operating a business is another element, in terms of both real estate and staff costs. In an environment where companies are looking more forensically at their portfolios in order to increase efficiencies and reduce costs, cities like Mumbai have a lot to answer for.

Brand-building and Going Global – Though some states like Gujarat, Rajasthan and Uttar Pradesh are investing in brand building for tourism, it is a far cry from what a solid brand should look like. Many global cities are employing consulting firms to boost their brand appeal to distinct audiences. There is also a rise of niche identities – cities that have a special association with sport, diplomacy, higher education, nightlife or gastronomy.

Among other things, JLL’s city indices illustrate the way cities are communicating their distinct offerings, and through unique channels. New cities are emerging as viable and attractive options for both international businesses and investors. It is not just the destinations of interest that are new, but there are also new sources of capital. For example, new sources of capital have emerged from East Asia, including China, South Korea, Taiwan and Malaysia. The growing range of city indices reflects the expanding universe of international business.

India’s culture, heritage and its pluralism are its strengths. Though we have the potential to be world leaders in economic terms, the country needs to consciously brand itself as a free, vibrant and dynamic nation. Only when India uses its culture to leverage on its brand will we see accelerated growth in terms of global recognition.

To conclude

The ‘Big Seven’ and the majority of the ‘Contenders’ are already among the world’s largest real estate investment destinations, given that their expanded role as global gateways attracts a wide spectrum of investors. The rapid growth in the number and ambition of JLL’s city indices matches the pace of global change – and the way in which businesses, investors, governments and citizens understand the fast-moving world of cities.

As a country, India must take cues from each of the winning cities and play on its strengths to ensure that its cities are not just in line with the top tier world cities, but also find representation is the next ‘Big Seven’.

Ramesh Nair is CEO & Country Head at JLL India

The post No Indian city on JLL’s list of top successful ones – What lessons can Indians learn? appeared first on International Finance.

1. Project details: Whether the project is new launch or is an ongoing one which has not received a completion certificate prior to RERA commencement, MahaRERA requires submission of all the project details. The exact boundaries of the plot, complete information on the number of wings or towers in the project, their exact configurations, the common amenities provided and the number of car parking spaces booked and available, as well as the details of the project’s infrastructure works, are available online.

Details of approved FSI and the recreational open areas in each project are also mentioned. The developer must also submit all the approvals he has received for the project, including the land title search report, building plan approval, proforma of the allotment letter, etc. It is easy to search for these details on the MahaRERA website.

2. Project performance: Details related to the performance of a particular residential project is also available on the MahaRERA website. In fact, developers have to update the sales achieved in a project on a quarterly basis. Tracking the sales happening in a project has, therefore, become a lot easier and transparent. Earlier, buyers were often unclear about the actual sales a developer had achieved and depended largely on information by the developer’s sales team which could not be easily verified. Analyzing the sales achieved can help a consumer understand the kind of traction a project is garnering on the market, and accordingly take a much better-informed purchase decision.
3. Developer’s details: MahaRERA makes disclosure of all information regarding the promoters of the project mandatory. This includes any pending or prior litigation against them, which is and should be a key concern for any consumer. Apart from this, the track record of the promoter is now disclosed – this includes his/her educational background, prior projects undertaken, financial details such as authenticated IT returns, audited balance sheets, etc. Such information was definitely not easy to obtain earlier, especially when it came to developers who are not listed entities.
4. Project completion timelines: The MahaRERA data also clearly indicates the original timeline that a developer has committed to for the completion of a project – as well as the revised completion date, if applicable. This helps consumers understand exactly when they can expect possession of their flat. In fact, the penalty for delays is so strong that developers now prefer to declare a fairly extended timeline for completion. In many cases, a true assessment of the timeline can be done by following the status of construction, which will also be updated on the MahaRERA site.
5. Information about real estate agents: Very often, aspiring property buyers were confused about which real estate agent to approach for their requirements. While some preferred local agents, others were more comfortable with brokers attached to big banks. A lot of this confusion has been put to rest with a mandatory registration of brokers authorized to sell flats in different projects. Buyers can look under each project head.
6. Micro-market analysis:Prior to zeroing in on a particular location, a consumer must always conduct a rough survey of the likely areas under consideration. This task has been simplified, as the MahaRERA website provides information on the area-wise performance of residential markets across the city. Current data disclose sales and upcoming supply for all the micro markets within Mumbai city, its suburbs and Thane. It also gives details of configuration-wise sales in each of these markets.

Ongoing Challenges 

Some challenges remain – for instance, MahaRERA still does not provide information on the pricing of apartments. Also, the bulk of the data available is given project wise, making it challenging to collate and interpret it for a micro-market analysis. Yet another difficulty is that the data on the escrow accounts required to be maintained is not available.

Nevertheless, there is no doubt that MahaRERA has now armed consumers with a granularity of details on residential markets which was not available to them previously. As the RERA concept evolves further, keeping in mind that it a is a process and not an event, the available information will become even more useful.

Ramesh Nair is CEO & Country Head at JLL India

The post A consumer’s guide to using MahaRERA Data appeared first on International Finance.

A look at different office markets shows how striking is the average age of a city’s SBD vis-à-vis its CBD. For e.g., in the case of Mumbai, the age difference between SBD-Bandra Kurla Complex (also called the de-facto CBD) and the original CBD of Nariman Point and Fort area is a staggering 28 years. No wonder the CBD has shown decline in rents in recent years compared to all other micro-markets in Mumbai and corporates have shown consistent preference for the SBDs, especially BKC.

Similarly, the difference between Delhi’s CBD vis-à-vis it’s SBD (Gurgaon Prime) is more than 12 years, which is considerable. Gurgaon is the preferred destination for corporates and MNCs whereas the CBD (Connaught Place) is preferred mostly by Indian firms and those having to liaison more with the government. Some of the more well-known names in Delhi’s CBD are expected to move to AeroCity.

In Pune, the difference (of seven years) is still higher than that in other tier-I, II cities. While Mumbai and Delhi have been the traditional favourites of most Indian companies and MNCs – at least as far as setting up their Indian head offices is concerned, Bengaluru too, has emerged as an IT and entrepreneurial hub in recent decades. Interestingly, the age gap between CBDs and SBDs in IT hubs is lower compared to Mumbai and Delhi.

Other cities, which saw more office space come up, especially in the last 12-15 years are younger markets overall, which explains the lower age gap between their business districts. In some of these cities, especially Bengaluru, the CBD still has many pull factors unlike Mumbai and Delhi’s CBDs. The age gap in Bengaluru’s case is only five years as both the CBD and SBD started seeing developments around the same time. Like Bengaluru, Hyderabad too has an age gap of five years only between its business districts but the average age of its CBD (at 20 years) is five years younger than Bengaluru’s CBD.

Ramesh Nair is the CEO and Country Head at JLL India

The post SBDs emerge as new favourites for office occupiers appeared first on International Finance.

The idea of creating new Smart Cities was mooted in the face of a clear need to decongest India’s Tier 1 cities and improve their livability quotients. However, even before the Smart City mission was formalized, the model of creating cities around the peripheries of Tier 1 cities (or satellite cities) has already established a proven track record for mitigating the dire effects of urban sprawl and boosting livability quotient.

In JLL India’s proprietary research report, Livability quotient – A paradigm shift in India’s emerging cities, 10 prominent emerging cities have been closely evaluated for their city administration practices, sustainability, and overall livability. Several factors were identified under the broad parameters of planning, connectivity, utilities, leisure, smart governance, safety, jobs, environment, real estate performance and future scope of expansion.

The top emerging cities assessed in this report are Navi Mumbai, Pimpri-Chinchwad, Magarpatta City, Palava City, Greater Noida, Manesar, Mohali, Rajarhat, Technopark and Mahindra World City (MWC). After an exhaustive analysis on the basis of the above-mentioned parameters for 10 cities considered, a definitive livability quotient ranking was arrived at:

On the back of major evolutionary leaps in the integrated townships model, this now makes logical sense to include privately-managed cities (large townships or commercial-cum-residential hubs managed by private developers) while comparing cities. The reason is clear – in the era of smart cities in the daily administration of which private players will be increasingly involved, it is important to look at private developers as future city administrators. As a result, some of the country’s larger integrated townships now qualify as standalone satellite cities in their own right – and, in fact, have taken city administration and governance to an entirely new level.

To date, only a handful of developers in India have successfully demonstrated their capabilities for city administration. Going forward, many more such developments will crop up on India’s real estate landscape, especially in times when large integrated townships are being promoted.

The report Livability Quotient – A Paradigm Shift in India’s Emerging Cities reveals several important aspects that conventionally-managed cities (municipal authorities) can learn from privately-managed cities (private developers or councils).

• In terms of adopting technology for efficient management of resources and also certain sustainability parameters, privately-managed cities have managed to score higher, thereby exhibiting the ‘skill’ required of city administrators
• On the other hand, factors that demonstrate ‘scale’ (or scalability) – connectivity, future expansion potential, job creation, etc. – have seen greater success in conventionally-managed cities.

This clearly indicates that the administrators of both city formats must learn from each other and demonstrate both ‘skill’ and ‘scale’ in order to create the smart and liveable cities of the future.

Integrated townships with mixed-use development are increasingly becoming the preferred option for residents, and concepts like ‘walk-to-work’, ‘last mile connectivity’ and ‘inclusiveness’ are going to be decisive factors in choosing the right integrated township development.

The parameters that call for definite and well-developed skill levels include:

• Planning
• Utilities and daily needs management
• Leisure and recreation
• Smart governance
• Safety and security, and
• Environment and sustainability.

There are two main reasons why these parameters are successfully implemented by the privately-managed cities:

• Continuous engagement with citizens through real-time feedback, and
• Implementation of technology for efficiency in resource utilization.

In some cities, the councils have a good representation of citizens or have mechanisms for faster real-time redressal of issues in place. Also, in most cases, state-of-the-art monitoring and surveillance technologies are in use to keep the city safe and secure.

As urbanization picks up pace in India, the emerging cities will play a key role in accommodating future expansion needs of existing urban agglomerations. Most importantly, these cities will play a crucial role in balancing growth in a more sustainable manner, thereby enhancing the livability quotient for residents.

The ensuing cross-learning exercise on the part of both large private township developers as well as the city municipal councils will be highly beneficial. Without a doubt, the next generation of megacities in India will see an unprecedented scale and quality of transformation when it comes to meeting the real estate needs of the future.

Ramesh Nair is CEO & Country Head at JLL India

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