| ign="center"> | | | | uptake remained at about the same level as it was |
| Established brand names that show potential for fast | | | | last year, when the slowdown was beginning to |
| completion will rule the roost this year | | | | show its claws in earnest. It is an immutable fact that |
| The effects of the slowdown were still noticeable | | | | Indian office space depends to a significant extent on |
| across the country in the first quarter of 2009. | | | | multinationals seeking to establish or expand their |
| However, towards the middle of the year, residential | | | | bases here. The health of Indian commercial real |
| rates in some of the larger cities began showing an | | | | estate is closely connected to the global economy, |
| upward curve. The cities that were most affected | | | | meaning that Grade A office spaces have largely |
| were Mumbai and Delhi. In Mumbai, many developers | | | | been about MNC occupiers and the IT/ITES industry. |
| began raising rates by as much as 12-15 per cent | | | | When the financial crunch deepened in the West, |
| under the assumption that the renewed demand was | | | | many intending international occupiers put their Indian |
| assuredly sustainable under all circumstances. This | | | | entry/expansion plans on hold. We are beginning to |
| assumption started backfiring towards the end of the | | | | see the first signs of revival incommercial real estate |
| third quarter, which is when demand began slowing | | | | now, but the process is pretty gradual. For investors, |
| down again in the financial capital. Delhi showed a | | | | this is the best time to invest in wellresearched |
| more rational graph, thanks largely to a better | | | | commercial real estate opportunities. There is, in fact, |
| volumes profile, with price escalations not going | | | | an increase in investors looking for such opportunities, |
| beyond 5-10 per cent even in high-demand regions. | | | | since the prices are now near the bottom. Long term |
| Bangalore continued to display a sombre profile, since | | | | investment, which is the kind that truly works, will |
| demand from the IT / ITES employee segment has | | | | ensure that investors can reap the benefits when the |
| not yet ramped up sufficiently. Chennai's residential | | | | office market shapes up for real in 2-3 years. |
| market continued to showcase its usual conservatism. | | | | Retail space |
| Looking at 2010, I can safely say that residential | | | | Indian retail had gone through a decisive learning |
| demand is the highest and most promising by far. | | | | phase in 2009. Like the commercial segment, Indian |
| Residential will continue to lead the revival phase, led | | | | retail growth depends significantly on the aspirations |
| on by a lowering of mortgage rates and price | | | | and spending power of cash-rich IT professionals. |
| rationalization in newly launched projects. It also looks | | | | When the downturn hit the IT sector, there was a |
| the most positive in terms of funding. There is | | | | noticeable setback in Indian retail real estate. There |
| liquidity available for certain typologies and formats, | | | | had been corrections in rentals and consolidation both |
| most especially in the affordable housing segment. | | | | at the retailer and market levels. Many unsustainable |
| This segment does not depend overly on | | | | market models were edged off the map. While 2009 |
| international funding. There are two cost-to-developer | | | | was the year that separated the boys from the |
| components in question for such projects. One of | | | | men, 2010 will be the year of the survivors to make |
| these is cost of land, but such projects are located in | | | | a serious bid at the recovery process. Many players |
| areas where land costs are low to begin with. The | | | | will consolidate their operations and rationalise their |
| second is cost of construction, which is adequately | | | | business models to dovetail with the newly emerged |
| covered by the down-payments taken on such units. | | | | consumer dynamics. Value retail will be the winning |
| Moreover, such housing formats invariably employ | | | | ticket, and we will see the stronger value retail |
| de-frilled mass-construction parameters, which also | | | | players make calculated plays in key Tier II cities. |
| imply lowered construction costs. I see an increase in | | | | High end retail will show a stronger hand in 2010, as |
| private equity funding for affordable housing projects | | | | well. There will be also a wider acceptance of big |
| in 2010, since the demand for such projects is | | | | brands as returning economic stability infuses buyer |
| inflexible and assured. The emphasis will be on | | | | confidence into the market. The revenue sharing / |
| projects by established brand names that show | | | | minimum guarantee model will gain wider acceptance |
| sufficient potential for fast completion and absorption. | | | | and become the norm rather than the exception, |
| Office space | | | | bringing this model's prevalence in India closer to |
| For the better part of 2009, the commercial segment | | | | international trends. |