mumbai residential real estate market view - " 'buy' - the panic of 2013 " by...
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RE/MAX Innovest
RE/MAX VIEW ON MUMBAI RESIDENTIAL MARKET
“BUY” - THE PANIC OF 2013 !
JANUARY 2013
AUTHORS : MILAN VORA # +91 98192 53100 E: [email protected]
KETAN VORA # +91 98197 95588 E: [email protected]
Private and Confidential
For Discussion Purpose only
RE/MAX Innovest
ESSENCE OF OUR VIEW ON MUMBAI RESIDENTIAL MARKET FOR 2013
The current demand environment in Mumbai residential market is at best ‘sluggish’. Further, current and potential supply over next few months is close to its peak (for this cycle) and pain at the developer’s end (debt laden) is at its maximum. This, we believe, is the perfect set up for ‘panic pricing’ of quality assets.
We are at mid of a 10 year real estate cycle, the worst will get over in 2013. We see the pendulum swinging from “Panic” to “Euphoria” over next 5 years.
We believe, investors who are able to find high quality under construction projects and ‘Buy’ – “The Panic of 2013”, taking advantage of deep price corrections, will see superior return over next 5 years
Investors who buy ‘Right Assets’ factoring future preference of customers, will make higher delta.
Several launches from premium developers expected in 2013. An indicative list has been provided for reference
Investors may look forward to “ ‘Buy’ - The Panic of 2013”.. Happy New Year
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GET 4 R’S RIGHT - TO MAXMISE RETURNS IN REAL ESTATE
Right Location Right Timing Right Project /
Flat Right Value
City (Tier 1-2-3)
Location with Rerating Potential
Closer to Business District & Social Infrastructure
Close to Existing and Planned connectivity
Premium perception
Pessimistic Demand Environment (Current) Vs Bullish Environment
Pre-launch / Under construction after doing due diligence on Developer
More Space within project and flat
Standalone Vs Complex Living
Right Amenities
Right Sizing - Preferred
Views - Vastu
Developer Trackrecord
Understanding nuances of project from End user perspective ( Design, Safety, Relevant amenities, Quality)
Evaluate on Carpet / Usable Carpet psft
Price Vs Value : Understand why you are paying premium and then take a call
Negotiate a good bargain
Use Moderate level of Leverage (Loan Financing)
“Right Timing” is most critical to Maximising Returns
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10-YEAR ECONOMIC CYCLE : HISTORY REPEATING ITSELF – CLOSELY LINKED TO THE INTEREST RATE CYCLE
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4.0
8.1 7.0
9.5 9.6 9.3
6.7
8.6 9.3
6.2 5.0
02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13
GDP Growth Rate at all Time Low – Is it Ready to Surge Ahead GDP Growth
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WILL 10-YEAR REAL ESTATE CYCLE REPEAT ITSELF WITHIN SECULAR BULL MARKET (HIGHER TOP HIGHER BOTTOM) ?
2002 2004 2006 2008 2010 2012 2014 2016 2018
Skepticism
Thrill
Euphoria
Maximum Risk
Excitement
Optimism
Confidence
Point of Maximum Opportunity -2013
Projection
Anxiety
Denial
Fear PANIC Desperation
Skepticism
Confidence
Optimism
Excitement
2013 - A Year of PANIC
Most Pessimistic Demand Environment
Maximum Supply Period
Maximum pain at Developer end (Debt laden)
Economic Growth expected to Revive while
Interest rates have peaked
2003 – 2008 – Massive Bull Run
Prices up by 3x to 5x (times)
depending on City, Location and Project
Strong Economic Growth led significant increase in
Demand & purchasing power
Mid 2013 to 2018 – Upturn Cycle,
By 2018 we would have,
Cash Rich Strong Demand Environment
Reduced Supply
Lowest pain at Developer end
Significant Price Appreciation !
2013 – Probably, the best time to “ Buy Premium Under Construction properties”
Markets Cycles are explained
better by Sentiments rather
than Price trends
---------------- Bull Market ---------------- -------------- Bull Market ------------ ---------------- Bear Market ---------------- Source : RE/MAX Research
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WHICH LOCATION LOOKS MOST ATTRACTIVE ? IS CENTRAL MUMBAI THE NEW SOUTH MUMBAI (MOST SOUGHT AFTER) ?
Preference for Central Mumbai is due to Newer development, New Connectivity
and better proximity to New CBD (BKC, Lower Parel)
•More than 90% work done
• Targeted to be operational by 2013
Metro
Versova – Andheri - Ghatkopar 11.07 km
•Completion : Soil Testing work is done
•Targeted to be operational by 2016
Metro
Charkop – Bandra - Mankhurd
•More than 90% work completed
•Targeted to be operational by 2013
Santacruz – Chembur Link Road
•Phase I: Pre commissioning Test & Trails in Jan/Feb 2013
•Phase II: by Nov 2013
Monorail
Chembur - Wadala – Jacob Circle
•Museum – Anik junction (Wadala)
•Anik - Panjarpol Chembur
•Panjarpol to Ghatkopar link road
Eastern Free Way
•Proposed 22km Road Bridge Mumbai Sewri to Navi Mumbai
Sewri– Panvel Six Lane Highway
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“RIGHT PROJECT” : WHICH ATTRIBUTES WILL COMMAND PREMIUM IN FUTURE ?
• Safety Measures
• Sports Facilities
• Social Facilities
• Green Building
• Lifestyle Amenities
• Concierge Services
• Quality of craftsmanship
• Promise Vs Delivery (Under Construction)
• Legal Approvals in place (Under Construction)
• Developer track-record and Financial Stability
• Living in a Large Complex
• Open Space within Complex
• Efficient Flat Layout & Larger Room Sizes
• Premium View & Vastu compliance
• Gentry
• Freehold properties
• Connectivity in terms of Time & Access ( CBD Areas, Airports, Highway, Railway, Metro/Mono)
• Social Infrastructure (Markets, Entertainment, School, Hospitals)
• Safety track-record of area
• Premium feel of area Location
Building -Flat
Amenities Quality
Execution
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PARTIAL LIST OF KEY LAUNCHES EXPECTED IN 2013
Sr Developer Location Part of Mumbai
1. Lodha Group Worli Central Mumbai
2. Godrej Properties Byculla Central Mumbai
3. Ashok Piramal Group Sewri Central Mumbai
4. Ajay Piramal Group Byculla Central Mumbai
5. HBS Realtors Worli Central Mumbai
6. Shapoorji Pallonji Group Tardeo South Mumbai
7. L&T Realty Powai Central Suburb
8. Tata Housing Mulund Central Suburb
9. Shapoorji Pallonji Group Kandivali Western Suburb
10. Kalpataru Goregaon West Western Suburb
11. Sheth Creators Malad West Western Suburb
12. Rustomjee Juhu Western Suburb
13. Oberoi Realty Goregaon East Western Suburb
14. Wadhwa Group Panvel New Mumbai
Marked in Red : Just Launched in Jan 2013
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OUR CORE FOCUS : PREMIUM PROPERTIES IN MUMBAI ACROSS DEVELOPERS
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RE/MAX INNOVEST – BROKER OWNER PROFILE
Milan Vora
Milan has a extensively worked in multinational firms like Siemens Ltd and CRISIL Ltd
and has rich experience in the areas of financial research & analytics, corporate
finance, risk management, and structured finance.
Runs an integrated wealth management company advising clients across major asset
class including (equity, bonds, insurance, real estate and commodities)
M: +91 9819253100 E: [email protected]
Ketan Vora
Ketan has more than a decade’s experience in insurance planning and investment
management business
Runs an integrated wealth management company advising clients across major asset
class including (equity, bonds, insurance, real estate and commodities)
M: +91 9819795588 E: [email protected]
Corporate Office Address
RE/MAX Innovest – A unit of Innovest Realty LLP
Block 30, 295, Miranda Building, N. C. Kelkar Road, Dadar (West), Mumbai – 400028. India
T: +91 22 24317075 / 2421 7075
W: www.remax.in ; www.remax.com ; www.global.remax.com ; www.joinremax.com
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Primary Business Focus : “Premium Properties”
Across Real Estate Segments
Residential | Commercial | Retail
Buy | Sell | Rent | Preleased
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DISCLAIMER
This document is prepared for information only and is not intended to be and
must not alone be taken as the basis for an real estate investment decision.
The user assumes the entire risk of any use made of this information. Each
recipient of this document should make such investigations as it deems
necessary to arrive at an independent evaluation of a real estate or
investment decision. The analysis, information discussed or views expressed
may not be suitable for all investors.
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CHANGING TRENDS IN REAL ESTATE BROKING