…(floor area ratio) for residential projects in India. What is the current range of FAR prevalent in urban areas, and how is it calculated?
Ashley D’Souza, Panjim, Goa
FAR parameters vary from state to state and are governed by the respective city development authorities. Areas that come under municipal limits are governed by the municipal authorities. The FAR for areas outside municipal limits are decided on by the Town and Country Planning Organisation.
FAR is calibrated according to the nature of the project in terms of the intended usage. Generally speaking, on a plot of 100 square yards with a permissible FAR ratio of 2 allows a total built-up area of 200 square yards — in other words, the plot area multiplied by the FAR is the amount of construction one can have on that plot. FAR for various zones and type of usage is notified by the local Development Control regulations. FAR in restricted zones like, say, Lutyens Delhi may be 1 or even lower, while it may be higher in suburbs.
Which sector of Indian real estate is seeing the highest level of foreign investor focus?
Preeti Saldana, New Delhi
Residential real estate has been foreign investment’s most favoured asset class, since exit from such investments is assured and the internal rates of return meet investor expectations. With the middle-income housing sector is the primary driver, with an anticipated shortfall of close to 25 million housing units by 2010.
Commercial space in India is also in high demand. Rentals for grade A commercial properties in tier-I cities like Mumbai and Delhi have risen by more than 100% over the last two years. The IT /ITeS sector constitutes for the highest absorption of commercial office space, with a projected requirement of 150 million sq ft across major cities by 2010. IT/ITeS is, beyond doubt, a key driver of commercial real estate in India’s metro cities.
The IT/ITeS sector is making enormous waves in Indian real estate. Can this sector continue to deliver competitively even though countries like China and the Philippines are entering in a big way?
B L Harolikar, Kolhapur
India occupies the top slot as a Cost-Sensitive Destination for outsourcing. It is ranked a creditable 3rd in the People and Skills Availability criteria, and the highest amongst the developing countries. With less than 10% of the market being currently addressed, there is still a huge market opportunity for the sector in India, and this will ensure sustained demand-led growth.
Factors like the evolution of the global delivery model, unbundling of large IT outsourcing deals with larger India-based delivery shares, and the large contract values due for renewal are some of the positive indicators for the sector.
Despite India’s ‘developing nation’ status, there is an immense amount of interest in its real estate market. How would you compare India’s property market to those in ‘developed’ countries?
Dr. Nagesh Sirur, Ahmedabad
India’s property market has always seen typified by unorganised and fragmented growth. However, the contemporary scenario seems to state that growth, whether organised or unorganised, is growth nonetheless. India’s real estate sector is seeing a sustained and eminently sustainable boom, fuelled by new projects, superior quality products, new growth corridors, increased infrastructure spending and the common man’s increased spending power.
With the stock market being highly volatile, investment in real estate has begun to look competitive, with typical yields of 10-12% per annum achievable. With increased buoyancy, the real estate market now falls in league with stocks, bonds, mutual funds, gold and commodities, and insurance policies as a viable investment option for investors in all categories - individuals, corporates, and funds.
What is all the trepidation about foreign retail giants coming into India? It would seem to be a good thing for all concerned.
Pradeep Gaekwad, Kondhwa, Pune
Indian retailers have reservations of the global retail giants dominating the local landscape, as they possess a lot of financial muscle vis-à-vis the Indian retailers. However, such fears do not factor in the larger picture — these retail giant houses can bring their better managerial practices and IT-friendly techniques to cut wastage and set up integrated supply chains to gradually replace the present disorganised and fragmented retail market.
I have been following the stamp duty debacle for some time now. Will reducing stamp duty help the real estate sector in any real way?
Brijesh, e-mail
Almost 80% of all buildings are on bank financing, and banks disburse financing on the precondition that the property is registered. The lower the amount of stamp duty, the more buyers will be encouraged to register and pay it. Affordability will increase. In the current scenario, buyers have to avail of personal loans and other sources even if they are getting a loan because of high stamp duty.
I have been advised to model my next residential project in line with the needs of NRI clients. How many other developers are doing likewise, and why?
R T Vashisht, Bangalore
A large number of Indian developers are now gearing up to meet NRI demand for quality residential properties. In metros, the accent is now on development of high-end constructions that meet the parameters of NRIs and the IT/ITeS sector. This is still an emerging market component, but there will certainly be escalated efforts as more transparency comes into the sector. You would do well to consider the advice given to you seriously.
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