Indian Real Estate: The Outlook for 2011 Industry Trends and Regulatory Policies

After one and a half years of gradual consolidation, real estate in India has fathomed its own comfortable ground, and is poised at the right threshold to take a giant leap in years to come. While a differential pace of strengthening is evident across sectors, geographies and segments, several property market indicators point to the fact that the industry has indeed bottomed out in the current cycle. The fears of a possible double dip recovery have given way to beliefs in the sustained healthy levels, if not a rapid growth. The experience thus gained in this slowdown is invaluable and will serve real estate strategists for years to come. The various stakeholders in the entire supply chain the material manufacturers, developers, property consultants, occupiers, investors and policy makers, have all emerged stronger and primed than yesteryears. And, if we have taken our lessons right, caution and diligence would be the keywords for the industry in the medium term. On one hand, the stakeholders cant afford to sway on the riding waves of healthy demand, and lose the ground advantage that they have so painfully regained by adapting to the rapidly changing business environment. And on the other, the emerging opportunities should be targeted with an unmatched fervour of potential and pragmatism. The year 2011 would usher a new decade of opportunities for Indian real estate, which will be a test of sorts for its stakeholders between these two fringes of the fulcrum. And the winners would be the ones who balance caution with diligence evaluating all the potential opportunities with pragmatism. Outlook: Commercial Real Estate

Office rents to start appreciating after mid-2011 More outright purchases by occupiers as well as private equity players IT/ITES and BFSI would continue to account for 60-70% of office demand

Outlook: Residential Real Estate

Launch of premium products to continue, albeit at a slower pace Launch of Ultra Low Cost (ULC) Housing by private developers Housing for all Large number of launches would continue to be in the range of INR 2,000-3,000 per sq ft at the leapfrogged suburban locations Impact on affordability will influence the price and absorption dynamics Sustainability to gain focus as the industry looks forward towards IGBC Green Homes standards

Outlook: Retail Real Estate

More collaborative models such as revenue sharing to emerge in the sector Rents to remain stable except select prime locations Large number of malls slated to become operational Retailers would continue to expand beyond Tier I into Tier II and III cities

More international retailers to venture into India Despite an ongoing financial crisis that has spared few industries and countries, participants in the recent Knowledge@Wharton Real Estate in Emerging Markets Forum focused on the opportunities that still exist in underserved markets for those who know where to look. Panelists and guest speakers at the Forum, organized in collaboration with Interconnect Events, included global real estate developers, investors, finance specialists and top-level executives in the industry. Their overall message, as stated by one participant: "No one is safe today, but on a relative basis, the emerging markets are better positioned." In this special report, Knowledge@Wharton offers podcast interviews (including transcripts) with Forum participants who spoke about their experiences doing business in emerging markets.

Hirco Group's Aniruddha Joshi: 'Long-Term Drivers of India's Growth Have Not Changed'

What impact has the global financial crisis had on India's real estate market? According to Aniruddha Joshi, executive director of Hirco Group in Britain, which develops residential properties and mixed-use townships in India, the credit crisis has affected portfolio allocations. Still, Hirco's strategy toward property development in India will not change, Joshi told Knowledge@Wharton in an interview during the recent Knowledge@Wharton Real Estate in Emerging Markets Forum. "We believe that the long-term India story and the fundamentals are still intact."
Equity International's Gary Garrabrant: 'Bearish' on the U.S., 'Bullish' on Emerging Markets

Those countries that had easy access to debt -- such as the U.S. and Japan -- are taking the biggest hit from the current financial crisis, while those countries without access to debt capital -- such as Brazil -- have been somewhat spared, according to Gary Garrabrant, CEO of Equity International. During the Knowledge@Wharton Real Estate in Emerging Markets Forum, Garrabrant spoke about his company's strategy for weathering the down market, how investment decisions are made, and what he sees happening in the next 18 to 24 months.
MLP's Bruce Gardner: Five Rules to Live by in Russia's Real Estate Market

While Russia initially may have been insulated from the impact of the global financial crisis -- due to the once-high price of oil -- the country is now feeling the impact of the slowdown. What does this mean for the Russian real estate market? How are real estate companies responding to the crisis? And what should international companies look for when doing business there? Bruce Gardner, managing director of MLP Russia and a participant in the recent Knowledge@Wharton Real Estate in Emerging Markets Forum, offers some answers.

Wuxi Iparks' Gilles Assouline: 'The Difference between China and the Rest of the World Is the Demand'

China's unsurpassed demand, cash reserves and willingness to invest heavily in new infrastructure make it an attractive option for foreign real estate investors, according to Gilles Assouline, president of Wuxi Iparks Creative Design & Development. In an interview with Knowledge@Wharton, Assouline spoke about why conditions in China are ripe for real estate development, and how partnering with the world's fastest-growing economy may be a requisite for survival in the current economic downturn.
Jones Lang LaSalle's Colin Dyer: Quality Assets at Prices 'Perhaps Available Only Once in a Generation'

From Colin Dyer's perspective, the worldwide real estate market is in pretty bad shape. As president and CEO of global real estate services firm Jones Lang LaSalle, Dyer has seen firsthand the problems that an absence of liquidity is causing for buyers who need financing for real estate transactions. Yet he is also optimistic that comparatively little competition and some good bargains provide excellent market opportunities for those who know where to look. Dyer expanded on these points during an interview with Knowledge@Wharton.
Istanbul Mortgage's Bahadir Teker: Turkey 'Is Ready to Deal with This Kind of Credit Crunch'

Having bounced back from its own profound financial crises in 1994 and 2000, Turkey is well prepared to ride out the current global economic storm, according to Bahadir Teker, CEO of Istanbul Mortgage. In an interview with Knowledge@Wharton, Teker noted that the stability of Turkey's banking system and its dramatic rise in housing demand will help to temper any slowdowns in the country's real estate industry over the next couple of years.
The Son Also Rises: Donald Trump, Jr., on Real Estate Opportunities in Emerging Markets

Back in the heady days of the real estate boom, property prices in New York City soared along with those in the rest of the U.S. When the subprime mortgage crisis hit and prices collapsed, the city's market held out longer than others -- for two reasons. First, it is a major financial center with strong demand; and second, the weak dollar made it possible for international buyers and investors to find deals at discounts as high as 40%. Where will the New York market be in 2009? Where are the most attractive deals to be found in emerging markets? In a podcast recorded at the Knowledge@Wharton Real Estate Forum on Emerging Markets on December 2, Donald Trump, Jr., executive vice president of development and acquisitions at the Trump Organization, speaks about those

questions and more. He also discusses how he views his unique contribution to expanding the Trump brand overseas, building on the foundation laid by his famous father.