From tenement to township, India’s $1.3 trillion housing push
When he was little and his father was building his taxi business, Pradeep Yadav lived in a “chawl,” a rundown tenement in India’s financial capital, Mumbai. The apartment had one light, a fan and water for just two hours a day. Now he stands at the vanguard of a potential housing boom that brokerage CLSA India Pvt. estimates could reach $1.3 trillion in the next seven years. With their three boys finished university, the family bought a flat in Palava City, a leafy township on the edge of the metropolis. Outside their balcony, tidy footpaths wind their way past manicured gardens and a swimming pool glints in the summer heat. “It was his dream to have something bigger,” Yadav, says of his father, now retired. “He didn’t realize he would get something like this.” The Yadavs are part of a swelling middle class in India that’s demanding better housing and increasingly has the means to get it. It remains to be seen whether the country, with its sprawling slums at one end of the housing spectrum and obsession with luxury at the other, can fill the gap but analysts such as CLSA say conditions are ripe for a broad acceleration in residential construction in the $2 trillion economy. “The last decade was about price appreciation,” said Pankaj Kapoor, founder of Mumbai-based Liases Foras Real Estate Rating & Research Pvt. “This decade will be about volume growth.” Burgeoning Demand Indian real estate, historically a depository for black-market cash, was hit hard by the government’s move to stamp out corruption with a ban on high-denomination bank notes in November. The slump is showing signs of a recovery. Sales across nine cities rose 19 percent in the March quarter after a 20 percent slump in the previous three months, according to PropTiger.com, an Indian real estate advisory firm. The demographic arguments for rising home sales in India have been long building. About 69 percent of the country’s 1.3 billion people are in prime house-buying age — 20 to 40 years — more than any than any other nation, according to a Bloomberg Intelligence report in April. Per capita income has grown at a compound annual growth rate of 10 percent for the past five years, according to CLSA’s note in May. The Yadav family is a textbook example of this burgeoning demand. Migrating to Mumbai from the northeastern state of Uttar Pradesh, they raised three sons — Pradeep, 28, an MBA graduate, Birendra, a doctor and Pramod a gemologist. They eventually climbed the property ladder to a rented flat. About three years ago they bought the two-and-half-bedroom apartment in Palava City for about 7.7 million rupees ($116,000), where they all still live together. It’s the supply part of the equation that India’s had trouble with. The growing migration of people to urban areas has overwhelmed infrastructure, pushed up land costs, and led to housing shortages. Building costs have also risen in recent years and developers have concentrated on the luxury end where margins are fatter. Government funding has largely flowed to the rural sector. Tipping Point But two catalysts have come into play that have put construction at a “tipping point,” CLSA’s Mumbai-based analyst Mahesh Nandurkar and his colleagues wrote. Prime Minister Narendra Modi broadened reforms this year to foster construction and home buying under his “Housing for All” program, launched in June 2015. That aims to build 20 million urban homes and 30 million rural houses by 2022. Property has also become the most affordable in two decades. Among the reforms: builders of affordable housing received “infrastructure status,” making them eligible for state incentives, subsidies, tax benefits and institutional funding; interest-rate waivers and rebates were extended to households with incomes up to 1.8 million rupees and laws to tackle building delays and protect home buyers came into effect on May 1. Modi has tapped into the widespread view that as the economy boomed, the property market “became a haven for speculators and investors,” making it nearly impossible for middle class people to buy a modest home, said Ashok Malik, who heads the New Delhi-based Observer Research Foundation’s neighborhood regional studies initiative. But “an uptick in the jobs market would be necessary for a fully-fledged middle class housing boom,” Malik said. “And that remains a risk.” Delayed Approvals Hurdles remain immense. There’s still “a big question mark” over whether the government’s housing plan is “realistic and implementable,” Anuj Puri, chairman of real-estate services at JLL Residential, wrote in a note released on June 5. “It seems impossible if enough land is not released for the creation of affordable housing. Land is a very price-sensitive commodity, and its current shortage in major city-centric areas prevents the development of affordable housing in areas where it is most direly needed.” Apart from costs, entrenched bureaucracy makes getting projects off the ground tedious. Once they do, more than 30 percent of projects run at least a year over schedule, according to Liases Foras. Economic Enabler Challenges aside, the government’s begun to view housing as an “economic enabler”, said Abhishek Lodha, 37, managing director of Lodha Group, which is building Palava City and is one of India’s biggest property developers. “The government has started recognizing that for the middle class to start creating wealth for themselves they have to participate in housing, just like any democracy,” Lodha, said in the company’s headquarters in Mumbai. “Property ownership plays a key role in the middle class growing their wealth over time without necessarily having to invest in speculative assets” such as stocks. Since the prime minister’s affordable housing incentives were announced, 113,508 homes have been completed and another 755,083 are in progress, said AA Rao, ministry of housing and urban poverty alleviation spokesman. “There is a palpable movement forward,” in private sector participation, he said. Lodha Group, best known for its luxury developments, has also been steadily building out Palava City on a 4,500-acre (1,821 hectare) tract of land — about a quarter of the size of metropolitan Mumbai.
Why NDA govt is pushing for road connectivity in Jammu and Kashmir
As part of its road connectivity programme for Jammu and Kashmir (J&K), the National Democratic Alliance (NDA) government has stepped up efforts to develop the transportation architecture for the state which has witnessed an unprecedented cycle of violence in recent years. These projects include developing roads totaling 683.31 km in length, with an investment of Rs10,204.45 crore, constructing the marquee 14-km-long Zojila tunnel and the 6.5-km Z-Morh tunnel on Srinagar-Kargil road. The increased pace of work by state-run National Highways and Infrastructure Development Corp. (NHIDCL) comes in the backdrop of China developing the China-Pakistan Economic Corridor (CPEC), part of its showpiece “One Belt One Road” (OBOR) infrastructure initiative. The importance of these projects can be gauged from their location. According to documents reviewed by Mint, these projects include four-laning of Jammu-Akhnoor section of National Highway (NH)144A, Punch-Uri road on a new alignment and Baramullah to Gulmarg section on NH 1A, which connects the Kashmir Valley to Jammu and the rest of India. Other road projects are in the Ramban, Doda, Kishtwar and Chatroo divisions of the state. Mint reported on 6 April about the NHIDCL being entrusted to build five tunnels worth Rs23,000 crore in Jammu and Kashmir with all-weather access by 2024. The other tunnels are Pir-Ki-Gali Tunnel on NH 244, Vailoo Tunnel at Sinthan Pass, and Daranga Tunnel at Shudh Mahadev. While NHIDCL managing director Anand Kumar declined to comment on India’s plan being tweaked in view of OBOR, he said that work was on at full speed for these projects in the state. Kumar added that NHIDCL will be playing a significant role in J&K connectivity through its tunnel network, with work on Zojila tunnel to be allotted this year. “The tunnel networks will provide all-weather connectivity and will be useful for movement of civilians and armed forces too,” Kumar said. India has expressed concerns over “sovereignty issues”, with the CPEC cutting through Gilgit and Baltistan areas of Pakistan-occupied Kashmir (PoK). India gave the OBOR conference a miss last month over Beijing’s insensitivity to India’s concerns. Another government official, requesting anonymity, said that these projects have a strategic intent given the state’s unique geographical position. OBOR, first unveiled by Chinese president Xi Jinping in 2013, aims to put billions of dollars in infrastructure projects, including railways, ports and power grids across Asia, Africa and Europe. India has been expediting the pace of infrastructure creation in the state with Prime Minister Narendra Modi in April inaugurating the country’s longest road tunnel—the 9-km-long ‘Chenani–Nashri Tunnel’, which links Jammu to Kashmir Valley. India accuses Pakistan of pushing in terrorists through the Line of Control (LoC) to foment terrorism in Indian-administered Kashmir—something Pakistan denies. New Delhi also says that Pakistan has been violating a 2003 ceasefire along the border to push terrorists under covering fire. Rod Smith Authentic Jersey
Piyush Goyal: The harbinger of change in the power sector
Son of late Ved Prakash Goyal who had served as a Union Minister for shipping in the Atal Bihari Vajpayee cabinet, Piyush Goyal, the Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, has in the past three years completely transformed the power and energy scenario in the country. The days of power shortages are over. In fact, for the first time India has become a power surplus country. The CA-turned-politician Goyal, who was given the task of reviving the country’s comatose power sector, has not only made electricity accessible and affordable, but also made India climb to the 26th position in the World Bank’s electricity accessibility, which was 99 in 2014. The most important aspect of Goyal’s plan is the stress on renewable energy. The heartening part is that the amount of coal required to generate a unit of electricity has decreased by 8 per cent in the last three years as rapid growth in the renewables has pushed the green energy share to 30 per cent with significant contribution from hydro and wind generation being supplemented by fast expansion in solar power. This is in line with India’s commitment to curbing carbon emissions under the Paris climate agreement. However, the major thrust of Goyal’s energy transformation plan is rural electrification. In February, Goyal informed Lok Sabha that as many as 12,033 villages out of 18,452 un-electrified have been provided with power and the remaining would be electrified by May 2018. In this regard, the game changer has been the Ujwal Discom Assurance Yojana (UDAY). Scripted by Goyal himself, UDAY is the first comprehensive power sector reform seen in India as it covers the entire value chain in the power sector from fuel, to generation, transmission, renewables, distribution and consumers. It has also turned around highly indebted state power distribution companies, the weakest link in the entire electricity value chain. Efficient and healthy power distributors are able to buy more power from generators, while keeping consumer’s power bills to the minimum. Goyal, who had more than 200 meetings with different stakeholders, says UDAY will spur foreign investment as it will bring down the cost in the entire ecosystem of power, coal, and renewable energy by about Rs 1.8 trillion every year by 2019 against a business-as-usual scenario. Goyal has dispelled the air of negativity surrounding the electricity sector, and replaced it with a sense of optimism by implementing a raft of reforms. In an interview, he said: “We have been able to change the mindset of this country from despondency to confidence. Earlier, the story was of shortages of power and coal, of a weak system, and of failing distribution companies which are perpetually in losses—a story of negativity. Today, the sector is full of optimism and positivity.” NO MEAN FEAT In February, Goyal informed Lok Sabha that as many as 12,033 villages out of 18,452 that were un-electrified have been provided with power, and the remaining would be electrified by May 2018 Scripted by Goyal himself, UDAY is the first comprehensive power sector reform seen in India as it covers the entire value chain in the power sector Jose Bautista Jersey
No gradual stake sale: Air India may be privatised at one go
Privatising Air India at one go is a view that has emerged strong among the many that the Narendra Modi government is grappling with regarding the future of the airline. Business Standard has learnt from sources who are involved in this process that once a final decision to divest a stake in Air India is taken, there won’t be any gradual stake sale. In a single stroke, the government will cede control by reducing its stake to either below 49 per cent, or exit the national carrier completely. “No investor, domestic or foreign, will be interested in buying a minority stake in Air India. There won’t be a 10, 15, 20 per cent stake sale. It has to be privatisation at one go. The decision to be taken is whether the government will bring down its ownership to below 49 per cent or exit altogether,” said a senior government official. The official said that a number of departments in the government, including the Prime Minister’s Office, civil aviation ministry, and finance ministry, are considering various options regarding the national carrier, which is laden with a debt of Rs 46,570 crore. A number of informal discussions have taken place on this. The consensus view is that there is no sense in the Centre divesting stakes and retaining ownership. The final decision would be taken by the Cabinet in the next couple of months, sources said. Derek Watt Authentic Jersey
Prepare to land at the aerotropolis
BIAL plans to create a mini-city centred around the Kempegowda airport to let visitors indulge in leisure as well as work during transit An Airport City on the lines of the one at New Delhi, which will have hotels, restaurants business parks, shopping malls and other amenities, has been planned near the Kempegowda International Airport (KIA). KIA is the third-busiest domestic and the fourth-busiest aviation market, attracting a mix of long-haul, high-yield international passengers. It is this that has prompted the airport authorities (Bangalore International Airport Ltd) to plan the Aerotropolis. “Envisaging a seamless expansion in size and capacity of the airport facilities over the next 10 years, based on the passenger and cargo growth, the airport is ambitiously being developed as an Aerotropolis, which means an airport city where layout, infrastructure and economy are centred on a major airport. BIAL aims to be the engine of economic growth for the region by connecting Bengaluru to the world and evolving into a Central Business District (CBD),” BIAL officials told BM. The idea behind conceptualising an Airport City is to enable passengers and visitors to indulge in leisure and business without having to leave the airport premises during transit. Rashaan Gaulden Jersey
Airports Authority expects to monetise 7,000 acres of land
The Airports Authority of India (AAI) expects to monetise nearly 7,000 acres out of its total land bank of about 1.36 lakh acres and use this land for building shopping centres, commercial offices and conference centres, among others. The civil aviation ministry has started inter-ministerial consultations on amending the Airports Authority of India Act, 1994, to expand the scope of usage for land owned by the Authority. After the consultations and the Cabinet approval, the government will introduce a Bill in Parliament to amend the law. “Currently, there are restrictions on the purposes for which we can use the Authority’s land. The amendment (in the AAI Act) will allow us to use nearly five per cent of our total land bank of around 55,000 hectares for other purposes. Some of the land will be used for cargo purposes as well,” AAI chairman Guruprasad Mohapatra told The Indian Express. The earnings from the monetisation of the land will be used for developing airports across the country. Chapter 3, Section 12 of the AAI Act lays down what is possible for the Airports Authority to do with its land. It allows the Authority to establish and maintain hotels, restaurants and restrooms at or near the airports, establish warehouses and cargo complexes at the airports for the storage or processing of goods. Jared Spurgeon Authentic Jersey
SpiceJet completes turnaround with Rs4.3b net profit in FY2016
SpiceJet recorded an operating profit of Rs3.88 billion ($60.3 million) for the year ended 31 March 2017, a marginal increase of 0.7% against the previous corresponding period. Total revenue for the 12 months came in at Rs63 billion, a 20.3% increase from the previous financial year. Expenses was also up by 21.8% to Rs59.1 billion. Net profit for the year was at Rs4.27 billion, down 5% from Rs4.5 billion for the same period last year. SpiceJet notes that “demonetisation resulted in significant decline in yield in Q3 and Q4 2017”. During the fiscal fourth quarter, SpiceJet recorded an operating profit of Rs416 million, down 5.8% in the same period last year. Revenue came in at Rs16.7 billion, up 10.3% from the Q4 2016. Net profit for the three-month period came in at Rs416 million, down from Rs1.07 billion against the previous corresponding period. The results also sees SpiceJet recording a ninth consecutive quarterly net profit. SpiceJet completes turnaround with Rs4.3b net profit in FY2016. John Matuszak Authentic Jersey
Privatisation of aviation infra in India failed to deliver results: IATA chief Alexandre de Juniac
Privatisation of airports and aviation infrastructure in India and some other countries has “failed to deliver” the benefits and the passengers and the economy have continued to suffer high costs, global airlines’ body IATA said today. As the World Airport Summit of the International Air Transport Association (IATA) began here, IATA Director General and CEO Alexandre de Juniac pointed to the burgeoning growth in air traffic demand and said a crisis in aviation infrastructure was looming. The summit was attended by over 1,000 industry leaders from across the world. “Many cash-strapped governments see privatisation as the solution for infrastructure funding. They should be cautious. “Many cash-strapped governments see privatisation as the solution for infrastructure funding. They should be cautious. “Privatisation has failed to deliver promised benefits in many countries–India, Brazil, France, and Australia to name just a few. The concessionaire makes money. The government gets its cut. The airlines pay the bill–usually a big one. And passengers and the local economy suffer the results of higher costs,” de Juniac said in his opening address here. He said when the governments privatise critical infrastructure, economic regulation is essential. “To date I cannot name a single success story. Finding the solution is an important piece of work that needs government and industry collaboration. It’s the only way to balance the investor’s need for profit with the community’s need for cost efficient connectivity,” he said. Referring to the threatening security situation, the IATA chief said “the freedom that is at core of aviation remains a target for terrorists”. Observing that the UN Security Council Resolution 2309 confirms that states would have to do more in fulfilling their responsibility to keep their citizens secure when travelling by plane, de Juniac said this was vital to the airlines which have a natural partnership with the governments. However, “the relationship is showing cracks”. On the US and UK ban on carriage of electronic devices on board, he said “there was no consultation with the industry and little time to implement. The action caught everybody by surprise. “And it was a big challenge for airlines to comply, and a huge inconvenience to our customers. It should not be that way.” The IATA chief summed up some of the major challenges – the mounting security threats, a “looming” infrastructure crisis and high taxes and “onerous” regulations. David Andrews Womens Jersey
Adani Power to consider hiving off Mundra plant today
The board of Adani Power will meet today to consider hiving off its flagship Mundra power station to a new subsidiary in which the Gujarat government entity may take a majority stake. “A meeting of the board of directors of the company is scheduled to be held on June 6, 2017 to consider and evaluate, among others, the Slump Sale of its Mundra power generating business undertaking to its subsidiary company, name Adani Power (Mundra) Ltd,” the company said in a regulatory filing. Industry sources said Gujarat Urja Vikas Nigam Ltd (GUVNL) — the Gujarat government entity — which buys bulk of the 4,260 MW electricity generated at Mundra – may take 51 per cent stake in the new subsidiary. While emails sent to company for comments remained unanswered, GUVNL officials could not be immediately reached for for the same. Last month, Adani Power had discontinued 1,250 MW power supply to GUVNL in a phased manner, mainly due to the unviability of running its power plant at Mundra on imported coal. Of 2,000 MW power provided by Adani Power to GUVNL under different power purchase agreement’s (PPAs), 1,250 MW supply was discontinued. Sources said the company had told the state government that operating Mundra power plant at the tariff specified in the PPA using imported coal (from Indonesia) was unviable after the Supreme Court disallowed raising power tariffs to compensate for rise in price of coal from Indonesia. Adani Power had entered into a long-term PPA with GUVNL in 2007 for supply of 1,000 MW of electricity at a levelised tariff of Rs 2.35 per unit for a period of 25 years. More supplies were contracted under PPAs signed at different times. It also contracted to sell 1,424 MW of power to Haryana. Mundra plant has a capacity of 4,620 MW, comprising of four units of 330 MW each and 5 units of 660 MW each. The 330 MW units are based on sub critical technology and the 660 MW units are based on supercritical technology. Power from the plant is evacuated by two transmission lines — one 433 km, 400 KV transmission line to transmit 1,000 MW from Mundra to Dehegam in Gujarat and another 989 km, 500 KV high Voltage Direct current (HVDC) bipole line with the capacity to transmit 2,500 MW from Mundra to Mohindergarh in Haryana. Blake Martinez Jersey
Delhi records country’s highest power demand
With the mercury rising in the national capital, the peak power demand shot up to 6,361 MW this afternoon, the highest ever recorded in the city. This is also the highest peak power demand in any city of the country. The previous record of 6,261 megawatt (MW) on July 1 last year is also held by Delhi. According to the power department figures, the peak power demand was 6361 MW at 3:06 PM. This is 12 percent more than the peak power demand of 5,673 MW recorded on the same day last year. Yesterday, as the maximum temperature soared up to 44.6 degrees Celsius, four degrees above the normal, the peak power demand was 5,775 MW at 11:06 PM. The peak power demand in the capital this year, breached the 6,000 MW mark in May at 6,021 MW, second highest this year on May 17. The power discoms have expected the peak demand this year to be around 6,600 MW. The hot summer months this year have pushed the peak power demands to set new records, with April registering the highest ever demand for the month at 5,685 MW which was 18 percent more than the peak power demand of 4,797 MW in the same month last year, an official of discom BSES said. In March, the peak power demand in the city crossed the 4,000 MW mark for the first time ever, he said. The peak demand of Delhi, even at the 6,000 MW level is three-fold of Kolkata(2,100 MW) and about 60 percent more than that of Mumbai(3,700 MW). While it is four times that of Chennai and Himachal Pradesh, it is two and half times more than that of the entire northeastern states in the country, the BSES official said. The power distribution company has made arrangements including long power purchasing agreements (PPAs) and banking arrangements with other states besides strengthening distribution network for ensuring uninterrupted supply to its consumers during the peak summer, he said. Vernon Hargreaves III Jersey