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Commercial realty demand scales new record of 69.4 million sq ft in 2019, up 40%

By Kailash Babar, ET Bureau | Jan 13, 2020, 12.58 PM IST


MUMBAI: Sustained robust demand for office spaces has pushed leasing activity across the country in 2019 to a new record high. Gross office leasing volumes pan-India touched a 69.4 million sq ft in 2019, compared to 49.5 million sq ft a year ago, showed data from Cushman & Wakefield.

While registering 40% on-year growth in leasing, preleasing activity also rose to a record level. Vacancy levels stayed low despite robust supply, rentals too increased, and co-working space take-up rose 1.43 times compared to 2018.

The year witnessed record-high preleasing activity at 17.2 million sq ft, a 7.2% on-year growth. Of key markets, Hyderabad saw pre-commitments of 5.8 million sq ft, garnering 34% share of the total followed by Bengaluru ay 4.7 million sq ft at 27% share. Healthy pre-leasing demand was also witnessed in Delhi-NCR, Mumbai and Chennai.

“Interestingly, the absorption figure for 2019 exceeds cumulative absorption of 2018 and 2017. Occupiers from the IT space expanded their real estate portfolio aggressively and contributed to the maximum share of leasing activity across sectors,” said Anshul Jain, Country Head & Managing Director, Cushman & Wakefield India. “On many notes, the office leasing performance in India surpassed industry expectations and paves the way for an optimistic year ahead.”

According to him, among major metros, Hyderabad & Delhi-NCR noted unprecedented net absorption activity, Mumbai markets saw pre-commitment activity increase over twenty-fold compared to 2018, and Bengaluru led the market in gross leasing.

Net absorption across India rose to an all-time high of around 45 million sq ft, a massive increase of 1.56 times from 29 million sq ft in 2018.

During the year, flexible workspaces leased more than 7 million sq ft, a new record in the Indian commercial leasing landscape. Indian corporate entities have leased more than 100,000 seats with large operators in the country over the last two years. Delhi-NCR has the largest share of flexible working space demand at 2.4 million sq ft, a 94% on-year rise followed by Bengaluru at 1.7 million sq ft. Flex-space demand in Pune touched 1 million sq ft, a 3-fold rise on an annual basis.

Information technology and Business Process Management (IT-BPM) sector continued to be the largest demand driver in 2019 with a share of 32.6% in leasing activity followed by Captive and Global Capability Centers at 19.8% share of total leasing.

Bengaluru topped the charts with 16.47 million sq ft demand followed by Delhi-NCR at 13.95 million sq ft, Mumbai 13.9 million sq ft and Hyderabad 10.7 million sq ft. At 3.6%, office vacancy in Pune dropped to the lowest in the country followed by Bengaluru at 5.2%, Hyderabad at 5.5% and Chennai 9.7%.

New supply of office spaces rose 47% from a year ago to 50.6 million sq ft during the year, with Delhi-NCR accounting for the largest share at 27%, where new completions have grown by a massive 140% during the year. Office stock in Hyderabad grew by 21% with new supply of 10 million sq ft during the year.

Commercial realty demand scales new record of 69.4 million sq ft in 2019, up 40%
 
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After price cap, local stent makers capture 60% of market

Sushmi Dey | TNN | January 13, 2020, 07:05 IST
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NEW DELHI: Stringent price caps on cardiac stents imposed by the government have substantially changed the market dynamics in the last three years. Improved affordability of stents has resulted in a 30-40% increase in usage and local manufacturers have gained market share at the expense of imports with a jump in volume to over 60% from 35% in 2016-17, industry data showed.

Price regulation has also allowed better margins to Indian companies even as locally made, lower-priced products gain in the market, helping local players increase revenues. The share of Indian companies in terms of value has increased from 30% in 2016-17 to over 55% in 2019-20.

On the other hand, with pressure on their margins, MNCs - particularly those selling expensive stents imported from the US - have faced a significant decline in market share from around 70% to nearly 45% in terms of value in last three years, after government capped prices of stents in February 2017.

Currently, the Indian stent market is pegged at around Rs 1,500 crore, growing at around 15-18% annually. The change in market share volumes and revenues came about after the National Pharmaceutical Pricing Authority (NPPA) imposed a price cap on stents, reducing prices by up to 85%. Subsequently, the regulator also capped the trade margin on stents at 8% which included distributors, retailers and stockists and even hospitals

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After a few revisions in last three years, a bare metal stent (BMS) is currently priced at Rs 8,261, while a drug eluting stent (DES) costs Rs 30,080. There have been reports of hospitals finding ways to up the costs through other charges but the use - and therefore accessibility - of stents seems to have gone up.

Industry executives describe the price capping as a "game changer and breakthrough", helping consumers as well as Indian companies struggling to make their mark. While before the price cap, MNCs were able to market products tagging them as "superior in quality" and had better margins to push through multiple trade channels, price regulation helped level the field for Indian firms.

"Indian drug eluting stents have gained 25% additional market post price revision. It has also enabled domestic companies to spend more efforts in R&D and clinical trials which has improved their market competitiveness," said Gurmit Singh Chugh, chief executive of Translumina.

Three Indian manufacturers - Translumina, Meril and SMT - together control around 45% of the domestic share. There are around seven more Indian companies manufacturing stents.

"The cap on margins helped Indian companies because they were already selling at a significantly lower price than imported counterparts. Besides, 65% of the business for local companies came directly through hospitals, whereas MNCs were giving huge margins to distributors. The price cap consolidated the trade margin and disrupted the traditional model. This protected manufacturers by rationalising trade margins," a senior executive said.

However, even with a reduced market share, volume of imported products has increased because of improved affordability, indicating some gains for them too in an expanding market. Data showed the average number of coronary stents implanted per person has increased from 1.2 to 1.5 in the last three years.

https://health.economictimes.indiat...al-stent-makers-capture-60-of-market/73220266
 
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SCO Secretary General suggests vigorous e-commerce partnership among member states

By Dipanjan Roy Chaudhury
Jan 13, 2020, 10.52 PM IST
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Speaking at an industry interaction, ‘Enhancing Indian Industry’s Engagement with SCO’organised by FICCI, Norov said, “The time has come for purposeful and active action for development of e-commerce in our countries.” Norov is on five day visit to India to host series of meetings besides participating in Raisina Dialogue.

Vladimir Norov, Secretary General, Shanghai Cooperation Organisation (SCO), Monday said that the member countries of SCO should partner in developing e-commerce in the region as it is rapidly growing and changing the structure of world economy.

Speaking at an industry interaction, ‘Enhancing Indian Industry’s Engagement with SCO’organised by FICCI, Norov said, “The time has come for purposeful and active action for development of e-commerce in our countries.” Norov is on five day visit to India to host series of meetings besides participating in Raisina Dialogue.

“Given that India is one of the driving forces behind the development of digitalisation and electronic commerce, we believe it is important that India actively participates in promoting e-commerce among the SCO countries,” he said.

Norov said that e-commerce provides opportunities for companies to expand their markets, scale up their businesses, reduce transaction cost through economies of scale and more efficient use of capital, as well as to create new jobs.

Further, he said that globalisation process despite the rise of some restrictive trade practices has opened up great opportunities for the growth of developing countries and SCO can play a key role in facilitating and boosting international trade.

“India’s accession to SCO as a full-fledged member has opened up new opportunities for further development and deepening of full-scale cooperation. This will be beneficial to India and other SCO members states,” he added.

Vikas Swarup, Secretary West, Ministry of External Affairs, said that the SCO has emerged as a key regional organisation in the Eurasian space in the past two decades accounting for 40 per cent of the world’s population.

Identifying areas of potential cooperation in the region as pharmaceutical, health, hospitality, renewable energy, education, culture, infrastructure, energy and disaster management, Swarup said, “India has emerged as an attractive destination for medical tourism.”

SCO Secretary General suggests vigorous e-comm partnership among member states
 
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Stagflation threat looms for former world-beating economy India

Stagflation threat looms for former world-beating economy India
At the heart of India’s problems is a slump in consumption following a combination of policy missteps.

Just two years ago, Prime Minister Narendra Modi was helming an economy expanding 8%, spurring optimism India was on a path to become a major global growth driver. Now, stagflation looms as the economy grinds toward its slowest expansion in more than a decade and inflation spikes above the central bank’s target, driven by higher food prices. Social unrest against a restrictive new citizenship law is yet another challenge.

And there’s few good options to deal with the slowdown. Dwindling government revenue and an already-stretched budget limit scope for fiscal support, while the shock 7.35% surge in inflation in December and the threat of higher oil prices mean the door for further interest rate cuts is closing.

So what went wrong? At the heart of India’s problems is a slump in consumption following a combination of policy missteps, from the unprecedented decision to ban high-value cash notes at the end of 2016, to the chaotic implementation of a unified goods and services tax the following year. That was followed shortly after by a credit crunch, which triggered a crisis among shadow lenders - a key provider of small loans to hundreds of millions of consumers and businesses.

Volatile Oil
Consumption makes up about 60% of gross domestic product, and spending has slumped as businesses shed jobs and put off investment plans. Consumer sentiment remains in the doldrums and the recent volatility in oil prices could be a further drag on spending. Economic growth in the fiscal year through March 31 is set to slow to an estimated 5%, the weakest pace in more than a decade. “The recovery is likely to be very gradual and a stagflation scenario is likely,” said Teresa John, an economist at Nirmal Bang Equities Pvt in Mumbai.

The central bank’s five interest-rate cuts last year and billions of dollars of liquidity pumped into financial markets have done little to spur lending. That’s because banks are already saddled with one of the worst stressed-asset ratios in the world and are neither lending much nor transmitting rate cuts to borrowers.

What Bloomberg's Economists Say
India’s recovery is still sputtering. Our GDP tracker shows growth slamming into reverse in November after a pickup in October, adjusted for year-earlier base effects. This cautions against any premature withdrawal of policy support. Our view is that the government and the central bank need to step up stimulus.

The government has taken steps to revive the economy, but they aren’t bearing fruit yet. Finance Minister Nirmala Sitharaman gave companies $20 billion worth of tax cuts, merged weak state-run banks with stronger ones and eased foreign investment rules. The government will also sell state assets in its biggest privatization drive in more than a decade.

“We are really extremely close to a point where we could be dipping into a major recession,” Abhijit Banerjee, winner of the Nobel prize for economics last year, said this month in Mumbai. “The critical problem in the Indian economy is demand. You definitely want to stimulate demand,” he said, urging authorities to abandon their inflation and budget deficit targets.

There are some early signs that the economy may be bottoming out. The latest high-frequency indicators, such as the purchasing managers indexes for manufacturing and services, show activity is picking up. Industrial production and capital expenditure also improved late last year.

Economists are forecasting a rebound in growth to 6.2% in the fiscal year through March 2021, although much will depend on how quickly global demand and domestic spending recovers.

Nouriel Roubini, a New York University professor and well-known economic doomsayer, told delegates at a Mumbai conference last week that he doesn’t see evidence yet that the “slowdown is going to give way to a significant pick-up in growth in this financial year.” He added that policy makers’ attention “should have been concentrated on the economy and is instead distracted by political things.”
 
Sandeep Parekh (@SandeepParekh) Tweeted:
This is Ill informed article. Indian law doesn’t allow foreign investment in government securities over 30 billion USD. There would be a flood of investment if that were relaxed. Has nothing to do with protests. Shashi Tharoor on Twitter (
https://twitter.com/x/status/1217496849654792198
)

Thread!!

Shashi Tharoor (@ShashiTharoor) Tweeted:
Sad to see foreign investors losing faith in BJP-ruled India as “vikas” is eclipsed by “vibhaajan”: Why a $453 billion bond manager is shifting bets from India to China (
https://twitter.com/x/status/1217454091552489472
)

When erudition in the English language can't / won't / doesn't conceal the fact that his knowledge of economics is equal to ours.
 
I think that we in India think too small.

With so many protest in Hong Kong, the west is pi$$ed about China and they fuel protests to poke the Chicoms and hit one of their key economic center. This should be used as an opportunity by India to create its own international finance center with ultra liberal fin laws. They should mark a land near Goa, create a special provision that we make international businesses in this area tax free beyond a certain limit(high) and we welcome foreign banks and comanies to set up their bases here. Many major banks from West and SE Asia would like to use this opportunity if provided.

I think the problem with Indians is that we believe that the world somehow "owes" it to us. All that Vishwaguru thing has taking a perverse tone in our mind. What we need to do is to give to the world and the world will pay back 100x times more. And the good news is that it doesn't take much to give to the world.
 
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_Anonymous_ said:
More a well delivered snub to Jeff Bezos the owner of WaPo. He was also denied meetings with Modi, NS, etc .
Click to expand...
He could have just personally delivered the message. Why give a bad press to global investors. This is just the usual twist given when things go wrong.

Looks like he already backtracked.
In response to his controversial statement on ecommerce major Amazon, commerce minister Piyush Goyal, on Friday, said that his words were misconstructed. He also said that the Indian government welcomes all investments coming fair and square into the country.
Click to expand...

Govt Welcomes All Ethical Investments: Piyush Goyal To Amazon
 
Ashwin said:
He could have just personally delivered the message. Why give a bad press to global investors. This is just the usual twist given when things go wrong.

Looks like he already backtracked.


Govt Welcomes All Ethical Investments: Piyush Goyal To Amazon
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Domestic posturing, Amazon and Flipkart hurt brick and mortar stores by snubbing them a right message is sent to people.

Piyush Goyal comments were good too if you put in context. Both Amazon and Flipkart give huge discounts or cashback, which makes local store uncompetitive, they do this and then post loss thereby hurting everyone except consumer. They are just filling up those losses by bringing in more money, not really an investment.

Audience here is small shop owners not public.
 
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BlackOpsIndia said:
Domestic posturing, Amazon and Flipkart hurt brick and mortar stores by snubbing them a right message is sent to people.

Piyush Goyal comments were good too if you put in context. Both Amazon and Flipkart give huge discounts or cashback, which makes local store uncompetitive, they do this and then post loss thereby hurting everyone except consumer. They are just filling up those losses by bringing in more money, not really an investment.

Audience here is small shop owners not public.
Click to expand...
I get that. But again, the wrong way to deliver the message. The richest man in the world is talking about investing in India. Which is always welcome. It will be noticed overseas for obvious reasons.

Target audience already got the message : Amazon and Walmart-owned Flipkart face India antitrust investigation - CNN
 
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False alarm over domestic savings in India?
As the Indian economy continues to slow, there is growing fear about a lack of resources in the economy to fund a revival in investments and commercial activity. The dramatic fall in the domestic saving rate in the economy, which determines how much domestic funds government and businesses can access for investments, has fuelled such concerns.

Both the old and the new GDP series data suggest that the savings rate has been declining since the global crash of 2008, with the new series suggesting that the drop may be less sharp than what the old series reported. In 2017-18, the fall in the savings rate was arrested, primarily due to higher savings of non-financial corporations. But the improvement was marginal and savings as a percent of GDP—at 30.5%--remained substantially lower than the peak rate of 37.8% in 2007-08.

However, a closer look at the numbers suggests that the savings squeeze may not be as big a constraint in funding growth as is commonly assumed. National accounts data shows that the decline in India’s savings rate is primarily because of a decline in household savings. Within household savings, a sharp fall in ‘physical savings’ of households in recent years (since 2011-12) has led to the decline in overall savings rate.

The term ‘households’ includes not only individual households but also non-corporate businesses including the unregistered micro, small and medium enterprises.

The estimates of physical savings of households --- the component largely responsible for driving down household savings and the overall savings rate --- need to be treated with caution. The savings of households in physical assets reflect the household segment’s investment in construction, machinery and intellectual property products—that is capital formation (or investments) by the household segment. In the absence of reliable data, this is derived by deducting investments by the public and private sector from total capital formation in the economy, and this method to capture ‘physical savings’ of households has come under question by statisticians several times in the past. Also, the decline in such ‘savings’ reflect the overall shrinking of the investment pie (overall gross capital formation in the economy) rather than a decline in financial resources for investments.

Physical assets of quasi-corporates, corporate entities that appear and maintain accounts like registered corporates, which were earlier captured under the household segment are now included as private corporate savings under the new GDP series. This also led to a bump-up in savings of the corporate sector with commensurate decline in the household sector, although even this change has faced trenchant criticism.

Not only does the decline in household savings reflect the decline in estimated capital formation on account of unorganized businesses and households, the accuracy of such estimates are questionable.

It is true that household savings in financial assets, especially in bank deposits, have declined (as a share of GDP) over the past decade but the decline has been less significant compared to the dramatic fall in household savings in physical assets. Since 2011-12, household savings in financial assets has hovered around 7 percent of GDP, with relatively muted year-on-year variations.

The financial savings rate of households has likely improved since fiscal 2018, since deposit growth has seen an uptick over the same period, according to Reserve Bank of India (RBI) data. At about 27%, bank deposits account for the biggest share in the total gross financial savings of households.

The national accounts data also suggest that the net financial liabilities of households as a share of GDP have remained steady over the past few years, belying the notion that households are saving less because they are now indebted.

A June 2019 NIPFP paper authored by Ila Patnaik and Radhika Pandey argues that the main challenge in India is not the (un)availability of savings but rather in the productive use of such savings for investments.

We must worry more about that challenge.
False alarm over domestic savings in India?
 
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