Mid segment thrust
Geetu Vaid

The residential real estate market is witnessing a shift in buyer preferences

The dawn of 2010 was wrapped in the bright hues of optimism and revival for the real estate sector in the country. The ominous clouds of slowdown of the past 18 months were surely revealing their silver lining for this sector. After the first quarter the residential market seems to be recovering fast and there is a flurry of activity in metros as well as in Tier II and III cities all over the country among the buyers as well as developers. Several new housing projects have been launched keeping the steep demand in mind. Economy related factors like sustained GDP growth, rising affordability, increase in the number of skilled workers and social factors like nuclear family system and urbanisation have given a boost to the residential real estate market in India.

"The real estate market on the whole, and the residential segment in particular, has been on an upswing over the past six months. The trend that is the most noticeable is that the market has moved from the affordable to mid in spite of the price correction. Typically a Rs 25 lakh apartment has now gone up to Rs 35 lakh. New launches will be higher in prices", says Samir Jasuja, founder and CEO of PropEquity, an online research portal.

The affordable housing is a significant part of the residential segment as there is an estimated shortage of 25 million dwelling units. As per Knight and Frank report the NCR alone will need about 5.5 lakh dwelling units in the price range of 15 to 20 lakh by 2011.

Bhim Yadav, CEO, Falcon Realty, agrees that mid segment housing is "fast gaining popularity with increasing consumer demand. There is a rise in 2BHK and 3 BHK homes and people are religiously eager to spend on a good apartment encompassing the consumer demands irrespective of prices, but in the NCR region the maximum demand is in the Rs 15-25 lakh segment and this should be tapped. Our flagship project Global Eco City (GEC) which is located on Expressway (NH-8), has a judicious mixture of executive homes, weekend homes, home for all and premium villas. However, Gulmohar Woods, which is our first project within GEC, offers studio apartments at as little as Rs 5.9 lakh".

While a lot is being said about the need for affordable housing, a recent study conducted in 13 cities all over India by PropEquity reveals that there is a marked shift in buyers' preference as instead of the affordable housing it is the mid segment residential units that are drawing the buyers. Typical price for affordable housing segment being under Rs 35 lakh and middle housing segment from Rs 35 lakh to Rs 75 lakh.

Analysing the trend of sale of residential units (absorption), at least nine of the 13 cities covered in the survey, have shown a rising trend towards mid-segment housing. Taking new launches in considerations in cities like Mumbai, Chennai, Pune, Bangalore etc, six cities show a movement towards the mid-segment. These can be attributed to the return of buyer confidence in the residential market.

Developers like Mohit Arora, Director, Supertech Limited, however, maintain that affordable housing is still going strong. "I believe, the trend of affordable is housing is still very high and is expected to be the same for the next five years. Looking at the demand of the masses, we recently launched Eco-Village at Noida Extension, which starts from Rs 9.85 lakh and we received a great response for the same". But response to mid segment projects too has been heartening, he says while adding, "We came up with projects like 34 Pavilion in Noida, Emerald Court in Noida-Greater Noida Expressway and Livingston in Ghaziabad a couple of years back when the demand for mid-segment was fairly high. These projects have around 364, 700 and 1,800 units, respectively, which lie under the price bracket of Rs 45 lakh to 60 lakh and more than 80 per cent of the dwelling units have been sold in these projects".

It's actually a mixed bag in the NCR region, with Noida, Ghaziabad and Faridabad having more projects in the affordable segment, whereas in Gurgaon both, the mid and higher segments are scripting a new growth story with an encouraging recovery in the selling scenario and 8,000 units being sold in a year. The affordable segment here is only a marginal participant. Sales of the affordable segment have gradually declined post first quarter of 2009.

The mid segment housing seems to be more attractive to buyers in Chandigarh, Mohali and Kharar area, if one goes by the residential projects on offer. While there have been no significant launches in Chandigarh post Q3 2008, which were primarily in the mid segment, there are around 18 ongoing projects and out of these the affordable segment is just two (346 units) and mid segment projects are 11 (2,253 units). Absorption levels since Q4 2008 have undergone marginal variations and have registered an average absorption of 110 units every quarter. And here, too, the mid segment has been dominating as absorption share of mid segment is recorded to be over 55 per cent across every quarter. The average transacted prices of apartments in mid segment have increased from Rs 2,510 per sq ft in Q3 2008 to Rs 3,213 in Q1 2010, an increase of 28 per cent.

In Mohali-Kharar area there are as many as 87 ongoing projects out of which affordable segment is 38 (7,495 units) and 41 in mid segment (9,504 units) in the price range of Rs 2,200 per sq ft for apartments in mid segment, and Rs 1,800 in affordable segment. A majority of the supply thus, belongs to the affordable segment. However, the absorption share exhibits almost an equal share for both the segments. According to Ranjit Singh Malhotra of Golden Properties in Mohali, the maximum sale is of dwelling units in the price range of 30 to 35 lakh.

So the question here is whether the buyer is moving towards mid segment or is it the affordable segment threshold that has moved a notch higher? Sachin Sahota, who has been looking for an affordable apartment says, "I want a good deal but I also want a reasonably good location and facilities that will make my family comfortable and now as economic crisis is almost over I can take the chance of spending a little more than I was ready to spend a year ago. "The affordability of an apartment lies on the basis of consumer demands. There has been a 30 per cent rise in home prices in the last six months as lot of pent up demand has come in the market during the festivals, which coupled with strong NRI investments. Demand for 2BHK with sizes ranging from 1200 to 1500 sq ft is quite high. This is also because it is going to be an end users' market for sometime now", says Yadav.

Sluggish rental march

Leading real estate consultants Knight Frank India have said retail rentals would continue to be lower in the next two years, except for some locations in Mumbai and Delhi. “The retail space available in the country today is in surplus. So, there will be no upward pressure on rentals except in some locations in Mumbai and Delhi where we expect very slight momentum due to higher demand compared to other cities,” Knight Frank India national research head Samantak Das said.

“The total retail real space available in the country now is 41 million sqft, out of which 1.76 million sqft is currently vacant. In the next two years, another 55 million sq ft will be added,” he said, adding this growth will create an over-supply situation of 21 million sqft in seven leading cities of Mumbai, Delhi & NCR, Bangalore, Chennai, Hyderabad, Kolkata, and Pune.

The Delhi NCR region will be the largest contributor of retail space by 2012 with 16.1 million sqft or 29 per cent. Mumbai would be the second largest with 11.3 million sqft or 21 per cent. Chennai, Bangalore, Kolkata, Pune and Hyderabad would be supplying around 7.5, 6.2, 5.1, 4.9 and 3.6 million sqft space, respectively.

The Mumbai retail space is expected to touch 20 million sqft by 2012, the report said. Currently, the city has around 8.72 million sqft retail space with nearly 20 per cent of it lying vacant. By 2012, Mumbai will continue to face oversupply by 1.31 million sqft which would be around 6 per cent of the total stock, the report said.

The Delhi NCR region has 17.87 million sqft retail space spread across Delhi, Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad. Delhi contributes around 36 per cent of this followed by Gurgaon at 29 per cent. Out of the 16.1 million sqft additional space that will be operational within the next two years, Delhi alone will contribute the maximum at 33 per cent, the report noted. — PTI

GROUND REALTY
Futuristic designs step into your homes
Jagvir Goyal

Change is the only constant in life. Over the time, everything has undergone a change including the mindsets. Often, the change is accompanied by a whiff of fresh air. There were times when an extra moment in the bathroom was considered as wastage of time. Today, the bathrooms have become luxury getaways where one is completely to oneself, can soothe one’s body and pamper one’s soul. And there is no stopping! Kaizen said, there was always a scope for improvement. Inventors are truly following this theory and coming out with unimaginable fittings. Here, have a look:

Automatic seats

The latest toilet seats have magical features. The seat covers open automatically when you stand in front of the seat. And these shut gently if you move away from the seat. The inbuilt sensor does the job.

The seat is provided with a special jet spray. The jet spray is programmed to be gentle, lukewarm and oscillating for perfect cleaning operation. Also provided is an automatic air dryer. Above that, there is a deodorizer also.

The seat is provided with a small LED light at the centre in such a manner that you can easily locate the seat even in the darkness.

Not only the seat cover but the flushing is also automatic. The moment you get up from the seat, the water closet flushes out automatically. There is no need of you to touch the flush handle or press the plate. There is no waiting for a refill. There is no noise of refilling. There is no cistern attached to the seat. It is a simple, one piece water closet. Above this, the seat is remote controlled! You can activate all operations from it.

The chinaware or ceramic of such a seat has to be of extraordinary quality. Yes, it is quite different from ordinary chinaware and given special ion barrier glaze coating to prevent any stains on it. You need not clean the seat!

The seat is produced in white color only. Water used is just 6 litres, perfectly matching with water conservation norms.

Self powered faucets

Believe it or not, the latest faucets in the market have self generating hydro-power. These are provided with rechargeable batteries. The batteries need not be recharged like those of mobiles. The faucets recharge them automatically by using the hydropower generator built inside them! The hydropower generator uses water flow to recharge the batteries. More you use the faucets, longer they serve you! However, just five uses a day of the faucet keeps its batteries recharged.

Below the spout, inside the faucet body, a power generating unit has been provided. The unit is equipped with a function unit, a controller and a solenoid valve. As the water is released, it flows over a tiny turbine. The turbine spins like that of a power house, generates current which gets stored in the rechargeable batteries.

You’ll wonder why the batteries are required. These are required keep the sensors active. The moment you position your hands near the faucet, the sensor detects their presence, activates the faucet and the water flows out. The moment you pull your hands away, the water flow stops. In line with green technology and water conservation principles, the faucets waste no water and conserve it. You need not touch the faucet! The faucet is best suitable, not only in the home but in public facilities also where one cringes before touching a tap or faucet.

Automatic washbasins

Not only the seats and faucets but the latest washbasins are also automatic. These washbasins look like a chinaware bucket hanging on the wall. In these washbasins, the faucet is located just inside the bucket-basin. This avoids any spillage of water on the floor or the counter. The faucets are automatic, sensor operated and open or shut the water flow as you take your hands in or out of basin. Made of stain free chinaware having ion barrier glazing, the wash basins are produced in white colour only. The flow of water is regulated to 2 litres per minute. The wash basin has an inbuilt thermostatic mixing valve that accurately sets the water temperature to desired level.

Concealed cisterns

For those, who don’t want to change the full water closet setup but are fed up of overhead cisterns with dangling chains or low level protruding flush units, concealed cisterns are now available. Concealed in the wall with only actuator plates for 3 litres and 6 litres visible, these cisterns are noiseless in comparison to wall hidden flush valves that make a lot of noise at night. The technology used in concealed cisterns is called ‘whisper technology’. Flush valves consume extra large quantity of water and have been banned in cities like Mumbai. In comparison, concealed cisterns conform to the principles of water conservation.

Concealed cisterns can be just 90 mm thick i.e. equivalent to thickness of a brick. These can, therefore, be well concealed in the wall. To avoid any maintenance or post-installation problems, concealed cisterns are subjected to stringent testing. In any case, if a problem occurs, the float valve or flush mechanism can be easily repaired by putting in a hand from the crevice created for this purpose. Top rated hotels have started adopting these cisterns on a large scale.

Aqua free urinals

Each of the Aqua free or waterless urinals now invented can save 1.5 lac litres of water per year. Biggest advantage of these urinals is that these can be installed at places where no water is available. A country like India can get rid of stigma of frequent roadside urination by people by installing these urinals. Aqua free urinals are designed to need no flushing. These are provided with a cartridge at the base of the urinal. The cartridge contains a sealant liquid that forms a barrier between the open air and the urine as it makes its way through the cartridge, sealing all odours within the cartridge. The cartridge is able to collect the uric sediment while the remaining urine flows to the drainage pipe. So there is no requirement or wastage of water. One cartridge is suitable for 7000 uses. Thus it needs to be replaced 2 to 3 times a year, depending upon the frequency of usage of the urinal. Both the sealant and the cartridge are biodegradable.

More tips will follow next fortnight. Till then, happy building!

(This column appears fortnightly).

The sunrise sector
Arupjyoti Gogoi

With tremendous pull of opportunity, India is a destination for several international hotel chains looking for growth. The successful growth story of hotel industry in India is second only to China in the Asia Pacific region. The rating on the Indian hotels is bullish. The iIndustry is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012.

The current market size of thel industry is estimated at Rs 85,452 crore. ‘There is a shortage of almost 1,50,000 rooms and this demand-supply mismatch has resulted in high room tariff in the country. Even budget hotels are charging as much as $ 250 per day in major towns. The room rates are most likely to rise 25 per cent annually and occupancy to rise by 80 per cent, over the next two years.

MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their share of pie in the race. Government has approved 300 hotel projects, nearly half of which are in the luxury range. With the $ 23 billion software services sector pushing the Indian economy skywards, more and more IT professionals are flocking to Indian metro cities. Hotel industry is set to grow at 15 per cent a year. This figure will skyrocket during the Commonwealth Games. This industry is inextricably linked to the tourism industry and the growth in the Indian tourism industry has fuelled the growth of hotel industry. ‘Scenario of Indian Hotel industry’ looks rosy, says S. P. Kochhar, CMD, Madhuban Group of Hotels and president of the Doon Valley Hotel and Restaurant Association and Hotels and Restaurants Association of Uttaranchal, talks about the future course of this sunrise sector:

Q. How is the market for hotels in India?

A. The market for hotels in India is growing and looking forward day by day. According to the tourism ministry, 4.4 million tourists visited India last year and at current trend, demand will soar to 10 million in 2010 — to accommodate 350 million domestic travelers. The World Travel and Tourism Council, India, data says, India ranks 18th in business travel and will be among the top five in this decade. Sources estimate that the demand is going to exceed supply by at least 100 per cent over the next two years.

Q. Has recession affected the hotel industry?

A. Recession affected almost all the sectors of the economy, including the hotel industry. But now the worst is behind us and things have been brightening up over the past few months and soon this industry will be.

Q. Due to the forthcoming Commonwealth Games; do you see an increase in the hotel industry business?

A. Yes, the Indian hotel industry is gearing up for the Commonwealth Games this year to make the most of the likely spurt in tourist traffic. There will surely be an increase in the business across all the tourist destinations in the country. However, states like Uttrakhand may not benefit much because of poor road connectivity, over-congested trains and prohibitive airfare. Anyways, we are also gearing up to capitalise on this mega sports event happening in India.

Q. Is the northern region lacking in growth in this industry, if yes why?

A. The sector can surely do much better but the government is not treating it as a priority industry. The view is to squeeze out the maximum in terms of taxes and license fee, the burden of which ultimately get passed on to the tourists. These are some of the issues which the government should take into consideration as early as possible.

Q. Do you think that additional services can change overall revenue generation in this sector?

A. Hotel industry is heavily consumer-focused industry segment, with more customer interactions than many other industries. Its product is also dominated by an intangible experience component, the quality of which can accentuate- or ruin- an otherwise perfectly suitable product, i.e., a clean and secure room. Indeed, additional services can change overall revenue generation in the hotel industry.

REAL TALK
Avoid the dangerous path of delay

Delay in handing over possession to customers has not only dented the image of builders, but has also increased the cost burden besides making the customers wary of finalising deals. Timely possession is the touchstone for a builder’s reputation, says Ashwani Prakash, Executive Director, Paramount Group. The group, that takes pride in offering its customers unmatched pieces of architecture at unparalleled prices and timely possession, has many projects under its aegis and has been involved in building the modern and finest residential and commercial complexes in Delhi and National Capital Region (NCR). The group’s upcoming projects include Paramount Floraville, Sector 137, Expressway, Noida and Paramount IT Projects, Greater Noida. Prakash shares his views on the current scenario in the real estate sector:

Q. What is the real estate scenario in India after slowdown?

A. The global recession which we have witnessed in the past two years has made a big impact on the real estate sector globally. Spurred by the sub-prime mortgage crisis in some of the world’s largest economies, it resulted in the worst ever economic meltdown. The impact on the real estate was much more deep rooted than merely a price correction — for the first time, perhaps in recent memory, we have seen an unprecedented gap between supply and demand. While the recovery across the world has been extremely cautious, I feel India has recovered much faster. The real estate sector in India has shown signs of recovery over the past 12 months and we see that the industry more or less back on track.

Q. How have you coped up with the downturn?

A. Most developers realised that timely delivery is not just their responsibility but also one of the most efficient tools to ensure the cost effectiveness of their product. The meltdown and consequent difficult economic scenario resulted in the introduction of several cost efficiency techniques – this not only led to savings but also improved the quality of work. This is a tried formula at Paramount. Timely completion of projects as per the schedule and at times ahead of schedule has not just been our promise to the customers but a fact. This has helped us to keep a check on our project costs and also established our brand in the market as an extremely reliable developer.

Q. How do you see the funding environment now, do you think the banks are being supportive? Is it a favour of the builders?

A. The banks have been supportive towards the real estate sector albeit on a selective basis. Understandably, developers with a good track record with the banks and customers are still being funded and offered facilities by the banks. This obviously is a very favourable gesture on part of the banks to boost the sector.

Q. What are the future prospects of real estate industry in the next two years?

A. Following the recent trend, many developers are planning several luxurious projects in various metros such as Bangalore, Chennai, Mumbai and also in the NCR region. This also demonstrates the increasing appetite of consumers in these regions, which is encouraging the developers to launch luxurious projects without any hesitation. The demand within the upper middle and middle income slab has also improved over the past one year and this certainly bodes well for a brighter future.

Q. Do you think the real estate sector would see the same scenario as it was pre-2008 era?

A. I think one can look at the situation in multiple ways. However, we have to recognise that while the markets are stabilising, there are a few fundamental shifts which have taken place. Firstly, the market today is a lot more competitive and secondly, the customer today is a lot more educated. In a competitive environment the developers have to be even more conscious of the quality, timelines and efficient delivery. This may provide a take off platform for the industry.

Q. What is your group’s philosophy and future plans?

A. We at Paramount believe in giving value for money to our customers and we achieve this through quality construction and timely deliveries. There are several exciting projects we have in the works and in the pipeline.

TAX TIPS
Be prepared for litigation
S.C. Vasudeva

Q. I am a senior citizen and my annual income from pension and interest is around Rs 2.39 lakh. I sold a plot acquired by me in 1998 on April 18, 2008 for Rs 20 lakh. I purchased second floor (20 per cent of constructed house) on April 21, 2009 for Rs 18.60 lakh. I spent Rs 1.17 lakh on stamp papers, Rs 10,000 on registration charges and Rs 20,000 for paying commission to property dealer. Thus total expenses came to Rs 20.07 lakh.

Kindly advise whether any income tax is payable by me for assessment year 2010-11. Which IT form should I fill? Should I show purchase/sale transaction in the IT form especially when it is written in  the instructions of IT forms that the purchase and sale of any immovable property value at Rs 30 lakh or more is to be entered in the form (item no.9 (ii) 6 and 7 of instructions).

— Jai Dayal Munjal

A. The sale of plot acquired in the year 1998 would have resulted in a capital gain which was taxable for the assessment year 2009-10 (financial year April 1, 2008 to March 31, 2009). The tax on capital gain which was payable for the assessment year 2009-10 could have been saved provided

(a) the net consideration (consideration for the transfer of the plot less expenditure incurred wholly and exclusively in connection with the sale) had been deposited in a bank account under capital gain scheme

(b) the investment in the purchase of a residential house had been made by withdrawals from the said account. Although you have purchased the house within a period of two years of the date of sale, there is a technical default as the amount of net consideration has not been deposited under capital gains scheme account before the due date of filing the tax return for assessment year 2009-10. The claim for exemption from the taxability of such capital gain for the assessment year 2009-10 under Section 54F of the Income-tax Act 1961 (the Act) would involve litigation for which you should be prepared.

There is no tax liability in respect of capital gain on sale of plot for the assessment year 2010-11 as the sale has taken place in the year ended March 31, 2009. The purchase of a residential property being at a price which is less than Rs 30 lakh, technically there would not be any requirement to disclose the purchase of the residential house for which a total amount of Rs 20.07 lakh has been spent.

Buying second joint property

Q. Person A and his wife, B, sell some shares/ property other than residential property and accrue Capital gains in the ratio of 80:20 i.e. A earns about four times more than B. A has a residential house more than 36 months old though possession was given less than 12 months back. B has a residential property jointly held with A and the housing loan is also joint in this case, but EMIs of the loan are being paid by B only. This also was booked and paid more than 36 months back but possession was given recently.

Now in this scenario can A and B buy another residential property jointly or as co-owners with ratio as 80:20 and avail of the benefits under Section 54F?

— Aadesh

A. It seems from the facts in the query that the capital gain has accrued on transfer of a capital asset other than an immovable property. The reply to your query is, therefore, based on the said presumption. Section 54F of the Act provides for the exemption from the taxability of capital gain provided the net consideration arising on the sale of a capital asset other than a residential house is utilised for the purchase or construction of a residential house within the specified period provided the assessee does not own more than one residential house except the one which is being purchased/constructed. The facts in the query indicate that A is already holding two residential houses and in case the new residential house property is purchased, it would not be possible for A to claim the exemption to the extent of 80 per cent of the share in the property. B owns only one property, it, therefore, should be possible for B to claim exemption under Section 54F of the Act to the extent of her investment in the proposed purchase of a residential house property.

Co-owner’s tax liability

Q. A plot had been purchased in the name of my wife, and a building has also been constructed on it. Sixty per cent of the amount invested in the said property has been spent by my wife from her own sources of income. Balance 40 per cent has been contributed by me in purchase of plot as well as in construction of the said property. As the property is in the name of my wife, will I be treated as a co-owner in the said property, and if the property is rented out then will I be liable to pay Income Tax in accordance with my share in the property?

— Govind Nath

A. It is evident from the facts in the query that the plot had been registered in the name of your wife and the ownership of the house also vests in her.

The contribution to the extent of 40 per cent towards the purchase of plot and the construction of the house can be treated as a gift to your wife for income-tax and wealth tax purposes. You would be considered as owner thereof to that extent. Income from property, if any, would also be taxable in your hands to the extent of the amount invested out of the gift made to your wife. It may also be possible to treat the said amount as a loan to your wife repayable at market rate of interest and in such a case the interest received/receivable from her would be taxable in your hands. If this option is exercised, the amount of loan should be refunded to you by her within a reasonable period. Further entire income from property in such a case would be taxable in the hands of your wife and interest paid/payable to you would be allowable as deduction from house property income subject to a maximum of Rs 1,50,000 if the property is self-occupied.

Can’t claim deduction

Q. My wife has been gifted a piece of land by my father out of his ancestral land. My wife is a state government employee in HP and I serve in the Railways. We have taken a joint home loan from a bank for construction of a house on the gifted land. Can I claim the tax benefits with respect to principal and interest payments. My wife does not come under the purview of tax yet. Kindly clarify.

— Virender Singh Rana

A. The deduction under Section 80C of the Act in respect of repayment of the principal amount towards the amount borrowed from a bank is allowable to a person who owns the house. Similarly the deduction under Section 24 of the Act for the interest paid/payable is allowable to an owner of the property. In view of the above provisions, it would not be possible for you to claim any deduction under the aforesaid provisions of the Act.

No inheritance tax

Q. My issueless widowed sister was allotted a flat in a housing society in Delhi in 1991. She bequeathed it to me in her Will as part of her immoveable property. My queries are as under:

In order to transfer the flat in my name after about four years of her death, would I be required to bear some computation and/or inheritance tax etc.?

After transferring the flat in my name, can I gift or Will it to my son without any implication of taxes and/or computation charges etc.?

What is the best course to make one of my sons owner of this flat without any lien /right over it of any member of his family?

Are there any tax liabilities and/or computation charges on inherited immoveable property?

Are there any tax or computation charges on gifted immoveable property?

Is it safe and economical to gift or bequeath immoveable property?

— Rakesh

A. Your queries are replied hereunder:

There is no inheritance tax leviable at present in the country. However, you may have to pay the transfer charges to the housing society on the basis of the Rules formulated by the society in which the flat is situated.

Your son can purchase the plot from you and thereafter make a Will in favour of any person of his choice who may not be a part of his family.

As stated above there is no inheritance tax leviable in the country.

There is no gift tax chargeable today in respect of a gift received by a person from his relative. The term relative for this purpose has been defined in Section 56 of the Act. In case the relationship does not come within the ambit of such definition, the receipt of any sum or property exceeding Rs 50,000 is treated as income of the recipient.

It would be advisable to make a Will in respect of a property because the same takes effect after death. In case of a gift, the possession of the property will have to be parted by a person who is alive.

The writer can be contacted at sc@scvasudeva.com

Office space in demand

Demand for prime office locations in the country's financial capital Mumbai has improved in the first quarter of 2010, thus bringing down vacancy level of such premises by over five percentage points to 12.9 per cent.

According to a latest report by the global realty consultant CB Richard Ellis (CBRE), leasing activities in major Indian office markets remained buoyant in the first three months of 2010.

"In Mumbai, there was a noticeable rise in enquiry levels and transactional activity. The increase in demand brought CBD (central business district) vacancy compressed to 12.9 per cent from 18.2 per cent recorded in the final quarter of 2009," the report said.

The consultant said the CBD of the National Capital Region reported an increased number of transactions in both Grade A and Grade B market segments.

The major business districts of Bangalore also reported a slight increase in interest from occupiers and a marginal rise in leasing activity, it added.

“During Q1 of 2010, while most micro-markets continued to face a situation of oversupply, demand levels did see upward movement. Overall, the economy in India has seen improvement during these past few months and this in turn has brought some stability to the real estate sector,” CBRE Chairman and MD (South Asia) Anshuman Magazine said. In the short term, rentals in most micro markets are expected to remain stable or even may correct marginally, he added.

"I also believe that future rental dynamics would depend on the velocity of absorption of existing demand," Magazine said. — PTI