Page 44 - CO_Feb_2023

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CONSTRUCTION HOUSING PRICES RISE BY 7% IN 2022 ACROSS TOP 8 CITIES Coworking major WeWork India has started a new centre in Pune
WEWORK INDIA LEASES K RAHEJA CORP’S ENTIRE
1-LAKH-SQ-FT OFFICE BUILDING IN PUNE
Increase in the cost of construction coupled with pent-up demand
resulted in an appreciation of housing prices by an average 7 per
with 1,500 desks and 96,000 square feet area amid rising demand
cent during the last year. The average housing prices increased
7 per cent last year across eight major cities to `6,700 – ` 6,900
for flexible office space from corporates. The new facility is located
per square feet as compared with the 2021 calendar year. As per
at Raheja Woods IT Tower developed by K Raheja Corp.This is an
the Real Insight report, the rise in prices of residential properties,
asset-light deal, and the company has leased the entire building
however, did not impact sales during 2022 because of huge
a deskspace of 1,500. This is the company’s third facility in Pune.
pent-up demand from the previous two years (2020 and 2021),
which saw muted customer demand because of the COVID-19 comprising five floors in this Kalyani Nagar property, spread across
Pune has offered quality real estate over the years, leading
pandemic. “Housing prices remained by and large stable during to its emergence as one of the strongest and ideal cities for
the 2016-21 period. The year 2022 saw an appreciation in prices companies to set up their offices. Spaces such as WeWork India
as the rates of key construction materials increased because allow companies to plug-and-play within their budget instead
of global headwinds like the Russia-Ukraine war. Strong revival of wrestling with office layouts and fit-outs. The company would
in demand for both under-construction and ready to move in continue expanding its footprint further. WeWork India has a
units also played a role in modest single digit increase in prices,” portfolio of over 6.5 million square feet area across 44 locations
said Vikas Wadhawan, Group CFO, PropTiger.com, Housing.com in Delhi-NCR, Mumbai, Bengaluru, Pune and Hyderabad. The
& Makaan.com. “With the increase in the overall construction company’s client portfolio comprises 70 per cent enterprises,
cost, builders were forced to raise the basic selling price (BSP) of while 30 per cent includes startups, freelancers, and SMEs. In 2017,
apartments,”. Gurugram saw the highest price appreciation of WeWork Global partnered with Bengaluru-based real estate firm
about 13 per cent, Bengaluru and Delhi-NCR, both, witnessed Embassy Group to enter the Indian market.
a 9 per cent growth in prices, followed by Pune (8 per cent). WeWork India had in December raised `550 crore from funds
Ahmedabad and Kolkata saw 7 per cent appreciation each managed by BPEA Credit for future growth and acquisition
in housing prices. According to the data, the housing prices in opportunities. The amount will be used for future growth and
Ahmedabad went up by an average 7 per cent year-on-year in potential consolidation opportunities. In 2020, WeWork India raised
2022 to `3,600-`3,800 per square feet. Southern markets continue `750 crore from WeWork Global. WeWork Global has around 27
to rise while in Bengaluru, the rates appreciated 9 per cent to per cent stake in WeWork India. WeWork India CEO Karan Virwani
`6,000-`6,200 per square feet. Similarly, Chennai also grew by had earlier said, “Our revenue for this calendar year is estimated to
close to 5 per cent to `5,600-`5,800 per square feet. Since grow to about `1,300 crore. The revenue was `760 crore in 2021”.
Hyderabad has already seen high double-digit growth in the last The company is not only EBITDA (earnings before interest, taxes,
few years, the market seems to be seeing some plateau in terms depreciation, and amortisation) positive but also generating
of growth rate. Although the realty prices continue to rise in the free cash flow to expand the business and sustain the growth
city of Nawabs and grew by about 4 per cent to `6,100-6,300 per momentum, he said. On the expansion, Virwani had said the
square feet. In Delhi NCR, the prices of residential properties rose portfolio would reach 6.5 million square feet by March and 8
9 per cent to `4,800-`5,000 per square feet. Among two major million square feet by December 2023. Realty consultant Vestian
markets of Delhi-NCR, Gurugram saw a surge of 13 per cent to in its recent report mentioned that ‘flexible workspace’ or ‘flexible
`7,000-`7,200 per square feet while Noida witnessed a growth of 7 space’ is a term used to cover a broad category of shared
per cent to `5,400-`5,600 per square feet. The prices appreciated office space options that include co-working space centres,
by 7 per cent in Kolkata to `4,600-`4,800 per square feet. private offices, hot desks, executive suites, serviced centres, and
Mumbai saw an increase of 5 per cent in housing prices to managed offices. Co-working centres are at the most flexible
`10,100-`10,300 per square feet. Housing prices in Pune rose 8 end of the spectrum, while managed offices would be at the less
per cent to `5,500-`5,700 per square feet in 2022 compared with flexible end, it said.
the previous year. “We believe that housing prices will continue
to grow in single digits during 2023 as demand continues to be ORDERS, EXECUTION MOMENTUM MAY REMAIN STRONG
strong. The input cost has eased a little bit, especially steel prices, TILL FY24: L&T CFO
but rates of other materials are still high,” Wadhawan said. The new Engineering major Larsen & Toubro Ltd is optimistic about order
supply is largely coming from trusted developers as demand is inflow and execution, given the momentum so far in 2022-23 and
getting consolidated towards such builders to avoid risks. the capex-heavy budget announced by the government.
Chief Financial Officer R Shankar Raman said that the
BROOKFIELD INDIA REIT LEASES 3.3 LAKH SQ FT OFFICE momentum may continue till 2023-24, if no major disruption
SPACE IN DECEMBER QUARTER happens, the alarming layoffs in the information technology
Brookfield India Real Estate Trust has leased over 3.32 lakh sq ft sector are a result of the transition taking place in businesses
office space during the quarter ended December, taking its total post-pandemic. And while there is an opportunity for core
leasing for the financial for the first three quarters to 9.49 lakh sq sector companies to attract talent, companies would have to
ft. The REIT has a leasing pipeline of 2.2 million sq ft including 0.9 make efforts to train and engage with people to draw them to
million sq ft of new leasing prospects and expected renewals of the infrastructure sector — which requires complex on-site work,
1.3 million sq ft in 2023-24. Raman added.

44 CONSTRUCTION OPPORTUNITIES|FEBRUARY 2023