05 June 2018

1. Embassy enters into the mid-income housing; partners Amazon for home automation

Bengaluru-based Embassy Group has forayed into mid-segment housing with the launch of its project titled Embassy Edge that is targeted towards the first time home buyers.

(Source: Moneycontrol, 24 May, 2018)

Research View

Bengaluru based realty firm, Embassy group is known for its quality residential, commercial and industrial developments. With the launch of their new residential project, Embassy Edge, the group has embarked into the field of intelligent housing, with home automation element provided by Amazon’s Echo products. Amazon’s echo devices are one of the many nascent-stage mobile smart speakers, which facilitate home automation amongst various home appliances by connecting its virtual assistant with the smart home hubs. The new project is a part of Embassy’s North Bengaluru situated self-sustained township – Embassy Springs, which is sprawling over 288 acres (1.1 million sq m), strategically located near the Bengaluru International Airport, the project will be offering residential apartments for less than INR 1 crore (USD 0.15 million) with configuration of 1,2,2.5 and 3BHK (Bedroom, Hall and Kitchen). The launch of Embassy Edge is expected to give a boost in the growing segment of smart-device enabled homes in the Indian urban market. The smart residences aim to cater to the rising demand of making households more integrated, practical, secure and sustainable for the tech-savvy urban dwellers. Many major residential developers such as Sobha, Lodha, Hiranandani, Mantri already have similar offerings under their real estate portfolio. Companies like Lodha, Bharti and Mantri have a tie-up with IBM, Airtel and Cisco respectively for their home automation features.

2. IBC: Govt tosses a new lifeline to homebuyers

The Cabinet on Wednesday approved promulgation of an ordinance to amend the 16-month-old Insolvency and Bankruptcy Code (IBC), which proposes to classify home buyers as financial creditors at par with lenders to help them quickly get refunds from defaulting companies.

(Source: India Finance News, 23 May, 2018)

Research View

The recent amendment of Insolvency & Bankruptcy Code (IBC), 2016 will give the home buyers a status of financial creditors and representation on the committee of creditors. Under the code, different classes of creditors have different rights, privileges, and roles in the Corporate Insolvency Resolution Process (CIRP) and in the liquidation process. As per the code, financial creditor implies any person to whom a financial debt is owed. The financial creditors get priority status in the bankruptcy proceedings. So far, the home buyers are considered as operational creditors and get paid only the residual value after financial creditors are paid in the bankruptcy proceedings. In our opinion, the move will further strengthen the homebuyers’ rights. With the demand for the residential real estate being stagnant for some time, the combined effect of Real Estate Regulatory Act (RERA) and the cabinet ordinance on IBC amendment is a positive move in boosting the buyer confidence in the market. Lately, many real estate giants are facing insolvency proceedings in various company law tribunals under the new IBC, 2016. Several real estate companies are facing such court cases, raised in recent times, leaving the homebuyers in absolute legal chaos. Although, this amendment would take some time to get implemented and may not give any immediate relief to the homebuyers struggling with delayed projects, with developers’ non-competence to complete the project, we believe, the amendment will support the real estate demand in long-term.

3. Realty deal in Navi Mumbai: Ascendas to pay ₹930 crore for two IT park buildings

In another high-value Mumbai Metropolitan Region real estate deal, property major Ascendas India Trust is set to buy 1.4 million sq ft in two under-construction buildings for INR 930 crore at an information technology park in Navi Mumbai.

(Source: Hindustan Times, 15 May, 2018)

Research View

The recent proposal by Ascendas to purchase 2 towers in an under construction Information Technology (IT) Park in Navi Mumbai for INR930 crore (USD142 million) will be the first investment by the group in Mumbai. Ascendas have a portfolio of 8 IT parks across Bangalore, Chennai, Hyderabad, Pune, and Gurugram. The 5 million sq ft (0.46 million sqm) Aurum Platz IT Park, also called Q PARĆ, is located at Ghansoli in Navi Mumbai, in the vicinity of K Raheja Corp’s Mindspace and Reliance Communications’ Dhirubhai Ambani Knowledge City. Ascendas is planning to buy two buildings and the construction of the first building, spanning 600,000 sq ft (55,762 sqm) is expected to be over in the next three months while the second building spread across 800,000 sq ft (74,349 sqm) is likely to be completed by 2020. Navi Mumbai, the satellite city of the financial capital Mumbai, is a growing IT/ITeS micromarket. In 2017, we witnessed technology and banking sector occupiers such as Atos, SBI, TCS occupying office spaces greater than 50,000 sq ft (4,646 sqm) in Navi Mumbai. In our opinion, satellite towns in the periphery of Mumbai such as Navi Mumbai and Thane are likely to witness more demand from technology occupiers given a robust supply pipeline and affordable rents.


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