Manufacturing Destinations of India: Hyderabad

nirav kothary“Hyderabad, being the joint capital of the two newly-formed states Telengana and Seemandhra, continues to attract massive investments in the manufacturing sector. Of course, the city is an established destination for the IT/ITeS sector, but its manufacturing foothold has also been growing exponentially in select sectors like pharma and Biotech, aerospace and FMCG.

Hyderabad was one of the pioneers in patronizing the Life Sciences industry in India when it became home to ‘Genome Valley’ in 1999 to attract R&D companies and synergize life science companies in Hyderabad. Genome Valley, proposed at over 600 sq. kms., has seen significant investments from national and international pharmaceutical and biotech companies, and hosts companies like Novartis, Biocon, Dr. Reddy’s Laboratory, Aurobindo Pharma, Bharat Biotech, DuPont, Zenotech Laboratories (Daiichi), Sanzyme, Lonza, Nektar Therapeutics, Indian lmmunological, Biological E and United States Pharmacopeia, among others.

In the Aerospace sector, Hyderabad hosts the GMR Aerospace Park for civil and defence aerospace players over 250 acres of land near the existing Hyderabad airport. Among the major industrial companies there are LFG and Sky Shop, MAS-GMR Aerospace Engineering Company Ltd. (MGAE), CFM Aircraft Engine Support South Asia Private Limited (CFMAESSA) and Tata-Augusta–Westland.

Procter & Gamble, one of the largest FMCG companies in the world, has acquired around 170 acres of land in Mahbubnagar, 36 kms from Hyderabad, making it one of its biggest manufacturing plants in Asia with an investment of INR 900 crore. At this time, more and more industries are considering Andhra Pradesh for the low land costs and the incentives offered by the government there. According to DIPP data, the undivided state of Andhra Pradesh saw industrial investments to the tune of INR 20,871 crore in the period from 2010 till October 2013 in the form of IEM implemented – projects completed on the ground – which is nearly 11% of the country’s share in this period.”
Nirav Kothary, Head – Industrial Services, JLL India

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About The Report:

Manufacturing Destinations of India: A Real Estate Overview

Manufacturing report ahmd

In this report, we illustrate the trends in the growth of the manufacturing sector in India. The sectors considered for the study include pharmaceuticals/biotechnology, automobiles, heavy engineering, fast-moving consumer goods (FMCG), electronics and communications & aviation. These sectors have been chosen as major manufacturing areas because of their contribution to the manufacturing sector in India.

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Manufacturing Destinations of India: Chennai

nirav kothary“Chennai accounts for 60% of the country‘s automotive exports and is rightly nick-named ‘the Detroit of Asia’. Two major industrial locations near Chennai – at Sriperumbudur and Oragadam – have seen large-scale investments from major auto manufacturers such as Renault Nissan, Daimler and Yamaha.

The presence of two ports in Chennai and Ennore makes this city a veritable industrial hotbed. Chennai also has one of the pioneering, world-class private integrated industrial parks in the country. Mahindra World City, Chennai is spread over 1,500 acres and more than 55 manufacturing players like BMW, Fujitec Elevators and TVS Timken are operating from there.

More recently, privately-developed industrial park christened ‘Sricity’, located around 90 kms north of Chennai in the state of Andhra Pradesh, has seen a host of industrial investments that are leveraging on this industrial park’s proximity to Chennai and its excellent infrastructures. Some of major industrial players who have committed investment in Sricity include Isuzu, PepsiCo, Cadbury, Colgate Palmolive, Kellogg’s and Unicharm, to name just a few.

Overall, Tamil Nadu has been proactively attracting significant industrial investments into the state – over the last three years, the state government had signed 33 MoUs (Memoranda of Understanding). In total, the investment was to the tune of Rs 46,602.72 crore and attracted 68 projects.

The state is renowned for the large-scale incentives it offers to industries setting up their manufacturing plants in lesser developed areas of the state. Because of the increasing scarcity of land near Chennai, the Tamil Nadu state government has now launched a land acquisition process for over 9,000 acres to accommodate eight new industrial complexes across the state.”
Nirav Kothary, Head – Industrial Services, JLL India

 Click here to download Manufacturing Destinations of India: Chennai

About The Report:

Manufacturing Destinations of India: A Real Estate Overview

Manufacturing report ahmd

In this report, we illustrate the trends in the growth of the manufacturing sector in India. The sectors considered for the study include pharmaceuticals/biotechnology, automobiles, heavy engineering, fast-moving consumer goods (FMCG), electronics and communications & aviation. These sectors have been chosen as major manufacturing areas because of their contribution to the manufacturing sector in India.

Digiprove sealCopyright secured by Digiprove © 2014 Jones Lang LaSalle

Manufacturing Destinations of India: Ahmedabad

nirav kothary“Ever since Tata Motors moved its manufacturing plant into Sanand near Ahmedabad in early 2010, the city gone into top gear in terms of growth in the manufacturing sector. The State industrial body (GIDC) proactively acquired more than 1,500 hectares of land adjoining the ‘Nano Plant’ in Phase 1, foreseeing the investments that would follow.

The focus was to develop Ahmedabad as a major automobile and ancillary cluster in India. Ford India’s entry in Sanand in 2011 with a proposed investment of INR 4,000 crore and a direct employment proposal of 5,000 persons was another major milestone. A host of other industries followed, not only in the automobile sector but across sectors. Notable examples are Hitachi Hi-Rail, Hyundai Engineering, Bosch, Inductotherm, Nestle, Colgate Palmolive and Beiersdorf AG, to name just a few.

Additionally, a Special Investment Region (SIR) is being developed in Mandal–Bechraji (laid out over 8 villages), about 90 kms from Ahmedabad. For this initiative, the Government of Gujarat and JETRO (the Japanese Government’s business promotion arm) has joined hands to develop a Japanese Industrial Cluster.

Maruti Suzuki, the country’s largest car manufacturer, has committed a greenfield manufacturing plant there with an investment to the tune of INR 4,000 crore. Honda Motorcycle and Scooter India Private Ltd (HMSI) has also announced an investment of INR 1,100 crore for a two-wheeler manufacturing plant. Other major industrial occupiers who have already been allotted land in this park include Mitsubishi Aluminium, ROKI Minda and TS Tech Co. Ltd.

The modus operandi of the Gujarat Government has to provide enabling infrastructure like good connectivity, uninterrupted power, quality water and industrial gas to the industries, rather than just offering incentives to lure industries. Even with minuscule incentives, the state has successfully managed to attract significant investments into the manufacturing sector. According to DIPP data, Gujarat saw industrial investments of INR 70,172 crore from 2010 up to October 2013 in the form of IEM (Industrial Entrepreneur Memorandum) or actual projects delivered on the ground, which is more than 1/3rd of the country’s share in this period.”

Nirav Kothary, Head – Industrial Services, JLL India

Click here to download Manufacturing Destinations of India: Ahmedabad

About The Report:

Manufacturing Destinations of India: A Real Estate Overview

Manufacturing report ahmd

In this report, we illustrate the trends in the growth of the manufacturing sector in India. The sectors considered for the study include pharmaceuticals/biotechnology, automobiles, heavy engineering, fast-moving consumer goods (FMCG), electronics and communications & aviation. These sectors have been chosen as major manufacturing areas because of their contribution to the manufacturing sector in India.

Digiprove sealCopyright secured by Digiprove © 2014 Jones Lang LaSalle

JLL: The Detriments of High-Rise Buildings

Subhankar MitraSubhankar Mitra, Head – Strategic Consulting (West) JLL India

Internationally, a building that reaches or exceeds the height of 150 metres is considered a skyscraper. Until recently, Mumbai was the only Indian city with high-rise buildings. The financial capital continues to see the highest demand for skyscrapers, as the only option to grow there is vertically. It now seems that in the coming decade, Maximum City will receive an even more cohesive skyline, with a host of projects in the race to touch the sky being constructed. The demand for high-rise buildings is certainly growing, and other cities are catching up.

Mumbai continues to have the maximum number of tall buildings approved or under construction. Development of India One – the tallest in the country – has already begun in Maximum City. It spans 126 floors and stretches up to a height of 720 metres. Apart from this, Mumbai has more than 30 such super-tall buildings ranging between the heights of 150 metres to 450 metres either at the approval stage or already under construction.

New Delhi, the capital of India, has around a dozen of such buildings coming up. They range between heights of 150-300 metres. Kolkata too is catching up with 9 such residential buildings extending to the height of 245 metres either approved or under construction.

Ahmedabad too has about 13 tall buildings which are under construction and are ranging between 200 metres to 410 metres. Hyderabad and Bangalore too are witnessing some development in construction of tall buildings for residential-commercial purpose with 2 or 3 approved projects.

All in all, this amounts to around 60 skyscrapers. Developers see such edifices as a good way to attract potential buyers – high-rise buildings are a good gambit to differentiate their offerings from the rest of the pack. However, this coin has two sides – high-rise development has its own share of demerits, too:

  • Effect On Urban Wind

Rise in the elevation of a building increases the distance of the wind shadow and minimizes the air flow at the street level behind the building. Near high-rise buildings, the local wind speed is high even in summer. In addition, high-rise buildings tend to create a turbulent flow of the gradient wind as a result of increasing the roughness of the boundary layer surface.

  • Increased Air Pollution

In summers, local wind speeds near skyscrapers are very high and troublesome. The ventilation conditions in the urban spaces and major streets with high vehicular traffic have significant impact on the concentration of air pollutants at the street level. The high velocity and turbulent wind at the street level results in the mixing of the highly polluted low-level air with cleaner air flowing above the urban canopy.

  • Effect On Urban Radiation

High-rise buildings absorb direct and reflected solar radiation of surrounding low-rise buildings and convert it into heat via convection of long wave radiation. However, when buildings are of different heights, the walls of the higher buildings absorb part of the reflected and emitted radiation and block a portion of the sky, resulting in reduced solar exposure and long-wave emission from the roofs of the lower buildings.

  • Increased Urban Temperature

Size and density of the built-up areas affect urban areas temperatures. In the congested centres of large cities, temperature levels are generally higher than in the suburbs. The largest elevations of urban temperature occur during clear and still-air nights, also called ‘Urban Heat Island’. Excessive opacity of high-rise buildings in city centres results in concentrated heat generation by high-density land use (traffic, lighting, heat exhaust) and contributes to the creation of urban heat islands.

  • Effect On Night-Time Cooling

Nocturnal radiation is a major climatic factor that reduces atmospheric heat in urban areas located in hot, dry regions. Nocturnal radiation decreases when the density and the height of built-up urban masses increase. High-rise buildings store solar energy during the day time and release it slowly into low-speed local wind, especially at night. The vertical distance between cool winds above buildings roofs and the ground surface is long, and this results in decreased radiant cooling during the nights. Low-rise buildings that match trees heights of 12-15 meters, on the other hand, penetrate night-time ventilated cooling at the ground level and also store cool radiation through built-up urban areas.

Other Factors

• Tall buildings are colder in winter and hotter in summer than regular buildings, and therefore require more heating and more cooling. This is particularly true of modern glass towers. Thus, a lot of energy is required to keep these high rises functioning.
• Exterior cleaning and maintenance of a high-rise building can be very costly and dangerous. With global warming (which causes higher wind speeds) on the rise, insurance companies often refuse coverage to maintenance companies in charge of high-rise buildings at certain times of the year.
• High-rise buildings take longer to build, and due to rapid and heavy construction activity within the city, there is a heavy load on civic infrastructure.
• In-high rise buildings, the average construction cost per square foot is 20-25% higher if the building has more than 12 floors.
• Major modifications and/or renovations in a skyscraper are significantly more cost-intensive.
• If a new building has to be built on the same piece of land, the number of claimants is vastly higher.

When it comes to our largest cities, there is not much one can do about these factors – and indeed, they are accepted as a fact of life in a city like Mumbai, which must grow vertically if it is to grow at all. Unfortunately, the areas of our cities which are in the biggest need of high rise buildings are also the ones which offer the lowest scope for remedial infrastructure measures that could reduce the impact of skyscraper development.

 

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Ultra Luxury Homes In India – Location Matters

Om AhujaOm Ahuja, CEO – Residential Services, JLL India

Many developers are trying their best to create new zones and addresses across India that can appeal to HNI property buyers. This endeavour has met with varying degrees of success on the ground when it comes to swaying the ultra-rich clientele. Barring upgrades in design concepts and the addition of some new accoutrements to amplify a luxury lifestyle, the baseline concept of luxury homes has not materially changed in many cities. Prominent addresses or ‘pin code value’ still matter, and the ultra-rich are willing to pay extra premiums to get them.

That said, cities like Delhi, Gurgaon, Bangalore and Pune have by now seen a high incidence of developers offering branded residences as alternatives to premium homes at the most sought-after locations within these cities. The success in swinging interest levels of the target clientele has varied markedly in tandem with the actual features being offered. While there is evidence of first-generation wealthy buyers evaluating and considering such options in these cities, the conversion rate among the historically rich has been negligible. The consensus among this segment is that branded residences offering very little value addition, and that the premiums charged on them are based on artificial factors that do not provide true value.

Demand continues to be robust for options in bonafide premium locations of the key Indian cities, but newly tailored luxury addresses are also seeing their share of action as long as the projects on offer meet certain parameters. To begin with, deals conclude rapidly in sellers’ markets where demand exceeds supply. Annual returns in such pockets are in the neighbourhood of 25%, and this figure will continue to see northward movement over the coming years as supply constraint drive prices up further.

Delhi

In Delhi, the preference of HNIs when it comes to established and high-value locations is more or less inflexible. South Delhi is still the micro-market of choice for ultra-rich clients from Delhi, Punjab and Uttar Pradesh with budgets ranging from Rs. 50-300 crore. Golf Links in Delhi is a more vibrant market in terms of demand when compared to even to Lutyens Zone. Shantiniketan and Vasant Vihar are two other key HNI destinations where demand exceeds supply. Golf Links is actually the most sought-after location in South Delhi. Most other cities have similar pockets, but also show evidence of a certain degree of demand diversion to newer locations and concepts, which is not the case in Delhi.

Mumbai

In Mumbai, with the Central Business District (CBD) shifting to BKC for all practical purposes, clients who would previously not have considered any options other than Malabar Hill or Nepean Sea Road zone are now evaluating newer areas like Worli, Bandra-BKC and Mahalaxmi as alternatives. Considering the limited supply in the historically prized locations, HNI buyers are looking for premium options that provide 24×7 security, a gated community experience and premium club houses as an amplification on their experiences in stand-alone buildings in the traditional premium areas.

The arrival of K. Raheja Corp’s ultra-luxury gated community Vivarea in Mahalaxmi, Mumbai has seen many wealthy south Mumbai residents accepting this as a luxury address in all respects. As such, K. Raheja Corp has definitely managed to create a new location that re-defines luxury in South Mumbai. There are similar examples in BKC and Goregaon, where Sunteck and Oberoi have played a similar role in creating new luxury housing addresses for HNI buyers – and in fact rebooting the whole concept of luxury living.

Bangalore

Similarly in Bangalore, developers such as Total Environment and Chaitanya have provided the city with genuine luxury projects in brand-new premium locations. These developers have been instrumental in turning Whitefield into a high-value address and their completed projects command steep premiums. The offering, product design, specifications and buyer profile are remarkable enough to make a difference. Total Environment’s project in one of the best luxury offerings in India, and demand for such projects in Whitefield significantly exceeds supply. Likewise, another project by this company has turned Bangalore’s JP Nagar into a highly aspiration luxury destination which now commands the necessary clout of ‘an address that matters’.

ahuja table

What Ultra-HNIs Look For

Ultra-rich buyers look at following parameters when it comes to buying a luxury residence:

1. The Profile Of The Residents

It really matters whether or not you share the neighbourhood with the tycoons, celebrities and prominent CEOs of the city, as this makes a definite status statement and is also good for business. While ultra HNIs do gravitate to creamy layer environments for reasons of prestige, it is also true that many business deals are concluded at these residential locations during social interactions over weekends and holidays. In Delhi areas like Amrita Shergill Marg and Jor Baugh come readily to mind for these reasons. In Kolkata, Ballygunge and Alipore are practically defined by such a resident profile.

2. Low Density

The rich and famous do not like to live in the crowded areas of a city, but prefer locations with lower population densities offer. For this reason, locations like Malabar Hill, Worli and Bandra Bandstand in Mumbai are traditionally locations where the rich pay very high premiums.

3. View And Privacy

A sea view, a view of a golf course and a high level of privacy (integral to the concept of exclusiveness) matter a lot when it comes to defining luxury for India’s ultra-rich. Luxury offerings in cities like Mumbai, Delhi and Bangalore rarely generate a lot of interest from the wealthy set of buyers if they do not score high on this aspect are addressed in most aspects.

4. Ready Access To The City’s Nerve Centre

Apartments in Mumbai’s legendary NCPA commanded highest premiums for various reasons, which included the profile of residents. However, their USP was that NCPA is closest to the erstwhile CBD of Nariman Point. Boat Club in Chennai and Golf Course Road in Gurgaon share this important attribute of proximity to these cities’ ‘centres of gravity. Mumbai’s BKC area has become the new luxury address of Mumbai because the CBD as well as the Diamond Bourse have now shifted there.

5. Overall Luxury Experience

The definition of luxury has been extensively abused in Indian real estate, and is being closely scrutinized by ultra-rich buyers when it comes to evaluating offerings. Luxury goes beyond club houses and the quality of fittings used in a project’s apartments. Multiple aspects of a project are evaluated to discern if the ‘luxury’ tag indeed applies. Among notable success stories, One Avigna Park in Mumbai stands out as a clear winner when it comes to offering real luxury in most respects.

It may seem strange that India’s ultra-rich are indeed booking into luxury projects in new locations. However, this is nevertheless true in many cases such as Atmosphere on EM Bypass and Urbania by Bengal NRI, south of EM Bypass in Kolkata against the traditional luxury locations of Ballygunge or Alipore. However, this trend is catching on in cities where HNIs perceive a vacuum in terms of offerings at the traditional premium locations.

(Chart: Ultra Luxury Home Location Rates In India)

 

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