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It has been noted that the Government is very hesitant while acting against 23 landlords and builders who have not as of now surrendered to it. It is believed that after the Congress-led state government actually took some steps to clear the files relating to public interest that were pending for action, its inactivity was evident. It was reflected in the fact that that despite two years’ time of relapse, no action was taken against 23 builders who have not handed over flats under the Urban Land Ceiling and Regulations Act (Ulcra) to the state. All in all there are a sum of 191 flats of that kind.
The sad part is that the file which makes a proposal that the government must take action against this damage is simply being ignored and is lying in the chief minister’s office. The government’s swiftness can be deciphered form the mere fact that it has taken over one and a half year simply to part with the names of the dwellings in question and the developers. Moreover, in the legislative council queries were elevated.
According to some sources, it has been noted that the 23 developers did not even think of handling over the flats, finished the housing projects on land that forms a part of the Ulcra some years ago. However, they have now either refused to surrender them or sold to third parties.
Survey conducted
When it was noticed by the state that there was a rupture, the office of the additional collector of Ulcra for Mumbai carried out a survey. Moreover, a plan to start forward an action was sent to the state urban development department too. This is being chaired by the chief minister. There was noticed that there was too much interruption in registering cases against the erring parties.
Hence, with an intention to curb the situation, the government came to a conclusion to hire a committee headed by the then principal secretary T C Benjamin. This was done with an intention to figure out if any steps were delayed at any level.
Delay in action
According to the Leader of Opposition Tawade, he stated that it would certainly be wrong to state that the CM was not in favor of the builders lobby regarding the delay in timely action. However, the fact is that the builders were being protected by him who have declined to part with the legitimate state share. Moreover, in spite of constant reminders, no action was taken against the developers by the state.
dreamz infra bangalore
- 01:11
No Action Taken by Govt against Builders Holding on to 191 State Flats
It has been noted that the Government is very hesitant while acting against 23 landlords and builders who have not as of now surrendered ...
It is being contemplated by the Securities and Exchange Board of India (SEBI) to make Real Estate Investment Trust (REIT) a novel investment mechanism. Basically, what a REIT does is it owns and manages income-generating developed property. Furthermore, it is designed to offer common units to the public as an investment option. These units symbolize ownership in the business of managing income-producing properties.
It has been observed that REITs will in future provide an opportunity to real estate developers to commercialize developed property, thus providing an exit avenue. What else it will do is also provide overleveraged companies an opening to deleverage. Moreover, it will increase the profundity of the Indian real estate market and provide extra liquidity.
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Through a regulated mechanism, REITs will also allow people to channelize their investments into India's realty sector. It makes an ideal choice for investors wanting to invest in real estate without the botheration of checks on property titles and the excess of regulatory approvals since the investment in REITs is asset-backed. Moreover, REITs are expected to infuse a fresh lease of life into an otherwise choppy market while considering the current economic slowdown and paucity of funds.
Uneven Road to REITs
The draft SEBI (Real Estate Investment Trusts) Regulations, 2013, seems to be well thought out. But the fact is that there is still much to be done to make the REIT structure commercially feasible. What are being considered as the major road blocks are foreign investments in REITs, taxation of REITs and stamping of agreements relating to transfer of property to the REITs. Apart from these problems, there is also an urgency to fix the following issues to make the REIT regulations workable.
One of the essential grounds of the draft REIT regulations is the need to provide an exit path and liquidity. But the definition of "real estate" seems rather thin. The definition of "property" or "real estate" must be broadened to include all residential and commercial property and completed infrastructure assets such as highways and roads that have a regular income flow.
Policy Marshland
What this policy will do is it will give a broader coverage of REIT regulations to supply to the funding requirements of not just real estate but the wider infrastructure sector in India too. Moreover, the sponsor eligibility condition of five years' experience in the real estate industry on an individual basis must be broadened to make sure non-core real estate players like hospitals, hotels and other corporate houses with real estate to participate in REITs as well. According to the draft REIT regulations, it makes sure that a REIT cannot undertake an initial public offer without the prescribed minimum asset value.
It is being contemplated by the Securities and Exchange Board of India (SEBI) to make Real Estate Investment Trust (REIT) a novel investm...
In a recent a report by Liases Foras, a real estate research firm revealed that in the last year, most of the apartments sold are priced below Rs.5,000 per sq. ft. in cities like Bangalore, Mumbai, NCR, Pune, and Chennai, where almost three out of four homes sold are priced alike. The data also showed that around 73 percent of the total sales in these areas were priced below Rs.5, 000 per sq. ft., whereas Bangalore and Pune saw total sales of 84 percent, which was the highest.
The figure give by the data was like this, where Chennai comprised total sales of 78 percent in Chennai, NCR witnessed a sale of 80percent under this category, and whereas the Mumbai Metropolitan Region (MMR) saw a total sale of 42 percent under this segment, which was the lowest.
The figure give by the data was like this, where Chennai comprised total sales of 78 percent in Chennai, NCR witnessed a sale of 80percent under this category, and whereas the Mumbai Metropolitan Region (MMR) saw a total sale of 42 percent under this segment, which was the lowest.
Lalit Kumar Jain - chairman of Confederation of Real Estate Developers Association of India, a builders' association said that people in this segment realise understood that prices will increase in future and this kind reasonable price will be difficult to get.
The report also said that property prices increased between 2010 and 2012 and over the past one year prices are steady in most places and in some places it has dropped.
Another data by National Housing Bank (NHB) Residex showed that the quarter to September saw decline in prices in 10 cities and in 12 cities the price raised marginally. In the NCR the prices declined by 4.5 percent and in Bangalore prices dropped 1 percent.
The data by Liases Foras also showed that around 711 million sq. ft. of homes continued to remain vacant in the country by the end of September and in just one quarter 41 million sq ft of vacant homes increased.
Shiv Priya - Executive Director of Amrapali Developers said that since the prices have reduced in recent quarters people in this segment are still buying and developers are offering discounts and schemes to attract buyers and also added that post general elections the property prices will increase.
RV Verma - Chairman of NHB said the need of loan in this segment is fairly lower and much more reasonable. Prices correction has also taken place; hence, people think it is the ideal time to buy a house.
Indiabulls Housing Finance gave a data, which showed that 80 percent of home loans account in this segment and more people in this segment are working in the middle management of companies with a job continuity viewpoint.
Gagan Banga - Managing Director and Chief Executive Officer of Indiabulls Housing Finance said that people in this segment are with job secure that has encouraged them to buy property.
In a recent a report by Liases Foras, a real estate research firm revealed that in the last year, most of the apartments sold are priced ...
In a recent report by NHB Residex, the Indian property prices saw a slow increase abruptly. The survey done in 15 major cities across the country by the NHB Residex showed that the house price in increased minimally in 9 cities and dropped in 6 cities all through the year to end-June of 2012. But, when the house prices were adjusted for inflation it was observed that only in 4 cities house prices increased and in 11 cities house prices dropped.
New Delhi
According to the National Housing Bank (NHB), in the year to end of second quarter in 2012, New Delhi witnessed increase in house prices by 17.01percent, which was the lowest annual price increase since the fourth quarter of 2010. However, when the house price was adjusted for inflation, the increase in house price in Delhi was only by 6.23percent.
According to the National Housing Bank (NHB), in the year to end of second quarter in 2012, New Delhi witnessed increase in house prices by 17.01percent, which was the lowest annual price increase since the fourth quarter of 2010. However, when the house price was adjusted for inflation, the increase in house price in Delhi was only by 6.23percent.
Mumbai
In Mumbai, house prices increased by 8.84percent during the year to end of second quarter of 2012, and when adjusted for inflation the house prices in Mumbai accounted to -1.18percent.
Pune
Pune recorded highest increase in annual house price by 33.33percent and by 21.06percent when adjusted for inflation y-o-y to Q2 of 2012.
Pune recorded highest increase in annual house price by 33.33percent and by 21.06percent when adjusted for inflation y-o-y to Q2 of 2012.
Jaipur
Jaipur also witnessed strong increase in house prices by 21.88percent and 10.65percent when adjusted for inflation during the year to end-June of 2012.
Jaipur also witnessed strong increase in house prices by 21.88percent and 10.65percent when adjusted for inflation during the year to end-June of 2012.
Chennai
Chennai recorded sturdy increase in house prices by 24.6percent and when adjusted for inflation, the increase in house price resulted to 13.12percent.
Chennai recorded sturdy increase in house prices by 24.6percent and when adjusted for inflation, the increase in house price resulted to 13.12percent.
Kochi
On contrary, Kochi City in Kerala saw a huge drop in annual house price that accounted to 31.78percent and when adjusted for inflation it resulted to -38.06percent.
Bhopal
Bhopal observed drop in annual house price by -7.59percent and adjusted-inflation was -16.10percent during y-o-y to Q2 of 2012.
Bhopal observed drop in annual house price by -7.59percent and adjusted-inflation was -16.10percent during y-o-y to Q2 of 2012.
Hyderabad
Hyderabad witnessed drop in annual house price by -6.59percent and adjusted inflation was by -15.19percent during the same period.
Hyderabad witnessed drop in annual house price by -6.59percent and adjusted inflation was by -15.19percent during the same period.
Patna
Patna recorded a drop in house price by -4.11percent in the year to end second quarter of 2012 and the adjusted-inflation was -12.94percent.
Surat
Surat saw a drop by -2.58percent in annual house price and the adjusted-inflation was -11.65percent in the year-on-year to second quarter of 2012.
Faridabad
Fardiabad observed fall in annual house prices by -1.36percent and the adjusted-inflation was -10.45percent in the year to end-June of 2012.
Lucknow
Lucknow City saw a rise in house price by 6.88percent in the year to end-June of 2012 but the adjusted-inflation was -2.97percent.
Lucknow City saw a rise in house price by 6.88percent in the year to end-June of 2012 but the adjusted-inflation was -2.97percent.
Kolkata
The annual house price in Kolkata increased by 1.03percent but the adjusted-inflation was -8.27percent during the same period.
Ahmedabad
The city of Ahmedabad followed Kolkata, which showed an annual increase in house price by 2.96percent and the adjusted-inflation was -6.52percent.
Bengaluru
Bengaluru recorded an annual increase of house price by 8.70percent, but when adjusted for inflation the result was -1.31percent in year to the end of second quarter 2012.
The report released by the NHB Residex as of June 2012 showed that Chennai City had the most expensing housing in India and Kochi with the low-priced.
According to a report of First post, property sales in Mumbai City have dropped by 70percent late-201l against the peak sales in 2007. The figures of unsold units in Mumbai was more than 45percent over the launched the units by late-2011. Alike, drops in demand were observed in other cities as well across the country.
Major developers in the country like DFL and Unitech have decided to cut short new projects for a while.
Boom in housing sector in Indian Realty Industry
The house prices in India saw a brisk increase from 2002 to 2007. The drive in the rapid increase of house price were the strong economic growth and urbanization and in city centers the housing slosh was stimulated by scanty infrastructure, lack of planning and outdated land use laws.
The increase in house prices was accompanied by low interest rates and home loan rates reduced to low rate to 7.5percent in initial 2004 till 2005.
After 7.6percent per annum growth from 2003 to 2004, the economy grew at 8.9percent per annum from 2005 to 2007 that made India has one of the world’s fastest growing country in realty sector.
The rapid growth in major sectors of the Indian economy during the early 1990s fetched a rapid inflow of foreign direct investment into the country. A boom in the Information and Communications Technology (ICT) and BPO industry created rapid employment growth that drive the demand for house and lead to a surge in the construction and telecommunications sectors.
Residential property became considerably less affordable from 2000 to 2006. In 2002, generally the cost of a house in Mumbai was around 85 times the average annual income, which turned out to be 100 times the average annual income by 2006.
Real estate developers’ assets rapidly grew as their property prices increased, which they used it to bid high prices for large plots of land and then sold properties at very high prices.
Recall of Global Catastrophe
During the world economic recession in 2008, developers in India cut prices and announced profitable deals like sponsored furniture and internet connections.
During the world economic recession in 2008, developers in India cut prices and announced profitable deals like sponsored furniture and internet connections.
According to a survey done by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in May 2009 showed that demand for luxury homes dropped by 50percent and affordable housing demand dropped by 10percent. During the year to H2 2009, Delhi saw an abrupt drop in house prices by 13.08percent, which made developers to come-up with low-income homes.
However, India’s economy bounced back quickly and house prices started rising again.
Rise in Interest rate could remain
In September 2011, the RBI increased its basis points in lending rates by 25 to 8.25percent, which was the 12th interest rate rise, since March 2010 after it hiked rates from 4.75percent to 5percent to hold inflation.
The RBI’s primary lending rates are also moving up, to a low of 7.50percent and high of 8percent in July 2010 from 11percent and 12percent respectively. As of March 2011, the principal lending rates are 8.25percent as low and 9.50percent as high.
Justifying this, Finance Secretary RS Gujral said that the government is now focusing towards slowing growth and inflation and also added that as the inflation continues to be high at 9.87percent, the RBI may rise the rate again.
The construction sector is already seeing an increase in interest rates by 1.2percent in second quarter of 2011, which fell by 8.2percent from the previous quarter.
India’s small loan market
Regardless of changes since 1991, India’s mortgage market is facing many issues:
Regardless of changes since 1991, India’s mortgage market is facing many issues:
- Banks choose to offer loans to middle and high-income sectors, giving limited funding options for low-income individuals.
- The government has a huge power on chief domestic banks, thereby restricting favoring initiative.
- There is no proper legal outline for foreclosures
- Title hitches are extensive.
As a result, in 2010 housing loans were only 4.04percent of India’s GDP and the leading mortgage lender being the Housing Development Finance Corporation (HDFC) and the State Bank of India (SBI).
In 2010, total housing loans increased by 8.66percent, which accounted to Rs.3009.29 billion (US$ 61.21 billion) against Rs.2769.57 billion (US$ 56.33 billion) of previous year. Interest rates offered by major banks and financial institutions for floating rate mortgages varied from 10.75percent to 12percent and 13percent to 14percent for fixed-rate mortgages, while the loan to value (LTV) of most Indian home loans is 85percent.
Low rental yields
In the Global Property Guide report, rental yields continue to remain low in India and it was recorded that smaller apartments have higher yields.
- Smaller apartment prices at Mumbai are around US$11,600 to US$14,000 per sq. m and yields are meager at 2.52percent to 2.76percent.
- Smaller apartment prices at Delhi prices are cheaper at US$4,000 per sq. m. and yields are also low at 1.71percent to 2percent.
- Annual yields in Bangalore are fairly higher than in Mumbai and Delhi and the yields ranged from 3.48percent to 4.19percent.
According to Colliers data, residential rents from Q1 to Q2 2011:
- In selected Mumbai areas, rents increased from 2percent to 5percent.
- Bengaluru major residential property rents increased from 3percent to 7percent.
- Delhi prime residential property rents increased by 2percent – 4percent
- Rents in Chennai increased by 2percent to 5percent, because of rising demand and lack of residential properties
IMF sated that a viewpoint is remarkably indeterminate:
According to the International Monetary Fund (IMF), the Indian economy grew by an average of 8.3percent per year from 2003 to 2010. But, the country’s real GDP growth dropped to 7.2percent in 2011 and subdued in 2012.
According to the International Monetary Fund (IMF), the Indian economy grew by an average of 8.3percent per year from 2003 to 2010. But, the country’s real GDP growth dropped to 7.2percent in 2011 and subdued in 2012.
The real GDP expanded by 5.5percent y-o-y, during the first quarter (April-June) of the fiscal year 2012-13, which was the decades worst Q1 performance.
The IMF reviewed its GDP growth forecast this year for India to 4.9percent from 6.1percent. Similarly, the World Bank reviewed its GDP growth forecast for the country to 6percent in 2012 against the previous forecast of 6.9percent. On the other hand, the Reserve Bank of India (RBI), reviewed the GDP growth by 6.5percent this fiscal year.
The exports and imports in the country fell by 9.7percent and 5.08percent that accounted to Rs.2 trillion (US$38 billion) respectively and resulted in a wider trade deficit of Rs.831.3 billion (US$15.7 billion). India’s present account deficit stood at 3.9percent of GDP during the quarter end-June of 2012.
According to IMF, the country’s total fiscal deficit was 9percent of GDP in 2011 and it may increase to 9.5percent in 2012 and may drop faintly to 9.1percent of GDP in 2013.
According to Bloomberg, from 2006 to 2011 the average inflation was 8.7percent, which was an abrupt against the average inflation rate of 3.9percent per year from 2000 to 2005.
The IMF said that the viewpoint for India is remarkably ambiguous, hence monetarist policy should stay on hold until a continued decrease in inflation happens.
Restoration of economic policy
After Prime Minister Man Mohan Singh was re-elected in 2009, the government eased economic policies and gave way to more foreign investment.
The economic policy revamp includes the following:
- A 51percent stake in multi-brand retail stores are allowed for foreign companies
- The cap in broadcasting agencies on foreign stakes has been upraised to 75percent from 49percent
- 49percent of national airline carriers are allowed to foreign investors.
In order to tackle the country’s budget deficit and taper the deficit to 5.1percent of GDP this fiscal year ending in March 2013 from 5.8percent of GDP of previous year, subsidized diesel prices have been raised by almost 14percent, which is the first rise in 14 months.
In a recent report by NHB Residex, the Indian property prices saw a slow increase abruptly. The survey done in 15 major cities across the ...
Placed in central part of the city, Chennai’s Kodambakkam is recognized as one of the full-fledged localities and currently it is witnessing rise in demand for multistorey apartments. According to a recent data of Magicbricks.com, the region has recorded 67% demand for multistorey apartment over the last three months.
The reasons behind this sudden spur in demand are:
Demand versus supply
Being a well-established region, the lack of land is one of the major reasons for the demand. The data by Magicbricks.com revealed that in the third quarter of 2013 (Jul-Sept), the region witnessed 67% in demand but the supply was only 34%, which shows the variance between the demand and supply.
The reasons behind this sudden spur in demand are:
Demand versus supply
Being a well-established region, the lack of land is one of the major reasons for the demand. The data by Magicbricks.com revealed that in the third quarter of 2013 (Jul-Sept), the region witnessed 67% in demand but the supply was only 34%, which shows the variance between the demand and supply.
Preferred Location
Mr. Venkat Reddy of Vshagna Developers and Dealers says that Kodambakkam locality houses well-to-do people of Chennai that include movie directors, producers, television stars, and famous musicians, as many Tamil movie studios are located in and around the locality. With the provided statistics of Magicbrick.com, Kodambakkam has seen a rise of 6% in Jul-Sept quarter of 2013 and presently, the property prices in and around the locality ranges between Rs.7,500 and 8,600 per sq. ft.
IT hubs and social infrastructures in the locality
The reason behind the drive in the demand is also the social and civic infrastructures in and around the locality that includes a number of schools and colleges hospitals and nursing homes that offer 24 hours medical facilities. Furthermore, the location is close to many IT companies, malls and local as well as is provided with cyclical and well-developed amenities such as drainage and sewerage system.
Accessibility
This locality is also easily accessible to many other hotspots in and around the city; it is also close to Grand Southern Trunk Road (GST), which connects it to the other parts of the city. This area is also well-connected to major city centre areas, such as Nungambakkam, T Nagar Vadapalani and Koyembedu that are just 5 to 15 kms away. On the other hand, Kodambakkam is only 4 kms from the Chennai centre, 12 kms from the Chennai International Airport, and 29 kms away from railway station. Ingersoll Surya of Property Shoppe says that the Rangarajapuram flyover also serves as ease traffic conditions for Kodambakkam. Some owners in the locality say that the region is ideal for residential living as it presents security, infrastructure and easy accessibility.
The sudden surge in demand in the Kodambakkam locality shows that the growth in real estate in any locality largely depends on the civic and social infrastructure, connectivity, which the buyers more often look for while buying a property.
Mr. Venkat Reddy of Vshagna Developers and Dealers says that Kodambakkam locality houses well-to-do people of Chennai that include movie directors, producers, television stars, and famous musicians, as many Tamil movie studios are located in and around the locality. With the provided statistics of Magicbrick.com, Kodambakkam has seen a rise of 6% in Jul-Sept quarter of 2013 and presently, the property prices in and around the locality ranges between Rs.7,500 and 8,600 per sq. ft.
IT hubs and social infrastructures in the locality
The reason behind the drive in the demand is also the social and civic infrastructures in and around the locality that includes a number of schools and colleges hospitals and nursing homes that offer 24 hours medical facilities. Furthermore, the location is close to many IT companies, malls and local as well as is provided with cyclical and well-developed amenities such as drainage and sewerage system.
Accessibility
This locality is also easily accessible to many other hotspots in and around the city; it is also close to Grand Southern Trunk Road (GST), which connects it to the other parts of the city. This area is also well-connected to major city centre areas, such as Nungambakkam, T Nagar Vadapalani and Koyembedu that are just 5 to 15 kms away. On the other hand, Kodambakkam is only 4 kms from the Chennai centre, 12 kms from the Chennai International Airport, and 29 kms away from railway station. Ingersoll Surya of Property Shoppe says that the Rangarajapuram flyover also serves as ease traffic conditions for Kodambakkam. Some owners in the locality say that the region is ideal for residential living as it presents security, infrastructure and easy accessibility.
The sudden surge in demand in the Kodambakkam locality shows that the growth in real estate in any locality largely depends on the civic and social infrastructure, connectivity, which the buyers more often look for while buying a property.
Placed in central part of the city, Chennai’s Kodambakkam is recognized as one of the full-fledged localities and currently it is witnessi...
There is a glut of office spaces with the country’s economy slowing down. This in turn, has pushed freezing development, up vacancy rates and prompted some builders to change commercial projects into housing establishments.
It is believed that the demand for offices in India has been on a steady decline. It faces the gentlest development in a period of 11 years. In the three months to September 30, new supply in India’s seven major office markets, which includes Hyderabad, Bangalore and Mumbai, fell to a low.
Reduced Demand
About two years ago, India was the favorite of the global investors. In the year ended March 2011, the economy expanded more than 9 percent. According to CBRE, which started gathering data that year, it stimulated 55 million square feet (5.1 million square meters) of new office space across India’s key cities in 2010.
With the economic growth falling by 50 per cent, and investors expressing very less faith in the government which was fighting corruptions, the building boom ended with that.
Cheaper Rents
The rents are less costly owing to the increase in empty office space in New Delhi and its surrounding areas, like National Capital Region, and Mumbai. According to a data by Jones Lang LaSalle, average prime office rents in Mumbai’s Bandra Kurla, was $581 per square meter a year. On the other hand, rents in Delhi were $374 per square meter. Whilst rents in Hong Kong was the highest at $1,486. This was followed by Beijing at $1,004.
Price Correction
According to an executive from Jones Lang LaSalle India, in the third quarter of 2008, Indian cities did not recover from the rental and price correction of between 20 percent and 40 percent. Moreover, what kept the prices and rents in check was the oversupply created in Indian cities.
According to CBRE, Bangalore, which is an established technology hub of India, has the largest office market in India with about 100 million square feet.
Bangalore – The CBRE also stated that Bangalore which is home to Qualcomm Inc., and Texas Instruments Inc., – has posted the sharpest deterioration in office space. Whereas, the NCR witnessed an 80 percent slide.
Rising Vacancies
What are prompting the developers to put off projects is the declining rents and rising vacancies. DLF Ltd. (DLFU), which is India’s biggest publicly listed builder, is presently holding off building new office towers until it witnesses a recovery in demand.
Turning Residential
In order to counter the decline in demand, there are some developers, like Oberoi Realty Ltd. (OBER), India’s second-largest by market value, who are considering converting plans to build offices into residential buildings.
Already, many developers have converted their commercial projects into residential owing to the fact that they provide positive cash flows upfront.
Economic Outlook
According to Cushman, It has been noted that DLF switched to plans for housing from office for a 17.5-acre (7-hectare) plot in central Mumbai before deciding to sell it to the Lodha Group last year.
According to a survey by the Reserve Bank of India, the country’s economy may expand 4.8 percent in the year through March 2014. This will be the slowest since 2003. From a year earlier, Gross domestic product rose 4.6 percent in July through September.
Bangalore Offices
However, not every builder is hesitating from adding supply. RMZ Corp., which is the largest office developer in south India, is still building offices outside of the central business district in Bangalore. Bangalore is home to Goldman Sachs Group Inc.’s third-largest office globally too.
dreamz infra bangalore
- 03:18
With Vacancies That Are In Surplus, India Office Boom Turns Glut: Real Estate
There is a glut of office spaces with the country’s economy slowing down. This in turn, has pushed freezing development, up vacancy rates ...
It is believed that the ITeS and IT sectors' tight hold on Bangalore's residential real estate market has noticeably loosened over the last five years. For most city-based developers, the sales input from non-IT sectors has moved forward the halfway mark. Moreover, the changing consumer sketch of the city's real estate market shows average residential sales of 35,000 units a year. It is being seen in the sharing of office space assimilation by the non-IT sectors.
According to a current report by international property consultants, it indicated the share of office space combination by 'other sectors' (which includes media, pharmaceutical and healthcare, telecommunication and consulting) had grown to 26% in the first half of this year. This was from 11% in the same duration about a year ago. In the first half of this year, the share of ITeS/IT in office space assimilation fell by four percentage points to 61%.
According to an executive from a renowned realtor, the constancy of the city's real estate market was due to the fact that this sectoral mix in buyer profile, with no one segment imposing a huge share of the sales as was the case many years ago. Moreover, according to the industry data, in the last fiscal, while markets such as NCR and Mumbai struggled to post sales growth. However, Bangalore's real estate market accounted four straight quarters of chronological increase.
It is believed that the ITeS and IT sectors' tight hold on Bangalore's residential real estate market has noticeably loosened ove...
Bangalore
Economic slowdown has cast a shadow on Bangalore’s housing market, with the rising cost of living and poor salary increments forcing an increasing number of IT professionals in the city to put their upscale homes on sale.
Gen Y techies, who had invested in apartments, row houses and bungalows in Bangalore — India’s IT capital, some 15 years ago, are now finding it difficult to service their expensive home loans or even maintain these houses amid falling rental yields. Resale inventory in this housing segment has grown 30-35% over the last six months, according to property portal CommonFloor.
Six of every 10 such properties are owned by IT executives, up from around four about two years ago, it said. “The booming real estate market was a major incentive for techies, but now that salaries are not going any higher, inflation is getting the better of these people, they are feeling the heat and the burden of hefty EMIs,” said Mohandas Pai, the former CFO and head of HR at Infosys, who has seen the IT industry grow in Bangalore over the last 20 years from close quarters.
“Now they are eager to get rid of any excess property they possess while they can still getting a good deal,” added Pai, who is chairman of Manipal Global Education. Since 2001, the city has seen an addition of 350,000 apartments, about 8% of which are now up for sale. During this period, about 45,000 villas and penthouses were added to the city and 8% of these are now in the resale market.
“These properties would fetch a huge premium now, running into a crore or more. Why not sell them off,” said Kalpana Murthy, associate director — residential services at Cushman & Wakefield, a property consultant.
Bangalore’s realty sector had witnessed steady investment by salaried IT professionals till a few years ago, with well-paying jobs making even a second or third home affordable for some. Around this time, real estate prices were low and the return expectation high, which helped push up rentals. That demand, however, began to peter off as recession set in, hitting company bottom lines and employees’ salaries. Salary increments in the IT sector this year have been in the 6-8% range, compared with a minimum of 15% between 2007 and 2010. Adding to the gloom is IT industry body Nasscom’s forecast that the domestic IT sector could generate 50,000 less jobs this year, down 17% compared with last year.
“Looking at the appraisals for the year, I stalled my shifting plans, which would only increase my expenses,” said 35-year-old Ankit Jain. The Accenture employee recently sold his 1,500 sq ft, three-bedroom apartment on Sarjapur Road, which he had bought in 2009, for twice the purchase price. But not everyone is as lucky. With several such professionals in the market to sell, and builders launching new projects every month, Bangalore is facing an oversupply of sorts while demand has been dropping steadily. “The market is certainly slow and sellers are finding it difficult to find buyers.
The slowing economy and rising inflation is making matters worse,” said Srinivas Reddy NS, senior manger — research at Jones Lang LaSalle, another property consultant. Home sales across the country have been slipping over the last few quarters. According to property research firm Liases Foras, new home sales in Bangalore in the June quarter were down 23% from a year ago. Another techie, Shameer VK, 35, who works with Cisco and lives in a 2,000 sq ft apartment in Marathalli, said his home is “too lavish”, given the current economic scenario.
“I bought my apartment for close to Rs 50 lakh in 2008, and I pay an EMI of Rs 39,500. A similar house in the same project now goes for Rs1.3 crore,” Shameer said, adding that if he is able to find a buyer for his flat, the money will help him pay off his debt and also buy a smaller property in the neighbourhood. The housing resale market in Bangalore is dominated by peripheral localities in the east and south of the city, which are close to major IT hubs.
According to Sumit Jain, chief executive of CommonFloor.com on Sarjapur Road, which is equidistant from Whitefield and Electronic City, more than 11% of all properties are available for resale. At Whitefield and Bannerghatta, it is 10.9% and 6.9%, respectively. Marathalli has 4.9% while JP Nagar has 4.6%. With the rupee having fallen sharply against the dollar, experts say it could be an opportunity for non-resident Indians who are repatriating dollars.
Source - TOI
dreamz infra bangalore
- 02:40
Resale housing inventory rising due to economic slowdown in Bangalore - Dreamz News
Bangalore Economic slowdown has cast a shadow on Bangalore’s housing market, with the rising cost of living and poor salary increment...
With the economy in a mess, the rupee caught in a whirlwind and the job scene deteriorating by the day, buyers are shying away from the market, leaving builders to grapple with an inventory of over 700 million sq ft. By end of June 2013, cumulative nationwide unsold inventory was 670 million sq ft, up 54 million sq ft in just one quarter, says property research firm Liases Foras.
According to the National Housing Bank's (NHB) residential housing index, Residex, 22 of the 26 cities it tracks have seen a decline in home prices in the April to June quarter. Prices are expected to fall further, says NHB Chairman RV Verma. "Developers are now willing to take a haircut on their margins," he says.
There are signs the bubble will finally burst. A 1,100 sq ft apartment in Noida Extension that cost around Rs 42 lakh a few months ago can today be bought for around Rs 37 lakh, as the builder is agreeing to a 10% discount.
Across town near Gurgaon's Dwarka Manesar Expressway, a 1,200 sq ft apartment can be had for Rs 77 lakh as compared to a86 lakh six months ago. gFor a first-time home buyer, this is the right time to buy as developers are under pressure and are willing to reduce prices and also waive off charges for benefits like club membership and preferential location, h says Samarjit Singh, managing director of IndiaHomes, a venture capitalbacked realtor.
In the ten years that I have been around, I haven't seen prices falling like this before, he says Rajni Naggar, a real estate agent in Noida, who is advising her clients to hold their investment plans until Diwali.
There is growing hope that new launches during Diwali will happen at lower than current market prices. Builders are already offering made-to-measure payment plans. Among the big cities, property prices have softened the most in Hyderabad (4.55%) followed by Kolkata (4.06%) and Chennai (2.26%). While property prices in the National Capital Region (Delhi and adjoining areas) fell 1.49% in the quarter, Bangalore saw a decline of 0.92%, Pune 0.90% and Mumbai 0.45%.
The situation is very grim. The industry is in the ICU, and without corrective action it could very well slip into a coma, h says Sunil Rohokale, managing director of Ask group, which manages a PE fund that invests in residential housing projects across the country. The corrective action Rohokale suggests is deep discounts, of around 20% for the mid-segment and 30% in luxury housing, if developers want at least some of the buyers to return. Builders are adopting new strategies to woo customers in this sluggish market.
Slowdown in real estate forces builders to cut prices and dole out freebies
Mumbai-based Lodha Developers recently launched its new project in Lower Parel with an advertising blitzkrieg featuring Bollywood star Aishwarya Rai. A developer selling high-end properties in Gurgaon is pampering potential buyers by ferrying them in Audi Q7s and Mercs and treating them to five-star lunches.
Another developer in suburban Mumbai is trying to entice buyers by offering an expensive international holiday. For the first time, DLFBSE 2.16 %, whose name was enough to sell a project in the past, has now been forced to launch a project with a subvention scheme, where buyers pay 20% upfront, take a home loan for the rest and start paying EMIs to the bank only after possession of the apartment.
It has become a buyers f market, says Lalit Kumar Jain, chairman of Confederation of Real Estate Developers Association of India, the builders ' association.
Agents say this is a good time to negotiate hard for better deals. The builder today is willing to throw in a 10% discount. Push him a little more and you could get 5-6% worth of freebies as well, says Sunil Kapur of KK Real Estate in Delhi, who sells apartments for builders in Gurgaon and Noida. These freebies could include air conditioners, customised kitchens, top-notch flooring, free furniture, free parking and the likes. h Though nothing seems to be working now, he says the buyer will emerge king once the economy stabilises around Diwali, h he says.
Builders agree that the pace of sales has slowed considerably. Most of them were used to the idea that a project will be sold overnight. Now it fs taking them longer to sell and for developers who are facing a liquidity issue, the only option will be to reduce prices.
There is demand for housing but the issue among buyers is the erosion of confidence in the economy and uncertainty, h says Niranjan Hiranandani, one of Mumbai fs biggest builders. With prices of properties not rising as fast as they did in the peak years, investors and speculators had gone out of the market.
Now with the rupee fs slide, higher inflation, job cuts, increasing interest rates and an environment of uncertainty all around, financial planning has gone awry and even end users are choosing to stay away. With the growth of India fs gross domestic product ( GDP) slowing down to a decade low of around 5% this fiscal year from a peak of 9.6% in 2006-07, new hiring by companies has dropped dramatically over the years and so have increments -- at all levels.
The manufacturing sector saw a negative growth of 1.2% in the quarter. Most real estate hotspots have mushroomed around manufacturing or service industry hubs like Gurgaon, Bangalore, Rajarhat in Kolkata, Chennai and Pune, and a contraction in manufacturing has had its negative effect on the market.
Increments across sectors like IT, telecom, auto, finance, banking, and many others have been sub-par this year, remaining on an average between 5% and 8%. Add to this the high cost of home loans. We will be cautious in pricing our new products, probably give options for simpler specifications to buyers to bring down price given that there are challenges in the economy, says Ajay Chandra, managing director of Unitech. In the April-June quarter, DLF reported a 38% fall in its net profit compared to last year.
Parsvnath's net profit dropped 25%. HDIL net profit was down 85% in the quarter.
Source: economictimes
dreamz infra review
- 01:53
Slowdown in real estate forces builders to cut prices and dole out freebies - DreamzInfra News
There are no takers for close to 6 lakh homes in the country, forcing builders to cut prices and dole out freebies, which many hope will...
