Riches rise from Mumbai slum clearance.
Seven years ago, the Jatias, a Mumbai hotelier family, bought land in the city's derelict former textile mills district that was partly occupied by slums and was faced by a large shanty town - hardly where most would site a five-star hotel.
But this week, after years of navigating red tape, the 202-room Four Seasons Mumbai became the first luxury hotel of its size to launch in the city's south in about 20 years.
"In hindsight, the choice of this location seems quite straightforward but at that time this wasn't an obvious site for a hotel," Adarsh Jatia, a director of the family company, Magus Estates and Hotels, says.
Guests arriving at night at the Canadian chain's first hotel in India will see slum-dwellers sleeping on one side of the road and on the other the glittering glass tower of Mumbai's newest symbol of luxury.
In India 's financial capital, engine of the country's rapid economic growth, such scenes are increasingly common as high-end developments sprout up among the sprawling huts that house more than half the city's 18m people. With land prices in Mumbai reaching record levels, the state government of Maharashtra, which controls the city, has been pushing an ambitious plan to rehabilitate its legendary slums. The idea is to move slum-dwellers into apartment blocks occupying a corner of the area over which they sprawl and redevelop the remainder, in developments of hotels, offices and apartments.
Mumbai skies set for congestion crisis
The Four Seasons slum-dwellers living on the site were compensated for the loss of their homes and the government wants to use the model for two big slum rehabilitation projects that will transform the city if they are realised.
The first is Dharavi, said to be Asia's largest slum, and home to 60,000 families. The second is on the grounds of the city's airport where 80,000 families live. The two will involve moving between 5 per cent and 10 per cent of the city's population.
"This will be the way of the future," Mukesh Mehta, the consultant for the Dharavi project, says. "Especially in the prime part of the city of Mumbai and in Parel (the mill district) and all those areas that are the upcoming areas."
The result is not lost on those selling the new Four Seasons. "You're seeing Rolls-Royces on one side, luxury hotels on the other and slums in between - that's why they call Mumbai the Maximum City," Jason Stinson, marketing director at the hotel, says.
There are good business reasons behind the development. Property analysts estimate there is a shortage of 100,000 hotel rooms in India - more than the existing supply. Archaic restrictions that have prohibited the construction of high-rise buildings and sky-high land prices have contributed to the shortage, Vincent Lottefier, chief executive of Jones Lang LaSalle Meghraj, says.
Bureaucracy and a shortage of skilled workers make building hotels difficult - the opening of the Four Seasons was delayed by at least two years. The hotel needed 165 government permits - including a special licence for the vegetable weighing scale in the kitchen and one for each of the bathroom scales put in guest rooms. In the end, the hotel cost $100m (euro 64.5m, pound 51m), or about $500,000 per room, and prices - which start at $500 per night rising to more than $1,000 - reflect that.
But there is little social envy. Vishal Doshi, whose shop sells samosas in the slum, says the hotel brings prestige. "Everyone can now say: 'I'm living near the Four Seasons'," he says.
He is under no illusions that he will be a guest there any time soon. "This side of the road is for servants, that side for bosses," he says.
Indian Real Estate Sector
Do you make black payment to builders when you book/buy a flat from them? How much black money would people pay for a flat worth 1 crore?Bade wrote:Since black money is a significant part of the investment that goes into real estate both from builders as well as individual investors in India, do not except any significant correction at the scales to be seen in the west.shyam wrote:How is the real estate situation in Desh? Is it still correcting or is that back in full blow?
Is there any good site to collect this information?
-
Bade
- BRF Oldie
- Posts: 7212
- Joined: 23 May 2002 11:31
- Location: badenberg in US administered part of America
Ah Singhaji, what you say is true perhaps for medium range flats (Rs 50 lakhs and lower) with the reputed ones like Brigade, Shobha, Adarsh etc.
What about land buys not 50X50 sq ft parcels in B'lore, but when the builder buys acres of farmland. In Kerala the rate I hear is 30% of price on receipt, rest is all black. B'lore cannot be far behind.
What about land buys not 50X50 sq ft parcels in B'lore, but when the builder buys acres of farmland. In Kerala the rate I hear is 30% of price on receipt, rest is all black. B'lore cannot be far behind.
IT park to come up in Century Textiles land.
The B K Birla Group has announced that an IT park, hotels, serviced apartments and residential buildings would come up at its Century Textiles & Industries land in Worli. The mill, which is over 100 years old, was shut down more than a year ago and the operations were shifted to Gujarat.
Half of the 30-acre land would be used for an IT and ITeS park. Through this park, the saleable area of the mill can be increased as a high floor space index (FSI) of 2.66 is allowed under state laws for IT parks in Mumbai.
Several international hotel groups have approached Century Textiles for hotels and serviced apartments, the company’s head of planning R K Vaish told DNA Money. “These groups are not in India yet. Talks are on and nothing has been finalised so far,â€
The B K Birla Group has announced that an IT park, hotels, serviced apartments and residential buildings would come up at its Century Textiles & Industries land in Worli. The mill, which is over 100 years old, was shut down more than a year ago and the operations were shifted to Gujarat.
Half of the 30-acre land would be used for an IT and ITeS park. Through this park, the saleable area of the mill can be increased as a high floor space index (FSI) of 2.66 is allowed under state laws for IT parks in Mumbai.
Several international hotel groups have approached Century Textiles for hotels and serviced apartments, the company’s head of planning R K Vaish told DNA Money. “These groups are not in India yet. Talks are on and nothing has been finalised so far,â€
[quote]Date:11/03/2008
Back RCF’s phospho-gypsum wall panel to earn carbon credits
Ties up with Rapidbuilding Systems of Australia
Rahul Wadke
Mumbai, March 10 Rashtriya Chemicals and Fertilizers Ltd plans to earn carbon credits from phospho-gypsum, a by-product of its manufacturing process.
The company intends to manufacture construction material — prefabricated wall panels — with the waste generated for which it has tied up with Rapidbuilding Systems of Australia.
A Rs 75-crore panel-making unit would be set up in Trombay for the project, which is expected to earn 1.1 lakh credits per year worth € 1.65 million.
A methodology is being formulated for claiming the credit rating. The World Bank has shown interest in buying up to 10 lakh such credits.
The Australian company has developed a process to turn the waste gypsum into high-quality plaster, which can be used to make ‘rapidwall’.
The patented load-bearing walling system is approved in Australia, India and China for construction of 10-storey buildings.
Saving on bricks
Mr M. Sundararaman, Finance Director, RCF, said the use of wall panel could help save on brick and mortar. A 36-sq-metre phospho-gypsum wall panel could replace 3,960 bricks. Additionally it would save on 10,000 litres of water and 2.9 tonnes of carbon emission. The carbon emission relates to brick manufacturing.
“Such environmental advantages will make the unit eligible for carbon credits. RCF will seek the approval of the United Nations Framework Convention on Climate Change for the purpose,â€
Back RCF’s phospho-gypsum wall panel to earn carbon credits
Ties up with Rapidbuilding Systems of Australia
Rahul Wadke
Mumbai, March 10 Rashtriya Chemicals and Fertilizers Ltd plans to earn carbon credits from phospho-gypsum, a by-product of its manufacturing process.
The company intends to manufacture construction material — prefabricated wall panels — with the waste generated for which it has tied up with Rapidbuilding Systems of Australia.
A Rs 75-crore panel-making unit would be set up in Trombay for the project, which is expected to earn 1.1 lakh credits per year worth € 1.65 million.
A methodology is being formulated for claiming the credit rating. The World Bank has shown interest in buying up to 10 lakh such credits.
The Australian company has developed a process to turn the waste gypsum into high-quality plaster, which can be used to make ‘rapidwall’.
The patented load-bearing walling system is approved in Australia, India and China for construction of 10-storey buildings.
Saving on bricks
Mr M. Sundararaman, Finance Director, RCF, said the use of wall panel could help save on brick and mortar. A 36-sq-metre phospho-gypsum wall panel could replace 3,960 bricks. Additionally it would save on 10,000 litres of water and 2.9 tonnes of carbon emission. The carbon emission relates to brick manufacturing.
“Such environmental advantages will make the unit eligible for carbon credits. RCF will seek the approval of the United Nations Framework Convention on Climate Change for the purpose,â€
Realty check: Mumbai upstages Chennai as investors’ favourite metro.
Mumbai, which is facing a torrent of obstacles in its bid to become an international financial centre (IFC), seems to have some good news at last. It has eased out Chennai as India’s most attractive tier-I city for real estate investment, according to a survey conducted by Jones Lang LaSalle Meghraj (JLLM).
The study, Accelerated Transformation: Investments in Indian Real Estate, which analyses investment trends in the fourth quarter of 2007 and will be released soon, places the Delhi-National Capital Region (NCR) fourth in the list of five tier-I cities with Chennai, Bangalore and Hyderabad getting the second, third and fifth spots respectively. Kolkata has topped the list among tier-II cities ( Kolkata is a Tier -II city?
) while Nagpur is the most preferred tier-III investment destination, according to the report.
Commenting on the country’s financial capital regaining the pole position, Redford Capital director Parry Singh said, “Mumbai has a lot of potential in terms of redevelopment projects. Areas like Virar, Borivilli, Panvel and Navi Mumbai can be used for fresh development.â€
Mumbai, which is facing a torrent of obstacles in its bid to become an international financial centre (IFC), seems to have some good news at last. It has eased out Chennai as India’s most attractive tier-I city for real estate investment, according to a survey conducted by Jones Lang LaSalle Meghraj (JLLM).
The study, Accelerated Transformation: Investments in Indian Real Estate, which analyses investment trends in the fourth quarter of 2007 and will be released soon, places the Delhi-National Capital Region (NCR) fourth in the list of five tier-I cities with Chennai, Bangalore and Hyderabad getting the second, third and fifth spots respectively. Kolkata has topped the list among tier-II cities ( Kolkata is a Tier -II city?
) while Nagpur is the most preferred tier-III investment destination, according to the report. Commenting on the country’s financial capital regaining the pole position, Redford Capital director Parry Singh said, “Mumbai has a lot of potential in terms of redevelopment projects. Areas like Virar, Borivilli, Panvel and Navi Mumbai can be used for fresh development.â€
RIL makes billion-dollar realty foray with Vornado.
In what could mark its foray into the real estate and hospitality sectors, Reliance Industries has sealed a $1-billion joint venture with the New York Stock Exchange-listed Vornado Realty Trust to set up a real estate fund that will develop a network of mega malls and highway shopping centres in India, not just for Reliance Retail (RRL) but also others. Reliance is also in talks with the Canada-based Four Seasons Hotels and French group Accor to set up hotels at some of its properties in Mumbai and Ahmedabad. The RRL spokesperson, however, declined to comment.
The joint venture with Vornado (ET had reported in February that the two were in exploratory talks) is Reliance’s fifth global partnership in three months—the other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.
Most retailers are bleeding because they have acquired properties mindlessly to cash in on the consumer boom. While some like RRL and AV Birla Group have the staying power, others want quick returns, which are clearly not coming through.
Meanwhile, a source said the group’s big-buck real estate foray may also see it tapping a synergistic foray into hospitality. “The group is looking at the possibility of setting up hotels to take advantage of the excess floor space index (real estate space) available at some of its existing properties,â€
In what could mark its foray into the real estate and hospitality sectors, Reliance Industries has sealed a $1-billion joint venture with the New York Stock Exchange-listed Vornado Realty Trust to set up a real estate fund that will develop a network of mega malls and highway shopping centres in India, not just for Reliance Retail (RRL) but also others. Reliance is also in talks with the Canada-based Four Seasons Hotels and French group Accor to set up hotels at some of its properties in Mumbai and Ahmedabad. The RRL spokesperson, however, declined to comment.
The joint venture with Vornado (ET had reported in February that the two were in exploratory talks) is Reliance’s fifth global partnership in three months—the other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.
Most retailers are bleeding because they have acquired properties mindlessly to cash in on the consumer boom. While some like RRL and AV Birla Group have the staying power, others want quick returns, which are clearly not coming through.
Meanwhile, a source said the group’s big-buck real estate foray may also see it tapping a synergistic foray into hospitality. “The group is looking at the possibility of setting up hotels to take advantage of the excess floor space index (real estate space) available at some of its existing properties,â€
New Record in Realty Prices. Each sq ft of space more expensive then a Nano car. 
Little Gibbs Road at Malabar Hill is a charming, upmarket residential enclave where the creme de la creme live, virtually cut off from the hustle and bustle of a congested metropolis.
On Tuesday, one of its most prominent landmark buildings, Il Palazzo, created a national record after an apartment here was sold at an astonishing rate of Rs 1.20 lakh a square foot - each floor tile more expensive than a Nano car.
The successful bidder was none other than veteran Bollywood star and BJP MP Vinod Khanna and his wife Kavita, who paid Rs 30 crore for the 2,500 sq ft (carpet area) flat located on the 13th floor of the B wing. The Khannas already own an apartment in the C wing of the 21-storeyed Il Palazzo.
The last big sale happened about six months ago when a flat measuring 3,475 sq ft (super built up) in the NCPA Apartments at Nariman Point was bought by a London-based NRI at the rate of Rs 97,842 a sq ft.
The Il Palazzo flat, 13B, is a sea-facing flat with a large living room, spacious bedrooms and a separate servant's quarter. It was put up on the block by its owner, Citibank, about two weeks ago.
The auction took place at the bank's 7th floor office in the IL&FS building in the Bandra-Kurla Complex at 10.30 am and continued till noon. There were 12 bidders in all. The auction was conducted by Mrunal Duggar of C B Richard Ellis, a global property consultancy firm.
Among the other bidders, TOI has learnt, was ex-Citibank honcho Jerry Rao and a certain Ms Malhotra, daughter of a former headmistress of a prominent south Mumbai school.
Many of the bidders were residents of Il Palazzo itself. Residents enjoy the first right of refusal. It means they get the first preference to buy the flat if they can match the highest offer.
The building was constructed in 1972 by a prominent Parsi developer of that time. Among the prominent residents of Il Palazzo is stock broker Rakesh Jhunjhunwala , who bought a duplex for Rs 25.25 crore from American Express bank in 2006. Sources said that Citibank has been hiving off its real estate (mainly apartments) all over the country. In the past one year, it has sold more than half a dozen flats in Mumbai alone.
These include a flat each in Meher Apartments (Altamount Road), Kanti on Mt Mary Road in Bandra, Hormuzd off Carter Road, NCPA Apartment at Nariman Point and five apartments at Harbour Heights building, Colaba.
Due to the sub-prime crisis, Citibank has been selling off its assets to shore up its balance sheet, sources said. Since becoming Citigroup's CEO last year, Vikram Pandit has sold or closed over 45 branches in the US and disposed of the Citigroup's building in Tokyo.
Recently, he announced plans to sell about $400 billion is assets over the next two to three years. There is growing speculation in Mumbai's property market that the Citibank building in the Bandra-Kurla Complex may also be put on the block as part of this plan. Several banks like HSBC and American Express have also been selling off their apartments for the past couple of years. They are now taking them only on lease to house their employees.
VIEW FROM THE TOP
Built in 1972, Il Palazzo is placed on the highest point of south Mumbai, surrounded by the sea on three sides and commanding a breathtaking view of the island city. It has 84 flats in all, including 14 duplex apartments, a basement car-parking, storerooms, four automatic elevators, 14 CCTVs placed at strategic points and an intercom facility installed in each flat. The lobby area is lined with granite, marble, mirrors and decorative lamp shades and sofa sets for the visitors.
Little Gibbs Road at Malabar Hill is a charming, upmarket residential enclave where the creme de la creme live, virtually cut off from the hustle and bustle of a congested metropolis.
On Tuesday, one of its most prominent landmark buildings, Il Palazzo, created a national record after an apartment here was sold at an astonishing rate of Rs 1.20 lakh a square foot - each floor tile more expensive than a Nano car.
The successful bidder was none other than veteran Bollywood star and BJP MP Vinod Khanna and his wife Kavita, who paid Rs 30 crore for the 2,500 sq ft (carpet area) flat located on the 13th floor of the B wing. The Khannas already own an apartment in the C wing of the 21-storeyed Il Palazzo.
The last big sale happened about six months ago when a flat measuring 3,475 sq ft (super built up) in the NCPA Apartments at Nariman Point was bought by a London-based NRI at the rate of Rs 97,842 a sq ft.
The Il Palazzo flat, 13B, is a sea-facing flat with a large living room, spacious bedrooms and a separate servant's quarter. It was put up on the block by its owner, Citibank, about two weeks ago.
The auction took place at the bank's 7th floor office in the IL&FS building in the Bandra-Kurla Complex at 10.30 am and continued till noon. There were 12 bidders in all. The auction was conducted by Mrunal Duggar of C B Richard Ellis, a global property consultancy firm.
Among the other bidders, TOI has learnt, was ex-Citibank honcho Jerry Rao and a certain Ms Malhotra, daughter of a former headmistress of a prominent south Mumbai school.
Many of the bidders were residents of Il Palazzo itself. Residents enjoy the first right of refusal. It means they get the first preference to buy the flat if they can match the highest offer.
The building was constructed in 1972 by a prominent Parsi developer of that time. Among the prominent residents of Il Palazzo is stock broker Rakesh Jhunjhunwala , who bought a duplex for Rs 25.25 crore from American Express bank in 2006. Sources said that Citibank has been hiving off its real estate (mainly apartments) all over the country. In the past one year, it has sold more than half a dozen flats in Mumbai alone.
These include a flat each in Meher Apartments (Altamount Road), Kanti on Mt Mary Road in Bandra, Hormuzd off Carter Road, NCPA Apartment at Nariman Point and five apartments at Harbour Heights building, Colaba.
Due to the sub-prime crisis, Citibank has been selling off its assets to shore up its balance sheet, sources said. Since becoming Citigroup's CEO last year, Vikram Pandit has sold or closed over 45 branches in the US and disposed of the Citigroup's building in Tokyo.
Recently, he announced plans to sell about $400 billion is assets over the next two to three years. There is growing speculation in Mumbai's property market that the Citibank building in the Bandra-Kurla Complex may also be put on the block as part of this plan. Several banks like HSBC and American Express have also been selling off their apartments for the past couple of years. They are now taking them only on lease to house their employees.
VIEW FROM THE TOP
Built in 1972, Il Palazzo is placed on the highest point of south Mumbai, surrounded by the sea on three sides and commanding a breathtaking view of the island city. It has 84 flats in all, including 14 duplex apartments, a basement car-parking, storerooms, four automatic elevators, 14 CCTVs placed at strategic points and an intercom facility installed in each flat. The lobby area is lined with granite, marble, mirrors and decorative lamp shades and sofa sets for the visitors.
Oversupply may bring home prices down
Bangalore: Knight Frank India, a real estate consultant company, expects further correction in home prices if the current slowdown in residential property sales continues, Chairman Pranay Vakil said.
"(In) residential, there is a slowdown. The volumes of transactions are low and it is a precursor to prices going down. In a lot of speculative areas, prices have already gone down. If these things (trends) continue for another two to three months, it is very likely prices will come down for residential segment," Vakil said, adding sales volumes traditionally drop in June.
His comments come at a time when there are concerns over a possible slowdown in demand for residential real estate due to high interest rates, oversupply, and funding issues.
Real estate developers such as Brigade Enterprises had said the company witnessed a 20 per cent slowdown in home unit demand in south India in January-March.
Media reports also suggested that prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20 per cent in the first three months of this calendar year.
On commercial office space, Vakil said, rentals are likely to remain high for another six months to one year because of mismatch in demand and supply.
Valuations of land, mostly above 25 acres, are also likely to remain high since in India foreign direct investment in real estate is allowed only in greenfield land projects.
Source: Business Standard
DLF 1/4/2008
......
(A) Name of Project: Bangalore Begur Project
(B) Location:
3Kms of BG road, Behind IIM-B
4 kms IIMB
6 kms form Jayadeva fly over
(C) 100 acres of land
(D) 5000 total number of apartment units and row houses
(E) Details of Apartment and Row houses:
2BR , 2 toilets - 1250 sqft
2BR , 2 toilets,1 study - 1500 sq ft
3 br, 3 toilets - 1800 sft
3 br, 3 toilet, 1 servants room - 2000 sft
(F) Row houses - 3 br, 3 toilets, 3500 sqft
(G) club bouse - 1 lakh sft, school nearby (!), convenicen store, swimming pool
(H) Prices not being finalized
(I) Launching date approximately: 2 to 3 months
(J) Completion : 2.5 to 3 years
(K) If you need more info, DLF Bangalore office contact :080-44103534
......
(A) Name of Project: Bangalore Begur Project
(B) Location:
3Kms of BG road, Behind IIM-B
4 kms IIMB
6 kms form Jayadeva fly over
(C) 100 acres of land
(D) 5000 total number of apartment units and row houses
(E) Details of Apartment and Row houses:
2BR , 2 toilets - 1250 sqft
2BR , 2 toilets,1 study - 1500 sq ft
3 br, 3 toilets - 1800 sft
3 br, 3 toilet, 1 servants room - 2000 sft
(F) Row houses - 3 br, 3 toilets, 3500 sqft
(G) club bouse - 1 lakh sft, school nearby (!), convenicen store, swimming pool
(H) Prices not being finalized
(I) Launching date approximately: 2 to 3 months
(J) Completion : 2.5 to 3 years
(K) If you need more info, DLF Bangalore office contact :080-44103534
Re: Indian Real Estate Sector
Many top city builders in dire straits.
After raking in phenomenal profits since 2004, builders, including some top guns in the industry, could be headed for serious trouble with the real estate market sliding rapidly.
Sources in the construction industry, financial institutions and individual investors have told TOI that several builders have started defaulting on interest payments and some of them have backed out of commitments to purchase land. Many builders are facing a liquidity crunch as sales of apartments are in a state of virtual stagnation. Moreover, politicians who had parked their slush funds with builders are now asking for their money back.
Information gleaned through these sources points to a dismal scenario set to unfold in the coming months. As one property expert who tracks the market minutely put it, “The real estate market has now moved from being under stress to a completely distressed condition.’’
A plethora of recent cases seems to back up this claim.
A leading Mumbai-based developer who belongs to one of the country’s leading construction families has backed out after offering Rs 700 crore to purchase the 18-acre Hindustan Composite land at LBS Marg in Ghatkopar. It’s learnt that the same builder has also walked away from buying 3.5 lakh sq ft of the Pramanik Landmark land in Goregaon after having made an initial payment of Rs 40 crore.
This builder, who has constructed landmark buildings at Colaba, Peddar Road, Prabhadevi and the far-off western suburbs, is believed to have overstretched himself with an exposure of Rs 1,200 crore in the form of loans taken from banks and private individuals.
TOI has also learnt that a Delhi-based construction giant (DLF)which was in negotiations for a 100-acre chunk of land at Kanjurmarg for about Rs 1,000 crore has suddenly turned around and said that it’s no longer interested.
Another Delhi-based developer (Parsvnath) ,currently undertaking a massive redevelopment project near the western express highway and also redeveloping a BEST bus depot, is facing difficulty in servicing its loans. “This company has started defaulting on interest payments to its bond holders,’’ a source said.
A Mumbai-based developer, who recently purchased a plot in the Bandra-Kurla Complex for a phenomenal price (Wadhwan) ,may also end up burning his fingers, say market sources. A confidential report prepared by a private bank, which was accessed by this newspaper, shows that this builder has a total loan exposure of almost Rs 3,000 crore. “He is finding it difficult to find tenants for his buildings. Even if he were to sell office space outright, he would have to sell it at a minimum rate of Rs 54,000 a sq ft. This is not possible because the record price in BKC today has not surpassed Rs 35,000 a sq ft,’’ said an industry source.
Another construction company that may have overstretched itself is a south Mumbai property redeveloper (Akruti Nirman) , said a market insider. “His permissions are coming in very slow and he is faced with huge overheads,’’ he added.
Interestingly, a Dubai-based construction company which faced an embarrassing setback a few months ago, is learnt to have taken a one-month loan at a huge 30% interest to bridge finance for one of its projects.
Asked to comment on the goings-on in the property market, HDFC honcho Deepak Parekh, who has his ear firmly to the ground, said, “We have been hearing about this crunch. It’s natural to happen. Builders have made land purchases, but the cash flow from the sale of flats has slowed down considerably because of high property prices. Despite the slowdown, they do not want to reduce prices. So, they default on payments towards land and also because they have borrowed money at exorbitant rates.’’
Parekh said he knew several big builders across the country who weredefaulting on payments, but refused to divulge their names. By a ball park estimate, both private and public sector banks have lent about Rs 20,000 crore to builders for construction purposes across the country. About one-third of this amount has been given to Mumbai builders, another one-third to Delhi developers and about 20% to Bangalore-based builders.
When asked if banks were jittery about builders defaulting on payments, a senior official of a leading bank said, “The phenomenon is cyclical. We will take over the assets of those who default. Banks will hold such assets until the market recovers and then sell them.’’
Parekh added that HDFC would not be hit in such an eventuality because the bank takes a personal guarantee, including the builder’s personal assets and his company shares.
ICICI home finance, on the other hand, has a board approved policy that monitors its real estate exposure. Loans are given only after looking at the developer’s track record, his past ability to complete projects on time, his liabilities and the like. ICICI officials also pay regular site visits to see how the project is progressing.
Anuj Puri, chairman and country head of Jones Lang Laselle Meghraj, a global property consultancy firm, said he did not forsee any builder going “belly-up’’ due to the stagnant property market. “They will now start selling their land portfolio at a reasonable value and enter into joint ventures with bigger developers.’’
According to Suman Memami, research analyst, Religare Securities Limited, developers are facing pressure on their books because the cost of borrowing has increased while demand has come down significantly. “This is trouble for builders. The smaller ones will be wiped out,’’ he said.
Memami added that developers were offering deepening discounts but flat rates were still at a significant premium. “The liquidity crunch is causing builders to postpone new launches. Furthermore, the cost of under-construction property is rising as commodity prices head north,’’ he observed.
After the property market crash in the mid-1990s, several banks which had funded developers got stuck as the borrowers could not pay up. One such case was that of the erstwhile Global Trust Bank, which could not dispose of properties it took over from its borrowers when prices plummeted. These included an entire floor in a Nariman Point building, commercial space in Kodak House, Prabhadevi, and two partially completed towers in Mulund (west).
The Karur Vyasa Bank, which had financed Lloyds Steel to purchase a property, was similarly stuck after the 1994 crash. It finally managed to sell it several years later. In another case, Apple Finance had bought a BKC plot in the 1990s and constructed a ten-storey building with a loan from a nationalised bank. When the market crashed, it got stuck with the building, which the bank then took over. The bank then tried to sell it through the court receiver.
After raking in phenomenal profits since 2004, builders, including some top guns in the industry, could be headed for serious trouble with the real estate market sliding rapidly.
Sources in the construction industry, financial institutions and individual investors have told TOI that several builders have started defaulting on interest payments and some of them have backed out of commitments to purchase land. Many builders are facing a liquidity crunch as sales of apartments are in a state of virtual stagnation. Moreover, politicians who had parked their slush funds with builders are now asking for their money back.
Information gleaned through these sources points to a dismal scenario set to unfold in the coming months. As one property expert who tracks the market minutely put it, “The real estate market has now moved from being under stress to a completely distressed condition.’’
A plethora of recent cases seems to back up this claim.
A leading Mumbai-based developer who belongs to one of the country’s leading construction families has backed out after offering Rs 700 crore to purchase the 18-acre Hindustan Composite land at LBS Marg in Ghatkopar. It’s learnt that the same builder has also walked away from buying 3.5 lakh sq ft of the Pramanik Landmark land in Goregaon after having made an initial payment of Rs 40 crore.
This builder, who has constructed landmark buildings at Colaba, Peddar Road, Prabhadevi and the far-off western suburbs, is believed to have overstretched himself with an exposure of Rs 1,200 crore in the form of loans taken from banks and private individuals.
TOI has also learnt that a Delhi-based construction giant (DLF)which was in negotiations for a 100-acre chunk of land at Kanjurmarg for about Rs 1,000 crore has suddenly turned around and said that it’s no longer interested.
Another Delhi-based developer (Parsvnath) ,currently undertaking a massive redevelopment project near the western express highway and also redeveloping a BEST bus depot, is facing difficulty in servicing its loans. “This company has started defaulting on interest payments to its bond holders,’’ a source said.
A Mumbai-based developer, who recently purchased a plot in the Bandra-Kurla Complex for a phenomenal price (Wadhwan) ,may also end up burning his fingers, say market sources. A confidential report prepared by a private bank, which was accessed by this newspaper, shows that this builder has a total loan exposure of almost Rs 3,000 crore. “He is finding it difficult to find tenants for his buildings. Even if he were to sell office space outright, he would have to sell it at a minimum rate of Rs 54,000 a sq ft. This is not possible because the record price in BKC today has not surpassed Rs 35,000 a sq ft,’’ said an industry source.
Another construction company that may have overstretched itself is a south Mumbai property redeveloper (Akruti Nirman) , said a market insider. “His permissions are coming in very slow and he is faced with huge overheads,’’ he added.
Interestingly, a Dubai-based construction company which faced an embarrassing setback a few months ago, is learnt to have taken a one-month loan at a huge 30% interest to bridge finance for one of its projects.
Asked to comment on the goings-on in the property market, HDFC honcho Deepak Parekh, who has his ear firmly to the ground, said, “We have been hearing about this crunch. It’s natural to happen. Builders have made land purchases, but the cash flow from the sale of flats has slowed down considerably because of high property prices. Despite the slowdown, they do not want to reduce prices. So, they default on payments towards land and also because they have borrowed money at exorbitant rates.’’
Parekh said he knew several big builders across the country who weredefaulting on payments, but refused to divulge their names. By a ball park estimate, both private and public sector banks have lent about Rs 20,000 crore to builders for construction purposes across the country. About one-third of this amount has been given to Mumbai builders, another one-third to Delhi developers and about 20% to Bangalore-based builders.
When asked if banks were jittery about builders defaulting on payments, a senior official of a leading bank said, “The phenomenon is cyclical. We will take over the assets of those who default. Banks will hold such assets until the market recovers and then sell them.’’
Parekh added that HDFC would not be hit in such an eventuality because the bank takes a personal guarantee, including the builder’s personal assets and his company shares.
ICICI home finance, on the other hand, has a board approved policy that monitors its real estate exposure. Loans are given only after looking at the developer’s track record, his past ability to complete projects on time, his liabilities and the like. ICICI officials also pay regular site visits to see how the project is progressing.
Anuj Puri, chairman and country head of Jones Lang Laselle Meghraj, a global property consultancy firm, said he did not forsee any builder going “belly-up’’ due to the stagnant property market. “They will now start selling their land portfolio at a reasonable value and enter into joint ventures with bigger developers.’’
According to Suman Memami, research analyst, Religare Securities Limited, developers are facing pressure on their books because the cost of borrowing has increased while demand has come down significantly. “This is trouble for builders. The smaller ones will be wiped out,’’ he said.
Memami added that developers were offering deepening discounts but flat rates were still at a significant premium. “The liquidity crunch is causing builders to postpone new launches. Furthermore, the cost of under-construction property is rising as commodity prices head north,’’ he observed.
After the property market crash in the mid-1990s, several banks which had funded developers got stuck as the borrowers could not pay up. One such case was that of the erstwhile Global Trust Bank, which could not dispose of properties it took over from its borrowers when prices plummeted. These included an entire floor in a Nariman Point building, commercial space in Kodak House, Prabhadevi, and two partially completed towers in Mulund (west).
The Karur Vyasa Bank, which had financed Lloyds Steel to purchase a property, was similarly stuck after the 1994 crash. It finally managed to sell it several years later. In another case, Apple Finance had bought a BKC plot in the 1990s and constructed a ten-storey building with a loan from a nationalised bank. When the market crashed, it got stuck with the building, which the bank then took over. The bank then tried to sell it through the court receiver.
Re: Indian Real Estate Sector
description of the first group sound like raheja.
one arm of this has built the "pebble bay" proj in RMV phase2 appropriately near
dollars colony.
asking price was 5100/sq ft starting when I poked my nose in last year
superb model flat though...biggest living room I have ever seen outside of
a bollywood movie and the bed had a white linen and a tray with red wine
and chocolate on it. I half expected a nude plastic model beneath the
sheet to warm up the sales pitch.
one arm of this has built the "pebble bay" proj in RMV phase2 appropriately near
dollars colony.
asking price was 5100/sq ft starting when I poked my nose in last year
superb model flat though...biggest living room I have ever seen outside of
a bollywood movie and the bed had a white linen and a tray with red wine
and chocolate on it. I half expected a nude plastic model beneath the
sheet to warm up the sales pitch.
Re: Indian Real Estate Sector
Most of the big builders are flushed with large cash generated from IPOs and private equities so they are resisting price decline by holding on to properties. What they are not realizing is that until prices come down RBI will not let interest rates to come down. Some smaller and medium size builders who were planning to imitate DLF model of cornering huge land banks at premium locations and then go for an IPO/PE were left hanging because of the market crash. These are the builder who must be defaulting or in distress now.
For instance DLF has revenue of ~Rs14K corer and net profit of ~Rs8K corer. Net profit margin of 50+% are ridiculous, sooner or later they'll have to come down to reasonable levels of 15-20%. Which suggests a price correction of at least 30%. Beginning this year if they don't bring down prices in their quest to defend profit margines (hence share prices and valuations which allows them to get big loans/equity at cheaper rates to expand) their top-lines will get hit.
RBI has sent a clear signal with recent interest rate increase that it won't allow this asset bubble and exorbitant profiteering to continue.
For instance DLF has revenue of ~Rs14K corer and net profit of ~Rs8K corer. Net profit margin of 50+% are ridiculous, sooner or later they'll have to come down to reasonable levels of 15-20%. Which suggests a price correction of at least 30%. Beginning this year if they don't bring down prices in their quest to defend profit margines (hence share prices and valuations which allows them to get big loans/equity at cheaper rates to expand) their top-lines will get hit.
RBI has sent a clear signal with recent interest rate increase that it won't allow this asset bubble and exorbitant profiteering to continue.
Re: Indian Real Estate Sector
It will be interesting to see which Banks/Finance Companies will suffer this time around due to the over exposure to the real estate sector.
It will be a super opportunity for Cash Rich Corporates and HNI's to pick up sizeable stakes in these troubled "Blue Chip" companies having cash-flow problems.Alok Industries is already doing this and is negotiating with some builders in New Bombay for providing finance.
It will be a super opportunity for Cash Rich Corporates and HNI's to pick up sizeable stakes in these troubled "Blue Chip" companies having cash-flow problems.Alok Industries is already doing this and is negotiating with some builders in New Bombay for providing finance.
Re: Indian Real Estate Sector
20K corer is peanuts for the size of balance sheets that big/medium banks are sitting on. Builders don't need much money from banks since India has huge supply shortage of quality space/properties which ensures that builders can sell properties even before they start building them.
If there is a future mega problem in Indian real-estate, it'll come from the retail home loan sector where bets are several orders of magnitude higher than the loans to builders.
If there is a future mega problem in Indian real-estate, it'll come from the retail home loan sector where bets are several orders of magnitude higher than the loans to builders.
Re: Indian Real Estate Sector
Its already started: Unitech offers stake to Lehman Brothers for 750 Crores in its 97 acre development project in Mumbai.
Unitech Ltd has managed to get some much-needed money in times of extreme cash crunch.
Lehman Brothers, one of the top 5 investment banks in the world, signed on the dotted line last week to invest Rs 750 crore into Unitech’s 97-acre project in Koliwada, Santacruz in north Mumbai.
But this is only half the money required for the massive commercial cum residential development, for which India’s No. 2 realtor has formed an equal-stake joint venture with Rohan Group, a Pune-based developer.
The total cost of the project is Rs 2,000 crore. Unitech brought in Rs 500 crore and got a 50% stake in the venture, while the Rohan Group, by virtue of owning the 97 acres, holds the balance stake.
Unitech was in talks with Deutsche Bank and Lehman Brothers to bridge the Rs 1,500 crore funding gap.
Deutsche, however, decided against investing after a couple of rounds of talks last month.
Lehman will now hold a substantial part of Unitech’s 50% stake in the venture.
A Unitech spokesperson refused to comment.
Lehman also recently signed a memorandum of understanding (MoU) with Peninsula Land Ltd, the realty major belonging to the Ashok Piranal Group, for investing $125 million or over Rs 500 crore for land acquisition and project development.
Lehman holds a 40% stake in Peninsula’s Hyderabad project, where an information technology park cum integrated township is being planned. Construction will begin in the third quarter of 2008.
Unitech Ltd has managed to get some much-needed money in times of extreme cash crunch.
Lehman Brothers, one of the top 5 investment banks in the world, signed on the dotted line last week to invest Rs 750 crore into Unitech’s 97-acre project in Koliwada, Santacruz in north Mumbai.
But this is only half the money required for the massive commercial cum residential development, for which India’s No. 2 realtor has formed an equal-stake joint venture with Rohan Group, a Pune-based developer.
The total cost of the project is Rs 2,000 crore. Unitech brought in Rs 500 crore and got a 50% stake in the venture, while the Rohan Group, by virtue of owning the 97 acres, holds the balance stake.
Unitech was in talks with Deutsche Bank and Lehman Brothers to bridge the Rs 1,500 crore funding gap.
Deutsche, however, decided against investing after a couple of rounds of talks last month.
Lehman will now hold a substantial part of Unitech’s 50% stake in the venture.
A Unitech spokesperson refused to comment.
Lehman also recently signed a memorandum of understanding (MoU) with Peninsula Land Ltd, the realty major belonging to the Ashok Piranal Group, for investing $125 million or over Rs 500 crore for land acquisition and project development.
Lehman holds a 40% stake in Peninsula’s Hyderabad project, where an information technology park cum integrated township is being planned. Construction will begin in the third quarter of 2008.
Re: Indian Real Estate Sector
Realty promoters pledging shares to raise funds.
Akruti City, Omaxe, Sobha Developers, among other property developers, are pledging shares with lenders to provide additional security, apart from hypothecating properties to borrow funds, according to information submitted to the stock exchanges.
Its interesting, on one hand there is a Cash-Crunch and on the other Indian companies are venturing on overseas projects.
Akruti City, Omaxe, Sobha Developers, among other property developers, are pledging shares with lenders to provide additional security, apart from hypothecating properties to borrow funds, according to information submitted to the stock exchanges.
Its interesting, on one hand there is a Cash-Crunch and on the other Indian companies are venturing on overseas projects.
Re: Indian Real Estate Sector
No takers for railways' prime Bandra plot.
MUMBAI: In yet another indication that the real estate business is on the downslide, the Indian Railways has deferred its decision to invite builders to develop commercially a prime 11-acre plot outside Bandra suburban railway station.
Sources claimed that there were few takers for the 45,371 sq m plot, mainly because of the meltdown in the property market. The railways had set a reserve price of Rs 1,750 crore, which was described as an “upfront lease premium for the site''.
Builders, including the big daddies of the construction industry, are facing a liquidity crunch lately and several of them have backed out of multi-crore land acquisition deals, as reported by TOI in its June 14 edition.
A senior Delhi-based official of the Rail Land Development Authority, an autonomous body under the Indian Railways, told TOI that the authority had received instructions from the Rail Board to “postpone indefinitely'' the bidding process.
The railways had called for tenders from builders all over the country to develop the plot, which is located on the eastern side of Bandra station, touching the Western Express highway. The bids were to be opened on June 6 and property experts were keenly monitoring the fate of this prime parcel of land.
When asked if the tenders were called off because the railways had realised that the plot would not fetch the expected price, the official denied this but said, “We wanted to change some clauses in the tender document and tweak the eligibility criteria. Once we are ready, we will start the bidding process.''
However, sources said a lukewarm response from developers was the prime reason the bids were not opened on June 6. The tender document had stipulated that any bid quoting an amount less than the reserve price of Rs 1,750 crore would be “summarily rejected''.
In March, the MMRDA got its first taste of the rapidly sliding property market when its five plots in the Bandra-Kurla Complex received a tepid response from developers. In fact, two of these plots found no takers at all. One of the successful bidders for the BKC plot is now believed to have asked the MMRDA to extend its time limit to pay up for the plot.
The railways have been keen on striking pay dirt through the development of this Bandra plot as they had hoped to use the money for the Rs 5,000 crore Mumbai Urban Transport Project (MUTP-II) which envisages adding an additional pair of tracks on both the western and central suburban lines, besides procuring new trains.
The RLDA was to select a developer to finance, design, construct, operate, maintain and market a commercial office complex on the Bandra land. The developer was to construct two office buildings of the same size and quality, of which one would have to be handed over to the railways free of cost. The developer, in turn, would get to keep the other building for a long-term lease of 80 years.
Meanwhile, the state government is still to take a decision on the railways' proposal to increase the floor space index (FSI) from 2 to 4 for the Bandra land, so that its value goes up substantially. More FSI will allow additional construction on the land. The state government says it's willing to double the FSI if the railways promise to plough back the extra returns from the sale to Mumbai's rail projects instead of using it elsewhere in the country
MUMBAI: In yet another indication that the real estate business is on the downslide, the Indian Railways has deferred its decision to invite builders to develop commercially a prime 11-acre plot outside Bandra suburban railway station.
Sources claimed that there were few takers for the 45,371 sq m plot, mainly because of the meltdown in the property market. The railways had set a reserve price of Rs 1,750 crore, which was described as an “upfront lease premium for the site''.
Builders, including the big daddies of the construction industry, are facing a liquidity crunch lately and several of them have backed out of multi-crore land acquisition deals, as reported by TOI in its June 14 edition.
A senior Delhi-based official of the Rail Land Development Authority, an autonomous body under the Indian Railways, told TOI that the authority had received instructions from the Rail Board to “postpone indefinitely'' the bidding process.
The railways had called for tenders from builders all over the country to develop the plot, which is located on the eastern side of Bandra station, touching the Western Express highway. The bids were to be opened on June 6 and property experts were keenly monitoring the fate of this prime parcel of land.
When asked if the tenders were called off because the railways had realised that the plot would not fetch the expected price, the official denied this but said, “We wanted to change some clauses in the tender document and tweak the eligibility criteria. Once we are ready, we will start the bidding process.''
However, sources said a lukewarm response from developers was the prime reason the bids were not opened on June 6. The tender document had stipulated that any bid quoting an amount less than the reserve price of Rs 1,750 crore would be “summarily rejected''.
In March, the MMRDA got its first taste of the rapidly sliding property market when its five plots in the Bandra-Kurla Complex received a tepid response from developers. In fact, two of these plots found no takers at all. One of the successful bidders for the BKC plot is now believed to have asked the MMRDA to extend its time limit to pay up for the plot.
The railways have been keen on striking pay dirt through the development of this Bandra plot as they had hoped to use the money for the Rs 5,000 crore Mumbai Urban Transport Project (MUTP-II) which envisages adding an additional pair of tracks on both the western and central suburban lines, besides procuring new trains.
The RLDA was to select a developer to finance, design, construct, operate, maintain and market a commercial office complex on the Bandra land. The developer was to construct two office buildings of the same size and quality, of which one would have to be handed over to the railways free of cost. The developer, in turn, would get to keep the other building for a long-term lease of 80 years.
Meanwhile, the state government is still to take a decision on the railways' proposal to increase the floor space index (FSI) from 2 to 4 for the Bandra land, so that its value goes up substantially. More FSI will allow additional construction on the land. The state government says it's willing to double the FSI if the railways promise to plough back the extra returns from the sale to Mumbai's rail projects instead of using it elsewhere in the country
Re: Indian Real Estate Sector
Mumbai's Altamount Road among world's most costliest.
LONDON: A Mumbai lane where Mukesh Ambani is building a billion-dollar home has joined the league of the world's 10 most expensive streets, but is outranked by over three-times costlier London's Billionaire’s Row where steel tycoon Lakshmi Mittal owns three houses.
Altamount Road in Mumbai has been named as the 10th costliest in a survey of the world's top 10 most expensive streets in the world, while London's Kensington Palace Gardens has been ranked at the fourth place.
While the tree-lined street in south of Mumbai is a favourite of India's "very rich," Kensington Palace Gardens area in West London is popularly known as Billionaire’s Row. It has been home to late Princess Diana and NRI-billionaire Mittal owns three houses on this street.
In the survey conducted by Wealth-Bulletin , a UK-based online news and analysis provider for global wealth management industry, Avenue Princess Grace in Monaco has been named at the top with a price tag of USD 190,000 per square metre.
It is followed by Hong Kong's Severn Road with a price of USD 121,000 per square metre (sq mt) at second and New York City's Fifth Avenue at third place (USD 80,000 per sq mt).
Kensington Palace Gardens has made to the fourth place with a price tag of USD 77,000 per sq mt, while the same for the last-ranked Mumbai's Altamount Road is USD 25,000 per sq mt.
Noting that the Mumbai lane has always been a popular choice for homes of India's very rich, Wealth-Bulletin said that the street was "catapulted into the ranks of the world's most expensive when Mukesh Ambani unveiled plans last year to build a residential apartment block on the street at a cost of around USD 1 billion.
"The extraordinary 27-floor building, called Antilia, will be as high as a normal 60-floor skyscraper, have elevated gardens and three helicopter pads," it said, adding the prices in Antilia were likely to be at least 25,000 per sq mt or even more.
Other streets ranked costlier than Mumbai's Altamount Road in the list include Avenue Montaigne in Paris, ranked fifth at 54,000 dollars per sq mt, Moscow's Ostozhenka (sixth at 40,000 dollars per sq mt), Via Suvretta in St Moritz (seventh at 38,000 dollars per sq mt) and Carolwood Drive in Los Angeles (eighth ranked at 30,000 dollars per sq mt).
The survey revealed that the prices for the top homes in the best locations appear to have decoupled from the gloom and doom being felt in the wider property market.
"The bursting of the housing market bubble is growing louder, causing increasing concern among a widening spectrum of the population, but for the really wealthy the downturn might have little or no impact on the prices they are paying, or selling for homes," it said.
Noting one needs to be a billionaire, or not far behind, to live in these streets, Wealth-Bulletin said Moscow's Ostozhenka Street and Mumbai's Altamount Road "would not have even been considered for the list a decade ago, but their inclusion today shows just how important these cities have become for burgeoning billionaire class in India and Russia."
LONDON: A Mumbai lane where Mukesh Ambani is building a billion-dollar home has joined the league of the world's 10 most expensive streets, but is outranked by over three-times costlier London's Billionaire’s Row where steel tycoon Lakshmi Mittal owns three houses.
Altamount Road in Mumbai has been named as the 10th costliest in a survey of the world's top 10 most expensive streets in the world, while London's Kensington Palace Gardens has been ranked at the fourth place.
While the tree-lined street in south of Mumbai is a favourite of India's "very rich," Kensington Palace Gardens area in West London is popularly known as Billionaire’s Row. It has been home to late Princess Diana and NRI-billionaire Mittal owns three houses on this street.
In the survey conducted by Wealth-Bulletin , a UK-based online news and analysis provider for global wealth management industry, Avenue Princess Grace in Monaco has been named at the top with a price tag of USD 190,000 per square metre.
It is followed by Hong Kong's Severn Road with a price of USD 121,000 per square metre (sq mt) at second and New York City's Fifth Avenue at third place (USD 80,000 per sq mt).
Kensington Palace Gardens has made to the fourth place with a price tag of USD 77,000 per sq mt, while the same for the last-ranked Mumbai's Altamount Road is USD 25,000 per sq mt.
Noting that the Mumbai lane has always been a popular choice for homes of India's very rich, Wealth-Bulletin said that the street was "catapulted into the ranks of the world's most expensive when Mukesh Ambani unveiled plans last year to build a residential apartment block on the street at a cost of around USD 1 billion.
"The extraordinary 27-floor building, called Antilia, will be as high as a normal 60-floor skyscraper, have elevated gardens and three helicopter pads," it said, adding the prices in Antilia were likely to be at least 25,000 per sq mt or even more.
Other streets ranked costlier than Mumbai's Altamount Road in the list include Avenue Montaigne in Paris, ranked fifth at 54,000 dollars per sq mt, Moscow's Ostozhenka (sixth at 40,000 dollars per sq mt), Via Suvretta in St Moritz (seventh at 38,000 dollars per sq mt) and Carolwood Drive in Los Angeles (eighth ranked at 30,000 dollars per sq mt).
The survey revealed that the prices for the top homes in the best locations appear to have decoupled from the gloom and doom being felt in the wider property market.
"The bursting of the housing market bubble is growing louder, causing increasing concern among a widening spectrum of the population, but for the really wealthy the downturn might have little or no impact on the prices they are paying, or selling for homes," it said.
Noting one needs to be a billionaire, or not far behind, to live in these streets, Wealth-Bulletin said Moscow's Ostozhenka Street and Mumbai's Altamount Road "would not have even been considered for the list a decade ago, but their inclusion today shows just how important these cities have become for burgeoning billionaire class in India and Russia."
-
Rishirishi
- BRFite
- Posts: 1409
- Joined: 12 Mar 2005 02:30
Re: Indian Real Estate Sector
I spoke to a few relatives of mine, who are suppliers to the builders. Basically all builders are in deep shit, as the market is overpriced. He said that the typical construction cost is arround Rs 1200 per sq ft. Rest is land cost and profit. The market is way to overpriced, as the supply will finally overshoot the demand.
His advice was, do not sign up to any flat that is not fully constructed. Big and small names are likely to go belly up.
His advice was, do not sign up to any flat that is not fully constructed. Big and small names are likely to go belly up.
Re: Indian Real Estate Sector
How is the market in Hyderabad? I am scouting for a property in Hyderabad. Any good builders? I kept quiet for some time thinking prices might come down more, but as far as the Indian real estate market in India goes prices come down little but on a long term it is worth the investment. Can never find the bottom. A flat in Madras {Chrompet suburb) that was bought for 9L, couple of years ago, is going for 30L these days. That is crazy for a conservative city like Madras.
-
Rishirishi
- BRFite
- Posts: 1409
- Joined: 12 Mar 2005 02:30
Re: Indian Real Estate Sector
What ever you do, do not sign up with ANY builder (no matter what his reputaion is), before the project is at least 80% compleeted. Builders across the country are in deep shit, and may simply choose take some of the money, before declaring "divala".SwamyG wrote:How is the market in Hyderabad? I am scouting for a property in Hyderabad. Any good builders? I kept quiet for some time thinking prices might come down more, but as far as the Indian real estate market in India goes prices come down little but on a long term it is worth the investment. Can never find the bottom. A flat in Madras {Chrompet suburb) that was bought for 9L, couple of years ago, is going for 30L these days. That is crazy for a conservative city like Madras.
Lehman Affects Indian Real Estate
Lehman fall may deepen Indian realtors' credit woes
16 Sep, 2008, 0820 hrs IST,Sanjeev Choudhary & Rajesh Unnikrishnan, ET Bureau
NEW DELHI/MUMBAI: Lehman Brothers’ bankruptcy is likely to cost Indian real estate dear. It may impact the financial major’s existing investments worth $500 million in realty firms, including DLF and Unitech, besides drying up another $500-million worth of potential investment which was expected to flow into Unitech’s Mumbai projects.
The news of Lehman’s collapse brought the BSE realty index down by 7.65% on Monday, while the benchmark Sensex declined 3.35%. Both DLF and Unitech fell 7.5%.
Lehman’s fall signals a deepening of credit crisis for Indian developers, who have lately been battling falling sales, rising cost of construction and tightening credit. It is expected that the US-based firm is likely to go for a fire sale of its assets.
The financial services major was very bullish on India and was among the active investors in Indian real estate. Early this year, it had leased out an office space in Mumbai paying Rs 1 crore per month as rental. This would divert a part of fresh funds seeking to invest in Indian realty.
Re: Indian Real Estate Sector
MaulanaV can probably lie in ambush and nab a distress sale from divyasree elan methinks.
TOI:
Home projects on IT corridor in worst-ever crisis
17 Sep 2008, 0537 hrs IST, Jayaraj Sivan,TNN
CHENNAI: They put their faith in the IT boom and planned large, luxury apartment projects on Chennai's IT corridor. Today, though, builders are feeling the pinch as the residential sector on the IT corridor is undergoing one of its worst crises ever.
Of the 40,000-odd residential apartments that are expected to come up in the outlying areas of the city over the next three years, 50% have been planned along the IT highway. The industry's biggies - DLF, Hiranandani, Puravankara , True Value Homes, Arihant, Vijay Shanthi, Akshaya , SSPDL, L&T , Doshi, ETA Star and Mantri - all have their presence on this sixlane road that is also home to IT giants such as TCS, Cognizant , Satyam and Infosys.
But more than a year into their projects, many have sold hardly 30% of their stocks. The Chennai builders have been keeping up a brave face and have not reduced prices, even when their counterparts in Bangalore started selling flats at discounted rates.
Builders here have not increased prices (average price Rs 4,000 per sq ft) since their projects were launched. "We bet our stocks on these projects as the city is already facing a shortage of 30,000 dwelling units. To add to the demand, eight million sq ft of IT space has been added in the Siruseri IT Park and another eight million sq ft IT space is being readied in the park over the next three years. Going by a conservative estimate of 100 sq ft per employee, it would have generated 1.6 lakh new jobs, and for us, selling 20,000 flats to IT professionals should have been a cakewalk," said Prakash Challa, president of the Tamil Nadu unit of Confederation of Real Estate Developers ' Association of India.
But their calculations have gone wrong. IT professionals are in no hurry to buy flats now. "The reasons for the slump are many - prohibitive land prices, construction of big apartments costing Rs 60 lakh and more when the demand is high for smaller ones in the sub-Rs 30 lakh segment and the steep increase in housing loan rates," said V Nagarajan, a real estate analyst.
"Against a monthly booking of 30 to 40 units last year, we're down to three to four, and many try to negotiate the price. People are adopting a wait-and-watch approach. If interest rates go up further, the scenario will worsen," said Suresh Kumar, managing director of Vijay Shanthi Builders. To add to the builders' woes, the IT sector is going through a bad phase. Many companies that recruited students on campus this year have not yet taken the new employees on board. Some companies have even suspended civil works. A leading IT company, which was developing a 50-acre plot of land in Sholinganallur and was expected to add 10,000 employees soon, has stopped construction halfway through, reliable sources said.
Even techies holding steady jobs have been affected by the slowdown. "Our increments this year were very low. Most professionals have put investing on hold," said R Maneesh, a senior executive in an IT firm. He had been scouting for a flat on Old Mahabalipuram Road but finally bought one in Kochi last year.
TOI:
Home projects on IT corridor in worst-ever crisis
17 Sep 2008, 0537 hrs IST, Jayaraj Sivan,TNN
CHENNAI: They put their faith in the IT boom and planned large, luxury apartment projects on Chennai's IT corridor. Today, though, builders are feeling the pinch as the residential sector on the IT corridor is undergoing one of its worst crises ever.
Of the 40,000-odd residential apartments that are expected to come up in the outlying areas of the city over the next three years, 50% have been planned along the IT highway. The industry's biggies - DLF, Hiranandani, Puravankara , True Value Homes, Arihant, Vijay Shanthi, Akshaya , SSPDL, L&T , Doshi, ETA Star and Mantri - all have their presence on this sixlane road that is also home to IT giants such as TCS, Cognizant , Satyam and Infosys.
But more than a year into their projects, many have sold hardly 30% of their stocks. The Chennai builders have been keeping up a brave face and have not reduced prices, even when their counterparts in Bangalore started selling flats at discounted rates.
Builders here have not increased prices (average price Rs 4,000 per sq ft) since their projects were launched. "We bet our stocks on these projects as the city is already facing a shortage of 30,000 dwelling units. To add to the demand, eight million sq ft of IT space has been added in the Siruseri IT Park and another eight million sq ft IT space is being readied in the park over the next three years. Going by a conservative estimate of 100 sq ft per employee, it would have generated 1.6 lakh new jobs, and for us, selling 20,000 flats to IT professionals should have been a cakewalk," said Prakash Challa, president of the Tamil Nadu unit of Confederation of Real Estate Developers ' Association of India.
But their calculations have gone wrong. IT professionals are in no hurry to buy flats now. "The reasons for the slump are many - prohibitive land prices, construction of big apartments costing Rs 60 lakh and more when the demand is high for smaller ones in the sub-Rs 30 lakh segment and the steep increase in housing loan rates," said V Nagarajan, a real estate analyst.
"Against a monthly booking of 30 to 40 units last year, we're down to three to four, and many try to negotiate the price. People are adopting a wait-and-watch approach. If interest rates go up further, the scenario will worsen," said Suresh Kumar, managing director of Vijay Shanthi Builders. To add to the builders' woes, the IT sector is going through a bad phase. Many companies that recruited students on campus this year have not yet taken the new employees on board. Some companies have even suspended civil works. A leading IT company, which was developing a 50-acre plot of land in Sholinganallur and was expected to add 10,000 employees soon, has stopped construction halfway through, reliable sources said.
Even techies holding steady jobs have been affected by the slowdown. "Our increments this year were very low. Most professionals have put investing on hold," said R Maneesh, a senior executive in an IT firm. He had been scouting for a flat on Old Mahabalipuram Road but finally bought one in Kochi last year.
Re: Indian Real Estate Sector
maybe it will be the Opera House plot off brigade road, now in ruins?
Trump’s tall India plan to kick off in Bangalore
17 Sep, 2008, 0013 hrs IST,Boby Kurian & Rajesh Unnikrishnan, ET Bureau
BANGALORE/MUMBAI: American real estate tycoon Donald Trump is finalising plans for a branded 47-storey residential project at the heart of Bangalore marking his foray into India. The Trump Tower will be a Rs 500-crore project with 16 condos and three duplex penthouses each priced between Rs 25 to Rs 40 crore, sources said.
Trump Sr’s flagship company, Trump Organization, is expected to unveil the Bangalore project by December this year after obtaining all necessary regulatory clearances. Ivanka Trump, daughter of the real estate magnate, will oversee the company’s India interests and is seen pushing for the project take-off with a visit in recent weeks.
Trump will not have financial exposure to the project, expected to come up just off Brigade Road in the central business district, as it is not FDI compliant, but will be in control of development, sales and management.
It is believed that domestic financial institutions like Kotak, IL&FS and HDFC are in the picture for financing the project. Trump appears to have roped in Blackstone backed Synergy Property Development Services for managing the Bangalore project development. Asipac Projects is involved with marketing of the property, while Thomas Associates, with several of the city’s landmark buildings in its portfolio, is believed to be the architectural consultants.
When contacted, Asipac, Synergy and Thomas Associates declined to comment, as some of the parties already on board are bound by stringent confidentiality clauses.
Trump’s tall India plan to kick off in Bangalore
17 Sep, 2008, 0013 hrs IST,Boby Kurian & Rajesh Unnikrishnan, ET Bureau
BANGALORE/MUMBAI: American real estate tycoon Donald Trump is finalising plans for a branded 47-storey residential project at the heart of Bangalore marking his foray into India. The Trump Tower will be a Rs 500-crore project with 16 condos and three duplex penthouses each priced between Rs 25 to Rs 40 crore, sources said.
Trump Sr’s flagship company, Trump Organization, is expected to unveil the Bangalore project by December this year after obtaining all necessary regulatory clearances. Ivanka Trump, daughter of the real estate magnate, will oversee the company’s India interests and is seen pushing for the project take-off with a visit in recent weeks.
Trump will not have financial exposure to the project, expected to come up just off Brigade Road in the central business district, as it is not FDI compliant, but will be in control of development, sales and management.
It is believed that domestic financial institutions like Kotak, IL&FS and HDFC are in the picture for financing the project. Trump appears to have roped in Blackstone backed Synergy Property Development Services for managing the Bangalore project development. Asipac Projects is involved with marketing of the property, while Thomas Associates, with several of the city’s landmark buildings in its portfolio, is believed to be the architectural consultants.
When contacted, Asipac, Synergy and Thomas Associates declined to comment, as some of the parties already on board are bound by stringent confidentiality clauses.
Re: Indian Real Estate Sector
report in TOI that many of tier2 and tier3 builders in BLR are on verge of bankruptcy and hounded
by the banks. they are offering their projects on sale to tier1 but these have their own issues and
are not interested. their own inventory is moving very slowly in south blr because of prolonged delays
in the infra projects like bmic, prr, skyway...
so its being said the banks will have to repossess these half-completed projects, spend money to
finish and try to sell them. or sell them as distressed assets at a steep markdown to vulture investors.
I feel ICICI and HDFC will have plenty of this s*** to clean out.
by the banks. they are offering their projects on sale to tier1 but these have their own issues and
are not interested. their own inventory is moving very slowly in south blr because of prolonged delays
in the infra projects like bmic, prr, skyway...
so its being said the banks will have to repossess these half-completed projects, spend money to
finish and try to sell them. or sell them as distressed assets at a steep markdown to vulture investors.
I feel ICICI and HDFC will have plenty of this s*** to clean out.
-
vina
- BRF Oldie
- Posts: 6046
- Joined: 11 May 2005 06:56
- Location: Doing Nijikaran, Udharikaran and Baazarikaran to Commies and Assorted Leftists
Re: Indian Real Estate Sector
I love being the vulture!!Singha wrote:report in TOI that many of tier2 and tier3 builders in BLR are on verge of bankruptcy and hounded
by the banks. they are offering their projects on sale to tier1 but these have their own issues and
are not interested. their own inventory is moving very slowly in south blr because of prolonged delays
in the infra projects like bmic, prr, skyway...
so its being said the banks will have to repossess these half-completed projects, spend money to
finish and try to sell them. or sell them as distressed assets at a steep markdown to vulture investors.
I feel ICICI and HDFC will have plenty of this s*** to clean out.
.. Ol' Vina is waiting with cash and near cash on hand baby !.. In fact, I checked out the Pindi Cantt , San Diego , over the weekend. They were nice. SHQ was maha impressed and wanted to open out the check book.. But moi said sush wait, and asked they guys for a quote..
They came back with a quote dating back to Dec '07
.. Nice try. Will wait for the bust to happen and look an already completed one going at firesale price . If something inside the city is available will look at that as well..
Mid and bottom tier builders going bankrupt aye ?. Well a not of shiny new BMW , Merc and Audi Q7 upgrades (like the guy in my in-laws apt complex) , aint gonna happen..
The blood hasnt started flowing in the real estate game yet. I think those idiots are digging their own game over there , holding on, hoping that the scene will improve. The ones left standing are those who are able to liqiuidate on hand inventory now and get to cash. The more they hold on without dropping prices, the more they are bleeding their own liquidity.. No liquidity , You DIE.. That is the first they they teach you in business. No Cash and YOU ARE bankrupt.
Are those idiots going to be like Lehman and Bear and try to sell when there is no market or are they going to be like Thain at Merrill and bail out when there is a deal on the table.
However, the price slide will be very very fast indeed. Just one bankruptcy and delayed payment, jittery guys like ICICI and HDFC will foreclose immediately and ask for possession. Every one will have to drop immediately and the entire thing will crash down hill. This dynamic is sort of like a giant sea of baby pengiuns tentatively at the ledge seeing who will plunge into the sea first. The first one jumping will set off the dominoes.
Nice nah. ?
Re: Indian Real Estate Sector
I believe some deep pocketed 'brokers' (frontmen from politicians and industrialists) tend to own
multiple villas in san diego. if inventory is not moving they have no cash flow. you maybe able to
negotiate a good deal on one thats complete but without a buyer or nearing completion.
in current scenario, it maybe risky to buy anything thats less than 90% complete.
multiple villas in san diego. if inventory is not moving they have no cash flow. you maybe able to
negotiate a good deal on one thats complete but without a buyer or nearing completion.
in current scenario, it maybe risky to buy anything thats less than 90% complete.
Re: Indian Real Estate Sector
Good old Vina like RBI has kept pretty good control over Bank exposure to real-estate sector. If real-estate meltdowns like in US its effect on banking sector would be limited. There is no subprime, alt-A in India. Almost all loans are below 15 years and with 20% down on floating rates which makes them Prime+ loans in USA. Builders and their private black-money financers would get fried if a real meltdown happens
Re: Indian Real Estate Sector
the KT govt has finally cancelled the 2005 BMRDA order putting a ban on conversion of agri land for layouts. one more circular finally clearing all roadblocks is expected soon. this will free up people
to form new layouts in outskirts.
to me it sounds like with new flat registrations dropping steeply, the cash flow from sub-registrar
offices back to vidhana soudha is weak. hence nothing like new plot registration and layout formation
to supplement the income.
ofcourse a good side effect is that the city can finally expand and BDA has big plans for new layouts.
to form new layouts in outskirts.
to me it sounds like with new flat registrations dropping steeply, the cash flow from sub-registrar
offices back to vidhana soudha is weak. hence nothing like new plot registration and layout formation
to supplement the income.
ofcourse a good side effect is that the city can finally expand and BDA has big plans for new layouts.
-
Bade
- BRF Oldie
- Posts: 7212
- Joined: 23 May 2002 11:31
- Location: badenberg in US administered part of America
Re: Indian Real Estate Sector
Maybe all the excess land banks with builders will get sold as 40x40ft plots at a fire sale. 
Re: Indian Real Estate Sector
To me, this "Indian land prices crashing" is like the impending death of Microsoft, "considerable waning of Amirkhan's influence" etc type of prophecy.
As long as we Indians produce (with a surreptitious smile, of course) more little Indians and as long as Parashurama doesn't come out of retirement to throw his axe in the general direction of Madagascar or Vanuatu, we are in for increasing prices. The max that can happen is a lull in the upward climb. And if we wait for that lull to happen before we invest in any land, well....this lull might happen only after the price has already vaulted above our individual "investment capability zones" (aka wallet size). I bought some stuff in the 90s in Bangalore, when a friend of mine (who researches quite thoroughly) cautioned me that Bangalore infrastructure is creaking and because of that the market will crash soon. After that Bangalore infra became even crappier, yet I am still smiling. My careful friend? Paid a hefty amount recently for a three bedroom apartment, because his SHQ threatened him with dire consequences if he doesnt get his act together fast. But as I told him, his story too is going to end happily, as his apartment also can be sold one day for an even heftier amount.
Dont know about anywhere else in the world, but in Indian Tier I and II cities it is always a decent scene if you can get any piece of land(or quality apartment) with decent documents and regulatory clearances. Its value might change negative over six months, but above 5 years, it pays back handsomely.
As long as we Indians produce (with a surreptitious smile, of course) more little Indians and as long as Parashurama doesn't come out of retirement to throw his axe in the general direction of Madagascar or Vanuatu, we are in for increasing prices. The max that can happen is a lull in the upward climb. And if we wait for that lull to happen before we invest in any land, well....this lull might happen only after the price has already vaulted above our individual "investment capability zones" (aka wallet size). I bought some stuff in the 90s in Bangalore, when a friend of mine (who researches quite thoroughly) cautioned me that Bangalore infrastructure is creaking and because of that the market will crash soon. After that Bangalore infra became even crappier, yet I am still smiling. My careful friend? Paid a hefty amount recently for a three bedroom apartment, because his SHQ threatened him with dire consequences if he doesnt get his act together fast. But as I told him, his story too is going to end happily, as his apartment also can be sold one day for an even heftier amount.
Dont know about anywhere else in the world, but in Indian Tier I and II cities it is always a decent scene if you can get any piece of land(or quality apartment) with decent documents and regulatory clearances. Its value might change negative over six months, but above 5 years, it pays back handsomely.
-
Bade
- BRF Oldie
- Posts: 7212
- Joined: 23 May 2002 11:31
- Location: badenberg in US administered part of America
Re: Indian Real Estate Sector
I agree, if you buy land or built up area with a 10+ year horizon just as one invests in stocks for retirement, should be ok in the long run. There is a serious scarcity of land in Kerala alone with the overpopulation and gulf wealth.
Re: Indian Real Estate Sector
I think it is time to be very selective in which tier II or III cities that you invest in. Places like Coimbatore in my opinion is over speculated. But positive about Coimbatore is that there is no more space inside the city, to build any more big apartment complexes or communities (only govt land left). Coimbatore for example is over reliant on IT as a selling point. All the builders keep talking about IT coming to the city, and how government has released plans to build IT parks (Tidel Park) etc. There is a s*** load of speculation there. I think its gonna go bust eventually.
Re: Indian Real Estate Sector
Seems MH govt has decided to hold a referendum among farmers of 22 villages about the land deal that RIL is offereing the for the mahamumbai SEZ. RIL's earlier Rs10 lakh/acre offer hasn't found takers onlee. Hope they're able to get this through smoothly and avoid future singurs.
Re: Indian Real Estate Sector
Nair/Bade:
You said it!
If one is "eyeing" the investments in real estate over 5 or 10 years, then buying something in the next 3-6 months is not going to be bad at all. Oh man, the $:Rs is so good these days, before the dollar tanks, it would be nice to get hold of some small property.
There will be a dent in the prices, over a long period of time the prices will appreciate. Just need to be little cautious and not buy all those crores worth of properties. Rather buy 2-3 30-40Lakhs property in different cities. It is like stock, one has to build a portfolio
You said it!
If one is "eyeing" the investments in real estate over 5 or 10 years, then buying something in the next 3-6 months is not going to be bad at all. Oh man, the $:Rs is so good these days, before the dollar tanks, it would be nice to get hold of some small property.
There will be a dent in the prices, over a long period of time the prices will appreciate. Just need to be little cautious and not buy all those crores worth of properties. Rather buy 2-3 30-40Lakhs property in different cities. It is like stock, one has to build a portfolio
-
vina
- BRF Oldie
- Posts: 6046
- Joined: 11 May 2005 06:56
- Location: Doing Nijikaran, Udharikaran and Baazarikaran to Commies and Assorted Leftists
Re: Indian Real Estate Sector
Hmm.. The "high end" part of the real estate rubbish in Bangalore seems to be in trouble. I see a quite a lot of "Penthouses" for sale ads, including a couple of ones in the apt I live in right now..Also noticed ads for penthouses for rent for some Rs 1,25,000 per month in my apt a few months ago.. obviously they are empty right now and I guess those are available for sale.
I think what is happening is that speculators/"investors" who played the game and bought up 2 or 3 with 25% or so margin money , hoping that the rents would cover a large part of EMIs are hurting seriously now. That is classic cash flow problem. Rents cannot cover the lions share of payments and since apts have stopped appreciating, you cannot pay the "flipping" game and henc you have to sell .. problem is, there is next to no market as of now.
Exactly the same dynamic as in massa.. but restricted to the "high end". There was a campaign in my apt from some developer of "villas" in Electronics City. The tag line.. "Exchange Your Apt for a Villa" !! . "Why live in a cubby hole while you can live in a villa ?" .. The prices are softening surely. The builders and speculators are holding out, hoping against hope of making a sale. Ah.. but dont worry, they will have to eventually give in and drop prices, which will set off a slide..(like the rest of the penguin herd jumping into the sea after the first chick) 
..
As for Singhaji's Rawal Pindi cross roads at San Diego, there was an ad about somebody willing to sell out at Rs 3250 for T2, with hand over in June 09.. I think it can be beaten down to Rs 2850, coz there are ready to occupy Sobhas and in vicinity at such prices. The rats are beginnign to bail out of the sinking ship.. Slowly but surely.
Hold on to cash boys.. Wait for big ticket distress news
I think what is happening is that speculators/"investors" who played the game and bought up 2 or 3 with 25% or so margin money , hoping that the rents would cover a large part of EMIs are hurting seriously now. That is classic cash flow problem. Rents cannot cover the lions share of payments and since apts have stopped appreciating, you cannot pay the "flipping" game and henc you have to sell .. problem is, there is next to no market as of now.
Exactly the same dynamic as in massa.. but restricted to the "high end". There was a campaign in my apt from some developer of "villas" in Electronics City. The tag line.. "Exchange Your Apt for a Villa" !! . "Why live in a cubby hole while you can live in a villa ?"
.. The prices are softening surely. The builders and speculators are holding out, hoping against hope of making a sale. Ah.. but dont worry, they will have to eventually give in and drop prices, which will set off a slide..(like the rest of the penguin herd jumping into the sea after the first chick) ..As for Singhaji's Rawal Pindi cross roads at San Diego, there was an ad about somebody willing to sell out at Rs 3250 for T2, with hand over in June 09.. I think it can be beaten down to Rs 2850, coz there are ready to occupy Sobhas and in vicinity at such prices. The rats are beginnign to bail out of the sinking ship.. Slowly but surely.
Hold on to cash boys.. Wait for big ticket distress news