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Indian Real Estate Sector

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Re: Nukkad 78

Postby vina » 23 Dec 2015 10:06

Suraj wrote:In India, the loan risk is entirely in the hands of the bank issuing the loan, and therefore you have the 9-10% rates. Even the US would have much higher rates without the backstop and guarantee provided by GSE.

Not entirely true. You do have the NHB in India. But yes, the market is not as deep as the "Agency" securities in the US. But notice, that this entire US structure was controversial to say the least even before he 2008 meltdown and people were warning (including my B. School prof who was pretty vocal about it) the status of the "Not Sovereign " status of the the agencies, and the issue of picking up the credit risk of non sovereigns and the attendant consequences of the "agency mismatch" problem. All that was prescient and was shown up starkly in the 2008 crisis.

In addition the US RE market has huge homogeneity (atleast within areas), have far fewer "issues" (in terms of just legality of title and asset , and ownership thereof) , is very organised and hence amenable to securitisation.

In India, there are very few assets like that .Though you do and can securitise the lending portfolio of Housing Finance institutions .

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Re: Indian Real Estate Sector

Postby SaiK » 28 May 2016 14:16

http://guidancevalue.com/pdf/Jayanagar.pdf

page 10, what does the heading say? anyone know kannada/telugu?
TIA

Image

I am interested in knowing the columns 4,5, and .

are these guidance value per sq ft? that would be way too much.
In the above example, Rs. 1,15,200 per square foot for 10th main Jayanagar 1st block? are they kidding?
that means a 1200 sq ft plot/home would be Rs. 13.824 crores !!!! bejesus!~

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Re: Indian Real Estate Sector

Postby srin » 28 May 2016 17:26

per my very limited kannada, it is per square metre, not per sq ft.

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Re: Indian Real Estate Sector

Postby Yugandhar » 28 May 2016 18:24

column 4( BDA/HSBC/BMRDA/KHB CITI? OTHER CITY DEVELOPMENT SCHEMES DERIVED/CONVERTED/BBMP ETC SITES) Govt estimated market value per sq mt = 115200
column 5 (VALUE OF BUILT APARTMENTS OR FLATS) (for buildings with mosaic/ceramic/vitrified tiles) per sq mt super builtup area = 80600
column 6 ( marble/granite/wood) per sq mt super builtup area = 82000

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Re: Indian Real Estate Sector

Postby chetak » 28 May 2016 18:43

My tenant from a reputed tata company insisted on paying one months deposit as security, when vacating he slyly kept changing the dates of his departure to prevent us from inspecting the premises, using one excuse or another. Finally, he informed us that he was leaving on the very day that he left and departed leaving the house in shambles.

We did not have any hold after that. Left with a lakh and a half to two lakhs worth damage to walls, doors and kitchen fittings. The expensive kitchen was my pride, bigger than most living rooms in normal flats, I had got it done professionally.

The SOB tenant was a well educated very senior engineer with the tatas.

The next guy who rents the flat pays 11 months deposit, period.

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Re: Indian Real Estate Sector

Postby Gus » 28 May 2016 19:14

Take pictures of walls and rooms before move in and have it acknowledged and signed, along with inventory of fixtures and lights and such stuff, mention all this in a proper legal contract along with at least one inspection at notice period and another inspection at key hand over.

contract should be such that - any issues found at first inspection should be agreed to be fixed within a month or tenant will be evicted. repairs will be fixed by owner then and subtracted from advance and remaining balance will be settled after that.

only such massan type rental agreement and enforcement stuff will work. but you also need some muscle power to enforce this.

i have also been badly burned because i was not paying attention and basically let it go because i had other headaches. i went to police once and they basically asked for 20,000 for an eviction and the tenant owed me only 10,000.

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Re: Indian Real Estate Sector

Postby SaiK » 28 May 2016 19:15

Thanks guys. it makes sense.. even though bengaluru has gone sky-high!

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Re: Indian Real Estate Sector

Postby rahulm » 27 Jun 2016 10:34

Yesterday, Sunday, I decided to check out BLR e-city properties.

Some parts of phase 1 look TFTA with Wipro, Velankani tech park, 3M, HP and HCL. Except these, the area looked like village(r)s caught in development head lights. Islands of some TFTA stuff surrounded by typical desi village-ness - abattoirs, fishmongers with fish not on ice, food rotting on pavements on a hot and humid day waiting for cows to come and eat and no pot holed roads - only holes.

Reminded me of Hadapsar and NIBM side development in Pune.

e-city seems to be witnessing frenetic construction activity and should look very different in 5-10 years. The extension of the Metro to e-city (eventually, one day, some day) will be a boon.

I inspected 5 flats in various projects - Godrej e-city, Shriram and a few local less well known players. I had to walk through slush to to get to some of them but eventually I suppose this will be fixed.

Godrey e-city was quite TFTA except that it borders a big open sewer so the deal is - buy a flat and enjjai the blended smell of yesterday's dinner of all your brothers and sisters in a 5 km radius with morning Coorg coffee. Completely non discriminatory - No App/bot/algorithm can help select your smell sources. Quite irresistible and democratic, I say.

Forget MUTU standards - maybe, lets first aspire for and implement desi standards - exemplars of which exists in fauji cantonments. That itself would be a good start. Nobody can say - it can't be done because the fauj has already done it - for ages. Upgrade all civil hygiene, infra, cleanliness and civility standards to fauji levels.

All are relying on bore water and the Godrej chap told me even after Cauvery water is made available, expect limited supplies (he said about once a week). Has the corporation or gram panchayats done any studies about ground water level usage sustainability or is it the the usual ram bharose aage dekha jaygea model? Are we using ISRO's BHUVAN-BHUJAL in town planning?

Indian RE seems to be quite over priced (based on gross rental yields compared to other markets). I found most interesting the fact that, the bribe amount for registration @ Rs 16k per flat is an unit priced, transparent, itemised, commoditised, publicised without guilt, shame or fear figure.

The innovation of the monopolised government services in monetising their public service and duty of care is diabolically indi-genious. If that does not take the samosa, then the propensity of the public, across the country to be willingly deprived of their rights and GUBO to buggery by public service thuggery by all political dispensations is nothing short of extra-ordinary.
Last edited by rahulm on 27 Jun 2016 12:43, edited 6 times in total.

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Re: Indian Real Estate Sector

Postby Sachin » 27 Jun 2016 10:40

rahulm wrote:All are relying on bore water and the Godrej chap told me even after Cauvery water is made available, expect limited supplies (he said about once a week). Has the corporation or gram panchayats done any studies about ground water level usage sustainability or is it the the usual ram bharose aage dekha jaygea model? Are we using ISRO's BHUVAN-BHUJAL in town planning?

Rest assured. None. The government agencies and the realtors have no plans to do any study of the water availability when they approve/build large housing apartments. I know an NGO who is doing a kind of mapping of areas and the water tables etc. They plan to release it to the general public, so that the people can at least know what is the chances of getting a steady supply of water (from bore wells etc.). There are some areas in Bangalore where even deep borewells have got dried up. Getting water through tankers is the only way forward.

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Re: Indian Real Estate Sector

Postby Singha » 27 Jun 2016 11:06

the rest of karnataka does not care for Blr's civic problems, they have own issues and priorities. blr's share of MLAs is not much vs rest of state. so generally Govts can get away by winning in other parts of the state and use blr as the cash cow.

if blr were a union territory like delhi things would be much better, but thats not possible.

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Re: Indian Real Estate Sector

Postby rahulm » 27 Jun 2016 12:09

An accurate description of the situation and replicated through all states of India no doubt - HYD for AP, MUM-PUNE for MH, NOIDA for UP, KOLKATTA for WB.

Probably, not so much for BIMARU where every thing is pretty much like everywhere else in the state.

And a wonderful tropical afternoon storm hits BLR now. One of the best things in India - the monsoons and the smell of the earth. ...
Last edited by Gerard on 10 Aug 2016 07:11, edited 2 times in total.
Reason: Test

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Re: Indian Real Estate Sector

Postby Singha » 27 Jun 2016 12:17

^ indeed. one day were were having a discussion on local civic matters here, and hearing all this, our friend from gorakhpur UP chimed in that "things are so different and constructive here, atleast people take an interest in these matters, and sometimes the govt does too, all talk is of growth and doing things better..in my place nobody talks of these things at all"

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Re: Indian Real Estate Sector

Postby Suraj » 01 May 2017 09:32

Real este buyers set to become king as RERA comes into force today
The much-awaited Real Estate Act comes into force on Monday with a promise of protecting the right of consumers and ushering in transparency but only 13 states and union territories (UTs) have so far notified rules.

The government has described the implementation of the consumer-centric Act as the beginning of an era where the consumer is king.

Real estate players have also welcomed the implementation of the Act, saying it will bring a paradigm change in the way the Indian real estate sector functions.


The government has brought in the legislation to protect home buyers and encourage genuine private players.

The Real Estate (Regulation and Development) Bill, 2016 was passed by Parliament in March last year and all the 92 sections of the Act comes into effect from May 1.

"The Real Estate Act coming into force after a nine-year wait and marks the beginning of a new era," Housing and Urban Poverty Alleviation Minister M Venkaiah Naidu said.

The Minister said the law will make "buyer the king", while developers will also benefit from the increased buyers' confidence in the regulated environment.

"The Act ushers in the much-desired accountability, transparency and efficiency in the sector, defining the rights and obligations of both the buyers and developers," Naidu said.

The developers will now have to get the ongoing projects that have not received completion certificate and the new projects registered with regulatory authorities within 3 months from tomorrow.

Under the rules, it is mandatory for the states and UTs to set up the authority.

However, only 13 states and UTs have so far notified the rules. The states that have notified the rules are Uttar Pradesh, Gujarat, Odisha, Andhra Pradesh, Maharashtra, Madhya Pradesh and Bihar.

The Housing Ministry had last year notified the rules for five Union Territories--Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman and Diu, and Lakshadweep, while the Urban Development Ministry came out with such rules for the National Capital Region of Delhi.

The other states and UTs will have to come out with their own rules.

Looking for a house? Here are 10 ways Rera makes life tough for realtors
Separate accounts for each project

Rera makes it mandatory for the promoters to deposit 70 per cent of the unused fund collected for a project in a separate bank account. Such funds can only be used for the purposes of construction and land cost

Required to pay compensation


Developers are required to refund or pay compensation to the allottees with an interest rate of State Bank of India’s highest marginal cost of lending rate plus two per cent, within 45 days of it becoming due. Interest rates are expected to range anywhere around 11-12 per cent

Compulsory registration of projects

The Act provides for mandatory registration of all projects with the Real Estate Regulatory Authority (Rera) in each state. Real estate agents who intend to sell any plot, apartment or building should also register themselves with this authority. Every project, measuring more than 500 square metres or more than eight apartments, will have to be registered with Rera

Punishment for delay

Under the clauses of the Act, in case of delay in transferring properties to buyers, the Real Estate Appellate Tribunal has the power to intervene and levy fines on developers within 60 days. The maximum jail term for a developer who violates the order of the appellate tribunal is around three years, with or without a fine.

Real estate agents will have to pay a fine of Rs 10,000 for violating any provisions of the Act, for each day the violation continues or face imprisonment of up to one year

No changing of building plans in the middle of development

The Act prohibits a developer from changing the plan in a project unless two-thirds of the allottees have agreed to such a change.

What is RERA and how it could change your home buying experience

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Re: Indian Real Estate Sector

Postby Singha » 01 May 2017 10:47

Some states like karnataka are dragging their feet on notifying rera. Bjp ruled states andhra and odisha have done so.

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Re: Indian Real Estate Sector

Postby arshyam » 01 May 2017 10:59

^^ Didn't KA notify the act? I read an article in TNIE a few days ago where the RE developers were pressurising the buyers to take possession of unfinished flats before the act comes into force, so they can avoid paying the penalty. Why would they do that if the act wasn't taking effect?

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Re: Indian Real Estate Sector

Postby rahulm » 01 May 2017 11:01

Haven't some BJP states diluted the provisions to favour builders ? Sad.

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Re: Indian Real Estate Sector

Postby JayS » 01 May 2017 12:45

All the state gobermints have tried to favor the builders. Its a big mistake to keep the Regulatory power in State's hands. Central government has taken cognizance of the dilution done by many states including those of BJP. Even if Central government enforces strong rules on states, finally the regulatory authorizes will be kept toothless. Central government should have gone for a pan-India Reg body like RBI or SEBI.

But even after doing all this, the decisions/fines by such regulatory bodies are taken to the courts and are kept on stay indefinitely. I read so many times how NGT or CCI or some other body fined huge amounts big builders. But I never heard anyone actually paying a penny. Having laws and all is fine but if there is not gonna be any enforcement then its being back to the square one.

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Re: Indian Real Estate Sector

Postby sankum » 02 May 2017 06:43

The economics of scarcity since Independence have cost us 30years of lack of development of 70 years. Our builders work on 50% margin. Will this change that quickly?

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Re: Indian Real Estate Sector

Postby chetak » 02 May 2017 07:03

JayS wrote:All the state gobermints have tried to favor the builders. Its a big mistake to keep the Regulatory power in State's hands. Central government has taken cognizance of the dilution done by many states including those of BJP. Even if Central government enforces strong rules on states, finally the regulatory authorizes will be kept toothless. Central government should have gone for a pan-India Reg body like RBI or SEBI.

But even after doing all this, the decisions/fines by such regulatory bodies are taken to the courts and are kept on stay indefinitely. I read so many times how NGT or CCI or some other body fined huge amounts big builders. But I never heard anyone actually paying a penny. Having laws and all is fine but if there is not gonna be any enforcement then its being back to the square one.


especially the BJP states have made modifications to the act, exempting many many projects on very flimsy grounds.

Also I hear that flats will be now be sold like FMCG products and prices will be jacked up for every "amenity" like clubhouse extra, maintenance management extra, swimming pool extra (what effing swimming pool?? It doesn't contain enough water to even wet your oysters!!) meaning that anything except the roof over your head will be extra and will put the flat in the "premium" category giving a huge chance for the builder to jack up his prices.

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Re: Indian Real Estate Sector

Postby shravanp » 02 May 2017 07:19

My cousin in Mumbai had bought an apartment a mid-high rise (~20 floors) which was under construction. It got a stay order and construction has been halted. It's been close to 8 years and builder keeps promising that it will be done next year. Will this bill help such people in restrospect?

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Re: Indian Real Estate Sector

Postby JayS » 02 May 2017 18:09

shravanp wrote:My cousin in Mumbai had bought an apartment a mid-high rise (~20 floors) which was under construction. It got a stay order and construction has been halted. It's been close to 8 years and builder keeps promising that it will be done next year. Will this bill help such people in restrospect?


In principle, the bill is suppose to cover such cases as well. But MH govt tried to dilute the rules. They have now agreed to make it more like it supposed to be. But I have not checked MH specific rules. But given there are legal issues here (stay from Court), I am not sure how the builder will be even able to get his project registered under RERA.

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Re: Indian Real Estate Sector

Postby JayS » 02 May 2017 18:20

chetak wrote:
JayS wrote:All the state gobermints have tried to favor the builders. Its a big mistake to keep the Regulatory power in State's hands. Central government has taken cognizance of the dilution done by many states including those of BJP. Even if Central government enforces strong rules on states, finally the regulatory authorizes will be kept toothless. Central government should have gone for a pan-India Reg body like RBI or SEBI.

But even after doing all this, the decisions/fines by such regulatory bodies are taken to the courts and are kept on stay indefinitely. I read so many times how NGT or CCI or some other body fined huge amounts big builders. But I never heard anyone actually paying a penny. Having laws and all is fine but if there is not gonna be any enforcement then its being back to the square one.


especially the BJP states have made modifications to the act, exempting many many projects on very flimsy grounds.

Also I hear that flats will be now be sold like FMCG products and prices will be jacked up for every "amenity" like clubhouse extra, maintenance management extra, swimming pool extra (what effing swimming pool?? It doesn't contain enough water to even wet your oysters!!) meaning that anything except the roof over your head will be extra and will put the flat in the "premium" category giving a huge chance for the builder to jack up his prices.


To their credit, they have atleast notified the RERA rules within deadline. Only some 13 states and UT had notified the rules last time I check. Other states didn't do anything. I am yet to see anything on KA's proposal. They were going to do it on 30April. KA govt was trying hard to exclude all projects started before 1st May. Anyways nothing better was expected from any state government. They are the reason for the mess in RE in first place. When I first saw a couple of years ago that Centre will only be issuing guidelines and its the states who will enforce RERA, I lost all hopes then and there.

Well, aren't flats charged premium for facilities already..?? If you buy apartment in BLR, you have to pay *premium* for things like club house, swimming pool etc. Other than direct charges like Club how membership fees, maintenance charges builders increase loading on the super builtup area to increase premium. You would easily be paying 30-40% premium for same carpet area apartment in same area for an apartment with lot of amenities compared to the no-frills apartments. Good thing with RERA will be that builder will have to mention all the component separately, which will reduce the hidden charges and would be easier for buyer to compared various properties.

Finally, the prices depend on demand. There are ample number of people who are ready to throw a lot of money to buy flats. And there are even more number of "investors" who are adding to the inflation of RE rates. These people help maintain high values and others have no option but to work hard to match those values if they want to buy a house at all.

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Re: Indian Real Estate Sector

Postby Suraj » 09 May 2017 12:20

$1.3 Trillion Housing Boom Set to Be India's Next Growth Driver
In a country where slums sit cheek-by-jowl next to palatial luxury -- including what’s been reported as the world’s most expensive private home -- India’s unhoused may soon become a more potent economic growth driver.

Prime Minister Narendra Modi’s drive to bring homes to the country’s 1.3 billion people, rising incomes and the best affordability in two decades will unleash a $1.3 trillion wave of investment in housing over the next seven years, according to CLSA India Pvt.

The firm expects 60 million new homes to be built between 2018 and 2024, creating about 2 million jobs annually and giving a tailwind of as much as 75 basis points to India’s gross domestic product. The volume of social and affordable housing will rise almost 70 percent to 10.5 million annually by 2024, exceeding the 33 percent increase in the premium market.

“The housing sector is at a tipping point and will be the economy’s next big growth driver,” Mumbai-based analyst Mahesh Nandurkar and his colleagues wrote in a note last week. “The catalyst is the government’s big push for an ambitious housing program.”

Image

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Re: Indian Real Estate Sector

Postby Sachin » 13 Jun 2017 14:00

x-posted from Nukkad
Sachin wrote:Was just scanning through the real estate advertisements (usually comes by truck loads on Sundays). In Bengaluru, the new trend seems to be not reducing the price, but offering "freebies" like Kitchen wood work, LCD TVs etc. etc. Is this an indication of the prices coming down?

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Re: Indian Real Estate Sector

Postby JayS » 13 Jun 2017 15:15

Sachin wrote:x-posted from Nukkad
Sachin wrote:Was just scanning through the real estate advertisements (usually comes by truck loads on Sundays). In Bengaluru, the new trend seems to be not reducing the price, but offering "freebies" like Kitchen wood work, LCD TVs etc. etc. Is this an indication of the prices coming down?


Seen such schemes previously as well in other cities, if not in BLR. But definitely this is to maintain per sqft rate high. The builders would rather give discounts in other ways than directly reducing the per sqft rate. I have seen some builders giving credit note for discount while keeping psqft rate same.

IMO this does not indicate any shift in prices overall. BLR RE market has more or less remained stagnant for few years now, leaving apart few pockets which have seen some appreciation. Also in my observation, there is only a small effect of demonetization seen on the apartment prices. Can't say anything on land prices though. Anyway the black money component for apartment was almost nil in BLR. But even resale prices are not seen to be going down much. In fact I expect the BLR RE to bounce back in next couple of years as the economy improves. But if IT goes down then it could have its own negative compensatory effect as well. But the sentiments I see in people around me are - "This is good time to invest in RE in BLR".

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Re: Indian Real Estate Sector

Postby Sachin » 13 Jun 2017 15:33

JayS wrote:Seen such schemes previously as well in other cities, if not in BLR. But definitely this is to maintain per sqft rate high. The builders would rather give discounts in other ways than directly reducing the per sqft rate. I have seen some builders giving credit note for discount while keeping psqft rate same.

IMO this does not indicate any shift in prices overall.

So can we assume that the sq.ft prices quoted earlier was really high (i.e profits were more), but today due to the circumstances the realtors have started giving the freebies? They could have done such things earlier too, but did not bother as there were gullible buyers who would buy and then spend another few lakhs decorating the house/flat?

And I do agree, at least in my part of the woods have seen apartment buildings just remain like skeletons for a long period of time. But these are small time builders (perhaps who just entered the scene too late).

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Re: Indian Real Estate Sector

Postby JayS » 13 Jun 2017 17:02

Sachin wrote:
JayS wrote:Seen such schemes previously as well in other cities, if not in BLR. But definitely this is to maintain per sqft rate high. The builders would rather give discounts in other ways than directly reducing the per sqft rate. I have seen some builders giving credit note for discount while keeping psqft rate same.

IMO this does not indicate any shift in prices overall.

So can we assume that the sq.ft prices quoted earlier was really high (i.e profits were more), but today due to the circumstances the realtors have started giving the freebies? They could have done such things earlier too, but did not bother as there were gullible buyers who would buy and then spend another few lakhs decorating the house/flat?

And I do agree, at least in my part of the woods have seen apartment buildings just remain like skeletons for a long period of time. But these are small time builders (perhaps who just entered the scene too late).


Such freebies are only 1-2% of the sticker price. My experience is one can get 2-3% discounts without much bargain easily. But if you have decent understanding of real value of property in certain area and can bargain hard, without falling for tricks of the developers, then you should be able to get up to 8-10% discount on sticker price. Giving some freebies is not a big deal for them. For them the cost of same thing is less than what an purchaser would pay since they get bulk deal rates. E.g. Modular kitchen which might cost an owner 1.5lakh, a developer can get it done in half the price if he gives contract for say min 20 of kitchens at a time. There profit margins are very high and this small dent in it if they get instant money is always welcome. Since having capital in hand NOW is most important thing for them. They get capital at much higher rate so 1-2% discount is nothing for them, if they can get money now instead of one month later.

It can be said some developers are taking some hits on their margins, but its not significant or as much as was expected, particularly after demonetization. But on the other hand there are some other developers like Prestige, Shobha which still very adamantly ask for higher and higher prices. And there are a lot of greedy investors who fuel them by giving them funds in pre-launch and launch phases as zero interest capital or some even take home loan where developer offer to pay interest until possession. Effectively big developers find ways to get cheap capital and thus can sustain longer even while maintaining large unsold inventory. They sooner or later find someone or other (end user) who think prices are going up and this is good deal at this rate.

I notice big builders and CREDAI is trying to create an atmosphere of confusion and fear regarding RERA saying that low-mid level developers will be wiped out completely and it will increase rate significantly due to cost to developers and shortage of supply. Blah blah blah. All fake. I always say, RE is biggest Ponzi scheme being run in India.

Majority of price hike is perceived. Big projects which are typically used as indicators start really low in pre-launch and keep increasing prices steadily until possession creating a illusion that prices are increasing always. This works well for developers-investors who make all the money, but results in higher prices for end-users. There is a system of developers, investors and brokers who maintain high perceived demand and fuel this frenzy.

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Re: Indian Real Estate Sector

Postby Sachin » 13 Jun 2017 18:02

JayS wrote: There is a system of developers, investors and brokers who maintain high perceived demand and fuel this frenzy.

A friend also had this to say; he bought a high rise in a Tier II city and was thinking of selling it. Till he decided to sell it, every one was talking about the 30%-40% margins he can expect to sell it. Chap also reworked his liabilities accordingly. But when it comes to the actual selling part, the expected rates came no where close. Every agent, prospective buyer had n number of reasons to happily slash down the price. Finally he got a margin of around 10%-15%. Then know a case of a chap who got a flat in a small town (Tier-III city, if it can be called that way). Got it for around 12 lakh, sold it of for 15 lakh.

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Re: Indian Real Estate Sector

Postby Theo_Fidel » 13 Jun 2017 22:55

so what happened to the Land acquisition bill. Not much in the news these days. Is it still 6x of market value?

From what I see the margins are fat for highly rated developers. For the rest the competition is cut throat, lot of shoddy materials and product being installed in 6-12-20 story buildings. Too often the location is worth more than the building, which needs to change.

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Re: Indian Real Estate Sector

Postby ShauryaT » 13 Jun 2017 23:14

Theo_Fidel wrote:so what happened to the Land acquisition bill. Not much in the news these days.
Each state is passing a version of the "dropped" central bill. The central law passed in UPA stays however assent is given to the state bill by a friendly center allowing the state provisions to override the central bill, where in conflict. Compensation levels by most states not being touched and in line with the current central law.

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Re: Indian Real Estate Sector

Postby Theo_Fidel » 14 Jun 2017 01:22

That suks.

So things not getting more affordable

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Re: Indian Real Estate Sector

Postby JayS » 14 Jun 2017 11:58

Sachin wrote:
JayS wrote: There is a system of developers, investors and brokers who maintain high perceived demand and fuel this frenzy.

A friend also had this to say; he bought a high rise in a Tier II city and was thinking of selling it. Till he decided to sell it, every one was talking about the 30%-40% margins he can expect to sell it. Chap also reworked his liabilities accordingly. But when it comes to the actual selling part, the expected rates came no where close. Every agent, prospective buyer had n number of reasons to happily slash down the price. Finally he got a margin of around 10%-15%. Then know a case of a chap who got a flat in a small town (Tier-III city, if it can be called that way). Got it for around 12 lakh, sold it of for 15 lakh.


Hi-rise projects are overhyped and a big component (~30-40%) of the price is based on perception. Its difficult to make money in short to medium term if you buy apartment in such project, unless you have invested very early in pre-launch or launch phase, which is again a risky investment. In fact MFs have given far far better return in 5yrs post 2012, than buying an apartment in a mature market like BLR. As an example, while the appreciation in cost of apartment in big projects is an upcoming are like Kanakapura road in South BLR, has gone up by mere 50% in last 5-6yrs, that too if you had booked early in launch phase. But if you compare completed apartments there is only 20-30% appreciation. In small-medium projects with not many amenities the appreciation is again in the ballpark of 20-30% as far as my observation has been. While if you had invested the same money in Share market you would have gotten 20% CAGR from any half decent equity fund. Of coarse share markets are more unpredictable. But even some of the bond funds have given >10-12% CAGR consistently.

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Re: Indian Real Estate Sector

Postby Vikas » 14 Jun 2017 16:00

I bought Appt in pre-Launch phase and now that the whole complex is complete and families moved in, The jump in price is hardly 25%. If you add my Registration charges and charges to get the interiors done, I would not make more that 10% at current rate.

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Re: Indian Real Estate Sector

Postby negi » 20 Jun 2017 17:41

^ Did you also buy on ORR ? Welcome to the winning team :)

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Re: Indian Real Estate Sector

Postby Singha » 20 Jun 2017 18:12

:mrgreen: :twisted:

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Re: Indian Real Estate Sector

Postby Sicanta » 12 Aug 2017 08:04

NCLT declares jaypee infratech insolvent : Here's what homebuyers should do

http://www.moneycontrol.com/news/busine ... 57269.html

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Re: Indian Real Estate Sector

Postby CalvinH » 12 Aug 2017 12:59

Sicanta wrote:NCLT declares jaypee infratech insolvent : Here's what homebuyers should do

http://www.moneycontrol.com/news/busine ... 57269.html

They are the largest land holders in Noida/GN/Yamuna Expressway region. Were a mid-sized (1000 Cr) EPC company in early 2000s before they started the debt fueled bing to branch out in Infrastructure sector and thermal power generation.

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Re: Indian Real Estate Sector

Postby CalvinH » 12 Aug 2017 13:06

Overall the RE sector in Noida/Greater Noida has been stagnant for past 2-3 years. If you bought property in GN 2009 onward the chances are that will be making a loss vis-a-vis a normal financial instrument such as a FD. If the scenario doesn't improve then it will just get worse.

Family own couple of GN Authority issued plots in prime sectors of GN and in a year the returns will start turning negative on those properties.

RE in these market is not showing huge downward trend because of lack of transparent information /data and use of partial cash in the transactions.

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Re: Indian Real Estate Sector

Postby disha » 13 Aug 2017 05:06

Sachin wrote:x-posted from Nukkad
Sachin wrote:Was just scanning through the real estate advertisements (usually comes by truck loads on Sundays). In Bengaluru, the new trend seems to be not reducing the price, but offering "freebies" like Kitchen wood work, LCD TVs etc. etc. Is this an indication of the prices coming down?


Exactly. A good indication on where things are headed.

Was looking into this thread to see effects of DeMo and GST and the above information proves my point. Thanks.

Coming to the above., what it indicates is that the interest for purchase is flagging., and with flagging interest there is lesser price competition and hence instead of placing a floor on the sale price - a flagging interest puts a ceiling on the sale price. From this point, the sale price is going to drop only. So the developer is throwing in goodies to increase the foot traffic and hopefully translating it into a sale and using that as a rising interest in purchase try to make the buyers compete and hence go into a positive cycle.

However something fundamental has changed in Indian Economy. There is a tight squeeze on slush funds. Anything above 1 Cr. shows up on the IT radar easily.

Given that the builders are resorting to freebies like kitchen wood work and LCD TVs now - and given that some of them are depreciating assets themselves (like LCDs) it means that the buyer interest will continue to flag and the builders have not yet come to terms with reality yet. They will continue to offer more and more freebies - better bathrooms or better elevators.

Now all of RE is location, location and location and in India's case - amenities, utilities and safety. So smart buyers can do some things., for ideal location instead of negotiating on price, negotiate on better amenities, utilities and safety if possible otherwise start negotiations on price.

I think the RE will be in slump for the next 2 years or so and will pick up., but again will pick up for reputed builders and for quality projects.

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Re: Indian Real Estate Sector

Postby srin » 13 Aug 2017 08:24

^^ 100% agree on ideal location. Many RE projects have bad/narrow approach roads, in a dumpy area with no nearby amenities (schools, hospitals etc).

What I've seen is that RE prices haven't come down, but they have stayed constant, so taking into account the inflation, they have come down in real terms. And going with decreasing interest rates and some regulatory cover in RERA, it will be a good thing to buy sometime in near future.
But, I still don't see the point of buying for sake of investments (as opposed to living in it). The rental yield is very low and price appreciation is getting iffy (for all above reasons).


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