Indian Real Estate Sector

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 28 Sep 2008 13:17

3250 for near ground floor or 11th floor. the lower floors got sold for around 1700-1800 range in 4Q04,
so thats still a 100% markup in 3.5 yrs.

KarthikSan
BRFite
Posts: 667
Joined: 22 Jan 2008 21:16
Location: Middle of Nowhere

Re: Indian Real Estate Sector

Postby KarthikSan » 28 Sep 2008 15:42

shyamd wrote: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.


There is still a quite a bit of space inside Coimbatore if you know where to look for. I agree with the speculation part. People in CBE have never been apartment dwellers. My 2 paisa on the whole thing. If you are going to invest your money then buy land even if it is outside city limits. Don't buy apartments in CBE. As long as there is textiles and engineering land will still sell in CBE.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 23 Oct 2008 19:59

big news boys - just in on TV!

UNITECH has defaulted on two installments of payment to Greater Noida Authority
(probably for their huge new project) to the tune of 150cr. a while ago we visited
noida and our friend there was lamenting he couldnt afford to buy into their proj
which was his dream - uniworld city at some 3500/sq ft+.
http://www.unitechgroup.com/projects/re ... ndex.shtml

GNA says they will be given some more time to pay up.

expect their stock to get slaughtered like a paki terrorist tomorrow morning.
it sank 14% today to 61, down from 546 around jan.

this was a biggie and like DLF I thought 'strong enough' to ride the whitewater.
well apparently not.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 23 Oct 2008 20:03

http://economictimes.indiatimes.com/Pro ... 567931.cms

Delayed home deliveries likely as realtors move to time-linked plans
7 Oct, 2008, 0305 hrs IST, ET Bureau

NEW DELHI: Several property firms, including DLF and Unitech, are increasingly doing away with ‘construction-linked’ payment plans and instead in
troducing ‘time-linked’ payment plans for home buyers.
By doing so, buyers become prone to higher risk of late delivery of homes, besides facing an indirect increase in the cost of owning a home.

In a construction-linked plan, a developer gets payment based on certain construction milestones, and is thereby forced to ensure progress in the project. Under time-linked plan, a developer gets assured money from a home buyer in instalments but is under no obligation to use that money in the same project to deliver homes in time. :((

It’s been a usual business practice for developers to divert sales proceeds from one project to another. During the real estate boom of the past five years, builders expanded massively by routinely using the proceeds of one project to purchase land elsewhere. :twisted:

Times have changed with the global financial crisis and realty
firms are now facing major cash crunch, which is likely to worsen. Therefore, if they were to divert funds from one project to another now, there is a likelihood that some projects may get stuck mid-way, leaving home buyers high and dry.

Much of the new launches by DLF and Unitech this year have not offered construction-linked payment plans.

For instance, DLF’s ‘New Town Heights’ and ‘Express Greens’ projects in Gurgaon and Unitech’s ‘Uniworld City’ and ‘Unitech Verve’ in greater Noida do not offer construction-linked payment plan, although they give time-linked plan option.

When contacted by ET, DLF and Unitech declined to comment on why they have replaced the option of construction-linked plan with a time-linked payment plan.

DLF spokesperson, however, said time-linked plan is “not a new introduction” for the company. Many other developers are offering time-linked as well as construction-linked plans.

Traditionally, home buyers have had the choice of either paying the full amount upfront or going in for construction-linked plan. Buyers can avail of a discount — usually up to 10% — in case of upfront payment, while construction-linked plan gives them a sense of security that the homes they have booked is actually getting built as they pay. But time-linked plan offers neither.

While some developers, including DLF and Unitech, have started offering penalty in case of late delivery, many others do not offer any such reimbursement. The penalty itself is generally Rs 5-7 per sq ft per month to the home buyer.

“The penalty amount is far too less compared to the rentals one pays for the same kind of accommodation,” says Raheja Developers chairman Navin Raheja.

Thus, a late delivery imposes additional cost on a home buyer in the form of rentals for the period one has to extend staying in a rented accommodation.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 23 Oct 2008 20:18

ET

Dark Diwali: Pink slips, pay cuts await realty staff
23 Oct, 2008, 1213 hrs IST, ET Bureau

NEW DELHI: It’s not going to be a happy Diwali for people working in the real estate industry. Even as sales failed to pick up this festive season, most realty firms including DLF, Unitech, Omaxe, Parsvnath and BPTP, now plan to lay off staff in significant numbers soon after Diwali.

While spokespersons of all these companies denied there were plans to cut jobs or salaries, executives in these companies told ET that job cuts were in the offing and salaries have been delayed in some of these companies.

“All real estate players, including us, will have to reduce manpower cost significantly if we are to survive in the current hostile market conditions,” says a top executive at a Delhi-based listed mid-size realty firm, which plans to reduce manpower by almost 20%. The job cuts will start happening soon after Diwali.

Executives at many other real estate firms also confirmed companies plan to offload people and a list of staff was being prepared, who would be asked to leave soon after the festive season was over. Developers are waiting for Diwali as they didn’t want to dampen sentiments further.

“Job cuts at Jet Airways became a big issue also because it was done before Diwali. Developers are wary of raking up any political controversy,” explained a senior executive.

Also, realty firms needed large number of sales staff for the festive season. But now that their price discounts or other freebies have failed to stimulate the home market, developers feel they can cut back on staff. The developers have already started easing off some staff. Many developers, including DLF, had already asked around a few hundred employees to leave.

And sources say more job cuts are in the offing at DLF, as construction pace slows and expansion plans are put on hold. Unitech, Omaxe, Parsvnath and BPTP too prepare to issue pink slips.

Salaries have been delayed at many mid-size and small realty firms, even as management is asking employees to take salary cut. Even though he denies salaries are being delayed or cut at his company, Parsvnath chairman Pradeep Jain supports the idea of salary cut.

“Employees’ salaries have risen so much in the past few years that I see no harm in reducing it a bit,” says Mr Jain.

“Salaries at the top management level have already started to come down. A number of real estate players are already renegotiating salaries with staff so that overall wage bill comes down and not many jobs are lost. Companies are preferring to retain the jobs of those capable of multi-tasking,” said Executive Access MD Ronesh Puri.

Employees at most real estate firms are in a state of panic as job loss fears mount. Too many resumes have been floating around in the market. “Earlier it was extremely difficult for a smaller developer like us to hire talent. Now we are flooded with CVs. Surely, people are being fired somewhere else,” says Ambience group chairman Raj Singh Gehlot.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 23 Oct 2008 23:37

I had blindfired a torpedo by dead reckoning onto uniworld city soon as the TV sonar
reading came in....now sonar room informs a satisfying boom and hull breakup noises
to confirm a hit.

IBNLIVE

New Delhi: Unitech, the country’s second largest real estate company, has defaulted on two payments on a housing project in Greater Noida in Uttar Pradesh.

Sources told CNN-IBN Unitech has not paid two installments worth Rs 150 crore to the Greater Noida Authority for the 100 acres it had purchased for its ambitious Uniworld City project.

The company is trying to reschedule the payment, but risks harming the land deal if it doesn't pay up, the sources say. The company insists the payment was stopped due to farmer agitation.

CNN-IBN Correspondent Nayantara Rai reports officials of the Greater Noida Authority understand that real estate companies have been hit by liquidity crunch and will be “understanding” to Unitech’s request.

DLF group chairman K P Singh says the financial crisis has hurt the real estate business, particularly “fly-by-night operators”.

“Good clients will pay up, but there are millions of developers who are fly-by-night operators. My feeling is that they will be in trouble and if they are in trouble they won't be able to pay up and they are going to default,” said Singh

Bade
BRF Oldie
Posts: 7212
Joined: 23 May 2002 11:31
Location: badenberg in US administered part of America

Re: Indian Real Estate Sector

Postby Bade » 24 Oct 2008 00:07

Maybe, it is time for realty guys to move over to panda class 5-10 lakh 2-bd units, where the demand really exists in India. Need a rethink on how such massive scale projects can be implemented cheaply without shortchanging safety aspects.

vsudhir
BRF Oldie
Posts: 2173
Joined: 19 Jan 2006 03:44
Location: Dark side of the moon

Re: Indian Real Estate Sector

Postby vsudhir » 24 Oct 2008 02:27

Bade wrote:Maybe, it is time for realty guys to move over to panda class 5-10 lakh 2-bd units, where the demand really exists in India. Need a rethink on how such massive scale projects can be implemented cheaply without shortchanging safety aspects.


Janapriya apartments in hyd comes to mind. These guys build these enormous mini-towns of about 500-1000 2BR flats within a compound wall, with security guard, street lights and central meetup/pandal/gossip place. And all reasonable too, <10L, IIRC. Thats where demand will not dry up in a hurry.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 24 Oct 2008 08:39

extra extra!

all 14 floors on part of a Prestige Shantiniketan in whitefield collapsed yesterday evening
for unknown reason. the floor slabs had been completed by the malaysian contractor.
front page in TOI today. took around 30 mins for the chain of
events to occur so the rest of them scurried to safety.

this is a premium 108 acre township+office+mall+5star radission hotel diagonally
opposite the ITPL

http://www.hindu.com/2008/10/24/stories ... 730100.htm

looking at the photo the building is pretty much useless now. has to be torn
down and rebuilt. feel sorry for the regular joe's like us who booked in that.
and the others in nearby buildings must be wondering how "strong" their
own are.

and prestige built the main campus of my co and forum mall apart from
so many landmarks here.

Sachin
Webmaster BR
Posts: 7411
Joined: 01 Jan 1970 05:30
Location: Undisclosed

Re: Indian Real Estate Sector

Postby Sachin » 24 Oct 2008 09:28

Singha wrote:this is a premium 108 acre township+office+mall+5star radission hotel diagonally opposite the ITPL

If this is the quality of workman-ship for a premium dwelling, cannot imagine what would be the state of the other not-so-premium apartment complexes. The Hindu also reports that the company has shipped all the workers etc. to an undisclosed location. After getting some basic treatent for the people injured (2-5 of them). :evil:

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 24 Oct 2008 10:04

the mistake was the support temporary pillars for the wet concrete roof not
enough or not fastened properly.

I would think the slabs are not strong enough to take the hammer blow
of the next one smashing down from 10ft high.

huge loss of face for prestige, loss of future business and financial
loss too. afaik they are a good company - their cmd is the son of a
fruit merchant in russel market area and worked his way up. also
runs a intl school called inventure academy iirc.

shyam
BRFite
Posts: 1453
Joined: 29 Jul 2003 11:31

Re: Indian Real Estate Sector

Postby shyam » 24 Oct 2008 10:25

How many new buildings can with stand a moderate earth quake?

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 24 Oct 2008 10:31

depends on the zone 1-5 std. assam,uttaranchal,J&K=5 which is the worst. BLR=1.

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

Postby vina » 24 Oct 2008 11:08

I think by law BLR buildings have to be zone 3 ( I think ) safe . All the builders put out some zone specs in their brochures.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 24 Oct 2008 15:08

as predicted, UNITECH loses 51% today.

its down 95% from its peak.

small timers are huring far worse and taken 20% interest loans from goondas.
many might 'disappear' or be 'forced into retirement', some will flee to HK, BKK or
Dubai and open grocery shops. as they arent listed we will never hear these
tales unless someone goes undercover like that phd guy did among chicago's
drug gangs.

Raj Malhotra
BRFite
Posts: 997
Joined: 26 Jun 2000 11:31

Re: Indian Real Estate Sector

Postby Raj Malhotra » 24 Oct 2008 16:54

My prediction, based on my personal knowledge of Delhi Prop market, a massive sub prime mortagage loans crisis is going to hit banks in Delhi. But it will be softpedalled and slowly adjusted in B/S in indian way.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 24 Oct 2008 21:34

DLF is trying to sell its new project in BLR bannerghatta road starting from Rs 2775/sq ft.
this unlike ORR is in the middle of nowhere and not at all easy to reach any itvity hub
from there.

the BMIC last km connection to bannerghatta road is stymied by a MP who owns that
patch of land (buses still go over this moonscape to reach the BMIC)

the new govt is laying lot of foundation stones and worshipping divine calves at temples
but in the trenches we smell the stink of ineffectiveness.

Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: Indian Real Estate Sector

Postby Vipul » 25 Oct 2008 18:47

With delivery of many projects upcoming in the next 2-3 quarters, property prices are going to be in a downward spiral.
moi is waiting for that moment to make some nice deals :mrgreen:
Lease rates at the BKC complex in Mumbai are quoting 30% down and nobody is commiting to renew at those rates.
Unitech is in deep trouble.Its negotiating very actively to sell stake in its Telecom arm to get the much needed funds.It claims to have spent 1.2 Billion $ on the investment so far, which is balooney as aside from the 1600 Crores on the lisence there have been no expenditure on setting up those towers(like all the new entrants its business model is to rent towers from the existing big 4 players).Most of the hot shots it had appointed to head the venture have since left.

Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: Indian Real Estate Sector

Postby Vipul » 26 Oct 2008 05:05

The Gimmicks have started:Buy a flat and get another flat, BMW, Merc free. :rotfl:

Hold on for now, there will be plenty of pickings for the patient Vultures hovering above.

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

Postby vina » 26 Oct 2008 06:55

Oh, these kinds of gimmicks have been on in Bangalore for more than a year now. There are offers of Get a house and get a car (from Swift to a Benz) "free" and a couple of gold coins and all the rest.

Problem is that the customer is not dumb enough not to realize that these "freebies" are actually coming out of his pocket and that if he wants a car he is better off going to a show room and picking one brand new, rather than give mucho dollaros to some shady real estate guy who will give him a car. The customer knows that he is paying for it!.

Again problem with too many MBA types thinking with their asses and not brains, like the ICICI Shah Rukh Khan ad.

Yeah, Shah Rukh Khan might be able to convince iggly giggly pimply faced school kids that Pesti (oops) Pepsi Cola is actually pesticide free and Amithab Bacchan that Wormsbury (oops) Cadburys doesnt give you any more free proteins of the worms kind than you actually pay for. However, that doesn't work for money and banks.. Yeah, you will smoke away like a Chimney , even if your cigaratte packat had grisly images of folks with cancerous lungs and throat and other things, but will run like the wind to withdraw cash from your bank if you feel that your money is under risk. :D

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 26 Oct 2008 09:06

throw in a house + 3 weeks unlimited time with a couple of supermodels and folks will bite.
a complimentary satin sheeted bed with all round mirrors and roof mirror also. a selection
of wines in the home bar and a huge marbled bathroom with tub and glass shower.

as always Mba's tends to think in textbook marketing terms and seldom outside the box. the
great ones are those who create their own rulebook and not seek template solns from case
studies.

sunilUpa
BRFite
Posts: 1795
Joined: 25 Sep 2006 04:16

Re: Indian Real Estate Sector

Postby sunilUpa » 27 Oct 2008 18:35

They should throw in a helicopter (in Bengaluru) or a yacht (in Mumbai), with the flat...for the price they are asking...

imho onlee.....

Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: Indian Real Estate Sector

Postby Vipul » 27 Oct 2008 20:52

These builders are really dumb if they think anybody is going to bite. Imagine buying a way Overpriced Bungalow in Lonavala to get free 1RK flat(the SuperBuilt-up variety) in Thane.

sunilUpa
BRFite
Posts: 1795
Joined: 25 Sep 2006 04:16

Re: Indian Real Estate Sector

Postby sunilUpa » 27 Oct 2008 21:09

Vipul wrote:These builders are really dumb if they think anybody is going to bite. Imagine buying a way Overpriced Bungalow in Lonavala to get free 1RK flat(the SuperBuilt-up variety) in Thane.


Read it the otherway around...free bunglow in lonawala, if you buy 1rk flat in thane..much more practical... :rotfl: :rotfl: :rotfl:

Satya_anveshi
BRF Oldie
Posts: 3532
Joined: 08 Jan 2007 02:37

Re: Indian Real Estate Sector

Postby Satya_anveshi » 28 Oct 2008 02:51

Are they also giving super models stay in your flats optionally (not that I can dare but mind works in strange ways) :P ?


Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 31 Oct 2008 09:01

Trump is having trouble finding the cash to complete his 90 storey
chicago proj. his venture that brigade/residency road
tower may not happen - he is not in much work outside conus if at all.

btw did you know the maintainence fees for Mantri Altius on cubbon road is 50K/pm ? and TOI named plenty more with 15-25k
fees. amazing.

Altius - one flat on each floor ... around 5500 sq ft/flat allegedly.
they are not even showing the interior floor plans.

http://propertybytes.indiaproperty.com/?p=527

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

Postby vina » 31 Oct 2008 09:19

Singhaji, the rental for the villas that was splashed so prominently in TOI(let) is all bound to head southwards. No two questions about it. Those are "yesterday's" prices. When the prices come up for renegotiation, you will see huge cuts.. There are 4 penthouses in my apt complex with roof top jaccuzis/individual mini pools and I see posted in June/July (the school end time) about an "expected" rent of Rs 1.25 lakh per month (onree thank you). Of course that thing was vacant for a long time before sense dawned on the owner.

For eg, my wife's big boss has a villa in "strategic cross roads", Pindi Cantt, San Diego, a big "villa" fit for an uber jarnail. The thing is complete, but it is not renting out . In fact from what I hear, Pindi Cantt being still under construction and no "community" yet is nowhere as desirable yet as the other sister complex in Islamabad Whitefield. Pindi Cantt is going to take atleast 5 more years to get "desirable" and given uncertain market conditions , who knows.

The guys who are raking it in with top hedgefund like 30 to 35% returns and massive capital appreciation are the guys in Islamabad/Whitefiled. I know folks who put up 40 lakhs back in 98/2000 for a jarnail level villa (yeah, back then, that was a mind boggling sum anyways , but those guys were cashing out IT/Vity stock options).. Now those villas are worth 4 to 5 crores and are renting out at Rs 3 lakhs a month.

Point is, it is impossible to duplicate Islamabad's success at Pindi Cross Roads, despite the builder quoting the 1000 % or 10000000000% return at Islamabad.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 31 Oct 2008 09:31

these obscene rentals are all driven by expats on fat 'hardship' pkgs
that inflate their salary. I have a feeling with significant coporate
belt tightening, the fat crooks-in-charge might see a reduction in
these philly cream cheese topped packages. ofcourse it will be among
the last to be cut, riff-raff like trench troops will suffer first like no
free paper cups, reduced toilet paper in restrooms, less frequent
cleaning of cubes, fused bulbs not replaced....

I'bad does have the adv of being completed and "community" (snotty
as it is, filled to the brim with bideshi passports) ... I will only
inhabit a jhuggi cluster on the fringes of rawalpindi cantt, so no
worries there. if the cantt burns we will go in and loot, if it doesnt
we can still snarl our defiance from the sidewalk and throw rocks
at their triple glazed windows. we have the high ground and can melt
away into bajaur if need be.

I would dearly love to see the fatcat expats put on indian payscales
for the time they are posted here. most are not even worth that
much, atleast the desi guy works his a$$ off to please his bovine gora overlords.


Nayak
BRF Oldie
Posts: 2553
Joined: 11 Jun 2006 03:48
Location: Vote for Savita Bhabhi as the next BRF admin.

Re: Indian Real Estate Sector

Postby Nayak » 10 Nov 2008 10:12

Even freebies failing to push house sales

http://www.expressbuzz.com/edition/stor ... 20property

A highrise apartment block (File photo)
IANS
First Published : 09 Nov 2008 02:03:00 PM IST
Last Updated :

NEW DELHI: Even freebies like Mercedes, BMW and gold medallions are failing to lure home buyers this season, resulting in a 50 percent dip in purchases in both premium and mid segments, with experts predicting distress sales in six months.

The high cost of home loans, land acquisitions at high prices, a dip in demand from non-resident Indians and the general liquidity crunch are also compounding the woes of realty majors, the experts added.

"It is not that demand has declined," said Santhosh Kumar, deputy chief executive officer of Jones Lang LaSalle Meghraj, a global real estate consultant and brokerage firm.

"There is a lot of demand in the middle segment but the prices quoted by developers are very high," Kumar told IANS.

In places like Lucknow and Meerut, he said, realty developers were quoting as much as Rs.4 million/Rs.40 lakhs for mid segment housing which was quite unrealistic.

"Sales are just not picking up. Compared to last year, the figure has gone down by 50 percent, even when they are selling at 20-30 percent below the earlier market prices," said Punit Saxena of the real estate consultants Axiom Estates.

"This is alarming. If the situation doesn't improve, there could be distress sales in six months."

According to Anil Chawla, private equity head with the $36- billion investment firm D.E. Shaw and Company, India's realty industry was heading for a slowdown much before the current economic slump.

"Increasing demand had pushed up prices with speculators and investors jumping in to inflate the market. Eventually the situation became grim as speculators withdrew and buyers refused to pay unrealistically high prices," Chawla said.

Developers, however, blamed the high home-loan rates for the situation.

"Certainly with interest rates at an all-time high, the middle-segment people cannot afford to buy new homes. I feel that the prices must be reasonable enough. Builders cannot just quote anything," Kumar said.

"In next six months the market will see a price correction up to 40 percent. There is no other way out," he said.

"Due to a liquidity crunch, the entire real estate industry looks to be in depression. As the people's perception has completely changed and they expect further price reduction, there is a tremendous sale reduction."

Anand Gupta, general secretary of the Builders Association of India, said people had also stopped buying since they expected prices to fall.

"As the people's perception has completely changed, they expect further price reduction - there is tremendous reduction in sales," Gupta said, adding: "Due to the liquidity crunch, the entire real estate industry looks to be in depression."

"Almost 90 percent of home-buyers take the home loan route," said Rohtash Goel, chairman and managing director of leading real estate firm Omaxe.

"As home-loan interest rates shot up, potential buyers also kept away. In the case of residential property, the rate of interest went up so high that it is keeping buyers at bay," he added.

"We hope softening of interest rates will bring some relief to our sector," Goel told IANS.

Companies like DLF, which reported a fall in profits during the second quarter of this fiscal, have also sounded the alarm bells.

"Real estate continues to face tight monetary conditions that has had an impact on the sector. If restrictive conditions continue, we expect the industry outlook to weaken further," the company said in a statement.

For the premium segment, the main worry is over loss of interest among non-resident Indians (NRIs), who had fuelled the boom in the past few years. And incentives like Mercedes cars and gold coins have not helped.

"The NRIs, who were potential targets for the high-end segment, are just not interested in the same numbers," said a senior executive of Jaypee Green, requesting anonymity. "Developers are going for fancy freebies but it has failed to attract them."

rohitvats
BR Mainsite Crew
Posts: 7633
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: Indian Real Estate Sector

Postby rohitvats » 10 Nov 2008 15:16

1. This lowering of interest rates is not going to help the realty sector. There are multiple factors leading to the purchase decision and the consequent boom in the residential prices. The present capital values are no way sustainable and any such measure will not help.

2. What has happened in the residential segments is that developers have taken totally wrong cues from the market. This was how it played out. A builder builds say 100 apartments and launches them at 1800-2000/sft price. 60%-70% get sold in the initial phase and the developer jacks up the price for the balance apartments. 60-70% of the balance also gets sold out but at a slower pace. The price reaches 2600-2800/sft territory. Mind you, there are investors also in this category. And the last few (10-15%) of the apartments are quoted at 3000/sft mark. The developer can hold on to this price as he has already made money and is in no pressure to sell.

3. Now sample this. The phase one was made on a land parcel which was/is historically owned. The land cost in practically zero. The developer was making a killing at 1800/sft. His margins of profitability are such along with prior rapid sales that he is under no pressure to sell the remaining flats in hurry.

4. The developer assumes the market will pay higher price (3000/sft bracket) and launches the next phase. Now the land has to be brought afresh at new prices (assuming he does not have more land). The land cost can be easily up to 30% of the total project cost. Add to it the sharp rise in the prices of raw materiel. The profitability margin, though still high, is no where as close as before. On top of it he launches at a price which is beyond the bulk of buyers. And hence, slow sales and delay in projects.

5. The affordability for a buyer has taken huge it. The salaries haven’t gone up (the IT-Vity folks can help me here), the interest rates have risen along with the capital values of the flats. For example, assuming a person is willing to pay 45% of his salary as EMI on home loan, for a 1200sft flat @ 3000/sft the capex is 36lakhs. Add another 15% misc cost and total capex is 41lakhs. Home loan @80% of the capex is 32lakhs. EMI @10% will be approximately 30,000/month. So to afford 30,000/month EMI a family’s take home better be 68,000/month. Now how many families earn this much?

6. It is this commonsensical thing that these idiots do not seem to be understanding. The apartments are simply unaffordable. The guy who bought an apartment in Marathalli in 2006 can’t buy it again in 2008.

SRoy
BRFite
Posts: 1840
Joined: 15 Jul 2005 06:45
Location: Kolkata
Contact:

Re: Indian Real Estate Sector

Postby SRoy » 10 Nov 2008 19:13

rohitvats wrote:5. The affordability for a buyer has taken huge it. The salaries haven’t gone up (the IT-Vity folks can help me here), the interest rates have risen along with the capital values of the flats. For example, assuming a person is willing to pay 45% of his salary as EMI on home loan, for a 1200sft flat @ 3000/sft the capex is 36lakhs. Add another 15% misc cost and total capex is 41lakhs. Home loan @80% of the capex is 32lakhs. EMI @10% will be approximately 30,000/month. So to afford 30,000/month EMI a family’s take home better be 68,000/month. Now how many families earn this much?


Your basis of analysis is wrong. Do you think IT folks will jump in and began buying at inflated price if they get a 100% salary hike today?

The go / no-go in purchases is affected by other factors. What good is a salary rise if one is not sure of a livelihood in next 5-10 year time frame ?

IT salary is quite okay/normal, real estate prices needs to be realistic.

I hope real estate crooks continue with this kind of assessment and keep on lobbying for lowering all sorts of interest rates. The imagined buyers will never turn up, I'll be happy to see some of these greedy crooks ending up shooting themselves or jumping off the high rises they've built.

SaiK
BRF Oldie
Posts: 36302
Joined: 29 Oct 2003 12:31
Location: NowHere

Re: Indian Real Estate Sector

Postby SaiK » 10 Nov 2008 19:23

real estate pricing is abnormal with Indian context, since the majority of land grabbers and profit makers are high tech industries and black marketing politician clouted and industrialists.

where is the real estate market heading for the middle class. that will largely drive the economy to stability. bangalore is totally expensive, at large.. and its being replicated to other states as well. this is insane. i wish a 50% fall in the land prices.

one earth quake (not that i wish), will throw open this idiocy to clarity... none of the bricks in bangalore can handle a >7 richter.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 13 Nov 2008 15:31

it maybe Unitech is unable to repay HDFC debt and the bank is doing a 'soft'
foreclosure to save some face for Unitech?

http://economictimes.indiatimes.com/New ... 706403.cms

Unitech puts Delhi office on block
13 Nov 2008, 0223 hrs IST, Sanjeev Choudhary & Ravi Teja Sharma, ET Bureau

NEW DELHI: India’s second-largest property firm Unitech has put on the block its 2-lakh sq ft office at upmarket Saket in New Delhi. Market buzz
suggests Unitech is in talks with HDFC to sell the property.

Both Unitech and HDFC admitted the property was on the block, but refused to confirm the deal. “I cannot confirm till we sign a deal,” Unitech chairman Ramesh Chandra said.

HDFC joint MD Renu Sud Karnad said Unitech wants to sell the property but HDFC was not interested in buying it. She said the Saket property was mortgaged with HDFC as collateral for the Rs 30 crore her firm had lent to the real estate developer. HDFC has a much larger debt exposure to Unitech, said Ms Karnad.

But a Unitech executive told ET that HDFC had agreed to buy the Saket property for Rs 450-500 crore and a formal agreement is likely to be signed by the end of this month.

Most real estate firms have been facing a severe cash crunch as sales have slowed down and credit has become tight. With the crisis deepening in the real estate space, rating agencies have been downgrading realty firms.

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

Postby vina » 13 Nov 2008 20:41

Singhaji.. Unitech is covering echhandee onree. The talk is that the FMPs and Mutual Funds are in trouble to a large part becuase they loaded up on debt paper from the real estate firms. It seems that many top firms including top 3 have defaulted on their paper and FMPs are liquidating their holdings , given the huge redemption pressure. Of course there is no market there. Now I am sure they defaulted on the secured holdings and the banks are calling in their collateral and auctioning it off. Of course, the reality will hit the realty guys like Unitech when the see the final price at which that thing gets sold. (which I am sure in this environment will be a deep mark down).

I dont know about how exactly real estate works. But applying general mark to market principle, the land bankers will have to write down the value of their land banks, because this is a material asset impairment based on market prices. What will happen to their valuations (already beaten down) will become clear after that.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 13 Nov 2008 22:13

most are 90% down in stock price from peaks. whatever happens, the downside on
that front is limited. but ability to attract future funding on land bank valuation math will be severely restricted.

rohitvats
BR Mainsite Crew
Posts: 7633
Joined: 08 Sep 2005 18:24
Location: Jatland

Re: Indian Real Estate Sector

Postby rohitvats » 13 Nov 2008 22:16

@Vina: There are two main methods for valuation of the land parcel: (A) Sales comparision: where the value of the land is based on the sale price of comparable land parcel (B) DCF method: where the residual value of the land is calculated after after undertaking a development feasibility study (if the land can be put to a particular use only/developer has his own plans) or a Highest and Best Use analysis where all the options as permitted by the development regulations are evaluted. This (B) is the favorite of the PE funds when they take stake at SPV level.

As for land prices going down, again its far more complex. The land banl guys who've bought land during the peak are the ones under great pressure. As for the guy with hbistorical land parcels, he is in no hurry. The big difference between the RE market and stock market is the lag effect in the RE market. The trends take a time to get reflected and can take anything between 6months to 1-1/2 years.

Another news which Singha's RADAR seem to have missed is the sale of premium land parcels in Mumbai by HDIL. Another sure shot sign of the companu facing liquidity crunch

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 15 Nov 2008 08:00

I think the "historical land bank" guys would be the top politicians and fumble harmer types?
only they would have the clout and 'contacts' to buy up entire villages worth of land.
then big builders would form a backdoor JV with such deep pocketed promoters and formally
launch their project after 'buying' the land for the book keeping purpose?

meantime, Phalcon1 to Vina1....TOI reports that SOBHA has officially dropped their prices
by 8% on all their properties in Blr. for instance Sobha Dahlia, one of their new super-luxury
props being sold at 3750 is down by 8%.

I think its the start of the ebb tide....things could be 30% down for flats before this ends.

---
Sobha’s Rs 2,000 crore Gurgaon project deferred
Pooja Sarkar & Vivek Seal
Saturday, November 15, 2008 02:46 IST

MUMBAI/ NEW DELHI: Sobha Developers Ltd, the Bangalore-based realtor which dominates south India’s premium residential segment, has delayed its ambitious Rs 2,000 crore project in Gurgaon.

In October 2007, Sobha had announced entry into north India through a consortium with QVC Realty, the realty arm of IL&FS, and Chintels India, a north-based local developer. While Sobha was to be the lead developer, the 192 acres in Gurgaon on which the project was to come up, is owned by Chintels. A senior official of the consortium, who did not wish to be named, confirmed the delay.

“It might now start in June 2010 because getting funding and licences is becoming difficult,” the official said. “Sobha is likely to sell a minority stake to a private equity player to bring in money for the project,” the official added.

But Sumit Keshan, chief financial officer, Sobha, said since the project has not been launched yet, “there is no way you can say it has been delayed”. Keshan said Sobha is conducting a feasibility study and gauging demand for the project. “Once we assess that, we will put in the money,” he said. Keshan also denied seeking private equity funding “right now”.

The consortium was to develop an integrated township in Sectors 106 and 109 in Gurgaon. Chintels and Sobha were to develop a group housing project on 72 acres in Sectors 108 and 109, where the developable area is 5.7 million square feet.

Sobha paid token money to Chintels for land acquisition, the unnamed official belonging to the consortium said. Though the consortium has received letter of intent from Haryana, it had not yet received the licences to develop the township. Sobha had told analysts last year that the Gurgaon project would be launched in the first quarter of the current fiscal.

Later, it pushed the date to the third quarter, but if sources in the know are to be believed, the project has long way to go before it sees light of the day. “Sobha’s cash flow position is very strained for it to be able to bring in private equity contribution right now. Their Chennai project launch, which was scheduled for last quarter, has also been delayed. Sobha has revised the launch of the Gurgaon project to the first quarter of next fiscal, but it is very unlikely they will be able to do it. Nobody is ready to fund in these times,” said an analyst with a local brokerage.

Singha
BRF Oldie
Posts: 66607
Joined: 13 Aug 2004 19:42
Location: the grasshopper lies heavy

Re: Indian Real Estate Sector

Postby Singha » 15 Nov 2008 08:03

rumour on street is Prestige is also facing a cash crunch. shantiniketan is delayed for sure.
and tremendous h&d loss due to that collapse.

but I guess cash crunch is true to for every builder without exception. only Confident Group
has taken out ad saying they are debt free and have no liquidity issue hence. they are busy
in small projects on sarjapur side including some completed villas near sarjapur circle.

stock market is claiming victims among common people. a family friend of ours had kept
all his money in stocks and traded actively. missed the signs of imminent fission initiation
and is reported in deep depression and mental torture. like any other joe, I too got my butt
spanked on MF front but atleast I have other money in cash, property etc being a more 'cautious' type. the good MFs I had are down 30-40% below by avg buyin price and the risky ones (that gave massive returns earlier) are down 70% :((


Return to “Technology & Economic Forum”

Who is online

Users browsing this forum: No registered users and 13 guests