Office Rentals Crash Across The Board

Grade - 1 Office rentals have crashed in Q4 2008 across India. Noida and Mumbai saw the highest fall while Bangalore and Kolkatta have seen the least, but they have corrected. The following chart shows Office Rentals / Month in INR across various Indian cities.
Source: Goldman Sachs property report

Tags: Office Rentals, Commercial Property, India Real Estate, Real Estate

More Affordable Housing Projects

Last week we broke the news about Affordable Housing in Mumbai - Part -1 and Part -2. Today we have more inputs on the affordable housing projects in Bangalore, Chennai, Delhi NCR, Hyderabad, Kochi and Ludhiana and Pune. All prices in Rs / sft

Affordable Residential Apartments in Bangalore:
Brigade Jasmine Bangalore J P Nagar Rs 3090
Golden Gate Properties The Commune Bangalore Banashankari Rs 2200
DLF New Town BTM Extn Bangalore Bannerghatta 2775

Affordable Residential Apartments in Chennai:
Puravankara Provident Cosmo City Chennai near Siruseri IT Park Rs 1722
Indiabulls Real Estate Indiabulls Greens Chennai Off OMR Rs 2700
Alliance Group Orchid Springs Chennai Anna Nagar Extn Rs 3199

Affordable Residential Apartments Delhi NCR:
Omaxe Panache Homes Palm Greens Greater Noida Sector Mu Rs 2500
Omaxe Panache Homes Royal Residency Ludhiana Pakhowal Road Rs 2700
BPTP Park Serene Gurgaon Sector 37D Rs 1995
Vatika Group Vatika Lifestyle Homes Gurgaon Sector 84 Rs 2554
Bestech Group Park View Residency Gurgaon Sector 23 Rs 3654
DLF New Town Heights Gurgaon Sector-90, 91 & 86 Rs 2250
DLF Express Greens Gurgaon Sector 1 Manesar Rs 2350

Affordable Residential Apartments Hyderabad:
Golden Gate Properties The Commune Hyderabad Tellapur Rs 2200
Indu Projects Indu Skies Hyderabad Shamshabad Rs 2100
JMD Group Grandeur Hyderabad Kothur Rs 2778
DLF Lake District Hyderabad Kokapet Rs 3143
DLF Hyderabad Kompally Rs 2800

Other cities:
Gera Developers Park View 1 Pune Kharadi Rs 2550
DLF New Town Heights Kochi Kakkanad Rs 2500
Omaxe Panache Homes Royal Residency Ludhiana Pakhowal Road Rs 2700

Greed in Stocks Destroy Traders Investors Wealth

The Investors / Traders Greed for Indian Real Estate stocks has destroyed their portfolio as the famous theory of Radio Active Decay applies to investing in this sector. We have actively covered how stocks have fallen Month over Month and the following screen shot [expandable image] of Live prices is a proof :-)
Real Estate in India is dominated by Shady people of the society - Politicians, Bureaucrats, Black Money Businessmen etc. The forthcoming election is seen as a strong chance for Realty Developers to lobby with the Government asking for doubling of income tax rebate on home loan interest to Rs 3 lakh from Rs 1.5 lakh, hiking the limit of income tax exemption on rentals from 30% to 50%. Apart from enjoying an infrastructure status, further demands of realty sector is under consideration of finance ministry.

Even if the government does what is lobbied for the demand in Indian Real Estate will not pick up immediately. When cash rich companies like Microsoft are firing employees to face the slowdown, Indian employers are under tremendous pressure and hence employees, the ultimate consumers of real estate will stay away. Indian IT is the Worst Employer in 2008 according to FreePress India.

What about Black Money local businessmen, won't they com forward to invest ? No not immediately because Developers have jacked up the prices to such an extent that RoI even for these businessmen is not seen viable.

Affordable Housing or lowering the prices by further 25% is the only solution to this problem. Otherwise, soft corner from RBI Governor will create a mini sub-prime bubble of Real Estate Developers in India if it fails to recover the loans given by Banks to these Shady / Greedy Developers [After all, its our Deposits which the bank has lent]

Mumbai Affordable apartments - Part -2

Yesterday we covered some affordable homes being developed in Mumbai. As promised here are more developers we have spoken to and are developing affordable homes.

Dharti Associates Sai Dham Complex Kandivali (W)
2 BHK 60.00
3 BHK 81.00
Evershine builders Evershine Classique Vasai (E)
2 BHK 22.47
3 BHK 30.35
Mantri Realty Mantri Park Dindoshi, Goregaon (E)
1 BHK 57.23
2 BHK 40.40
Greencourt Developers Greencourt Developers Orchid Vasai (E)
1 BHK 16.53
2 BHK 24.22
Mayfair Virar Gardens Vasai (E)
1 BHK 13.61
2 BHK 17.98
1 BHK - Ready possession 17.50
2 BHK - Ready possession 23.20
Rustomjee Evershine Global city Virar (W)
1 BHK 13.30
2 BHK 18.60
3 BHK 30.00
4 BHK 56.00
Kalpataru Srishti Sector Mira road (E)
2 BHK 46.93
2.5 BHK 42.48
Arrow Arrow City Manhattan Pen, MMR
1 RMK 5.80
1 BHK 9.75
2 BHK 12.40

Do let us know if you book with any of these developers, your experience. This will help many others as well. Thanks and Good Luck.

Unitech, Haryana govt spat over land for SEZ

Realty major Unitech, which is in the midst of a financial crisis, has blamed the Haryana government for lack of support in land acquisition for its Rs 22,000-crore special economic zone (SEZ) at Sonepat. The government's attitude has led to the project being put on the back burner, the company added.

On the other hand, the Haryana State Industrial and Infrastructure Development Corp (HSIIDC) has countered the accusation stating that the company has not shown any serious interest in acquiring land since the formation of the joint venture two years ago.

Unitech, in an alliance with HSIIDC, had announced setting up an SEZ in Sonepat on over 10,000 acres of land, proposed to be developed in four phases.

HSIIDC had 10% equity in this project and it had to acquire up to 25% of the land for maintaining the congruity of the project.

Affordable Housing in Mumbai

As most of you must be looking for Affordable Residential Apartments/ Housing in Mumbai, our team has managed to get the prices from various builders for Affordable Housing, most of them less than 25 lakhs for 2 BHK.

Here is the complete list, [all prices in Rs Lakhs]
Chauhan Group Chamunda Classic Dahisar - Mira road
1 BHK 24.00
2 BHK 38.96
3 BHK 46.75

Sanghvi Group Sanghvi Nagar Mira road (E)
1 BHK 17.55
2 BHK 21.75
Sanghvi Complex Mira road (E)
1 BHK 15.79
2 BHK 17.41
Sanghvi Park Mira road (E)
1 BHK 13.99
2 BHK 22.49
Sanghvi Valley Thane - Kalwa (W)
1 BHK 19.99
2 BHK 28.99
3 BHK 40.99
Shankheshwar Nagar Dombivli (E)
2 BHK 15.99
Sanghvi Nakshtra Nasik
1 BHK 13.44
2 BHK 16.00
3 BHK 24.90
Sanghvi Nisarg Lonavala
1 BHK 14.41
2 BHK 21.75

Stay tuned we are also talking to various other developers and we will update it shortly. Good Luck for your dream home.

FDI accepting realtors may be barred from non-FDI compliant projects

The impotent central government has finally got some guts to stand up, but against its own businessmen as it will not not allow real estate companies, which have accepted foreign direct investment (FDI) to continue keeping projects that are not compliant with new FDI norms.

As per the norms, FDI is allowed in real estate projects involving housing, Information Technology (IT) parks, hotels & resorts and integrated townships. Projects like shopping malls, etc are not allowed to accept FDI. In this wake, developers that have both types of projects and if they are accepting FDI, they may have to let go the projects that are not in the FDI permissible list.

The issue was taken up by the Foreign Investment Promotion Board (FIPB) and has been referred to Department of Industrial Policy and Promotion (DIPP). One of options for realtors may be to set up n special purpose vehicle (SPV), which can manage the projects where FDI is not allowed. The matter is now pending with DIPP and a decision is expected soon.

Delhi NCR Market Condition Worsens

The recent rate cuts have failed to stimulate demand and transaction volumes have literally dried-up. There are almost no takers for luxury apartments and most buyers in the mid-income segment find homes priced above Rs4m unaffordable. Buyers are still in a wait and watch mode and are expecting prices to correct further. Many are willing to buy only at prices 20%-30% below what sellers are quoting today.

Prices in the resale market have fallen by up to 25% and could decline a further 5%-10%. Some small developers who have failed to start construction on their projects even 1-2 years after launch are being forced to refund money to customers. In such cases there are several instances of bouncing of cheques issued by developers and developers issuing post dated cheques (due after 1.5 years).

In some cases, where developers offered assured return schemes to buyers of their office / commercial properties, developers are borrowing funds from banks to pay the assured return promised by them.

Developers not paying commissions due to brokers for over a year and defaulting on installments due for land purchased at high prices in auctions are other instances of the severity of the liquidity crunch being faced by the real estate sector.

Breather to Textile, Jewellery SEZs Likely

India's special economic zones, believed to be the instrumental in forwarding India's success story to next level, are currently feeling the heat of global economic slowdown. To help them overcome the problems posed by changed economic environment, government is looking to give certain relaxations, primarily to those engaged in textile and gems and jewelery business.

Government may ease the restriction relating to foreign exchange earning which states that total foreign exchange spent by these units should be less than foreign exchange earnings, for 6-2 months. It may further allow such SEZs to sell part of their output in domestic market without paying customs duty.

These measures are being contemplated in wake of sharp decline in consumer spending in US and European Union, two largest trading partners of India. Government feels that by giving certain relaxations to these export oriented entities will help maintain employment in these industrial as well help halt the declining trend in exports.

Hiranandani's Merger Proposal Scam ?

Be it DLF, Unitech or Hiranandani all the Indian Realtors have to have shady practices since "Black Money" drives the Indian Real Estate.

We all know about the Satyam + Maytas Scam that rocked the country last week. In a Hush Hush Move, Hiranandanis were planning to merge Hirco Developments and Hiranandani Investment Companies with Hirco, which would have given the promoters a stake of 50% instead of 20%.

Colin Kingsnorth of Laxey Partners who holds 10% in Hirco said,

We were appalled by their proposal and it had no merits other than to the Hiranandanis. Earlier, in a letter to other shareholders, Laxey Partners had argued that the merger was shocking and ill-conceived.

Under severe pressure, Hirco announced that EGM scheduled for January 16 in Mumbai to vote on these proposals has been adjourned till further written notice. AIM Listed Indian Realty funds already has no takers and during such a time the promoters want to crate a scam, who will tolerate :-)

Home Buyers Press Exit Button with a Loss

It shouldn't come as a surprise to you that there is no protection for Home Buyers in India. You Zero in on your dream home and start your EMIs only to realize that there is no construction activity happening on the proposed site. You are at the mercy of the Realtor since the impotent and incompetent Government which lacks serious will to protect the consumer has turned a deaf ear despite several letters to the Ministry.

Todays ET is reporting that, DLF is under pressure from Buyers to begin work at one of the delayed projects in Delhi. The home buyer, a HNI has threatned to take the company to the court of law as he has already paid Rs 1 crore upfront. He said,

DLF is way behind schedule in their projects. It should either start work on the project immediately and deliver in time or return our investment with 15% interest.

Not everyone of us are HNIs and not everybody can knock the doors of he Indian courts. However, you can try the Consumer Court for speedy justice. [But most of the times the courts refers the case back to the Civil Court]

Unitech and Parsvnath are other pioneer Realtors in delaying the project. A Garment Exporter who has booked in Unitech's Grande project said,

I am paying Rs 4.5 lakh as EMI. Unitech executives say the project will be delivered on schedule, but there is no worker at the site

When he insisted for a refund, he was told that the company will cut 15% of what he has paid and will refund the balance amount. Unfortunately it is the Real Estate Developers who are favored as most Politicians are involved directly or indirectly with one of these shady companies.

Crack Widens - Prices Fall

Developers have been forced to cut prices for new and under construction projects by 30-45%. Until recently, such discounts were not publicly reported and were available only to large investors. In the last two months, several large reputed developers have issued public advertisements about discounts, hoping to stimulate demand and lower inventory.
Industry experts opine that the core issue in the real estate sector has shifted from "affordability" to "necessity". Job insecurity and low business confidence have become key concerns. Studies reveal that during times of severe economic uncertainty, consumers postpone big ticket purchases. As such, developers indicate that they do not expect demand to resurface in the near to medium term, even if (1) real estate prices correct and (2) mortgage rates decline 200-250bp.

I don't understand why the RBI has vested interest by allowing restructuring of commercial loans till June 2009 [earlier March-09, end of FY], without the loans being classified as NPAs, has provided some reprieve to real estate companies with distressed balance sheets. Here are some interesting Paper Advertisements from Mumbai offering homes at Discount.

SEZs loose steam as slowdown deepens

Special Economic Zones (SEZs), an ambitious instrument to promote exports / [We call it a Massive Real Estate Scam ], are loosing steam in wake of deepening global economic downturn. SEZs are expected to account for 30% of total Indian exports in the current fiscal with the target amount of exports set at 1,20,000 crore.

However, as recessionary forces take charge in key destinations of Indian exports including European Union, India’s largest trading partner and US, analysts are expecting SEZs to miss the target by around 15-20%. Total exports from SEZs may not exceed Rs 1,00,000 crore in the current fiscal, a fact accepted by additional secretary R Gopalan too.

This comes even as government plans a series of moves to help protect jobs in SEZs, which have been cutting the employee count due to declining business. According to estimates, around 36,000 people working in the SEZs have lost jobs in the last few months.

Property Greed - Cause of Satyam + Raju's Debacle

Property and Land Banks are for greedy Goons and Politicians of the Indian society. However, Satyam's B. Ramalinga Raju was so fascinated by the property boom he thought of becoming the Land Lord of Andhra Pradesh and ultimately failed bankrupting the successful IT Services Business. ET has quoted that,

The family holds over 6,500 acres through Maytas Properties, the individual members in their personal capacity have significant holdings of agricultural land across south and western India.

and the cause of liquidity crunch...

One of the theories doing the rounds suggests they were trapped by a murky cocktail of political developments and a real estate crash. In the recent past, Maytas Properties and Maytas Infrastructure had won a number of prestigious projects. Maytas being awarded road projects even without proper bidding.

and the Real Estate House of Cards Crashes in India adding to Raju's woes

Political circles were said to have demanded funds from the family instead of land. Upcoming elections may have also forced members of the establishment to change their preference from land to money which put them in a fix.

and what Raju did now was lean on 24% money lenders....

Satyam's promoters raised huge funds from tobacco traders in Rayalseema district by pledging Satyam shares. The promoters may have assumed that they would be able to raise funds to recover the pledged shares through an IPO of Maytas Properties. But the downturn in the real estate market derailed Maytas Properties IPO plans thus bursting the bubble on Jan-07.

Kindly note that, hardworking intelligent Indians in Profession and Business please continue to do so as this property greed will take you no where. Invest in yourself, in your own business and see the fruits of success in long term :-)

IndiaBulls Realty - Key Projects

The key projects of Indiabulls Real Estate are as follows,

Project and Developed Area (mn sq ft)
Jupiter Mills - 45% stake 0.8
Elphinstone Mills - 45% stake 0.7
Nasik SEZ 122.0 [Overall its a 3,000 acre SEZ]
Sonepat Township - Plots 6.4
Panvel Township 31.2
Chennai Township 13.0
IT SEZs 10.5
Residential 15.8
Commercial/Retail 11.8
Total 212.2

Upcoming Office Projects in Mumbai Metropolitan Region

Below is the list of Grade-A office projects coming up in the Mumbai Metropolitan Region (MMR). Totally MMR will see a fresh addition of 28.50 mn sft of office space.

Developer Location Area (m sq ft)
Akruti City Andheri, BKC, Kanjurmarg, Thane 2.45
DLF Parel 1.90
HDIL/Mack Star Marketing Andheri, Bhandup, Mulund, Turbhe 3.90
Indiabulls Real Estate Parel 2.90
Kanakia Andheri, Borivali, Rabale 1.77
Lodha Group Kanjurmarg, Mahalaxmi 0.90
Man Infraprojects Bandra, Nerul, Vile Parle 0.68
Marathon Realty Mulund, Parel, Panvel 2.45
Neptune Kurla, Mulund, Thane 2.54
Oberoi Constructions Goregaon 0.70
Orbit Corp Kalina, Parel, Sakinaka 0.83
Peninsula Land Parel, Kurla 2.10
RNA Bandra 0.15
Rustomjee Andheri, Sion, Thane 4.98
Shree Naman Developers BKC 0.26
Total 28.50

Developers may have to set aside 20% space for EWS

After the Union housing minister's decision to hold a meeting with state governments urging them to ensure reservation of developed land for EWS in housing projects, developers may soon have to reserve 20% of the space in their housing projects for economically weaker section (EWS) of the society.

According to the proposed norms, private builders and developers will have to adhere to the new policy and make space for accommodating the poor in their housing projects. The proposal has been included as part of mandatory reforms to avail funds under the Rs 50,000 crore Jawaharlal Nehru Urban Renewal Mission (JNURM).

Riverbank to Develop first marina hotel in Calcutta

The 50:50 joint venture between Bata India and Calcutta Metropolitan Group - Riverbank Developers - is planning to set up India’s first marina hotel beside the Hooghly river for a total cost of Rs 175 crore.

The company has inked pact with Intercontinental Hotels Group (IHG) for management and technical services for this and is aiming to commence operations at the hotel by 2013.

The five star 35-storied hotel christened -- Calcutta Riverside will have 200 rooms and 75 service apartments. Besides it will also provide parking facilities for 25 boats with cruises and other river activities.

The proposed project would be funded through a mixture of debt, equities and cash flow from the customers.