Residential Property Prices Fall By 7% In Delhi, 15% In Kolkata
The housing regulator said that even as residential property prices skyrocket, Delhi and Kolkata, are bucking the trend, reporting a decline of up to 15 per cent in the first quarter of this calendar year. As per the Residex for the period January-March 2010, a residential property index put together by the National Housing Bank (NHB) for the 15 biggest metros, the residential property rates in these two metros have come down sharply, signaling a correction in the market. While in Delhi property prices have crashed by 7 per cent as compared to July-December 2009, in Kolkata the decline has been sharper at 15 per cent. In Delhi, the prices have dipped by nearly 20 per cent from the peak levels during July-December 2008, a time when the economic slowdown was beginning to spread its tentacles. The index assumes 2007 to be the base year. "In Delhi, the market has seen a huge correction in residential property prices, which was much required. As state land development agency Delhi Development Authority's (DDA) plans to come up with DDA colonies around farm areas beyond Mehrauli fructify, there is no big pressure on demand. Supply is expected to grow," said National Housing Bank Executive Director Mr RV Verma.
2 Sep 2010 Indian Express

Buyers Can Choose To Opt Out Of Residential Project If Possession Is Delayed
The National Consumer Commission has held that a buyer is now entitled to opt out of a housing project if there is a delay in delivery of possession of the house by the real estate developer. It said the buyer is also entitled to a full refund with reasonable interest and any deduc tion on the amount is unjustified. "The petitioner was fully justified in opting out of the scheme and demanding refund of the money that she had paid along with interest," the commission said. The order was passed after a petition was filed by Agra resident Ms Indira Gupta, who was seeking quashing of the Uttar Pradesh State Consumer Commission's direction to deduct 20% from the amount to be refunded to her by the Agra Development Authority.
29 Aug 2010 DNA scheme and demanding refund of the money that she had paid along with interest," the commission said. The order was passed after a petition was filed by Agra resident Ms Indira Gupta, who was seeking quashing of the Uttar Pradesh State Consumer Commission's direction to deduct 20% from the amount to be refunded to her by the Agra Development Authority.
29 Aug 2010 DNA
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  • Nice piece of information , especially "Buyers Can Choose To Opt Out Of Residential Project If Possession Is Delayed"
  • Issue is every news reporting company or RE company comes up with its own facts and figures based own research and its almost impossible to keep track on the actual scenario. Also much of it is paid and biased hence the authenticity is always under doubt.

    We badly need a national regulation agency which does unbiased research and also works to make this sector a bit organised.

    WIth so much of corruption and black money its always a challenge.
  • Great Thought!

    I agree in totality and second your view , MM!
  • Home rentals zoom on high realty prices

    The industry norm of eight to 10 per cent rise in rentals is now passe. Ask Deepak Varma, a 38- year-old resident of Kandivili, in the western suburbs of Mumbai. He was shocked when his landlord demanded a 25 per cent hike in rentals to renew his housing lease.

    "The landlord gave me just two options - either pay up the increase or search for another property. After some research I found that rentals have zoomed up in Mumbai. As buying a house at these levels is just not possible, I would have to look for a smaller house where the rents are affordable for me," he said.

    The trend has been confirmed by real estate portal According to a study conducted by the portal, residential rentals have continued to rise in sync with the increase in realty rates. The rentals have increased between 12 to 20 per cent. In places like south Mumbai and south west Mumbai, the appreciation has been the most, the study revealed. Khar, a western suburb of Mumbai has seen 47 per cent appreciation in rentals in the second quarter of this year compared to the previous year. It is closely followed by places like Mahalaxmi and Napean Sea Road, which saw 28 per cent and 13 per cent rise in rentals, respectively, over the same time period. Bandra West witnessed an 11 per cent rise in residential rentals. Similarly, Breach Candy and Lower Parel saw rental values move up by six per cent in the second quarter, the study pointed out.

    Yashwant Dalal, president of the Estate Agents Association of India said that high property prices are responsible for the rise in rentals in the city. "Property prices have gone up beyond the 2008 peak and are consistently going up since the last three quarters. So people are waiting for the prices to correct and have postponed their purchasing plans for some time. As preference is more towards leased property, the rentals have gone up in the city," he said.

    The study by 99acres. com also shows a similar trend in Delhi and NCR. Saket in South Delhi witnessed a 31 per cent rise in rentals in the second quarter of 2010 as compared to the same period last year. South Extension, Safdarjung and Malviya Nagar followed at 24 per cent, 22 per cent and 21 per cent respectively. Vasant Kunj saw a 17 per cent rise in rentals while Dwarka witnessed an increase of 12 per cent in the second quarter of this year compared to last year. Vasant Kunj and Dwarka have emerged as the most affordable rental destinations in Delhi, the study revealed.

    Connaught Place has seen an eight per cent rise in rentals while Pitampura and Rohini saw 35 per cent and 37 per cent rise in prices respectively, over the same time period. Key localities of Noida like Sector 93, Sector 53, Sector 61 and Sector 82 saw rentals escalating in the range of 18 per cent to 25 per cent. Prime areas in Gurgaon like Sohna Road and Sushant Lok saw 16 per cent appreciation in rental values.

    Pankaj Kapoor, managing director of real estate research firm Liases Foras, said that he does not believe that residential rentals in the country could rise so steeply. "There are lots of properties lying vacant in many of the new residential projects. So, it is quite unlikely that the rentals at this stage could increase," he said.

    Link -
  • Commercial real estate witnesses rise in demand

    Commercial real estate projects, including office and retail space, have started seeing increased demand after suffering poor sales during the economic slowdown, as firms and retailers revive expansion plans. In eight cities, including Delhi-National Capital Region (NCR) and Mumbai, firms leased out or sold 9.2 million sq. ft of commercial space in the three months ended 30 June, up 58% from 5.8 million sq. ft in April-June 2009, said Ravi Ahuja, executive director for development services at consultants Cushman and Wakefield India.
    Some 16.4 million sq. ft of retail space is expected to be available in 2010, against 6.3 million sq. ft last year. Consultant Jones Lang LaSalle Inc. has predicted 8.9 million sq. ft will be absorbed this year, compared with 4 million sq. ft in 2009. “The commercial real estate space is again active with inquiries and transactions,” said Supreet Suri, director, The Three C Universal Developers Pvt. Ltd. The company is planning to launch a 12.5-acre commercial project in Noida, on the outskirts of New Delhi, by October. “We are getting inquiries for our Noida project, which is still in the planning stage,” Suri said.
    Developers such as BPTP India Ltd, Assotech Ltd, Anant Raj Industries Ltd and Wave Inc. have also reported improving property demand. Metros have witnessed a large number of investment deals in office space development at information technology (IT) and corporate parks during April-June, according to a report by the Royal Institute of Chartered Surveyors. “While improved corporate profits seem to be the demand driver for office property, retail property has also seen an upswing, as a result of improved economic climate within the country, making it an attractive market for global retailers as well,” says the report.
    Leasing and sale of office space in Mumbai and Delhi-NCR rose 69% and 18%, respectively, according to another consultancy, DTZ International Property Advisors. The report says 70% of transactions in Delhi-NCR have been recorded in Gurgaon, Noida and Delhi’s south business district. In Mumbai, most commercial realty projects are coming up in peripheral areas. Noida has attracted large multinational corporations from IT and the banking, financial services and insurance (BFSI) sectors who want to set up back offices, says an office market report from BNP Paribas Real Estate.
    Mumbai’s Bandra Kurla Complex adjoining Santacruz, Andheri, Powai, Vikhroli and Vile Parle has also attracted buyers, says the BNP report. Consultancies say capital and rental values will remain stable in the near term as new projects inundate the market in the next few quarters. “Rental and capital values will remain stable as the markets will witness huge supply in coming months,” said Priyankar Bhikshu, head of research for India at DTZ International Property Advisors. “Increased absorption and reduced vacancy are likely to take place in most Indian cities by the end of this year. However, a complete revival of the rental market is unlikely until mid-2011,” Bhikshu added.
    But deal sizes are getting smaller. “Multinational firms are looking for central locations in big metro cities. Since rental cost in these areas is still higher, the space occupied is smaller in comparison to the ones that were occupied during 2008,” said Rajesh Goyal, chairman and managing director of the Delhi-based developer RG Group. “In doing so, the occupiers have the dual advantages of cost saving and central location.”

    See link -
  • Basically Residential growth is directly proportionate to Commercial.

    If u make more houses, u need to create more jobs and vice versa:)
  • Traffic jams. Delayed flights. Crowded trains. That is the reality of any big city in India. The future could be much worse. The country's cities are expected to grow by an additional 250 million, mostly young people, over the next two decades. Without massive investment and thoughtful planning, chaos will ensue.

    Or not. McKinsey, in an unprecedented nearly two-year study of Indian cities, envisions a way for India over the next 20 years to turn that influx of young population into a quadrupling of per-capita income. This growth hinges on adequate investment in cities so they can handle the surge in people and the simultaneous increased demand on services. The urban migration, if properly handled, could generate 70% of net new jobs and produce 70% of India's GDP.

    To meet their needs, McKinsey suggests that India must build--every year for the next 20 years--between 7 billion and 9 billion square feet of real estate (the equivalent of one Chicago) a year; 220 to 250 miles of metros and subways (more than 20 times what it has built in the past decade); and between 12,000 and 15,000 miles of road lanes (nearly equal to all the road lanes constructed in the past decade).

    That's a pretty ambitious task, given India's infamous bureaucracy, corruption and a sketchy track record on accomplishing large-scale projects. Ajit Mohan, the lead author on the McKinsey report, says for the first time there's some recognition in India that urban development has to become a priority. It could take one success in a single city to create the momentum for a national push, he says, comparing the current lack of infrastructure investment to the way the IT sector was developed in India. "When Bangalore became successful, other cities started to emulate it," he says.

    The major changes will happen, adds Chetan Vaidya, head of the National Institute of Urban Affairs in New Delhi. "We can already see bits and pieces of that falling into place," he says.

    Multiple infrastructure investment programs have launched in the last handful of years. One is the Jawaharlal Nehru National Urban Renewal Mission, which is putting $28 billion into 65 cities over a seven-year period starting in December 2005. Once it runs its course, it could be replaced by a similar program. The government of India is also in talks with the World Bank for a $3 billion infrastructure loan.

    India's federal treasury is increasing its grants to cities and states from the $960 million they received annually for the past five years to $5 billion each year over the next five years as long as they meet a nine-point agenda. The conditions attached to receiving funds in both programs are similar and focused on land and tax reforms, among other mandates. The idea is to improve governance and creditworthiness of cities, says Vaidya, and lead to commercial or market-based financing in urban investment.

    Multinationals like Aecom, Veolias and Bombardier are in the process of bidding for various projects, including building portions of metro rails in Chennai and Kolkatta and supplying rail cars to Delhi's expanding metro network. Aecom was recently awarded a contract to do the master plan for two of the six satellite industrial cities India plans to build along the 1,700-mile Delhi-to-Mumbai corridor. Each city will house 5 million people.

    "This is a huge investment opportunity, but you need to cherry-pick your cities," says Vaidya. He recommends focusing on tier-2 cities like Pune in Maharashtra and Surat in Gujarat and investing in projects like ports and special economic zones (which typically build sector specific manufacturing or research hubs), and in affordable housing, as 90% of the demand is for those. He expects an average investment period to range from three to five years before investors can exit and move on to the next batch of cities.

    Mohan, the author of the McKinsey report, too sees opportunity for the private sector (and multinationals, to boot) to provide services like water supply and waste management. "But," he admits, "the question is will we do it fast enough--and that's a political choice. That will determine how dramatic the pace of the change will be and up until now no one has stepped up to champion that."
  • India may face shortage of 26 mn houses by 2012

    New Delhi, Sep 16, (IANS):

    India will face shortage of over 26 million houses by 2012, which would lead to spurt in housing prices as demand-supply gap widens amid rising purchasing power of the middle class people, a consultancy firm has said.

    "With India back on a high growth trajectory, demand for commercial and residential space is likely to witness an upward trend," consultancy firm Ernst and Young said in a report.

    Demand for residential property is rising sharply because of growing young working population, increasing urbanisation, declining household size resulting in more nuclear families with growing household income and improved availability of loans.

    Co-chairman of FICCI Real Estate Committee Pranay Vakil said over $1.2 trillion investment was needed to meet the rising demand for urban development. He said that the urban population in India would nearly double to 600 million in the next 15 years from nearly 350 million now, and this would put massive pressure on urban infrastructure, including roads, power and water supply.

    Dean Hodcroft, partner-head of real estate for Europe, Middle East, India and Africa at Ernst and Young, said India needed institutional reforms to attract more investments in infrastructure development projects.

    He said the country’s macro-economic fundamentals were in great shape and it was poised to reap huge benefits of growth. "India needs to fix the institutions to attract more private investments, including foreign investments," he said.

    Comparing the investment climates in India and China, Hodcroft said: "While it is easy for investors to get into China, it is extremely difficult to get out. In contrast, it took time for foreign companies to enter India, but exiting is comparatively much easier." He noted that India was lower ranked in areas that were easy to fix.
  • Top 10 residential hotspots

    Many cities in the country, after the slowdown, are once again in the spotlight for the good investment potential they offer in the mid to long term

    1 GURGAON Massive infusion of commercial office and retail space Currently at 22 million sq ft and likely to grow to 40 million sq ft by 2012 Substantial rationalisation of prices Correction of over 25 per cent to 30 per cent across micro-markets Wide breadth of projects across price ranges and geographies The downturn has opened new geographies at rationalised prices Shortening absorption period Increased absorption rates has led to fewer unsold housing units Quality developers and developments Tier I developers and good quality developments Water, power and connectivity continue to be areas of concern The Delhi Metro is expected to improve connectivity

    2 MUMBAI High-income demographics High investment activity levels across price bands Massive infusion of commercial office and retail space Relative affordability in suburban markets Most of the markets within the city are unaffordable. Affordability in eastern suburbs, Thane and Navi Mumbai Infrastructure can't keep pace with growth of city Infrastructure development to boost residential demand in suburbs

    3 NOIDA Affordable micro-markets Reasonable price range has led to increased absorption momentum Excellent connectivity Connectivity through existing road infrastructure and the Delhi Metro Commercial office space Addition of another 12 million sq ft of office space in the next three years Residential demand primarily linked to IT/ITES sector

    4 PUNE Huge supply of office space Addition of 19 million sq ft of office space over the next three years Affordable micro markets close to the city Oversupply in select micro markets only Proximity to Mumbai

    5 BANGALORE Shifting geographies of commercial office development Most of the micro markets highly affordable Residential demand linked to growth of IT/ITES sector City has attained a critical mass of IT occupiers, which will help attract even more IT occupiers Infrastructure hasn't kept pace with the growth of the city

    6 CHENNAI Diversified migrant population working in industrial, logistics and IT and ITES sector Prices have rationalised across micromarkets Properties along OMR benefit from excellent connectivity and proximity to IT hubs Absorption rate yet to pick up

    7 HYDERABAD High affordability in Hitec City and Gachibowli Oversupply in Hitec City and Gachibowli Other markets having low activity Residential demand linked to growth of IT/ITES sector

    8 KOLKATA Absorption rate has picked up in Rajarhat Highly affordable micro markets Growth in office take up projected to be low

    9 AHMEDABAD Newest metropolitan city with population of more than 4 million Absorption rate has picked up in affordable markets closer to the city Highly affordable micro-markets s, logistics and automotive sector to drive population growth in the suburban markets Poor IT/ITES presence

    10 KOCHI Diversified economy with growing IT/ITES presence Highly affordable micro-markets Huge non-resident Keralite demand drives residential real estate Micro-markets of Edapally and Kakkanad highly dependent on IT/ITES sector The only segment to emerge almost unscathed from the turmoil that the real estate sector underwent during the slowdown was the residential sector. Its resilience in the face of negative global cues was as much a result of the latent demand for affordable housing in India as the large share of the Indian real estate pie that the residential sector holds.

    As with office space and retail malls, residential property did, to a lesser degree, suffer the effects of the global downturn in 2008 and 2009. However, unlike its counterparts, the residential sector has begun to show signs of stability in many markets, and even recovery in certain cities. Whether this trend will continue depends in large part on economic factors (mortgage rates, GDP growth, labour market stability) and on prudent decisions by developers on issues relating to pricing and quality of products being offered.
    Jones Lang LaSalle Meghraj Research conducted an analysis of residential markets across India to help identify investment hotspots for retail investors. While abnormally large returns can be found in specific projects throughout the country, the analysis was limited to India's seven largest cities due to high residential demand from their large populations, relatively higher transparency levels and presence of premium regional and national developers.
    The top ten cities were Gurgaon, Mumbai, Noida, Pune, Bangalore, Chennai, Hyderabad, Kolkata, Ahmedabad and Kochi.
    Based on proprietary data from the Real Estate Intelligence Service (REIS), each cities' potential was examined across a variety of parameters, including affordability, investment yield, absorption momentum, supply overhang etc “Residential property is very definitely the flavour of the year in 2010. While the primary metros continue to command the highest demand and appreciation potential, many other cities are once again in the spotlight for their mid-to-long term investment potential,“ says Abhishek Kiran Gupta, head research and REIS, Jones Lang LaSalle India.

  • Is Indian Real Estate Heading For A Bubble?

    A valid question, and one being asked by almost everyone looking for property in Mumbai, Delhi or any of the other cities where real estate prices have spun out of control. Still, speculating about real estate bubbles on the Indian property market without looking at the facts is the work of a doomsayer, not an analyst.
    First, a much-required definition. What is a real estate bubble? How does it happen?
    A real estate bubble occurs happens when the cost of homes climb unrealistically fast. In a normal market scenario, prices do rise, but only in gradual tandem with the rate of inflation or a rise in middle-class incomes. When a real estate bubble goes critical and finally bursts, the prices of the same homes come crashing down and the real estate market takes a nosedive.
    In nature, a bubble is the most energy-efficient configuration for something as fragile as a stretched sheet of soap water. As long as it is not acted on by an external force, it can stay that way for a long time. In a way, that is true for a real estate bubble, as well – unless something happens to disrupt the status quo, it will prevail. Fortunately, it is not the nature of the property market to leave a real estate bubble alone for too long. The artificial pressures that form it are always defeated by the pressure of demand for rationality. Once demand for irrationally priced properties drops sufficiently, the bubble bursts.
    So, are we looking at the formation of a bubble in Indian real estate? It is possible, but only in the cities where prices have actually skyrocketed beyond affordability. It can be argued that they have done so almost everywhere in the country, but the fact is that local people are still buying homes on a as-needed basis in most Tier II and Tier III cities. Nor is the supply in most of those cities either overly constrained or curtailed. So, when we talk of the possibility of a bubble, we’re actually only talking of property in Mumbai and Delhi right now.
    Delhi’s was the real estate market that led the correction, and Mumbai was the last in line. Both bounced back after the introduction of stimulus packages and the Government’s direct actions in restructuring debt, which staved off further fallout on the Indian sector. Also, both these markets had in any case reached the bottom.
    During the revival phase, the large volumes of capital sitting on the fence immediately saw an opportunity. This was first seen in the equity markets, and then later in the real estate and commodity markets – all three classes bounced back convincingly, and Mumbai and Delhi’s real estate markets made very decisive comebacks.
    There is now a concern that these two markets have demonstrated higher than expected enthusiasm, especially in the central parts in the case of Mumbai, and Gurgaon and Noida for Delhi. A lot of investors have plugged in considerable amounts of capital in these regions, and the values have, on an average, now gone 30% higher than the last peak. Some of the residential developments in central Mumbai in the year 2008 had peaked at Rs. 30,000/sq.ft. Today, they stand at 38,000/sq.ft.
    There is yet another reason for the concern over a bubble building on the market. All developers who had ventured to buy land overseas or across India are now buying only in their primary cities. In other words, Mumbai developers are concentrating on acquiring land solely in Mumbai, and the same is happening in Gurgaon. Investments are now chasing these Tier 1 markets – and if this continues there is certainly the probability of a bubble in residential property by the end of the year.
    Banks and BRFIs are also eager to exit from their non-performing assets and convert them into liquidity. At the same time, there is a considerable amount of lending towards investors who have an unrelenting focus on high-end projects. If this continues, we may see a number of high-value NPAs on the market in a couple of years.
    However, we must remember that some of the larger high-value residential projects in Mumbai will undergo at least two property cycles before completion, and that evaluations of their viability will change accordingly.
  • A million dollar question . No body has the correct answer to it
  • Govt to unlock 30k acres in NCR

    Govt to unlock 30k acres in NCR

    Vishakha Talreja Posted online: Wed Sep 22 2010, 09:02 hrs
    New Delhi : The National Capital Region (NCR) may soon have 30,000 acres of land available for residential construction, if the government’s steps in this direction bear fruit. The Centre is attempting to fast-track the resolution of disputes over NCR title deeds, which force developers to stay away. NCR is estimated to be short of 5 lakh housing units, and demand is growing at 1 lakh units a year.
    The move will spark price correction, releasing over 2 million housing units. The exercise piloted by the urban development ministry and implemented by the NCR planning board, will be kicked off by year-end.
    The exercise will unlock land in three states: eight districts in Haryana (Gurgaon, Rewari, Faridabad, Sonepat, Rohtak, Panipat, Jhajjar and Mewat); five districts of Uttar Pradesh, (Ghaziabad, Bulandshahar, Meerut, Baghpat and Gautam Budh Nagar) and one district (Alwar) in Rajasthan.
    The government plans to seek help from local bodies to identify and verify land ownership, after which independent agencies will cross-check data.
    “This is good for developers who can get land and good for consumers who can get residential units at lower prices. But one has to see how it is implemented. India doesn’t have a very good history in implementing such policy initiatives. One also has to see how soon the free land can be made available for developers,” Abhishek Kiran Gupta, head-research, Jones Lang LaSalle, India said.
    “In any big transaction, the problem of title deed arises at some point. We are trying to work out a formula. Various suggestions have come in. The exact strategy will be worked out in some time,” an urban development ministry official said. The ministry plans to advise states to create an ad hoc title deed in the name of the claimant to facilitate the transaction. “This should not be difficult as in villages and small towns, everyone is aware of who owns which land. The only problem in some cases is that official records are not available. This exercise will help do away with this problem,” said an official from the Haryana housing board.
  • reed returns to real estate; is there a bubble lurking?

    Greed returns to real estate; is there a bubble lurking?

    Published on Tue, Sep 28, 2010 at 11:56 Source : CNBC-TV18

    According to a report by Jones Lang LaSalle Meghraj, the market value of under-construction projects in India has crossed over USD 100 billion from USD 9.4 billion at the end of 2006. While commercial market still remains flat, the residential property market has witnessed a sharp rebound.

    Keeping with the trend, Jones Lang LaSalle Meghraj recommends investing only in residential properties as they see revival in commercial property unlikely before next Diwali. In the commecial office space, Mumbai, NCR-Delhi and Bangalore contributes to about 70% of the market value.

    In an interview with CNBC-TV18’s Udayan Mukherjee, Anuj Puri, Chairman and Country Head at Jones Lang Lasalle India and Anand Narayan National Director-Residential at Knight Frank discuss the possibilities of a real estate bubble.

    Anuj Puri said that the greed for real estate had returned in Indian metros. Realty prices in Mumbai have crossed its 2007 peak but realty markets in the rest of India were still unheated and remain safe, he said adding, “There is strong resurgence of demand coming in metros but overall, other than some micro markets in major cities, I don’t think there is a bubble that is being formed.”

    On the sky rocketing price in Mumbai, he said, Navi Mumbai and the suburbs of Mumbai were doing really well, while prices in Central Mumbai too were up quite sharply. Puri expected a correction of price in the mill land area in Mumbai.

    Anand Narayan, meanwhile, sees huge demand in Lower Parel and Prabhadevi region in Mumbai. He feels that Sewri, in Mumbai, is the most undervalued pocket.

    Here is the verbatim transcript of their interview with CNBC-TV18's Udayan Mukherjee. Also watch the accompanying video.

    Q: Do you sense any bubbles forming in real estate in any parts of the metros driven by where other asset classes like equities have reached?

    Puri: I think the stock market is back, the economy is back, the confidence is back, so greed is back as well in real estate. Greed in certain metros is back greater than some of the other micro markets. So, certainly in Bombay, Delhi residential, I believe there are pockets where we have actually crossed the peak of 2007 and we are walking on very thin ice on those micro markets.

    But if you were to look at entire India, I think we are pretty strong, pretty safe. Lot of the markets haven’t got heated the way Bombay and Delhi have and certainly the office and the retail market seems very safe, very consolidated. The prices haven’t gone up. There is strong resurgence of demand coming in those sectors. So, overall, other than some micro markets in major cities, I don’t think there is a bubble that is being formed.

    Q: Mumbai and Delhi are important and influential markets, which pockets of residential in these two areas are approaching bubble like proportions?

    Puri: Certainly, there are areas which are doing very well also. If you go into Navi Mumbai area, if you go into Panvel area, the suburbs of Bombay are doing well. I think it is largely where there is lot of supply that is coming up, which is the mill district in Bombay, which is the Central Bombay area. I think that is where we are seeing the price having gone up very quickly, lot of supply coming up. We believe that there is somewhere that one may see some correction coming up.

    Certainly, there is a lot of demand in there. So, if the prices do get reduced, we are going to see the demand come back within the Central Bombay area. But currently the way the prices are stacking up, it doesn’t look like the entire supply, which is going to come up in the Central Mumbai area, is going to get absorbed.

    Q: Do you concur with that view? Do you agree that there is price risk in some of these areas where most of the supply is being created?

    Narayan: I would say yes and no to that. Fundamentally, in the Central part of Bombay, if you look at South Bombay upto Bandra, pretty much anybody who needs to move in from an old premium building to a swanky looking new building has options available in Lower Parel, Prabhadevi belt. So, you are having something like catchments of about two million households trying to absorb a supply of a bout 7000-8000 new apartments that are coming in today.

    The fact is that the 7000-8000 apartments that come into the market have all come-in in the last six-nine months. So, there has been tremendous of supply that has come in. But fundamentally it’s catering to about two million households who are there in South Bombay and who would want to move into a swanky new building. My sense is that fundamentally, the sales velocities will come down, but I don’t there is a huge price risk at this point of time.

    Q: What about Delhi, do you see any problem areas there because of oversupply where the price maybe at risk?

    Narayan: I would actually say Delhi is at a far greater risk than Bombay. Bombay as everyone knows is land locked, the supply is restricted unlike so Delhi, Manesar is also become Gurgaon. Manesar which was once a second home destination has now become Gurgaon. So, I think there is a lot of price risk because the model of developers is also highly financial derisking model. Unlike in Bombay where a developer has taken a project and gained value out of it over a period of two-three years.

    In Delhi, developers de-risk the entire project in about 10-20 days by down selling the entire project to about 10-20 investors. And then its investors who carry the performance as well as the market risks on the entire projects. So, it gives me a funny feeling of almost a small Dubai in making there. So, I would say Delhi is something that one needs to watch out for. When I say Delhi, it’s more the Gurgaon, Noida markets rather the South Delhi, Central Delhi part.

    Q: Those are fairly significant markets, Gurgaon and Noida, do you prices at risk there because that is typically where the investor money tends to play around in?

    Puri: My view is that in Delhi and Gurgaon, I certainly don’t see risk. Delhi certainly not it is as land locked as Bombay, so prices will continue to hold. I don’t think there is any cause of worry and there is very little supply coming in Delhi market. Similarly, if you had to look at Gurgaon, there is huge amount of corporate activity, there is huge amount of R&D, KPOs, IT, ITES coming into Gurgaon and a lot of employment that is getting generated. So, I am not worried on the Gurgaon market either because there is huge amount of economic activity that is coming in.

    Certainly, I am worried about Noida and Greater Noida. I think that market has got a huge amount of land that was auctioned in the peak, a lot of the developments that are coming up, developers are struggling at Rs 34-35 per sq ft per month as the lease rental for the offices. Even with that, we are not seeing the kind of take up of space as we are witnessing as we are witnessing in Gurgaon. That on one side and the other side a huge amount of residential that is being built up and was being sold to the investors and not the end users. So, Noida, Greater Noida, there is a lot of supply, not as much demand. But Delhi and Gurgaon are pretty safe markets.

    Q: Generally in markets where you are getting a little worried, is the same phenomenon that we saw in 2007, where it was not the end user buying, but investors parking money because for couple of years we saw investors getting out of the real estate markets have they come back in hoards?

    Puri: I think two-three different things have happened this time. One, this phenomenon is not across India. So, let me put that caveat very clear that this is only Delhi and Bombay. In 2007, it was all across India.

    The second is that this phenomenon is not across the office and the retail sector; in 2007 it was all across that sector.

    The third is that even in Delhi and Bombay, it is micro markets that we are seeing this phenomenon. In those micro markets as well, I don’t think so it is really the investor led downfall that is going to come in. I think it’s more the greed where the prices are rising way beyond the reach of the end user. That is why I have more confidence in the market today than I had in 2007 because the ability of the developers to bring down the price will immediately bring up the demand from the end user and the absorption should happen in those micro markets, which are relatively riskier.

    Q: Do you see that trend picking up again because in the last few weeks, once again one hears of things like let us just pay the booking amount and we will flip it into three years and pocket the difference in the price, is that the kind of phenomenon in real investing coming back again?

    Narayan: I think the answer is yes. We have seen some very innovative payment plans coming in, which were hitherto unseen in the luxury market. So, yes, what that means is it’s basically margin trading in equity as an asset class. So, Bombay, which was not very investor friendly in terms of product making, has suddenly become investor friendly with respect to these payment plans coming in.

    Q: How is Bangalore looking, apparently prices have gone there, are you keeping an eye on that one?

    Narayan: Yes, Whitefield, which was the leading indicator of down fall much before in 2007, is stabilizing, consciously fresh supply hasn’t come in the manner that one would have expected. So the supply is getting absorbed in Whitefield, so Whitefield is stabilizing. I would see even the Northern belts of Bangalore, which includes Hebbal and things like that, having a lot of value in terms of it being a location which addresses both the CBD demand and as well as it being closer to the logistic hub that is coming up near the airport.

    Narayan: I think the answer is yes. We have seen some very innovative payment plans coming in, which were hitherto unseen in the luxury market. So, yes, what that means is it’s basically margin trading in equity as an asset class. So, Bombay, which was not very investor friendly in terms of product making, has suddenly become investor friendly with respect to these payment plans coming in.

    Q: How is Bangalore looking, apparently prices have gone there, are you keeping an eye on that one?

    Narayan: Yes, Whitefield, which was the leading indicator of down fall much before in 2007, is stabilizing, consciously fresh supply hasn’t come in the manner that one would have expected. So the supply is getting absorbed in Whitefield, so Whitefield is stabilizing. I would see even the Northern belts of Bangalore, which includes Hebbal and things like that, having a lot of value in terms of it being a location which addresses both the CBD demand and as well as it being closer to the logistic hub that is coming up near the airport.
  • Part ii


    Source :

    Q: What is the reality in markets, which are outside the four metros, like in Hyderabad, Jaipur, Ahmedabad, what kind of trends are you picking up in those markets?

    Puri: What happened is that after the debacle in 2008, all the market came down and between 25-30% we saw reduction in the prices. The bigger markets Delhi, Bombay, to an extent, Bangalore have come back to those levels. But many of the other markets haven’t really regained, so the tier II, tier III markets haven’t really regained the valuations that they had really gone down to. So, still very good markets, safe markets to invest, to go into those markets.

    One other thing, as the economic activity is coming back into India, the IT companies have started to expand. As they are expanding, they are finding to get in more labour pool, the attritions have started to rise, the real estate cost have started to increase, the cost of living has started to increase in tier I markets. They are now looking at tier II and tier III markets again, which is the phenomenon that we had seen in 2007. But then 2008 debacle happened and everyone contracted and suddenly the tier I markets had become cheaper and the corporates did not really want to expand into tier II, tier III. But now that resurgence of confidence and expansion has come back, we are going to see a lot of activity by these multinational and Indian majors in IT expanding into tier II, tier III. The moment they expand, we are going to see a lot of residential activity come up, lot of retail come up along with the offices due to that expansion.

    Q: If you had to pick now in terms of good opportunities for residential investment, which pockets would you go for in Bombay- Delhi?

    Narayan: In Bombay, specifically two-three pockets. One would be Sewri. If you go to Sewri right now, you wouldn’t like the location, but there is humongous amount of activity that is happening here. There are disproportionate investments from MMRDA that is coming in there. Not just the Nhava Sheva ceiling, which happens to be a dreamer’s paradise, but there are other things like mono rail connecting Sewri. A lot of redevelopment opportunities coming in there, there is an elevated highway coming in from Colaba all the way up to Chembur. So, all this being said and done, Sewri is like almost like and undervalued asset today. It’s almost 30-40% lower than the neighbour, which is Parel, which is an hour’s away. So, I would say Sewri is a good choice; it is almost like Parel of tomorrow.

    If you have to go up North, I would pick up something like Chandivali, which is sandwiched between East and West. For Bombay, the last three decades belonged to western part of Bombay, most of the activity in the suburbs belonged to the western parts. Historically, Bombay’s infrastructure has been in North-South. It is now in the last five years, and in forthcoming decade, we would see a lot of east-west connectivity as well as humongous amount of activity happening on the Eastern seaboard of Bombay. So, I would say Chandivali, which is at Rs 8000-9000 per sq ft, as compared to Powai, which is just a half km away, at Rs 16,000 per sq ft, but the amount of connectivity that is happening, JVLR coming in, the metro connecting just the contours of Chandivali. So, Chandivali is an undervalued location with possibilities of good value being there over the next three-five years.
  • Imroved Road Facilities In Gurgaon-manesar Urban Complex Soon

    Imroved Road Facilities In Gurgaon-manesar Urban Complex Soon

    Source: Imroved Road Facilities In Gurgaon-manesar Urban Complex Soon 29/Sep/2010

    Gurgaon-Manesar urban complex will have an improved circulation system of roads as a decision to this effect has been taken in a meeting of the state level committee of Town and Country Planning Department held here under the chairmanship of Haryana Chief Minister, Mr Bhupinder Singh Hooda.

    The committee approved the development plan of Gurgaon-Manesar urban complex-2025 A.D. A 200 metre wide institutional belt has been approved, which would be exclusively reserve to be developed by government and semi-government organizations.

    The new development plan has been prepared with the perspective year 2025 for a project population of 40 lakh. Six more controlled areas have been added to the earlier 41 controlled areas. The earlier plan was approved in 2007 to accommodate a population of 37 lakh by the year 2021. The sector density has been increased from 80 Persons Per Acre (PPA) to 100 PPA and from 100 PPA to 120 PPA for Gurgaon-Manesar urban complex.

    A 60 metre wide road with 50 metre green belt on outer side and 24 metre wide road on inner side has been proposed at the outer periphery of sectors 59,60,63,64 and 67. The circulation system of roads has been improved as it was observed that the sector roads leading from sector 58/61, 59/61 to 59/60; 61/62 to 60/63; 62/65 to 63/64 and sector roads of sector 65/66 to 64/67 were ending abruptly at the end of development plan area. The provision of 60 metre wide sector road at the end of these sectors has been made to improve the circulation system.

    To check the haphazard and unauthorized development, a 50 metre wide green belt and 200 metre wide institutional belt along the road has been approved which would be exclusively reserved and developed by government or semi government organizations like HUDA and HSIIDC. Kost nallah would be re-aligned along southern peripheral road upto the junction of SPR and Sohna road, in the shape of covered drain box type drain, which would benefit the residential sectors from 58 to 66. Earlier, it was an open nallah.

    The new development plan for 2025 has made provisions of 15148 hectares residential area, whereas it was 14930 hectares for development plan-2021. No change has been made for commercial, industrial, public utilities, special zone, defence land, special economic zone, existing town and village abadies. The transport and communication land use area has been increased to 4289 hectares from the earlier 4231 hectares, the pubic and semi-public use institutional area has been increased to 1786 hectares from the earlier 1630 hectares. Open space has also been increased from 2675 to 2733 hectares.

    Principal Secretary to Chief Minister, Mr Chhatar Singh, Deputy Principal Secretary to Chief Minister, Mr R.S. Doon, Financial Commissioners and Principal Secretaries and senior officers of various departments also present in the meeting.