this is like music to my ears.. :) .. well would like this to be in the archive for future reference and like your comments on this article below as on 13 Mar 2009, 0735 hrs IST, RAJESH UNNIKRISHNAN & SANJEEV CHOUDHARY, Economic Times Bureau

MUMBAI | DELHI: Some two weeks ago, Mumbai-based stock broker Ashok Samani won an auction to eight apartments owned by the late Harshad Mehta and his family in the posh Worli locality. Mr Samani, who put in a winning bid of Rs 32.60 crore, or Rs 26,080 per sq ft, for the apartments in the upmarket housing society, Madhuli, is pleased with the bargain.

“I feel it’s a reasonable price. Compared to prices a year ago, it’s a decent ,” he says. Apartments in buildings of Madhuli’s class were selling for Rs 38,000-40,000 per sq ft around the same time last year, about a third higher than the rate at which Mr Samani struck his deal.

Mr Samani may be satisfied with his bargain, but a number of other potential ers don’t seem to think that the time is ripe yet for the best deals. In early 2008, a Rs 18-crore deal was negotiated for a 2,925 sq ft house in Delhi’s upscale Defence Colony area by a builder who planned to demolish the house sitting on the land and develop apartments, hoping for a return of about 30%.

But after the downturn in the real estate market, he is trying hard to wriggle out of the deal, even at the cost of losing the Rs 50 lakh he had paid as ‘token money’ indicating his intention to purchase the property. “A few ers have approached me with a price of Rs 9-10 crore, but exited mid-way,” said a broker who is negotiating on behalf of the property’s owner.

As in the rest of the world, the real estate market in India is trapped in a vicious cycle of plunging prices. With the bottom nowhere in sight, potential ers do not want to try and catch a falling knife, says Pranay Vakil, chairman, Knight Frank India, a property consultancy firm. “They are expecting a further cut in prices, while developers themselves have been dropping prices, anticipating an increase in sales volumes.”

Rajneesh Chhabra, a property broker based in south Delhi, says asking rates are down 30% from their peak, but it’s still almost impossible to find a er. “Financiers have disappeared from the market and those dependent on bank loans do not property in south Delhi,” he says, adding that deal volumes have shrunk by more than 95% from their peaks about a year ago.

With the financial year drawing to a close this month, cash-strapped real estate developers have already cut prices by an average 40% in all their upcoming projects.

“I expect prices will soon come back to the 2003-04 levels, when rates were hovering between Rs 12,000 and Rs 17,000 in upmarket areas like Malabar Hill,” says Mumbai Estate Agents Association president Yashwant Dalal.
In Malabar Hill, the most expensive home address in India, prices have fallen by a fourth to Rs 25,000-45,000 per sq ft, depending on the age of the building and amenities.

Ten months ago, actor Vinod Khanna offered to pay Rs 1.25 lakh per sq ft for a 2,500 sq ft apartment in the ultra-luxury El Plazo housing society in the Hanging Gardens area of Malabar Hill. “Now the rates are in that area (Hanging Gardens) are around Rs 70,000 to Rs 75,000 per sq ft. Similarly, in Pedder Road, rates are around Rs 45,000 per sq ft,” Mr Dalal says.

A London-based Indian national acquired a 3,475 sq ft property at NCPA Apartments in the Nariman Point area at Rs 97,842 per sq ft nearly six months ago, but rates there are almost half that now, says a south Mumbai property dealer.

In central Mumbai’s Worli and Lower Parel areas, rates are down to Rs 12,000-18,000 per sq ft, while in Bandra they have fallen by more than a fifth to Rs 15,000-25,000. Where price drops have been of the order of 50%, ers appear to be showing interest.

“We are quoting Rs 16,000 per sq ft for our new project in Lower Parel and the initial response has been positive,” says Orbit Corporation finance director Ram Yadav. A year ago, property prices in this area were over Rs 35,000 per sq ft.

Properties in the heart of the national capital on Prithviraj Road, Aurangzeb Road, Amrita Shergill Marg, Jor Bagh and Golf Links, which have seen deals involving industrialists such as LN Mittal, Naveen Jindal and GM Rao as well as film star Shah Rukh Khan, are now struggling to find ers. A 11,250 sq ft home in
Golf Links, which was purchased for Rs 70 crore, is now available for Rs 50 crore, but there are few takers.

“Earlier, financiers used to homes. Now, they neither have money nor the hope that they will be able to sell it at a higher rate and so have just withdrawn from the market. End-users are rare and they only negotiate, but don’t in the expectation that prices will fall further,” says Neeraj Chopra, a Dwarka-based property broker.

In India’s technology capital Bangalore, prices have fallen by up to 25% in some areas, a recent Morgan Stanley report says. DLF, India’s biggest real estate company, cut rates by about 30% at its upcoming project and the company sees prices falling further. Irshad Ahmed, president of Irshads Property Matters, says that in suburbs such as Whitefield, Outer Ring Road and Sarjapur Road hard bargaining can result in final prices, which are 30% lower than card rates.

Property dealers and builders are also lining up an array of discounts and freebies to try and clinch deals.
The Gateway project by developer Brigade in Malleshwaram, one of the oldest localities in town, is quoting at Rs 5,090 per sq ft against Rs 5,790 per sq ft last year. But there is scope for negotiations, depending on which flat is chosen and the mode of payment, says an official of the marketing team. Second-sale rates at Gateway are Rs 4,700-4,800 per sq ft, according to a property dealer.

In Bangalore’s downtown area, the Mantri group’s upmarket Altius complex, which has only one apartment to a floor with a current market price of around Rs 14 crore, there aren’t many units available for a second sale. A city broker says that since there are no other projects that open up to views of the city’s lung space, Cubbon Park, the price will hold. But the number of people showing interest in ing has dropped, he adds.

However, in the upmarket areas of Chennai there have been no considerable price drops. In Chennai’s Arcot Road, Purasawakkam, Thiruvanmiyur and Valasaravakkam areas, rates still hover between Rs 4,700 and Rs 6,600, about the same a year ago, a dealer says, but prices have fallen by 20-30% in the suburbs.

In Kolkata, prices have fallen from their peaks touched in mid-2008 and hover around levels seen at the beginning of the year. In areas such as Ballygunge Circular Road, Sunny Park and Queens Park rates, which were Rs 8,500-10,000 per sq ft in January 2008 jumped to Rs 13,000-14,000 in June-July before dropping to Rs 9,000-11,000.

“Prices in the city’s posh areas, including Ballygunge Circular Road and Queens Park, had surged because of limited supply, but they have been hit now. Areas like Prince Anwar Shah Road, Behala and Lake Town remain unaffected, as real estate prices in these areas never reached unrealistic levels,” says Jitendra Khaitan, CEO of real estate consultancy Pioneer Property Management.

Sumit Dabriwala, managing director of property developer Hiland Group, says high-end residential properties, which were being sold at Rs 12,000-15,000 per sq ft last year, are averaging Rs 9,000-10,000 per sq ft now. “On an average, properties in upmarket areas have seen a 10-15 % price reduction in the premium category,” he says.

A few banks have cut home loan rates in recent weeks, sparking hope that sales will pick up in the quarter beginning April, rescuing the property market from its downward spiral. This could be a crucial period, as the impact of the ongoing financial crunch is expected to peak by then.

(With inputs from J Padmapriya in Bangalore, Anuradha Himatsingka in Kolkata and Hemamalini Venkatraman in Chennai)
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