Despite slowdown, housing prices bullish across cities

According to the residential real estate index prepared by the National Housing Bank (NHB), the housing prices in 16 cities including Delhi, Mumbai, Chennai, Bangalore, Pune, and Kolkata improved in the quarter ending June 2012, compared to the previous quarter ending March 2012.

In fact, in most of these cities, prices improved quarter after quarter since January-June 2009 quarters barring in a few exceptions like Bangalore, Hyderabad , Jaipur, and Indore, where prices have corrected in some quarters.

But when compared to prices in January-June 2009, when the index was first announced , the prices in the latest quarter have shown a significant jump.

It is also because January-March 2009 was the first quarter when the impact ofglobal bank crisis of 2008 was fully realized. In fact, the index of property prices in Delhi continued to fall till January - March 2010, when the index touched 106, from 121 in January-June 2009.

According to the NHB, the prices of residential properties in 16 cities have shown an increasing trend in the range of 1.1% in Kochi to 10.5% in Pune, in April-June 2012 quarter , against the previous quarter.

At the same time, it saw marginal decline in three cities - Jaipur, Hyderabad and Indore. Faridabad remained stagnant in this quarter.

According to the data prepared by the NHB, the maximum increase was observed in Pune, by 10.5%, followed by Bangalore (8.7%), Patna (8.6%), Ahmedabad (6.4%), Ludhiana (5.3%), Lucknow (4.1%), Mumbai (3.7%), Delhi (2.6%), Kolkata (2.6%), Bhubaneswar (1.7%), Bhopal (1.7%), Chennai (1.7%), Surat (1.2%), Guwahati (1.2%), Vijayawada (1.1%), and Kochi (1.1%).

Three cities have shown marginal decline in prices over the previous quarter, with a maximum decline of 2.6% observed in Jaipur, Indore (2.4%), and Hyderabad (1%).

The data has been prepared by NHB RESIDEX, which tracks the movement in prices of residential properties on a quarterly basis, an exercise it has been conducting since 2007.

However, according to the NHB Residential Index, the property prices in the NCR region increased by around 11% in the last one year, while a close look of different micro markets give a different picture.

The property prices in certain developing pockets like Dwarka Expressway in Gurgaon went up by almost 50-80 % in the last one year. Similarly, in other developing pockets like New Gurgaon and Golf Course Extension Road, property prices have gone up by 30-50 %.

In Noida, prices of property on the Noida-Greater Noida Expressway increased by almost 30% since June 2011. In Ghaziabad too, prices in Indirapuram and Vaishali went up by around 30%. In certain pockets like Crossings Republik, where possessions have been given to buyers, the prices have improved by almost 50% in the last one year.

However, prices in the matured markets of Delhi, Gurgaon , and Noida have not appreciated so sharply during the period, as they are already very high. As in the index, when prices of properties located in different areas are taken into account, it does not give a clear picture. But, the index has vastly improved and reveals the prevailing bullish trends in the property markets in the NCR.

QUICK BYTES

Compared to prices in January-June 2009, when the index was first announced , the prices in the latest quarter have shown a significant jump

Source: http://economictimes.indiatimes.com/features/et-realty/despite-slowdown-housing-prices-bullish-across-cities/articleshow/16042170.cms

Migrants build city homes

BHUBANESWAR: People from neighbouring states dominate city realty market's workforce even as workers from Odisha continue to migrate to outside the state in search of work.

While masons from Jharkhand and Bihar rule the state capital's construction works, carpenters are mainly from West Bengal. Those from Andhra Pradesh have a substantial presence in all categories while plumbing work is the forte of local people.

C S Sharma, a labour contractor from Jharkhand who operates from the city, said construction workers from outside Odisha outnumber the locals in Bhubaneswar. "Outside state workers tend to work continuously for months without taking breaks while local people take too many leaves. That is why it is easier to meet deadline with outsiders," said Sharma who currently has around 500 workers under him here, mostly from Jharkhand. Similarly, when Odia workers go for work outside Odisha they work without leave for long, he added.

The industry knows who is good at what. In various components of the semi-skilled works, people from different areas have expertise. "Masons from Bihar and Jharkhand are good at finishing work while there is no match to local plumbers, mainly from Kendrapada and Jajpur districts. Workers from Bengal are good in painting work and carpentry," said Manoj Chandrabanshi, another labour contractor.

Real estate developers said big projects prefer mix of workers. "If one employs workers say only from Odisha, none will be left to work during a festival like Raja. Similarly, those from West Bengal prefer to go home during Durga puja. If the workforce is mixed, work will not suffer," said D S Tripathy, state president of confederation of real estate developers of India (Credai).

Besides hundreds of housing projects by private builders, big-ticket government projects such as All India Institute of Medical Sciences, National Institute of Science Education and Research, Indian Institute of Technology are under construction in city these days. Besides, work for around dozen flyovers and expansion of National Highways are under way here employing a huge workforce.

According to 2001 Census, 16 lakh Odia were listed as seasonal migrants to other states. The cities attracting maximum migration from the state included Kolkata, Surat, Hyderabad, Visakhapatnam, Raipur, Coimbatore, Delhi, Chennai and Bangalore. While thousands of people from Odisha migrate to Nalgonda, Guntur and Vizag, among other areas of Andhra Pradesh to work in brick kilns and as farm labourers, migration from Andhra is also substantial. The 2011 census report on migration is still awaited.

Source: http://timesofindia.indiatimes.com/city/bhubaneswar/Migrants-build-city-homes/articleshow/15111095.cms

Rough patch for realty

Property developers in all major cities are battling with significant drop in sales of residential properties due to the economic slowdown and delay in approvals

Real estate industry seems to be entering another trough. Property developers in all major cities are battling significant drop in sales of residential properties due to the economic slowdown and delay in approvals. Mumbai and Delhi, which already witnessed a substantial dip in sales of commercial properties in the past couple of years due to excess supply, are now hit by a slump in sales of residential properties.

According to industry officials, the impact on residential sales till December 2011 was marginal, and developers were betting big on projects to ride out the economic slowdown. However, a sudden fall in sales during the January-March quarter has shattered hopes of an early recovery.

While commercial property sales were affected due to oversupply, the residential segment has been hit mainly due to slow approvals as sales are proportionate to new launches, apart from the inevitable impact of a general slowdown and drop in sentiments.

Lalit Kumar Jain, chairman of Kumar Urban Development, told FC Build sales have dropped in cities, especially Mumbai and Delhi. “In the past 18 months, there were very few approvals for new projects in these cities. Since sales are directly proportionate to new launches, we have witnessed a significant dip in absorption of residential properties.”

Jain says the demand is stable in cities like Pune, Bangalore and Chennai since these markets are mostly driven by end users.

Rajeev Talwar, managing director, DLF, agrees, “Sales are down because of slow approvals mainly in Mumbai. In the past 18 months, there has been no supply coming in due to delays in project approvals.”

Real estate experts feel the problem is due to unreasonable increase in property prices along with uncertain economic conditions. Pankaj Kapoor, chief executive officer of Liases Foras, said that in April-June 2009, Mumbai witnessed sales of 21 million sq ft, the highest in past four years, that has now declined to barely 8 million sq ft in the January-March quarter.

“Sales increased in June 2009 as real estate prices corrected during the economic slowdown. However, prices went up steeply after 2009, and now developers are witnessing lower sales due to these unreasonable prices,” said Kapoor.

“The high cost of land is creating another hassle for developers in big cities. They are shelling out huge amounts for acquiring land, that has resulted in price increase of properties,” Kapoor said, adding, “The balance sheets of developers are already stressed, and declining sales would reduce their profitability further.”

PropEquity, a data analytics and research firm, said in a recent report that residential unit absorption numbers in January-March in the national capital region (NCR) and Mumbai metropolitan region (MMR) plunged over 50 per cent due to the economic slowdown enveloping the country.

Surprisingly, Bangalore, the IT-capital of India, has escaped relatively unhurt, and witnessed a drop in absorption by just 18 per cent.

Jackbastian Nazerth, chief executive officer, Puravankara Projects, said, “In the southern markets, the drop in sales is lower than cities like Mumbai and Delhi as the prices are still affordable. In the past one year, property prices have increased by around 15-18 per cent in Bangalore, whereas, in Mumbai and Delhi, price increase is around 30-40 per cent, mainly driven by speculative buying by investors.”

Nazreth said while the Bangalore market is driven by end users, the city requires more houses as 60 per cent of the population still stays in rented houses.

“We are worried that speculative buying should not start in southern region, leading to situations like what Delhi and Mumbai is facing. We don’t sell more than two apartments to individuals, and most of the other developers in the southern region are also following the same so that speculative buying remains under control,” Nazreth added.

Paras Gundhecha, president of Confederation of Real Estate Developers Association of India (Credai), said the main reason for the slowdown in sales are because of unaffordable prices in Mumbai and Delhi, and also a slowdown in economy.

“For developers, the total cost of developing the project has increased significantly in the past two years in these two cities as developers are paying higher interests due to delay in approvals, and also due to very high cost of land. Interest costs have gone up by 30 to 40 per cent for developers due to approval delays. Further, developers are paying very high prices for land acquisition since it is scarce in cities like Delhi and Mumbai,” says Gundhecha.

However, in cities like Bangalore, Pune and Chennai, developers are not paying higher interests as approvals more or less come on time, and land is available at reasonable price. Moreover, these markets are driven by end users and not by investors. Generally, investor-driven markets would see downside risks than end user driven markets, said the report by PropEquity.

According to PropEquity, the total absorption fell just 18 per cent in Bangalore, to 7,704 units in the first quarter, from 9,410 units in the previous year. Mumbai metropolitan region in January-March period saw absorbed of 11,473 units, compared with 27,676 units a year ago. The total supply in this region in the first quarter of the calendar year 2012 was 89,461 units. In Navi Mumbai, 2,709 units were absorbed in the same period, compared with 7,903 units a year ago, whereas, Mumbai witnessed sales of 4,642, compared with 10,915 units a year ago. Thane witnessed sales of 4122 units, compared to 8,858 units a year ago.

In NCR, 15,104 units were absorbed during the first quarter of 2012, compared with 35,420 units during the corresponding period a year ago. Total residential supply in NCR in the same period was 107,731 units.

During the first quarter, Gurgaon witnessed sales of 5,547 units, against 9,242 units a year ago. Noida witnessed sales of 4,848 units, against 9,160 units a year ago. Greater Noida witnessed sales of around 1,050, against 12,163 units a year ago. Faridabad witnessed sales of 446, against 910 a year ago. Ghaziabad witnessed sales of 3,201 units, against 3,433 units a year ago. Delhi witnessed sales of just 12 units, against 512 units a year ago.

Samir Jasuja, founder and chief executive officer of PropEquity, said the take-up rates in key micro-markets have fallen significantly. “In the coming quarter, there would be strong pressure on many micro-markets, and we expect inventory overhang to increase and absorption could continue to slow down. Mumbai and Gurgaon have already seen one of the sharpest falls in absorptions, with Mumbai metropolitan region seeing a drop of 58 per cent, and NCR a drop of 57 per cent. If this trend continues, there could be ‘stage 1’ price correction in the range of 5 to 20 per cent, especially in micro-markets of NCR, Mumbai metropolitan region and Hyderabad. Some micro-markets where inventories have been managed well by developers would be able to overcome this phase,” says Jasuja.

So, the next few months would be crucial for the sector before taking a final choice – either a stabilisation phase, or a ‘stage 1’ price correction.

jharnamazumdar@mydigitalfc.com

Source: http://wrd.mydigitalfc.com/real-estate/rough-patch-realty-445

Also visit http://www.margproperties.com/vishwashakthi/index.php is you are looking to by luxury apartments in Tirupati.

India real estate players under pressure

Indian realty sector seems to be going through a rough phase. On one hand, in metros like Mumbai, sales have declined, and the government has been strict with regulations and granting clearances. On the other hand, it is difficult to get investments.

DLF, India’s biggest realty player, has seen a 38.6% drop in its profits for the quarter ended March 2012. One year ago, DLF reported a net profit of Rs 344.54 crore, but this year, it has come down to Rs 211.7crore. Higher interest costs and margin compression have been cited as the reason for the loss. A brokering report said that interest cost increased by 32.5 percent year-on-year to Rs 604 crore, while other income declined by 30 percent year-on-year to Rs 131 crore.

DLF has a staggering Rs.22,725 crore debt on its book, after shedding only Rs33crore in the fourth quarter. The firm has long been looking to sell non-core assets and sell off some of the special economic zone(SEZ) properties, but have not met with much success. The company is looking sell around 12 million sq. ft of residential space to raise Rs.4,000 crore and Rs.6,500 crore, respectively

DLF is not alone. Parsvanath Developers too, have posted a loss of Rs 23 crore in the fourth quarter. Last year, it had made a profit of Rs32crore. Mr Pradeep Jain, chairman, Parsvnath Developers Ltd, said: “Financial Year 2011-12 has been very challenging for us, primarily due to the increasing cost of material, funding and then the unavailability of funds for real estate sector. “

Other players, like Omaxe and HDIL, who have reported profits, have also pointed out that there is scarcity of funds available for realtors. The glum economic scenario, along with the rupee devaluation has put a strain on builders. To add to their worries, market regulator Securities and Exchange Board of India (Sebi) has issued a notification that makes Rs1 crore the minimum limit for alternative investments, including realty funds, up from Rs5 lakh earlier.

Sebi’s move will make it difficult for builders to find investors, as many of them would not like to invest as high as Rs1 crore in real estate when the situation is tough. Hence, the demand for private equity funding will remain, even though the borrowing rates are sky high in cities like Mumbai and Delhi.

Join Businessfriend today. Where social networking leads to productivity

Source: http://www.businessreviewindia.in/money_matters/india-real-estate-players-under-pressure

Realty market booming in Chennai

Post the 2009 slowdown, the demand for property has been robust in Chennai so much so that the city is leading other metros.

Chennai is witnessing steady demand for budget and luxury properties and properties in the bracket of Rs 20 to 45 lakh is the most sought after, said a group of leading realtors who will hold a three-day Chennai Realty Property show at the Nandambakkam trade centre here.

The organisers pointed out that there is a shortage of 24,000 homes in the city in the budget home segment and added that more than 80 builders and banks that provide housing loans will put up stalls offering 50,000 property choices.

“A wide range of properties ranging from Rs 5 lakh to Rs 2 crore will be on the display and we expect a footfall of around 15,000 to 20,000 during the three-day event,” said Kishore Kumar, director, Eyeball.

“Property seekers were in a wait-and-watch phase because of Reserve Bank guidelines and market fluctuations and now the phase is over.

The investors and those who need homes should come forward to purchase properties and the Chennai real estate market is steady and booming,” said Kalyan Jayaprakash, managing director, Inno Geo City.

Chennai suburbs have potential and the public should start thinking about leading a peaceful life in a suburb, where there is no traffic chaos and congestion, said J. Kishore, director, Evocon.

He also pointed out that properties in the suburbs of Mumbai and Delhi were sort after by people, and a similar situation would soon arise in Chennai.

Jayanthi of Vijay Shanthi Builders spoke about new projects coming up at Ambattur, Kovalam and Besant Nagar.

Source: http://www.deccanchronicle.com/channels/cities/chennai/realty-market-booming-chennai-885

Industrial Corridors along Chennai: Regional Economic Integration

Following the successful operationalization of the Delhi-Mumbai Corridor similar projects are planned pan India. The Delhi-Mumbai Corridor covers 7 cities in the first phase covering the states of Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharastra and Madhya Pradesh. This Industrial Corridor includes developments of all means of transport including renewing or establishment of airports and seaports in the corridor cities, building and expansion of roadways and rail networks.

On these lines the Chennai-Bangalore Industrial corridor and Chennai-Hyderabad Industrial Corridors are proposed and are being developed. The focus of these corridors will be automobile and ancillaries in Chennai, Aerospace in Bangalore and pharmaceuticals in Hyderabad.

Huge investments are being made in the developments of road and rail networks along the corridors. The hurdles like land acquisition, rehabilitation, funding are being tackled.

The Chennai-Bangalore Industrial corridor is expected to cover the cities of Ranipet and Hosur. Social infrastructure is also encouraged along this corridor which is an integral part of any industrialization. Karnataka government wants to extend this corridor to Belgaum and Mangalore with plans to integrate mining, food parks and cements as part of the corridor industries.

Tamil Nadu government is also planning industrial corridors along Chennai-Madurai-Tuticorin-Tirunelveli corridor and Coimbatore-Salem corridor. These corridors are expected to encourage industrialization and integration of regional economies. This could also be seen in the rising real estate prices along the upcoming and proposed corridors.

Source: http://news.estatelister.com/report/industrial-corridors-along-chennai-regional-economic/1200

Tamil Nadu govt to push for Chennai Mega Region

Chennai

With the city expanding at a fast pace, expectations for better infrastructure are running high.

The state government is mulling the CMDA’s proposal to declare Chennai Mega Region for better regional planning on the lines of Delhi, Mumbai, Bengaluru, Kolkata and Hyderabad, since the Chennai Metropolitan Area (CMA) extending to 1,189 sq km was declared four decades ago.

The second master plan has foreseen larger development outside the Chennai Metropolitan Area along the Rajiv Gandhi Salai (IT corridor), Grand Southern Trunk Road and Grand Western Trunk Road in areas around Sriperumbudur, Kelambakkam, Tiruvallur and Maraimalai Nagar. Sources said the CMA area will be extended up to 8,000 sq km. The CMDA has already submitted a preliminary report to the government in this regard.

Source: The Times of India, Chennai

Chennai tops in residential property cost

Contrary to the popular belief, it was not the country’s Capital city Delhi but Chennai in down South which witnessed maximum increase in prices of residential properties as high as 166 per cent — among major cities in five years since 2007.

According to the Economic Survey 2011-12 tabled in the Parliament on Thursday by Finance Minister Pranab Mukherjee, residential property prices soared by 54 per cent during the period in Delhi.

However, in comparison, it trailed much behind Bhopal where property rates zoomed by117 per cent followed by NCR Faridabad (116 per cent) Kolkatta (92 per cent), Mumbai (87 per cent) and Ahemdabad (67 per cent).

The survey has attributed the spiraling property prices to the shooting cost of the infrastructural materials such as concrete and iron as well as better connectivity particularly with the upcoming metro network

“The possible reasons for increase in prices could be overall increase in inflation rate particularly relating to building materials, improvement in infrastructural facilities like metro connectivity resulting in increased demand for housing, favourable political and economic environment and increased business and employment opportunities,” says the survey.

The other cities where real estate market was buoyant were Pune and Lucknow which saw a jump of price hike by 63 per cent and 60 per cent respectively in the residential property between the years 2007-2011. Prices in Surat and Patna also soared by 47 per cent and 43 per cent respectively.

However, astonishing as it was, four cities, according to the survey, witnessed drastic decline in prices. Maximum decrease was observed in Jaipur by 36 per cent in the said five years followed by Hyderabad (14 per cent) Bengaluru (6 per cent) and Kotchi (2 per cent).

However, with the real estate market booming, the survey has tried to drew attention of the policy makers to the widening gap between demand and supply of the housing units resulting from inadequate housing.

The other main cause of concern was that while the finance sector in the country has experienced buoyant growth over the past several years, homelessness amongst the lower segments of population has continued to increase.

“Despite significant growth of the housing loan portfolio in the sector, access to formal credit was mostly available to people in the formal sector…Sizeable segments of the informal segment market still remain untouched,” said the survey giving a macro and micro-view of the country’s economy.

Source: http://www.indianrealtynews.com/real-estate-india/chennai/chennai-tops-in-residential-property-cost.html

Mum, Delhi slip on real estate list

MUMBAI: Due to rising economic and inflationary pressures, rankings for two major metros of the country, Mumbai and New Delhi, slid down to 15th and 12th position, respectively, on the list of foremost real estate investment markets, a survey by consultancy firm PwC said.

Last year, however, PwC had ranked Mumbai at the third and New Delhi at the fifth place.

According to the report titled 'Emerging trends in Real Estate Asia Pacific 2012', the vacancy rates in Mumbai are likely to remain stable through the close of 2011 and into 2012 and the absorption will again be positive next year, but rental values will remain questionable as economic and inflationary issues continue to linger.

"In New Delhi, inflation continued to spike costs, and it may not be economically feasible to build there. On going funding problems do provide investment opportunities for private equity investors," the report said. PwC has ranked Bangalore as the 10th most favoured investment destination, a similar rating like last year.

"Bangalore's organic, growth driven market and ability to buck mega trends has helped it retain its credentials as a stable play and maintain its position on the list," the report said.

Source: http://timesofindia.indiatimes.com/business/india-business/Mum-Delhi-slip-on-real-estate-list/articleshow/11519623.cms

Santacruz (W) apartment sold for Rs 3.8 crore

Delhi

In one of the recent transactions in Gurgaon, a 5,200 sq.ft apartment was transacted at a price of Rs 5.63 crore. This transaction took place in Unitech World Spa, a luxury condominium complex located in South City I. This 5BHK apartment is located on the 3rd floor in one of the apartment towers. The unit comes with three car parking spaces.

The group housing project is built on 21 acres of land and has amenities like 100% power back-up, unlimited water supply, exclusive club house, 24/7 security system, swimming pool, spa facilities and jacuzzi, among others.

Mumbai

A 1,285 sq.ft. resale apartment at a premium residential project at Santacruz (W) was transacted at Rs 3.8 crore. This price is inclusive of two car parks.

This unfurnished apartment is housed in a 12-storied building located in one of Santacruz West's premium residential pockets. The building has two wings with 2- and 3- bedroom apartments with only four spacious flats per floor.

It is one of the few buildings in the city that offers a wide array of amenities and an ideal location. Santacruz (West) is strikingly more affluent than the eastern part of the suburb. It is bordered by Khar, Juhu and Vile Parle. It is primarily a residential area, with the market situated near the railway station. Residential rates in this area range between Rs 16,000 and Rs 26,000, depending on the age of the property and the amenities offered.

Source: http://economictimes.indiatimes.com/markets/real-estate/news-/santacruz-w-apartment-sold-for-rs-3-8-crore/articleshow/11383746.cms