Home sales drop across cities

Metros lead the drop, but drag also seen in smaller places, with high prices, interest rates & job gloom.

Sale of residential properties has dropped by 18-28 per cent in major metros, hit by dampened demand as a combination of higher property prices, rising home loan rates, and job cuts take a toll.

Data released by real estate research firm Liases Foras for Delhi, Mumbai and Bangalore indicates this trend. Bangalore, for instance, considered one of India’s fastest growing and most crowded metros, shows a 21 per cent drop in residential area sold in April-September, compared to last year.

“Residential sales across cities are falling. After a record jump in Delhi and Mumbai prices, tier-II cities also got a fillip, but six to 12 months later, in cities like Pune and Chennai, too, sales are now on a downward slide with the price increase,” said Sanjay Dutt, chief executive of the business division of international property consultants Jones Lang LaSalle India. “Inflation and interest rates are largely responsible for denting sales. In the present environment, high priced apartments are not selling; only projects in the mid-income segment are selling”.

Tier-II also hit

A number of realtors launched projects in the high-end segment after the realty market upturn in March 2009, as margins here are higher at 45-60 per cent compared to 20-35 per cent in the mid-income segment.

Ahmedabad, Hyderabad, Chennai, Goa, Mohali and other cities — called Tier-2 by marketers — saw an influx of bigger listed developers launching projects at that time. They have either slowed the pace of their launches or exited those locations due to a slowing in sales.

"All across the country, the residential sales numbers for the past two-three months have come down,” said Gulam Zia, national director, research and advisory services, at Knight Frank India, another property consultancy. “Volume dips in most cities like Ahmedabad, Chennai, Pune and Hyderabad has been in the range of 15-20 per cent, whereas Delhi has seen a fall of 20-25 per cent and Mumbai sales have plummeted by 60-70 per cent."

But, not down for all

Not all developers second these findings. Venkat R Narayana, chief financial officer of the Prestige Group, a Bangalore-based listed real estate company, said, “The Bangalore market in general has seen very good sales momentum and products in the affordable and mid-income category in the range of Rs 2,800-4,000 per sq ft are doing well. In the first six months, we have recorded new sales worth Rs 1,000 crore and in the next two quarters, we will be launching two-three new projects in the residential segment, of which one will be in Chennai.”

In Delhi, sales dropped by 18.7 per cent in April-September this year, according to the Liases Foras data. Home sales in Mumbai slowed the most, falling almost a third. Forecasts on home sales are also not good.

“Price corrections have begun in the Mumbai market, though it has not happened as much as people were expecting. In other metro cities also, prices had skyrocketed. The global economic outlook is weak, with retrenchments in the financial sector and possible job cuts in others. We expect a downward curve in sales to continue, unless interest rates and prices come down,” said Pankaj Kapoor, founder and chairman of Liases Foras.

Realtors are pinning their hopes on the mid-level segment. “In Noida, the court has given directions and after that, we have launched a mixed-use development project last week. We are hopeful that sales will continue in the mid-income segment,” said R K Arora, chairman and managing director, Supertech, one of the largest land holders in Noida.

Source: http://www.business-standard.com/india/news/home-sales-drop-across-cities/458239/

Budget Home exhibition till November 6

The property exhibition “Budget Home 2011” at CODISSIA Trade Fair Complex here showcases properties starting from about Rs. 10 lakh.

According to K. Santhosh Kumar, Head-operations, and Prashanth Bashyam, Business Head – Events and Exhibitions of Eyeball Media, the company is organising the exhibition here for the second year.

About 30 builders and five financial institutions have displayed details of their projects and home loan products in 45 stalls.

The three-day exhibition till November 6 is open from 10.30 a.m. to 8.30 p.m. and entry is free.

Five major builders from Chennai have details of projects in Chennai. In Coimbatore, projects on residential apartments, senior citizen residential communities, villas, and independent houses are displayed. The price of properties starts from less than Rs. 10 lakh and goes up to Rs. 50 lakh. The price of plots starts from Rs. 50,000 a cent.

According to the organisers, the event attracted a large number of visitors last year and this year, enquiries are expected for Rs. 200 crore to Rs. 250 crore.

With increase in interest rates, home buyers are taking time to take a decision. However, purchases have not come down. With cities expanding, several projects are coming up in the fringe areas and there is a demand for these properties. Eyeball Media plans to organise a luxury home expo here next year. The Hindu is the media partner for the exhibition.

Source: thehindu.com/

Builders want govt to rein in cement producers

CHENNAI: India is the world's second largest producer (224.4 million tonnes per annum ) of cement , after China , in the world. Tamil Nadu is the third largest cement producing state , after Andhra Pradesh and Rajasthan , in the country. But ironically, cement prices in Tamil Nadu are among the highest in the world.

The reason : Against an installed capacity to produce 34.38 million tonnes of cement per annum in the state , the 19 major cement plants and four small plants manufacture only 20 million tonnes per annum . "Underutilization of the installed capacity , cartelization , syndication and rationing of supply have resulted in a rapid rise in cement prices ," noted NNandakumar ,secretary of theTNchapter of the Confederation of Real Estate Developers Association of India.

Cement costs Rs 300 per 50kg bagin Tamil Nadu . In the north , it is available at Rs 190 per bag , he noted . Cement being a decontrolled commodity , state and central governments can do little to regulate prices . "But the state , which gives licence for mining limestone , has every right to interfere if the cement manufacturers indulge in unfair trade practices . If they do not fall in line , the issue should be escalated to the Competition Commission of India," opined Nandakumar.

Rising cement prices had put the brakes on government infrastructure projects in the past . When the erstwhile Kalaignar Housing project was stalled owing to spiralling cement prices a year ago , the then DMK government issued a take-over warning to private cement manufacturers . The suppliers wriggled out of the issue by offering cement to the Kalaignar housing scheme at reduced prices . But the common man was left in the lurch even then . The government did not bother much.

While cement consumption is growing at 7% per annum worldover ,in India it is increasing at 9%. The volume of cement entering the international trade is just 6-7 %of the total global production . The rest is consumed in the respective domestic markets.

Large-scale imports are the only immediate solution to tide over the present crisis , opined a senior government official. Tamil Nadu Cements , the state-owned cement supplier , is gearing up to import about five lakh tonnes of cement, out of which, about one lakh tonnes will be imported in the first phase . The government needs to speed up this process.

Source: http://articles.timesofindia.indiatimes.com