Wednesday, November 07, 2007

Times of India recognizes the bubble

Mumbai: If you are not a slum dweller entitled to a free flat or a mill worker promised a subsidised tenement by the state government, chances are your dream house will remain a dream.
Despite sluggish sales, the city’s builders are holding on to their astronomical prices. Going by the rates that are being quoted by most developers, a salaried person looking out for accommodation in the suburbs could find the options very limited.
Inquiries by this newspaper show that apartments which are less than 1,000 sq ft in size are being priced at about Rs 1 crore in faraway suburbs like Chandivali and Jogeshwari.
Take, for instance, K Raheja Corp’s Maple Leaf project comprising seven wings of 20 storeys each in Andheri (east) opposite Chandivali studio. A twobedroom flat with a carpet area of 873 sq ft is being quoted at close to Rs 1 crore with stamp duty. The project will be ready for occupation only in mid-2009.
In Goregaon (east), a two-and-a-half bedroom apartment with a built-up area of 997 sq ft is going for Rs 1.15 crore in Oberoi Woods, a residential project comprising three 35-storey buildings which are being set up by Oberoi Constructions. The rate works out to about Rs 10,400 a sq ft. Goregaon (east) commanded a price of barely Rs 3,500 a sq ft about three years ago.
In Mulund (west), Nirmal Lifestyle is pitching duplex apartments in its Amethyst World Home for close to Rs 2 crore each. Each duplex has a builtup area of 3,200 sq ft (carpet is 28% less) and the asking rate per square foot here is Rs 6,000. In another Nirmal project called Polaris in Mulund (west), a two-bedroom home costs Rs 70 lakh with stamp duty.
Hiranandani Gardens in Powai is now a residential area for top corporate honchos, doctors and businesspersons. Under-construction buildings like Hiranandani’s upcoming 30-storey Sierra are already quoting Rs 3 crore and above for a three-bedroom flat. This works out to a whopping Rs 15,750 per sq ft up to the 20th floor and an additional Rs 200 per sq ft for each floor above that.
Even in neighbouring Thane, twobedroom flats have an asking rate of Rs 60 lakh in Siddhachal, a Kalapataru residential enclave on Pokhran Road No 2.
HOME TRUTHS
Despite slow sales, builders are refusing to lower prices
Two-bedroom flats cost close to Rs 1 crore in the suburbs
Middle class edged out to the fringes of the city
Experts blame govt for failing to create mass public housing Experts slam Maha govt
Mumbai: Rising realty prices are threatening to ruin the dream of the middle-class Mumbaikar of owning a house.
“With the kind of property prices being quoted today, a Mumbaikar has to earn a minimum of Rs 35 lakh per annum to afford the EMI for a two-bedroom house in the suburbs,’’ said Gopal Sharma, general manager (marketing) of Gundecha, a city-based builder.
“Today there are only two classes of people in Mumbai—the super-rich and the poor. There is nothing left for those in the middle,’’ said a veteran south Mumbai developer. Housing experts and activists have time and again blamed the state government for completely abdicating its role in providing affordable public housing and “leaving the field open to developers’’.
Another source in the industry told TOI, “Real estate prices have reached a level which is beyond the reach of the common man and even the business community. At these prices, a person can buy property only if he has made a bumper profit from any other business or the stock market.’’
According to the source, if the person takes a home loan, as much as 50% of his salary could go towards repaying the instalment. “At the end of the day he is just surviving to clear his debts. If anything goes wrong with him or if he loses his job or falls sick he will plunge . straight into a debt trap,’’ he said.
Rajiv Sabharwal, senior general manager, ICICI Bank, said that home loans are sanctioned based on the “fixed obligation to income ratio’’. It means the person’s capacity to pay the fixed monthly instalment vis-a-vis his salary. “It is generally in the range of between 35% to 50% of the person’s salary. For instance, if he is earning Rs 12 lakh a year, the EMI could be Rs 6 lakh,’’ he said.

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