Monday, December 29, 2008

Outlook money article on the real estate meltdown

A comprehensive article on the state of the real estate industry vindicates what people on this blog have been saying all along. Prices have to fall in line with affordability for buyers to bite. Those who leverage beyond their means will get wiped out. Speculate and Die is the mantra of real estate. Right now the black money operators have been swindeled by the construction companies who have promised astronomical profits but now are facing wipeouts. Unfortunately no one will shed tears for these undeserving and corrupt hooligans.
Wait! Real Estate Meltdown Ahead

“Do deewane shehar mein, raat mein yaa dopahar mein,

Aabodana dhoondhte hain, ek aashiyana dhoondhte hain...”

These lines from the 1977 classic Hindi film Gharonda would, in brief, encapsulate the struggles that most people go through while buying a home, especially so in the last 2-3 years. Residential property prices crashed in the mid-1990s, and it took till 2002-03 for them to start rising again. When they did, however, the progress was rapid. Within a short span of time, the prices had risen so much that the budget buyer, who comprises the bulk of the market, was left out in the cold.

This would possibly have continued had real estate developers not been overtaken by international events of a scale that they could not anticipate. The US sub-prime crisis triggered recessionary forces globally. That, in turn, crashed volumes in the Indian property market to a trickle. “Going forward, the market will remain slow and transaction volumes will remain low,” says Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia, a realty consulting firm.

For homebuyers though, things are getting better. A correction in property prices is already underway. In the following pages, we try to figure out what you should do if you are in the market to buy or sell, and how to arrive at a reasonable price, give or take a bit, at which to strike a deal.

Friday, December 26, 2008

Builders ask govt to buy unsold flats

Yet another dumb, foolish, stupid, retarded, moronic, idiotic, asinine, (your favorite adjective) idea to prop the realty market. Trust nitwits like realtors to come up with these pearls of wisdom.
Indian express reports
New Delhi: In the first of its kind bailout demand, real-estate companies are planning to ask the Government to buy out their unsold flats at current market prices and sell these at a later date. The proposal floated by one of the big Delhi-headquartered and listed real-estate companies is one of the many ideas to be hard sold at the Planning Commission tomorrow.

A real estate company’s chairman and managing director who did not wish to be quoted told The

Indian Express, “We will discuss this tomorrow with Planning Commission Deputy Chairman Montek Singh Ahluwalia.” He, however, did not disclose the inventory position of the large firms in India.

According to Jaskirat Singh, owner of Delhi-based real estate broking firm Grand Real Estates, about 30-45 per cent of properties worth Rs 50 lakh and above launched over the last six months remain unsold for DLF and Unitech. In the case of Omaxe, it is 25-30 per cent, he said. These companies do not disclose their ready but unsold assets.

When contacted, a promoter of another leading Delhi-based and listed developer said this was not the only proposal on the table to bail out the sector. “We want states to enter into joint ventures with big real-estate players by offering land as equity. State-owned banks must also be directed to start disbursing home loans now that they do not have a problem of funds,” he said.

To boost consumer demand and give a fresh stimulus to the sector, the companies are also seeking a further cut in interest rates on home loans. “It should be slashed to 6 per cent for loans up to Rs 5 lakh and to 7-7.5 per cent for loans up to Rs 30 lakh. What the public sector banks have done is grossly inadequate,” a developer said. Tax incentives to home buyers must be enhanced and rental income be made tax-free to incentivise purchases, he added.

Stung by the liquidity crisis, real estate companies also want the Reserve Bank of India to refinance the cash gap in existing projects. Most companies are borrowing at rates over 20-22 per cent to complete ongoing projects. “But, now, loans from banks have virtually dried up,” a promoter said.

Monday, December 22, 2008

How India Avoided a Crisis

NYTimes article on what could have been a super inflated bubble in real estate. The article reproter fails to mention that black money and corruption was responsible for the spike in prices. Reddy left the private equity folks, hedge funds and "Black Money" to take the risk of escalating land prices. These folks are the sub-prime of India. Not the bank.

“What has taken a number of us by surprise is the lack of adequate supervision and regulation,” Rana Kapoor was saying the other day. “This was despite the fact that Enron had happened and you passed Sarbanes-Oxley. We don’t understand it. Maybe it’s because we sit in a more controlled economy but ....” He smiled sweetly as his voice trailed off, as if to take the sting off his comments. But they stung nonetheless.

Mr. Kapoor is an Indian banker, a former longtime Bank of America executive with a Rutgers M.B.A. who, along with his business partner and brother-in-law, Ashok Kapur, was granted government permission four years ago to start a private bank, which they called Yes Bank. In the United States, Yes Bank is the kind of name a go-go banker might give to, say, a high-flying mortgage lender in the middle of a bubble. (You can even imagine the slogan: “Yes is part of our name!”) But Yes Bank is not exactly the Washington Mutual of India. One news release it hands out to reporters who come calling is an excerpt from a 2007 survey by The Financial Express: “#1 on Credit Quality amongst 56 Banks in India,” reads the headline.

I arrived in Mumbai three weeks after the terrorist attacks that killed 200 people — including, tragically, Yes Bank’s co-founder Mr. Kapur, who had served as the company’s nonexecutive chairman and was gunned down while having dinner at the Oberoi Hotel. (His wife and two dinner companions miraculously escaped.)

My hope in traveling to Mumbai was to learn about the current state of Indian business in the wake of both the credit crisis and the attacks. But in my first few days in this grand, sprawling, chaotic city, what I mainly heard, especially talking to bankers, was about America, not India. How could we have brought so much trouble on ourselves, and the rest of the world, by acting in such an obviously foolhardy manner? Didn’t we understand that you can’t lend money to people who lack the means to pay it back? The questions were asked with a sense of bewilderment — and an occasional hint of scorn. Like most Americans, I didn’t have any good answers. It was a bubble, I would respond with a sheepish shrug, as if that were an adequate explanation. It isn’t, of course.

“In India, we never had anything close to the subprime loan,” said Chandra Kochhar, the chief financial officer of India’s largest private bank, Icici. (A few days after I spoke to her, Ms. Kochhar was named the bank’s new chief executive, in a move that had long been anticipated.) “All lending to individuals is based on their income. That is a big difference between your banking system and ours.” She continued: “Indian banks are not levered like American banks. Capital ratios are 12 and 13 percent, instead of 7 or 8 percent. All those exotic structures like C.D.O. and securitizations are a very tiny part of our banking system. So a lot of the temptations didn’t exist.”

And when I went to see Deepak Parekh, the chief executive of HDFC, which was founded in 1977 as the country’s first specialized mortgage bank, practically the first words out of his mouth were these: “We don’t do interest-only or subprime loans. When the bubble was going on, we did not change any of our policies. We did not change any of our systems. We did not change our thought process. We never gave more money to a borrower because the value of the house had gone up. Citibank has a few home equity loans, but most banks in India don’t make those kinds of loans. Our nonperforming loans are less than 1 percent.”

Get Real : Times of India editorial

The newspaper which prints "Property Times" and subtly promotes real estate bulders through carefully planted advertorials is now playing to the public sentiment. Alas we know TOI is the wolf in the lamb's clothing. As soon as prices drop 10% they will be back with articles promoting how people are lapping up properties by the dozens. Whether it is in god-forsaken places is another matter. What they care about is advertisements from builders. In a city of 20 Million like Mumbai, if 200 people buy an apt in Khandeshwar, Karjat or Panvel, far flung exhurbs in Mumbai it makes front page news. So much for the grand old lady of the Bori Bunder.

Real estate is one boom-gone-bust that's proving hard to tackle. At the government's prodding, public sector banks recently offered concessional
interest rates on new home loans up to Rs 5 lakh and between Rs 5 lakh and Rs 20 lakh. This was welcome, save that discretionary lending could still thwart loan aspirants. Also, the rates weren't retrospective, giving existing borrowers cause to grumble. As a palliative, the government appealed for lower floating interest rates. Its efforts paid off. State Bank of India, the country's largest bank, is to offer cheaper loans. Earlier, HDFC, India's largest private mortgage player, announced cuts in home loan rates for both new and existing borrowers. ICICI also hinted at reductions. So the soft rate trend is emerging in major private loan disbursing institutions as well. Reportedly, other realty-boosters under the government's consideration are an external commercial borrowing window, a service tax cut and rationalisation of stamp duty on property deals.

Realtors must accept that their big margin-driven boom-time is over for now. Much of their woes are their own doing. They overbuilt assets, riding on a bubble. With depressed demand, they continued to expect unrealistic profit margins. And now they're resisting top-end price corrections. Inflated asset prices are such that even the moneyed are sweating over purchases in tier-I and tier-II cities. Shifting gear from luxury and high-end to mid-level and affordable housing is required. Demand for low-cost housing is massively unmet; the potential for investment here goes beyond the context of today's economic downturn. India's young demographic profile, rapid urbanisation and high savings rate can keep propping up the property market. But housing prices in some segments need to fall by as much as 30 per cent to match affordability.

However, difficult bank financing can hobble low-cost housing projects. Banks need to ease lending, for which they may have to lower deposit rates. Further rate cuts from the RBI would help. Also, apart from builders' pricing, the issue of artificial land shortage keeping prices up needs addressing. Some of realty's demands converting short-term bank loans to long term and rate cuts on home loans of all categories have grounds. Others are mad-hatter expectations, such as wanting a government buyout of unsold assets at current market rates. Realtors have sensibly refrained from formally soliciting any such morally hazardous bailout.

The health of real estate has strong macroeconomic multiplier effects, both in terms of contribution to GDP and employment generation. The more the sector is stimulated, the faster India's economic turnaround will be. The real estate sector has to get real about the changed market environment, doing itself, consumers and the economy a favour.

Thursday, December 18, 2008

Bangalore: Builders Gasp while Buyers Wait with Bated Breath

Bangalore: Builders Gasp while Buyers Wait with Bated Breath
Sharath S. Srivatsa / The Hindu

* Discounts and freebies fail to work for the real estate sector which finds itself grounded by the economic downturn
* Developers are removing extra amenities to bring down the project cost
* Cancellation of bookings has gone up drastically in the recent months

BANGALORE, Dec 17: The real estate sector in Bangalore, affected by the recession, is in a dreadful situation.

A sector that was riding high on the economic boom till recently finds itself grounded by the economic slump.

This has left a large number of developers in the lurch even as customers wait with bated breath for the completion of projects.

The sudden downturn in the last three months has not only forced developers to postpone the launch of new projects, but also delay those under construction. The gap between demand and supply has widened as sales have come down in the last six months, and especially so from September.

“Let alone new launches, it will take a long time for the developers to clear the glut in the market. It will take a minimum of one year for the industry to overcome the slowdown even after measures have been initiated by the Reserve Bank of India (RBI) and Union Government,” an industry insider said.

Removing extras

In an effort to attract buyers, the developers are re-positioning the price by removing extra amenities to bring down the project cost. Though developers are offering discounts up to 10 per cent on the projects, some big companies, burdened with huge overheads, are struggling to bring down the rate.

A few developers are also offering plots along with a housing unit, an unusual move in an industry that has become price-sensitive.

Though figures on the number of unsold flats are hard to come by as no surveys have been taken up by the industry, sources estimate they run in tens of thousands. When the IT sector was bullish, the north-east, east and south-east parts of the city witnessed large-scale development — residential, office and retail — especially in K.R. Puram, Marathahalli and Sarjapur, as well as Bannerghatta Road, Kanakapura Road, J.P. Nagar and Jayanagar.

While the tightening money flow has hit the industry badly, analysts say the downward trend started with the Reserve Bank of India’s (RBI) increasing the risk weightage for the real estate sector a few months ago.

“The high risk weightage to real estate sector essentially meant cut-down on lending to the sector — both to developers and buyers, by the lending agencies,” said T. Venkatesh Babu, Senior Manager-Market Research at Nitesh Estates.

“Funds to the sector are choked as both developer and buyer found it difficult to secure loans. Several families have also postponed purchases due to the uncertain future. This has contributed to reduced sales, affecting project funding.”

Private lenders

With an estimated Rs. 2,000 crore locked up in the Bangalore market, many developers are scrambling to service their debts even as lending institutions have started recovering the loans. “Already some developers have defaulted on their loans; many have borrowed from private money lenders at exorbitant rates ranging between 24 and 36 per cent as they were unable to get institutional loan,” said M. Ramesh, Secretary of Builders’ Association of India –Karnataka.

He said that the plight of developers is so bad many of them have not only pledged their projects but also their residences to ensure completion of projects.

“An industry that believes time as the essence of any contract, schedules are not being adhered to even by big players,” Mr. Ramesh added.

Buyers too

While the builders found it extremely difficult to secure funding for their projects, many prospective buyers have failed to secure funding from the financial institutions and banks. “Cancellation of bookings has gone up drastically in the recent months.

These are mainly due to the fact that the buyer, who had already booked the flat by paying 10 per cent advance, does not get the desired funding from the banks,” confirmed a marketing executive of another leading real estate company.

In many cases, the executive said, the delay in completion of projects has caused anxiety among the customers.

“This is the case, especially among those who have bought flats from small builders, and are not sure when the project would be completed.”

According to secretary of Confederation of Real Estate Developers Association of India (CREDAI) - Karnataka S. Suresh Hari, “Genuine buyers have been affected by lack of availability of loans. The high taxation rate in Karnataka — close to 34 per cent — has also become a deterrent.”

The industry is hoping that the measures implemented by the RBI and Union Government will improve their fortunes by March.

If the sector does not begin to look up by then, the consequences may be disastrous.

Sunday, December 14, 2008

Top city builders meet to discuss slashing prices

This meeting by the builders smacks of an oligopoly where these moneybags decide to raise or drop rates by consensus. The SEBI and other organizations should look into this meeting for price fixing and prosecute the ceo's of these companies. Imagine a meeting between Airtel , Vodafone and Reliance to decide on per minute rates. This is a cartel and should be accountable for monoplistic practices. The biggest irony of this article is the shedding of crocodile tears for the poor laborer who has seen his daily wages drop to 50rs from 150 rs. If these builders who prices apts for 50,000 per sq/ft , they can sure pay a half decent wage to someone who toils in the heat and sun, while these neo-rich bozos sip drinks in the comfort of a 5 star hotel

The 2nd bigger irony is blowing the trumpet of the Times of India, that they were the first to report on the price drops. While they reported price drops, they also reported why prices are going to go up and how 40,000 per sq/ft is real steal for a crappy apt in Bandra. Such irresponsible journalism has made the times of India, the toilet paper of India.

Nauzer Bharucha | TIMES NEWS NETWORK

Mumbai: At least half a dozen of the city’s top builders met at a prominent five star hotel in central Mumbai on Friday night to brainstorm about the one thing that has been worrying them for the past several months—how to kickstart the virtually stagnant apartment sales following the downturn in the real estate market.
Among the several issues discussed was the possibility of reducing prices of flats if it helps sales to pick up. According to industry sources, the Maharashtra Chamber of Housing Industry (MCHI), which has leading developers as its members, is expected to explore this possibility at its meeting on Tuesday, although the matter is not on its agenda. Already, some builders have informally reduced their prices between 12% to 20% in their projects in the suburbs.
However, Mohan Deshmukh, one of the developers present at the dinner meet, denied that builders can ever take an unanimous decision to cut prices. “Every developer has his own priorities and it is up to him to decide on a price cut. The MCHI cannot take a decision on their behalf,’’ he said.
Although the property market began to flatten out about 18 months ago, Mumbai’s builders, by and large, have managed to hold on to their prices. Between 2004-2007, home rates shot up between 100% to 300% on an average, going up to 500% in certain high-end projects. Builders may move Centre to plead their case
Mumbai: Top city builders, who were peeling the pinch after global meltdown, participated in the brainstorming session to decide price cut on Saturday. The meeting commenced at 7.30 pm and wound up only at around 11 pm, sources said.
It is learnt that among some of the leading builders who were present at the meeting included Rajni Ajmera of Ajmera Builders, Dharmesh Jain of Nirmal Lifestyle, MCHI chairman Pravin Doshi (Acme Group) and Deshmukh, who is CEO of Deshmukh Builders and past chairman of MCHI.
There was complete unanimity among the participants that the industry is passing through an “unprecendented’’ crisis. This has affected not only the developers, but a host of ancillary industries, including a large army of unskilled labourers working at the project sites.
“A labourer who used to earn Rs 150 a day is today struggling to barely eke out Rs 50 a day because many projects have come to a standstill,’’ a leading developer told TOI recently. Virtually every Mumbai-based developer is on a cost-cutting drive including retrenching employees across departments.
The Mumbai developers are also thinking of representing their case to the Centre to increase the priority sector lending to home buyers from Rs 20 lakh to Rs 40 lakh. Early this month, the RBI had allowed banks to classify housing loans up to Rs 20 lakh as priority sector advance. The interest rate on such home loans is 1.5% lower than the normal rate of interest.
The downward trend in the property market began in January 2007 when banks began hiking their interest rates, and since then, bookings have continued to drop with every rate hike announced. The crisis worsened after the global economic meltdown affected the Indian market since the past few months.

Property consultants said even existing loan account holders are finding it tough to hang on as EMIs threaten to upset their monthly budgets. Last year, TOI was the first to report that several builders, dealing on a one-to-one basis with home buyers, had begun offering freebies like not charging for parking slots, not charging a premium for a floor rise and, in some cases, even offering to pay the stamp duty.


DNAIndia reports from Bangalore.

As techies default on EMIs, banks are reclaiming their homes

N Raghuraman. Bangalore
If you are a code jock or call centre employee, watch out. Your dream home is about to become a nightmare. Worried about your ability to repay, banks are in overdrive to repossess your property if you have not been paying your equated monthly instalments (EMIs) for more than three months.

Over the last few days, nationalised and private sector banks have issued a rash of repossession notices in newspapers to recover properties from borrowers who have been defaulting on EMIs. Industry insiders say that one out of every 10 homes bought with loans is in default in Bangalore city, most of it from the technology and BPO sectors. The houses being reposssessed are spread out across the city, from HAL Stage III to Kumara Swamy Layout and from Vignana Nagar to RT Nagar.

"The IT sector is one of the main contributing factors for the repossession drive that banks are undertaking in Bangalore. Several IT companies have laid off employees and the bonuses of several others have been cut, which has resulted in defaults in home loans," admits BR Bhat, general manager, Corporation Bank. The bank has a Rs 1,000 crore home loan portfolio in the city and the share of IT staffers is nearly half of that.
According to banking industry insiders, almost all banks in the city have registered a 20% increase in loan defaults, and thousands of properties are being recovered under a stringent law called Sarfaesi – or the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002.

The Act empowers banks and housing finance companies to recover their dues in case of defaults within a specified timeframe. Earlier, banks had to file civil suits against defaulters, which could take more than 20 years to settle cases.

In the first half of this month alone, the recovery process has been initiated on various flats and independent houses worth Rs 80.23 crore. The number will surely bloat as this is only the tip of the iceberg, and banks are worried about the impact of these defaults on their bottomlines.
"It would be foolish to live in denial that there will be no impact of the (global) slowdown on our books. This will be reflected in our books in the coming quarters. In Bangalore, there might be more home loan defaults under the current circumstances. But things are not out of control," says Syndicate Bank chairman and MD George Joseph.

At least 15 nationalised and old private sector banks have initiated recovery proceedings and they are in various stages of execution. The list includes Vijaya Bank, Andhra Bank, Syndicate Bank, SBI, State Bank of Mysore, the Bangalore City Cooperative Bank, Corporation Bank, Canara Bank, Federal Bank, Bank of India, Karnataka Bank, Karnataka State Financial Corporation, Citibank and Indian Bank.

If one goes by the printed notices, Canara Bank, Vijaya Bank and State Bank of Mysore seem to be worst affected with their non-performing assets (or bad loans) contributing 80% of the dues which are under process.

Monday, December 08, 2008

Home Loans to be locked in for 5 years at 9.5%

It looks like Indian bankers are yet to learn from the wave of option ARM defaults hitting the US home-owner. If the text of the press release is to be believed the bankers will be lending upto 20L for 9.5% for a period of 5 years until the loan resets to the market rate. In today's enviroment the publicly listed builders need the middle income earning to buy housing and the only way they can get that to happen is to pressurize banks to lower lending rates.

As expected builders will now price homes at 25L white and everything above as black. If one things this will bring relief to the common home buyer they are in for a rude shock. Another trick the builders do is build jodi flats, i.e. flats which meet the middle income criteria but are adjacent to each other so that they can be combined by the high income purchaser. reports
Mumbai: Public sector banks (PSBs) are set to offer home loans of up to Rs20 lakh at a concessional rate of 9.5% for a period of five years as part of the government’s fiscal stimulus package announced on Sunday to spur spending and bolster sagging economic growth.
All new home loans advanced by state-owned banks until 30 June will come at the 9.5% rate, which will be reset five years later depending on the prevailing trend, according to two senior bankers involved in devising the package who didn’t want to be named.
A formal announcement of the scheme will be made soon by public sector banks. Two officials at two different ministries, who also didn’t want to be named, confirmed the plan.
Housing is one of the key areas on which the government is focusing to lift economic growth that’s slowing from an average annual pace of 8.9% in the past four years. Lower interest rates prop up the demand for homes, which in turn, creates demand for steel and cement and generates jobs in the construction sector.
Banks and housing finance firms are now charging between 12% and 14% for fixed-rate home loans and offering floating-rate mortgages at between 9.5% and 11.75%.
Because the cost of funds for banks currently is higher than the rate at which they will offer loans under the new scheme, the government may work out an arrangement to compensate the lenders, analysts say.
It is not clear what will be the nature of the arrangement but “certainly not subvention”, said one banker. The government offers 3% subvention—or interest subsidy—on small agricultural loans, which are given at a concessional rate of 7%.
The Reserve Bank of India’s (RBI) decision on Saturday to include home loans of up to Rs20 lakh in so-called priority sector lending—targeted at segments such as agriculture, small industry and education—will come in handy for banks to offer mortgages at a concessional rate.
Under banking industry guidelines, 40% of advances are meant to be channelled to the priority sector. Banks that are not able to meet the target are required to park the shortfall with the National Bank for Agriculture and Rural Development at a low interest rate. The money is used for rural infrastructure projects. Analysts say the five-year fixed rate of 9.5% will dent banks’ profitability if the government doesn’t offer a support plan for lenders in case interest rates remain at this level or rise further. But if interest rates drop, consumers will lose out on the benefit of falling rates.
“If interest rates fall and home loan rates come down below 9.5%, we will have to watch what exit options this package would provide. Many questions of potential borrowers might have to be answered before they go ahead and avail of such loans,” said Ravi Sankar, a banking analyst at Antique Stock Broking Ltd, a Mumbai-based brokerage.
The asset quality of banks might be compromised if they try to push the scheme aggressively, Sankar said.
“This rate is quite attractive for borrowers at the moment,” said Hatim Brochwala, an analyst at Khandwala Securities Ltd, another domestic brokerage. “However, if interest rates fall and home loan rates become cheaper, borrowers might start complaining. So, the banks will have to chalk out an exit plan. Converting fixed rate into floating rate (loans) may not be a good option as the penalty is heavy.”
Analysts are betting that interest rates will come down by 300 basis points in two years and home loan rates will be cheaper than 9.5%. One basis point is one-hundredth of a percentage point.

On Saturday, the RBI announced a special refinancing package of Rs4,000 crore to the National Housing Bank, which regulates housing finance firms, to help prop up the home loan market. Analysts say the refinancing facility is too small.
Housing Development Finance Corp. Ltd (HDFC), India’s oldest mortgage firm, has a disbursal target of about Rs45,000 crore this year. While HDFC accounts for at least 40% of the housing loan market, public sector banks make up about 20%, limiting the scope of the stimulus package, analysts say. ICICI Bank Ltd, India’s largest private sector bank, is a prominent lender in the mortgage market.

Delhi flat owners re-sell in down mood

Gaurav Jha, Hindustan Times reports

With property values falling, frenzied property owners in Delhi NCR (National Capital Region) now seem to be in a selling wave, fearing further fall in the prices of their property.

Businessman Rahul Gupta is in a hurry to sell his three-bedroom flat in the Faridabad area for Rs 32 lakh, Rs. 50,000 below the amount he paid nearly a year ago. In Delhi, it is unsual for a property to be sold at a price less than the purchase price.

“I am in urgent need of money and the prices are crashing. I may not get this amount after a month. I don’t know when the market will revive,” Gupta told Hindustan Times.

“It is just a seller’s market, not buyer’s” said U.K.Bhardwaj, founder-president of the Delhi Property Deaders Association.

Sajoy Mittra, a retired bank employee, has been trying in vain to sell his three-bedroom Gaur Green apartments at Indirapuram across the Delhi border near Ghaziabad (Uttar Pradesh) for Rs. 72 lakh for the past two months.

Unlike Gupta, he is however hopeful. “I feel the laid off employees and NRIs (non-residential Indians) in the West will buy my home after coming back to India”

However, the brokers have a different take. They are not much optimistic of the market.

“There are only sellers in the market, no buyers”, said Pradeep Mishra, a broker who has operations across NCR. “For every single buyer, the market has at least five-six sellers” he added.

“The market has only 10 percent buyers, while 50 percent have disappeared because of the economic slowdown while remaining 40 percent are waiting for the prices to decline,” Mishra said.

“This is happening all over. RBI’s announcement of cuts in repo and reverse repo rate (signal interest rates) is a welcome move. But until we don’t get a rate of 7-8 percent on home loans, buyers will not have confidence in the market,” said Sanchin Sandhir, managing director at property consultancy firm RICS, told Hindustan Times.

Tuesday, December 02, 2008

Palace property sold for 6,000cr

I always thought the Palace Grounds was owned by the government. Mr Wodeyar should thank his fore-fathers for his golden spoon. Wish is everyone was so lucky :)

Palace property sold for 6,000crBY R. JAYAPRAKASHBENGALURUArticle Rank I Wodeyar has sold prime land in Palace Grounds to a city-based developer I ‘ Many high profile realtors were interested in the deal ‘ but in the end leading developer Dayanand Pai struck the dealIt is disputed land but already been sold for Rs 6,000 crore. In the biggest land deal that Bengaluru has seen so far, some 250 acres of prime land in the heart of the city in Palace Grounds, has been sold to a leading city-based developer Dayanand Pai.The state government and the scion of the Mysore royal family Srikantadatta Narasimharaja Wodeyar are shadow-boxing in the Supreme Court over rights to the property.The deal has been brokered by a godman, who is close to both the politicians and the maharaja.A team of chartered accountants drafted the sale agreement that will be executed after the court case is resolved.Highly placed sources said the Maharaja had received Rs 1,000 crore as advance and the money has been deposited in the Bank of Mauritius in an escrow account. “Mr Wodeyar is earning close to a crore as interest on the advance money. He will receive the balance after the legal hur dles are cleared. Many high profile realtors were interested in the deal but in the end Dayanand Pai struck the deal as he was confident of getting the papers cleared.Of the 250 acres belonging to the Wodeyar family, 50 per cent is for outright sale and the remaining land will be developed on a joint venture basis by Mr Wode yar and the buyer. The plans include developing an IT Park, setting up malls and multiplexes,” sources said.A city-based BJP Cabinet rank minister has offered to resolve the issue.“In 1998, Mr Wodeyar had filed an application to conduct events at the Palace Ground which was turned down by the then state government. Following this, he moved the court and got a stay order on the Bangalore Acquisition and Transfer Act which was moved by the state government in 1997. The minister is working on dropping the case by the government. Another possibility being worked out is to grant the land in lieu of some other property which is also contested by the state and Mr Wodeyar. The high profile minister has resolved many such cases in the past. Looking at his track record, things look positive for the Wodeyars,” sources added.Princesses Meenakshi Devi, Kamakshi Devi, Indirakshi Devi, Vishalakshi Devi and the late Gayatri Devi, have about 28 acres of land each apart from the major chunk of land that belongs to Mr Wodeyar.

Thursday, November 27, 2008

Mumbai :Terror hits where it hurts the most

Adding to the original post I think we can expect the following in the days ahead.
1. The stock market crashes to lows never seen in the past 4 years. One may question why did the market hold up on Friday. The answer is simple. It was propped up by the institutions and the government. If the market had crashed 5%, the terrorist would've won. So basically the brokers traded amongst themselves and squared the deals at the end of the day. On Monday and the weeks ahead we will see massive liquidation by the FII's which will wipe out the most die-hard bull of the Sensex.
2. We may also see a rate cut of 200 basis points and loan interest rates can dip to 10%. Builders will use this cut as an opportunity to tout their ridiculously priced assets. As believers in black-swan theory will observe, the events of 26/11 will be the last straw which breaks the camel's back, be it the Sensex or the mega bubble in Mumbai real estate.
3. It doesn't take a genius to figure out that foreign companies outsourcing work to India will be more cautious and circumspect in their dealings. The binge madness of outsourcing everything to gain arbitrage will now to looked more carefully as to whether it affects critical business functions in times of disruptions.
4. India's date with terror will continue. The folks who commit these crimes have no regret, remorse or a living conscience. They are so blinded by hatred that it will be only time before another attack of a similar magnitude is mounted on Mumbai or some other city. To deal with this situation we need the Army to run security operations in major metro areas. The police is too corrupt and incompetent and pictures of pot-bellied policemen hanging around the Taj as mute spectators are a disgrace.
5. The cocky behavior the many South Mumbai-tes will now be a thing of the past. I distinctly remember a recruting pitch made to me by a just returned US educated individual way back in Jan 1993 when I went to meet him at his apt in Malabar Hill. He said "The tile you are standing on is worth 30000 Rs", effectively telling me that he has deep pockets. That day was an eye-opener to me on the sheer arrogance which was a part and parcel of some people who live on prime real estate.
I can go on and on but I'd like readers to comment on the aftermath of the siege on South Mumbai.
As Mumbaikars assess the extent of the damage to lives and property in the attacks of 26/11, it is the healing of psyche which will be in question. While previous attacks have targeted densely populated areas like railway stations, temples and mosque's these attacks have been focused on the rich and elite in South Mumbai. This affulent area is home to less then a fraction of Mumbai's 13 million population, and now appear to be as vulnerable to the crossfire of terrorism as the average mumbaikar.

Lets hope the government wakes up to this tragedy and shakes up the law and order machinery. If an attack of this magnitude is replicated somewhere else, we will have ourselves to blame. A lone fire engine battling the fire at the Taj hotel speaks volumes of the lack of preparedness to handle emergencies.

I hope all readers and their close ones are safe. Our thoughts are prayers are with the injured and the unfortunate victims of this massive tragedy. MumbaiHelp has more coverage on this issue.

Tuesday, November 25, 2008

The Sound Of Crashing Real Estate (Goldman Sachs)

You mentioned that you were recently laid off from a big construction house. What is your experience like for working for these folks ? What are the inside secrets which you could share for the benefit of all readers.
Goldman Sachs
India: The Sound Of Crashing Real Estate India's property market is poised for a deep correction. This will bring on sizeable knock down effects, with India GDP expect to slide down to a growth of 5.8 per cent in FY10. We estimate prices may need to fall by up to 30% from current levels, with significant knock on effects on the economy.

In particular, it will slow construction activity, which directly accounts for 7.3% of GDP, but has sector linkages which we estimate to be 14% of GDP.
After India's last housing bust in 1996, real property prices fell some 40% over three years, negatively affecting consumption and investment demand.

Mitigating factors-favorable demographics, low mortgage penetration, ongoing infrastructure demand.
India's property market is poised for a deep correction. Property prices have risen dramatically over the past three years, supply exceeds demand in most geographies, and affordability lags prices. Our India Real Estate Team believes that residential property prices in some geographies may need to fall by up to 30% from current levels for affordability to catch up. As elsewhere globally, we think this will have negative effects on the economy.

The imminent slowdown in construction activity can potentially have a big impact on the economy. By using an input-output matrix, we estimate that although the sector directly accounts for 7.3% of GDP, its backward linkages in terms of the sector's usage of iron, steel, cement etc., and forward linkages to other sectors, impacts an estimated 14% of GDP.
Therefore, a slowdown in the construction sector can potentially have large knock-on effects on the economy.
From the demand side, a property downturn, we think, will have negative effects on consumption and investment. As housing forms the largest component of household wealth, consumer demand will be impacted. The fall in collateral will also hurt firms' balance sheets, increase their funding costs, hurt confidence, and reduce investment demand. However,
the impact on demand will be lower than in developed countries.

Lessons from previous housing busts suggest that they tend to be prolonged episodes with considerable macro consequences. After India's last housing bust in 1996, real property prices fell some 40% over three years, and did not recover to their previous peaks for a decade.

Consumption and investment demand were both negatively affected, and growth slowed from an average of 6.8% in the four years prior to the bust to 5.4% in the four years after it. Typically, housing busts in OECD countries have lasted six years with a 30% decline in prices and substantial negative implications for the economy.

Mitigating factors, such as India's favorable demographics, low mortgage penetration, falling interest rates, and ongoing infrastructure demand, in our view, will keep the property downturn from being protracted. However, we believe a sharp slowdown is imminent. We therefore remain negative on the real estate sector, and its supplier industries such as cement, iron, and steel, and reiterate our below consensus estimate of
5.8% GDP growth in FY10.

Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations,
tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.

Saturday, November 22, 2008

Mumbai constructions grinds to a halt

Construction halts in Mumbai, so ‘they wait here endlessly for some work’
reports on the human toll of the housing meltdown. While the builders can keep taking up obscene prices of 20,000 rs per sq/ft, the laborers who build these houses struggle for 250 rs a day. An ironic state of affairs. This is extreme greed on part of the construction industry who seem to believe that they are generating mass employment for unskilled workers. K.P Singh and the lobby should be ashamed of asking for bailouts from the Indian government when they treat their laborers so shoddily. Its about time the real face of the construction industry is bought to light.

MUMBAI, NOVEMBER 21 : Every morning, Lalita Rathod joins the mass of labourers outside Khar station, an “open labour market” where people are chosen for work at construction sites. But this last fortnight, the wait outside the station has been one huge disappointment for Lalita and other daily-wagers from the Bharat Nagar slums — nobody needs them.

“In the last one month, finding a job has become really difficult. Some of my neighbours have returned to their villages as they couldn’t earn enough to pay rent here. They hope to get back after a few months when things get better,” says Lalita who brings home Rs 250 a day by lifting earth and gravel at construction sites. She says she can find a job as a domestic help but that will just get her Rs 1,000 a month — not good enough because she has five school-going children.

Rafiq Khan, a construction contractor, points to a row of skilled labourers — masons, painters, plumbers. “This line has reduced by half lately. Many have gone back to their villages and will remain there till we call them for work. First, there was an exodus of construction workers from Bihar after attacks by the Maharashtra Navnirman Sena. Now, there is a lull in the real estate market. They wait here endlessly for some work.”

For a city that has some 45 million square feet under construction, Rathod and Khan’s experiences might come across as stray cases. But even the best plans have gone all wrong, so several developers are focusing on selective projects or on completing one building instead of four. At the Kalpataru Aura project in Ghatkopar, work has been stopped on all buildings except one. The DLF construction site in Lower Parel, which had earlier planned to employ about 1,000 workers, has very few workers at the site.

Thursday, November 20, 2008

Fear and Deflation in Vegas

Life comes full circle and the anti-matter version of Fear and Loathing in Vegas is rearing its ugly head. Steel is down 75% per ton, cement is down lows never seen. Stocks like ACC and Tata Steel blue chip Tata companies are getting cheaper by the minute and the center piece of action, DLF and Unitech the darlings of the real estate industry are down 90-95% from all time highs. What does all this data fortell ? To the brokers and the touts of the real estate industry they still are calling for a 8% cut (Sobha in Bangalore ) or another stupid builder who is giving an apt in Mira road free if you buy a super inflated apartment in Santa Cruz. With IICI bank and HDFC bank down 70% banks are in deep trouble. They will be very worried about Non performing assets and will be very reluctant to lend at over priced properties. They also would like their current borroweers to pay thru the teeth to compensate for the NPA's. Looking all around there is doom an gloom. I wonder what the trolls on this blog think.

Tuesday, November 18, 2008

Builders in fix as bhais want money back

Shailesh sent this link in the comments sections which deserves to the highlighted. In the past the builders were the target of the Bhai's for exotortion. Now the bhai's help the builders to milk the middle class with the help of the banks. The poor middle class owner who has bought a 50L 1 bed apt at 10,000 rs is paying a handsome profit to the builder, the politician,the Bhai and the bank. Ofcourse now the ponzi scheme is up and the guys with guns are asking for their money back. Money back guarantee scheme of Mantri builders from Mumbai, is now played with a different twist. Now people can appreciate the deep influence of the underworld on the pricy world of real estate. We have times reporters who know about dealings but the police are busy chasing drunk drivers on the streets. The builders are the sub-prime of India.
MUMBAI: Several builders are in deep trouble with the underworld which had invested heavily in their projects now demanding their money back.
Dawood Ibrahim, Chhota Rajan and other dons are known to have invested in real estate projects hoping to make a quick buck. "But with the downturn in the market they are not getting the returns they expected and are asking the builders concerned to return their monies immediately,'' sources in the industry told TOI on Wednesday. The builders' problem is that they have already invested these funds in buying land and old buildings for redevelopment and have no liquidity to meet the demands of the gangsters. But the mafiosi is not known to take "no'' for an answer and is turning the heat on the builders. One of the builders in the western suburbs is reported to have returned a whopping Rs 750 crore to a big-time gangster. Another big player in the real estate market is receiving calls from a Malaysia-based don to give back his money and he simply does not known how to do that. "None of these builders have approached the police since their financial partnerships with the gangs would be exposed,'' sources added. "We are already saddled with unsold stocks. Where are we going to get the money to repay the `bhais?' They are not interested in taking over the unsold flats since it is a dead investment for them,'' a builder observed. For the past several years, many of the builders are known to accept investments from the gangs since the latter are able to give big volumes of cold cash and that too at a short notice. Since there was boom in the market there was no problem in giving the `bhais' good returns on their investments, but the scenario is totally different now. Incidentally, it is not only the underworld which has been financing the real estate boom. Several top bureaucrats and senior police officers too are known to have parked their black money with builders. These persons have also become jittery and are pressing for the return of their money. At least with these type of investors
the builders are not facing much problem because they are privy to details of the ill-gotten wealth of the babus and cops. But with the gangsters it is a different ball game altogether.

Land dealings hit by global recession’

Looks like the finance minister and the minister in Pune are looking are different set of numbers. Here Mr Pawar is calling for a deep recession and the FM is saying that India will not be affected. The FM needs to dig his head out of the sand and quit. He has wrecked havoc in the construction industry by fuelling the bubble and now is denying its existence. Today he exorted Autos, airlines and reatly companies to drop rates of their products, and ofcourse the banks too, they have to drop their interest rates ? What does all of this translate too ? A slowdown of profits for some and deepening losses for others like airlines.

The article below mentions about townships being in trouble. In Pune we have Amanora, Lavasa, Blueridge whose investors will see their mirage's last longer then half a decade.


Pune: The global recession has hit township projects and land dealings in and around the city, affecting it dearly, Pune guardian minister, Ajit Pawar, said on Monday. Addressing a meeting of the NCP workers, Pawar said, “The global recession is witnessing a local impact. Township projects around the city are largely affected due to the economic meltdown. Only few days ago, Pune and Raigad districts were leading in land deal transactions. Today, there are hardly any transactions happening.”
The state has already increased the FSI (ratio of permissible built-up area to plot area) for townships from 0.5 to 1. “But these townships are in deep trouble due to the crisis,” Pawar said.
He added that as per projections by Indian economists and political leaders, the recession will continue for a long time. “It’s time to reorganise resources and plan things,” Pawar said.
Mayor Rajlaxmi Bhosale in her speech admitted that the civic body was also facing financial crisis.
“However, the crisis can be attributed to the mammoth development works carried out by the PMC in one year. The PMC has developed infrastructure worth Rs 1,000 crore in a single year. The civic body has also contributed its share to the JNNURM funds. We have provided citizens with world class facilities on the occasion of the Commonwealth Youth Games and that has put some pressure on the municipal corporation,” Bhosale said.
Bhosale said though there are others taking credits for the successful completion of the Games, it was the civic body that created the infrastructure, with the state and Central government providing the funds and Sharad Pawar playing an important role in the process.” She said in the last one and half years after the NCP came to power, various development works have been implemented.

Friday, November 14, 2008

Funny Reliance email

Found this funny email doing the rounds on the internet. It truly refects the state of the Bombay shock market.

Dear Shareholders,

Through self RELIANCE, you will have the POWER & ENERGY to bear all your losses. This COMMUNICATION is directly from our boss who is making CAPITAL on your behalf. Remember, you foolish investors are our NATURAL RESOURCES.

Yours Truly,

Aadhi Duniya Apna Group (ADAG)

Roz India Looto (RIL)

"The broker is not your friend. He is more like a doctor who charges patients on how frequently they change their medicine."

Forthcoming IPO from Reliance Group









RPL (Raha Paisa to Lenge)

RNRL (Rona Nahi Fir Bhi Ro Lenge)

RIL (Risk in Life)

REL (Roz Ek Lafda)

Thursday, November 13, 2008

Builders go with a begging bowl to the PM has a good article on the sorry state of builder finances
In India real estate gets unreal

By Dr arvind, Section Real Estate
Posted on Wed Nov 12, 2008 at 11:31:03 PM EST
someone please help me here. How is it that the country's top realtors who could not have, in their wildest dreams, hoped for formal audiences with the country's economic decision-makers even a few years ago are walking in and out demanding, among other things, lower interest rates, ostensibly to protect the interests of 250,000 construction workers?

Let me break this argument up piece by piece, or should I say separate the carpet area from the built up area. Let's begin with an example. Assume I bought property in Mumbai (pre-2004) paying around Rs 30 lakh (Rs 3 million). Today, the same property quotes for anything between Rs 90 lakh (Rs 9 million) and Rs 1 crore (Rs 10 million).

How did this happen? Well, it began in the glorious days of interest rates, with the figure at an all-time low of around 7 per cent. Today one can definitively say it was this very low interest rate regime - I don't care what the supply side guys say now - that triggered, massaged and abetted the mad spiral that resulted in the 300 per cent hike in property prices in the city of Mumbai.

And obviously if it applies to Mumbai, it must apply in similar or identical proportions to property and land across the country, including for industrial land and special economic zones. The same low interest rate regime triggered a housing bust in the United States and a global financial cataclysm, but that's another story.

It also meant that the well-to-do here were buying second, third homes, and trying to flip them around. At 7 to 8 per cent interest rates and rising incomes, the opportunities were almost magical. Browse any major realtor's website (including DLF) and you will see grand, upscale projects which are great for those who can afford them, but hardly deserve the finance minister's intervention if they have to be sold at half the present asking price.

There is an important reality, pun not intended, to reckon with. It is that the stock market party is taking a long breather. Obviously it would be good for all, including this writer's financial assets, if the party resumed. But it looks unlikely to for a while. And promoters would be wise to accept that the markets are not discriminating against any specific industry or company, at least at this point. A look at DLF's stock price versus the Nifty since January 2008 is illustrative. Both have moved almost in tandem.

As have the stock prices of a host of other companies in diverse sectors. So why then is the fate of the real estate industry more perilous than anyone else's, is the question I would like to pose. Surely not for building more diesel genset-powered malls or lakeside apartments and chalets. As I see it, every business house in the country is struggling to match capacity to demand, which is falling. Tata Motors [Get Quote] has shut plants to manage inventory, so have a host of other auto companies. And they, quite naturally, want auto loans to be made cheaper.

Click on "Full Story" for more...

And for all the prime minister's pleas, every industry I know of is rationalising its workforce. Thanks to Naresh Goyal and Jet Airways [Get Quote], no one will, let me assure you, put 400 youngsters out on the streets overnight. But they will cut back and they have little choice but to do so, particularly in industries where out-of-control factors like sky-high oil prices have wreaked terminal damage.

One newspaper report quotes a prominent developer (apparently trying to convince the UPA government to ease up things for homeowners) saying, "The impact of the depressed market will not only be felt on our share values, but also on jobs and overall economic growth." What he mostly means is that the depressed market has severely hampered his ability to raise funds in the last nine months or so. Too bad but he is not alone.

If I were to go by one report, DLF's K P Singh is asking for interest rates in the range of 8-9 per cent. Which is about 1 per cent higher than when the mess began piling up. Brilliant. And would that assume that real estate prices remain where they are or ideally head up another 300 per cent? The industry also wants easing of bank lending norms. Nothing could be more disastrous at this point, I would hazard. So should the real estate industry (it insists it wants to be called one) be abandoned? Not at all, treat them well by all means, but do not by any stretch create special dispensations. For the simple reason that their expansionist ambitions were linked to capital markets and the absence of the latter does not mean monetary or fiscal measures are called for.

Now what is our Joe the Plumber saying? I have an idea. Which is that it has nothing to do with how much supply there is in the system, at least in real estate. It is to do with prices. And till they come down sharply, there is no hope of demand picking up again.

Think at least a 100 to 200 per cent reduction. Sure we could do with lower interest rates but I am of the opinion that higher interest rates (not 17 per cent!) are not a bad deal for this economy.

I have a thought that I would love to open up for debate which is that the excesses of low interest rate regimes outweigh the pain caused by high interest rate ones. That's another story as well.

For now, it's best to leave the real estate sector alone and focus government time and money on real low-cost, rental housing. Like China is.

Thursday, November 06, 2008

2 builders drop prices by 20%

20% down, another 30% to go. Anmol used to be 4100 per sq/ft 3 years ago. Its time for it to return to mean

DNAIndia reports

Low demand, global crisis finally take toll

MUMBAI: Builders did everything to keep the realty prices high — from shrinking flats to laying off employees and offering freebies to prospective buyers. But the slowdown has finally made them wilt. Two major builders in Mumbai — Orbit Corporation and Wadhwa group — have cut their property rates by up to 20% amid a severe credit crunch triggered by the meltdown, low demand and high interest rates.

The Orbit Corporation, a real estate development company specialising in redevelopment schemes, has slashed its rates by up to 20% for its 10 projects under construction across the city. It brought down the rates from Rs70,000 per square foot (psf) to Rs60,000 psf for apartments at Orbit Haven, a project under construction on Napean Sea Road. The company has already reduced the area of the apartments to 2,500-2,700 sq ft instead of the planned 4,500-5,000 sq ft in the wake of the realty slump.

The company has brought down the rates for its projects in central Mumbai - Rs12,000-18,000 psf instead of the earlier band of Rs15,000-22,500 for 600-1,600 sq ft flats at Orbit Grande (Lalbaug) and Orbit Grand (Lower Parel).

“One has to accept that there is a slowdown and accordingly adjust your prices. There’s no harm in creating a demand by lowering the prices,” said Pujit Agarwal, Orbit Corporation managing director.

The Wadhwa group, which paid a whopping Rs831 crore for a plot of less than two acres at the Bandra-Kurla Complex, has also slashed its rates by Rs1,500 psf, bringing it to Rs10,000 psf for flats at Anmol Pride and Prestige, the company’s residential projects in Goregaon (West).

Group promoter Vijay Wadhwa said: “We had to reduce the prices as the demand is low because the rates are too high. When the demand is low, I can afford to reduce the rates.”

The group had also not given bonuses and increment to its staff this year. “The slowdown is definitely affecting and my staff understands the ups and downs of business. I could have dismissed 10 employees but I didn’t,” said Wadhwa.

Monday, November 03, 2008

I came across this web-site which can be used as a good tool to share information about housing/plot prices in various locations of India. It uses the same principles used by and other crowd-sourcing websites which attempt to figure out the consensus opinion, based on a large set of users. Once this site gets traction, the data will be a valuable set of unbiased information. I urge all readers to update as much information as they can, about plots/apts and rentals. Kudos to Anand for this endeavor.

CNN -IBN poll

CNN-IBN is conducting a poll on the state of the real estate market in India. Click here to cast your vote. The battle is between the hesitant buyer against to the defiant seller. Its a poker situation where each one is waiting for the other guy to blink. The banks are mute spectators to the shenanigans of the RBI governor and Chidambaram. They would rather lend at current rates and hope that builders drop prices, rather then lower rates and pass on the profit to the builders.

Sunday, November 02, 2008

Builders in crisis mode in Mumbai

The Times of India is reporting on the slowdown in the building industry.

New housing projects on hold in city

Mumbai: The city is unlikely to see any new housing project coming up soon as the screws turn on the property market. Last month, Mumbai’s leading developers met and discussed the possibility of not launching new residential projects considering the slowdown, sources said.
“New projects are not viable, sales are slow and buyers are sitting on the fence. Every developer is looking at his own cash flow and many projects have slowed down. Each one is wise enough to take a call on what to do,’’ said Mufatraj Munot of Kalpataru, one of the city’s oldest builders and past president of the Maharashtra chamber of housing industry. He, however, denied that builders had taken a unanimous decision not to start new projects.

But with each passing week, stagnant sales is turning up the heat on the construction industry. “Builders are deferring launching of new projects. With banks and financial institutions turning the screws, the real estate market has dried up. There are no investors and the actual users are waiting for prices to come down,’’ said a property developer, not wishing to be identified.
With their backs to the wall, a majority of builders has also started retrenching employees. Last week, a prominent developer known for his signature buildings decided to virtually halve the 450 employees on his payroll, it is learnt.

Even the once lucrative transfer of development rights (TDR) market has lost sheen. Builders used to purchase slum TDR at Rs 4,000 a sq ft till about six months ago. It is now down to Rs 1,200 a sq ft. Still, there are few takers. Moreover, builders who have bought TDR have been unable to pay sellers. It is estimated that about 100 builders owe close to Rs 200 crore to TDR owners and traders.

In the market, although builders are not officially reducing the rates of properties, they are negotiating with individual flat buyers and offering discounts to bulk purchasers. In Bhandup, a developer recently sold six flats after he reduced the price from Rs 7,500 to Rs 4,200/sq ft. In Goregaon, the builder has offered a similar reduction to six buyers.

On Ghatkopar’s LBS Road, work on residential project of a prominent developer has come to a halt n Members of a housing society near Bandra’s Bhabha hospital were recently taken aback when a prominent developer from the eastern suburbs withdrew his offer to redevelop the property n Another society near Khar gymkhana received a similar withdrawal letter from a builder from the western suburbs who is said to be “neck-deep’’ in debts n A Delhi-based developer, who had won the bid for a prime mill plot in 2005, hasn’t progressed beyond the basement level in two years n A south Mumbai property redeveloper has mortgaged a high-end flat in his upcoming building to the lender from whom he has taken a Rs 9 crore loan at 39% interest n A young developer with projects in Goregaon, Virar, Thane and Juhu is reportedly in big trouble, having taken loans from Kutchi, Marwari investors at 36% interest. He is believed to have put all his projects on hold

Saturday, November 01, 2008

Email from a disgruntled Purva apt buyer

Lets vote with our wallets and boycott these unscrupulous builders

Dear Friends,

Please forward this mail to as many people as possible.

My name is Rishi Agarwal and I am a 1996 EE graduate from IIT Kanpur. I returned to India in 2005 and purchased a flat in Puravankara Fountainsquare. Please go through the message to see the horror story.

I wanted to write this mail to all of you so that all of you can benefit from my (our) experience with Puravankara Projects Limited. I purchased a flat in their Fountainsquare project in Bangalore and this is the story of all my fellow Purva owners.

The agreement that we signed with Puravankara has the following:

1. The delay from our side is charged at 24% per year.
2. The delay from their side will make them pay at 6%.
3. They don't have to pay the penalty if we delay two payments by more than 2 days.
4. What they call as delay is also decided by them.
5. They reserve the right to cancel the agreement at any time and
they will keep 15% of your money.

Sounds scary right? but every word here is true. I can scan and send the agreement to all of you.

Why would you think I signed the dotted line? Why did any of us sign
this flawed agreement? The thing is that when you go to a premium
builder (for which you pay a premium), you expect to have a smooth
transaction. You don't expect such uneven agreement. At the least,
you'd expect that they'll not exercise it.

Puravankara is exercising it bluntly. There are 200 of us who are
already in court against it but as you know we have no legal stand.
We have signed the dotted line. Their executives have been
nightmarish and are very discourteous.

Please contact Mr. Prem at in case you want to confirm the validity of what I wrote in this mail.

Please come forward and teach the unethical business house a lesson.

Kind Regards

Friday, October 31, 2008

Loan defaulters rights

What a change of headlines in the Economic times. From buy before you get priced out, to "How do you pay the loan on the property you thought was going to double ?" . Ofcourse the black money operators don't have to worry ;)

Defaulted on home loan? Be aware of your rights

MUMBAI: Almost every home loan borrower has this niggling fear: What if I default? Higher interest rates could hit those with floating rate home loans, triggering a rise in defaults.

A loan, which could be comfortably serviced at an 8% floating interest rate could cause substantial discomfort after the rates rise to around 12%.

For some, it could even lead to a problem in repayment. This scary scenario isn’t all that rare. According to rating agency Crisil’s forecast, the share of bad loans is likely to swell to 4% of banks’ total loans in the next two years.

In case of a default, it is best to approach the lender for an amicable settlement. If all the efforts undertaken for repayment fail, the lender is likely to take over and sell the mortgaged property.

No doubt, it is very painful to let go of your prized possession, which you may have acquired with your lifetime’s savings. However, in such circumstances, borrowers need to keep an eye on their rights, which provide adequate opportunity to repay.

As regulated entities, there are certain limits that banks cannot cross. For instance, RBI guidelines do not allow a lender to repossess without proper notice.

The central bank also has norms that are taken into consideration under specific circumstances. There is a well-laid out procedure for taking possession of the security, provisions regarding a final chance to repay and a procedure for sale. These are in addition to the strict guidelines for recovery agents.

Usually, banks invoke the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (Sarfaesi) Act for a quick recovery. This involves a 60-day notice period. But the Act states that such a notice cannot be issued until the borrower’s account is classified as a non-performing asset; that is, when it is 90 days overdue.

“If the borrower fails to repay even after the notice period, the bank can go ahead with the sale. However, in order to sell, the bank has to serve another 30-day notice mentioning the sale,” Abhay Debt Counselling Centre debt counselling head VN Kulkarni said.

Further, if your mortgaged home has to be sold, the bank has to publish a notice regarding the same in two leading newspapers specifying the reserve price. The sale has to be a private treaty sale, based on conditions mutually agreed upon by the bank and the borrower.

“If you feel the property is undervalued, you can raise an objection. However, in case the auction is done through the court, an independent valuer is appointed for carrying out the valuation,” said Poorvi Chothani, proprietor of law firm LawQuest. “You can even sell your own house in order to repay the loan.

Thursday, October 30, 2008

Real estate crunch forces IIM-B to experiment with off-campus housing

Interesting to see that the builder has opted to rent out apts instead of selling them off at discounted prices . Is it a sign of the times ? If we go by the yield calculation, the builder is getting a paltry amount in rent as opposed to selling it off and getting 10% in fixed deposits.

Real estate crunch forces IIM-B to experiment with off-campus housing
Archana M Prasanna / Bangalore October 31, 2008, 0:22 IST

Faced with the prospect of escalating real estate costs and the lack of adequate finances, the Indian Institute of Management-Bangalore (IIM-B) is experimenting with “off-campus housing” to accommodate additional students from the next academic year. If the experiment works, it may set a precedent for other IIMs.

With its campus in Bannerghatta already brimming, the institute has decided to take 50 apartments (150 rooms) on lease in a nearby residential building called Ajmera Complex. The plan is to lodge students from the one-year full time Executive Post Graduate Programme in Management (EPGP) — to be launched in April 2009 — in the leased apartments.

“Unless we experiment, we wouldn’t know if this is the way ahead,” reasoned Pankaj Chandra, Director of IIM-B, on the initiative.

IIM-B may also accommodate some students from the Post Graduate Programme (PGP) and doctoral programme at off-campus locations. The institute is planning a bus service from its premises to the off-campus housing to make it convenient for students to travel.

In its recent report, the IIM Review Committee — led by Maruti Suzuki India Chairman RC Bhargava — suggested that IIM faculty and administrative staff residences could be moved to off-campus sites, and accommodation bought/rented there so that “the existing infrastructure could be more intensively used”.

Chandra said the institute had received Rs 29 crore from the human resources development (HRD) ministry for the OBC quota expansion, but the overall expenses of accommodating new faculty and students is expected to be much higher than that. Subsequently, the institute is keenly looking at financial support from corporate houses and alumni.

Unlike IIM-Ahmedabad and IIM-Lucknow, which have two campuses, IIM-B hasn’t had any major construction activity in the last 10 years. Chandra added that the institute has taken up the off-campus option despite plans to commission some construction from this December. The institute has hired an architect for a new hostel facility, 10 classrooms and 24 faculty homes.

The institute has over 950 students from various programmes on its campus at present. From the academic year of 2009-10, the number of students in the PGP and doctoral programme is expected to go up from 640 to 690, the Post Graduate Programme in Public Policy and Management (PGPPM) will have an increased intake of 63 from 33, and the one-year EPGP is expected to have 75 seats, making it an intake of 150 new seats at the campus.

Tuesday, October 28, 2008

Mumbai's super bubble

Here is an advt for an apt in Mumbai which sent my head spinning. At 55000 Rs a sq/ft it is the highest I've seen advertised. A 4 crore price tag will buy you 875 sq/ft of super builtup area. The seller is kind enough to remind you that newer apts in the locality come in larger sizes at 1500 sq/ft which would make it unaffordable to a normal resident. Also maintainence is higher in other apts, so the buyer better worry about paying Rs 10k extra a month. Once the buyer buys this 4crore apt, he has the option to commute using the conveniece of the local train and rub shoulder, noses and oily hair with thousands of other local residents by paying 10 Rs for a ticket. This is the peak of a massive bubble in Mumbai which is destined to collapse under its own weight.
NR39500000 Racecourse View From All Rooms-2BHK. (Mahalaxmi)
Centrally located 2 BHK, 875 sq feet(a size which is not available nowadays in 2bhk,since most new constructions are over 1500 sq feet and above charging about 55000 per sq feet in the same area, making the flat not affordable for many buyers), one bedroom with attached bathroom, and one with a bathroom outside,large living room with dining area,ready with high quality flooring as well as well painted walls and with 24 hours water supply,electricity backup,children's garden,and a garden to walk in as well,with 1 parking space which will be sold separately. The flat is located on the 9th floor in the B wing,Flat no 902, Is Vastu Compliant and has sea view from all rooms and also a full race course view,It is located in such a way that no construction will ever be coming up in front of it to obstruct the view. The flat is a 2 min walk from Mahalaxmi Station,15 min drive to Vt station via J.J Flyover,15 mins to churchgate by train,10 min drive to phoenix mills,10 min drive to worli seaface which will be helpful to travel to the suburbs in the next year via the sea link.Besides all of this the property is in an area which is suitable to any sort of occupants even the ones who travel to thane and lonavala and pune since it is a 2 min drive to dadar from where the western express highway begins. Also it is 5 mins away from the newly built five star Four Seasons, and also 10 mins away from ITC GRAND MARATHA Sheraton at dadar. Basically its an all gain flat which has to be sold due to the occupants moving to another country and there are no other properties up for sale in the same building or in the neighbouring buildings except for in Planet Godrej which has high maintainance as well as larger flats which are sold at prices which dont lie in anyones budget.

Monday, October 27, 2008

Real estate presses panic button in Mysore

MYSORE: When Bangalore sneezes, Mysore catches a cold, says a veteran developer borrowing a popular cliché.

He is referring to the sudden fall in property demand in Mysore. After Bangalore, Mysore has been the most attractive real estate investment venue for the moneyed Mumbaikars and Bangaloreans.

Despite claims to the contrary, Mysore realtors suddenly find themselves in an unenviable situation. The value of the sites and apartments, according to reliable sources within the industry, has come down by 15 - 20 per cent in just about three weeks.

Mysore has, in the recent past, been drawing investors in droves from within and outside the states after property prices of Bangalore had hit the roof. Even the "neo-rich" IT personnel found Bangalore property scalding. There then took place a race for prime plots in the nearest "Heritage City." In terms of 'quality of life' such as greenery, good roads and less crowd, Mysore beat Bangalore and the big players like Sobha Developers, Brigade Group and Leo Builders made Mysore their home.

Sources with Mysore Chapter of Builders' Association of India (BAI) told DNA the enquiries for apartments and luxury villas have gone down by 30 per cent since October second week. This has left them wondering what was happening. Have they made a miscalculation or is it a temporary slump, nobody really know.

Pradeep, a real estate dealer who has been in the business for the last two decades says, "Mysore never saw the kind of demand it witnessed in the last few years. Sites were sold before they hit the advertising board, just five years ago.
Plot after plot, even in suburbs, was blocked by potential builders who wanted to cash in on the growth. But the fall in demand taking place in the past few weeks is alarming."

Sub-registrar's office which otherwise used to be doing brisk business with 8 to10 registrations a day, now has just one or two," he said. This, he points out is despite this being a festive season when people planned major investments.

"Last year this time, registrations touched an all time high with an average 30 a day." said a lady clerk working at sub-registrar's office.

According to BAI sources, the situation was aggravated by many factors, besides the psychological slump. Nagesh, who has been working closely with BAI says, "When land was earmarked for SEZ near Mysore, industries rejoiced. But, the power scarcity proved a big blow. Slow progress of infrastructure development and political instability added to the woes. It was thought, Mysore, which had earned a major chunk of funds up to Rs 1,800 Cr under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) would wean away many big real estate players from metros. An airport was also thrown in to woo investments. But, nothing seems working.

Now, Mysore has turned into an investor's nightmare with sharp decline in prices at the peak of the season. Apartments or luxury villas find no takers," Nagesh adds.

The nearby Hassan district, which too witnessed a similar growth as Mysore in the recent years has also witnessed a fall in demand and consequent prices.

Developers seem indeed perplexed at the situation. Apart from announcing lollipops and hoping that situation would improve, they are devoid of any fresh ideas.

"We have announced attractive plans and packages with great returns. We just hope the markets will get better," Nagesh says.

The upshot of it all is that realtors are unwilling to climb down, and investors are equally vehement. The result is stalemate.

Experts speak : All is not lost

A 90% drop in real estate stock market values is now a reality. has list of current stock price and its annual performance. All we need now is a price reduction in selling prices, not gimmcks like free car, free flat or free plots. We are not stupid guys. How long will it take for you to realize this ?
Expertspeak: All's not lost
27 Oct, 2008, 0000 hrs IST, ET Bureau
Every cloud has a silver lining if seen from the perspective of equity analysts. Forget the fact that the Sensex has dropped 70% and many stocks dropped 90%, the experts are trying to reason and assure the investors that all is not lost. Ofcourse all is not lost. A 10L portfolio is still worth 2L even today, but as the Unitech chariman said on CNBC, they have not reduced housing prices, inspite of borrowing at 2.5 per month from legal sources. Many builders are borrowing at 3-5% per month. How can they recoup their losses when the buyers have vanished from their 1cr+ properties. The end is near as far as the housing bubble is concerned. Stock prices are a leading indicator of the days ahead. The housing companies used absurd metrics to value their property and investors lapped onto their lofty projections, some due to greed others due to ignorance.

MUMBAI: Chin up when the chips are down. The climbing fear index (43 during the 1929 Great Depression and 75 in October 2008), is more disturbing
than the slipping Sensitive Index. It took a good two-and-a-half hours and four of the country’s best stock market analysts to reassure an 800-strong audience of Mumbai investors on Thursday that all’s not lost. Every dip brings in a new buying opportunity was the message.

The Economic Times, Gujarati, last week kicked off its latest initiative “Managing Financial Turbulence” by bringing the fourth edition of “Sensex Ni Sangathe” (In Tune With Sensex), a popular series of investor camps, to Mumbai. Eminent stock market experts Nilesh Shah, joint MD, ICICI Prudential Mutual Fund, Nipun Mehta, ED of Society General India Private Banking, CS Nanda, CCM, financial market investors protection committee, ICAI and Madhusudan Kela, head of equity investments, Reliance Capital Asset Management, reaffirmed their faith in the India growth story. The meet was jointly organised by ET (Gujarati) and ICAI, Western India Regional Council, at Bhaidas Hall in Vile Parle on October 23.

What they said...

Forced liquidation is happening in the market. Fear (among investors) is at the highest level. This is the worst situation in the past 100 years and so an overnight recovery is not on the cards. While the Indian economy is growing at 6.5-7.5%, the world is already talking of a negative growth rate of 0.5% and 1.5%.

Madhusudan Kela
Head of equity investments, Reliance Capital Asset Management

There are some good developments which the market has ignored. This year, we had an average monsoon, Indo-US nuclear deal is now a reality, we received FDI worth $10 billion during the past two quarters, crude oil prices have fallen and inflation is expected to ease out in the coming days. It is just a matter of time when FIIs will be forced to back the winning horse (India).

Nilesh Shah
Joint MD, ICICI Prudential Mutual Fund

Prices are indeed attractive. It’s like the latest McDonald ad campaign ‘Aap ke Jamaane mein, baap ke jamaane ke daam’. Lot of Indian global acquisitions happened at peak prices, and now fund raising has become difficult for these companies. Still, impact on the Indian economy will be limited. Investors need to have a longer time-horizon and take a fresh look at their portfolio holdings.

Friday, October 24, 2008

Realty funds bear the brunt of the ball

New Delhi: Shares of real estate firms were the worst hit on Friday after concerns of a liquidity crunch in the business drove the sectoral index, the Bombay Stock Exchange’s (BSE) realty index, down nearly one-fourth.

Shares of Unitech Ltd, India’s second largest developer by market value, fell by a record 51.29% to close at Rs30.10 each after intra-day trading took it down to an all-time low of Rs26.60.
Bangalore-based real estate developer Puravankara Projects Ltd, which saw its shares closing 44.32% lower, also touched a record low of Rs42.20 in day trade.

“People are concerned about cash provisions and where will real estate companies get money from,” said Sandeep Mathew, an analyst at BNP Paribas Securities in Mumbai.
An analyst with a domestic brokerage firm, who did not want his or his employer’s name to be used, said, “...people are exiting at any price because there are no buyers for realty stocks”.
There is an aversion towards real estate stocks among “investors (who) are now shifting from net asset value-based valuation to cash flows of the company”, he added.

Shares of DLF Ltd, the largest developer in the country, shed 23.96% to close at Rs203.90. Parsvnath Developers Ltd fell by 20.70% to close at Rs45.20.
BSE’s benchmark index, the Sensex, shrank 10.96% while BSE’s realty index, which consists of 14 real estate stocks, fell by 562.31 points or, 24.4%.

“Real estate stocks have been correcting mainly because developers have not reduced home prices despite a slowdown in sales,” said another analyst with a domestic brokerage firm. “In Unitech’s case, the stock has corrected because the company is heavily leveraged.”

mint reports on 30-50% drop in prices if you are willing to pay cash instead of staggered payments.

New Delhi: As the Indian economy faces a liquidity crisis, banks remain wary of lending money to the real estate sector. The developers, facing deadline pressures for delivery of projects, are forced to tap private money lending sources. Consequently, they have been forced to borrow money at steep rates.
According to Sanjay Khanna, managing director of Kailash Nath Associates, this rate could be as high as 5% per month. A rate of 5% interest per month translates to a whopping 60% per annum. It means that a developer will have to pay Rs6000 for every Rs10,000 it raises. Builders do not have the money to construct and have approaching delivery deadlines. Real estate experts fear that some builders may even default.

Santhosh Kumar, deputy CEO of property consultants and brokers Jones LaSalle Meghraj agrees with Khanna but says that players with better fundamentals may still find money at 15-20% rate of interest. “But others may have to pay upwards of 30% as well,” he says.
As demand slows, the price of residential and commercial real estate in the country has been sliding. It has fallen by 15-20% across metros over the past nine to twelve months and is expected to fall by another 30-40% over the next few months. In such a scenario, developers who went aggressive on land acquisitions, based on the presumption that prices will continue to rise, find themselves in a tight spot. They are now forced to borrow money from the market at unsustainable rates.
Ashish Mathur, Head-Business development and marketing for Mahindra World City says, that some small developers may have to exit the business all together if the market does not pick up soon.

The problem is worsened by a slowing economy and over supply of office space and it’s slow off take as reported by real estate consultants Cushman & Wakefield and CB Richard Ellis among others. Expensive home loans have turned away the residential buyers as well. Almost 90% buyers use bank finance for home purchases. Santhosh Kumar says that developers are expected to cut prices by 30-50% or more to boost offtake in the coming months. He warns, there may even be distress sales by developers.

The bad news for realtors extends to the stock markets as well. The BSE realty index fell 24% on Friday on worries that the real estate sector is heavily leveraged. As the economy slows down and money gets dearer, the pain is only expected to get worse for real estate developers.

Happy Diwali from the Finance Minister Mr Chidambaram

Dear Fellow Citizens,
On behalf of the Congress party, Manmohan Singh, Sonia Gandhiji and Mr Rahul Gandhi I would like to extend my warm wishes to the citizens of India on the eve of Diwali 2008. It has been a tumultuous year for the markets and as we have seen things have been going as per plan. We had a plan for 9% growth, however we came close to it at 8% and got a bonus 12% in inflation. We also managed to bankrupt a lot of the speculators and investors, some of who were senior citizens who lost their retirement saving in the market .
When the congress came to power in May 2004, the Sensex was 5000, now after 41/2 years it is at 8500, A stellar gain of 70% over a 4.5 year period as opposed to a 40% compounded gain if you had invested in safe fixed deposits. However if you had invested exactly a year ago, the return would be a -70%, a warning to speculators that India will not tolerate short term investors.
We are also happy to report that the rupee has breached Rs 50, so now your NRI brothers and sisters are given a welcome bonus this Diwali. The Foreign investors who have dumped the rupee and fled like rats will now have a greater incentive to return back, now that they have gained 20% over a period of 1 year. As you can see we are trying hard to please all sections of society and we look forward to continue this good work in the year five years under the astute leadership of Shri Manmohan Singh and Smt Sonia Gandhi.
Having seen the turmoil with the Italian Lira, we have superb leadership at the top which understands the economic consequences of pandering to the common people. I have instructed the SEBI and the RBI to take strict action against market manipulators who have been trying to create a illusion of wealth in the Indian stock market. Thanks to their efforts the Sensex has been brought down from 21000 to 8500, a level which will hold for a few more days, before we bring it down further to 6000 so that it is affordable to the common man.
It has also been an very happy Diwali for some of our Foreign short sellers who were allowed to participate in the merry making outside the borders of the country, thanks to a recent directive by SEBI, a brilliant move by the SEBI chairman.
With reference to housing we have managed to create a spectacular bubble where land prices have soared to the heavens. Some of the property where I live is now worth Rs 50000 per sq/ft. Even developed countries like the US and UK don't have the prices we have. We have asked our banks to make sure that the citizens are working hard to pay off the EMI's on the house/car loans for their highly prized properties. These banks are creating thousands of recovery agent jobs each month to make sure borrowers don't default on their loans.
As a consequence of the soaring housing prices, the congress party and other political parties have had great success in raising funds for the upcoming elections. Unlike the US which has a lobby system, the Indian political system depends on builders to finance their political activities. We prefer black money to avoid scrutiny of the Income Tax bureaucracy and thereby reduce corruption in the system.
Some of the builders have defaulted on their payments to government authorities and banks, and as a penalty, we will be confiscating their assets and then auctioning them over to our brothers in the Gulf, some of who have nefarious designs against our great nation. By doing so we will establish an ownership society where all the prime land is owned by our enemies, so they will have no vested interest in creating turmoil, riots or exploding bombs in our cities and towns.
In closing, I wish all citizens a very happy Diwali and hope that the next five years are even more prosperous then ever before.
Mr P.C Chidambaram
Finance Minister
Government of India
New Delhi
Samvat 2050

Prestige Shantiniketan - Roof collapse.

Four injured as Prestige group’s 15-storeyed structure collapses
S. Rajendran and M.T. Shivakumar
The cement slab of the top floor collapsed first and then the rest crumbled

— Photo: Bhagya Prakash K

CASCADING EFFECT: One of the structures at Shantiniketan, Whitefield, which collapsed in Bangalore on Thursday.

BANGALORE: Four persons were injured and another 100 construction workers had a providential escape when a part of a 15-storeyed concrete structure under construction of the Prestige group crashed at Whitefield here on Thursday.

The block which collapsed is part of the 20 blocks under construction by Prestige in a joint venture with Shantiniketan. The top floor slab which collapsed first was laid only a few days ago.

The police told The Hindu that the accident occurred around 5 p.m. when a small portion of the top floor collapsed resulting in the slab of the floor below it collapsing in a short while. Owing to sheer weight, the slabs of the lower floors collapsed subsequently, all in a span of 50 minutes, although the embedded steel rods prevented the slabs from falling in a heap.

The injured were identified as Srinivas (20), Dasharat (25), Mahendra Prasad (25) and Dadudar (30). Dadudar is said to be a native of Bihar and the other three residents of Kadugodi and surrounding areas in Bangalore. They sustained minor injuries when they were running out of the building, and were initially taken to Vydehi Hospital and after first aid were reportedly taken away by the site engineers for further medical attention. The workers were evacuated from the site. Complete information relating to the building collapse is yet to be made available to the police. The Prestige Shantiniketan complex comprises several towers, each of them of several storeys and located in the vicinity of the International Technology Park. There is no information on the strength of the work force at the construction site. A Malaysian construction company (IJM) was building the superstructure for the Prestige Group, which has undertaken the joint venture project with Shantiniketan (Chaitanya Properties) of D.K. Audikesavalu.

Nayeem Noor, vice-president (public relations) of the Prestige group said the collapse occurred after the top floor slab was cast. “The super structure is intact and there are no casualties.” A head count at the construction site has been conducted and it is confirmed that there is no casualty including injury suffered by any person, he added.
Enough time to escape

N.M. Nachappa, security guard at the site, told The Hindu that “the entire building crashed in 50 minutes. There was enough time for all the workers to escape.”

According to an eyewitness, around 4.50 p.m., the slabs of the building started to collapse. Then there were around 120 people, including women and children. “Immediately after the incident, the workers at the construction site had left. Very soon they were sent to isolated places in a few trucks.”

“A Few officers, perhaps from the contractors side, had shifted all the workers to some other location immediately. They instructed the security guard and other workers at the construction site not to answer the media or the police,” he said.

The Bruhat Bangalore Mahanagara Palike has taken a serious note of the accident. Directions have been issued to stop construction pending an inquiry.

Several superstructures are under construction in the vicinity of the ITPL.