Saturday, January 19, 2008

Bangalore builders set to ruin Chennai outskirts

Rising prices in the real estate sector in Bangalore, the IT capital of the country has turned the attention of several realtors to Chennai, a city which is slowly but surely set to beat Bangalore in the real estate space.
Experts point out that Bangalore is becoming crowded and there is hardly any space for new construction. Moreover due to the demand and supply mismatch, a large number of apartments are lying vacant.
Realtors point out that there were plans to slash the prices of the apartments, but they realised that it was not a feasible option as huge amounts of money had been invested. Builders however may reduce the prices marginally to ensure that the apartments are sold.
Keeping this scenario in mind, several builders are shifting base to Chennai. There is plenty of land available in the outskirts of the city and there is no mismatch in the demand and supply in Chennai, realtors point out.

Builders also have in mind the fact that several IT and automobile giants are shifting base to Chennai. Thanks to this, there would be more demand for apartments in the city, realtors point out.
Builders say that they have been assured of more infrastructure in Chennai compared to Bangalore. In Bangalore, people are scared to invest in certain areas such as Hosur road and Koramangala due to the chaotic traffic. On working days, one would have a three-hour battle with the traffic to reach home.

However, the scene is different in Chennai. The city is better planned and the traffic is well managed. Constructing apartments in a 20-kilometre radius of the city would not be a bad deal as the travel time is negligible thanks to the excellent management of traffic.
Purvankara builders are moving into Chennai in a big way. The firm is constructing 2072 apartments at Pallikarani in Chennai. The builders feel that Chennai is a better bet at the moment thanks to infrastructure available in the city.
In Chennai, builders expect their apartments to be sold off faster compared to Bangalore as there is a huge difference in the prices. In Bangalore, where there is a synthetic pricing, apartments are being sold at Rs 10,000 per square foot, while in central Chennai, the prices are Rs 5000 per square foot.
Builders see Chennai as an emerging market when compared to Bangalore. The prices are affordable in comparison to the unrealistically high prices in Bangalore. With more realtors shifting to Chennai, the city is set to beat Bangalore in the real estate race. But will Chennai go the Bangalore way? Only time would tell.

Friday, January 18, 2008

Congress blames SEZ lobby for Goa crisis

The SEZ lobby is strong enough to topple governments.

The Congress leadership here on Friday launched hectic efforts to save the Digambar Kamat government in Goa amidst serious charges that the powerful SEZ lobby was attempting to destablise and install an alternate dispensation with the help of three defiant NCP MLAs.

Kamat, who reached here on Friday afternoon with party MLAs, attended meetings convened by Congress president Sonia Gandhi as well as the NCP leadership, who was trying to win back the three errant MLAs. The Goa chief minister had managed to tide over an embarrassing situation in the state Assembly on Thursday, but events took a fresh turn after the three NCP MLAs refused to give their support to him.

"We met Gandhi and briefed her about the political situation in Goa. We discussed the situation. Now we will talk to NCP leaders again and a solution will be found," Kamat told reporters. The AICC had earlier in the day, put the blame squarely on the "SEZ lobby" for the crisis, as party leaders suggested that it would be a miracle if the government could be saved.

Wednesday, January 16, 2008

Economic times turns to Astrologers to predict the future

Realty market may see major growth till April '08

NEW DELHI: Circa 2007 may have been an extended joyride for investors, but the stars spell a word of caution during 2008. And the general feeling among the cross-section of astrologers that SundayET spoke to was that while the first half of the year would be good for investors, the next half could be a bit choppy in parts due to unfavourable changes in planetary positions.

The idea behind the interaction with the astrologers was to get a sense of the investment outlook for stocks, real estate and commodities. On the brighter side, the year 2008 would symbolise leadership, dominance and position of authority for the economy. Aura reader S Bhattacharya foresees a positive outlook for the real estate sector. But he doesn’t rule out a few hitches either.

“The sector will continue to be strong till August 17 in Delhi and surrounding areas. But there will be a 18-20% decline post that. Prices are expected to be weak in all other areas, except for Mumbai and Goa, which will continue to remain strong. The bubble burst may happen in February 2009 but there is still room for optimism for real estate in 2008.”

Unlike last year, when the stockmarket threw up surprises with the Sensex touching the magical figure of 20,000, leading numerologist Sanjay B Jumaani predicts that the bourses will take a beating after June next year. “Gold is yellow just like the sun and can have a field year.

Real estate will continue to march upwards though the pace could reduce. In stocks, after August 15, India will enter its 62nd year and 62 adds up to 8 of Saturn. This does not favour stocks but it does favour real estate, farming and steel. One should also be careful about treading in commodities after August 15.”

His logic is that the year 2008 adds up to the number 1, which represents the sun and creative forces that give light and life. It symbolises leadership, dominance and position of authority.

Agrees astrologer Anurag Tripathi, “with the planetary position changing subsequent to June 2008, the financial markets will be hit. The market will end up in the range of 24,000 to 25,000 points in 2008.” According to him, the major astrological implications on the markets will be seen in December 2009 when the position of Saturn will change.

He expects a huge fall in December 2009 onwards and sees the market ending up from where it started its bull run. Leading US-based astrologer Ashok Motiani, however, feels that Sensex will touch the 21,000 mark before April-end 2008.

He anticipates a decline from May onwards, a trend likely to continue for several months. “There will be a major correction during this period. This correction is likely to be caused by liquidity squeeze, not only in India but all over the world.”

Mega IPOs and FIIs may have left the real estate sector smiling in the spotlight during 2007, but Motiani sees possibility of a mild correction next year. “Saturn has been transiting in Leo since July 16, 2007 and will continue to transit till September 10, 2009. During this period, real estate in India is likely to slow down. Prices will stop rising that’s for sure,” he says.

According to yet another astrologer Kewal Anand Joshi, the real estate market will see substantial gains till April 2008. He forecasts a downfall from April 15-July as there will be decline in foreign buying interest. “The market will be normal from September-December but ups and downs will exist,” he feels. For the yellow metal, the upward journey may continue as Joshi foresees it reaching Rs 12,000 in the New Year.

Gold scaled new highs with the price for 10 gms zooming to Rs 10,000 in 2007. Bhattacharya also cautions against a rise in petrol prices in 2008. “Prices will continue to rise in the commodities market. Agricultural items will also be expensive,” he says.

So while punters are dreaming of stronger positions on Dalal Street, it could be the gold-diggers who will have the last laugh on their way to the bank. After all, that’s what the stars have to say.

Record Slum TDR Rate in Mumbai

Another record was created in the city's real estate industry on Wednesday when slum TDR or transfer of development rights belonging to the Maharashtra housing and area development authority (Mhada) fetched an all-time high price of Rs 3,275 a sq ft. This is the first time that the rate of slum TDR has gone up so high, ever since it was introduced by the state government a decade ago.

In Mumbai's construction industry, slum TDR certificates are the equivalent of the stocks of blue-chip companies. They are generated when the developerowner surrenders his land to the government or agrees to rehouse slumdwellers or project-affected persons free of cost. In turn, he is issued a TDR certificate that gives him additional construction rights in the suburbs, but only to the north of the plot he has surrendered.

The latest stock of slum TDR came from a state government company, Shivshahi Purnavasan Prakalp Ltd (SPPL), which has been entrusted with the task of constructing low-cost houses to rehouse projectaffected persons.

Recently, Mhada had invited bids for about 8,000 sq m of slum TDR which was generated by a SPPL project in Turbhe near Mankhurd. When bids were opened on Wednesday, Swastik Realty quoted Rs 3,275 a sq ft for about 2,000 sq m of slum TDR. The remaining stock was purchased by Mantri Realty at Rs 3,250 a sq ft and another investment company, which paid Rs 3,204 a sq ft. It fetched Mhada Rs 28 crore.

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What makes this stock of slum TDR lucrative is its use in prime areas like Bandra (west). This is because Mankhurd, where the slum TDR has been generated, falls south of Bandra on the map.

Mhada sources told TOI that till a few days ago, the price of slum TDR was around Rs 2,800 a sq ft. Wednesday's record price is an indication about the demand for slum TDR. But such high rates is bad news for flat purchasers as it has a direct impact on the final price of an apartment. Residential property prices are already at a record high, and only a certain high income class of citizens can actual afford to buy a home in Mumbai today.

Builders have reaped a bounty ever since the concept of slum TDR was introduced by the state government a decade ago. They have gone on a construction spree, especially in the congested western suburbs between Bandra and Andheri. Activists have criticised this policy on the grounds that it puts a further load on the already stretched infrastructure in the suburbs. Critics call it transfer of disaster rights.

Virtually all construction activity in the suburbs is today carried out with the aid of slum TDR, which the builder can load on his project as additional floor space index (FSI) to construct additional floors. For instance, if the FSI in the suburbs is restricted to 1, the developer can load a maximum of FSI 1 on his project by buying slum TDR from the market.

Tuesday, January 15, 2008

Property boom not yet over

New areas are fertile territory for investment.

BANGALORE: While the stamps and registrations department on Friday gave its official stamp to the real estate slump in the city, realtors indicated a potential boom in areas outside the traditional hotspots like Electronics City and Devanahalli.

And according to the city’s realtors, now is the time to invest.

Prices near Electronics City, Bommasandra and ITPL have gone through the roof and returns on investment here could take long.

“The problem with the sellers in these areas is that they quote unrealistic prices ,” says C Venkatesh, a realtor from Yelahanka.

And for those who have invested huge sums on sites here, the only hope is an up-and-running Bangalore International Airport and the proposed expressway connecting it.

“It is advisable for prospective buyers to now zero in on housing sites at Singapura and its surroundings. Land is available at Rs 1,000 a sq ft adjacent to main the road and Rs 800 a sq ft in the interiors.

So there is no sense is looking at ‘distant’ Devanahalli when cheaper sites are there for the asking closer to Bangalore,” explains C Mallikarjun, a realtor.

And with areas like Chikka Madura, Hesaraghatta, Peenya Dasarahalli, Laxmipura, Abbigere in Bangalore West and Doddaballpur, Vijayapura, Chikballapur, Attur, Singapura in North, the proposed infrastructure facilities will lead to rapid appreciation, say realtors.

“I bought a site at Rs 250 per sq ft two years ago. It can now fetch me Rs 1,000 a sq ft and is only set to go north. I now wish I had bought more sites two years ago. The same can’t be said of Hoody. I bought land at Rs 1,000 a sq ft six months ago. I have no buyer for this property today,” rues B Manjunath of Abbigere.

The scene, it seems, is similar with flats. Again, there must be due diligence before the final decision. Realtors say areas like Kaggadasapura, Vignananagar, Basavanagar, GM Palya and Nagavara, where new projects are coming up, are worth a look.

And with smaller builders, while it is necessary to read the fine print carefully, one can haggle on the price to one’s advantage, says a realtor.

Infosys acquires land for second campus in B'lore

Government lends no hand to software giant.

The country’s second largest software exporter by revenue, Infosys Technologies Limited, has acquired 300 acres of land near Sarjapur off Bangalore to develop its second campus in the city.

This is the first time that the company has acquired land on its own without seeking the assistance of the state government’s land acquisition agency, Karnataka Industrial Area Development Board (KIADB).

“We bought the land directly from the owners for prevailing market prices. At present, the process of conversion of the land use pattern is in progress. We expect the entire process to be completed in the coming days,” Mohandas Pai, Member of the Board and Director (Human Resources, Education, Research and Administration), Infosys, told Business Standard.

Since 2004, all successive state governments had been sitting on Infosys’ application for additional land to expand campus in the city. When the JD (S) was in power, its chief H D Deve Gowda had even questioned the need for additional land. Since the issue took a political turn, Infosys decided to go ahead with the land acquisition on its own.

Pai said the company was yet to work out the plan for the second campus. “Once the land conversion is sanctioned, we will work on the design for the campus. It will be a long term project and an ongoing process,” he added.

The company intends to freeze the number of employees in Bangalore to 25,000 by the end of the fiscal. At present, Bangalore, which is the company’s largest centre, has 21,293 seats. Another 3,787 seats are being added in Bangalore to take the total headcount to 25,080 by March.

“We are taking space for 3,787 seats from a private firm on lease. It is our intention to cap the Bangalore centre at 25,000. The growth will stagnate in Bangalore and the focus will be on other centres. We are also planning to add 5,000 seats to the existing 5,434 seats in Mysore,” Pai said.

In the coming days, Pune will emerge as the largest centre for the company. At present, it employs 11,901 employees in Pune. Infosys is ramping up capacity in Pune to add 11,782 seats. “Pune will have in excess of 26,000 seats in the coming days. Our intention is clear. We want to grow in all other centres.”

The company, which employs 9,430 personnel in Hyderabad, has been allotted an additional 447 acres of land in the city. “The land was allotted to us in the third quarter of 2007-08. We intend to start work on the campus soon,” Pai said.

Infosys had a total seating capacity of 70,321 as of December 31, 2007. It intends to add another 29,791 seats in the coming months for which work is under progress.

They include 636 in Bhubaneshwar (existing is 3,300); 2,216 in Chandigarh (existing is 3,900); 5000 in Chennai (existing is 8,966); 1,000 in Gurgaon (existing is 195); 3,200 in Jaipur (existing is 890); 1,600 in Mangalore (existing is 3,275) and 220 in Thiruvananthapuram (existing is 1,337).