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.