Sunday, January 18, 2009

Sobha, Unitech offload assets to pay debts

Cash-strapped realtors look to offload assets

Livemint.com reports

The developer has debt obligations worth Rs2,500 crore coming due by the end of March

Bangalore / New Delhi: India’s second largest developer by market value, Unitech Ltd, is selling parts of its 14,000-acre land bank, leading a trend among realty firms putting up parts of their properties for sale to tide over a financial crunch and repay debt.

About 30 plots of the company in the National Capital Region centred on New Delhi, that are part of Unitech’s mixed-use developments and were dedicated for building hospitals and schools, are now up for sale.
“We are selling some of the plots but not all of them,” a company spokesperson said. “We have already sold two such plots.” He declined to give further detail.
Unitech had earlier said it was looking at “monetization” of some of its completed properties to meet debt commitments. The company is trying to sell land parcels in Noida and Gurgaon, both on the outskirts of New Delhi, to meet its debt obligations, analysts say.
The developer has debt obligations worth Rs2,500 crore coming due by the end of March. Unitech is trying to raise funds to repay this debt through several measures such as selling some hotel, office and retail assets and by diluting equity at the company and at the project-specific levels.
Unitech, which is holding an extraordinary general meeting of its shareholders on Monday to seek approval for an enabling resolution to raise up to Rs5,000 crore through various means, has to repay Rs1,100 crore in the next two weeks and meet further debt obligations of Rs1,500 crore over the next three months, according to a 15 January report by BNP Paribas Securities.
“The management has hinted that it is in the process of raising Rs800 crore to tide over the near-term liquidity crisis,” Sandeep Mathew, an analyst with BNP Paribas, wrote in the report. “Failure to do so could lead to forced sale of underlying assets (primarily land).”
In the heart of Bangalore’s business district, a 1.5 acre plot has been put up for sale by Sobha Developers Ltd, a leading developer in south India.
The land, strategically located close to the city’s main shopping and business district of MG Road, at the junction of Church Street and Museum Road, is a fetching piece of real estate in an area that is one of the most expensive in the country’s technology hub.
The builders, analysts said, have been trying to sell off the plot for the last four months, where it had initially planned a shopping mall and a hotel. But the high asking price of Rs120 crore has kept away buyers. The money will be pumped into Sobha’s under-construction projects that are delayed and to repay expensive loans.

Realty firms are looking at other avenues to manage cash flows as debt has become more expensive, analysts at Credit Suisse India Research said in a 13 January note. The report states that Sobha, for example, borrowed funds at 24-30% for short-term periods in October-November and seems to have defaulted on some repayments during this period.
Unitech borrowed at 19% in the same period. “These borrowings are due for payment in January which could become a problem for both Sobha Developers and Unitech as volumes in the property sector are yet to pick up. With mutual funds having stopped lending to this sector and private banks reluctant to lend, Sobha is selling off its ‘excess’ landbank,” the report states.
Unitech and Sobha Developers are only two of many such cases of forced land sales in the past few months that have witnessed aborted land deals, low demand and few sales, pushing developers to defer launches, stall projects and scurry for cash to beat the financial slowdown.
Sobha Developers managing director J.C. Sharma declined to comment, citing a so-called silent period firms need to observe ahead of quarterly results announcements.

“The Church Street land was bought on a 60-year lease period and the developer is planning to re-lease it away. But the sale price is too high,” said a Bangalore-based real estate consultant close to the negotiations. The consultant didn’t want to be identified.

“These are land parcels that would have been bought in the last two-three years at steep prices and where construction hasn’t yet taken off. There are some buyers still—mostly high-net worth individuals—who can buy, but are hard bargainers. With demand being low, it is a buyer’s market now, putting developers in a tough situation,” he said.
Tables have turned for developers, who till the beginning of 2008 would scout for land and pay steep prices. Not any more. “Today, I am flooded with proposals from builders wanting to sell some land assets. But where are the buyers?” asked Praveen Kumar, chief executive officer of One Third Earth, a property and land advisory in Bangalore.
“Many developers are selling the licensed land or developed/under construction projects to get working capital,” said Manish Aggarwal, director, land and industrial agency, at consultancy Cushman and Wakefield India.

Developers are selling assets that will fetch the maximum price such as hotels, office or land licensed for residential group housing.

Land prices in the periphery of cities across India have on average fallen by 25-40% over the last few months, said Aggarwal. “Should the landlords or developers decide to price their products rationally, it is expected that there may be an interest for joint development, joint venture transactions for sellable projects starting from July-October quarter this year,” he said.

28 comments:

Anonymous said...

Luxury real estate market takes a hit


18 Jan 2009, 0643 hrs IST, Neha Dewan, ET Bureau


Print EMail Discuss Share Save Comment Text:



NEW DELHI: The luxury sector may have been perceived as recession proof. But there is a visible dip in demand that is now being seen in the luxury Real estate: A good hedge
Home office
US crisis & Indian realty
Home gadgets
More Pictures
segment as well.

SundayET's survey with global real estate consultancy Cushman and Wakefield (C&W) revealed that average capital values of luxury properties in posh localities across major metros have taken a dip of 10%-20% during the last three months.

Residential rental values for the same segment have also been impacted, with some locations witnessing a drop as high as 20-25%.

Take the case of Delhi, for instance, where residential capital values of high-end properties such as Shanti Niketan, Westend and Vasant Vihar, GK I and II and Maharani Bagh have dropped to 10% over the last three months. Rental values have also followed a similar track and have seen a 6% drop over the same period.

Rajeev Talwar, executive director, DLF agrees to the fact that there has been a genuine drop in this segment.

"A 25%-30% drop has been seen in capital values for these luxury properties. Luxury buyers also plan their investment cycles, hence it is only natural for them too to cut down on spending. Sales are currently going on even in the luxury sector...no segment is unaffected by recession which is a worldwide phenomenon."

The case is similar in other swanky localities in metros. Areas in South central Mumbai such as Altamount Road, Carmichael Road, Malabar Hill, Napeansea Road and Breach Candy have seen a drop of 7% in average capital values during the last three months.

The impact has been more visible in the rental values in these areas where a drop to the tune of 19% is being witnessed whereas locations in South Mumbai such as Colaba, Cuffe Parade, Nariman Point and Churchgate have seen a drop of 12% in rental values over the same period.

Niranjan Hiranandani, MD of Mumbai-based Hiranandani Developers feels that there has been a temporary respite in demand in this segment. "Demand has not taken a dip...it is a temporary phenomenon. There has been a drop of 10-20% in capital values for luxury buys. People are basically postponing their buying decisions and waiting for liquidity conditions to improve."

Kolkata, however has seen more of a drop in residential rental values in the high-end segment. Areas such as Southern Avenue and Dover Lane in South Kolkata have seen a sharp drop of 20% during the last three months.

While sought after locations such as Ballygunge, Queens Park and Gurusaday Road have seen a drop of 12% during this period.

The drop has been slightly more in South West locations like Alipore Park Road, Ashoka Road and Belvedere Road which are seeing a drop of 22% in rental values. Average capital values, though, have not seen much of a change during the same period.

On the contrary, down south in Bangalore, it is more of the capital values in the high-end segment that have taken a beating. Sought after areas such as Lavelle Road and Richmond Road in central Bangalore have gone down by 9%. Residential rental values for the high-end properties in the same locations have however not been affected during this period.

Hyderabad is seeing more of a decline in residential rental values in the previous three months. While posh Banjara Hills in central Hyderbad has seen a marginal drop of 4%, other locations such as Jubilee Hills also in central Hyderabad have seen a drop of 5%. Average capital values have, on the other hand, increased by 5% in these locations.

Residential capital values for the high-end segment in Chennai have seen a drop of 7% in R. A. Puram in South Chennai while it has been only 1% in Boat Club. There has been no change in rental values for the same period.

Similarly, Pune's capital values have remained unaffected in most desired locations such as Koregaon Park and Bundh Garden in North East Pune.

http://economictimes.indiatimes.com/Features/The_Sunday_ET/Luxury_real_estate_market_takes_a_hit/articleshow/3995443.cms

Anonymous said...

Lease of life: Property on rent


18 Jan 2009, 0000 hrs IST, E Jayashree Kurup, ET Bureau


Print EMail Discuss Share Save Comment Text:



Rental values in major cities across the country saw a hike of between 100% and 200% over the last year. In smaller cities this hike ranged between
50% and 90%. Even in Q3, rental values registered a 15-50% hike across cities. Why have the rental values across the country risen so dramatically over the year? Experts say when the buyer is unable to afford products available in the market, he will go for rented tenements. This leads to an increased demand for rental products and values go up correspondingly. Among the metros, Delhi’s rental values increased on an average 200% on a yearly basis, Mumbai’s at 150%, Kolkata’s at 100% and Chennai’s at 170%. On a quarterly basis, Mumbai registered the maximum hike of 50%, while Delhi clocked 30%, Kolkata 26% and Chennai 25% in December 2008. The IT corridor of Chennai, despite being a peripheral area registered a healthy 85% hike in a quarter. Take for instance, Gurgaon in the Delhi NCR region. While premium products were largely unaffordable to buyers, the rental market became buoyant. As a result, a property that was fetching Rs 15,000 per month in rental returns started fetching up to Rs 25,000-30,000 in 2008, when the number of sale transactions had dropped.

In Bangalore, rental values for a three BHK house on the key MG Road doubled in a year from Rs 50,000 per month to between Rs 90,000 and Rs 1 lakh per month. Obviously, the residential properties near the prime commercial districts or in suburban hubs which were key commercial districts was on the rise due to end user demand. With increasing traffic snarls, many end users prefer to take apartments on lease near their place of work as the monthly commuting costs are often equal to or just short of the rental value.

Take the case of Deepak Bansal, a TCS employee who used to commute from his North West Delhi residence to his place of work by car everyday. He travelled about 60 km in one direction and had to drive during peak time for three hours. He spent Rs 10,000 per month on petrol and maintenance of his vehicle. Today he spends Rs 6,000 for a 2 BHK flat in a HUDA colony and actually saves money by staying on rent. Many others at various levels are opting for the same.

This spike in rental values have started stabilising in many areas as the values have risen sharply. Preliminary studies reveal that areas such as Gurgaon, Ghaziabad, Noida and Greater Noida have started stabilising or in some cases even dropping rental values.

However, in cities where the spike was not so sharp as in Coimbatore, Pune, Ahmedabad, Rajkot, Vijayawada and Vishakhapatnam, the rental values rose by an average 10%. This is continuing this year. In cities such as Mysore, Chennai, Nagpur and Goa rental values are going down. With the negative economic sentiment and loss of jobs across the country, fresh people movement has slowed down and has resulted in a stabilising of rental values. Where tourism was a driver, as in Goa, that too has been affected and rental values have dropped.

Sameer Saxena in Gurgaon was a worried man till a month ago because the lease rental for his society apartment in Gurgaon was up for review and he was expecting a hefty hike as per his reading of the market till November. However, when the rental negotiation took place in end December, the landlord was not so stuck on a hike but wanted to retain a good tenant. Saxena managed to renew his lease for a year with a nominal hike of just Rs 500 per month.

Realtor Hemant Gupta of Delhi says last month his transactions comprised 60% rental and 40% sales. Pune Realtor Avinash Pawar says he executed 80% rental transactions and only 20% sales. A similar ratio was quoted by S K Gupta from Jaipur. Sandeep Sen of Kolkata also witnessed 70% rental transactions and 30% sales. Obviously, rental is the preferred mode of transactions in Q3 2008.

The increased preference for rental apartments have also resulted in an increased occupancy of ready-to-move-in apartments. No longer are users only looking to buy. Rental is very much in. For those living on plotted developments, creating an additional floor to lease out has become lucrative again as the number of tenants seeking apartments has risen substantially.

Will the trend continue? The government has already given sops to those seeking to buy affordable houses. But the stock is only being announced now. Those who buy today will have to wait for another year or two for the apartment to be ready. This results in a steady demand for rental housing for at least another two years.

http://economictimes.indiatimes.com/Property/Lease_of_life_Property_on_rent/articleshow/3995184.cms

Anonymous said...

Property prices drop, but buyers not biting
17 Jan 2009, 0011 hrs IST, Viju B, TNN

Print Email Discuss Share Save Comment Text:



Residential properties in areas such as Dahisar, Mira Road, Vasai and Virar are slowly becoming affordable for the middle-class, as real estate
developers, for the first time, have started bringing down property rates. "The prices have come down by 10-15%, and most developers are willing to bargain for a cheaper rate,'' admits a real estate developer, who was participating in the three-day property exhibition in Kandivli that began on Saturday.

Real estate in places beyond Dahisar did not enjoy the same boom that swept Navi Mumbai over the last five years, mainly because of lack of infrastructure, water supply and power shortages. "But over the last two years, prices rose due to the boom in the economy, and even in areas like Virar and Vasai the property rates went up by 25-30%,'' said Sanjay Thakker of Aangan properties.

But though this trend has begun to reverse, few people are biting. Buyers are opting for the wait-and-watch approach. "We feel that property prices, especially in areas like Borivli and Kandivli are still very high. Developers should realise that the economy has slowed down, and if they want to sell their flats, they need to reduce their rates,'' said Borivli resident Pradeep Kumar who was one of the few visitors at the fair.

In an attempt to woo potential buyers, developers are giving away freebies like cars, LCD TVs, modular kitchens, refrigerators and washing machines along with sale of every apartment. "We are giving buyers the option of taking home a car, or alternatively, offering a reduction of Rs 200 per sq ft for the sale of every flat at the residential project that near Thakur Mall, Dahisar,'' said an official with Chamunda Developers.

Virar-based builders, Tirupati Constructions, are offering free stamp duty and registration, a modular kitchen and an LCD colour TV to the first 25 buyers, at its upcoming project in Virar. "We have kept the rates at around Rs 17.30 lakh for a two BHK flat,'' said an official with Tirupati Constructions.

Market watchers welcome the move. "In such times, builders should think out of the box as regular pitches may no longer work. They should provide better amenities, and sweeten the deal with competitive rates,'' said Anuj Puri, chairman, Jones Lang Lasalle Meghraj.

http://timesofindia.indiatimes.com/Mumbai/Property_prices_drop_but_buyers_not_biting/articleshow/3991088.cms

Anonymous said...

5000 job cuts in Pune real estate sector, 450 projects halted

Kaustubh Kulkarni / Mumbai/ Pune January 15, 2009, 0:59 IST

Severe cash crunch and falling sales have brought more than 450 real estate projects in Pune to a standstill. This has led to around 5,000 construction workers and many others losing jobs. By December 2009, only 16,000 new apartments would be unsold in Pune while the demand is more than 50,000.

These numbers were revealed by a detailed survey undertaken by Promoters and Builders Association of Pune (PBAP), a body that represents a large number of real estate developers in Pune and surrounding regions. "Construction of cheaper flats is impossible for builders at a stage when there is severe credit crunch and the buying power of Pune residents has got stagnated due to higher home loan interest rates. This has formulated into a 'deadlock' which seems difficult to get resolved without active steps by the government of Maharashtra and Pune Municipal Corporation," PBAP president and Kumar Builders chairman Lalitkumar Jain told Business Standard.

A large number of real estate analysts have been projecting Pune as country's top destination for real estate investment as the city has seen extensive growth in sectors of information technology, automobile, manufacturing, education and services. All this resulted into a sudden price hike across all locations in Pune and real estate properties saw an appreciation of more than 200 per cent within three years. However, the PBAP over the last four months has experienced a sudden fall in sales mainly due to higer interest rates.

"We have come to a situation where we have asked all our members to sell flats at the lowest possible rates because banks are not keen on financing our new projects and unless our present flats are sold, we cannot start new projects," Jain stated.

Rohit Gera, another prominent developer from Pune said, the steps taken by the Reserve Bank of India (RBI) have helped bring down interest rates but the state government and local municipal corporation are adamant over taking any new measures to facilitate real estate growth.

Gera stated, around 450 real estate projects in Pune and surrounding localities were at a standstill since developers do not have cash in hand. "Since projects are held up, more than 5,000 workers have lost jobs and a number of engineers, architects and allied workforce too have received pink slips. And still, the government has continued the readreckoner rates while the stamp duty for land development has been increased from one per cent to five per cent," he added.

The PBAP also blamed PMC for severe increase in various premium and development charges, which the builders have no option but to pass on to the end buyer. "Our survey show that by December 2009, there would be only 16,000 ready-to-sell flats available in Pune while the demand is of more than 50,000 units. If the demand-supply gap continues, there are no chances of prices falling," Jain added.

http://www.business-standard.com/india/news/5000-job-cuts-in-pune-real-estate-sector-450-projects-halted/00/01/346160/

Anonymous said...

These newspapers is full of crap.

The rental cannot go up in this period of poor economy, speculative demand, major housing supply, people losing jobs and petrol prices going down.

Eco Times crew is way drunk and bribed by RE folks that they have sold their conscience.

Prices of high end market will fall similar or more to the low end market in percentage terms. A house worth 50 crores in Delhi today would be worth 10 crores in a year or so.

HB

Anonymous said...

Kaustubh Kulkarni in the post above is an asshole. How does this idioe know that the demand will be 50K and supply is 12K.

Mr. Kulkarni, please don't screw naive people of Pune, go screw your wife.

Bloody RE Pimp.

Yoko Ono's Owner said...

I dont agree that Rental values will go up, considering earning power is being curtailed and under huge pressure. High end properties especially in mid income areas will face a predicament worst than the mid-income type housing. Its going to be terrible. 1 Crore house will have more value.

Areas like Navi Mumbai which is holding back currently will crash deeply. as it is there is no real law and order there and its like a frontier town it will get the valuation it deserves. Down down down.

Anonymous said...

Pls. don’t believe news paper reports. We are happy when we read the reports we want/like and unhappy when the opposite news come.

Trust yourself and pls. don’t try to time the market. I believe if you can afford the property you like pls. go ahead and buy especially if there is around 20 to 25% correction. (Urbanisation will happen in a big way in India and so there will always be a demand at least for next twenty years. )

God only knows how the market will move? Prices have corrected in lot of areas and can correct further if the banks won’t reduce rates. Best is to start checking and as mentioned close the deal if there is around 25% discount.

I had discussion with my old builder the other day; he mentioned that the rates will pick up once the interest rates come to 8%. He says in India people follow the herd mentality and once buying starts then the same customer who is running away will call and start begging to give atleast parking free.

I don’t know if that will happen but the builders are hoping by June rates will come around 8% and buying will start as the demand for the houses Mumbai and Pune is huge.

Pls. don’t time the market and take loan only what you can digest easily.

The best time to but anything is when others are not buying!!

All the best!!!


Bindas Bhai

Anonymous said...

er. is this a banglore-bombay-pune blog only?

and who is this guarantor who keeps dropping wisecracks like
"pick up yada yada guaranty"

people who are real buyers have little hope to find authentic information on the web or otherwise. i request the blog owner to start an online spreadsheet where people can only give 'real rates. not what THEY WANT. everyone can put rates of their locality.

by that way, vik, it will become useful. else this is just another whine-whine place on the web.

soory to put it bluntly. repeating same lines in comment is not going to make any difference or help anyone

arun

Anonymous said...

Great to see that Bindaas Bhai is back!

Anonymous said...

Thanks Pal, just that the same thing is written by all of us again and again, i thought, will take a break.

Kind regards,

Bindas Bhai

Yoko Ono's Owner said...

This is really aweful news. Do read.

Reproduced from http://internationalpropertyinvestment.com/indian-property-developer-bailout-backfiring

January 18, 2009
Indian Property Developer Bailout Backfiring

A recent initiative by the Indian government to prop up property developers by allowing banks to restructure and extend loans is backfiring and turning into another fiasco. Last December, the Reserve Bank of India (RBI) relaxed a key rule on restructuring bank loans to the real estate sector as a one-time measure to help Indian real estate developers cope with falling demand and a credit crunch.

The key requirement from the government was that developers agreed to reduce property prices. Which they now flatly refuse to do. Despite falling demand and dropping prices in the market, newly built properties are still being advertised (but not sold) at artificially high prices.

Bankers have now complained to the Central Bank that after making use of the relaxed rules, which permit banks not to classify loans to real estate firms as bad loans the moment they are restructured, builders continue to hold on to artificially-inflated prices. During a meeting with the RBI’s deputy governor Rakesh Mohan on Thursday to discuss monetary policy issues, a senior banker pointed out that the RBI’s relaxation had provided builders with an opportunity to hold on to high property rates that were quoted before the market slump.

“There is a feeling among bankers that builders are choosing to retain assets on their balance sheets rather than reducing prices and getting rid of assets,” said one banker, who asked not to be named. “In other words, to overcome the liquidity crisis, builders are pushing for restructuring of loans rather than selling off assets or reducing property prices.”

Several developers such as DLF, Unitech, Sobha, Omaxe, Parsvnath Developers and Housing Development and Infrastructure have approached banks to restructure their loans.

The developers, of course, are blaming the banks for causing the market slump by over-charging for home loans.

Several public sector banks recently cut rates charged on loans for affordable housing. Many of them now charge a fixed rate of 8.5% for loans up to Rs 500,000 and 9.25% for loans up to Rs 2,000,000.

Anonymous said...

Welcome Bindaas Bhai and his clone clone aka arun. If fact you are the real whiners who cant find the real estate prices going up. If you are so confident then go and buy shares of real estate companies.

Check following USER COMMENTS - http://economictimes.indiatimes.com/opinions/4001501.cms.

Surekha,Hyderabad,says:I have always observed that ICICI Bank quotes that Rates will come down after some days, but never noticed them coming down aggressively as PSB's. Hello citizens of India - Kindly do not go with any of these Pvt Banks especially for Retail Loans.
[19 Jan, 2009 1604hrs IST]

Arvind Sataraddi,Pune,says:Good news from ICICI. It is a highly efficient and effective bank that has brought revolution in banking. The bank was very quick to increase the housing loan interest rates in the past, but is very slow in reducing the interest rates to existing customers. In public sector banks housing loan rates is @10% whereas for existing customers of ICICI, it is 12.5% (reduced by only 0.5%in Jan-09). It would be wise on ICICI if they could reduce interest rates commensurate with public sector banks immediately and before customers like me start migrating housing loans to public sector banks.
[19 Jan, 2009 1602hrs IST]

AMEET,india,says:When rates are to be reduced, bankers talk of "looking ino".When they are to be raised, immediate letters are sent justifying the increase!!
[19 Jan, 2009 1600hrs IST]

ajay,hyd,says:Home loans taken @7 to 8 % are now paid @ 13 to 14%. Repayment periods got extended in such a way that some borrowers are required to pay EMIs till the age above 70 years. RBI is requested to extend loans to ICICI at zero % so that some relief will be given to such borrowers.
[19 Jan, 2009 1552hrs IST]

Vik said...

Arun,

You are correct that we need a price discovery mechanism for the web. However many times the prices in India are skewed by seller spam. Zillow.com has access to public records and they can show the true price of the last sale and sometimes the history of sales. In India as we know there is the black component and mostly prices are anecdotal. I dont want to list prices quoted by builders since then it will appear I am validating it. Saneprice.com is an effort to this end. However if people post the prices of the areas/complexes/plots they are interested in, I can compile it and post it as a spreadsheet on docstoc.com. Why dont you give me some numbers and I will start put my numbers as well. I encourage others too to post prices. We cannot rely on any newspapers to publish the truth.

Anonymous said...

Bhindas Bhai -- looks you are very worried about people reading the blog missing opportunities and incurring huge opportunity loss...

Price for a flat or a house is dependent on whats the worth of it... Not the affordability of the buyer...

I bought a house calculating my affordability in 2006... (I still remember how a ICICI/HDFC or some loan guy will be available with every builders office giving you the quote for your emi...) I know i am in loss... So guys dont follow this guys advice...

bhindas knows the readers over here are sensible (or like me learnt the lesson hardway).. You as a sales guy wants to fool this group...

Dont try to fool us... There are enough fools out in the market...

Observer said...

Rentals going up in Bangalore? Nonsense. They are going down. My own 2BHK rental in Koramangala is coming down from 14K/month to 12K/month. But I have set my sights on another luxury apartment. Remember those Sobha Aquamarine apartments in Bangalore which were completed with great fanfare a few months back? It is near IT companies like Wipro, Intel etc. My friend was staying in one of those on rent (3BHK) for 22000 Rs/month. He has transferred to another company, and he was saying that rental rates have come down as people are losing jobs and moving in with families, or local friends etc.

Now the rent for the same complex is down to 15,000 Rs/month! That is a whopping 30% reduction! Of course the builder is still quoting a price of 65 lakhs, but nobody is buying. Who will, when the rent is 15,000 and the EMI would be 65,000?! Only someone really stupid would go for it. I plan to check it out this weekend, and if I like it, I will move into it. Here is the craigslist ad for Sobha Aquamarine.

Sobha Aquamarine 15000/month 3BHK

Sobha Aquamarine 62L 3BHK

I really love those stupid investors who buy up all these flats, so that every 3-4 years I can get to move into a brand-new, nice flat, heheheheheh. I would request Bindaas Bhai to buy some more flats in Jayanagar area of Bangalore. I am thinking of moving into that area to be closer to my friends. I prefer 3BHK, but 2BHK is also ok. Also Bindaas Bhai, please buy a flat which is on the pool facing side. I like taking a swim during the summer time. Thanks!

Observer said...

Check out Office Spaces in Bangalore

Lots and lots of nice furnished office spaces in all the prime areas. Airport Road, Whitefield, Koramangala, Indira Nagar you name it! Most of them still have cubicles and other furniture from the previous occupants. Some of the office spaces still have leftover cubicle art from the people who vacated those office spaces. There is a major glut of office spaces, particularly for software/BPO/KPO etc outfits now as companies are shutting shop and downsizing.

Office rentals in Koramangala are down considerably. Most of the ones are now available at less than 50 Rs/sqft. This is unbelievable. Just a year ago, it was extremely hard to find any space at all, and rates were more than double.

So looks like Vulture is right. 50% price cut has happened in office space rentals, 30% price cut in residential rentals, and maybe prices will also come down by 50%. Just wait, do not hurry to buy, since we can continue to rent. There is no urgency to buy, and do not fall for the hype. If you ask a broker, of course he will say "this is a great time to buy", but that is what he said last year also when prices were higher. Wait and watch.

Observer said...

Sorry above link should be

www.officebangalore.com

Vik said...

Observer,

good points. however I notice the Aquamarine apt for sale is on the ground floor. The least preferred option. The rental looks interesting but it is 16,500 because of the maintainence. I think people losing jobs is a reality today. there is an article in mid-day which talks about auto-drivers been forced to take short distance trips since their business is down.. Welcome to the real world. If one of the most cocky set of people I have ever encountered are now facing the heat, I am not sorry for them.

Observer said...

Well, even at 16,500, it is still a 25% reduction from last year's rent of 22K. I am not sure if that amount included maintenance or not. I will check it out and update. In any case, rentals are going down in Bangalore overall. There might be one or two areas where rentals are going up because some companies are consolidating their offices near headquarters, and so people want to move closer to avoid commuting. But definitely in the peripheral areas, from chats with my friends, all rents seem to be going down!

Observer said...

For those who do not believe office rentals are going down, check the link

officebangalore.com

You will see even in IndiraNagar, which is a very posh area of Bangalore, rental rates are 50Rs/sqft for many offices. Ranging from 3000 sqft offices, to 30,000 sqft.

I am still shocked that office space rentals have fallen so much. I think lots of companies must be consolidating or downsizing.

Kannan said...

Around 20 important people have resigned from six real estate companies. Chief financial officers have quit in four out of six real estate firms. Ansal Properties and Sobha Developers have lost two CFOs each over the last 6-7 months, while the Omaxe CFO resigned in January this year. Parsvnath, Omaxe, and Puravankara lost independent directors over the last six months.



In Sobha Developers, two CFOs and one company secretary and compliance officer quit. CFO Sumit Keshan quit on December 15, 2008. Bhaskaran is likely to take over from him. CFO Pradumma Kanodia resigned on June 15, 2008; K Suresh, Company Secretary and Compliance Officer, quit on August 3, 2008; while Shine V Nair, President-Hotel and Retail Business, left on July 1, 2008.



Similarly in Ansal Properties, two CFOs and one company secretary quit last year. Mahesh Chand Maheshwari, CFO, resigned on November 25; Anup Kapoor, CFO, resigned on May 30, and is currently working in Infosys; while Amitav Ganguly, Company Secretary, resigned on November 14.



Parsvnath saw one independent director and one CFO quit. Vijay B Raheja, Independent Director, resigned on December 29 last year. Ravi Pani, CFO, resigned on March 28, 2008. Sunil Malhotra takes over from him. It may be noted that Samir Shah and Gaurang Vasani quit in 2007.



In Omaxe, one independent director and one CFO quit. Vipin Aggarwal, CFO, quit on January 3 this year. While last year's prominent exits include BP Singh, Independent Director, who resigned on July 7; Arvind Parekh, Director, CEO-Corporate Strategy and Finance, quit on October 4; and Brijinder Ahuja, Advisor-Corporate Strategy left on September 1.



Puravankara saw one independent director and company secretary quit. Noshir Talati, Independent Director, quit on October 14, while Sharda Balaji, Company Secretary, resigned on March 24 last year. Another high profile exit included that of Girish Puravankara, Deputy MD, who left on October 30, 2007.


Realty cos see 20 honchos exiting in last 7 months

Similarly, one independent and company secretary director quit Orbit in 2007. Vijayita Chauhan, Company Secretary and Compliance Officer, who quit on June 21, while Deepak Dhawan, Independent Director, resigned on May 21, with Raman Maru.

SOMETHING IS COOKING FOR THE INVESTORS....WAIT AND WATCH THE UGLY THINGS

Anonymous said...

Which fool is talking about high rental in Pune?
In May-2008, my close friend rented out his apartment (1500sq ft) in Zircon- Viman Nagar, Pune. for 17,000Rs (includes maintenance) after searching for tenant for 6 months. The re-sale apartment price is around 60Lakh. He bought this apartment in 2006 for 32Lakh.

Whatever the 2009 demand prediction is nothing but the day dreaming. A very simple fact is that lot of migrants who came to Metro for jobs are returning back to home. How long people will keep searching for job? & keep paying for expensive lifestyle?

http://seekingalpha.com/article/112863-india-
unraveling-stay-short-emerging-markets

Builders may be thinking that holding the property prices & paying the interest will help them to sustain this recession, but this time the rules of game has changed. We will see the surprise. When there are no signs of improvement in economy, else matter who is saying what, market is not going to improve. The greatness/sadness of this recession is that, it is global & synchronous, so a sheer power of any corrupt govt. is not able to manipulate the market.

So guys let it fall then only pick up, minimum 50% price cut is guaranty.

Vulture.

Anonymous said...

David Greogry on "Meet The Press" . Breakup of Bailout and Stimulus spending in USA

Stimulus from Feb'08 : $ 168 billion
Fannie Mae, Freddie Mac : $ 200 billion
AIG : $ 122.8 billion
TARP (bailout of auto companies,BofA,Citigroup) : $700 billion
New administration Stimulus plan : $825 billion
( with great focus on job creation in USA)
-----------------------------------------------
Total : $ 2 Trillion


The End of Banking as We Know It

“Paul J. Miller, an analyst at Friedman, Billings, Ramsey, thinks that the nation’s financial system needs an additional $1 trillion in common equity to restore confidence and to get lending — the lifeblood of a thriving and entrepreneurial free-market economy — moving again.”

So the total bailout money is $3 Trillion. And the consequences are loud and clear: higher borrowing costs, tight credit, consumers spending less money.

We have already seen how the BFSI sector has impacted the TCS's profit margins. This is just the beginning for the reduced/no profit for India IT companies in the long run. So the Techies please prepare for the rainy days and don’t squander the hard earned money for Super-Bubble real estate prices.

Shailesh said...


The Ascent of Money 05 Safe As Houses 1/5

Bharat said...

Dear Shailesh,

A very interesting link. Lots of ideas thrown around..One can see the genesis of the property as an asset and how government uses it to quell disquiet.

One can also see how much of a giant ponzi scheme this market is in reality.

Also, one can see that like other asset classes its subject to booms and busts.

I suppose the conclusion is that one should treat houses as place to stay and incomes as securities as the commentator keep repeating ad nauseam?

I think this is similar to Kiyosaki in his Rich Dad Poor Dad series who stresses on the importance of cash flow as opposed to capital gains?

Shriniwas Kulkarni said...

Dont go offtrack in the comments please... This post is for Sobha and unitech's doomsday - I just say a graphic of Unitech which is lying at its all time low of 25 Rs per share from a 310 Rs per share value last year. Thats more than a whopping 10 times drop. That suggests how the hell fly-by-night "giants" like DLF, Unitech , Omaxe, Parsvanath, sobha, JP Assoc are no one cheaters and lied about the true value of their land banks. Also Thee companies have definitely paid up the accountants who do property valuation. As it is after the Satyam-Maytas (Ramalingu might have written this String Palindrome program in his youth) fiasco, other deals via construction giants GMR, Emaar, L&T are under scanner for cheating and bribery.

2009 will get even more skeletons out of the closet. I want to see Kushal Pal Singh become a beggar this year - I will honestly pay him 10 Rs !!!!

Plus I have fresh news - the software industry which is more intense than the IT sector, has seen 10% flat job cuts and additional 10% salary cut. With projects in the line of fire, there is big nervousness to every one who has taken a home loan over 20 lakhs.

Builders, Realty "Giants" and constructions cos are not going to recover from this mess without support from IT/Software/BPO industry in India which contributed nearly 60% of GDP via services sector growth.

A good move now will be the Government steps in and re-evaluates all the hokie land pricing and lad grabs that have been done in the past decade. I know that we can use the ROI act to get these details on private deals too .... someone who knows about ROI should step in right now!

Jai Hind

Anonymous said...

Posted: Wed, Jan 21 2009. 12:20 AM IST

Realtors to report sharp fall in earnings:

Net profits of around 15 listed firms expected to decline 16-61% and revenues to fall 18-20% in December quarter

Shabana Hussain

New Delhi: Property developers are expected to report a sharp slump in revenues and profits for the three months to December on weak home and office demand, and high financing costs, five brokerages have predicted.


Net profits of around 15 listed realty firms are expected to decline between 16% and 61%, and revenues between 18% and 20%, in the December quarter, against the same period in the previous fiscal, according to expectations put out by Macquarie Capital Securities (India) Pvt. Ltd, India Infoline Ltd, Religare Capital Markets Ltd, Motilal Oswal Securities Ltd and a unit of Citigroup Inc.
.......

Real estate prices in big cities reversed course in the last three months of 2008 after three years of a bull run as interest rates peaked mid-year because the Reserve Bank of India (RBI) raised the cost of money to dampen inflation.
The average earnings expectation for DLF Ltd, India’s biggest realtor by sales, is a 7.56% fall in sales and a 24.78% drop in net profit year-on-year (y-o-y). On a quarter-on-quarter basis, it is expected to post a 14.41% drop in sales and a 20.30% decline in net profit for the December quarter.
........
.......