Monday, January 26, 2009

Where to invest in 2009 in ITndia

The soothsayers are back with predictions. Not where prices will drop, but where prices will rise.
Jones Lang LaSalle Meghraj, the sophisticated marketing arm of the building industry are making new predictions. Here is the link for the pdf on LiveMint.com's site. The analysis seems pretty straightforward as it proximity to the IT/ITES industry as the main drivers and I've headlined this post to reflect that.

Mumbai
Mumbai has witnessed some of the highest selling prices in the residential market till the
beginning of this year. Clearly, those prices were not sustainable, since buyers for super
luxury homes are shrinking fast.

One of the focal areas was central Mumbai (specifically Lower Parel and Worli) that
witnessed the highest price escalations. These now faces the challenges of the slowdown.
The current slowdown has curtailed the investor segment in the residential property market.
The driver for what demand exists now are real end-users.
In Mumbai, there is no dearth of those desperate to find homes within an affordable range -
affordable housing is therefore now the silver lining on the dark cloud of today’s slowdown.
Mumbai has three different directions in which growth can still be observed. Appreciation is
not a factor currently, but these are the areas that will sustain their prices – while other areas
in Mumbai will correct.
The extended western suburbs; Vasai-Virar sub-region
Drivers:
1. Economic drivers such as the MP SEZ by DHL, BIO tech SEZ by Mahindra
and IT SEZ
2. Connectivity is going to increase by introduction of additional suburban trains
from next year
Prices are in the range of Rs2,500-3,500/sq.ft
Area adjoining Panvel
Drivers:
1. This region is benefiting significantly from trunk infrastructure enhancements
such as the upcoming new airport, the Trans-Harbor Link, a railway terminus,
mono rail etc.
2. Positive impact from the upcoming Mega SEZs by Reliance and others.
3. The expansion of JNPT.
Many developers have already initiated large township projects in this region. The price range
are Rs. 3000-3800/sq.ft.

Bandra-Khar area
Prime property hunters are still focused on this area.
Drivers:
1. It will witness increased connectivity by the Bandra-Worli sea-link, the
proposed Metro Line 2 and also the upcoming Santacruz-Chembur Link road.
2. This region is always a preferred destination for prime property seekers
because of its elite profile, and because of the high level of available
shopping, healthcare, education and recreation facilities. Developers there
are offering products in redevelopment schemes.
The prices range from Rs18,000–25,000/sq.ft.

DELHI
Currently, there is a definite slowdown in growth in the suburban residential market.
Construction has stopped on new projects, resulting in a stabilization of rates for readypossession
flats. This scenario also reflects in Delhi, where the rates for good properties rates
are now stable.
However, the areas around the 150-meter road that will eventually connect Gurgaon to
Dwarka – specifically, Sectors 103-111 – have significant growth potential.
Drivers:
1. Sufficient developments will come up in this area, and one can expect a year-on-year
appreciation of at least 5-7% even now.
2. The area is currently under-developed – however, when residential projects there
reach completion in 2-3 years, the appreciation will be between 30-35%.
3. A lot of this depends on the ability of developers to raise enough cash to complete
their projects. Those who do not have the requisite finances will miss out on an
extremely lucrative opportunity.
The current rates in this belt range between Rs. 2200-2300/sq.ft. In Dwarka, the rates are
between Rs. 4000-4500/sq.ft and in the further locations of Gurgaon between Rs. 3500-
4000/sq.ft.

CHENNAI
Chennai’s residential real estate scenario is considerably depressed at the current time.
Developers who have projects along the once booming IT corridor are all set to reduce their
rates by as much as 20%.
However, the Mogappair-Porur composite region continues to hold mid-to-long term
investment potential.
Drivers:
1. This overall location is very close to the prime residential catchment of Anand Nagar
and also to Chennai railway station and the bus terminus.
2. The fact that it is not near the IT corridor also increases its potential.
3. The rates there are competitive at Rs. 2800-3000/sq.ft.
The expected appreciation for residential properties here is between 20-30% long term).

BENGALURU
Bengaluru (erstwhile Bangalore) is surely feeling the brunt of the IT slowdown. However,
established suburban areas like Koramangala, Outer Ring Road and Bellari Road continue to
be good investment destinations.
As in the case of Mumbai, appreciation is not a focal point in the current scenario - these are
the areas that will sustain their prices, while other will correct.
Apart from these, Mysore Road –which encompasses the upcoming NICE corridor, has lots
of future promise thanks to good connectivity to Mysore and many commercial developments
being planned there.
Koramangala
Drivers:
1. No scope for fresh developments
2. Close to Electronics City
3. Residential demand is high
Rates are between Rs7,000-8,000/sq.ft.
Outer Ring Road and Bellari Road
Drivers:
1. Close to IT hub
2. Outer Ring Road is close to Whitefield and is a commercial area.
3. New developments are coming up on Bellari Road, which is also close to the
Devenhalli airport.
Rates – Rs3,500 – 5,500/sq.ft. Appreciation potential between 5-8% short term. Long term
10-15%.

PUNE
With Talegaon not picking up in the anticipated manner, Pune’s new growth corridor now
encompasses Kharadi and Nagar Road. This can be safely considered as the most lucrative
real estate investment zone for 2009-2010.
Drivers:
1) Eon IT Park – 4 million square feet of prime IT space in the last stages of completion
2) Other IT SEZs as well as commercial ventures also on the anvil
3) Proximity to revamped airport
4) Improved connectivity, largely via the opening of the VIP Road connecting Viman
Nagar to the airport
5) Imminent arrival of 5-star hotels such as JW Marriott, Grand Hyatt and Leela
6) Reasonably low entry costs:
Rates – Rs2,700-3,500/sq.ft

HYDERABAD
Hyderabad continues to hold its own in the current slowdown scenario, though significant
growth has now been restricted to certain specific areas.
Residential real estate investment growth potential in Hyderabad will center primarily around
Gachibowli and Tellapur.
Drivers:
1) Proximity to the financial district, which is where the highest growth of IT and other
commercial projects is happening
2) Could become another CBD over the next ten years
3) Outer Ring Road (Phase 1 in advanced stage, phase 2 scheduled after six months) in
the vicinity will reduce commuting time of residents to key workplace locations
Rs3,000-3,500/sq.ft.
Appreciation in these areas will be about 5% in 2009 and might increase in further years.

MOHALI
Residential rates at Chandigarh have gone through the roof, and there is little scope for
appreciation for now. Moreover, because Chandigarh is a planned city conceived on certain
density specifications, which give rise to limitations on development.
It is therefore not dynamic in real estate terms, which means it will not change much with time.
Chandigarh could not partake in the IT boom for these reasons. However, adjoining Mohali
presents a completely different picture. The area called Greater Mohali, which encompasses
the fast-developing Landra-Mohali Road area, is a very promising residential nexus.
Pan-India developers such as Unitech, Emaar-MGF, Ansals and DLF have snapped up land
there for development into mega, multi-sector residential hubs. These will be highly organized
cluster projects, and all the right drivers are in place:
Drivers:
1) International airport coming up
2) Indian Business School coming up
3) Multi-terminal bus stand soon to be commissioned
4) 120 acre township with IT SEZ coming up
The investment opportunity here is in land, which currently sells at between Rs12,000-
14,000/square yard. After 3-4 years, the land rates in these areas will surpass those in central
Mohali, which currently stand at Rs30,000-35,000/square yard.

KOCHI
Kochi has the fast growing residential market in Kerala. The NRI investments has caused
sudden spurt in residential demand in Kochi City.
Apartment units have the highest demand owing to affordable prices and availability. In
addition, high ranking of Kochi as IT/ITES destinations which resulted in demand generated
by the infrastructure initiatives like the Smart City Project, Cyber City project, Infopark,
International Transshipment Container Terminal Project, etc.
Waterfronts are the most sought out residential real estate destinations and usually get a
premium. The prime residential areas adjacent to M.G. Road and along Marine Drive still
command a premium with landmark projects asking for Rs7,500/sq.ft
Drivers:
1) Close to CBD
2) Attractive Water fronts
3) Huge demand for waterfront apartments
Peripheral areas of the city such as Kakkanad, Edapally and Kalamassery currently face a
short-term oversupply of mid-range flats that are selling in the Rs. 2,500-3,000/sq.ft range.
Drivers:
1) Close to the existing InfoPark
2) Positive impact from the upcoming Proposed Smart city and Cyber city in Kakkand
3) Good infrastructure has lead to a diverse and robust economy and job creation.
Commercial trade, a traditional sector of the economy, is being complemented by growing
sectors such as IT/ITES (due to large scale IT parks and SEZ), BFSI activity and tourism.
4) Excellent connectivity resulting from a combination of airport, sea port, road and rail,
has positioned the city for long term growth and competitive advantage.
5) A disproportionately large number of NRIs, or non-resident Keralites to be more
specific, are investing from abroad and have increased demand for residential space.
Appreciation in the peripheral areas of the city will be about 5% in 2009. We expect a 5-
10% increase over the long term.
Rates: Rs2,500-3500/sq.ft.

AHMEDABAD
Ahmedabad, which has recently started leveraging its real estate potential for ‘real’ now, has
some real residential hotspots coming up.
For instance, there will be considerable economic activity with the arrival of the Tata Nano
project, which will definitely boost the value of real estate in and around the corridor of
Sanand.
Drivers:
1) Located in an industrial region rich with SEZs
2) NANO plant coming up
3) Infrastructure upgradation in process
4) Good connectivity due to S G Highway and SP Ring Road
5) Good land availability
6) DMIC investment region
7) Low land prices (Rs. 650/sq.ft)
Some of the reputed developers active in this region include Pacifica Sahara, Savvy and
Safal. Residential units are primarily villas, selling at rates between Rs2,600-3,000/sq.ft.
Prahlad Nagar is another good area to consider. It is surrounded by premium areas, has a
high income population and the prices are still relatively low. It is also close to the new
business district on SG Highway and has good connectivity to the core city. Rates range
between Rs. 2300-3000/sq.ft
One should also mention the Sabarmati-Gandhinagar highway, which is close to the airport
and Gandhinagar as well as the upcoming GIFT city and Ecopolis, has good connectivity and
infrastructure and will soon see many institute campuses like NID, IIT and DAIICT coming up.

JAIPUR
Jaipur has witnessed some of the best-planned and balanced real estate developments in
commercial, retail and residential space.
While affected by the current slowdown, Jaipur still manages to sail through on account of its
growing population and sound purchasing power.
While residential projects within central locations of the city have witnessed high absorption,
the city seems to be expanding towards two new prime destinations for residential
development.
Two key destinations with the highest investment potential in residential real estate include
Ajmer Road and Jagatpura (both suburban locations).
Ajmer Road (NH-8)
Drivers
1) Availability of land parcels to support large expansive townships as against low land
availability within city limits
2) Low land prices
3) Proximity to Mahindra World City; Mahindra’s SEZ being developed close to Ajmer
Road having campus developments by Wipro, Infosys, Deutche Bank, among others;
this makes the region a potential business hub of the future
4) Rapid connectivity to neighboring towns of Rajasthan as well as the prime city of
Jaipur with NH-8
5) Presence of numerous townships being developed by established developers like
Vatika, Omaxe, Ansal among others provide multiple options for sound investment
Rates - Rs2,500-3,000/sq.ft.
Jagatpura
Drivers
1) Proximity to South Jaipur, the hub of upcoming institutional, commercial and retail
developments. The location is also close to the new airport coming up, which
provides good connectivity
2) Availability of land parcels to support large expansive townships as against low land
availability within city limits
3) Low land price points and entry costs attracting good investor interest
4) Rapid residential development accruing to large number of townships and group
housing projects and townships in and around the area
5) An upcoming destination as a residential hub, with a large concentration of
government housing projects as well; a new expansion zone for the city population
Rates - Rs 2,000-2,500/sq.ft.

43 comments:

Anonymous said...

i was checking with my collegue on Kochi on why the rates were so high - 7K - 8K per sqf. He says its the central area where actress Asin bought a flat...

Now to own a house next to Asin one can give... Any thoughts... OR like observer we can rent a house near asin and save compared to EMI...

Bharat said...

Thanks for the article. The thesis that rates will go up further because an airport might come up in Panvel or Reliance SEZ "might" come up etc..to justify rates of 3500 psf in Panvel!! It was hilarious. All this can be nothing but a bull trap. The final exit point for all the bulls by finding a final bigger fool before the bubble pops.

Anonymous said...

Couple of points..I have been foillowing a lot of these real estate consultant reports and I can vouch that Anuj Puri and JLMM have been nothing more than a front for the builders..All through last year these guys tried to prop up the market and lure unsuspecting buyers into their stories..And never ever could they predict the fall in real estate and they come with this crap theories of where to buy and why..SO FRIENDS WHEN YOU READ A JLMM analyst report ..you know how much to rely on and trust it..

Anonymous said...

Couple of points..I have been foillowing a lot of these real estate consultant reports and I can vouch that Anuj Puri and JLMM have been nothing more than a front for the builders..All through last year these guys tried to prop up the market and lure unsuspecting buyers into their stories..And never ever could they predict the fall in real estate and they come with this crap theories of where to buy and why..SO FRIENDS WHEN YOU READ A JLMM analyst report ..you know how much to rely on and trust it..

Anonymous said...

Have you guys seen Manorma -6 feet under..Its all about property...The politicians announce projects to see their baren land and atrocious prices..The land prices go up and people are lured into them..and then the projects never come up and people are left holding the lands for decades at high prices..So thats the crux of it all..and most of these SEZs are big scams to jack up land prices so the ploticians and big builders can exit them at creamy profits...

Vik said...

Speaking to some of my friends who own businesses in Mumbai, their sales are down 60%. Many business have stopped making deliveries to builders since builders are not making small payments of even 50k, 1L . Vendors of Satyam are screwed as well with many computer distributors having receivables running into tens of crores. This is ugly

Anonymous said...

I think Govt. should start enforcing regulations tightly and let market decline by itself rather than keeping it propped up.

The way Govt. is handling it, there could be a civil war in India in a year or so. UK is already on the brink of a civil unrest.

Once the price correct by even
50%, buyers will start coming in. All this bailout and stimulus is going to cause hyperinflation which will be really painful.

HB

Anonymous said...

Lodha managed to sell 500 Flats in 15 days and Seth builder sold 100 flats in just a single day,(booking closecdd) both at Thane.

I dont know if this is bullshit or true. If they are lying then we will comw to know in coming times. If the same is true then all of us are living in folls paradise!!

Sudershan

Anonymous said...

Anon @7:22PM:

The whole Emerging markets concept and this India Shining thing is a big ponzi scheme.

All the big players in India used these slogans to make money for the last 8 years. All the stock markets upswings were a big lie.

The whole last decade was a big bubble.

HB

Anonymous said...

Mr. Sudershan,
Don't believe in these news.
Realtors = Realtwhores.

India is on the brink of a major downfall which can even cause a civil war. US is already seeing one. Google for the news from UK.

Don't be under any impression that India's market is coming up. People are scared to save their jobs. Builders are not making payments of even 50 thousand rupees. The RE in India will fall by 50% in 2009, another 30% in 2010.

Everything will come to light in the time to come. Bullshit was going on for the past 8 years. Now is the correction time to get back to normal. But so much damage has been done, it will not be easy to revert back in a year or two. We are talking a massive downturn for at least 10 years in India.

HB

Anonymous said...

European leaders fear civil unrest over economic woes

Peter O’Neil
Canwest News Service

Friday, January 23, 2009

Europe, Canada’s second-largest trading partner and top global ally after the U.S., is getting pounded by a tidal wave of bad economic news that has prompted warnings of a frightening hike in civil unrest.

Europe’s top politicians are so rattled by the prospect of growing protests that they have arranged an emergency leaders’ summit in March to deal with growing tensions, the Daily Telegraph reported Thursday.

UK Cities On Recession Red Alert

http://news.sky.com/skynews/Home/UK-…r_Cities_Study

10:27am UK, Monday January 26, 2009

Belfast, Liverpool, Wigan and Hull have been put on a recession “red alert” as a study reveals the downturn will hit Britain’s leading cities harder than expected.



HB

Anonymous said...

US lost close to 80,000 jobs just in one day i.e. today.

www.layoffdaily.com


HB

Anonymous said...

The RE in India will fall by 50% in 2009, another 30% in 2010.

HB,

This is what you have mentioned on your earlier post. I think i better wait for two years and buy five houses instead of one. This is quiet cool and i am sure all other members would also like to do so.

My appeal to everyone is to wait for one or two years and buy five houses instead of one.

BTW HB which areas r u talking about which will see this kind of fall?

Atul said...

Civil war or not. What is very clear is that India is sitting on a biggest scam of the civilized world - The LAND SCAM.

Look at these evidences (I have not compiled all of them yet, but I will):

1. Ex-Finance Minister (now Home Minister) keeps coming into picture to woe Real Estate industry even after he is no more a Finance Minister now. He is asking banks to lend Real Estate industry.

2. RBI is reducing risk on RE industry even when all industry leaders are accepting that there is a demand slow down in Real Estate. This ia absolute violation of basic Monetory Policies of central bank of any country. If the sector is not doing well, the Risk factor for that sector has to be increased by Central Bank. They can not decrease. But in India, RBI can do whatever they want.

3. Chidambaram cries loud in public for Cartelism when Steel and Cement prices went up. The same Chidambaram can not see clearly visible Cartel of RE industry in this country.

4. Chidambaram is trying to propogate RE Industry as 'Growth Engine'. I could not stop laughing. Any novice student in Civilization growth can tell you that Real Estate industry is not a Growth Engine but it is a barometer of Growth. If the region's economy is doing good, RE industry does good and otherwise. The Engine for Growth for any region are - Manufacturing and Agriculture.

5. All Real Estate players have mis-used funds they collected through - PE, IPO, Sales, Bank Loans, FDI and other sources for completing their project. They diverted the funds to increase their land banks. This is absolute misuse of funds. RBI is absolutely turning blind eye to this visible fact. This does not need any proof. Just pickup balancesheet of any RE company and you will find this fact.

6. All the RE companies have HUGE LANDBANKS unutilized since more then 2 years appearing on their balance sheet. This has created artificial land scarcity. This is a clear case violating MRP (Monopolistic Restriction Policy). This is also a case for unfair trade practice by accumulating stock of necessary item beyond permissable limits. No court is taking any step against these buildrs. Also no PIL masters are coming forth to file case against them. Just to give you a small glimpse, if government starts taking back all unutilized stock of landbank from builders, there will be huge land stock available across the country to bring down land value by atleast 75%.

This scandal is biggest in the history of civilized human kind. The exposure of this scandal will bring down the growth rate of this country for sometime. But exposure of this scandal will give way to much cleaner administration and lesser greed in this country leading to a consistent growth.

It is only after the exposure of this scandal that India will become SUPER POWER.

Anonymous said...

Anon 12:54 AM,

If a commodity falls by 50 % and 30 % in total it will fall by 65 % and not 80%.

If it need to fall by 80 % then it has to fall 50 % and 60 % in consecutive years...

Need to clear in maths right whether we buy houses or not...

Anonymous said...

Anon above:
You are very smart.

It was 50% and 30% off the peak prices and not 30% of the price next year.

HB

Anonymous said...

To all readers:

If you really want a house, please have patience. The market will correct drastically. As HB mentioned above, I think prices would fall 40% in 2009, another 30% in 2010 and the last correction would be in 2011 of about another 15%, and all corrections based on peak prices.

A house selling for 1 crore today would be worth close to 25-30 lacs in 2010-2011.

And what happens after that: The market would stay flat for 4-5 years.

So, there is no use buying now. Either it stays flat or go down for the next decade. It is better to keep money in fixed depsits and earn 9-10% interest income, and then pay cash to buy your dream house.

My 2 paisas.

Anonymous said...

@ 2 paisa,

Actually, whenever markets start cracking there is a scramble for exit doors. Which means that as soon as the markets crack they fall rather steeply. So I think the majority of the fall will happen in 2009 and it will be rather sharp. Followed by a long period of despondency and sideways drifting. So you do not have to wait too long. Just wait for 2009 to get over...somewhere in between you should get a nice bargain!

Anonymous said...

Well, here in US I made an offer on a house on East coast. It was sold for $698K in 2006 March. It is now listed at $412K. My offer price is $300K. My offer is based on Rent to mortgage ratio in this area, in fact 30K more than that. I know the bank will not accept it as it has hired all the same kind of MBA fools in US unlike other parts of the world. The bank will try to keep the price propped up until the tax payer money will bail them out. I know that these buffoons sitting in the banks are ones who caused this whole mess.

Anyway, I'll keep low balling them. My next offer would be $270K around March 09, if the bank survives. If the bank is nationalized, even better as all the high paid bank fools will be kicked out.

Time is coming in US when the banks will start liquidating massive inventory they are holding.
Houses will be available dirt cheap i.e. at 20% prices from their peak prices in 2006-7. Only for people who can secure financing or have Cash.

Bottomline is, CASH IS KING.

HB

P.S: Don't get into trap of realtors. They look at what the price was. many tried to fool me that it was close to 700K and 500K is a good buy. One has to see what is the future and not what it was 2 years back. So guys, make your own judgement.

Anonymous said...

The India software companies who have been bragging about going on the hiring binge, robust growth of 20-25% are in fact sheepishly laying off the people. Instead of admitting openly about the global economy having adverse impact, leading to lay-offs they are masquerading the whole exercise as doing favour on "underperformer" and kicking him out at the end of a appraisal cycle.

Infosys puts over 5,000 employees under scanner

It is learnt that Infosys, the country’s second-largest information technology services provider, has told its senior managers (project managers, senior and group project managers, delivery managers) to give the lowest performance rating (4 on a scale of 1-4) to the 'underperforming' 5 per cent as a part of the company's consolidated relative ranking (CRR).

Though rock-bottom rankings are not unknown in the company, this is the first time that Infosys has made it mandatory.
.................

Anonymous said...

Anon above:
Looks like India ekdam choron ka desh hai. Layoff ki news bhi khul kar nahin batate hain. If Infosys is firing, let them say it openly.
Wtf.

Anonymous said...

Cement despatches record robust growth




Rajesh Chandramouli | TNN



Chennai: Contrary to the general perception of a downturn in the construction industry, cement production and despatches in the country are not showing any sign of slowing down. In fact, they are peaking.
With production of 158 lakh tonnes and despatches of 160 lakh tonnes, December 2008 is the second best month ever for the industry. As per CMIE data, the previous best was in March 2008 when production was 164 lakh tonnes and despatches stood at 164 lakh tonnes.
“There is a slowdown only in the organised construction segment. They form just 8% to 10% of cement demand. The individuals and unorganised sector continue to buy cement. We do not see any swings of any major slowdown in the industry,’’ says Rakesh Singh, joint president (Marketing) of The India Cements. However, there is a slowdown in some industries in the infrastructure space, he says.
But, there is a section which feels that the real heat of the slowdown would be felt by the industry only by mid-2009. “I don’t think you should look at it month-on-month. As most of the projects which have been commissioned and half done, would, in any case, go ahead. Therefore, cement buying would be strong,’’ says Puneet Dalmia, managing director of Dalmia Cements. “The question mark is on the new project and industrial capex, which have substantially slowed down. For this to have an impact, it would be June-July of this year.’’
Even as consumption is increasing, profitability of companies could be under stress. Costs of power and coal are showing signs of falling only now. Selling price of cement have more or less remained stable in the past six months. Therefore, topline of companies would show robust numbers, while there would be pressure on bottomline, says an analyst with a domestic mutual fund.
“December demand has been high. Typically, cement demand goes up in March, July and December. Pricing has been stable too,’’ said Singh of India Cements.
“The sharp rise in cement production could be explained by the rise in capacity as well. There have been major additions to capacity in the last few months,’’ says Pawan Burde, a cement analyst at Angel Broking. But, the capacity utilisation has also fallen for the industry as a whole - and is it portent? For instance, capacity utilisation stood at 82% to 83% in November 2008 as against over 95% for entire FY08. “The growth of cement consumption, which stood at 11% in April-December 2008, has already fallen to 7% to 8% this year,’’ says the analyst.

http://epaper.timesofindia.com/Daily/skins/TOI/navigator.asp?Daily=TOIM&login=default

Anonymous said...

Anon above:
Good, produce more cement and it will cement their own factories for good in a few months.

RBI has already downgraded growth to 7% and they are still lying. The growth by the end of the year would be close to Zero or negative territory. Why do they try to doctor these numbers when they themselves don't know what is going on.

Anonymous said...

Easier FDI rules for real estate likely

Surajeet Das Gupta / New Delhi January 28, 2009, 0:07 IST



To ease the flow of foreign direct investment (FDI) into real estate, the government is mulling a proposal that mixed development projects should be exempt from the minimum capitalisation and area development norms.


Also Read

News Now
Paper
Specials



- Sensex up 109pts; Tata Motors gains 5%
- PM making speedy recovery
- Pre-market: Sensex may move up to 9,150
- FIIs net buy Rs 1,397 cr in F&O on Monday
- Tech view: Markets rise on overseas cues, US housing sales
- Dow gains 59pts; ADRs shine
More


Also Read

News Now
Paper
Specials




- RBI prods banks to cut rates
- Satyam appoints sale advisors
- Easier FDI rules for real estate likely
- Infosys puts over 5,000 employees under scanner
- Fare cuts don't work for airlines
More


Also Read

News Now
Paper
Specials



- Q3 FY09 Results: Earnings Season
- Saving Satyam: Govt gets into action
- India-Pakistan Tensions: Fallout of Mumbai Terror Attack
- Your Money: Where to invest
- Market Crash: Global worries weigh
- Time Out: Books, fashion, food, travel, sports, health...

More


The changes, proposed by the ministry of commerce and industry, will be discussed by the committee of secretaries set up for the purpose. A mixed development project can include townships, housing, commercial premises, hotels, multiplexes and recreational facilities.

Current rules allow 100 per cent FDI in such a project, provided it has been capitalised at $10 million (Rs 49 crore) or more ($5 million if it’s a joint venture where funds have to be brought in within six months), has in its possession at least 25 acres and proposes minimum built-up area of 50,000 square feet.

Under the proposed policy, the government is seeking to exempt such projects from the $10 million requirement, reduce the project size to 10 acres and cut the minimum built up area to 10,000 square feet. All FDI brought to these projects will continue to have a lock-in of three years after the date of completion of the project.

However, the developers of these projects will have to keep at least 50 per cent of the total built up area for hotel and tourism related activities and ensure the project is regulated by the concerned authority and residential buildings are not misused for non-residential purposes.

http://www.business-standard.com/india/news/easier-fdi-rules-for-real-estate-likely/01/49/347303/

Anonymous said...

Anon above:
US sales have increased in housing but prices have declined drastically. US is also full of fools and knife catchers.

Don't worry about Sensex, it is going to 6000 level in the coming months.

Anonymous said...

In US to keep the milk price up:
I heard that dairy farmers may slaughter 400,000 cows to shrink milk supply. Biggest since 1985.
They do anything for money.

Anonymous said...

Sudershan,

My friend is an architect with Seth builders and he has confirmed that they have sold 100 flats in a single day. He is not sure about Lodha, he has also confirmed that 95% of the flats are brought by end users.

Flats which were sold were priced at 24Lakhs++ for one BHK and 30++ for two BHK. This is a confirmed news.

I dont want to guess/predict where the market will move but the fact is that if priced reasonablly, buying is seen.

Subash

Anonymous said...

ITS VERY TRUE,THAT DONT BELIVE IN JLLM & ANUJ,THEY ARE LIKE WHITE COLLER ROAD SIDE ESTATE AGENTS,ALL THEIR REPORTS ARE JUST COPY PEST,ALWAYS BAISED TOWARDS DEVELOPERS COMMUNITY,THEY ARE JUST INTRESTED IN MONEY,LIKE PWC.FOR GETTING MONEY THEY WILL DO ANYTHING,THEY ARE USING INTERNATIONAL NAMES TO RUN BUSINESS BASSSSS BAKI SUB BELOW INDIAN STANDARDS HEY,ALL CRAP,EK TIME LOCAL AGENT KE UPER TRUST KARO LEKIN UNPE NAHI.
----X CUSTOMER OF JLLM

Anonymous said...

All big builders and corporations like PWC are professional thieves.

guru said...

Hi all.. following wasn't my creation... just copying and pasting from some other resource ( might be this blog or other). Thought of posting it, after reading the current post.



October 2005 - "Prices are rising, now is the time to buy or be priced out forever."
November 2005 - "Prices are stabilizing. The time to buy is now."
December 2005 - "Prices are coming back to earth. Now is the time to buy."
January 2006 - "The market is finding its level. Now is the time to buy."
February 2006 - "The snowbirds are here and itching to purchase. Now is the time to buy."
March 2006 - "Business in Florida is doing well. Now is the time to buy."
April 2006 - "The spring selling season is down and good buys are plentiful. Now is the time to buy."
May 2006 - "Middle-class homebuying is the thing to do. Now is the time to buy."
June 2006 - "Interest rates are climbing. Better buy now while loans are still affordable."
July 2006 - "You may never see bargains this good on the Treasure Coast in your lifetime. Now is the time to buy."
August 2006 - "It's been a light hurricane season, which means demand for housing will grow. Now is the time to buy."
September 2006 - "Buy now before the snowbirds return. Now is the time to buy."
October 2006 - "Watch me pull a rabbit out of my hat. Now is the time to buy."
November 2006 - "Forget that housing bubble talk. Now is the time to buy."
December 2006 - "Yes, Virginia, now is the time to buy."
January 2007 - "Just you wait. Ol' Charlie Crist will make taxes drop like a rock! THIS is the time to buy."
February 2007 - "Kiss a Realtor today! Now is the time to buy."
March 2007 - "Boy, this subprime thing sure looks like a buying opportunity to me! Now is the time to, well, you know..."
April 2007 - "Like it or not, the Boomers will retire and wrestle your home from you like a wild dog! Now is the time to buy!"
May 2007 - "Some of these failing banks shouldn't have existed anyway. Now is the time to buy."
June 2007 - "Summer's hot, and so are the bargains! Now is the time to buy!"
July 2007 - "We're bottoming out here...Easy now...Steady, steady...Buying season is HERE!"
August 2007 - "WHOOPS! Hit a little rough patch there. Not declining anymore, no sir. Now is the time to buy, to buy, to buy!"
September 2007 - "All right, maybe we had like way too many homes built. All that means for you is now is the time to buy!"
October 2007 - "Just stare at this watch. You're getting sleepy...sleepy...When you awaken now is the time to buy..."
November 2007 - "Look at that! People are selling homes! Baby boomers will be trucked in here by the thousands, and they will all be chanting NOW IS THE TIME TO BUY!"
December 2007 - "I'll have a Blue Christmas without my commission. Now IS the time to BUY!"
January 2008 - "Who are we kidding? This is pathetic, so why don't you folks understand that THIS is the time to buy?"
February 2008 - "YOU PEOPLE ARE DISGUSTING! I BET YOU CAN'T WAIT FOR ME TO FAIL! AND IT'S ALL BECAUSE YOU'RE TOO STUPID TO SEE THAT....

NOW....IS....THE....TIME....TO....BUUUUYYYYYyyyyy......AAAAHHHHhhhhhh...."

Anonymous said...

Anon above:
Please go ahead and buy. Maybe buy more than what you and your family needs. Buy maybe 4-5 flats as the housing is very strong and will stay strong. The houses will double in value from their current value in 2-3 years.

But what is coming to India will make you pee in your pants very soon. All the pimping you are doing will bite you hard in your tiny arse.

And Indian people are awakeing to all the cheating. They will soon start beating the shit out of all the cheating.

K said...

anon above:

You don't understand the above post. Grow up..be a man.

Anonymous said...

K:
Looks like anon above you read only the last line of the post posted by anon above him.

Bottomline is that a train wreck is coming.

HB

Anonymous said...

India IT companies are slowly but surely coming out of denial mode. The time has come for the so called "Managers”...Gap Manager...Gap Analysis Manager...Capacity/Resource manager...Escalation Manager...Engagement Manager...Document review manager…..what not..??????. to wake up from the deep slumber and actually start working.

TCS may call back 20% onsite staff in US

MUMBAI: TCS, India’s largest software company, is planning to move about a fifth of its employees working onsite at various locations in the US to India, as general slowdown and reduced client requirements have declined the need for a large workforce in the US. According to a person familiar with the development, a communication was sent last week to various middle and senior-level management personnel, informing them about the proposal to shift people back to India, following a sharp fall in client requirements.

Anonymous said...

The chest thumping idiots who helped companies fudging the figures. This consequently resulted in meteoric rise of SENSEX, unimagined profit, unabated orgy of reckless spending (more expansion...forgetting the core business and entering into retail/entertainment/sports arena) and real estate super bubble.

Crooked auditors

.....
.....
KPMG was reported to be involved in laundering millions of dollars of the corrupt and ill-gotten wealth of Pilipino dictator Ferdinand Marcos. Despite this ‘remarkable’ history behind it, KPMG, without compunction, conducts annual fraud surveys in India. Corporates are unaware that they are rated by an organisation whose conduct is more than suspect.

Deloitte was penalised for reckless auditing practices, negligence and frauds in several cases. Their negligence in audit is reported to have resulted in many companies going belly-up. Yet, in India even to this day they could be called upon by Insurance companies to conduct their audits or by banks to write secret security codes!

Ernst & Young have their quota of sordid history too but were more in the news for a ‘stink’ operation, as they were caught conducting “Pristine Audits” in 2003 and reported by the Guardian. To the uninitiated, Pristine Audits refers to inspecting toilet seats and U bends – yes inspecting toilets - for stains. Yet, this firm bestows the annual entrepreneur award in a much-hyped annual affair. Most of our entrepreneurs are unaware of this fact.

Price Waterhouse Coopers – They are the guardians of Truth – “Satyam”! Need we elaborate?

....
....

Anonymous said...

If US(World Bank) can ban Satyam and Wipro from doing business with them, why not India ban PWC, Deloitte, E&Y etc. especially after the facts are coming out of Satyam scandal and as per the post above.

Anonymous said...

Why the Banks/Housing Finance Companies will not lower the interest rate or reset the teaser rates (9.5) immediately? These suckers who took the gullible home buyers for a ride will confront the same fate 3 to 4 months down the line.

TOI Article


BANKERS expect more loans to turn bad in coming quarters, as the impact of global slowdown starts setting in. Bank chairmen expressed their concerns at a meeting with RBI governor D Subbarao, following the monetary policy announcement on Tuesday.
.....
......

The impact of slowdown on loan quality would be felt only after a few quarters, according to some bankers. While textiles, real estate, retail, exports and auto sectors will come under increasing strain, banks would exhaust all available options in a couple of quarters to prevent an asset from moving into the substandard category, felt bankers.
.......
.......
The country’s largest bank, State Bank of India (SBI), reported gross NPAs of Rs 13,314 crore for the quarter ended December 2008 compared with Rs 11,182 crore in the corresponding period last year.
.........
..........
Bankers are closely monitoring their asset portfolios and have stepped up their recovery mechanism in anticipation of increased bad loans, bankers pointed out.

............

Anonymous said...

A shameless former finance minister who is a sidekick of a real estate lobby and still touting the real estate as the engine of growth and prosperity should spend some time reading recent RBI's reports of slower growth, listening to clamor of lenders feeling fidgety about the oncoming loan defaults Tsunami and meeting with the businessmen who feel that it is their moral obligation to give the real picture to the employees.

Tata warns employees, brace for harder times ahead

New Delhi: Tata group Chairman Ratan Tata has asked his employees to brace themselves for hard decisions.


The managements of the group's 96 companies have described the current crisis as the worst one.


A message has been sent by the Chairman to the 3.5 lakh strong work force to sustain meaningful level of operation in the next 12 months. Drop in the demand and non-availability of credit at reasonable rates has impacted most of the Tata companies.


Ratan Tata in the letter dated December 31 wrote: "This economic crisis may well be the worst we have ever faced in our living history."


It will call for hard decisions and call for deferment of all avoidable expenditure and growth plans," Tata added.

Observer said...

Another example of fictitious transactions by these real estate companies below. No wonder people are rightly apprehensive about entering into any transactions with these companies, and their stock is down by 80-90%. Prices may also correct once all these financial tricks are exposed. Who trusts those sales numbers? One entity floated by DLF (DLF Assets) seems to have "bought" properties from DLF Properties Ltd, and of course these numbers will be trotted out as examples of "sales".

What really matters is sales to end-users and not to fictitious inter-group companies and to investors. Rents are the best way of judging how much actual end-users are willing to pay to live in the house. With EMIs staying at 2-3 times the rental amount, it absolutely makes no sense for end-users to buy now.

DLF, Unitech Lack Transparency

MUMBAI: With Satyam scam making investors more concerned about corporate governance issues, a global investment banking major has said that the country's top real estate firms, including DLF and Unitech, are found lacking in terms of transparency and key disclosures in their businesses.

Noting that related-party transactions account for a significant portion of their revenues, Credit Suisse said in a report that their network of key related parties run into hundreds of entities and include a number of un-listed JVs, subsidiaries, partnership firms and companies under control of key management personnel.

"It is clear after the Satyam incident that investors should focus on corporate governance issues, particularly because of losses incurred in the past 12 months that have failed to rise to the fore," Credit Suisse said in its report on Corporate India.

Some "concerns" might not be wrong from a legal viewpoint, but "flags for investors what they should know."

On DLF Ltd, the report said the company has had significant intangible asset/goodwill on its balance sheet, there are significant departures from conservative accounting practises, there have been material related-party transactions and the company does not disclose detailed accounts of key subsidiaries on a regular basis.

Besides, there is "no transparency in the land acquisition process. Promoters have privately controlled entities from which DLF buys land. Also, its landbank disclosure in annual reports is inadequate."

DLF, where key related parties included 245 subsidiaries, 12 partnership firms, 12 JVs and 124 entities under control of key management personnel, had outstanding receivable from promoter entities of Rs 1,940 crore as of March 2008.



Credit Suisse further noted that "DLF's dealings with the promoter entity have been questioned by investors. In FY'08, DLF sold assets/real estate projects amounting to Rs 5,560 crore to a promoter-controlled entity, DLF Assets. It also cancelled an earlier sale of assets worth Rs 1,890 crore."

Observer said...

Let us analyze the following statement by Credit Suisse in the above link:



Credit Suisse further noted that "DLF's dealings with the promoter entity have been questioned by investors. In FY'08, DLF sold assets/real estate projects amounting to Rs 5,560 crore to a promoter-controlled entity, DLF Assets. It also cancelled an earlier sale of assets worth Rs 1,890 crore."



Also from the link below, the total profit last year appears to be Rs. 2400 crores.

DLF sales to promoter firm DLF Assets


Now, if the inter-group sales have been Rs. 5600 crores, and if the actual value of the properties is 50% when sold to end-users, then the profit of Rs. 2400 crores may go down to almost zero if the properties stay on DLF's books. That is why to fool the market, DLF has floated this DLF Assets firm and then "sold" the properties to this new company.

This also allows DLF to come up with an "average" sales price and sales volume which is apparently only 10-15% below the list price, and only 20% drop in sales. Look behind the numbers, and remember that the maximum number of crooks in India along with politicians are involved in the real estate sector.

All the above financial trickery is to fool gullible techies and international investors. If people hold off from buying for just another six months to a year, then this entire charade will come crashing down. At this point, Vulture seems right, there is a 50% price cut from the peak coming, which means another 30% price cut from current levels.

Shailesh said...

Actors and sportspersons cashing in on plummeting realty prices

WTF DNA? Don't become another TOI.

saurabh kumar said...

Amazing blog thanks for shre.
Assotech Business Cresterra Noida is the world class specially economic zone available in Noida.

Rohit Yadav said...

Very nice post. Real estate is good option for investment. If you are thinking about investing Real Estate in Gurgaon than go for palm drive gurgaon.