Maharashtra govt tables ULCRA repeal Bill

BS Reporter / Mumbai August 01, 2007
Buckling under pressure from the Centre, the Maharashtra government finally tabled the Bill to repeal the Urban Land Ceiling and Regulation Act (ULCRA) in the state legislature today. The matter will come up for discussion tomorrow.

Though Maharashtra is set to be the 10th state to rescind the Act, the impact of the repeal on Mumbai’s realty market is going to be minimal. A major chunk of surplus land is covered by the Coastal Regulatory Zone (CRZ), No Development Zone (NDZ), forests and slums.

Introduced in 1976 with an aim to provide affordable housing to lower- and middle-income groups in urban areas, the Act prohibits any individual from holding more than 500 sq mt of land.

However, companies and trusts were exempted from this provision with a catch that they could use the land only for the purpose for which they had been set up. They were barred from trading these lands or developing housing schemes on these lands.

The Assembly has merely three days in the current session to take up the Bill and it is unlikely that both the Houses of the state legislature would give their nod converting it into a law.

After the Act was repealed by the Centre in 1999, each state had to repeal the respective Act by passing separate Bills since land is a state subject. Taking advantage of this fact, Maharashtra government, along with nine other state governments including Tamil Nadu, West Bengal and Jharkhand chose not to repeal the Act.

However, Jawaharlal Nehru Urban Renewal Mission (JNURM), under which states get funds from the Union government for urban infrastructure projects, made it mandatory to repeal land ceiling Acts to get the aid.

In the absence of repeal of ULCRA, the Maharashtra government, which has planned infrastructure projects worth Rs 40,000 crore for Mumbai’s makeover, stands to lose nearly Rs 10,000 crore as central aid under JNURM.

According to an affidavit filed by the state government in the Bombay High Court in 2006 following a public interest litigation (PIL), out of 30,000 acres of land in Mumbai Urban Agglomeration that could have been acquired under ULCRA, the state government acquired only 2,000 acres of land till 2006 and promised the high court that it would acquire another 1,000 acres by the year-end. The state government has also given exemption of 3,000 acres of land from ULCRA.

Even if the Act gets repealed in the current session, according to informed sources, the impact on the Mumbai realty market is going to be marginal.

As nearly 12,000 acre of land is under CRZ, NDZ, forests and in litigation, while nearly 5,000 to 6,000 acres is encroached by the slums. After all this, merely 6,000 to 7,000 acres will become available for housing or other development projects.

Real estate industry hopes that repealing of ULCRA will make trading of land more easier since buyers of vacant land will get clear title. “It will help foreign investors and real estate funds who are particular about titles, to invest in properties. Land buyers also can mortgage the vacant land now and get loans,” said RS Ajmera, president, Confederation of Real Estate Developers Association of India (CREDAI).

Maharashtra Chamber of Housing and Industry (MCHI) president Mohan Deshmukh said the impact of the repeal on the Mumbai real estate could be seen over a period of a year or so.

“In Mumbai, only 400-500 acres are vacant and the rest unoccupiable. Nonetheless, the repeal can ease the shortage of dwelling units in Mumbai, which is as much as 35,000 units. However, tier-II cities in the state could see a major correction in land prices where the prices have gone up drastically.

“For instance, in Pune, land prices 5 to 7 km away from the city have risen 300 to 400 times. An acre of land was sold at Rs 12 lakh three years ago in Pune, today the same land is sold at Rs 45 lakh. After the repeal, more land supply will come and prices will stabilise.”

Deshmukh believes since major land holdings are held by trusts and corporates, more players could come into the market. “Either the land owners would develop the land or would go for joint development with existing developers,” Deshmukh said.

Property developers in Nagpur expect the repeal would free up a lot of land in the heart of the city and its suburbs. Noted builder Ashutosh Shewalkar said that most of the land had been utilised under the Talegaon Dhabade Scheme and Sections 20 and 21 of the Act which allowed developers to go for development on the land falling under the ULCRA, if they handed over 25 per cent of the developed land to the government.

“Nagpur should witness a cooling period as more land will be available for development. However, with the ambitious cargo hub project shaping up, the city would be well in position to accommodate the extra land being freed,” he said.

A Mumbai-based developer said on condition of anonymity that the repeal could stop the corruption in getting the no-objection certificate (NOC) under the ULCRA for development.

The state has powers to give exemption from the Act in certain cases. “Developers were spending Rs 100 per sq feet in getting the NOCs. Now we can save all that,” he said.

Disbursement of home loans fall

Hindu reports

High property prices and rising interest rates appear to have lowered the demand for home loans, with the country’s top two lenders in this category recording a fall in disbursements during the first quarter of this fiscal compared to the January-March quarter.

HDFC and ICICI Bank together disbursed about Rs.10,000 crore in home loans in the April-June quarter this year, down from over Rs.16,000 crore in the previous quarter.

Market leader HDFC recorded a 35 per cent plunge in home loan disbursements at Rs.5,645 crore during the quarter ending June 30, 2007, from Rs.8,713 crore in the period January-March 2006-07.

ICICI Bank, the second-largest mortgage lender, saw a sharper erosion of 42 per cent sequentially in home loan disbursal during the quarter. Disbursements dropped to about Rs.4,500 crore in the quarter ended June 30 from over Rs.7,700 crore in the previous quarter.

Although home loan disbursements fell sequentially, HDFC recorded a rise in the amount when compared to Rs.4,386 crore in the first quarter of 2006-07. On the other hand, ICICI Bank’s home loan disbursements fell 29 per cent during April-June 2007 compared to the first quarter of the last financial year.

According to market observers, loan volumes declined as consumers deferred their home purchase plans on expectations of a correction in interest rates as well as property prices.

The Reserve Bank has increased key interest rates six times in the last year-and-a-half to check credit demand and keep inflation under check. This had prompted most banks to increase interest rates on home loans.

“Customers are adopting a wait-and-watch policy on expectations that high interest rates will bring down the property prices,” real estate developer Omaxe’s Corporate Strategy and Finance CEO Arvind Parakh sai

Unitech builders sloppy work

One of the numerous examples where consumers are taken for a ride. This video is taken in Delhi ncr at the Unitech Grande project. Very bad roads, finishing, no water in swimming pool, broken tiles, cracked paint, poor tiles, pathetic premium housing at astronomical prices. Buyer beware


Here is the marketing video from Unitech..

Some sense returning to the market

Economic times reports

AS BUYING interest slows down for residential properties due to high interest rates on home loans, property developers across India are said to be taking a fresh look at the Rs 20 lakh - Rs 40 lakh segment, which was left largely unattended over the past couple of years.
The developers are seeking to address the needs of this vast segment by bringing down the sizes of the residential apartments from a large 2,500 sqft-3,000 sqft high-end flats for a 3BHK, to a reasonable 1,400 sqft-1,650 sqft 2BHK flats and make them affordable for a larger customer base.
“The developers are coming back to the basics across the country, be it Gurgaon and Ghaziabad or Hyderabad and Bangalore,” said Mr Raminder Grover, president, Residential Services, Sandalwood High Street Residential Consultancy, a division of Jones Lang Lasalle Meghraj. While, several developers in Gurgaon are planning to launch a slew of projects after the new ‘Master Plan’ for the region is firmed up, Mr Grover said, those in other cities like Bangalore too are working on this front. Property developers in Ghaziabad’s Indrapuram are already offering a 2BHK flat for Rs 18 lakh - Rs 20 lakh, which was not the case earlier.
“While the high land prices prevent the developers to offer dwelling units at a lower price beyond an extent, they are resorting to reducing the size to make it suitable for a large segment, with as much amenities as possible that was earlier offered for larger high-end flats,” he said. And banks too tend to take it easy in the case of a Rs 20 lakh loan for a 2BHK apartment, he added.
Mr Grover prefers to call the reported fall in prices of residential apartments across several cities as “slowdown due to high interest rates” and not a “correction”. “It is not a correction, but a slowdown. And the residential segment is going through a phase of consolidation across the country, in every city in its own way,” he said.
According to Mr Grover, with residential segment accounting for almost 80% of the Indian real estate market, any slowdown in this segment attracts attention. But, none of the established residential developers have lowered the prices in the recent past.
However, what has been happening is the fact that investors, roughly comprising 20% - 30% of new home buyers for quick returns, are selling their holdings at the available prices. “Here too, as early movers, the investors continue to exit with profits. What varies is the extent of their profits across cities,” Mr Grover said.

Pimpri-Chincwad in the fast lane

With the population of the Pimpri-Chinchwad crossing the one million mark, the demand for real estate in both the commercial and residential sector has increased manifold.
Pimpri is witnessing tremendous development in the real estate sectors like never before. “The biggest township in Pimpri-Chinchwad, Empire Estates, is the new, upcoming mega township here, which is raising living standards to never-before heights. It is meticulously planned to create an environment that’s exclusive, spacious and green, with all facilities for comfort and convenience,” says a source from Sukhwani Builders.
Increasing number of malls, multiplexes, hospitals, schools, colleges in the area have added to the city’s desirability quotient. Jai Ganesh Fame multiplex at Akurdi has been a recent development in the entertainment arena. With the multiplex offering a decent ambience and good value for money, residents of the twin cities do not have to travel upto Pune for quality entertainment.
Major real estate developers have been attracted to the area because of its proximity to Pune – just 15 km away - and its developing infrastructure. Rates in the Pimpri-Chinchwad zone are stable now as compared to about 10 months ago. The rates for residential projects range from Rs 2550-2880 per sq. ft depending on the location and the amenities being provided.
Mahindra Gesco has a vast expanse of land in Pimpri and is aiming at developing the land with the best of the contemporary amenities in the near future. Mahindra Royale and The Woods are two of their major projects in the area.
“Mahindra Gesco is primarily aiming at developing residential zones keeping in mind the proximity of amenities and facilities like shopping complexes, malls and multiplexes at the service of its prospective buyers. Also being a reputed giant in the market helps as we don’t have time lags clearing with other legal matters and conveyance laws,” says Milind Patange, Head of Marketing of Mahindra Gesco Developers.
Pimpri-Chinchwad has many tourist attractions and hosts green and peaceful environs for the residents. Some attractive destinations in the twin-cities are Appu Ghar, Bhakti Shakti and Durga Devi Hill park.
In the wake of its increasing population demands there has been a steady increase in the number of primary and higher educational centres. Dr. D.Y. Patil’s educational institution, besides setting benchmarks in the educational arena, has also been a blessing for local residents. Sant Tukaram Nagar in Pimpri has developed post D.Y. Patil era. Many shops and restaurants have developed owing to the percentage of youth. Many people have constructed duplexes and offer the upper storey to the students on a cot basis or as paying guests.
“Renting our rooms to the students has become a secure monthly source of income for us. Besides offering rooms on rent, we also cater to mess facilities,” says Mrs. Salunkhe of Yayati society at Sant Tukaram Nagar.
Pimpri-Chinchwad College of Engineering, D.Y. Patil College of Engineering (Akurdi), Maharashtra Academy of Engineering, ATSS IICMR at Pradhikaran, Lokamanya Tilak Homeopathy college at Chinchwad are a few other institutions in the area.
The close connectivity and easy commuting to and from Pune is also an asset for the residents. Pune and Pimpri-Chinchwad Municipal Corporation are keen and interested in the development and widening of major roads and construction of bridges. The development of Dehu-Katraj bypass, national highway IV, has contributed towards relieving the traffic congestion.
“The old Mumbai-Pune highway has been converted to a four-lane highway with direct connection to the Mumbai-Pune expressway at Somatne Phata,” says Abhijt Sarwade, a resident of Pimpri.
The twin cities are well connected by road and rail. With regular bus services of PMT and PCMT to aid in commuting, railway trains also provide a decent connectivity to Pimpri Chinchwad. Nashik too is just three to four hours’ drive from here.
Government hospitals like Yashwantrao Chawan Memorial and other hospitals like DY Patil and Lokmanya Tilak offer quality medical service at nominal rates. Birla hospital one of the best in the country is providing quality medical facilities at affordable rates. The 500-bed hospital, spread over a sprawling 13-acre land, is located at the heart of Chinchwad.

With major developers Sukhwani, Mahindra Gesco and DSK vying for the real estate market in Pimpri-Chinchwad, their prospective consumers are catered to with an array of options.

Despite maintaining close proximity to Pune; Pimpri-Chinchwad has managed to maintain its distinct identity. Its offer of quality services with good amenities and a tranquil ambience is making Pimpri-Chinchwad a sought after residential location. The twin-cities of Pimpri-Chinchwad have become the preferred choice of the connoisseurs of fine living. The developments at the current pace will surely ensure that Pimpri-Chinchwad will be a coveted zone for developers and consumers alike.

No occupancy verdict in favor or apt-owners- Supreme coutr

The recent Supreme Court verdict on Non-Occupancy Charges (NOC) has put an end to the long-term feud between societies and its members, once and for all. The Apex court upheld the constitutional validity of the notification dated- August 1, 2001, issued by the State government that NOC cannot exceed 10 per cent of the service charges.
Now that the verdict has come out, thousands of flat owners who have let out their flats or who are contemplating renting them out will breathe a sigh of relief with the latest verdict upholding the Mumbai high court order. This verdict will definitely help to curb unwarranted charges levied by bureaucratic societies and release vacant flats in the city for rental purposes. This order will also minimise conflict between flat owners and societies across Maharashtra, which have resulted in litigation.
By virtue of the powers under section 79A of the Maharashtra Cooperative Societies Act, 1960 the State Government issued a NOC circular in 2001, which fixed the ceiling on NOC at 10 per cent of the service charges. However, the government order was challenged recently on 2/3/07, when Mont Blanc CHS at Peddar Road in Mumbai filed a special leave petition (SLP no. 7964, 7965, 7966) and demanded interim relief and autonomous authority to decide upon the non-occupancy charges. This petition was called for hearing on June 19 wherein the Supreme Court upheld the Bombay High court ruling but provided interim relief to petitioners who are entitled to charge 10 % of the monthly rentals and not 10% of the service charges.
The August 2001 notification had clearly spelt out that in case societies have not amended the old byelaw on NOC then they would have to amend and update it. Moreover, even if the amendments are not made societies in the state cannot charge more than 10 per cent of the service charges. Despite this clarification from the government, many societies tend to charge unreasonable non-occupancy charges.
There are more than 58,000 cooperative housing societies in the state, with more than 12,50,000 flats. In Pune, according to a 2002 report of the divisional joint registrar of cooperatives societies, there are 7,711 societies, with 20 per cent of the flats lying vacant.
Earlier, the non-occupancy charges were not regulated and fluctuated according to the whims of societies, who obtained general body resolutions. Many societies charged exorbitantly, making huge profits on this.
Mr. Alwyn D’Souza, Secretary, Alpine Heights, Co-operative Housing Society at Baner argued, “For middle-class societies wherein the maintenance charges are around Rs 500 per month, 10% of it amounts to mere Rs 50, which is unfair, since the sub-tenants also utilise the same amenities as the society members.” Office-bearers of societies also believe that the flat owners charge sub-tenants exorbitant rates and would pay a pittance to the CHS as per the new law.
Advocate D. Vader explained, “The apex court defended its decision and justified its stand that the sub-tenant has no locus standi with the society. The member and the society thereof settle all the matters concerned. The owner pays the maintenance charges for the flat per se and the sub-tenant pays his dues to the owner. So the society recovers services rendered to the occupant, i.e. the sub-tenant. The society should not be concerned with the monthly rentals charged by the flat owner.”
Mr. Lalit Kumar Jain, Chairman, Promoters and Builders Association of Pune (PBAP) and also Chairman of Kumar Builders, points out that it is more important for societies to know who is coming in to stay rather than the monetary aspects. “In fact, by charging more they may be compromising on the quality of the person coming into the premises,” he explains. Also the exorbitant charge does not have any logic. Prior to this, societies were charging exorbitant non-occupancy charges, which ultimately reflected in the high rentals, burdening the end user. This also led to many non-occupied vacant flats not being rented out. This SC ruling will help to curb exorbitant NOC and facilitate the consumer.”
The maintenance charges are funds raised by the society members for maintaining common amenities like elevators, garden and cleaning. The flat owner has to pay both maintenance charges and nonoccupancy charges if he or she rents out the flat, and this amounts to surplus charges for the benefit of the society.
Mr. Rohit Gera, Executive Director of Gera Developments Pvt. Limited, asks, “Why do societies want to put their hands in someone else’s pockets? Why do they want a share in somebody else’s fortune? If the flat owner is making a profit from his own property, why does the society want a share? It is absolutely irrelevant what the owner charges as rent as the services which are being provided are already being paid for in terms of maintenance charges.”
Following the ruling many the nonoccupied vacant flats will be released for licensing and rental, reducing the crunch on rental housing in a city where the demand is constantly on the rise.

CM gets Microsoft to invest in Pune IT park

I hope the CM ensures Pune doesn't go the same way Mumbai has - to the dogs. The good thing is Microsoft is happy with 50 acres. If it was Infosys they would've asked for 500 acres. Microsoft realises its not in the real-estate business. This news is surely going to set the tails wagging in the fledgling Pune real estate market and brokers and builders will jump on it to hype up prices in areas in the vicinity of Hinjewadi.

Mumbai: Maharashtra chief minister Vilasrao Deshmukh’s American holiday got an unexpected sweetener—Microsoft chairman Bill Gates has committed to setting up a state-of-the-art IT park in Pune district’s Hinjewadi, sometimes described as the Silicon Valley of India.
Deshmukh, currently touring the US to market Maharashtra as a ‘first choice destination’, had a long meeting with Gates at the Microsoft offices in Seattle. Deshmukh’s pitch—that his government would apply the new developments in information technology to the welfare of farmers—evidently tugged at Gates’ heart-strings, and purse-strings too.
“Microsoft will set up an IT park in Pune district and will take all possible steps for the welfare of farmers,’’ the philanthropist-techie announced to the highlevel Maharashtra delegation comprising Deshmukh, industries minister Ashok Chavan, chief secretary Johny Joseph, the CM’s secretary U C Sarangi and industries secretary V K Jairath.
“After my meeting with Bill Gates, I am sure relations between Microsoft and my government will be strengthened. I am overwhelmed by the reception given to me,’’ Deshmukh observed in his concluding remarks. The chief minister said that in the next decade, Maharashtra would emerge as one of the best states in terms of basic infrastructure, power, industrial development and roads. “We will be on par with any other developed country,’’ he announced. State expects Gates to invest Rs 300-500cr
Mumbai: Reviewing the performance of his government, chief minister Vilasrao Deshmukh said in Seattle that during the last year, a record number of major industries—49—had been set up in the IT sector in Maharashtra, with a total investment of Rs 5,929 crore and had created an estimated seven lakh jobs.
Details of the Microsoft project are not available but what is known is that the government has offered a 50-acre plot in Hinjewadi and is expecting an investment of between Rs 300 crore to Rs 500 crore. “The fact that Gates has decided to set up an IT park in Maharashtra is significant,’’ said an official. “Along with us, at least a dozen states were knocking at his doors asking for his business.’’
Microsoft currently has 5,000 people working in India. Of these, 1,300 are software developers at the company’s development centre in Hyderabad. Until now, for Microsoft, this has been the only city where so large a number of software developers was posted. Bangalore has a research centre but is much smaller, with only 50 people.
The official said ever since Deshmukh made it known that he had plans to visit the US six months ago, senior bureaucrats had been drafting a strategy to ensure that this would not be just one more foreign tour. “We planned our strategy very carefully and fixed our targets. The decision of Gates to invest in Maharashtra is being viewed as a major success of Deshmukh’s foreign tour,’’ the official said.

Apartment registration mandatory

Its time for the speculators to exit the market since the government plans to make apartment registration mandatory at the time of booking. This bitter pill is a bit too late since prices have jumped up 100% and more over the past couple of years. This is an ill-conceived plan and will put the apartment buyer at risk when dealing with small time builders. More often the not, construction is delayed by atleast 6 months to 18 months and many times in times of tight liquidity the apartment is left unfinished. So speculators and end-owners of these properties will be left in a lurch. Nevertheless in cities like Mumbai where prices have reached dizzying levels, there is bound to be a slump since no-one likes to pay 10-20L (10% of 1-2 crore) as registration if they dont plan to stay in it. Lets keep watching as the party unwinds and the drunk's stagger their way home

Financial Express writes
NEW DELHI, JUN 26: It may not be easy to frequently sell property for a hefty premium much longer. With an eye to curb speculation and claim a slice of such transactions, the government plans to make it mandatory for all buyer-seller agreements to be registered. According to industry sources, registration will have to be carried out within a week or two. Since the subject falls under the state list, individual state governments will decide the registration fees.
SHUTTING A WINDOW

• Registration will have to be carried out within a week or two
• Individual state governments will decide the registration fees
• Will deal a blow to the speculator market and check inflation


At present, it is mandatory to register an apartment only after one gets possession. That leaves open a window of opportunity for speculators to resell property at a premium during the period between initial payment (the advance) and actually taking physical possession.

Here’s how it works: the cost of an apartment of 2,000 sq ft at Rs 5,000 a sq ft works out to Rs 1 crore. The booking amount of, say, 5% is Rs 5 lakh. As marketing hype escalates the price by 10-20%, the speculator offloads the apartment. If the sale price works out to Rs 6,000 a sq ft, the investor pockets a cool Rs 20 lakh on an investment of Rs 5 lakh.

“In fact, property usually changes hands four to five times before it actually comes to the end-user. By introducing such a provision, the government will deal a blow to the speculator market and check inflation in the bargain.

Further, it will also enable the government to know how many times a particular property has changed hands,” says Sandeep Donald Shah, director, Taylor Devices.

Smaller realtors take exit route

Its judgement day for the small time builders and it looks like the brunt of the fiasco will be felt by the consumers who have booked apartments with these crooks.

Economic times reports

MUMBAI: Liquidity crunch in the real estate market is driving many small-time developers to look around for a cover. Many want to liquidate their land or incomplete projects by selling them to larger developers or private equity players even on reduced valuations. What is forcing them to take this drastic step is the stagnant market, where property rates are showing signs of a major correction, said industry sources.

“I am sitting on, at least, five-six such proposals. Some deals are at an advanced stage. The small-time developers are mainly offering land that they had acquired earlier,” Pradeep Jain, chairman of Parsvnath Developers, told ET.

An official with Mumbai-based realty developer Runwal Group said it had received similar proposals, mainly from markets like Pune, Nagpur and Bangalore. “Though we have not concluded any such deal so far, there are, at least, a couple of proposals we are working on,” he said.

“Small developers are under pressure now. Fund flow into this sector has begun to dry up. Selling incomplete projects to big developers or private equity firms is an option explored by many such developers,” said Pranay Vakil, chairman of KnightFrank India, a frontline property consultant. He added that in the past two months, home sales have come down by over 70%.

“A sharp fall in sales would force them to cut the price in the coming months. The trend is visible in many suburban markets,” Mr Vakil said.

Industry observers said the residential property market, which remained stagnant for the past few months, has started developing cracks, especially in Mumbai’s suburban markets and the tier-II and III cities. The volume of sales has dropped by 70-80% in the past two months in the wake of rising interest rates and additional pressure on household budgets.

Besides, there is pressure on real estate developers due to the tightening of fund-raising norms. The recent moves by the Reserve Bank of India (RBI) and the finance ministry have left them with a few choices like private equity and public offering for their fund needs.

While RBI has been imposing increased restrictions on banks on their exposure to real estate sector, the finance ministry has been trying to curb unrestricted flow of foreign funds.

In May this year, the finance ministry had said that all foreign funds raised by Indian companies, through the issue of partially convertible, non-convertible and optionally convertible preference shares, would be treated as debt and would be subject to guidelines applicable for external commercial borrowings (ECBs).

This move has made it tough for developers to access foreign funds, since ECBs are allowed only in large real estate projects and the conditions are far more stringent than FDI. Several real estate funds admitted that they are working on a clutch of projects now, much more than what they used to around two-three months ago.

“The quantum of deals has seen a manifold increase over last three months. We feel it is mainly due to the tight fund raising norms introduced in the sector,” said Ritish Vohra, director, investments, Saffron Asset Advisory.
According to Mr Vohra, the developers are seeking private equity funds even for small-sized projects. “The valuations are also more realistic now,” he said.

Property consultants said in Navi Mumbai, one of the largest residential markets, prices have fallen sharply. “The enquiry level have come down to almost nil last month. Developers are now slashing around Rs 1,500 per sq ft in the property prices,” said PM Raju, a Navi Mambai-based property dealer.

Tax raids on Bangalore real estate developers

I believe this is the tip of the iceberg. There are probably thousand other developers defrauding the government and the end-users by using black money to jack up land prices and then get end-users to pay for it using white money financed through loans. This is a local hawala operation to say the least.

Times reports.
BANGALORE: Tax sleuths on Tuesday unearthed cash estimated to be in billions of rupees, gold and jewellery and incriminating documents in raids on the offices and residences of some Bangalore-based real estate developers and property dealers, a top official said.

The searches were carried out simultaneously in four to five premises of the developers and dealers in the presence of police and senior officials of the income tax department.

"The raids are still on. Details on recoveries are awaited, as the teams are yet to return from the field. The searches are being conducted in connection with tax evasion and amassing of wealth disproportionate to their sources of income," the income tax official told IANS on phone.

Police officials accompanying the tax sleuths said raids in the premises of S. Manjunath, a leading builder-cum-property dealer, yielded about Rs.100 million in cash, seven kg of gold, documents and stamp papers related to buying and selling of lands, residential plots and houses.

Official-cum-residential premises of two other developers - Reddy Veeranna and Kupendra Reddy - were also searched leading to the seizure of unaccounted cash, forged documents and passbooks of bank accounts.

"The seizures have revealed the extent of evasion and non-disclosure of the deals taking place in and around the city, where demand for commercial and residential properties has been surging of late," the official said on condition of anonymity.

Meanwhile, Karanataka Chief Minister H.D. Kumaraswamy denied reports that realtor Manjunath was associated with his family and handled property deals on his behalf.

"So many people have began claiming to be close to me and my family since I became the chief minister last year. It is for the authorities to verify such claims," Kumaraswamy told reporters at the secretariat when the raids were brought to his notice.

Sources in the ruling Janata Dal-Secular said Manjunath was only a supporter of the party and participated in its campaign during the last elections.

NRI's land's target of mafia in Delhi

The "land mafia" in the national capital seems to be turning its attention to non-resident Indians (NRIs) whose absence is usually long enough to grab their land and sell it illegally at whopping prices.

Four cases of unauthorised occupation of land, known in New Delhi as land grabbing, that Delhi Police are investigating show how well-off NRIs, mostly settled in the US and Britain, are falling easy prey to such gangs.

Police officials say the land mafia - mostly a bunch of unscrupulous real estate agents - form a well-organised network to keep a close watch on the lands and properties of those NRIs who hardly visit the city.

"The land mafia has formed a complex web including government and bank officials to keep a tab on people who rarely visit their properties back home," a senior Crime Branch official said.

The mafia not only sells such land with forged documents but also puts NRIs in trouble by obtaining bank loans against their property.

Statistics available with police show that at least 14 cases of grabbing and selling of land owned by NRIs - mostly in upmarket areas of south Delhi - have been registered in the past three years.

Explaining the modus operandi, an official said the culprits keep in touch with the contacts of NRIs in order to know about their visits and the duration of their stay in Delhi. They also study the status of their properties.

"Through these contacts, the mafia finds the person in whose name the initial conveyance deed - a legal document signed and delivered to effect a transfer of property and to show the legal right to possess it - has been executed by the NRI or the caretaker of the property here. After that the person is lured by the mafia with hefty amounts."

In most cases, the person is a property dealer who resides only a little distance away from the property. This person is first lured into the mafia loop, say police.

"As the original conveyance deed doesn't bear the photograph of the actual owner or NRI, the newcomer in the mafia group executes a general power of attorney (GPA) in favour of a property dealer of the mafia. They also spend hefty amounts in paying stamp duty," the official told IANS.

After completing the paper work, the mafia creates confidence in a prospective buyer, showing him the rosy picture that this particular property is available for a throwaway price. Sometimes the buyer is told that the owner needs money for his medical expenses or foreign trips.

Another modus operandi the mafia adopts is showing the prospective buyer a fake agreement and the receipt of a hefty amount as proof that the property has been sold off.

"Through such means they receive a hefty amount from a prospective buyer. If things become apparent to the buyer, they threaten him with dire consequences and while returning his money ask him to compromise on a much lesser amount," said another senior police official.

"It has also been noticed that such properties are mortgaged with banks for big loans."

"Banks are also sluggish in getting a case registered, as they report the matter after a gap of more than four or five years. Such attitude on the part of bank officials adversely affects the prospects of a case and apprehending the accused persons," the official added.

Nandagudi SEZ causes land prices to zoom

Times had an article on the speculative nature of land prices in Nandagudi. The sellers are making hay while the sun shines. More power to the farmers. Now the land-sharks have moved so better watch out before buying anything here.

Nandagudi: One announcement, and the dusty swathes of Nandagudi village, 45 km from Bangalore, have turned into fields of gold. The Karnataka government’s proposal to set up a special economic zone (SEZ) has ensured that per acre of land, which was being sold for a paltry Rs 1 lakh just a few months ago, reach the dizzying Rs 1-crore figure. Also joining the party in the boom is Hoskote, a neighbouring biggish town.
Land prices have appreciated 200% in two months and show no signs of slowing down. Land sharks are already on the spot. Adjacent to the SEZ area, the land used to cost less than Rs 2 lakh. Today, it is nothing less than Rs 60 lakh. Move further down towards the NH 4 near Hoskote, and it goes up to Rs 1 crore per acre.
Why not? Nandagudi hobli serves as the centre-point for the international airport in Devanahalli, new Outer Ring Road and, of course, the SEZ. Already, 50% of the land around the proposed SEZ area has been bought by local leaders, real estate firms and land dealers from Karnataka, Maharashtra and Andhra Pradesh. Remaining lands are either under sale-purchase process or being held by original owners, who are waiting for the prices to go up further.
“Many farmers have sold their lands and settled down in neighbouring Chintamani or Kolar. We are making hay while the sun is shining,” said Nandagudi resident Satyanarayana gleefully. The village, where bullock carts used to trundle, is being dusted up by quite a few pricey SUVs, he says.
A nondescript village till last year, Nandagudi caught the shine of real estate developers when the BMRDA proposed to set up an IT township in Hoskote, between D Shettarahalli and Nandagudi hobli.
The proposal is still pending before the government, but that has not stopped land sharks from creating the hype and pumping up the prices. They have already acquired large swathes of land and are waiting to make a killing. Nandagudi’s USP: Silk ’n’ milk
Nandagudi: Situated 45 km from Bangalore in Hoskote taluk, Nandagudi hobli has been involved in silkwormrearing (sericulture) from the 1780s and the village got involved in milk production only later.
“Tipu Sultan introduced sericulture in Hoskote during the early 1780s, along with Chennapatna and Ramanagaram. Since then, the silk traders from this village competed with Chennapatna’s traders and met a major part of the demand from Mysore state,’’ explains Arun Prasad, research head, Discover Bengaluru.
Even today, most of the villagers are engaged in sericulture. This in turn, provides employment to many others. Dairy products prepared in Nandagudi and its vicinity meet the demand of parts of Bangalore, Chintamani and Kolar. A small village near Nandagudi — Idigenehalli — contributes about 2,750 litres of milk every day. Of late, even vegetables are being grown in the area.
Eminent historian Suryanath Kamath cites records dating back to 1530 AD from Voddarahalli, which reveal that Nandagudi was the headquarters of an administrative unit (sthala) called Nandaguli. In another record from the same period, Nandagudi is referred to as ‘Nanjiguli’ under Sugatur Seeme. Tamil records mention the place as Nondukolli.
“Earlier, under the Cholas, it was called Kaivaranadu. Under the Hoysalas, Nandagudi became the headquarters of Naadu,’’ Kamath said.
Many monuments and temples in Nandagudi still narrate tales from the pages of history. The village is situated at the foot of a laterite hillock and a small cave there houses a renovated Mutyalamma temple — the village goddess. The temple pillars have many relief sculptures carved in the Vijayanagara style.

Mumbai's mega crore slum building scam

CNN-IBN puts a face on a story known to everyone. Corruption and builders go hand in .hand

Hindu reports on the bust in Hyderabad real estate

Over the past few days, there are news-paper articles on the real-estate bust covering Coimbatore, Hyderbad, Mumbai, Delhi-NCR and Bangalore. Its a buyers market now, so any price is fair price.

Has real estate boom that touched the lives of many and reigned for more than two years finally taking a downward curve? Has it hit the high and there is no way it can go up further and has to take a downturn? Will the real estate prices take a drastic dip or will the heat simply goes in for a cooling-off phase?

In the last few months, the property scene did calm down and it appeared rather subdued when compared to the aggressive domination that it had starting later half of the year 2004. For more than two years, a variety of factors fuelled the boom and while some ended up realising dreams of owning a dwelling of their own, others went for a second and in some cases third and fourth property too.

The price rise which was phenomenal set new records both in residential, commercial and agriculture lands and had people scurrying long distances to acquire a slice of the boom. In just three years, the entire suburbs have metamorphosed beyond recognition as they got dotted with series of apartments, row houses, commercial centres and started buzzing with unprecedented activity.

Those who lost out in the race were left dismayed while the ones who made it to the bandwagon sported a broad grin. However, a certain uncertainty did mark the whole boom and even while the buying spree was on, a question on how long does this boom last did kept bugging many.

And now ominous signs seem to have started looming over the realty horizons. The industry insiders accept, though a bit reluctantly, that the construction works have slowed down a bit, that the enquiries about their projects have come down and that they are a tad worried. “A lot of money, mostly borrowed, has been invested in projects and builders are naturally apprehensive at the slow down,” concedes one.

The rise in home loan interest rates and the sudden surge in the land prices appear to have made many investors wary about putting their money into the real estate while reports from across the country suggested a possibility of the property boom taking a knock in the days to come. However, many builders in the city look at this as a temporary phase and some accept the stagnation in property dealings on the ground that a correction of prices was taking place.

“There is a correction and we welcome it. Last two years saw all sorts of persons entering real estate industry and spoiling the scene. They are getting weeded out and once this process is over, the prospects will be much brighter,” says P.S.Reddy, President, Andhra Pradesh Real Estate Developers’ Association.

However, he refuse to see the trend as the property scene having a block. Till the boom hit the city a couple of years back, the annual price rise here used to be in the range of 10 per cent to 15 per cent.

The same however hit the roof in the last two years and the hope is that it will get restored with the present correction.

The builders point out that the mid-segment which look out for flats in the range of say Rs.1,800 to Rs.2,500 has not been that badly affected as the one in deluxe and super deluxe category beyond Rs.3,500 has been. This, perhaps could be due to the fall in NRI investment into city real estate. Agrees Mr. Reddy, “the rupee turning stronger has indeed affected the NRI investments”.

A section of builders relate the sudden dip in enthusiasm of property seekers with the beginning of education season. This is the usual trend in the period of March to June, they say. “This is the time when education of children keep the parents preoccupied and not investments in real estate,” it is pointed out.

Banks queue up to sell rising bad home loans

We're taking foreclosures and auctioning of apts to the highest bidder, a.k.a US style. This is very big news. If the number of foreclosures is significant, the prices will be in a downward spiral. Its interesting to note that one of the reasons for foreclosure is the builders inablity to handover the completed apartment on time to the buyer who is forced to cough up rent and EMI at the same time. The builders will be forced to accept the lowered payments from the bank since most of them have over-leveraged land positions and need the liquidity to complete the construction. It will be interesting to follow Arcil as it unwinds the loans piece by piece.

Business standard reports.

Defaults due to rising rates resulted in the move.

For the first time since the housing loan boom, the country�s top three home loan providers, State Bank of India (SBI), ICICI Bank and HDFC, are approaching the Asset Reconstruction Company Ltd (Arcil) to sell bad loans from their home loan portfolios.

The move has been prompted by a sharp rise in defaults from retail customers, squeezed by rising interest rates, in the last two quarters.

Arcil is a company that buys bad loans at a discount and sells the assets for a profit. All three institutions are selling home loan portfolios worth Rs 250-300 crore each, sources close to the developments said.

While Arcil will take these loans on its own balance sheet, a subsidiary will be set up to service the loans � in terms of valuing property, collecting cheques and so on.

The retail loans, scattered across the country, will be taken over by Arcil for Rs 100 crore to Rs 150 crore each. �We are in negotiations. These deals are expected to close by the second quarter,� the sources added.

Interest rates on home loans have risen from 8-8.5 per cent to 10-12 per cent in a year�s time, a result of the Reserve Bank raising the cost and reducing the availability of money to achieve monetary policy objectives. As a result, borrowers have seen their equated monthly instalments rise significantly.

�In many places, builders have failed to give possession of the apartment and the customer was unable to pay EMIs as well as rent for his present accommodation. The double blow for retail customers has increased the incidence of bad loans,� sources in ARCIL said.

Several banks have reported a 3.5 to 4 per cent default in home loan repayments, against less than 2 per cent a year ago. State Bank of India Chairman O P Bhatt recently commented that rising interest rates would result in higher defaults for India�s largest commercial bank.

ICICI Bank, HDFC and SBI have grown their portfolio at an average annual rate of 28 per cent in the past three years. Though HDFC says it has not seen a deceleration, SBI has seen growth slow to 18-19 per cent in its home loan portfolio.

Once the loans are in Arcil�s portfolio, the Mumbai-based firm will either offer a package to existing customers to pay off the loans or sell their property to the highest bidders.

Ramgarh of Sholay to become district - Ramnagaram

This is going to be huge as this area will get exclusive funds for development. With the CM's blessings I'm predicting Ramnagaram and Bidadi to be the next Whitefield.

Times of India reports

Bangalore: Gabbar Singh’s Ramgarh will now become a district. Ramanagaram, where Sholay was shot, will make its debut as a district on Independence Day.
Along with Ramanagaram, Chikballapur in Kolar district will be carved out as a district on August 15, with the cabinet clearing both the proposals on Thursday. With this, the number of districts in the state will go up to 29.
Though chief minister H D Kumaraswamy announced that Ramanagaram would be inaugurated on the “auspicious day’’ of June 28, the procedure for district formation is not going to be complete by then.
Home minister M P Prakash told reporters after the cabinet meeting: “The decision has to be notified in the gazette. The public will be given 30 days to file objections. Other procedures might take about three-four months, but we hope to have both the districts inaugurated on August 15.’’
The reason cited for new districts: “Administrative convenience.’’ Prakash admitted that administrative expenditure will increase but insisted that it was necessary.
Prakash said the revenue department had written to the Justice Kuldip Singh Delimitation Commission seeking permission to carve out the districts. “The commission has said it will shortly notify the constituencies, so we have decided to go ahead.’’
The naming of new districts after historical personalities — Kempe Gowda for Ramanagaram and M Visvesvaraya for Chikballapur has been dropped. Prakash said: “The district reorganisation committee headed by V Balasubramanian has said the names of historical figures should not be given to districts. They have cited the examples of Tamil Nadu and Uttar Pradesh and said the naming issue has caused agitation.’’
The government has also dropped move to split the burgeoning Gulbarga and Belgaum districts, a long-standing demand that was not addressed even when seven new districts were carved out by the Patel government in 1997. The people of Gulbarga were split over whether the new district should be Yadgir or Bheemarayanagudi in Shahpur, while local representatives in Belgaum were against the carving out of Chikkodi as it would become Marathi-dominant, increasing the border problem with Maharashtra.
Prakash said Rs 72.58 crore had been earmarked for infrastructure for Ramanagaram and Chikballapur districts. New & Old
Will be carved out of Kolar district
Will comprise:
Gowribidanur, Gudibanda, Bagepalli, Chintamani, Sidlaghatta and Chikballapur taluks
Kolar with 1,792 villages will comprise Srinivasapura, Mulbagal, Malur, Bangarpet and Kolar taluks
Will be carved out of Bangalore Rural Will comprise: Present taluks of Ramanagaram, Chennapatna, Magadi and Kanakapura (including assembly segment of Sathnur) Bangalore Rural will have remaining taluks of Nelamangala, Devanahalli (including assembly segment Doddaballapur), Hoskote (including assembly segment Varthur) and Anekal 7 in ’90s
Chamarajanagar, Davanagere, Koppal, Gadag, Bagalkot, Haveri and Udupi. Bangalore: Here is a new coalition hitch: The state’s decision to carve new districts out of Bangalore Rural and Kolar was taken without even consulting the minister concerned — revenue minister Jagadish Shettar of the BJP!
At Thursday’s cabinet meeting, a fuming Shettar demanded to know how the move had been made without even consulting him. “I have not even seen the file. The V Balasubramanian Committee report has not even been submitted. How can this decision be taken?’’ he is said to have asked.
Sources said Shettar had not opposed the decision to carve out the districts, but was very unhappy at being bypassed. “He also raised the issue of 30 new taluks that are demanding to be carved and the conversion of about 500 Lambani tandas into revenue villages. He said officials had stalled this, citing the stay by the Delimitation Commission.

Mysore is hot property

Times of India reports

Property prices in Mysore have doubled in a year’s time. IT professionals from Bangalore are looking at parking their money in property here with a second or even third site. Deepti Ganapathy
reports

Nearly 7,000-8,000 sites are up for grabs in Mysore today. And this translates into 1.6 crore square feet of residential plots in the city. The scenario in the apartment market too is buoyant. A whopping 3,000 flats are expected to be made available by the end of this year. This translates into 30 lakh square feet of private housing space in the coming year. Nearly Rs 600-700 crores is being pumped into these private housing projects in the city by property developers.
Of the enquiries real estate consultants receive, nearly 30 percent are from IT professionals, and that too from techies based in Bangalore. Most of these IT professionals are looking at making a second or third investment here, and 15 percent of these techies are actually investing in the city. The real estate market is the city is on an upswing. Property dealers say prices are surging and they will continue to do so in the near future, and that this is the right time to invest in property here.
In the light of strong and proactive initiatives from the State Government, including providing quality infrastructure and a rapidly responsive administrative system, Mysore has emerged as a front-runner in attracting investments. An average increase of 40-60 percent in residential plots within the city or fringe areas over the last 6-12 months has been reported. Vijayanagar Stage IV, Dattagalli, Srinagar, and Rajivnagar, with substantial offtake, have registered increases in prices.
While a majority of the investors are keen on investments in developed land, others prefer built units. 60 percent of the people are looking for residential properties. 70 percent are short-term investors, while 30 percent are long-term investors. "Investors today are very knowledgeable. They are looking at buying sites in areas where development is happening. The Ring Road is today a hotspot for potential investment," says Radhakrishna, a city-based real estate consultant. According to most developers there are plenty of sites available in the city. In a matter of months, the prices will soar again.
Most of the IT professionals who are buying property here, are working in Bangalore, and have invested here, in anticipation of the city being tipped to take a good share from the IT capital in a matter of few years. The Bangalore-Mysore Infrastructure Corridor Project which will reduce travel time to an hour and a few minutes, has also been a factor that has worked on the minds of investors. The proposal by the IT Secretary to introduce AC buses and trains exclusively for the techies to commute between the two cities has added to the government's commitment to give the city a major thrust.
According to D Srihari, a property consultant in the city, smaller investments too command good appreciation. "It is safe to invest in a plot that has a value of Rs 500-700 per square feet, as the returns will be high after a few months".
Ring Road brings good returns
The Outer Ring Road that runs along the city's periphery, where land is available, is a good place to invest in. With the city rapidly growing, and the city's old localities already bursting at their seams, its time to look beyond. With the Bangalore-Mysore Infrastructure Corridor Project, IT belt, textile park, and airport located in the vicinity of the Outer Ring Road, the potential of development along this stretch is immense. It is for this reason that sites are being picked up in Vijayanagar Stage IV, Dattagalli, Rajivnagar and Srinagar.
Variety of layouts
available
As of now, there are three types of layouts available in the city. Layouts developed by Mysore Urban Development Authority and Karnataka Housing Board are well-developed layouts that will be available after around 15 years from the time of application. Then there are the layouts formed by Societies. As of now, there are 25-30 acres of land available under these layouts. Also, there are layouts formed by private developers.

Goldman Raise $12 Billion for Property Funds

Bloomberg reports that upto quarter of the funds would be put to use in India and China. So if we do the math 69/12.5 = ~5.5 billion dollars for Indian real estate. What will these guys develop and how will it impact property prices in India is the billion dollar question ??

By Hui-yong Yu

June 20 (Bloomberg) -- Morgan Stanley and Goldman Sachs Group Inc. raised $12 billion for global real estate funds, tapping a surge in investor demand for high-return assets outside the U.S.

Morgan Stanley, the biggest real estate investor among Wall Street banks, said today it raised $8 billion to create the largest global property fund. Goldman drew $4.07 billion for a real estate fund, twice as much as it originally sought.

More than 100 real estate funds may raise a record $69 billion this year as investors seek better returns than stocks and bonds provide, according to Private Equity Intelligence Ltd. Morgan Stanley's high-return real estate funds have posted average annual gains of more than 20 percent since 1991, about twice the return of the Standard & Poor's 500 Index.

``There's clearly still significant capital out there,'' said Stephen Coyle, a managing director and head of Citigroup Real Estate Partners. ``Most funds are fully or oversubscribed today, especially those that have been in the game a long time.''

Rising interest rates in markets including the U.S., Europe, India and Japan, have yet to halt deal making, investors said.

``Borrowing costs are going up globally,'' Citigroup's Coyle said. ``That's creating what may be the first cracks in the market but capital is still seeking real estate and seeking it much more globally than in the U.S. for maybe the first time.''

Other Funds

Blackstone, the New York-based buyout firm set to go public this week, has raised more than $7 billion for its sixth worldwide real estate fund, a pool that investors expect will reach about $10 billion when it closes later this year.

Merrill Lynch & Co., the third-largest securities firm, also plans to raise funds for global real estate purchases, Co- President Ahmass Fakahany said today at a news conference in Dubai, United Arab Emirates.

Morgan Stanley will invest almost half of the money in Japan and about 25 percent in countries including China and India. The securities firm contributed ``just over 20 percent'' of the total equity in the fund and the rest came from institutional and retail investors, the New York-based company said in a statement today.

Morgan Stanley typically borrows $3 to $4 for every $1 raised to increase the funds' buying power and returns.

Goldman got the $4.07 billion for a new fund called Whitehall Street Global Real Estate LP 2007. The sum surpassed the 2005 Whitehall fund of $3.2 billion, according to Gia Morón, a spokeswoman for New York-based Goldman.

Focus on Asia

``The increase we've seen over the past two years has been enormous,'' said Tim Friedman, a spokesman for Private Equity Intelligence, noting that real estate funds raised just $21 billion as recently as 2004. ``A third of all funds being raised by Americans have some focus on Asia and everyone is looking to developing regions for deals that are more profitable.''

Morgan Stanley for the first time will charge 0.25 percent of the value of every acquisition its new fund makes. It's also taking a 20 percent cut of the fund's investment gains as an incentive fee, up from 17 percent previously.

Record fund inflows have allowed the best managers to charge higher fees and helped fuel takeover battles.

Goldman and Morgan Stanley are locked in a fight for two Italian real estate funds, Berenice Fondo Uffici and Tecla Fondo Uffici. Morgan Stanley and Pirelli & C. Real Estate SpA today increased their offer for the funds, trumping a June 18 bid of 782.4 million euros ($1.05 billion) by Goldman and its partner, Union Generale Immobiliare, a company controlled by Italian businessman Francesco Caltagirone.

Blackstone

Blackstone in February outbid Vornado Realty Trust to acquire billionaire Sam Zell's Equity Office Properties Trust for $39 billion including assumed debt in what was the largest real estate buyout.

Coyle said his current investment target is to put 65 percent of assets outside the U.S. and the rest within, the inverse of what it was two years ago as China and other economies grow faster.

``I don't think we're going to see a lot of other $8- to $10 billion funds,'' Coyle said. ``The whole real estate market is probably $20 trillion, soup to nuts.''

Morgan Stanley plans to invest almost half of its new fund in Japan, where the longest expansion since World War II is pushing up rents and creating a building boom in Tokyo. About 25 percent is destined for emerging markets including China and India.

Morgan Stanley

Morgan Stanley has been on an acquisition spree spanning offices, hotels and residential developers. The firm invested $12.5 billion in May alone, agreeing to buy Investa Property Group, Australia's biggest office owner, for A$4.7 billion ($3.9 billion), and Crescent Real Estate Equities Co. in the U.S. for $2.78 billion.

In April, Morgan Stanley agreed to buy 13 hotels in Japan from All Nippon Airways Co. for 281.3 billion yen ($2.4 billion) in what was Japan's largest real estate purchase by an overseas investor. Morgan Stanley also bought 10 hotels in Europe from Hilton Hotels Corp. for 566 million euros ($770 million), adding to its more than 80 hotels worldwide.

Also today, Morgan Stanley said second-quarter profit rose 40 percent, beating analysts' highest estimates, as gains from trading stocks and bonds and fees from investment banking helped the firm overcome a slump in demand for mortgage-related securities.

Morgan Stanley generated $2.9 billion from fixed income, which includes mortgages, even as rising delinquencies on the riskiest home loans curbed demand for mortgage-backed bonds. Goldman and Bear Stearns Cos., the largest underwriter of mortgage-backed securities in 2006, said last week that rising foreclosures reduced their earnings.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net .

Coimbatore land bubble bursts

Chennai prices as an indicator. In some areas prices have quadrupled in 5 years.

After Mumbai, now its Coimbatore. The bubble is deflating faster then expected. The bad news keeps pouring in.

Hindu reports from Coimbatore

our businessmen bought seven acres, located about 10 km from Tirupur for over Rs.1 crore. A real estate broker gave them hope that they could expect a huge income in a couple of months. But nobody has showed any interest in the property in the last six months.
Hardship to businessmen

Half the amount invested in the land got locked up and they could not pay the remainder. It caused a lot of hardship to these businessmen in their day-to-day transactions. It is not a story of single group, but the nightmare of many in Tirupur.
Investors blamed

K.J. Prabakaran of J.S. Promoters estimates nearly Rs.250 crore invested on lands in and around Tirupur is effectively locked now. Even those with good expertise in the land deals invested in land with long term plans. Now they have also been affected. The real estate boom that prompted investors from Tirupur to buy land to a distance of 100 km was at its peak between 2000 and 2005. But it appears that the boom has now burst. Sources in the registration department say that registration of land and agreements has come down in the last two months.

Many realtors say the downturn was expected and in fact overdue for sometime. They blame it on investors who wanted to make quick money by creating artificial demand.

Speculators pushing land costs, hardening interest rates and the fall of the US dollar against the rupee are being attributed as the main reasons for the downturn.

E. Thiagarajan of KRC Constructions said that while real estate was all about property development in metros such as Mumbai, in Tirupur even purchase of agricultural land was labelled as real estate business.

Like others, Mr. Thiagarajan maintains that there is still a good demand for budget houses and plots.

Even now investments on factory buildings and houses are being made based on requirements.

“Those who diverted funds from existing business, investing their surplus funds on land of five to 10 acres around 30 km from the town without any requirement for the same, are now in a spot. In many cases, their regular businesses were affected. Some of them have started selling the land at cost price while some are even incurring losses,” he adds.

Lured by heavy transaction, dozens of small time traders and people from many walks of life played the role of brokers. It was like mushrooming of brokers camping in every other tea shops. Now, their role also has been marginalised.

He, however, insists that transactions are being done now though not on a big scale. Selling the same land to many persons without registering it for a brief period was the trend till recently.

“In every stage, whenever the property changes hand, the value goes up by not less than 20 per cent. This kind of business has come to a standstill,” points out G. Ramasamy of Vasantham Group.

Exuding hope, he further showcases the brighter side of the business: A large number of buyers from all segments are ready to buy plots or houses if the promoter provides necessary infrastructure with quality.

Has the bubble burst in Mumbai ??

Due to cheap availablilty of land, the number of high paying jobs grew in cities like Bangalore, Pune, Hyderabad and Chennai. In these cities one can find a decent apartment for 3k a sq/ft. In Mumbai the corresponding price would be 9k. The Mumbai boom was fueled by cheap credit and black money. End user demand was priced out even at the onset of the boom, when prices were 4k+, which was due to lack of supply. Now with supply outstripping demand several times over, It wont be long before Mumbai prices find their floor at 3-4k a sq/ft. Most builders will sell at the best price they get since they know, the situation could only get worse. Its best for buyers to quote 40% of the value and see if the seller blinks. This market can crash, faster then it went up

Mumbai: The buildings in Mumbai may be soaring higher each passing day, but the property sales charts in the city are experiencing a slump.

Developers are now bending over backwards to make that sale, and are ready to offer huge discounts freebies such as free parking space and stamp duty payments have become commonplace.

In suburbs such as Andheri, Goregaon and Malad builders often offer a 10 to 15 per cent discount on bulk deals. Those discounts could reach 30 or 40 per cent if it will them clinch the deal.

“A builder might quote Rs 10,000 per square foot. But if you sit across the table with money in hand, he will reduce his price by 30 to 40 per cent.” says Bastvi Estates Agent, Rashid Bastvi

Because the sales have fallen, the rate in some cases rates have gone down by 90 percent in the past six months

“In my opinion, overall sales have gone down by 60 to 70 per cent, also in the second-hand property market, sales are down by almost 80 to 90 per cent,” President of Estate Agents Association of India, Yashwant dalal says.

The sales slowdown is playing heavy on the psychology of the developers. Even A-grade developers are now calling on brokers with a hope to turn the sales graphs up. But there is no reason for the common man to get worried, as it is the ideal time to cash in on this real estate market slump.