Friday, February 29, 2008
Realty prices in suburban Pune on a downslide
DNA reports
Bargain hard to save up to 10 per cent, say brokers
After witnessing an exponential rise over the last two years, real estate prices in Pune have come down by 8-10 per cent — Rs 200-400 per square feet — with prospective buyers prepared to wait because of high interest rates, if property agents are to
be believed.
Most real estate agents admit that there is a shortage of demand. “Even second sales are not getting the expected price and owners and builders have been found negotiating hard,” says Anil Kamble, a property dealer in Camp.
According to brokers, the decline is particularly seen in the fringe areas and suburbs, which have seen an increase in construction activity in recent years. Property prices in the main city are, however, still high, they say.
“In areas like Kharadi, the property prices vary from Rs3,500 to Rs5 000 per square feet and can be brought down by another Rs300-400 per square feet by bargaining hard,” says a member of the Pune real estate association. “Similarly, in areas like Pimple Nilakh, where the rates are Rs3,000 and upwards, bargaining can save prospective buyers up to Rs250 per square feet,” he said.
Senior IT professional Anuj Pradhan, who has been trying to sell his 3BHK flat at Wanowrie, was shocked to see a reduced price tag put on his property by his real
estate agent.
“Four months ago, the broker could have fetched me Rs60 lakh, but now he says buyers are not willing to pay more than Rs54 lakh,” Pradhan says.
“The buyer response,” according to Rajesh Vaswani, a property agent in Camp, “is now less than enthusiastic.” Builders, however, are hesitant to admit the fall, he says.
Sachin Kadam, a member of the Real Estate Agents’ Association of Pune, says property rates went up by more than 60-70% in the last two years in the heart of the city.
“But of late, the prices have started to stabilise. Buyers can now bargain with builders and pay a lower price,” he says.
Because of high interest rates on home loans, prospective buyers, mostly from the middle class, have decided to wait and watch, he says.
Ranjit Tiwari, another real estate agent, however, believes that the dip in prices
is temporary and will not last more than a couple of months.
“With the kind of growth the city is witnessing, real estate can’t lag behind,” he adds.
Bargain hard to save up to 10 per cent, say brokers
After witnessing an exponential rise over the last two years, real estate prices in Pune have come down by 8-10 per cent — Rs 200-400 per square feet — with prospective buyers prepared to wait because of high interest rates, if property agents are to
be believed.
Most real estate agents admit that there is a shortage of demand. “Even second sales are not getting the expected price and owners and builders have been found negotiating hard,” says Anil Kamble, a property dealer in Camp.
According to brokers, the decline is particularly seen in the fringe areas and suburbs, which have seen an increase in construction activity in recent years. Property prices in the main city are, however, still high, they say.
“In areas like Kharadi, the property prices vary from Rs3,500 to Rs5 000 per square feet and can be brought down by another Rs300-400 per square feet by bargaining hard,” says a member of the Pune real estate association. “Similarly, in areas like Pimple Nilakh, where the rates are Rs3,000 and upwards, bargaining can save prospective buyers up to Rs250 per square feet,” he said.
Senior IT professional Anuj Pradhan, who has been trying to sell his 3BHK flat at Wanowrie, was shocked to see a reduced price tag put on his property by his real
estate agent.
“Four months ago, the broker could have fetched me Rs60 lakh, but now he says buyers are not willing to pay more than Rs54 lakh,” Pradhan says.
“The buyer response,” according to Rajesh Vaswani, a property agent in Camp, “is now less than enthusiastic.” Builders, however, are hesitant to admit the fall, he says.
Sachin Kadam, a member of the Real Estate Agents’ Association of Pune, says property rates went up by more than 60-70% in the last two years in the heart of the city.
“But of late, the prices have started to stabilise. Buyers can now bargain with builders and pay a lower price,” he says.
Because of high interest rates on home loans, prospective buyers, mostly from the middle class, have decided to wait and watch, he says.
Ranjit Tiwari, another real estate agent, however, believes that the dip in prices
is temporary and will not last more than a couple of months.
“With the kind of growth the city is witnessing, real estate can’t lag behind,” he adds.
Wednesday, February 27, 2008
FSI increase on cards in Mumbai
As per the latest news articles it looks like the state government will be increasing FSI uniformly to 2 across the board. As per current rules, Mumbai city has an FSI of 1.33 and suburbs 1. SRA schemes have an FSI of 2.25 and Dharavi redevelopment 4. Most high rises are built in the suburbs using the TDR (transfer of development rights) certificates. The price quoted for them thru legal channels is 4500 per sq/ft. If one has to factor in the cash component, the price would shoot up to 7k-8k. With FSI being normalized at 2, it is possible to construct twice as much on the same land as before. Prices can drop here if this is implemented.
I found this excellent document on FSI by Alain Bertaud. He makes no bones of the fact that the BMC uses the TDR certificates in a monopolist manner thereby corrupting the system to a level where mumbai citizens have to live on 2.9 meters of land. Its an eyeopening document and it worth a second read. Quoting from the document.
Which factors are responsible for this situation? What is so exceptional about Mumbai?
The very low consumption of floor space coupled with very high real estate prices would suggest that a number of supply bottlenecks might be responsible. By comparing Mumbai to other metropolis in Asia it appears that indeed 4 factors are exceptional and contribute to the very low supply of floor space:
1. An exceptional topography that reduces the amount of developable land
2. A draconian and ill-conceived land use policy restricting the area of floor space which can be built on the little land available;
3. Muddled property rights preventing households and firms to freely trade land and floor space as a commodity;
4. A failure to develop major primary infrastructure networks, which prevents the city to overcome its topographical constraint. In turn, the weakness of the infrastructure network is used to justify the restrictive land use policy
To give an order of magnitude to these figures consider the following: Shanghai in 1984, recovering from more than 10 years of Cultural Revolution, had a floor area per person of 3.65 m2. Shanghai’ Municipality, at the time, considered that rapidly increasing floor consumption was to be the city’s first priority. In 2003, the average floor space consumption in Shanghai was 13.1 m2/person. This was achieved in part by drastically increasing the FSI to allowredevelopment of obsolete buildings with relocation largely in situ.
http://alain-bertaud.com/AB_Files/AB_Mumbai_FSI_conundrum.pdf
Another article on Time discusses Dharavi.
http://www.time.com/time/business/article/0,8599,1711330-2,00.html
I found this excellent document on FSI by Alain Bertaud. He makes no bones of the fact that the BMC uses the TDR certificates in a monopolist manner thereby corrupting the system to a level where mumbai citizens have to live on 2.9 meters of land. Its an eyeopening document and it worth a second read. Quoting from the document.
Which factors are responsible for this situation? What is so exceptional about Mumbai?
The very low consumption of floor space coupled with very high real estate prices would suggest that a number of supply bottlenecks might be responsible. By comparing Mumbai to other metropolis in Asia it appears that indeed 4 factors are exceptional and contribute to the very low supply of floor space:
1. An exceptional topography that reduces the amount of developable land
2. A draconian and ill-conceived land use policy restricting the area of floor space which can be built on the little land available;
3. Muddled property rights preventing households and firms to freely trade land and floor space as a commodity;
4. A failure to develop major primary infrastructure networks, which prevents the city to overcome its topographical constraint. In turn, the weakness of the infrastructure network is used to justify the restrictive land use policy
To give an order of magnitude to these figures consider the following: Shanghai in 1984, recovering from more than 10 years of Cultural Revolution, had a floor area per person of 3.65 m2. Shanghai’ Municipality, at the time, considered that rapidly increasing floor consumption was to be the city’s first priority. In 2003, the average floor space consumption in Shanghai was 13.1 m2/person. This was achieved in part by drastically increasing the FSI to allowredevelopment of obsolete buildings with relocation largely in situ.
http://alain-bertaud.com/AB_Files/AB_Mumbai_FSI_conundrum.pdf
Another article on Time discusses Dharavi.
http://www.time.com/time/business/article/0,8599,1711330-2,00.html
Tuesday, February 26, 2008
End of the dream for Devenhalli real estate
Without water, electricity and roads all dreams can turn into nightmares. It will be interesting to see what the farmers do with the crores they have raked in from the sale of their "hot property". I know a friends domestic help who owned 1 acre of barren farmland in Devanhalli and they sold out in mid 2007, only to buy a site in RT nagar. Talk about jackpot.
TROUBLE AHEAD: Without guaranteed water and electricity supply, builders and developers in Devanahalli are in a fix
Builders have bought acres and acres around the new airport, but aren’t building.
Gated communities, integrated townships, villas and high-end-apartments are all on the cards, but are unlikely to see the light of day in the near future.
Developers bought agricultural land paying fancy prices up to Rs 1,300 a square foot hoping to cash in on the demand once the airport came up. But the harsh reality is that their hands are tied by many factors.
No clearances
The government has yet to release a development plan for the Devanahalli area. Without such a plan, approvals are impossible to come by.
Government agencies such as the pollution control, water and electricity boards are not ready to clear projects as they are in no position to provide service. Farmers no longer own land in the neighbourhood, and housing layouts can’t come up because of a lack of basic amenities.
Water woes
“Water is a major problem,” said Capt Raja Rao, former chief engineer and water resources expert. “The water board can’t supply much, and ground water in the region is already overexploited.”
A developer said the situation had pushed him to pessimism. “Even if the government allows us to dig borewells, where is the water? We have dug up to 900 feet, but it’s no use. We are in a real crisis.”
Premium builders like Shobha, Mantri, and Prestige have lined up mega projects, but nothing is moving. Only GMR has made a leap of faith and built its corporate office in Devanahalli.
Re-cycling of drainage water is one remedy, according to the BWSSB. But experts such as Raja Rao and A N Yellappa Reddy say it is contaminated beyond permissible limits.
Pay up for power
The power situation isn’t much better. A Bescom source said, “It is not as critical as the water problem, but we can’t assure uninterrupted power supply as the IT and BT industries demand. We can try to provide power at high rates, but industrial and domestic consumers may not be able to afford it.”
No IT hub
The software industry is reluctant to go to Devanahalli. No IT company is building an office in the region. Some plan townships for their employees but are demanding a satellite town ring road (STRR) that connects Dodballapur, Devanahalli, Hoskote, Ramanagar, and Magadi. But that is a costly wish.
“STRR calls for massive investment,” said Sudhir Krishna, BMRDA commissioner. “It is estimated to cost a whopping Rs 3,000 crore, or Rs 10 crore a km.”
Though the project has been planned as a public-private venture, no investor has come forward with the money. “With no IT company in the vicinity, our hope for real estate growth is receding. I am afraid we are heading for big trouble,” a developer said.
Some hope
However, the larger developer community is not so despairing. “With older airports running out of space, Bangalore is going to be a major aviation hub. And that will kick-start growth,” said K Sriram, chairman, Builders Association of India, Karnataka chapter.
TROUBLE AHEAD: Without guaranteed water and electricity supply, builders and developers in Devanahalli are in a fix
Builders have bought acres and acres around the new airport, but aren’t building.
Gated communities, integrated townships, villas and high-end-apartments are all on the cards, but are unlikely to see the light of day in the near future.
Developers bought agricultural land paying fancy prices up to Rs 1,300 a square foot hoping to cash in on the demand once the airport came up. But the harsh reality is that their hands are tied by many factors.
No clearances
The government has yet to release a development plan for the Devanahalli area. Without such a plan, approvals are impossible to come by.
Government agencies such as the pollution control, water and electricity boards are not ready to clear projects as they are in no position to provide service. Farmers no longer own land in the neighbourhood, and housing layouts can’t come up because of a lack of basic amenities.
Water woes
“Water is a major problem,” said Capt Raja Rao, former chief engineer and water resources expert. “The water board can’t supply much, and ground water in the region is already overexploited.”
A developer said the situation had pushed him to pessimism. “Even if the government allows us to dig borewells, where is the water? We have dug up to 900 feet, but it’s no use. We are in a real crisis.”
Premium builders like Shobha, Mantri, and Prestige have lined up mega projects, but nothing is moving. Only GMR has made a leap of faith and built its corporate office in Devanahalli.
Re-cycling of drainage water is one remedy, according to the BWSSB. But experts such as Raja Rao and A N Yellappa Reddy say it is contaminated beyond permissible limits.
Pay up for power
The power situation isn’t much better. A Bescom source said, “It is not as critical as the water problem, but we can’t assure uninterrupted power supply as the IT and BT industries demand. We can try to provide power at high rates, but industrial and domestic consumers may not be able to afford it.”
No IT hub
The software industry is reluctant to go to Devanahalli. No IT company is building an office in the region. Some plan townships for their employees but are demanding a satellite town ring road (STRR) that connects Dodballapur, Devanahalli, Hoskote, Ramanagar, and Magadi. But that is a costly wish.
“STRR calls for massive investment,” said Sudhir Krishna, BMRDA commissioner. “It is estimated to cost a whopping Rs 3,000 crore, or Rs 10 crore a km.”
Though the project has been planned as a public-private venture, no investor has come forward with the money. “With no IT company in the vicinity, our hope for real estate growth is receding. I am afraid we are heading for big trouble,” a developer said.
Some hope
However, the larger developer community is not so despairing. “With older airports running out of space, Bangalore is going to be a major aviation hub. And that will kick-start growth,” said K Sriram, chairman, Builders Association of India, Karnataka chapter.
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