Business Standard reports
Construction in Mumbai has come to a near halt due to a serious shortage of sand, the most essential component. Ready-mix concrete production units in and around the city have also closed temporarily for want of sand.
A revenue department official said against 4,500 sand spots across the state, only 1,300 which had been cleared by the respective gram panchayats are available for auction. The government proposes to increase the royalty rate to Rs 200 per brass from the next financial year from the present Rs 100 per brass.
This is because the Maharashtra government has made it mandatory for the area’s gram pachayat to approve any sand auction.
As a result against a daily sand demand of 600-1,000 trucks, hardly three to 10 trucks are now coming into the city and that, too, from neighbouring Gujarat. Sand prices, earlier Rs 2,500 per truck of 2.5 brass (1 brass is equal to 100 cubic feet of sand), have surged to Rs 12,000 per truck.
If the shortage continues, says the the realty and construction industry, construction cost will surge and projects will be delayed.
A leading builder and developer, who did not want to be quoted, told Business Standard, “The licences used to be extended every year. There was no monopoly, as any person could buy from any of the sand dredging villagers and from various village,s depending on their quality, quantity and price. The royalty for the dredging used to be collected by the revenue department, for the extent of sand dredged. Local villagers were granted dredging licences, under which they used to dredge and sell the sand to any supplier in bulk.”
He said an average building of 14 floors with two wings, of 100,000 sq ft, requires 2,500 trucks of sand for just the civil work.
Dharmesh Jain, chairman and managing director of the Nirmal Group and vice-president of the Confederation of Real Estate Developers Association, confirmed the shortage had brought realty development in the city to a standstill. So did Pravin Doshi, president of the Maharashtra Chamber of Housing Industry. Navin Kothari of the Bhakti Group, a Mumbai based real-estate developer, said over 90 per cent of construction activity in Mumbai’s suburbs had been affected by the acute shortage for over a fortnight.
Construction in Mumbai has come to a near halt due to a serious shortage of sand, the most essential component. Ready-mix concrete production units in and around the city have also closed temporarily for want of sand.
A revenue department official said against 4,500 sand spots across the state, only 1,300 which had been cleared by the respective gram panchayats are available for auction. The government proposes to increase the royalty rate to Rs 200 per brass from the next financial year from the present Rs 100 per brass.
This is because the Maharashtra government has made it mandatory for the area’s gram pachayat to approve any sand auction.
As a result against a daily sand demand of 600-1,000 trucks, hardly three to 10 trucks are now coming into the city and that, too, from neighbouring Gujarat. Sand prices, earlier Rs 2,500 per truck of 2.5 brass (1 brass is equal to 100 cubic feet of sand), have surged to Rs 12,000 per truck.
If the shortage continues, says the the realty and construction industry, construction cost will surge and projects will be delayed.
A leading builder and developer, who did not want to be quoted, told Business Standard, “The licences used to be extended every year. There was no monopoly, as any person could buy from any of the sand dredging villagers and from various village,s depending on their quality, quantity and price. The royalty for the dredging used to be collected by the revenue department, for the extent of sand dredged. Local villagers were granted dredging licences, under which they used to dredge and sell the sand to any supplier in bulk.”
He said an average building of 14 floors with two wings, of 100,000 sq ft, requires 2,500 trucks of sand for just the civil work.
Dharmesh Jain, chairman and managing director of the Nirmal Group and vice-president of the Confederation of Real Estate Developers Association, confirmed the shortage had brought realty development in the city to a standstill. So did Pravin Doshi, president of the Maharashtra Chamber of Housing Industry. Navin Kothari of the Bhakti Group, a Mumbai based real-estate developer, said over 90 per cent of construction activity in Mumbai’s suburbs had been affected by the acute shortage for over a fortnight.
34 comments:
seems like lot of supply coming to Pune.
Rush of integrated townships into Pune
hi all,
you people kow about cults. Every cut stands on one strange belief. like.. world is coming to end... free sex is the solution to the world's problem....don't use undergarments .. ets... etc..... they just don't see the reality.. they just stick to their belief... and very hard to bring them out of that belief.
People who post in the blog are also looks like some kinf cult. who believes in...
1. india is going to ruins soon
2. all the builders going to become beggars soon
3. you can buy a house for few hundreds of rupees soon.
4. all the software and MNC employs r going to loose their jobs and going become beggars
5. dooms day is coming... ( for last 3 years i was reading this blog.. it never came...)
trust me .. none of these gonna happen. Remember... we common people are in the hands if BIGs.. u can never escape from them... you r going to work like dogs for those BIGs.. things will go as usual...
Laaloo Prasad yadav
There is no water in Pune, there is sand shortage, load shedding for 6 hours, loans are getting expensive for developers. all the township boom is coming crashing down. Paranjpe reduced their prices in Hinjewadi to 2900 from 3500. all these townships are deserts whenever they complete, maybe 5 years from now if one is optimistic. builders are throwing sand in everyone's eyes.
Lalloo dear!!
I've been reading this blog for quite a while now and I don't think anyone ever said that world is coming to an end, or free sex is solution, or India will be ruined, or houses would sell for few hundred rupees etc...
You are not understanding the basic reason for this blog and basic economics. You should take a small course on micro/macro economics. You'll yourself realize the excesses we have put ourselves into.
You are right that we people are in hands of Biggies, but this time it is just insane. Things have gotten out of control.
And somewhere in your heart you also believe that what is happening is not true and that's why you have been visiting this blog for the last 3 years.
My friend, I see light at the end of the tunnel. RE will crash undoubtedly. There is only so much Govt. can print or borrow.
A crash means pricing going down by 30-50% and not hundreds of ruppees as Lalloo mentioned.
A flat that used to be 15 lacs in 2003 is selling for 1 crore now. If it goes back to 50lacs, it is not few hundred rupees. But reality. Appreciation of 35 lacs in 7-8 years and a crash of 50% from peak of 1Crore.
Mr. Laloo, I just have one chart for you.
What We Can Learn from Japan's 15-Year Decline in Real Estate
Bear in Mind, Japan's growth was much faster than India's. They had world class factories producing high tech items like Cars & Electronics. India on other hand is doing back office work of US, which is not innovative nor value add. India's export growth is completely dependent on US corporate software expenses. Yes, that share will grow, but without much value add, the prices are coming down quite a bit.
India does have organic growth, but it is not as fast as being projected by Media. India has to yet tackle lot of thorny issues like Land Reforms, Corruptions, Education etc... We haven't developed industries which provide mass job opportunities.
There is long way to go before we call India developed country.
Within Australia, Canada, Republic of Ireland, New Zealand, United Kingdom, and the United States, Vancouver is the most expensive city according to Demographia.
The bubble there is so ready to pop. Just in time for the City to flood the market with extra capacity.
http://www.demographia.com/dhi-ix2005q3.pdf
Hi all,
I am not saying that.. "high housing prices or inflation" are good or should happen. But what i am driving here is.. "this is what going to happen."
Trust me.. life is going to get tougher.. what u r wishing might not happen in near future. Our govt is in hands of Biggies and giants. we r too little (in heart i.e small heart) to fight back..
try to accept the fact.... recently one journalist was killed, who is fighting back against these builders. People hardly know about this news. We r not really living.. we r existing merely
.
if u don;t trust me.. just wait for few more years
Laloo Prasad Yadav
Intelligent comments by Laaloo Prasa yadav. I totally agree with him. Reports/analysis/predictions published in the electronic media are all orchestrated by Biggies and most people swallow them as they are all written by economic pundits, IIM professors, business analysts etc etc. The one fact misses everyone's attention is that all these guys are paid servants of Biggies.
Recently one IAS couple was apprehended by IT dept for amassing 200 cr wealth and this made national headlines. No one is asking how he amassed so much wealth without being caught for a long time. He got caught because he probably cheated on royalties to Biggies.
Few years back people used to hoard money in Petis (Lalks), now it is in Kokas (crores) All these people are controlled by Biggies, be them be police officers, ministers, gangsters or filmwalas. These biggies tell you want they want you to hear. There are thousands of Biggies in Mumbai and realestate is one of their prized card. Therefore, there is not going to be a crash and longer you wait, the dearer it will become
Hats off to Laaloo for his realistic report
@Anonymous, 7:31 pm
I don't see a a connection between Vancouver and Mumbai. You are trying to compare a well governed city with a highly corrupt city like Mumbai.
Corruption is everywhere. What do think about US. All the Wall Street folks are in bed with politicians. All the builders and corporate America get done what they want through lobbyists. They are the ones controlling America and have created so many asset bubbles in the past 10 years.
First the dot com bubble, then housing, then commercial RE, then Oil, Gold etc...
If they are crashing, what is India's corruption. It is about fundamentals. When they go too much beyond equilibrium, they have to come back to a sustainable point.
I can bet you all the black money will be evaporated as soon as the Govt. tries to dry up excess liquidity from the system and remove stimulus.
If things are that rosy for Mumbai, why do they need stimulus? Why do they need Govt. infusion of funds?
If they continue with infusion of money by borrowing, India is risking Rupee crash or not being able to raise any more money in futire for major projects or to pay salaries of Govt. employees.
Sabbal and Lalloo:
See, there is only so much that the RBI can do for the greedy beasts. China's central bank is closing its valve now. Stock markets across the world are going to go down by another 3% today.
India will also have to do the same to prevent India from becoming another Zimbabwe. Read about Zimbabwe, India is following its footsteps.
"I can bet you all the black money will be evaporated as soon as the Govt. tries to dry up excess liquidity from the system and remove stimulus."
I bet that this isn't going to make a wee bit of difference to the prevailing system.
As for Zimbabwe, 80% of India is worse off than Zibabwe. Go to rural Maharashtra and you will see it. In fact Zimbabwe is better off, but BBC and its surrogates make lot of propaganda thus showing the country in a bad light. If our relationship with UK becomes sour, they will only show Dharavi and the starving people in their broadcasts
Jai Hind and Jai Slumbai
Anon above:
The analogy to Zimbabwe was their financial crisis caused due to a broken fiscal and monetary policy.
That's why read about it. Google it. See what happens when Govt. prints a lot of money, when Govt. borrows a lot and when there is massive corruption. You have to read it.
As regards to poverty, India still has 800 million people around poverty line. But India also has a strong middle class now which is around 150 million people who can afford a lot of new gadgets, houses as they are getting paid good by MNCs and now even the Govt.
This middle class of spenders is as big as the class in US.
That's the prime reason for all the car companies or ohter foreign companies to sell their products to this class of people and make money for their countries.
wow!!
1 billion living in abject poverty but 150 million can afford all the gadgets that money can buy, so we are no less than Americans!!!!!! and all Indians should be proud of this fact!!. In another 20 years, our population is going to touch 1.4 billion of which 200 million will belong to middle class. that is. 35% increase in middle class alone in two decades!!!! No other country can or will achieve this and we all should be proud of this. What a flawed logic.
I live in Dubai and was hoping to settle in Mumbai or Pune. But, after seeing the home prices and ever increasing pathetic conditions, have seriously trying to migrate to Canada or Australia.
With ever increasing popularity of Indians, this too seems to have become difficult
anon@11:22 above
Don't move to Australia or Canada, there is nothing like your homeland to move to. In the long run, you will be happier if you move to India.
There are many other cities in India that have affordable real estate and a good quality of life. Bombay/Pune should not be your only option. Indian Real estate will come down significantly in the next few years, a lot of the comments on this blog make perfect sense about a bubble. So, hang on tight!
Also, I am from Mumbai, but note that I called it Bombay. I am participating in a nationwide campaign against the T-company and its divisive politics. Let us all start calling Mumbai as Bombay. On March 1st, Let us all mail a post card to Bal Thackeray with the senders address as "Indian, Bombay". Let us clog his mailbox. Pass this on.
Anon @11:22
I don't think you should move back to India. If you really do plan to move back, be prepared to be judged by everyone. You will be respected by your friends and relatives only if you have a few flats in your name and are making good money and driving a big car. Otherwise, even your relatives will not call you or show up at a function at your place.
Indian society is highly driven by false show off. If you cannot afford flats in India, do not move to India. You will hardly find anyone who will sit down with you and talk heart to heart. All people care about is what you have, what you make and where your degrees are from.
You can live a very comfortable life in Canada or US. Away from all the day to day hastles and corrupt Govt. officials who will try to scare you if you don't pay them their share.
Just go once in a year to meet your folks but living in India is a nightmare after you have seen the world outside India. For people who have never been outside India, they will always say living in India is grea as they are ignorant..
Anon @ 8:43
Dont agree with your views. I have been living in US for a long time now but I feel that I was happier in India.
“Easy access to credit in China has been a boon to residential construction activity and the real estate market. These construction projects have boosted GDP numbers while increasing the paper wealth of many Chinese government officials. Affordability ratios suggest that these real estate prices are unsustainable, and that we could see a mortgage meltdown in China on even larger proportions to that of the US. Indeed, since 2003, residential construction has far surpassed household formation. International Monetary Fund statistics note that home ownership is at 86 percent in China, compared to 69 percent in the U.S. at the peak of the U.S. housing bubble.”“Easy access to credit in China has been a boon to residential construction activity and the real estate market. These construction projects have boosted GDP numbers while increasing the paper wealth of many Chinese government officials. Affordability ratios suggest that these real estate prices are unsustainable, and that we could see a mortgage meltdown in China on even larger proportions to that of the US. Indeed, since 2003, residential construction has far surpassed household formation. International Monetary Fund statistics note that home ownership is at 86 percent in China, compared to 69 percent in the U.S. at the peak of the U.S. housing bubble.”
Anon @ 9:00
Then why don't you go back to where you feel happy i.e. India. Why are you wasting your life in US? For the Green dollars.
India has a lot of money and everything is just great. You live only once. If you don't like it here in US, go back and give your job to some American who needs it.
My 2 cents.
Anon at 9:00:
Is someone stopping you to go back to India? Follow your heart.
India is waiting for you. Don't even waste one more night of your life in US.
“The China story starts to look more like that of Japan shortly before its stock and real estate markets collapsed almost two decades ago. The growth of the Chinese economy during the past decade largely was the result of Americans borrowing from the Chinese to buy Chinese goods. Now that the United States is pulling back on credit-based spending, the cycle may stop, leaving China with bad loans and fewer exports.”
“With the Shanghai stock market up more than 60 percent since the start of last year, investors around the world are looking to China to bring us out of a global recession. The country’s recent GDP numbers that suggest 8 percent growth for the year give signs of hope. Closer scrutiny, however, reveals the Chinese economy is in the midst of a debt-fueled asset bubble likely to burst within the next five years.”
Same story as India as below. RBI is doing the same thing:
“‘Another element is that the [Canadian] government is driving housing bubble,’ he added. ‘Central Bank has been buying so much product. Functionally you’ve had this huge liquidity dump from the government into housing finance.’”
“Just don’t expect any policy maker to acknowledge that misguided government policy typically aids and abets bubble formation. Nor will they ever agree publicly with the notion that a bubble mentality has taken root and that it has to be nipped in the bud. ‘Imagine the political backlash if a politician or central banker told people their house is worth 20 per cent less than they think it is – and they’re prepared to do everything in their power to ensure that it is worth less,’ said Arthur Heinmaa of Toron Capital Markets in Toronto.”
Greek Slump Threatens Debt Plan, EU Aid Elusive.
Friday, 12 Feb 2010 ~ Reuters
Greece’s economy shrank more than feared last quarter and the government on Friday sharply revised down its figures for the previous three quarters as well, increasing doubts about its ability to resolve its debt crisis.
A European Union government source said meetings of the region’s finance ministers next week were unlikely to put together an aid package for Greece, suggesting governments were still unable to decide how to prevent the crisis from hurting financial markets’ faith in the euro zone.
Greek Prime Minister George Papandreou, saying his country had become “a guinea pig in a battle between Europe and the international markets,” blamed bickering among EU bodies for delaying support for his country.
China Urges U.S. to Cancel Obama-Dalai Lama Meeting Next Week.
Feb. 12 (Bloomberg) — China called on the U.S. to cancel a meeting between President Barack Obama and the Dalai Lama next week at the White House, saying it is “firmly” opposed to the event.
The Chinese government has had “stern” exchanges with the U.S. on the matter, Foreign Ministry spokesman Ma Zhaoxu today said in a statement from Beijing. White House press secretary Robert Gibbs yesterday said the meeting with the Tibetan spiritual leader will take place on Feb. 18.
I forecast more Chinese central bank tightening ahead if the U.S. does not honor this request.
This Dalai Lama meet up is really twisting their nipples.
http://economictimes.indiatimes.com/quickiearticleshow/5568341.cms
For a change, I agree with the thoughts expressed in this article.
Throughout the history of man, wealth creation has always meant owning some property.
Things are not going to change beause we hate builders and their corrupt ways.
(Please dont bash me, I am not BB)
Venkat ND
Noted journalist and writer, late V S Upadhyay, who played a key role in acquiring land from DDA for Delhi-based journalists in Gulmohar Park and was also responsible for enrolling many journalists as members of a cooperative society which built this posh area in South Delhi, used to tell his junior colleagues that they must purchase a house before reaching the age of 40.
And if possible, they should buy another house before they retire!
While giving this sage advice, he also used to say that those who do not get any pension after retirement must buy another property before retirement as it would give them social security in the later stage of their life.
The thinking behind this advice was that if you have more than one property, you could rent out one and earn a good amount. Naturally, those who invest in property cannot be losers and it is advisable to invest in realty . This is especially true for all those who do not get pension benefits.
Samir Jasuja, CMD of PropEquity, says that property can be a great source of income for your retired life, or in case you loose your job, as many people have done last year. There is no question that property would not help if your investment were made at the right time.
“Those who invest in realty should have a longer period of time to enjoy benefits of appreciation as it is a long-term game. One should not expect miracles in a short span. It wouldn’t make any sense for a 60-yearold to invest in a property to earn rental income as real rate of return would not be profitable” , says Jasuja.
There is also an opinion that if you are thinking of a second property, you should not have any hang ups in investing on the outskirts of your city. With the passage of time, even outskirts become part of a city.
You can meet many people in various trans-Yamuna colonies, who will tell you that they came to that part of the city when it was bereft of any worthwhile facilities. After facing hard times for a couple of years, development commenced .
And with development, values of their properties went up multifold. That has changed the class character of a large number of people. As rates have really gone up in main parts of the city, one should not mind investing in outer or little unknown areas.
Vijay Jindal, MD of SVP Developers, says that among buyers of his flats in various projects , the number of those who already own properties are pretty high. That is an indication that the present generation knows for sure that investment in property would help their cause when the chips are down.
Anil Makhijani, a realty expert, strongly feels that land can be another option for those looking for a second property with a specific goal.
Between land and constructed property, the former is a lucrative option as it is much easier to sell it and the rate of appreciation is also higher. If you live in Delhi, then you should not think twice in buying land in any part of NCR. That would ensure for you enough returns in future.
Realty experts say that those dependent on loans for buying a second or third property should focus on it early in life. For example, one should start thinking on lines of buying a second property before In that case, you would get enough time to shed all loan liabilities before reaching the retirement age. Discussing the purchase of a second or third property, Avinash Aggarwal, director marketing of Orange County, says that if one were to look back at the situation of 15-20 years ago, one would realize that, earlier, people were satisfied after buying one property.
“As salaries have gone up over the years, there has been a paradigm shift in the attitude of people in terms of investing in realty. If investors settle for one property earlier, the later generations have been investing in multiple properties,” says Avinash.
He is spot on. Now, people are investing in realty with clear-cut thinking that their investment in property would be their source of income in post-retirement life. With higher disposable incomes and more loan options, this thinking is being adopted by a larger number of families.
Venkateswaran K Iyer: I agree with you on having social safety net and buying investment property is an option. The issue now is,
Home prices are completely out of whack from Rental income.
In Mumbai suburbs, my friend is renting a flat at Rs 15K per month. The price being asked for purchase of this flat is Rs 80 Lakh. How in the earth is that good investment? If one has 80 Lakh Rs equity or cash, he can easily earn Rs 80K in interest alone. By renting it out the owner is making loss of 65K every month. I don't think that can be called wise investment.
Once prices come in line with Rents, it will become investment alternative. Right now it does not make any sense.
@shailesh,
You have hit the nail on the head. Rentals are true determinants of people's paying capability...inflation et al..
Because if you hike up rentals and its beyond people's capability to pay it up, the people will not rent they will move elsewhere right?
So if 15000 is the rental then @ 9% return in FD's working backwards the price of the flat should be around 20 Lacs!! or at max if you want to do a 50% jump then 30 Lacs!! 80 Lacs is completely idiotic...and which is why I won't even look at investing in houses right now, the prices are completely out of whack!
Hi Shailesh.
I reproduced the ET article which is on Delhi. I think it is very much applicable to Delhi people for the last 60 years.
Bombay I think is just irreparable. Only thing to do is repeal laws related to tenency, demolish the crappy tenements in downtown areas (Parel like) and rebuild.
They can start with Dharavi.
Will the politicians do it? No chance.
Sensible thing would be to work in Bombay and retire elsewhere. But somehow Bombay people love their city (WHY????) and dont want to leave it.
If rents are so low in Bombay, it is stupid to buy. If you can rent at 15000 per month, why the hell would you want to spend 80L to buy it?
Delhi is not so out of whack. 15000 rent usually costs 30-40L if built new. Transport is still manageable for NOIDA and Gurgaon with good expressways(not like Thane or something)
But here also in developed area, cost is 60-80 L and rent is 15000 (flat will have more space than Mumbai).
We just returned after visiting Lajpat Nagar. Paying 60L for a floor with maybe 1000sf of space in such a hell hole of a place is simply crazy.
But new apartments in Gurgaon and NOIDA are spacious and nicely done.
Thing is, is India going to change or is the last 60 years again repeat for next 60 years also?
At the end of the day, main thing is not to be self deluded and think "I know everything" and either over reach or under-reach your salary limits.
Being middle of the road, sensible and within ones means and diversifying 30% RE, 30% stock, 30% FD and 5-10% gold and others should work for 99% of people 99% of the time.
NEW YORK: US home prices unexpectedly slipped in December but the annual rate of decline slowed, reinforcing the housing market's rocky road to Where has US bailout money gone?
The S&P composite index of home prices in 20 metropolitan areas declined 0.2 per cent in December, matching the dip in November, for a 3.1 per cent annual drop.
A survey had forecast that prices would be unchanged for the month and down 3.2 per cent annually following a 5.3 per cent annual drop in November.
The S&P/Case-Shiller US national home price index, which covers all nine census divisions, fell 2.5 per cent in the fourth quarter from the same time a year earlier. This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.
The national price measure had been down 19 per cent annually in the first quarter, 14.7 per cent in the second quarter and 8.7 per cent in the third quarter.
On a seasonally adjusted monthly basis, the 20-city index rose 0.3 per cent in December, S&P said, matching the November increase.
Despite this steady improvement, much of it on the back of government incentive programs that will end this spring, prices in December reflected the hurdles still facing US housing.
Unemployment hovers just under 10 per cent, foreclosures are running at a record pace and banks still own a massive amount of repossessed properties yet to be placed on the market.
All could test prices anew. "Many of the secondary markets, which were away from the center of the initial problem, are starting to feel the effects of the crisis," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
"While affordability has improved, confidence about the outlook has not, so there's hesitancy to move on purchases," he said.
Fifteen of the 20 metro areas saw price declines in December compared with November.
Three of the markets, Charlotte, Seattle and Tampa, posted new low index levels as measured by the past four years, erasing any gains seen in the past few months, S&P said.
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