Nariman point soon to be deserted

As financial institutions head for the exits South Mumbai is fast losing its allure as the premier business district of Mumbai. Ofcourse we won't see such articles in the various editions of the toilet paper of India. We get this news thru Bloomberg. Just as we hear this news there is other news that Edielwess securities moving into the BKC area. J.P Morgan moved to the Malad(w) area. Why overpay for realestate in Nariman point when employees commute from far flung suburbs.

JPMorgan Quit India’s Manhattan as Buildings Rot (Update2)

May 6 (Bloomberg) -- UBS AG and JPMorgan Chase & Co. are leading an exodus of finance companies from Mumbai’s Nariman Point financial district as they balk at paying double midtown- Manhattan rents for crumbling four-decade-old buildings.

UBS, Switzerland’s biggest bank, moved to a new complex on the site of a drive-in cinema about nine miles north. JPMorgan, the second-biggest U.S. lender, shifted to an adjacent suburb, while private-equity firm KKR & Co. went about three miles north of Nariman Point. Local lender Axis Bank Ltd. and broker Motilal Oswal Financial Services Ltd. are moving in the next year.

They are departing a district reclaimed from the Arabian Sea in 1940 that is marred by traffic jams and poor sanitation, and constrained by a 46-year-old law that limits building height. The city’s shortcomings and fragmentation may hinder Mumbai, with the fourth-most-expensive office space in the world, from establishing a financial center to rival Shanghai and Dubai.

“Transforming Mumbai into a world class financial center is very distant,” said Sunil Saberwal, chief executive officer of Bombay First, an organization modeled on London First to work towards the regeneration of Mumbai. “We are at least 15 to 20 years away from something like that. Even then, Mumbai will not be as beautiful as Dubai, but it will be functional.”

If Mumbai doesn’t get its act together by 2030 by improving transportation, housing and water systems, and reducing costs, the city may lose out to places such as Dubai as Western companies seek a base in the time zone, Saberwal said.

More here

The foul play in super-built up constructions

Article Link

Developers have drastically raised the super built-up area of the new properties. From 50% super built-up area, it has almost reached 100%,” said Pankaj Kapoor, founder, Liases Foras.

However, with the increase in super-built up area, the cost of properties has also doubled over a period of time. Consumers are getting lesser space at a higher cost. For example, if an apartment of 1,000 sq ft carpet area had a saleable area of 1,400 sq ft in Kandivali (a Mumbai suburb) in 2005, at that time, the apartment was priced at Rs2,500 per sq ft. The total cost came to Rs25 lakh. But now, an apartment of 1,000 sq ft is quoted as 2,000 sq ft saleable area. Taking the current cost into consideration, it is priced around Rs8,000 per sq ft. The total cost of the apartment has jumped to Rs1.60 crore.

Mint asks a very pertinent question. Have Mumbai prices risen to fast ?

Far flung suburbs are quoting at 10,000 per sq ft. I'm not taking about Andheri but Kandivili and Borivili. 95% of Mumbaikars cannot afford these prices. What is the point of living in such a city ? Ofcourse we won't see such questions asked in the Toilet paper of India which is keep spreading all bogus news about real estate developments which have no consequence on the Mumbaikar. The city has gone to the dogs but nobody is willing to bell the cat. All these meaningless statistical analysis by the RBI economists ignores the biggest factor of black money in Mumbai real estate. Builders quote 50% in black money. The RBI is like the Roman emperor Nero who played the fiddle when Rome burned. All these bogus facts about the island city are meaningless when we have sprawls all the way upto Panvel and Virar. I believe the builders are keeping apartment prices high to keep their stock prices high. They can then sell the stock to gullible investors by planting stories in the news media. Also they can sell their apts to gullible NRIs just like what happened in Dubai.

The stock response to a question on housing prices in Mumbai is that they have become unaffordable. The general feeling is that they have risen too far, too fast. Fingers are pointed to the vast number of unsold apartments and everybody wonders how builders can afford to keep these flats vacant for months. But have real estate prices in Mumbai really gone up so dramatically? Mint reports

The Reserve Bank of India’s (RBI) report on macroeconomic and monetary developments has, in its chapter on financial markets, a chart on the house price index in Mumbai. The chart gives the index weighted by the value of transactions and the number of transactions. It shows that the Mumbai house price index reached a peak of around 230 or so in the second quarter of 2008 before starting to plunge. The index then fell to a low of slightly above 150 in the fourth quarter of 2008 before starting to climb again. By the second quarter of 2009, it had exceeded its pre-crisis highs and by the fourth quarter of 2009, it had gone a bit higher than 250. The chart has data from the second quarter of 2003, when the value of the index was 100. Putting it another way, if RBI’s index for Mumbai is right, then it means property prices in the city have, on average, gone up by a bit more than 2.5 times between 2003 and the end of 2009. But the gross domestic product (GDP) at factor cost at current prices has, between 2003-04 and 2009-10, gone up 2.3 times. And if India’s GDP has gone up by 2.3 times over the period, GDP of Mumbai city must have increased by a far larger factor. Add to that Mumbai’s island location, which makes expansion difficult and the rise in real estate prices does not seem too steep.

India weighs capital controls with rupee on rise

Economic times reports on the RBI's efforts to curb the inflow of hot money into India. Instead of adding a tax to the inflow, the RBI should tax outflows so short term speculators think twice before speculating the currency. The govt. is pandering to the exports led IT lobby which will see rupee based earnings shrink as the rupee appreciates. RBI is trying to generate some fear among the investment community however given its inept record in overseeing the IPL Cayman islands/Marutius mess its credibility is doubtful when it is given the task of policing inflows into capital markets.

If foreign money from Caymans ended up in IPL, it would not be surprising if thousands of crores found its way in real estate deals. Anyone from Goa can tell you how much Russian money has influenced the rise of real estate there. Showing fake teeth to the public is what govt officials can do. The general population has to deal with the ineptness of its own elected and selected officials. Just quoting fancy Yale professors to solve India's problems is like applying balm for treating coronary heat disease. Sigh..

India's government is weighing capital controls with the rupee on the rise amid fears of "hot money" flowing into the country as investors pile back into Indian assets.

Unlike fellow emerging market giant China, India allows its currency to float freely and the central bank has warned of the dangers of "sharp and volatile" exchange rate movements that could hurt India's economy.

With the rupee riding at 18-month highs against the dollar, one idea Reserve Bank of India Governor Duvvuri Subbarao is airing to curb sudden big movements in the currency's value is a tax on foreign exchange transactions, known as a Tobin tax, similar to one Brazil introduced last year.

"Depending on what flows come in, we would employ measures, including if necessary something like the Tobin tax," Subbarao said last week, referring to a proposal first aired in the 1970s by Yale economics professor James Tobin.

Sales drop 50% as realty prices get unreal again in Mumbai

DNA Report here

Mumbai: City developers, who witnessed a revival of sales at hefty prices in the past six months, are now up against buyer resistance. With demand dropping like a stone, the sale of residential flats across segments has nosedived, property experts said. The drop is as high as 50% in some segments.

Sandeep Sadh of Mumbai Property Exchange says it is a weird situation. “In South Mumbai, where there are no new constructions, people are deferring buying due to high prices even in resale flats. In contrast, despite having a large number of flats available in the suburbs, buyers are unable to buy due to unrealistically high prices.’’ Sadh says his clients are sitting on the fence and have deferred buying till after August when prices may just become a bit realistic.

Venkatesh Iyer of Siddhivinayak Real Estate Consultants says the number of inquiries he gets seldom translates into actual sales. “People’s budgets have become constrained, as prices have increased exorbitantly. In Chembur, prices have jumped from Rs8,000 per sq ft to Rs10,000 per sq ft, to almost Rs14,000 in six months. High prices have affected the resale market the most, as owners find the next new flat to be more expensive,’’ said Iyer.

A negative fallout of recent trends is that developers have increased the carpet area-to-built-up area difference to almost 50%. “This is a dangerous trend. There is no clarity on what rate developers have calculated the balcony area, terrace or storage room. Baring a few places, there is no mention of it in agreement papers. It is time the government brings clarity to the issue,’’ said Vakil.

JLLM touting growth in IT industry

Realty firms under scanner for slush funds

Just what the doctor ordered. An anema of of the entire money laundering system. Ironically DLF and others will have Modi to blame for all the attention. If the heat turns on, new funds will be very afraid to enter the market. Expect the bubble to pop in the foreseeable future.

Economic times reports

NEW DELHI: Major realty firms of the country are under the probe of enforcement agencies for alleged violation of FDI terms and use of slush funds worth several thousand crore brought in from certain tax havens.

While the Enforcement Directorate has carried out raids at premises of realty firm Emaar MGF for alleged violations of Foreign Exchange Management Act in the recent past, the latest to feel the ED heat was realty fund and developer IREO.

Sources said more number of firms are under the scanner and a detailed probe is underway. The Income Tax department has also conducted its operations and is now planning to delve deep into the tax statement of the realty firms.

When contacted, IREO had said "Some officials from the department of revenue have approached IREO for certain information and clarifications, which are being duly responded to. IREO remains committed to fully cooperate with the authorities, like always."

Incidentally, the moves come following a report prepared by an arm of the Revenue Department late last year, which identified the real estate market as the sector having the highest percentage of black money.

The most common violation that the investigating agencies have found in the realty sector is the alleged breach of Foreign Direct Investment terms.

They said many firms are believed to have diverted investments meant for the real estate sector to purchase agricultural land.

Under various agreements with the Foreign investment Promotion Board (FIPB), agricultural land is a sector barred for investment.

The searches that have been initiated now by the ED are the culmination of months of discreet probe into the real estate sector by various arms of the Revenue Department.

They said many of the funds are being brought in from tax havens like the Caymen Islands, Mauritius among others.

In some cases, the Directorate has learnt that certain realty firms had opened up multiple companies to acquire more land than the prescribed ceiling and had even made their low level employees as its Directors without their knowledge.

Freedom at Midnight

On August 15th 1947 as the clock stuck twelve a.m Jawaharlal Nehru made a powerful speech exhorting India to wake up to the new world.

To quote Nehru said "At the stroke of the midnight hour, when the world sleeps, India will awake to life and freedom. A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long supressed, finds utterance. It is fitting that at this solemn moment we take the pledge of dedication to the service of Inida and her people and to the still larger cause of humanity."

On similar lines in the wee hours of April 26th, 2010, BCCI suspended Lalit Modi thereby singling out Modi as the single individual responsible for all the scandals which IPL is a part of.

On one day India attained freedom, on another the party of the powerful have tried their best to severe off their right hand hoping that this surgical procedure will be the best option under the given circumstances.

Everybody knows the levels of corruption in Indian politics and business. As followers of real estate we have seen massive amounts of speculative capital being parked in lands all over the country. There is no accountability since the law-makers and law enforcers are in cahoots with each other.

This is the India we awake to every day. The sooner we realize it the better it is. It is not going to get any better. Modi was made the scrape-goat since he got too big for his own shoes. The Indian political system operates at more nefarious level then even the Bhai's. I have no sympathy for Modi however I am convinced that he people against him are 10x more deep in the muck which Modi finds himself in.

Now imagine if a commission was setup to examine the land-holdings and source of funds of the builders.

That scandal will make Lalit Modi look like King Harishchandra.

Land sharks grab land in Alibaug

One of the most picturesque places in Konkan is now getting destroyed by the land mafia. At this rate there will be nothing left but concrete structures all over the coast. As usual the government does nothing. One more sad tale in a one of the most corrupt states in the country.

Fantastic interview with Mohanish Pabrai

Steve Forbes does a very god job in interviewing Mohnish Pabrai of Pabrai funds. Mr Pabrai's views Chinese and Indian companies with a dose of skepticism as he doesn't trust the accounting balances sheets and the audit process in these countries. Great viewing for anyone who is swayed by the morons on CNBC TV, whether in the US or India. Greed is universal. Here is the full video.

Infosys posts Q4 profit of 1600 cr; to hire 30,000

The hiring number looks ridiculously large. Getting 30,000 employees productive is a challenge of mammoth proportions. Its going to drive recruitment consultants crazy.

Tuhina Pandey and Mokshada Batra, April 13, 2010 (Bangalore)

Infosys, the second largest Indian IT company, kick started the earning season on Tuesday posting numbers quite aligned with the street's expectations.

Infosys on Tuesday reported a consolidated net profit of Rs 1600 crore for the quarter-ended March 31, 2010, a quarter-on-quarter growth of 2.6 per cent and year-on-year decline of 0.9 per cent.

The company registered revenues of Rs 5,944 crore for the March-ended quarter 2010, up by 3.5 percent quarter-on-quarter and a year-on-year-growth of 5.5 per cent.

But investors were, as always, more focused on the keenly awaited guidance for next fiscal which came in healthy at 16-18 per cent for dollar revenue growth but more muted in rupee terms at 9-11 per cent with earnings seen largely flat in FY11.

"We have done very well to what we thought we would. We have been able to take advantage of the opportunities in the market and grow faster due to our investments in capacity and capability building during the economic downturn", S Gopalakrishnan, CEO and MD said on Tuesday. "This quarter we added 47 new clients, the highest in recent times", he said.

Infosys also said it was looking at recruiting nearly 30,000 persons for this fiscal year including over 2000 from overseas.

In India it had already made 19,000 campus offers, T V Mohandas Pai, Member of the Board and Head-HRD and Education and Research said.

The company was planning to induct 5,500-6,500 laterals, he said while talking about Infosys' hiring plans. It was planning to recruit 1000 each for its China and US office and around 400 in Manila.

Infosys also saw one of the largest wage increase. "There has been a large wage increase for middle and junior level employees. In senior level there has been a 10 per cent increase in wages". Overall the average wage hike has been around 14-17 per cent, he said.

All expect Infosys to beat its indicated guidance as it has in the past but the margin contraction by 150 basis points next fiscal on the back of rupee appreciation and wage hikes, and rising attrition are causes for some concern.

An upbeat management at Infosys headquarters and the most widely used phrase "cautiously optimistic” is out of fashion for now. However, as of now it seems like "play it safe" is still the Infosys mantra.

Times of India now calls the bubble in Mumbai

Fools rush in where angels fear to tread. If I had bought in Mumbai in before 2006, I would just sell it and sit on the money. The profits are just too good to be true.

Beneteau yacht for a crore, but not a flat

Anil Singh | TNN

Mumbai: A brand new fourseater Cessna 172 aircraft,a new Beneteau 35-footer coastal cruiser yacht that can comfortably carry a family of six to Goa, three Mercedes ‘C’ class saloons; each of these can be had for one crore rupees. But raised eyebrows and blank stares is all you will get at the ongoing property expo at Bandra-Kurla Complex if you ask what you can get for this sum. “Please pick up the rate charts from that corner,’’ sales executives at several counters told this correspondent disinterestedly on learning that the budget was a mere Rs 1 crore. It was as if a slum dweller had strayed into a mall.

Nonetheless, if one is willing to visit every stall in the 14,000 sq ft air-conditioned hall put up by the Maharashtra Chamber of Housing Industry (MCHI), one can find apartments costing less than one crore in the municipal limits of Mumbai. Only that they may be in under-construction,standalone buildings on the outskirts of the city or in rundown localities. For instance, a 2BHK flat at Bhandup by Neptune builders measuring 1,000 sq ft (carpet area 700 sq ft) comes for Rs 67 lakhs. The 30-storey building, Flying Kite towers, behind Metro mall, is still under construction.

The more affordable options include a 2BHK flat at Mantri Park, Goregaon (E), off Film City road for Rs 70 lakh. A 1,160 sq ft 2BHK flat at Gundecha Altura, Kanjurmarg (W), LBS Marg, is going for Rs 76.5 lakhs. HDIL is selling 1BHK and 2 BHK flats at Galaxy Apts at Kurla East at 5,251 per sq ft. A 1,035 sq ft, 2BHK flat at ‘US Open’ by Nirmal Lifestyle at Mulund (W) will cost you Rs 85 lakh at Rs 6,552 per sq ft if you are willing to wait four years for possession.

According to builders specialising in SRA projects, it is possible to get an 800-sq ft carpet area flat for Rs 80 lakhs in Andheri. MHADA recently sold 2BHK flats with a carpet area of 700 sq ft at Versova for Rs 42.5 lakhs. However, at the MCHI expo, most of the 2BHK flats are tantalising out of reach if your budget is Rs 1 crore. For instance, a 2BHK at Ackruti Shikhar at Parsi Panchayat Road, Andheri (E), will cost you Rs 1.3 cr at Rs 12,500 per sq ft. A 2BHK flat with a carpet area of 775 sq ft at Kohinoor City, which has replaced the Premier auto works at Kurla, comes at Rs 1.18 cr. A 2BHK at Kalpataru Aura at LBS Marg, Ghatkopar, comes for 1.1 cr. Flats at HDIL’s Metropolitan at Andheri are being sold at Rs 11,500 per sq ft and a 2BHK with a carpet area of 765 sq ft costs Rs 1.31 cr. At Ajmera Pristine, Yogi Nagar, Eksar Road, Borivli (W), a 3BHK with an area of 1,595 sq ft can be had for Rs 1.43 cr.

Of course, all these flats come with amenities such as a swimming pool, a gym, a clubhouse, multi-level car parking and the like. But then, it would be much cheaper to live in a trailer, or for that matter in a Beneteau cruiser yacht bobbing on the waves.

Realty check: Rising rates thwart home buyers' plans

The bubble grows bigger day by day. Most buyers are priced out as the flats are sold to investors or with folks with pots of black money. I'm sure the journalist who wrote this article is facing the pinch as well. 13000 is Andheri is 3 times the rate in 2006. Add to that the usual bogus built-up rate the sq/ft rate is over 18,000. Just rent the same property for 30,000 rs and enjoy it. One blogger asked the opinion of SS and BB on Bangalore real estate. I would say that Bangalore real estate is priced right and if you have need an apt you can get one from 40L onwards though you might have to goto the outskirts for that. Apartment sizes are generally larger then Mumbai and it is not uncommon to find rates in the vicinity of 3,000-4,000. Also the built up loading is roughly 20%, unlike the 40%+ loading applied by the Mumbai crooks

DNA reports


Mumbai: If the projects displayed at the annual property fair by the Maharashtra Chamber of Housing Industry are any indication, purchasing a flat will be a daunting task for home buyers this year as well.

Buyers will have to contend with property prices, which have almost doubled, and a dwindling stock of ready properties in “affordable” areas beyond Kandivli in the western suburbs and Panvel on the harbour line.

Take for instance Athena and Astraea buildings being constructed in Rustomjee’s Urbania project near Majiwada Junction at Thane. In a year’s time, the price of the project has increased from Rs4,000 per sq ft to Rs6,143. Similarly, Gundecha Symphony in Andheri (West) has increased rates from Rs8,000 per sq ft to Rs13,000.

The rates were a huge disappointment for visitors. Lillu Asurlekar, a prospective home buyer, said, “I am looking for a flat in Andheri or Goregaon, but the prices are very high. I will now have to go beyond these areas. How can anyone shell out Rs4,000 a sq ft for a flat in Panvel?”

Barring Everest Developers, who offered a discount of Rs100 per sq ft, there were no discounts offered by any top ranking developers. In fact, for the first time, developers like Lokhandwala and K Raheja Universal did not participate in the property fair.

Who Is Jacking Up Property Prices In Mumbai?

Moneylife.in reports on issues much discussed on this blog for quite some time

By Sindhiya, Section Real Estate
Posted on Fri Apr 02, 2010 at 11:42:54 PM EST
A bunch of vested interests seem to be working together to fuel India's new property bubble, especially in expensive real-estate markets like Mumbai

Real-estate prices in India, which are already reaching for the stratosphere, are being further fuelled by a set of vested interests such as established brokerage firms and leading media houses through reports which exaggerate demand and suggest that realty prices may go up even further. Meanwhile, angry investors are struggling to get the regulators to act quickly and decisively to dampen the price escalation.

Recently, ICICI Securities released an all-India survey (across eight cities) which was headlined--`Affordability not a concern--healthy demand for homes at current prices: ICICI Securities survey'. A closer look suggests that things are not so rosy.

In fact, apart from vaulting prices, potential property buyers are outraged at how they are being cheated with regard to the actual usable area that is being sold to them. Moneylife has already reported on how the loading, which used to be anywhere between 20% (built-up) to 40% (super built-up) has now been pushed up to as high as 80% by several builders in Mumbai. With the government showing no signs of setting up a property regulator, builders and developers clearly feel confident that nobody will check their dubious selling tactics.

Another factor that has increased prices in Mumbai is the loading of taxes (in form of value-added tax (VAT) and service tax) on the already high price being forked out by consumers.

Source: moneylife.in Who is jacking up property prices in Mumbai?

Click On "Full Story" For More...

A research report circulated by ICICI Securities says that Ahmedabad has the highest inventory of 59%, Chennai has inventory of 10% while Mumbai has an inventory of 8% and National Capital Region (NCR) has only 1%. However, property experts are sceptical about these numbers. "It is a doctored report to show optimism. In fact, Chennai represents the least inventory and Mumbai & NCR the maximum. I am surprised to see such a false picture being painted by one of the credible brands," said Pankaj Kapoor, founder, Liases Foras.

For many media companies, headlines that point to property prices rising even further, usually translates into increased advertising revenue. In some cases, they have equity deals with realty companies which include an agreement to project reports that favour these companies. A reader has written to point out that some of these headlines sound like "quotes from the builder".

A senior executive of a leading information technology firm has even been writing to the governor of the Reserve Bank of India, pointing to how vested interests are pushing up property prices.

Buy 1800 sq ft, Get 1000, Housing Industry Chamber Says Developers Digging Own Graves

SALEABLE AREA From 40 per cent of carpet area, jacked up to 60-100 per cent; housing industry chamber says developers digging own graves

Aspiring home buyers, already grappling with spiralling prices, have a new problem: developers are jacking up the sale able area in most new projects by "unrealistic proportions".

Developers sell flats not on the basis of carpet area (the net usable wall-to-wall area) but on the basis of sale able area, also known as super built up area, which includes facilities like staircase, lobby and lift as also add-ones like sun decks.

Traditionally, these spaces have been limited to a maximum 40 per cent of the carpet area. Of late, developers have increased this notional "loading" to 60 to 100 per cent of the carpet area. As a result, a flat-buyer paying for a 1,800-sq-ft flat may end up with only 1,000 sq ft floor area to live in.

"We have tried explaining to developers that we are digging our own graves by resorting to such practices. The MCHI (Maharashtra Chamber of Housing Industry), time and again, appeals to developers to stick to selling flats on carpet area basis but we cannot impose any regulation on them," said real estate developer Pravin Doshi, president of MCHI.

Two years ago, the government had approved a Bill, whereby any developer who does not sell flats according to carpet area is liable to face imprisonment for a period of three years, a rule that has failed to take off with no one appointed to oversee implementation.

Developers, on the other hand, get to maximise their profits as the BMC rules allow them to build parking lots, elevators and other frills free of FSI. Also, developers are allowed to build four-foot pro jections in the form of sundecks or flower beds in addition to building a balcony free of FSI and enclosing it as part of the flat.

"We had to discontinue giving permission for such projections as they were mostly misused. But recently the BMC has started sanctioning these once again," said an official from the building proposals department.

This is the very reason why balconies, which had mysteriously disappeared from facades of flats in Mumbai, have made a comeback in new projects along with fancier versions like sun decks, viewing gallery, planter's box and individual terraces.

All these were earlier charged at one-third the rate (per sq ft) for the flat, but now everything is sold at a flat rate. Brochures of new launches by Orbit Corporation, Dheeraj Realty, Wadhwa Developers, RNA Corp, Lodha Group, Oberoi Constructions, Indiabulls, DB Realty and a string of many others show a huge discrepancy between the actual usable space and the saleable space the buyer is made to pay for.

Real estate experts said there is an upper cap of 2 on FSI in the suburbs, but by constructing the components free of FSI and selling them at market rates, developers effectively get an FSI up to 3 or 4.

"In the absence of a regulator, loading is sort of an eyewash by developers to salvage high land costs.

So while per-sq-ft rates in Ghatkopar is Rs 9,000, with loading the rates are as good as being a high Rs 13,500. While actual rates in Bandra-Khar are Rs 20,000 to 25,000 per sq ft, customers end up paying up to Rs 45,000 per sq ft of the usable area due to huge element of loading," said property consultant Sandeep Sadh.

Customer continues to be the king

Realty sector in Mumbai: High prices hit demand

Realty sales in Mumbai Metropolitan Region (MMR) have fallen. The total area (m sq ft) sold in MMR in December 2009 as compared to September 2009
quarter, has come down. Prices have risen or remained flat in some cases. This shows that homebuyers are holding on to their demand and exercising restrain. Demand for big-ticket houses has been the worst hit.

As per the data compiled by Liases Foras, a real estate research agency, flats costing Rs 1 crore to 2 crore have seen a sharp fall in demand which is contrary to what many developers in the region have been saying. Homes costing over Rs 2 crore are also witnessing the same trend. This is in contrast to cities like Bangalore, Hyderabad and NCR, where sales have risen, thus proving again that Mumbai property market defies rules applicable to other markets. The main reason for the same being that prices have fallen in the above-mentioned cities whereas Mumbai based developers have been increasing their prices.


They must realise that ‘Customer continues to be the king’, at least for the time being.

Redeveloped Bandra-Khar buildings lack open space

I have seen many such buildings in Mumbai where balconies jet out to the road. There is no setback and all architecture norms are flouted. Now it appears these guys flout civil aviation norms where the maximum number of floors in the Bandra Khar, SantaCruz, Vile-Parle, Andheri (east) zone is set to be 8-9 floors. Bribe and get away is the age old mantra. Buyers need to be extra vigilant else they may find that their floor is illegally constructed. The best thing is to go for floors below 8 just in case something comes up in the future. Given the prices I wonder who is buying in these areas.

Locals fear that these redeveloped buildings which have their entry points on roads and footpaths could cause serious safety hazards. According to the rules, compulsory space of 15 feet should be left open around the buildings for free movement of people during emergencies.

“From the roadside, at least 4.5m of space should be kept open. If this is not the case, then there is a cause for worry. We first have to verify if the building line is from the inside. This varies from case to case and on how the plans are passed. If buildings are constructed under section 33(7), then relaxation of open space is found. It also depends on whether relaxations were allowed by the municipal commissioner or the SRA commissioner,” said Uday Tatkare, chief fire officer.

According to Right to Information (RTI) replies,these redeveloped buildings without compulsory open spaces are on Linking Road opposite Khatwari Darbar, at the SV Road and Khar Station Road junction, at the Waterfield Road (near Popley Jewellers) junction of 13th and 8th Road in Khar (W) and on 33rd Road.

When VL Joshi, chief engineer (Development Plan) was contacted, he said, “We will call the building proposal officials from H (West) ward and clarify this. We approve certain plans, but if DC rules are not followed we don’t give the occupation certificate.According to DC Rules 1991, the plot potential has increased for builders in Bandra.”

A builder on condition of anonymity said: “If builders have a commencement certificate for six floors, they construct an additional six illegally. Many new commercial and residential buildings have even flouted civil aviation norms.”

Over eight months, property prices at Powai in central Mumbai have almost doubled

Moneylife.in reports

Powai is a tony residential location in central Mumbai. Property prices here are reaching for the stratosphere. Rates have almost doubled over the past eight months. Recently, a two bedroom-hall-kitchen (BHK) of 985 square feet (sq ft) in Lake Homes, a residential complex—developed by Ekta World and Supreme Universal— sold for between Rs 90 lakh-Rs 95 lakh. During the slowdown (around nine months back), an apartment of the same size would have sold for Rs68 lakh. In 2007, when the real-estate segment was at its peak, this apartment would have sold for Rs78 lakh, revealed a source.

Prices have been steadily going up in this apartment complex (Lake Homes). Around a month back, the property was priced between Rs80 lakh-Rs85 lakh; four deals took place at these prices. “Prices have been rising quite rapidly. I have seen four-five deals happening at Rs80 lakh-Rs85 lakh—recently a deal took place between Rs90 lakh–Rs95 lakh,” said a resident of that area, who preferred anonymity.

Subbarao Warns of ‘Hard Landing’ as Goldman Expects Rate Rises

Bloomberg reports

By Kartik Goyal and Anoop Agarwal

March 23 (Bloomberg) -- Reserve Bank Governor Duvvuri Subbarao said India risks a “hard landing” if inflation isn’t reined in as Goldman Sachs Group Inc. and Morgan Stanley said last week’s interest-rate rise isn’t sufficient to curb prices.

“If we don’t tighten now and take action, the adjustment that we will have to make later on will be strong and we might indeed have a hard landing,” Subbarao told reporters in Bangalore yesterday. “Even if there’s a short-term trade-off between growth and inflation, in the medium term it is important that inflation is kept low in order to sustain growth.”

Big ticket land deals end 18-month

18 acres 570crores = ~31 crores per acre in Ghatkopar, with an FSI of 1:1 one can build 90,000 sq ft leading to a price of 3400 per sq ft. With an FSI of 1:2 that is down to 1700 per sq ft. Now with a construction cost of 1000 rs per sq ft, the cost basis is 2700 rs per sq/ft. These properties will be loaded up 35-40% , so a 1000 sq ft apt will actually have 600-650 sq ft living space . An apt with a cost price of 2700 x 600 = 16L will be sold for 10,000 Rs per sq/ft leading to a price of 1 Crore(1000 x 10000) , thereby generating a return of 600% to the builder. Great job guys in looting the Mumbaikar of every available living space.

Livemint.com reports


Raghavendra Kamath / Mumbai March 22, 2010, 0:23 IST

High-value land deals are back in the country’s commercial capital after an 18-month break. The first two-and-a half months of this year have already seen developers, with more cash at their disposal from rising home sales, close half-a-dozen deals worth Rs 4,000 crore.


Three large property deals have already been finalised this year in Mumbai. The largest among these is the bid to develop a 250-acre plot in Kharghar (Navi Mumbai) for Rs 1,530 crore. The deal was won by a consortium of Bhushan Steel and Subhash Chandra’s Essel Group from the City and Industrial Development Corporation of Maharashtra (Cidco).

This is the biggest land deal in Mumbai for the past 18 months.

Soon after came a Rs 571 crore deal by the Wadhwa group to buy 18.18 acres in the Ghatkopar suburbs from Hindustan Composite, and Sheth Developers bought Golden Tobacco Company’s property in Vile Parle for Rs 591 crore.


More mega-deals are expected. For instance, sources said Jet Airways, which bought land in the Bandra Kurla Complex, for Rs 826 crore around two years ago, is close to signing a deal to sell the land in a joint development project.

Despite facing setbacks in land auctions in 2009, government agencies like the Railway Land Authority (RLDA), National Textile Corporation (NTC) and Mumbai Metropolitan Region Development Authority (MMRDA) are planning to auction their land this year again.

Leading the pack is RLDA, which managed to sell only one plot last year due to the property slowdown. In the next financial year starting April, the authority is planning to raise around Rs 4,500 crore from selling 25 sites covering 172 acres.

“Overall participation from developers has also improved,'' confirmed P D Sharma, member, planning and infrastructure, RLDA, the nodal agency for developing surplus land of Indian Railways.

He said RLDA received 20 requests for qualification (RFQ) from well-known developers for its Sarai Rohilla plot and 14 expressions of interest (EoI) for the Bandra land. RLDA is having to re-auction the Sarai Rohilla plot because the previous winner could not pay the bid money.

Though NTC's last attempt to sell its Finlay Mill in Mumbai to the Lodha group is yet to materialise, it is planning to sell two or three more defunct Mumbai mills to developers.

Bolstering the upsurge in demand for commercial land is the rise in home sales. After a 25 to 30 per cent drop from their peak, home prices have gone up 15 to 20 per cent in the last nine months as demand returned to the residential market.

“Finished product (home) sales have gone up. As a result, developers are willing to pay higher prices and buy land now. They would not have paid such prices a year ago when home sales were low,'' said Anuj Puri, chairman of global property consultant Jones Lang LaSalle Meghraj.

“Developers’ liquidity positions are certainly better now than a year-and-a-half ago. We are seeing a lot of non-banking finance companies and mutual funds lending money to developers now,'' added Parry Singh, managing director of Red Fort Capital, an India-focused realty fund.

Most land buyers in Mumbai are planning to build premium residential apartments to make the most of their expensive investments.

“Today an average product does not sell. Only good products by good developers sell. A lot of developers are stuck with title issues, poor sales and so on,'' said Vijay Wadhwa, promoter of Wadhwa group.

Wadhwa has already pre-sold 0.5 million square feet out of 1.6 million sq ft of built-up space in the Ghatkopar residential project and Sheth Developers is planning premium residential apartments on its newly acquired land.

DLF, the country's largest developer, recently changed its plans to build an office-cum-retail complex into a high-end residential complex in Lower Parel because commercial rents have fallen sharply. DLF bought the 17-acre Mumbai Textile Mill land from NTC for Rs 702 crore in 2005.

Puri says developers’ interest and ability to pay have also improved because the floor space index (FSI), the amount of construction permitted on a given plot of land, is increasing in Mumbai. Though the base FSI is 1.33 in the Mumbai suburbs, re-development projects on defunct mill lands, slums and so on get a higher FSI.

This time, however, the revival in land deals is marked by caution. This was evident at the MMRDA's recent land auction when none of the developers turned up because the agency's quoted price of Rs 3 lakh a square metre was considered too high.

“Though markets have revived, deals are being closed only at reasonable levels. There is money to be made but developers have realised that they need to be cautious,'' said Red Fort's Singh.

Developers such as Wadhwa group who bought expensive land parcels, say they are focusing on executing their current projects than buying new land.

Private equity funds are also equally cautious. “Though we are looking at property deals actively, we are focusing on those in which risks have been taken out and proper approvals are in place,'' Red Fort's Singh added.