More evidence of a bubble - Navi Mumbai has 23% flats vacant

23% of flats in Navi Mumbai lying vacant The newest destination for property investors in the Mumbai Metropolitan Region is the Navi Mumbai-Panvel-Raigad zone. Experts have concluded this based on Census 2011 findings , according to which 23% of houses here are lying vacant. They say that while investors are buying most vacant homes expecting rate appreciations ; genuine buyers are deferring purchase in the hope of a correction in prices. But some experts feel that low occupancy of houses does not necessarily imply a flourishing investor presence. Now a days Times of India too has been reporting on the sorry state of Mumbai real estate. The ads by the builders are down significantly from the huge booklets to just a few pages.

Mumbai home sales growth stagnates in June

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A situation of plenty continues to plague the Mumbai real estate market with unsold inventory amounting to 80,000 units which forms 37 per cent of the total residential supply under construction.

The market stagnated in June due to high prices and most buyers having stayed away expecting an imminent drop in prices in the near future. 

The report indicates prices have been moving in a narrow range in the past four quarters as a virtual stoppage of new launches over the past year has constrained supply and cushioned prices from dropping in spite of absorption levels steadily trending downward.

Absorption numbers in FY2012 are estimated to have dropped more than 60 per cent from its 2007 heydays and 35 per cent from FY2011, to an estimated 45,000 units. This steep drop in absorption levels should have resulted in a similar correction in prices.

FSI for slum schemes hiked to 4 from 2.5

Times of India has the scoop on all this. More good news for builders as they get to build more floors. Bad news for prices as supply increases. Anybody care to comment on the fact that increasing FSI will cause prices to increase ?

MUMBAI: The state government has formally increased the floor space index (FSI) for slum rehabilitation projects from 2.5 to a maximum of 4.

The state urban development department issued a notification on Friday after it got an approval from chief minister Prithviraj Chavan, who also heads the department.

As per the notification, projects involving all high-density slums-those having over 650 tenements per hectare-are entitled to an FSI of 4, whereas those with lower tenement density are entitled to 3.

Senior officials from the urban development department said that the notification highlights that all procedural formalities concerning the higher FSI move are now complete.

After the move to increase size of each rehabilitation tenement for slum dwellers from 225 sq ft to 269 sq ft in 2009, slum redevelopment projects were allowed higher FSI.

A notification under section 154 of the Maharashtra Regional and Town Planning Act ( MRTP), 1966, was issued at that time to allow it to implement the provision pending completion of procedural formalities, including invitation of suggestions and objections from citizens.

These procedural formalities have now been completed and a formal notification issued, a senior state official said.

FSI is a development tool that determines the extent of construction permitted on a plot. It is a ratio of permissible built-up to the total area of the plot. A higher FSI would allow developers additional construction on slum land.

Lux is up: realtors confident that housing prices will not dip

Another feeble attempt by the paid news media to sucker buyers into their trap 

If the Indian economy is booming Mumbai property goes up. 

If the Indian economy is slowing Mumbai property goes up. 

These morons think that Mumbaikars are lemmings. What is constant in Mumbai is the generation of black money. This could be responsible for the rise in property till now during boom times. However when everything is slow, black money generation too has to be slow. 

If existing investors have their black money stuck with builders, how can they take profits and invest in the next venture. I spoke to a broker who said, "Investor ka paisa atka hain, he is ready to discount the price" however the project is delayed so which person in the right mind will buy from the investor when the builder is running out of money. This is in Vile Parle.

I forsee this situation all over Mumbai. Its best to buy I keep repeating ready to move in or resales. This market is stuck in the muck for many years to come. Demand for housing will remain, the smart investor will bring cash to the table and take a discount. Anyone going for too good to be true deals will be slaughtered mercilessly by the brokers 

 Hindustan Times report 

 As the Indian economy slows down, the real estate sector, with its back to the wall, remain gung-ho that prices will not dip any time soon. 

 In a recent realty event in Mumbai organised by CII, top property developers aired confidence that prices in residential realty would remain high. “There is pressure on developers, but that is because of the delays by the state government,” said Sandeep Runwal, director, Runwal Group, a Mumbai-based developer. “The delays are affecting the prices as it would only increase the cost for developers.” And the costs are likely to be passed on to customers. 

 According to data compiled by international real estate consultants, about 60% of projects launched in metros fall in the luxury category. However, private investors seem to be taking a cautious approach, and are only going in for smaller projects with smaller tenure of investment. “We are treading cautiously and want that the project we invest in is priced conservatively,” said Ramesh Jogani, managing director, Indiareit, a private equity arm of the Piramal Group. 

“We are giving preference to smaller projects over bigger ones.” Commercial realty, however, is a different story, with rentals under pressure. “The situation has improved (recently) as the demand and supply currently match, but if supply increases, there would be a pressure on rentals in commercial real estate,” said Cherag Ramakrishnan, CEO, Equinox Realty, the real estate arm of Essar Group.

Home sales slump by more than 50% in Delhi, Mumbai areas

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While MMR reported the sharpest drop of around 58%, NCR slumped 57% from the year earlier. Bangalore witnessed a drop of 18% in sales, the report added.

Sales in NCR dropped to 15,104 units from 35,420 units and it fell to 11,473 units from 27,676 units in MMR.

The two regions saw a residential supply of 107,731 and 89,461, respectively, in the first quarter.

Samir Jasuja, founder and chief executive officer, PropEquity Analytics, said, “In the coming quarters, there would be strong pressure on many micro markets and we expect inventory overhang to increase and absorption could continue to slow down. Mumbai in MMR and Gurgaon in NCR have seen the sharpest falls in absorption.”

“If this trend continues, there could be a price correction of 5-20%, especially in the micro markets of NCR, MMR and Hyderabad,” he added.

Bangalore hasn’t been as badly hit because of demand from genuine homebuyers and end-users, apart from the fewer unsold properties.

Sales in the southern city fell 18% to 7,704 units from 9,410 units.

The other two markets are largely investor driven.
“Generally, investor-driven markets would see downward risks than end-user driven markets,” added Jasuja.

Jokers are appalled at the S&P downgrade threat

The jokers at the planning commission install 35L toilets while projecting a 50 cents a day as survival metric for Indian. Scum of the earth can be better then these guys

Minister of State for Planning Ashwani Kumar defended India on Thursday, saying its expected growth rates and projects to boost internal trade and development do not warrant a junk status credit rating. On Monday, Standard & Poor's warned that India could become the first so-called BRIC economy to lose its investment-grade credit rating citing slowing economic growth and policy inaction for instituting economic reforms. 

 The rating agency cut India's BBB-minus rating outlook to negative in April, meaning it expects to make a decision within a 6-24 month time frame. 

The news knocked the rupee and stocks lower. "People are entitled to ask what are you going to do about delayed decisions, what are you going to do about second generation reforms," said Kumar. "But 

I am appalled by the suggestion of S&P that India is compared with junk status," Kumar told Reuters. India reported its worst economic growth rate in nine years for the first quarter of 2012, marking a dramatic slide in world's second fastest growing economy.

Gross domestic product growth slowed to 5.3 percent, from 9.2 percent in the same period a year ago. "I recognize that our last-quarter GDP growth figures at 5.3 percent have not given us any comfort," Kumar said during a visit to the United States. 

 He reiterated a government growth forecast of 7 percent in 2012, and said that despite the difficulties of the global economic situation, India expected an average annual growth rate of 8.5 percent between 2012 and 2017.

More here by Business Standard

Salman Khan 'overpays' for flat, lands in trouble

I've seen some flats which have a parking lot on each floors. Most brokers say the buyers will convert it to the living space in the future. Salman's case will cause immense grief to these buyers as BMC will slap big fines on these flats. 

 By Sudhir Suryavanshi | Agency: DNA 

Bollywood actor Salman Khan has once again landed in trouble for paying a higher amount than the actual market value of a house in ‘The Address’ building at Bandstand in Bandra (West). Khan has bought a 1,079-square metre carpet area on the 11th floor of the 28-storey building. The building is being developed by Samudra Developers Pvt Ltd of the Dheeraj Group. Besides paying Rs1. 64 crore towards stamp duty, Khan has paid almost Rs20 crore for the said area. “It comes to almost Rs1.80 lakh per square feet, against the market rate of Rs25,000 to Rs30,000. The amount is six times more when compared to the existing market rate. It is quite high. It must be a case of money laundering,” said YP Singh, an activist who played a major role in exposing the controversial Adarsh Housing scam. 

 More here

Cell phone towers increase cancer risk in residential buildings

Recently I thought of looking for a rental apartment in Mumbai and asked few brokers to show me some apartments. One of the apartments I liked was on the 6th floor of a 7 storey building which had a cell phone tower installed on the terrace. I had heard about the ill-effects of cell-phone radiation in the past but never thought much about it as it didn't  affect me. I did a quick google search and a very recent study done by an IIT professor Dr Girish Kumar came up in the results. 

The results of his study are alarming. In one case  he has listed the occurrence of cancer in residents living in consecutive floors of a building(5,6,7,8,9) which faces a cell phone tower. This particular instance was enough for me to abandon that particular apartment and finding the choice apartment has now become increasingly hard as there are cell phone towers everywhere. Given that one can easily step-up the power of these RF amplifiers I would not be surprised if a majority of cell-phone towers are  on steroids. I urge all home-seekers ownership or rentals to consider this very important factor  in their home search.

Staying 400 meters from a cell phone tower is possible only in the IIT Mumbai campus :). 

The study is below. Mobile Tower Radiation Danger and Solutions Proposed to Government - Prof. Girish Kumar - May 2012

Power of Attorney deals cause market slowdown

NEW DELHI: The ban imposed by the Delhi government on general power of attorney as a mode of property transfer, following a Supreme Court order, is expected to impact the entire property market. Property dealers say that while the ban was required to regularize property transactions, in the absence of a simple and clear procedure for converting leasehold property or property held under GPA into freehold, transactions may fall sharply, at least for a while. 

"The move is right - that's how it should be. Property should not be transferred through power of attorney. However, along with this, the government should improve the process, the system of transfer so that people don't suffer. A majority of owners go for GPA because they don't have a choice. I think residential property will be hit the most," says Anshuman Magazine, chairman and MD, CBRE South Asia Pvt. Ltd. 

More from the Economic Times

Mumbai is the world's least affordable home market

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Bloomberg research shows a 100-square-metre luxury residence in Mumbai costs about $US1.14 million, or 308 times the average annual income in India, based on calculations from a housing index compiled using 63 markets by Knight Frank LLP and income estimates of the US Central Intelligence Agency for purchasing-power parity in 2011.

“There are big differences in wealth levels in emerging markets compared to the developed world, which is part of the course for economic development,” Bailey said in an e-mailed response to questions. “In the first phase of growth some people make big fortunes, it takes time for this to trickle down as the middle class develop and generate their own wealth.”

This guys have no clue on why prices are so high in Slumbai. It is politician, builder, mafia nexus which does not let prices down and does not create infrastructure to increase land supply.

Chennai - GST road land value rises rapidly

Chennai, the laggard in the property bubble has finally caught up with Bangalore and other IT cities like Pune and Noida. Guideline values of agricultural land on the fringes of the city have been revised on an average of upto 270%. Hindu has more on this. 32L documents have been registered in FY2011. By this comparison the number or registrations stands at 4,000 per month. This just shows the scale of affordability in Mumbai as compared to Chennai. 

Jumping on this trend Artha property, an arm of the Times Group has launched villa's off GST road, in close proximity to Mahindra World City. Gives the reach of Times of India full page advertisements coupled with Artha's marketing savvy, I am expecting huge positive response to this property.  Added to this the Times Group can post surreptitious  marketing articles likes this which promote their own self interest it won't be too long that these 230 villa's will be sold in no time.

I expect that the area around Artha meadows sees rapid development in the next few years, as investors and end users join in herds in anticipation of double digit returns. Areas like Adyar are over priced and OMR is flooded with investors which have pushed land prices way to high for anyone to make money in this high interest rate environment. GST road appears to solve the problem of affordability at the expense of a longer commute. For those working around GST this cannot come at a much better time.

Disclaimer : 

I have been a fan of this area for some time due to its low prices and high potential and some of the investments made by me few years ago might see some fruit in the years to come.

Budget 2012 implications on Indian real estate, Gold , Stock markets and black money

Lets discuss how this impacts investments and taxability for Indian residents and NRI's.

1. IT exemption limit raised marginally so more income in every tax payers pocket.
2. Gold bars tax limit increased, making gold more expensive. The process of laundering black to white using gold also becomes more expensive.
3. Service Tax increase of 2% passed down to end users
4. Cars become expensive due to increase in excise duty
5. Electronics less expensive as the import duty is cut marginally
6. TDS for real estate transactions. This is a big one.
7. I don't understand how real estate capital gains become tax free after one year.
8. The first step for Indian government to tax all global income is proposed by the FM where NRI's/Indian residents are mandated to report foreign ownership of assets held abroad. Hell if the US government can do it, so can the Indian FM
9. Rail budget has increased Freight rates which directly inflates the cost of everything including steel, cement, coal
10. Coal prices are expected to increase in April which causes electricity prices to be hiked.
11. Petrol/Diesel will soon rise now that UP elections are behind us.

Instead of presenting the budget the FM should just increase the cost of everything by 10% every year. It will save us the trouble of analyzing

Please add comments and I will roll all salient points into the main post

Investors in Mumbai flats want money back Investors in Mumbai flats want money back Investors in Mumbai flats want money back

Times Of India reports. Of all the papers this is TOI reporting.. Again.. Times of India reports :)

Underconstruction investors are screwed big time. Brokers are returning calls as prices are dropping in Mumbai. With good cash one can easily snatch a good deal.  Unfortunately this cannot be said of Bangalore/Chennai or Pune as yet.

MUMBAI: Property speculators and investorswho book flats even before the project is launched are in trouble. Builders who used to take money from them upfront and promised them large areas by manipulating certain spaces in the building, can no longer do so after BMC's stringent building laws kicked in in January. 

Across the city, most builders sell up to 30% of their stock at a discounted rate to investors if they pay a major chunk of the amount upfront. These deals are struck when builders do not even have the basic construction approvals in place. 

Earlier, when building rules could be manipulated to the hilt, developers misused and sold areas which were not part of the apartment. These areas were then surreptitiously and illegally amalgamated into the flat to make it bigger. New rules have upset the calculations of such builders who had promised larger houses to their investors. 

DLF Business Model Suspect

Here is the news 

•  - http://business-standard.com/india/news/veritas-says-dlf-accounting-biz-model-suspect/466477/
• http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/dlf-shares-fall-after-negative-research-report-from-veritas/articleshow/12097092.cms 
• http://www.firstpost.com/business/is-dlf-on-the-ropes-stock-is-worth-only-rs-100-says-report-230946.html

Verbatim
"Canadian research firm Veritas has slammed realty major DLF Ltd, calling its accounting practices “conflicting” and pointing at gaps in its business model — charges the company termed “mischievous and presumptive”. Earlier, Veritas Investment Research had come out with damaging reports on other Indian firms, including Reliance Industries, Reliance Communications and Kingfisher Airlines.
Veritas has said DLF’s stock is at best worth Rs 100, and the company may have to recast its loan. DLF said “the company adhered to the highest standards of corporate governance and financial integrity”. “We do not generally comment on individual research reports. However, this report in question is presumptive and mischievous as the analysts have never contacted the company to seek any information or clarification,” a DLF spokesperson said . “The audited financials of the company are always in the public domain,” he added. Following the report, the DLF stock price dropped 5.5 per cent on Thursday, becoming the biggest loser on the Bombay Stock Exchange, closing at Rs 214 after an opening of Rs 224."

Source: Moneycontrol ticker

- Source Business Standard (link 1)

Stock price chart
http://www.google.com/finance?chdnp=1&chdd=1&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1330634199048&chddm=391&chls=IntervalBasedLine&q=NSE:DLF&ntsp=0

Later Times of India trying to assuage market fears by claiming that DLF is crying foul
http://economictimes.indiatimes.com/markets/real-estate/news-/dlf-says-report-that-hit-its-shares-mischievous/articleshow/12100095.cms

Smart money is moving out of realty; so why should you buy?

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If you are a home buyer waiting for property prices to fall before buying, here’s a counter-thought: the big investors are actually moving out of real estate.

One signal came last week when Deutsche Bank asked the Mumbai-based Lodha Group to return its money with a clean profit. The group forked out Rs 2,542 crore to the bank to enable it to exit its investment.

According to a Business Standard report, apart from Deutsche Bank, there are at least six other private equity and property funds that have exited. Among them: HDFC Property Ventures (two investments of Rs 715 crore), Kotak India Real Estate Fund I (Rs 575 crore), Indiareit Fund (Rs 500 crore), India Advantage Fund Series I (Rs 305 crore) and Trinity Capital plc (Rs 120 crore).

That’s a cool Rs 4,700 crore-and-odd opting out of real estate . The problem is fly-by-night “investors” are realty’s big mafia – keeping prices unreasonably high and preventing actual users from buying. This is also one reason why the Deutsche Bank’s are running away.

Mumbai placed at 199 in list of 200 cities by per capita income

Read a report from Brookings Insitute.
Article Link

Top 3 Cities
1 Hartford North America 75,086
2 Oslo Western Europe 74,057
3 San Jose North America 68,141

Bottom 3 cities
198 Alexandria Middle East and Africa 2,248
199 Mumbai Developing Asia-Pacific 1,990
200 Cairo Middle East and Africa 1,989

So the question is: We have lowest per capita income, but highest real estate prices? All RE Bulls are immediate to compare Mumbai with New York, London, Tokyo, Singapore and Sanghai. While our income is just $1990 per capita. Are these BULLS cracking something???

Real estate BUY/SELL classifieds thread

Let use this thread to post classifieds for sale of apartments/houses/plots in India. I will pin this thread to the top so it can be accessed directly. Sellers please saleable Square Feet area, price and contact information. Buyers please do your due diligence before making the final purchase. Brokers can use this thread if they mention their commission percentage.  Please flag any trolls or undesirable postings.

Real estate BUY/SELL classifieds thread

Let use this thread to post classifieds for sale of apartments in India. I will pin this thread to the top so it can be accessed directly. Sellers please saleable Square Feet area, price and contact information. Buyers please do your due diligence before making the final purchase. Brokers can use this thread if they mention their commission percentage.  Please flag any trolls or undesirable postings.

Ajit Dayal on real estate prices in India

I think someone with some real guts pointed out why Real Estate prices in India are artificially kept high by Politician / Builder nexus.... The unfortunate thing is there is no outrage. All PSU banks have large amount of money to Builders, and not to needy folks who want to start business, generate employment, etc... GOI has given tacit support to such an act. This situation needs to come out, unfortunately Main Stream Media has not reported this in detail.



Video Link

Mumbai Home Sales Drop to 3-Year Low as Prices Climb to Record

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Mumbai’s residential home sales dropped to a three-year low in the quarter ended December as record home prices and higher interest rates crimped demand, according to Liases Foras Real Estate Rating & Research Pvt.

Sales in Mumbai, India’s most expensive property market, fell 17 percent from the previous quarter to 7.59 million square feet, said Pankaj Kapoor, founder of Liases Foras. The city’s unsold inventory, or the number of months needed to clear stock at the existing absorption rate, climbed to 44 months. A “healthy market” normally maintains about eight months of inventory, according to Kapoor.

“The likely scenario looks like we will see a dip in prices seeing the dismal sales and as liquidity remains tight,” Kapoor said in a phone interview from Mumbai yesterday.