The Rs. 10,000/- crore Indian real estate industries is all set
to grow at a rate of 40% by April 2010, according to builders and international
property consultants. This is
owing to the recent dip in propertyprices in certain metros by 40% to 50%. It
has also led to increase ininquiries for affordable properties from 60% in
January 2009 to 100% inFebruary-March 2009.
According to Lalit Kumar Jain, President, Promoters Builders
Association of Pune (PBAP) and vice-president Confederation of Real Estate
Developer’s Associations of India (CREDAI), by April 2010, the ongoing
affordable housing schemes would be sold completely in all metros due to dip in
property prices. Post April 2011, there would be a severe supply crunch. Also,
real estate prices would rise again as any new construction due to high land
prices, infrastructure and service tax issues. Those who start developmentwould be
able to complete projects only by 2013.
During Q4 2008-09, property prices have come down from Rs 8,000
to Rs 3,500 per sq ft in Kurla, Mumbai. Thane has witnessed a drop from Rs
5,000 to Rs 3,000 per sq ft. Similarly, prices in Virar has nosedived from Rs
3,000 per sq ft. Similarly, prices in Virar has nosedived from Rs 3,000 to Rs
1,800 per sq ft. Other cities like Delhi, Bangalore, Pune, Chennai, too are
witnessing increase in inquiries and sales concersion to a limited extent.
According to Pawan Malhotra, Managing Director and CEO Mahindra Lifespaces,
there is a 300% increase in enquiries by end buyers. Apart from
droppingprices, what is necessary is personal negotiation. Everest Builders
have soldabout 400 affordable apartments within 48 hours in Thane in February
2009. There is a requirement of 4-5 lakhs affordable homes in
Mumbai, whereas only 40,000 flats are available of which 80-90% would be sold
out by April 2010. Apart from Mumbai, such as Delhi, Bangalore, Pune, Chennai
too would join the race in selling out most affordable flats by April 2011.
According to
industry experts, real estate market currentlycontributes only 1.6% to india’s
GDP, as compared to 30% as registered duringthe financial year 2007-08. Inquiries
for properties has started increasing since February-March 2009 which has lead
a fair conversion of flats in Thane, Bhandup, Vasai, Virar, Dombivali as these
localities has close railway connectivities. Evershine Builders has sold around
400 flats in 48 hours in Thane.
Lodha Group, India’s premier luxury real estate developers has
launched Casa Bella, a leading affordable integrated township project in
Dombivali, targeting the middle class segment. The township will be spread over
125 acres and Cas a Bella will be built over 40 acres as an integrated
residential township with 3,500 residences under the first phase of
development.
There is already a visible and escalating response for
affordable housing. Developers will have to increasingly develop the ability to
respond to the current market dynamics rather than follow an obsolete agenda of
business expectations.
Chennai has always been considered as a good resale market for
residential properties. Good value for money, ready-to-occupy status and
locational advantage has always attracted buyers to second-hand flats. This
trend has been on the rise in recent times. This trend has also brought to
light the various issues that come with buying them.
In the present market conditions, many buyers do not want to
wait for construction of the house. So HDFC brought together the realtors
concerned and facilitated the resale by providing loan facilities. Most of the
buyers wanted property in the city limits in the price range of Rs 50- 70
lakhs. But properties available for resale in the city limits are in the range
of Rs 1.25 to Rs 2 crores. The market slowdown has made the task of finding
clients for new and upcoming apartments more difficult for many banks.Tapping
thepotential for resale of property has become a necessity for the banks
andbuyers may be able to gain from the development. The merits of buying a
houseon resale include lesser price and location within city limits.
The demerits of buying such houses are possible deviation from
the approved plan, internal problems among the members of the residents
association, including legal proceeding and absence of opportunity for the
buyer to assess the quality of construction.
Technical valuation of a property on resale normally calculates
depreciation at 1.5 per cent per year. Around 75 percent of properties on
resale are ‘delinquency flats’. The registration
charges are higherfor resale apartments as it is decided on the guide lines
value of the totalproperty whereas in a new apartment, the charge is arrived at
only based on theundivided share of land.
However there were no delinquency flats among the property on
resale during the recent initiative of HDFC. Brokers continue to say that the
market is favouring the buyers. As market prices of new flats are gradually
reducing, price of resale flats should also follow suit soon. Buyers analyse
the aspects such as location, quality of construction and track record of the
builder in the process of resale. The buyers not showing interest in properties
on resale in outlaying areas.
The majority of buyers showing interest in properties on resale
are end-users and the investors are not opting for purchase of properties on
resale. Many properties
on resale belong to speculators who investedin the property a few years ago and
planned to sell the property at a higherprice soon after the construction got
over. They wanted to sell the property as quickly as possible
fearing a reduction in the prices. With rentals not increasing to match the
EMI, speculators are finding it difficult tomaintain the property.
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