India Real Estate Monitor

AHMEDABAD: The great Gujarati joint family is urging topend realty. Amid buzz of stagnancy in city’s property market, super luxury apartments are selling like hot cakes. Realtors may struggle to sell 2 and 3 BHK homes, but buyers, mostly large joint families, are lining up to book 5 and 6BHK flats. In large flats of 5-6BHK flats, old people of the families feel more comfortable rather in bunglows.

Take the case of ISCON group, which recently launched a residential scheme along SP Ring Road. While the entry-level three BHK flats generated least inquiries, all the top-end 5 BHK units were booked within days. “Those who could not get five BHK are going for 4 BHK units,” according to a survey. Looking at the response, Kotak now plans to convert 1 tower originally planned for entry-level flats into premium flats. Experts say the trend is inspiring as demand has been coming not only from NRIs and investors, also from local buyers who find Ahmedabad cheaper than other large Indian cities. “Moreover these flats offer security along with luxury.

Further, people who have stayed in 3-4 BHK and looking to upgrade are driving the demand for premium flats. So, no wonder 5-6 BHK apartments are being booked up like hot cakes,” says regional director (Gujarat) of real estate consultants. “A city based Businessman says that they sold off their bungalow and opted for a 5 bedroom flat because of security. He stays in that flat with his two sons. Ashish Shah of Shree Balaji Group got enormous response for the 5,100 sqft top-end flats as compared to other categories. Now, Shah plans to hold the remaining 6 BHK apartments till completion of project. “Demand for upmarket flats would remain high. Realtor Mukesh Goyal, who launched 4BHK scheme, for about INR 2 crore per unit at existing market rates, in Prahaladnagar around a year ago has already sold 80 per cents flats.

Worried about economic and political factors influencing the real estate sector, investors have dumped real estate stocks in the past few months. The 15-member BSE realty index is down by 40 percent in past one year. The members of the index have had varying degrees of fall in their stock prices ranging between 8.5 percent and 81 percent during the same period. However, through all this, the Godrej Properties scrip has not only held its ground, but also registered 19 percent appreciation in price in the last one year.

One of the few business houses to be in real estate, Godrej Properties is a national real estate developer with presence across 11 cities in mid-income housing development. One of the biggest advantage enjoyed by the company is the equity of its brand “Godrej”. At a time when the sector is losing investor confidence due to some of its players’ supposed involvement in corruption, having a strong and reliable brand in the realty space could not have been more cherished by Godrej Properties.

Given the command of high interest rates, high influence is yet another issue for real estate companies. The low capital-intensive model is a good change over other capital-intensive companies. The fourth quarter ended March 2011 has been the best one for the company driven by sales from its projects in Ahmedabad and Gurgaon. The company is expected to launch 4.5-5.5 million square feet area in fiscal 2012.

Though, one of the concerns is its geographic concentration of the company’s landbank around half of which is located in Ahmedabad and another concern is the weak demand in Mumbai market where the company’s ambitious project ‘The Trees’ is being constructed at Vikhroli. The demand should recover by the next 02 years.

The smaller apartments are selling big! Presently, the maximum demand is for 2BHK residential apartments and the supply is fullfiling this demand. No wonder, some developers claim 55-60 percent of their current inventories are 2BHK units, the GM – Marketing of Ashiana Housing Ltd., Atma Sharan, says the same, “About 55-60 per cent of our inventory comprises 2BHKs. It is definitely the fastest growing segment, particularly since for the first-home buyers as they are at the beginning of their careers and married life.”

The maximum demand for the 2-bedroom units is from the middle-income group nuclear families typically a middle-class salaried employee hailing across sectors, like government employees, school teachers, or employed in the BPO, IT, banking and service sectors. Also the middle level self-employed professionals. This is likely for nuclear families with small kids where a third bedroom is not a necessity and not worth the additional cost. A lot of developers, who were primarily focusing on luxurious housing earlier, have changed their focus to the smaller units as it is said that “the pot of gold lies at the bottom of the pyramid, and that is where everyone wants to get.” The 2BHKs are doing particularly well as they tend to attract the first time buyer who is young, has just married and taken the first few steps of his or her professional life.

NEW DELHI/MUMBAI: A 25 basis point rise in key interest rates by the RBI on Thursday is likely to further squeeze home sales across the country, some developers and bankers said in the midst of increase in bank rates. Customers will now have to reconsider the size and locations of houses they wish to purchase and many buyers are expected to put off their purchases altogether till home prices come down and rates stabilise. This is certainly bad news for existing home loan consumers as banks will certainly increase home loan rates.

Purchasing capacity had already gone down visibly during the last tranche of interest rate hikes, and we will see a further reduction in buyer interest. Owing to the last 10 rate hikes by RBI, EMIs for housing loans have risen 25 percent to INR980 per INR 1 lakh of borrowing, and consequently loan eligibility for homebuyers has declined by 20percent. Anil Kothuri, head of retail lending business at Edelweiss Group says, “Housing finance companies have no wriggle room available.” For new home loan seekers, this will be big warning, not just because of the rate hike but also because of the frequency of the rate hike by RBI. “The person who is looking to purchase a home has the option, of buying or not buying. Existing home loan customers are stuck. However, of the opinion of Renu Sud Karnad, Managing Director of HDFC, is that this quarter percentage hike will not impact housing demand and loan off-take.

NEW DELHI: Real estate prices in some areas of the NCR glided high by 20 to 27% in the first quarter of the current financial year as compared to the subsequent period of 2010-1. “Property prices for Delhi have seen boom if we compare per square feet prices of Q1-11 over Q1-10. Certain key areas like Sarita Vihar and Rohini have seen 27% and 20% growth respectivly in prices compared to prices over Q1-10”.

According to a report, the upward price sentiment would continue as the prices on average are hiking up by 15%. The South Delhi locality Sarita Vihar’s PSF prices rise by 27.60% at INR 8,110 as compared to Inr6,356 in the period of 2010-11, while north Delhi-based Rohini’s PSF prices increased by 25%. This is followed by Patparganj at a PSF price appreciation of 21.68%. Other localities like southwest Delhi-based Dwarka sub city’s PSF price also increased by 28 % in sector-11 and sector-2. Realty prices in suburban NCR like Noida and Gurgaon also increased because of metro rail services came into operation. Prices per square feet in sector 110 and sector 93 of Noida also moved up by 16 % and 11 % respectively, as compared to prices in the corresponding period of last financial year. “Gurgaon witnessed an upgoing trend in property prices. Properties located on the Sohna Road and DLF City phase IV have seen the highest growth in prices by 46 % and 42 %, respectively, in Q1-11 over Q1-10”.

GMR Infrastructure on Tuesday declared a consolidated net loss of Rs 1,006.7 crore for the fourth quarter ended March 31, on account of a one-time loss from its dissociate of power company InterGen NV and losses from its Delhi airport.

Losses from the Delhi airport stood at INR 214 crore for the quarter on higher capacity costs, including interest charges and depreciation, with Terminal-3 becoming operational during the financial year. GMR’s net revenue during the quarter increased 74% to INR1,962 crore over INR1,125 crore in the corresponding period last year. The growth was assisted by revenue from its Male airport, the increase in traffic at Hyderabad and Delhi airports and better operations in its Chennai and Kakinada power plants, the company said.

The losses from the InterGen dissociate and Delhi airport operations also diminished the full year performance of the company which posted a loss of INR 929 crore for 2010-2011 as against net profit of INR158 crore in the past year. Full year revenue, however, increased 26% to INR 5,773.8 crore with airports contributing 41%, energy business 38% and highways 7%. The chairman of the GMR group said,“Though the dissociate of InterGen has resulted in a one-time and non-recurring loss, it has released equity capital of INR 958 crore and would enable us to reinforce our focus and resources on more profitable Indian assets.” The company also expects to recover part of the loss through Island Power, which is Singapore-based electric utility.

NEW DELHI: Out of the 4,587 members of the IAS, about 660 has not filed their statements even on the last day for declaring immovable property.The statements posted on the department of personnel and training website shows how babus are clever investors since most of them own several properties, Greater Noida is the most preferred investment place, followed by other parts of the extensive and fast growing NCR.

Any senior bureaucrat on Central deputation owns a plot or flat or house in Greater Noida. It is also a favourite destination for babus of AGMUT cadre, who are usually posted in Delhi at some point of their careers. Several officers, irrespective of their ranks, own several properties. However, there are certain exceptions among senior officials, whose returns show that neither they nor their spouses own any property. Many officers have not filled in the column on current market value on the plea that they have not determined it. There are some statements, which show suspect at first glance.

Former NDMC chairman Parimal Rai, who was one of the officers indicated in the Shunglu Commission report, has declared 08 properties, including 02 flats in posh area of Green Park. He has valued the flats at Rs 10 lakh each, which is out of sync with the prevailing property prices in the city. His other propertues include a four-bedroom deluxe flat in Lucknow, and a plot in Ghaziabad. A K Mehta, a J K cadre 1978 batch Joint Secretary in UUD ministry, owns 10 immovable properties, which are three plots – two of which are in Golf City (Noida sector 75) worth Rs 37 lakh each – and a property in a Dwarka mall worth Rs 16 lakh.