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The report showed, Asians spent around 761 million pounds in fresh properties in London for gains in the current fiscal year. Surprisingly they accounted for 49% of total purchase in the country while only 36% was constituted by the locals.

Asians are expected to put 20% of their money on new build residential properties also.

The report marked a change in the priorities of buyers as now they prefer more high class quality properties than in the last year.

Asia is on  roll for sure even as the effects of recession start to wear off of other countries.

Mr. Pranay Vakil said on the occasion, “One of the major reasons why the prices are high today is infrastructure. Nobody wants to travel long distances for work. Title insurance is another major issue in this industry.”

Photo by Northfield.orgHe added on being quizzed about the short recession, “Liquidity is vital. Developers realized this when sales volumes declined drastically due to the liquidity crunch. The slowdown gave customers ample choice as affordable housing came into the industry in a big way. Investors are ‘fair-weather friends’, Sell ‘ready’ products during a slowdown; contracts can be broken; healthy growth can be sustained by a gradual increase in prices; high-value transactions hyped by the media are not the ‘real’ market and the need is to innovate sales strategy.”

Mr. Kapoor said, “Are we heading towards another asset bubble? Are the prices affordable? What is wrong with the valuation and where is affordable housing? The government is responsible for hiking prices. We need a regulator for this industry to grow and curb wrong practices.”

The workshop witnessed enthusiastic participation from several investors, research analysts and industry experts in form of healthy exchange of ideas between them.

Ms Kavita Hurry, CEO, ING Vysya Mutual Fund asked the speakers to highlight three major issues in the sector.

On which Mr. Vakil said “Three most important things we need in real-estate as a priority are—rental housing, all over the world there is organized rental housing. Here you are left at the mercy of the broker who does not know anything. Secondly, infrastructure— the government cannot be a provider, it can be a facilitator. Thirdly, all these need funds, so get foreign parties excited about India.”

Mr. Kapoor said, “We need to address the congestion issue in the island city. If we move five buildings from the island city to Bandra, there will be a whole shift in the crowd. If we can shift Mantralaya, BSE or the Income-Tax office, there will be a difference. There are three-four magnets which draw the crowd there. Everyone knows about it but there is no intension to do that because they are sitting in luxurious places. We need to add more connectivity. We need a complete master plan for Mumbai to reduce the congestion. We need a regulator, and urban planning.”

Other industry experts also voiced their opinion.

The audience reached to a consensus which was that there is an immediate need for a citizen action forum to make higher authorities listen.

“It’s is too early to say anything now. However, the attack would definitely be a dampener to the sentiment, at least in the initial few months. The attack may also create a ripple effect on the property prices in the suburban market,” Pranay Vakil, chairman of Knight Frank India said.

Many property consultants had already assumed that South Mumbai property prices would further appreciate, though marginally, in the second half of the year due to demand-supply mismatch. With the government taking measures to attract more foreign business in recent years, there has been consistent interest in establishing and expanding operations in India, thus leading to an obvious pressure on real estate, especially in South Mumbai.

Price is usually a function of demand and supply. The excess demand for properties had been pushing up the prices in this part of the city till recently. “The attacks would spread negative sentiments in the property market. New property deals will be very negligible in the next few months,” said a senior official with Birla SunLife’s real estate division.

The scenario presents a few interesting constituents. Vakil said, “There is no demand for an outright purchase and a lot of people are going for the lease option. In a falling market, that is a more practical solution”. IT and ITES, according to him, account for 80 % of all commercial space in India. Further he added, “Besides, 70% of that industry is dollar denominated”. That’s exactly what is affecting Bangalore, India’s IT capital and to an extent Hyderabad as well.

Retailers themselves are going easy and a lot of large players have been pretty vocal about it. With higher rentals, the pressure on margins is far greater. Retailers form a significant part of the overall commercial scene and that proportion is merely getting larger. Kishore Biyani, managing director, Future Group said, “Ultimately, it is a question of affordability in retail”.

There are not too many ways to get past the zooming commercial rates. Biyani, when questioned about this, points out that his group signed up for properties much before the boom. He added, “To that extent, we were protected. Actually, we have been quite docile over the last six months”.

A significant development was actually when five plots were offered for sale in Bandra Kurla Complex (BKC), Western Mumbai’s business district. That was in March this year. Out of the five plots, two each were for residential and commercial while one was reserved for a clubhouse. One of the commercial plots was picked up by Jet Airways at Rs 3.44 lakh per square meter against a reserve price of Rs 3 lakh. Strangely enough, there was no other bidder in the fray.

Both the residential plots were won by Star Light, a joint venture between the Ajay Piramal Group and Suntech Realty. Here, the price paid was in excess of three times the reserve bid price. The story did not quite end there. The worrying part was that one commercial plot and one for the clubhouse remained unsold. These two plots together had an area of a little over 12,500 square metres with a reserve price of Rs 3 lakh per square meter.

A report put out by Enam Securities after the bidding process was completed makes a clear mention of what could possibly have gone wrong. “The lack of interest among developers for commercial space in BKC, while disheartening, is primarily attributable to the high reserve price.

Indiabulls was another player in the news when a significant amount of mill land in central Mumbai was put on the block. That was in 2005 when the company acquired an impressive 22 acres of land for what was then a massive Rs 720 crore.

Today, with so much of talk on a slowdown in real estate — in more pessimistic quarters, the whispers of a crash as well — it will be interesting to see how the company has viewed that investment. Mr. Gagan Banga, CEO, Indiabulls Financial Services, declared, “We have had an encouraging response. We are getting rental offers at around Rs 300 per square feet which is in line with what we had set out for ourselves”.

He added, “Suburban Bangalore is witnessing a slowdown. Here, there has been a 5-10% drop in rentals”. In the overall scenario, there could be some serious challenges.