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Mr. Shapoor Mistry, Group MD said during a function in Mumbai, “We have done a lot of projects under our company Afcons as contractors; now we will give a greater push for ownership-based infrastructure projects. We have already done some work in these areas, but owing projects would be our key focus.”

The group’s interests lie majorly in Real Estate, Construction, Textiles, Apparels, Shipping and Water Purification Appliances.

Shapoor’s father, Mr. Pallonji Mistry, Chairman, Shapoorji Pallonji Group is reportedly one of the largest shareholders in Tata Sons with 18.5% stake in the salt-software corp. house.

There was no change in office rentals in some of the major office locations in the national capital region, Mumbai, Bangalore, Hyderabad and Kolkata, while rentals at some others in Chennai and Pune fell by 5-6% in the quarter ended June 30. In contrast, rentals in Connaught Place in Delhi and Gurgaon in Haryana registered an increase of 5-8% in the last quarter.

“The increase in demand is largely due to improving economic conditions, positive market sentiment and growing corporate confidence. However, it will take some time for the supply-demand gap to get bridged. Thus, both rentals and capital values are expected to remain stagnant or under downward pressure in the medium term,” said Anshuman Magazine, chairman and managing director for South Asia at CB Richard Ellis.

In Mumbai, commercial office space is seeing a slight pick up in demand but rentals continue to be competitive. The September quarter saw close to 95,000 square feet of cumulative lease transactions as compared to 83,000 square feet space being rented in June 2009 quarter, according to the report.

However, as Mumbai continues to be 15th largest office construction site in the world with about 3.5 million square feet of office space coming up in extended business districts (EBD), capital values will remain low. This has resulted in a few unexpected transactions of outright purchase. Recently, Motilal Oswal, a brokerage firm purchased 90,000 sq feet office building for Rs 156 crore. Constructed by K Raheja, the property was purchased at Rs 17,333 per square feet as against the ongoing rate of Rs 19,000-21,000 per square feet.

“Indian corporates firmly believe that current valuation of commercial property is attractive, so they are capitalising on it rather than leasing as is being opted by MNCs,” said Sanjay Dutt, CEO (business), JLLM, an independent property consultant.

In November 2007, the largest-ever residential transaction on record was completed when a four-bedroom flat at NCPA Apartments at the Nariman Point end of Marine Drive fetched a price of Rs 34 crore.

The survey, “Trend in residential space across top cities in the current scenario” ranked Mumbai as the most preferred destination to invest in property while in south, Chennai is in the first place for property investments, overtaking Bangalore.

Cities like Patna, Nasik, Tiruchirapalli and Madurai have also become choive destinations for property investments, the survey said.

It said 60 percent of respondents felt interest rates for home loan would come down further in the coming months, while 40 percent evinced interests on properties with an area between 500 to 1,000 square feet.

More than three thousand people from the metros and other cities, including Pune, Ahmedabad, Thane, Coimbatore, and Vadodara participated in the survey.

“Market sentiments are reviving and people are ready to invest. Based on our survey, more than 60 percent of customers are looking at buying residential properties in the next six months. They also have a hope that interest rates on home loans will soon come down”, Consim Info Founder and CEO Murugavel Janakiraman said.

Mhada’s affordable housing scheme for the economically weaker, lower, middle and higher sections of society has seen upto 1.89 lakh application forms picked up till Tuesday evening. All this for only 3,863 flats.

The surge from potential home buyers for Mhada flats comes at a time when private developers are struggling to sell their apartments, mainly high-end ones that are out of the reach of the average Mumbaikar. Despite the stagnant property market, most developers are resisting lowering their rates, although some have reduced them marginally by 10% to 15%.

“Builders should realize that their days of profiteering are over,” said former bureaucrat and real estate consultant Zafar Iqbal. Reacting to the phenomenal demand for Mhada flats over the past two days, Iqbal said that the housing recession is only for the “crazy fellow” willing to shell out over a crore of rupees for a flat. “I have always maintained that there is a huge demand for housing in the range of Rs 20 lakh to Rs 30 lakh,” he added.

Iqbal, who was in charge of land acquisition under the now abolished Urban Land Ceiling (Regulation) Act more than two decades ago, said private developers are not catering to home buyers in this category. “They are running their businesses like a glamour show, catering only to big names,” he said. According to him, the city will soon implode because of lack of public housing. “People will begin to move out of the city,” he predicted.

Builder Niranjan Hiranandani said the response to the Mhada housing scheme “vindicated” his claim that there will always be a huge demand for homes. Asked whether private developers should reduce their prices, Hiranandani said this has got nothing to do with property rates. “If there is adequate land with permissions and if banks and financial institutions start lending money to home buyers and builders the way they should, the market will revive,” he said.

Jaidev Mody, chairman of Delta Corp Ltd, a real estate, hotels and gaming company, said the segment of home buyers who rushed for low-cost Mhada flats was never affected by the recession. “I am not surprised. Builders should now focus on low-income housing because there is a shortage of such units,” he observed.

Former Mhada president and housing activist Chandrashekhar Prabhu said the middle class in Mumbai finds itself marginalized today. “On the one hand, it cannot afford flats put up by private developers and, on the other hand, they are not law breakers who will squat on public land,” he said.

Architect and housing activist P K Das said builders have never built houses for the poor. “There is a clear disconnect between the hype that there are no sales of flats and the pent-up demand for Mhada’s housing projects. I have always argued that it is the government’s responsibility to provide mass housing. It cannot be left to the developers alone,” he said.

In Mumbai, 60% of the population lives in slums, 5% live on pavements, 15% are tenants living in old cessed buildings and about 5% live in rental housing. “Barely, 15% of Mumbaikars live in private houses,” Das pointed out.

Prabhu, however, blamed Mhada for abdicating its role in setting up mass housing. “Under pressure from politicians, the housing authority, over the years has transferred land to private developers,” he alleged. According to government sources, many politicians have huge stakes in slum redevelopment on Mhada land. “A politician lets his cronies encroach on a Mhada plot by setting up shanties. Soon, a frontman of the elected representative approaches Mhada officers for permission to redevelop the slum,” explained a source.

For over a decade, hundreds of plots in the city have been arbitrarily allotted to societies or trusts, many of which are reportedly controlled by politicians or their kin.

The company, which is planing to invest the amount in the first phase of the plan that will see development of 102 townships, is looking at both debt and private equity investments to raise the fund. The move by the firm follows consolidation of real estate business of the Sahara Group under it as the holding company.

“We plan to develop 102 townships in the first phase. The average project cost for developing townships would be 150 million dollar,” Sahara Prime City Head (Strategic Finance) Sandeep Wadhwa said. Asked about source of funding for the project that will spread over 100-300 acre, he said it was being done through sales, debt and promoters contribution but there is a gap of Rs 100 crore in each project.

“We will raise Rs 2,000 crore by 2009-10 fiscal as debt and private equity,” Wadhwa said, adding the company was in talks with banks, financial institutions and private equity firms. The company is open to selling stakes at both company and project level, he added. It is also in talks with global developers to form joint venture for townships development.

On initial public offer, he said the company would unlock value when market condition improves. Sahara Group had announced its plan to develop townships in 217 cities in 2004-05. It has launched nine townships where construction is in full swing and is planning to launch 22 more townships by middle of 2009.

Sahara Prime City has 20,000 acre of land, including 10,600 acre in Aamby Valley City near Mumbai.

Pankaj Jaju, head-real estate practice, Enam Securities told FE, “Metros and Tier II towns having a huge pipeline of projects have witnessed a 60% drop in sales of apartments in the last six months.” Selling land parcels to other builders for joint development will enable land owners to invest in buying more land bank and increasing the supply of properties, he opined.

Rohit Gera, executive director, Gera Developers aired similar views. “The real estate market in Pune has witnessed a 60% drop in sales. If inflationary trends continue till December 2008, land value will undergo a price correction of about 30% by March – April 2008,” he said.

However, this will not impact consumers as developers will not charge a premium from them. Instead, as Gera revealed, “Large, medium and small developers have already started offering land to us for joint development. We are, in fact, waiting for price discounts at which we can borrow land from them for constructing their projects.”

Industry experts believe that real estate prices in Navi Mumbai and Bandra Kurla Complex (BKC) are expected to shoot up further by about 10-15% within the next six months if developers are not able to complete their projects on time.

The scene is not too different in Bangalore and Chennai, where the real estate market has started witnessing a rise in labour costs, mainly due to a crunch in the availability of labour, sources in Puravankara Projects told.

Raw material input costs for construction constitute 40% of total project cost. Since input costs are expected to rise further, the real estate market will witness a further dip in sales of apartments across the country.

Only certain small pockets in National Capital Region (NCR) and Bangalore could see a correction in prices in the near future, while any downward correction is very unlikely across Mumbai region, it said.

“The National Capital Region (Gurgaon and Noida) is expected to witness flattening trend in rentals over the short to medium-term,” CBRE said.

“However, some micro-markets with forthcoming supply is likely to experience a marginal value correction in the next six months,” it said, adding there would be significant additional supply in Gurgaon, Noida and Jasola in South Delhi.

CBRE noted that in preparation for hosting the Commonwealth Games in 2010, rigorous efforts have been made to improve infrastructure all across the NCR.

For Mumbai it said, that with over one million square feet of corporate office supply currently available and another nine million square feet ordinary office space expected to come online in the next two quarters, rental values are likely to remain stagnant.

The fund will be developing an information technology park in Kolkata with Godrej Properties, with Red Fort holding a 49 % stake. The project, dubbed Godrej Genesis, is expected to generate sales of over Rs 7.50 billion.

“We are in the process of closing a number of transactions in the National Capital Region, Mumbai and Bangalore. We are currently talking to six different developers in these cities,” Red Fort Capital director Kuldip Chawlla said.

With the US property market witnessing a correction due to subprime crisis, the NRIs are expecting the same to happen in India and are holding back on their purchases.

Three-four years ago, there were only a few big developers into the game of building luxury homes. But the higher margin in the business prompted many others to join.

The developers entered the luxury segment without a proper assessment of the market. Now they are faced with a major supply-demand mismatch. In Punjab, Delhi NCR and Mumbai suburbs, the supply far outstrips demand.

The price correction in the US has prompted NRIs to evaluate buying properties in their local market, where they can easily control and manage them, unlike in India, where managing property has been an issue with them.

Besides a demand problem, the competition among developers has intensified as they are wooing the same segment of NRIs.

PIOs are second or third generation people across the world, whose forefathers had migrated from India during British Raj and settled abroad. There is a good population of PIOs in Africa and Australia. The recent attempts by the Indian government to renew ties with PIOs by hosting Pravasi Bharatiya Divas may also have a positive push to the marketing efforts of developers such as Ansals.

Besides targeting a new segment, developers are also offering freebies to woo NRIs. Firms are offering free tickets to potential NRI home buyers to visit India and take a look at their property. This is done in association with banks, which maintain a list of high net worth individuals.

The hospitality group is not only looking at bringing a full bouquet of hotels, better called – The Hilton Family of Hotels – to India but also partnering with more than one real estate company. “We are in negotiations with real estate players in the country,” said a source close to the development. Hilton has a joint venture with real estate company DLF Limited for setting up hotels in the country called DLF-Hilton Hotels, which became the reason behind the end of a four-year-long relationship between the Oberoi Group and  the Hilton.. The alliance between The Oberoi Group and  the Hilton came to an end on April 1, 2008.

The new concept of one-BHK flats in Ranchi has failed to attract customers, leading developers to shelve many such projects. The “revolutionary” projects were supposed to provide reasonably good accommodation at a reasonable price of Rs 5-7 lakhs. Initial surveys pegged a good demand of these kind of housing, more so when the state capital has of late been witnessing a boom in finance, private banking and the industry sector with company executives expected to buy these temporary accommodations instead of preferring the rented ones.
Mr. C. M. Kapoor, a partner in KV Constructions, said, “We planned to develop as many as 72 one-BHK flats. But as there were few takers, we returned the advance booking amounts. We have shelved the project for now and are instead going for construction of two-BHK and three-BHK flats in our Shalimar Bagh project”.

Experts in real estate business say that as the city still offers residential accommodations at much lower rates than in Mumbai, Delhi, Calcutta among others, it could be the reason for people not going for compact accommodation of around 500sqft superbuilt area. They further added,“The square feet rate of residential projects vary between Rs 1,200 and Rs 2,000 depending on the location. But in Mumbai, owning even a one-BHK flat might cost upwards of Rs 20 lakh”.

Mr. Nitesh Shetty, chairman of Nitesh Estates, said, “Our customers typically belong to the top management in various corporate firms while some are overseas Indians”. Mr. Shetty has priced its luxury home products in Goa, Bangalore and Chennai in the range between Rs 5 crore and Rs 8 crore. Like Nitesh Estates, many real estate firms have started marketing their projects in the overseas market by organizing property exhibitions and floating sales offices in the countries like the UK and US and UAE.

The Bangalore-based firm is marketing its projects in the overseas market by hiring sales executives and participating in property exhibitions. While it has been there for some time now, the luxury home segment in India is estimated at Rs 2,000 crore with around 30 million potential buyers.

Such homes are typically located on private roads that are fenced off with an exclusive private gate and state-of-the-art security systems including cameras. The amenities could also include a spa, multi purpose court, climate controlled swimming pool, gymnasium and a business lounge.

In the past, a steady growth trajectory of software companies allowed to predict and plan their additional requirement for space. In 2003-07, new hires by the top three software firms like TCS, Wipro and Infosys grew at over 20% each year. For 2008, analysts expect a drop in new hires. Says an analyst with a Mumbai-based broking firm: Hiring will continue to slow down in future if the dollar remains weak. A slowdown in the US economy will worsen things further for software companies in the short term.

Industry experts expect that if the weak market continues to persist, companies may actually slow down their investment in the upcoming SEZs. Companies like Unitech and DLF say that work in all their new zones across the country are progressing on schedule and they are not pulling back yet. The DLF executive, however admits, We will be in no hurry to get approvals for new IT/ITeS zones in the near future.

Software companies read the situation as a positive development. In the last two years, lease rentals in metros like Mumbai, Delhi and Bangalore have shot up nearly 50-60%, forcing firms to move to smaller cities like Pune, Bhubhaneshwar and Jaipur.