The Rs. 10,000/- crore India 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 resent 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 landprices, 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 to Rs 1,800 per sq ft. Other cities like Delhi, Bangalore, Pune,
Chennai, too are witnessing increase in inquiries and sales conversion to a
limited extent. According to Pawan Malhotra, Managing Director and CEO MahindraLifespaces, there is a 300% increase in enquiries by end buyers. Apart fromdropping prices, what is necessary is personal negotiation. Everest Builders
have sold about 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 currently
contributes only 1.6% to India’s GDP, as compared to 30% as registered during
the 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. Similarly, other leading builders such
as Akruti City, Mayfair Housing, Evershine
Builders, Lokhandwala Builders have all set visions of bringing
in rising demand that matches supply of properties as
was seen during the financial year
2006- 07.
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. Thistrend has been on the rise in recent times. This trend has also brought to lightthe various issues that come with buying them. A few weeks ago a resale apartment fair was held by HDFC Ltd.
The response to this resale initiative was very good and more than a thousand
properties were on resale and it is reported that the realtors associated
with them are busy closing the deals.
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
the potential for resale of property has become a necessity for the banks and
buyers may be able to gain from the development. Themerits of buying a house on resale include lesser price and location withincity limits. for many banks. Tapping the potential for
resale of property has become a necessity for the banks and buyers may be able
to gain from the development. The merits of buying a house
on 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 proceedings and absence of opportunity for the buyer to assess the
quality of construction.
Technical valua- tion of a property on resale normally calculates
depreciation at 1.5 per cent per year. Around 75 per cent of properties on resale
are 'delinquency flats' The registration charges are higher for resale
apartments as it is decided on the guide- lines value of the total property whereasin a new apartment, the charge is arrived at only basedon the undivided share of land. Howeverthere were no delin- quency flats among theproperty on resale during the recentinitiative 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 invested in the property a
few years ago and planned to sell the property
at a higher price soon after
the con- struction 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 to maintain the property.
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