Welcome!

If you are here, chances are that you are tired of your wife's nagging and have accepted the fate that it's time to move out of your parent's abode, which for years had been a paradise for you. If not, your parents must be planning to kick you out of the house. Still better, you are looking for a good investment opportunity. Or, have simply shifted base to a new city and looking for permanent accommodation.
But, for those hit by escalating costs…maybe, this blog can butt out 'the but' in your case. So, feel free to read it and leave your comments.

Thursday, June 18, 2009

Double dhamaka: Rs 3 lakh I-T relief on home loan likely

Sorry I have not been able to post regularly on account of work-related constraints, but this deserves attention…

In fact this piece of information is bound to rise excitement within the realty sector.

In a latest move to boost the sector, the urban development ministry has plans to double the income tax relief on home loan interest.

At the moment the slab is set at Rs 1.5 lakh per year, but chances are that in the new budget the government might just hike it up to Rs 3 lahks.

This apart, the ministry also has a proposal for raising the limit for exemption on repayment of principal amount to Rs 3 lakh – triple of the existing limit.

The existing exemption limit is rather inadequate at a time when a two-bedroom apartment in the metro cities costs anything between Rs 25 lakh and Rs 35 lakh.

Monday, April 13, 2009

Tech Mahindra takes over Satyam

Finally, 48,000 employees and 300,000 shareholders of Satyam Computer Services can heave a sigh of relief.

The company’s government-appointed board today approved Tech Mahindra’s bid to acquire 31 per cent stake in Satyam for Rs.1,756 crore ($351 million) at Rs.58 per share.

Soon, Tech Mahindra, which is acquiring the software major through its subsidiary Venturbay Consultants, will make an open offer for another 20 per cent stake at Rs.58 per share for the controlling stake (51 per cent).

Thursday, April 9, 2009

DLF launches major residential project in Delhi

You would say that I am fickle minded, for today’s post in a way contradicts my last post – Real Estate prices are really…really down.

Most of you would wonder, when real estate prices are plummeting by the day why would the builders still invest in housing projects.

Ironically, the recession hasn’t stopped big builders from doing what they are best at – making residential buildings.

The latest to join the bandwagon is DLF. The realty major has launched a massive residential project in west Delhi.

Located on Shivaji Marg, the project will consist of 1,400 flats. The 18-floor structure, which will house 2BHK and 3BHK apartments, has been priced between Rs 5,000-6,000 per square feet.

To lure the buyers in the time of recession, the company also plans to offer a discount of Rs 500 per sq. ft for buyers who pay their instalment on time.

The size of the apartments will vary from 1,200 square feet to 1,525 square feet.

Now, now…isn’t it a rather ambitious project considering that the company plans to sell flats in the range of Rs 60-90 lakhs?

Wednesday, April 8, 2009

Real Estate prices are really…really down

In case you are still thinking that Real Estate prices are not as low as the market pundits predict then here’s what — A 2BHK flat that was priced somewhere around Rs 23 lakhs four months ago is now priced at Rs 21 lakhs.

Isn’t it an eye opener, certainly it is.

How do I know? Read on and you will know too…

Last week my friend Abhishek who works for a reputed media company came visiting and he told me that he was still keen on buying a house.

Incidentally, he wanted to buy one three months ago in Indirapurm and had also met a builder for the purpose. At that time the builder had quoted a price of around 24 lakhs for a 2BHK flat and he would have bought it but for the paucity funds.

Around, the same time I had told him to check out Ramprastha (again in Ghaziabad), only because it is better connected to Delhi via busses and other means of transport and the price range is almost the same as Indirapuram.

That was then.

Now when he visited me, he told me that he had met a property dealer in Ramprastha and actually seen a couple of flats before coming to my place. And the fall was actually shocking.

The property dealer had told him “whatever was prices at around Rs 23 lakhs then could be easily bought for Rs 21 lakhs and if you bargain you could ask for a further reduction in prices.”

Now, that’s what I call a steal.

Thursday, April 2, 2009

Time to wipe out the mess at Satyam

Here’s another one to add to the on-going ‘Satyam Saga’.

The Satyam Computer Services today said it has made amendments to the bidding process to rank the suitors for their technical bids. And the criteria will be based on price only. Earlier, the bids were not ranked.

For those who came in late, a government appointed board is trying to sell control of the firm, which was plunged into crisis in January.

Meanwhile, the company has also said that it will share the financial details of the past 2-4 months with the buyers after scrutiny of their expression of interests.

The major buyers who have shown interest in the company are Spice, L&T and Tech Mahindra.

Wednesday, April 1, 2009

Sensex on a high, but realty market still low

There was some good news from the stock market today, with the realty stocks helping the Sensex rise 193 points to finish in the green.

All the 13 sectoral indices on the exchange turned positive, with the indices for realty, IT and oil and gas stocks generating interest among traders owing to their low valuations.

The 30-scrip Bombay Stock Exchange (BSE) sensitive index (Sensex), which opened at 9,745.77 points, rose 193.49 points or 1.99 percent to close at 9,901.99 points.

However, whether this push will help the realty sector in reality is yet to be seen. For the real estate market is still reeling under the ongoing recession.

But, the experts say it’s not exactly recession but market correction. Maybe, but there isn’t going to be any major price hikes as far as housing is concerned.

Thursday, March 26, 2009

Is the slowdown forcing builders to move out of metros?

It’s been rather long that I haven’t posted. I was not in town and kept rather busy. Still, I owe you guys an apology.

Anyway, here’s something to cover up the loss…

Today, while going through the papers, I found a report in the ET with a header – ‘Small is beautiful in real estate finds Omaxe’.

As the headline suggests Omaxe has decided to stick to small projects to keep its costs low. It has even launched an integrated township in Vrindavan. And according to the report the township “will entail 1 Room (Studio) and 2 Room apartments ranging between Rs 7.25 lakhs and Rs 14.25 lakhs targeting frequent visitors.”

They have even projected a 12-15% net gain from the project.

Now…now, I have touched upon this subject earlier, but the point that I intend to make here is that more and more builders are moving away from the metros and the reason is simple – recession.

The ongoing slowdown has reduced the profit margin so much that investing in real estate in the metros no longer seems like a feasible option for builders.

In fact, an increasing number of companies have started focusing on their core businesses to counter the slowdown. And this trend has not just been restricted to real estate companies but has spread across the board.

Omaxe too is following the same route. The company, which started as a construction firm before moving on to real estate, has once again gone back to it’s roots by bagging a Rs 39.95 crore contracts from Haryana State Roads & Bridges Development Corporation.

This is what the company CMD Rohtas Goel said in the report:

“In the past six months we have received construction orders worth Rs 650 crores and we are expected to receive another Rs 650 crore turnover in the next six months.”

“We were a construction company by origin. We see this as good way to buck the slowdown in real estate business so we have restarted construction activity after we stopped it in the year 2000 to concentrate on real estate.”

Tuesday, February 24, 2009

Interesting joke on Satyam’s Raju

Three world famous magicians were in the bar drinking and boasting about their achievements.

The first one said, “During my latest show, I made three women from the audience disappear, it was so convincing that their relatives started panicking, no one could find the trick!”

The second one said, “Hey, that is nothing. During one of my open air shows I made the Municipality building disappear and the entire town was searching for it!”

The third one sighed and said, “Both of you are so local, I went to Paris and made the Eiffel Tower disappear for a full one hour, it was live on the TV, entire France was searching for the building & no one had a clue.”

Just then an Indian walked into the bar and the three magicians suddenly turned quiet, gave each other fugitive glances and started to slip towards the door.

A Bartender watching this got curious and asked one of the magicians, “Hey what happened? Who is that guy?”

One of the magicians whispered, “He is the World’s greatest magician, he has done the biggest disappearing trick of all times, we are all mere amateurs compared with what he has done. His name is Ramalinga Raju. He has made $1.5 billion disappear from his company’s balance sheet in front of everyone’s eyes, and the entire world is still looking for it.”

Thursday, February 19, 2009

Houses cheaper than cars!

I usually take the National Highway No. 24 while coming to office and like always today too I couldn’t help but notice a large signboard saying – “Coming soon: Houses cheaper than cars”.

And like always today too I thought, “What’s the big deal. It has been the case for decades; at least as far as high-end cars were concerned. Cars like Merc and BMW would always costs higher than an average 2BHK house.”

However, that’s not what the advertiser meant when he put up that signboard on the highway. He obviously was taking into account cars, which are within the reach of the urban middle class.

But, then he forgot to mention or purposely refrained from stating the location of the site. Still, it’s common knowledge that the farther you move from the city limits the cheaper the rates get.

Here too the same logic would apply or chances are it may be a teaser advert for one-bedroom houses, which are easily affordable.

In any case you might find more such adverts of late and I would just say they are all measures to counter the ongoing recession.

Sunday, February 8, 2009

Home Loan – Stay put with your bank

If you are thinking of switching your bank owing to a higher interest rate on home loan, then this is for you…

While the State Bank of India (SBI) has frozen interest rates at 8% for a year for new home loan seekers, many are reconsidering their decision to go in for SBI or a PSU bank as opposed to private banks like HDFC and ICICI, which offer loans at a much higher rate of interest (11-13%).

No doubt it would be feasible for you (in case you are a new seeker) to go in for a PSU bank, but if you already have taken a loan from a private bank, transferring it to a PSU bank isn’t advisable.

Firstly, it’s a very tedious process and involves a lot of paperwork; secondly chances are that you may end up paying much more by virtue of ‘prepayment charges’.

In some case these charges may be as high as 2 to 3%. Besides, such a transfer is not possible without the banks approval. So, I would say it’s not worth the effort.

Monday, February 2, 2009

Bad news for realtors across the board

This wasn’t surprising at all, in fact many investors would have thought about it earlier and may have been anticipating government’s crackdown across the board. And that has actually begun. I would say all this is fallout of the Satyam saga.

First it was global investment banking major Credit Suisse, who came up with a report that contained bad news for the blue chip companies and yesterday the Income Tax department ordered special audit of DLF accounts of FY06.

Apparently, DLF had allegedly tried to lower its tax liability by understating sales for 2005-06.

The IT department may have restricted it’s investigation to DLF but Credit Suisse’s report pointed a finger at all the bigwigs in the industry.

It’s report on corporate governance practices of major real estate companies, it said that DLF, Unitech, IVRCL, IBREL, Parsvnath and Sobha Developers are lacking in transparency and that certain key financial disclosures have not been adequately provided.

Both DLF and Unitech, for instance, showed “revenues on a percentage of completion method even where the cash receipt is yet not due,” the report said.

Unitech's investments in telecom, an unrelated business at a time when the real estate business needed funds, are also under the scanner.

In FY08, DLF sold real estate projects (assets) amounting to Rs 5,560 crore to a promoter-controlled entity, DLF Assets. It also cancelled an earlier sale of assets worth Rs 1,890 crore.

Another builder, Parsvnath Developers too has a mismatch between revenue recognition, cash flows and capitalisation of interest expense.

Wednesday, January 28, 2009

Barter back in fashion!

Sorry guys!

Have been rather busy of late and so have missed out on important info. But this one beat all...

If you haven’t read it already in the HT under the headline ‘Realtors look to barter deals’ here’s this – Real Estate firms are getting into ‘barter deals’ with manufacturers and suppliers of construction materials to tide over the slump.

Pretty good I must say.

This is another innovation that they are doing to cut cost after using mobile phones as a medium of advertising.

Interesting…very interesting!

Saturday, January 24, 2009

And now houses you can afford…

I may have written about this earlier but it’s worth mentioning again.

People keep asking me if this is the right time to buy a house?

My answer is YES

The recession in the realty sector has certainly helped bring property prices down and that has given rise to the new mantra – affordable housing.

That’s exactly what builders today are focusing on. Look up any newspaper and you would find many schemes for 2BHK and 3BHK houses, which are affordable.

What’s more there are builders who have devised newer strategies to sell their apartments especially the ones, which are off the city limits or not easily accessible.

To lure the buyers many not only give proper layout plan of the area around the site but also provide with transport facilities, in case there aren’t many.

There are builders who have promised luxury busses offering pick and drop facilities at nodal points.

The idea is to provide affordable and easy to reach destinations to the customers.

Today’s ET too sheds light on the trend of affordable housing.

Here’s what an article with headline – Affordable housing: New mantra of realty companies says –

With real estate market facing considerable slowdown, a new trend of building affordable houses is emerging in the National Capital Region of Delhi. After Ghaziabad, Indirapuram , Noida, Greater Noida and Faridabad, a number of projects in the range of Rs 20 lakh to Rs 30 lakh for an apartment, have been launched in Gurgaon.

So far, Gurgaon has been known for its luxury apartments. In the last two years, the township witnessed the development of apartments in the price range of Rs 3,500 to Rs 10,000 per sq ft. On top of this, the size of most of the apartments used to be upwards of 1,800 sq ft.

Thus, the cheapest apartment available in the area was priced around Rs 60 lakh. This affected demand in the residential real estate sector here. At the same time, as most builders were into the construction of premium apartments, these properties are in oversupply and witnessing correction in prices.


Once again I would say go for it!

Wednesday, January 21, 2009

Of those SMSes and advertising gimmicks

A couple of days ago I got an interesting SMS suggesting an investment opportunity. Better put, it was an advertisement relating to real estate investment.

I am sure you would have tumbled upon such SMSes in the past. Considering that your mobile phone has now become good advertising tool that delivers personalised messages and at negligible costs…the fad certainly is on the rise.

And it isn’t just restricted to real estate but stretches across the board with many companies especially the ones in retail using this method to promote their wares.

This one was from GoDirect.in and here’s what it said:

“Property investment next to Expressway, Noida, Buy at 11.88 Lakhs and (earn)
rent for 9 years at 11,880 to 22,300 per month.”

Seems like an interesting proposal, but here I must add that there always are some hidden clauses in such cases. But, if you are interested do check out their website www.godirect.in.

Here’s another one. It was from a Noida-based BPO and it too offered a similar proposition. The site too was located near the Expressway, Noida and it said:

“Book an apartment in JP Wish Town Klassic on Expressway – Noida and pay no
interest or EMI from next two years.”

The options in this case were 2/3/4 bedroom apartments with a starting price of Rs 35 lakhs.

No doubt, good investment avenues…but the point is are there any takers considering the hoopla surrounding the recession.

Monday, January 19, 2009

Satyam - the fallout continues

In my last post I had said that the ‘Satyam saga’ will carry on for some time and have it’s effect across the board especially on the IT and real estate sectors.

And that’s exactly what is happening now, the fallout is continuing.

The government on Monday decided to widen its sphere of investigation and look into realty firms Matyas Infra and Maytas Properties.
The Serious Fraud Investigation Office (SFIO), which is conducting the investigation against Satyam, has been asked probe the accounts and other assets of the two companies.

Thursday, January 15, 2009

No end to Satyam saga

Satyam Chairman B Ramalinga Raju did he wanted to do. He maybe behind bars but the fallout continues and my bet is that it will carry on for a pretty long time.

Today, both IT and realty stocks took a beating pulling the BSE Sensex to a one-month low before ending with a loss of over 323 points at 9,046.74.

Realty stocks suffered after Maytas Infra fell further in the lower circuit to end in the red. The primary reason for the nosedive by the news that a high-level probe would be ordered into the projects sanctioned to the company.

But, there was another reason for the slump in IT stocks. According to experts Nortel Network Corporation, which has filed for bankruptcy had an adverse impact on Indian software majors Infosys, Wipro, and TCS, which provide back-up support to Nortel.

Wednesday, January 14, 2009

DDA…simply amazing! Here's why

Now, here’s what I was trying to say in my last post, but stopped short. I thought it best to let you read it first in the newspaper.

If you look up today’s HT and turn through the sports pages chances are that you would notice a brief item with a headline – Playing golf just got cheaper.

But, it’s not the headline which will make you curse the DDA but follows …

Here read it for yourself…

Carrying forward its endeavour of “taking golf to the common man’s doorstep”, the Delhi Development Authority (DDA) threw open the country’s second public course on January 8. Though a practice range and three greens were in existence since 2003, the nine-hole course was commissioned last Thursday. Adjacent to the Bhalaswa Lake Complex in the northern end of the capital, officials are confident the Bhalaswa course will be a boost for “deficient” areas…

My point here is that after getting embroiled in the ‘lottery scam’ (draw of lots) the DDA had the guts to do something like this.

That’s why I had said the DDA never ceases to amaze me.

Older posts on DDA
DDA…simply amazing!
Why waste money on DDA schemes?
Good news

Tuesday, January 13, 2009

DDA...simply amazing!

The DDA never ceases to amaze me.

You won’t believe that after getting embroiled in the ‘lottery scam’ (draw of lots) they have embarked on another venture.

Though, there’s nothing fishy about it but the mere fact that they are into this business and at such a time beats logic.

Watch out for this space tomorrow to know what that is…

Older posts on DDA
Why waste money on DDA schemes?
Good news

Sunday, January 11, 2009

Surprising, but true!

Today I got to know an interesting point about Satyam.

Now, now…Satyam has got nothing to do with Real Estate (or has it LOL), but I am still reading and writing on it as I have somewhat developed an interest in the company’s affairs of late.

Not that I wasn’t interested in it, for I was a regular user of it’s service Sify Broadband, before I decided to discontinue it after facing innumerable problems. In fact, calling it slow would be an understatement.

Before I tell you what the interesting point is let me just talk about the service itself. Last night, while chatting away with my neighbour, I said, “Its service is terrible and worst it’s expensive.”

But he disagreed saying, “Please don’t say that, it’s not so bad after all.”

He explained, “Its Internet service was initially started for cyber cafes, but was gradually put for personal use. That’s when the problem started.”

I would still say that the service is over priced.

Now that the monkey is off my back, let’s touch up that interesting fact.

Amidst all the humdrum about it’s founder Ramalinga Raju arrested and charged, and the board of directors sacked only to be replaced by government functionaries, in came an interesting observation – it was about their acting-CEO Ram Mynampati.

Here’s what…Mynampati, now being questioned by SEBI, earned more than Raju.

His total package last year was over Rs 3.5 crore, 80 per cent more than Raju.

What say?

Other related posts
Bad news for realtors across the board
Satyam – the fallout continues
No end to Satyam saga
It’s all over for Satyam’s Raju
An interesting observationSatyam vs World Bank

Wednesday, January 7, 2009

It’s all over for Satyam's Raju

Strangely after criticising the World Bank for the ban imposed by them on the company on account of fraudulent dealings, Satyam chairman Ramalinga Raju has finally stepped down from his high horse.

On Wednesday, after sending an apology letter to all the company’s stockholders, Raju finally resigned.

He even admitted to all the wrong doings that he had done in a bid to acquire Maytas Properties and Maytas Infra.

Subsequently, many brokerage firms including Credit Suisse, Religare and Angel Broking suspended their coverage of Satyam Computer’s shares.

Wish something similar could be down about their Internet service Sify Broadband. If you are a user I am sure you would know what I am talking about…

Tuesday, January 6, 2009

Why waste money on DDA schemes?

Those of you who had been wondering why I have not touched upon the DDA scam till date, here’s the answer:

I had been following the turn of events which got ‘interesting’ by the day.

Anyway, I have finally decided to write something on it. But before I do let me just do a quick flashback. Some months ago when the DDA scheme was announced, somebody urged me to go for it. But, I did not and I had cited my friend KSD’s .

KSD, currently in the US, is busy fighting a long-drawn case with the DDA. He emerged a lucky winner in their draw of lots years ago but hasn’t been allotted a flat. No doubt, that was a reason for my decision, but there was another — I had already bought a flat and wasn’t interested in wasting Rs 5000 towards application fee.

With this scam coming to light, I am actually thanking my stars that I didn’t ‘go for it’.

And, you won’t be surprised to know that KSD’s case isn't an isolated one. Last night, a news channel telecast brief interviews of people who hadn’t been allotted a flat by the DDA since decades. On person even claimed that his name had appeared in DDA list in 1981 and yet he hasn’t been allotted one.

Here, I would say it’s not just the DDA, which is at fault, for if you look up the google, chances are that you may find many such cases all over India. Closer home, the Ghaziabad Development Authority (GDA) comes to my mind.

Incidentally, in Indirapuram itself there are apartment blocks, which could have matched the Archaeological Survey of India’s list of ‘protected buildings’ considering their ruined look. Surprisingly though, many such blocks are up for sale though at a cheaper rate than the prevailing market price.

But, what’s even more interesting is the reason how they achieved that state. A decade ago the GDA along with the EIL (Engineers India Ltd.) had planned a society and construction began in full flow. The apartments were completed in good time only to lie vacant and unattended for more than 10 years.

Why?

Because of a legal soup. Now that case is over and these flats are up for sale.

The point that I am trying to raise here is that there is no point investing money in such schemes for seldom do these meet your expectations.

Monday, January 5, 2009

What they say…

Today, I was surprised at the number of contradicting reports and opinions that have emerged on the realty horizon.

While Mr Pradeep Jain, Chairman of Parsvnath Developers, feels the boom is back in the real estates sector, the Economic Times in it’s article - Real Estate: Correct time to innovate – feels otherwise.

It says:
It is quite clear now that after a fairly long bull run, the Indian real estate sector has begun to show signs of slowing down to a more realistic equilibrium rate of growth. In fact, the present changes that Indian economy and real estate sector is going through can also been seen as the test of the resilience of the economy and our real estate sector.

And then, Moneycontrol.com has quoted The Minister for Urban Development Jaipal Reddy as saying that he is not too happy with the second stimulus package.

In a letter originally written to the PM on Thursday, a day before the package came out, Reddy wanted banks to lower interest rate on home loans from 9.25% to 7.5% for loans up to Rs 30 lakh. The minister also asked for the doubling ofincome tax rebate on home loan interest to Rs 3 lakh and income tax exemption on rentals to be raised from 30% to 50%.
However, my understanding says that the boom has yet to come, but the process 'towards stability' has begun. In other words it’s not exactly a bad time to buy a house.

Sunday, January 4, 2009

Is it the best time to buy a house?

This is for those of you who are facing the dilemma over the purchase of a house.

Is it the best time to buy a house? If that’s the question crossing your mind then you ought to read today’s Economic Times.

Here are the excerpts fron an article under the headline - Can borrowers expect a further fall in rates?

Some banks are yet to offer the reduced rates to their existing customers. In such a scenario, a floating rate loan would be an ideal choice. Since there is a possibility of reduction in rates, floating in these turbulent times is better than being locked at a high rate. Those who are unsure can wait for the turbulence in the markets to quell.

Real estate has been an ideal hedge against inflation over a long term. Limited land resources, a growing economy and increasing population make real estate an ideal investment avenue. When demand for housing goes up compared to supply, prices shoot upwards. With a fall in rates on the horizon and lucrative bargain deals offered by developers, it is time you seriously explored owing a house.
And this is the time, because many industry experts feel that soon the market will stabilise and when that happens property prices may rise again, especially considering the fact that the government is leaving no stone unturned to boost the realty market.

Also read And now houses you can afford…

Thursday, January 1, 2009

Some cheer for realty stocks

There was some good news for the real estate firms on Thursday with the realty index of the BSE gaining valuable points on fresh buying by investors.

The realty index gained as much as 6.52 per cent to settle at 2,422.43 points. During the day, the index surged to a high of 2,445.93 points.

But, the major news for the day was Goldman Sachs Investments Mauritius (India) buying shares worth Rs 30.84 crore in Indiabulls Real Estate through open market transactions.

Led by Indiabulls, which surged nearly 18 per cent, the BSE Realty index ended in green. Indiabulls rose as much as 18.30 per cent to Rs 155.15 points.

The major gainers were Unitech (9.61 per cent), Housing Development Infrastructure Ltd (8.20 per cent), Ansal Infrastructure (7.23 per cent) and Parsvnath Developers (6.67 per cent).
Apart from Indiabulls’s acquisition, expectations of further cut in interest rates also influenced the market operations.