Kamaal Property

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

2009-06-18T19:58:00.000+05:30

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.

Tech Mahindra takes over Satyam

2009-04-13T18:26:00.000+05:30

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).

DLF launches major residential project in Delhi

2009-04-09T18:38:00.001+05:30

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?

Real Estate prices are really…really down

2009-04-08T17:56:00.001+05:30

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.

Time to wipe out the mess at Satyam

2009-04-02T21:42:00.000+05:30

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.

Sensex on a high, but realty market still low

2009-04-01T20:22:00.000+05:30

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.

Is the slowdown forcing builders to move out of metros?

2009-03-26T21:45:00.000+05:30

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.”

Interesting joke on Satyam’s Raju

2009-02-24T21:39:00.000+05:30

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.”

Houses cheaper than cars!

2009-02-19T22:15:00.000+05:30

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.

Home Loan – Stay put with your bank

2009-02-08T21:38:00.001+05:30

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.

Bad news for realtors across the board

2009-02-02T22:32:00.000+05:30

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.

Barter back in fashion!

2009-01-28T23:40:00.000+05:30

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!

And now houses you can afford…

2009-01-24T23:43:00.000+05:30

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!

Of those SMSes and advertising gimmicks

2009-01-21T21:29:00.000+05:30

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.

Satyam - the fallout continues

2009-01-19T22:56:00.000+05:30

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.

No end to Satyam saga

2009-01-15T21:51:00.000+05:30

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.

DDA…simply amazing! Here's why

2009-01-14T18:41:00.000+05:30

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

DDA...simply amazing!

2009-01-13T21:01:00.000+05:30

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

Surprising, but true!

2009-01-11T20:09:00.000+05:30

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 observation Satyam vs World Bank

It’s all over for Satyam's Raju

2009-01-07T19:33:00.000+05:30

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…

Why waste money on DDA schemes?

2009-01-06T19:02:00.000+05:30

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.

What they say…

2009-01-05T22:07:00.000+05:30

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.

Is it the best time to buy a house?

2009-01-04T21:56:00.000+05:30

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…

Some cheer for realty stocks

2009-01-01T21:58:00.000+05:30

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.

Slump in the cement industry

2008-12-31T22:02:00.000+05:30

A very happy New Year to you!

But, I am not sure if major players in the cement industry would be partying tonight. The reason is the slump in the cement industry.

Not surprisingly, the slump is due to the slow down in the economy or more directly put a slow down in the real estate sector.

This is what today’s Business Line had to say about the industry

Starting on a bullish note with prices touching historic high amid buoyant demand, cement industry slipped on to a sticky wicket as the realty sector was rattled by the unprecedented financial crunch.

An interesting observation

2008-12-30T22:48:00.000+05:30

My friend A.R. Hemant today made an interesting observation concerning Satyam-Maytas issue. It was simple and yet it left me spellbound. In fact many in the industry (real estate or software) would not have even thought about it.
He just said, “Maytas is Satyam spelt the other way round.” What an observation, Sirji!

Real Estate — Has it lost its sheen as a lucrative investment avenue?

2008-12-29T21:36:00.000+05:30

That is the question doing rounds in the realty market. And there are ample reasons for many to feel that way. I personally feel a major factor which is keeping investors or for that matter genuine buyers at bay is the overall economic slump.

No doubt sops have been announced by the government to bring the industry back on rails, but I don’t think they would in anyway raise the earnings of an individual buyer, who till two months back would have been on the radar of the hawks in the industry (property dealers), but now is more busy trying to retain his job.

With more and more companies announcing job cuts, employment has become the priority for many.

A headline in today’s ET read: “Real estate: No more an attractive investment”

And what followed below was an eye opener. Here’s what it said:

Investors have shed 50-60 % of their investments in realty stocks. Investors’ perception has been dealt a severe blow. Measures like interest rate cuts for low-value homes and correction in property prices don’t seem to be working. But a further 200-250 bps rate cut and a 20-25% price cut can spur demand. And people may once again start buying houses to live in them, rather than for investment purposes.

I think it’s high time Real Estate becomes what it was earlier – an avenue for providing people with shelter rather than an investment.

An investment opportunity?

2008-12-26T17:36:00.000+05:30

Yesterday, I saw this huge full page advertisement on Page One of the Hindustan Times. The advertisement screamed First Time in India @ Cost Price. The site address was six minutes drive from International Airport in Bangalore.

And below an International Villa price was quoted for Rs 69 Lakhs and further down was given the price for a 2BHK apartment. At 13.59 Lakhs it certainly promises to be a steal.

And then there were other offers too. One of them offered a Mercedes Benz for a down payment of Rs 10 lakhs. Now…Now, builders of late have started using such marketing tactics to boost up their sales. It can be justified considering the ongoing recession. But, I still feel the prices quoted by them are not just affordable but a steal, especially with regards to their 2BHK flats.

In the end a word of caution – do watch out for hidden clauses which are usually enumerated under the cliché “conditions apply”.

Satyam vs World Bank!

2008-12-26T16:57:00.000+05:30

You would call it surprising but ever since the World Bank has issued a ban on Satyam. It’s subsidiary Sify Broadband has been sending me messages by the tons promising me gifts surprises if I renew their Broadband service that I had discontinued owing to poor connectivity (read no connectivity).

Worst the copy asked the World Bank to withdraw "inappropriate" statements about the company and to issue an apology for harm done to the company. Kamaal hai.

For those who came in late, the World Bank has taken the step for providing improper benefits to Bank staff and for failing to maintain documentation to support fees charged for its subcontractors.

However, I would say the World Bank’s move is very much related to the company’s proposal to acquire Maytas Properties and Maytas Infra, companies controlled and run by the promoter family, for $1.6 billion (around Rs 7,680 crore).

Everything about that proposal was strange. No wonder the World Bank took the harsh step.

More banks join the bandwagon

2008-12-23T18:40:00.000+05:30

As was expected the other banks taking cue from market leaders State Bank of India and HDFC have decided to cut down their prime lending rates (PLR) thereby slashing their interest on loans.

However, the cuts are not as steep as that announced by SBI. Bank of India and Bank of Baroda have brought it down by 75 points to 12.5 per cent. The new rates will be applicable from January 1, 2009.

Still, there isn’t much to cheer for as both banks have also announced cuts in interests on Fixed Deposits for 1-2 years. So if you plan to invest in FD, you would be getting a much lesser amount at maturity as compared to what you used to get earlier.

These measures will no doubt even out the losses for the banks, but at the costs of customers.

A reality check

2008-12-22T20:18:00.000+05:30

Amidst all this euphoria about home loan reduction and cheaper interest rates what is being forgotten is whether you can actually afford to buy a house.

Today, someone asked me if he could buy a house worth Rs 20 lakhs in Delhi. The first question I asked him was – Does your salary support it?

Don’t forget ‘the salary’ is the first pre-requisite when applying for a home loan and that forms the basis for an EMI (Equated Monthly Instalment), unless of course you have enough savings in your bank account.

No doubt the loans have come down, but the purchasing power of the common man too has taken a dip.

The banks may have reduced interests on loans, but they have even slashed interests on deposits. So, where is the money to purchase a house?

But, all’s not lost at least for that guy who was keen on purchasing a house worth Rs 20 lakhs. For I came to know that he could manage some 7 lakhs, but still his salary could not support a house worth Rs 20 lakhs.

My suggestion in this case would be to buy an unauthorised house. If this person is lucky he might just be able to get a decent deal for Rs 10 lakhs (one room set at least).
But since he won’t be able to avail a home loan as it being an unauthorised construction, he can go in for a personal loan. But remember there’s no Income Tax rebate for personal loans.

Some relief for existing customers

2008-12-21T16:47:00.000+05:30

This time there’s some good news for existing customers. For State Bank of India has announced a major slash on interests on home loans.

This would mean that existing customers who had borrowed money at floating rate may have to pay less EMI.

Here are the figures:
Amount...............Tenure.......Fresh Interest Rate
Upto 30 lakhs....15-25 years.......9.5 per cent
30-75 lakhs.......15-25 years......10.75 per cent
Above 75 lakhs...15-25 years......11 per cent

The figures are all the more interesting for shorter tenures. For example if you have a home loan of Rs 30 lakhs for a five-year tenure will witness the rate of interest come down to just 9 per cent.

Taking cue from the SBI even the LIC has announced a cheaper home-loan packet for existing customers.

But, if you are not an SBI or LIC customer don’t lose heart for chances are that other banks too may follow suit. After all for most banks old is gold, especially in the time of recession.

Affordable houses galore!

2008-12-19T20:45:00.000+05:30

Home loans have got cheaper but interestingly the real estate prices too are coming down.

Today, Supertech Limited announced their plans for a spectacular township on the outskirts of Delhi. Christened Supertech Livingston, the project being built at Crossings Republik in Ghaziabad has already attracted a lot of seekers especially for their 2BHK flats.

And the reason is simple - their price tag of Rs 21.25 lakhs is certainly gettable. Unfortunately, the offer is only valid for the losers in the DDA housing lottery scheme.

So, if you still possess lottery ticket, the offer is worth considering.

But, if you don’t belong to the ‘lucky losers’ category, don’t lose heart as company insiders say that they are also considering fresh applications.

Satyam getting into real estate…what a farce

2008-12-18T18:31:00.000+05:30

Satyam had proposed to acquire Maytas Properties and Maytas Infra, companies controlled and run by the promoter family, for $1.6 billion (around Rs 7,680 crore).

The move was as good as drawing money from the company’s bank account and putting it in the family’s saving account. No wonder the investors cried foul.

What’s worse is that Maytas Properties is a loss-making venture and investment in it was certainly not a wise thing to do.

The surprising part is that Satyam Chairman B. Ramalinga Raju expressed surprise at the market reaction…kamala hai!

Good news

2008-12-16T19:26:00.000+05:30

Here’s some good news for the real estate investors. Yesterday, the sensex finished on a bullish note.

The rate cuts announced by the government on home loans had an effect on the bourses as the reality index on the BSE went up and with it the sensex too gained valuable points. And today, the banks benefited.

Has the recovery already started!

But that’s not the end of it for real estate giant DLF, bouyed by robust sales in the mid-income housing, has announced that it will invest Rs 15,000 crores over the next three years. Watch out for some lucrative housing schemes.

Meanwhile, the Delhi Development Authority today conducted the draw of lots for their 5,000 DDA flats ranging from Rs 7 to 77 lakh. They’ve been built in Dwarka, Rohini and Vasant Kunj.

For results please visit http://www.dda.org.in/ or http://www.urbanindia.nic.in/ or its Vikas Sadan office.

What goes up must come down!

2008-12-15T19:40:00.000+05:30

Somehow the ongoing recession makes me feel that things are getting back to the normal rather than going into a slump.

Sometimes the laws of physics apply to economics as well. In this case I would just say – what goes up must come down. That’s exactly what’s happening at the moment.

Not very long ago (say end of 2006), the stock market was sitting pretty on 9000 points and the BSE Sensex too was rather stable. Then there was a sudden surge.

The bullish trend followed and the Sensex scaled up and up till it reached an unprecedented 21,000 points – an astronomical number, which obviously wasn’t stable and could be easily influenced.

Then the fall happened. The FII’s who were investing heavily on the bourses decided to pull out their money and the result is there for all to see.

The stock market crashed and came down to where it was before the surge had started.

The same can be said about the real estate market. The prices went up in the face of the booming economy but could not stay there for long and now they have started coming back to normal.

The other day a property dealer told me that it was bound to happen. “The prices had gone up too much and they were artificial,” he said.

So what you are seeing at the moment is not slump but return to normalcy.

Why wait till February?

2008-12-11T19:22:00.000+05:30

A couple of days ago the ET carried a column (http://economictimes.indiatimes.com/Opinion/Columnists/Jaideep_Mishra/Fiscal_stimuli_creditable_would_do_good/articleshow/3816072.cms) which dealt with the influence of reality market on the GDP.

The figure enumerated was an eye-opener.

The copy stated: “Estimates suggest that for every rupee invested in the construction of housing, Re 0.78 is added to the gross domestic product. Further, the real estate sector impacts as many as 269 other industries. Besides, it is the second largest employment generator in the economy.”

Considering the figure, the monetary and fiscal measures announced the government to bring the reality market out of the recession loop is understandable.

And since housing is directly linked to GDP, I am sure the measures would be swift.

So there’s no point in playing the waiting game. If you have a house in mind and can arrange the finances go for it. This is the right time.

I have come across people saying wait till February and the prices will fall to an all time low.

On the contrary, I think the market will stabilise by that time.

The builders are feeling the pinch

2008-12-10T20:55:00.000+05:30

The other day I was speaking to a builder and invariably the conversation meandered towards the hot topic of the day – recession.

Though reluctantly but he did admit that there was recession in real estate sector. “I am not sure what this is but everyone these days are asking for low-price houses and I just can’t understand how to make them. After all the constructions costs have not gone down at all,” he said.

“Now the point is where do I compromise? Obviously, I can’t do it on the quality of the raw materials. If I do that my reputation will suffer and if I don’t I will have to bear losses. As of now I am bearing losses but for how long that I don’t know.”

He may be not wrong for there are many such small or medium scale builders who are feeling the pinch.

No wonder the government has announced sops in the form of cheaper loans and slashing of interest rates. But, what remains to be seen is how far would these be effective.

Still, I would say that this is the right time to buy a house considering the drop in prices – even though they may not be so acute.

P.S (only for the filthy rich): Today someone told me that the rent in capital’s upmarket Nizamuddin area is around one lakh a month. Now, now, if you can pay that amount of rent why not buy a house instead.

Recession in real estate…unlikely!

2008-12-08T17:37:00.000+05:30

Rumour is abuzz that the real estate market is undergoing a slump. There maybe some truth in it considering the on-going recession.

But, what surprises me is the ongoing activity in the market. For despite the recession, construction work especially in the housing sector hasn’t slowed down at all.

And with the government stepping in to provide the much-needed boost in the face of the global economic slowdown with sops such as cheaper home loans and cuts in interest rates, chances are that people thinking of postponing their plans of buying a house might just think again and act swiftly.

If that happens, the property rates might just go up instead of coming down…so saying that the real estate market is undergoing a slump is but an eyewash.

Pupon that and if you have time do visit the Pragati Maidan on December 20 or 21 to get your queries on property related issues sorted out.

Beware of your tenant

2008-11-29T22:05:00.000+05:30

I am putting another mail up on how the tenants can fox the landlord and seize their property.

Please beware of such cases

-------------
Resp. Sir,

Sub: Police Inaction in the case of house grabbing by Deepak Niranjanath Pandit (Superitendant of Customs, Air Cargo Complex, Mumbai, brother of producer/Director Ashok Pandith) by misusing official power /and connection at high places

We, Mr & Mrs. K. Gopal Rao aged 75 years and 65 years are the Legal owners of flat no 803 Brookhill Tower, Andheri (W), Mumbai. Mr and Mrs. Deepak Pandit are known to us through Ravi Suvarna who is also Superintendent of Customs, approached to us for temporary shelter for a period of 2-3 months, since in the society in which they stay do not have lift and Mrs Arushi D.Pandit was undergoing a major heart surgery in Leela Hospital and need one bedroom in our flat. Hence, we allowed Mr. Deepak Pandit to stay in our flat with his wife and son (One son is away in Bangalore), by providing one bed room and allowed them to use common hall and kitchen on humanitarian and medical ground with out charging a single rupee.

In Sept 2007, we visited our native place in Karnataka, and locked other 3 bedrooms apart from which has been used by Deepak Pandit and his wife Arushi Pandit by showing blind faith and trust and handed over the keys of main entrance. When we came back from our native place, we found our other two bedrooms locks were broken and the bedrooms have been used by Mr. Deepak Pandit and Mrs.Arushi D. Pandit. When we asked about this mischief, Mr Deepak Pandit very rudely replied that we people should vacate the flat along with our belongings. We were shocked and surprised after this incident.

Then we immediately contacted Ravi Suvarna and Ravi Suvarna contacted Deepak Pandit about vacating the flat. He bluntly denied to vacate the flat and also threatened with dire consequences and that his brother Mr Ashok Pandit is a very influential political person, and Deepak Pandit himself is a Custom Officer and by virtue of his position/post he will grab our flat.

Further we approached to one/two reputed persons in the society and narrated the things, which have been going on and requested them to mediate the dispute. He refused to meet the persons and asked us to pay Rs 10 lakh otherwise he will not vacate the flat .At the same time he mentioned that we will see how he will grab our flat.

Recently we have come to know that other than his house in Juhu (no 214) Juhu Shantivan co-operative Housing Society, building No 13, Gulmohar Cross Road No 6, Andheri (W), he has got one house at Takur Complex, Kandivili (E), and one at Andheri (E). He has rented out all these houses and took shelter at our place on sympathetic/humanitarian grounds.

We have approached the Oshiwara Police and lodged written complaints dated 4/10/07 and 28/02/08 but to no avail. Police have threatened to arrest our grand daughter if she doesn't vacate the house and she was forced to leave the house at 0400 AM on 05/10/07(By SI Gaikwad, Kadam on the instruction of the PI Sonawane of Oshiwada Police Station). As we are old aged and can not run from pillar to post, I kindly request you to Publish this issue because this kind of acts by people by misusing the legal provisions to their advantage and grabbing only shelter of senior citizens by taking the help of police and security staff of the building. This is nothing but breach of trust and they know that if it goes to court it will take years together. These kind of issues should be debated and people should be educated about this kind of offences/crimes (misuse of legal provisions) which were probably made to safeguard poor tenants

Yours sincerely,

Mr. & Mrs. K. Gopal Rao
76/41,14th cross, Padmanabha Nagar,
Bangalore-70
Cell No 09343952727
----------------

Harassment by Housing Society

2008-11-29T22:03:00.000+05:30

I recently got a mail by a friend who was being harassed by his housing society members.

I am putting this mail here for your perusal. I live in Ghaziabad so I won’t be of much help in this case, but if you are a Mumbai resident kindly do provide information on the front.

Thanks
---------

Dear Sir,

I have a query. I recently acquired permission from my housing society in Mumbai to re-plaster the internal walls of the flat and re-do the tiling. It was in very bad condition and difficult to stay.

The Society committee members recently slapped me with a Rs. 25,000 fine claiming I had violated the structural integrity of the building by touching the beams and columns. In reality, it was just the exterior fascia (plastering only) and no structural modifications were done. As a confident structural engineer from IIT Bombay, I find the whole case really nonsense and am very confident that some of the society members have some personal vendetta against me and hence the allegations. I must mention that I have got local structural engineers to inspect and certify that the level of works have not violated the structural integrity of the building. They, on the other hand have not got any structural engineer from their side to back their claims.

I am confident that the Society is misusing its powers to abuse me this way. Are there any legal clauses that I can use to prevent their misuse of power? Can you please quote the same and help me in this regard? I am based outside India and the local follow-up is difficult and expensive. I have my own personal problems and cannot put up with such nonsense. Who do I approach?

Thanks in advance.
Kind regards,

XYZ
-------------------

Just a suggestion….

2008-11-19T21:28:00.000+05:30

If you own a flat in Delhi don’t even think about selling it off and moving to Ghaziabad, Gurgaon or adjoining areas.

No doubt, you would be able to save a lot of money by selling off property in Delhi and buying a flat on the suburbs at a much lesser cost, but don’t forget that rates in Delhi are skyrocketing and chances are that property that you have sold today might be a prime location tomorrow.

And with the metro gradually connecting far-flung areas of the city, the property rates are increasing by the day.

Then again the 2010 Commonwealth Games and the proposed F-1 race in 2011 are an added attraction. So, Delhi is the place to be.

Know your facts

2008-11-15T14:04:00.000+05:30

The other day a couple came visiting me. They had already bought a flat in the neighbourhood but were a little worried and there was reason for them to feel that way.

Apparently, their loan application had been rejected by a bank stating peculiar but correct clause. The bank told them that 60 per cent of their flat was unapproved while the builder had obtained the approval of 40 per cent of it.

Now, you would wonder how is it possible. But it is very much possible and in practice by the men in business (read builders).

To get over the red tape and speed up the construction process, the builder usually gets the map of a particular building approved and construct a whole lot of others based on it.

But sometimes owing to market trends and demands of the customers, slight changes are made in the plan of the buildings that are constructed at a later date and so the construction is slightly off the map.

To get over this anomaly the builders usually obtain a NoC from the authorities. However, in some case the change so much that obtaining a NoC is rather tough and that’s what happened in that couple’s case.

Some banks reject loan application in such cases. So before you buy a flat please be sure to check the original map of the building.

No slump in property

2008-11-10T20:43:00.000+05:30

Is there really a slump in property prices?
I think it’s an all time high at least going by real estate prices in the residential sector.

Biking around in search of a home

2008-11-10T20:41:00.000+05:30

Last year, after much nagging and prodding I decided to take the plunge. No! I am not talking about marriage here, for I was already married and my wife was in the family way, when I took what I now call the most ‘expensive’ step in my life.

Expensive, literally as the even a layman would be able to tell you how difficult it is to buy a flat these days especially with the sky-rocketing property prices.

Please ignore all those newspapers reports and articles that claim that property prices are undergoing a slump. For before you discover the hard way, let me tell you they are an all time high. At least that’s what I have discovered in the past few months.

I still clearly remember how difficult it was to find a guarantor when I approached a bank for a house loan.

And not to forget the running around I had to do to get my flat registered. The pain me and my wife, who was six months pregnant, then had to endure. I would never ever forget the day when she was riding pillion with me as we did not have a witness to testify for our flat and the amount of money that I had to pay as bribe to make those stamp papers move.

Alas! We have a flat in Ghaziabad.

Let’s hope you don’t go through those hardships…