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.

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.

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…

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.