Thursday, April 17, 2008

80% Decline in Primary Realty Sales

There is an 80% decline in primary realty sales in India, according to Unitech's vice president (Sales and Marketing), Bhaskar Basu, who has upped the advertising of Unitech Grande, a 347-acre project outside of Delhi. Unitech is trying hard to lure buyers. for this project, which was started 8 months ago.

“Speculators are exiting real estate. Therefore, promotional activities have increased these days to woo buyers, who are the actual users now,” said Omaxe chairman Rohtas Goel, who has just launched a luxury apartment project.

“All developers will have to work harder now. And that’s why the visibility of promotion campaigns has gone up. Everyone is trying to grab a piece of the shrinking market,” said real estate consultancy Knight Frank India chairman Pranay Vakil.

Desperate times call for desperate measures. One builder in Mumbai is trying to make "brokers" out of customers. If you have picked an apartment or a plot in some grand scheme, you can convince your friend to buy too, and coolly pocket 2% as commission from the builder.

The times would be getting harder, is what the writing on the wall says. After years of frenetic sashaying, builders and developers are now scraping their best to close deals.

The focus of builders has now turned to high-earners in the banking sector who get their bonuses around this time. If this fails to enthuse executives, it would mean another step lower for the real estate industry.

Read the original ET story here

Posted by Eclectic Investor at 12:06 AM  

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IN PASSING

Consider how the crisis has unfolded over the past eighteen months. The proximate cause is to be found in the housing bubble or more exactly in the excesses of the subprime mortgage market. The longer a double-digit rise in house prices lasted, the more lax the lending practices became. In the end, people could borrow 100 percent of inflated house prices with no money down. Insiders referred to subprime loans as ninja loans—no income, no job, no questions asked. - George Soros in latest book


“When everything’s going up, there’s a feelgood factor and people tell each other how much their houses are going up at dinner parties,” says Professor Mark Stephens of York University’s Centre for Housing Policy. “Then the music stops, as it always does.”

“Last year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” - a senior executive at an international financial services group, who did not wish to be named.

"Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond, "Mortgage experts were too caught up." - John Paulson, trader, who bet against subprime market and made $15 billion.

The most puzzling are the real-estate projects of Parsvnath. Just have a look at the Pride Asia project near Chandigarh. They are asking almost US $300K-$350 K dollars for 2 bed room apartments. They have Villas in this project that costs more than US $1.5 million dollars. It is true that some people in India have that kind of money in India. However most of their wealth is black money and that can not be used to buy these properties. Obviously, these projects have been launched keeping NRIs in mind. - Sanjeev, comment from another site

Prachi Desai, aka Bani, the star of Balalji Telefilms's soap, Kasam Se, has been house hunting for over a year. She had almost closed a 2-BHK deal last year for Rs 1.5 crore in a Oberoi Constructions' building located at Andheri, Mumbai, but when she went back to confirm it, she was asked to cough up Rs 2.61 crore. Since then, she is still house hunting. - Mumbai Mirror

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