Friday, December 05, 2008

Hiranandani Exploited Middle Class for Super Rich

Mumbai builder, Niranjan Hiranandani, exploited a middle class housing scheme in Powai to construct luxury apartments catering to the superrich. This comes across from a High Court order passed Thursday preventing the builder from selling more than two flats to one person.

In 1986, builder Niranjan Hiranandani was allowed to construct over 230 acres of land under the Powai Area Development Scheme, (PADS), in which 50 percent of the flats constructed had to be less than 40 square meters (430 square feet) and no flat could exceed 80 sq meters (861 sq ft). The objective was to allow the burgeoning middle class to benefit from the scheme.

However, in 1989, Hiranandani was provided an exemption allowing it to merge flats but the amalgamated flats could not exceed 15 percent of the total development.

However, the greedy developer built flats of area 1870 sq ft and 4925 sq ft which are currently priced at Rs 4 crore and Rs 8 crore respectively. In March 2008, a report submitted by the MMRDA confirmed the violations. However, the state government allowed the company to get away with just Rs 3 crore as a penalty.

Today's judgment came as a victory for petitioners, Kamlakar Satve and Rajendra Thacker. The judges said that the developer could carry out further construction at its own risk. The next hearing is December 18 when all parties have to file their replies.

Read the story here

Posted by Eclectic Investor at 8:41 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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