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

Sunday, November 30, 2008

Dubai Debt to GDP a Whopping 148 Percent

The days of sipping black tea over puffs on shi-sha are over. There will be no more easy on Friday mornings, when expatriates would laze in the security that Dubai was India's cleanest city - considering the number of Indians here.

Many at times would argue that a European lifestyle, without citizenship and rights, was as good in the desert than one that was offered in the snowy mountains of Canada or coast of Australia or the islands of New Zealand. One could have it all here in Dubai, without the attendant niggling irritant called income tax.

Well until October, nobody cared what the GDP or inflation of Dubai was. They did not care to inform the world community anyway, as long as property prices in Dubai skyrocketed and speculators minted money with every 10 percent put down to book an off-plan apartment.

This was supposed to be Wonderland, but Alice has to wake up some day, and this day is now. When she does wake up indeed, Wonderland remains just a fantasy. And so it will be in 2009.

Millions of expatriates would find 2009 the most painful year in their history. God would indeed send the angel of death to knock them out. So many had got accustomed to easy speculation in real estate - a lot did in fact make money, only to invest in bigger and larger projects with more leverage - building their proverbial castles in the sands.

As I had said earlier, the devil has now come home to roost. Dubai has declared its debt through formal speeches of its member of the Executive Council, Mohammed Al Abbar, who said the level of debt owed by the Dubai government is $10 billion, with a further $ 70 billion owed by state-owned companies.

Dubai’s GDP is $54 billion, according to a source that releases such data, which puts Dubai’s debt to GDP ratio at 148 percent.




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

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.”

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.

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.

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

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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