Thane Real Estate Prices Start Tumbling

Runwal is offering free parking and a write-off on your stamp duty and registration costs, while Dosti is providing an upfront 10-15% concession. These Mumbai builders are offering sops to those willing to invest in their projects. Clearly, Thane's realty boom is slowly turning sour.

Encroachment of Forest lands by developers, a case that is now in the ambit of the Supreme Court, has made Thane a shaky destination for real estate home buyers. If the Supreme court case turns against them, they stand to lose their entire investment. Banks too are unwilling to fund such properties. Further compounding these problems are sky-high real estate rates.

Owners of apartments on forest land are even offering their homes for Rs 1,500 cheaper per sq ft, yet are unable to attract buyers. May is the peak month for real estate and a time when brokers and builders have a field's day, demanding prices according to whims and fancies. This has not been the case this year. In private brokers admit that they foresee a slowdown once monsoons arrive and the slack sets in.

According to Edelweiss analysts tracking the realty sector, demand for homes in Thane has fallen 20-30% percent in the last quarter. In Mulund it is 40-50 percent say broker sources. Despite this, builders are not toeing this line, but say that rates have in fact been increased 5-10% percent. This however is a gimmick, since all of this becomes negotiable once the money is placed on the table.

Affordability and forest land issue have become a bone of contention in Thane. No one wants to shell out Rs 4,200 to Rs 6,500 per sq ft for apartments in this city. Brokers are advising that unless there is a pressing need for a home, 4-5 months, homes are certain to fall further.

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Soros's Gloomy View has Lessons for India

Wake up Mr. RBI Governor and Mr. Finance Minister. It is you who hold the reins to prevent mishaps in the Indian economic story, before elections come about. If you sit aside and watch cheap PE funds sloshing around in to hideous real estate schemes, then I am certain you will not mind opening your ears a bit and listening to man who will not hesitate a bit from playing vulture to the carcasses of the stock markets.

The news web sites are full of George Soros and his gloomiest forecast of the US, UK and other world economies. But what catches my eye is his advice to the UK governor, which resonates like a message for our own YV Reddy.

Here are some of the Soros gems:

• Central bankers are partly to blame for the credit crunch because of their past behavior in bailing out the financial sector whenever it got in to trouble for over-lending - the so-called moral hazard problem.
• Central banks should explicitly target asset bubbles such as housing booms and try to stop them getting out of control, which is something they have resisted doing so far.
• Tougher but smarter regulation would be needed in the future, in order to reduce the excess supply of credit in the economy. These could include measures to force banks to put aside more reserves in good times, to help cushion them in bad times.

YV Reddy if he is listening is certain to announce a larger than expected CRR hike soon, and ICICI's Kamath will not be able to keep home loan rates low any more.

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Delhi Prime Land Sold at 17 Percent Discount

In what is seen as a significant indicator of a cooling Indian realty market, a prime land deal in Delhi, was concluded at 17 percent discount to its price one year ago. The 1.18-acre land, sold for Rs 200 core, and bagged by Parsvnath Developers, was jointly owned by Mahajan Industries and the Videocon group in Connaught Place. The deal, at Rs 169 crore an acre, has come at a discount of almost 17 percent.

“We have come to the end of one property cycle. Speculators have exited the market and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing cost going up, and prices softening, the euphoria towards land acquisition has certainly died down,” says Cushman & Wakefield Asia executive managing director Sanjay Verma.

Land prices in the national capital region (NCR), Mumbai suburbs, Bangalore and Hyderabad have corrected by up to 25% as property developers slow down their land purchases. Poor sales and lower availability of credit at higher cost have prompted property developers to end the mad rush to acquire land. Some of the developers have even backed out of land deals which were agreed upon as the slowdown hit the sector.

Prices have come down by up to 25% in Mumbai’s distant suburbs, including Thane and Belapur, and pockets of Hyderabad and Bangalore, according to property consultancy firm Knight Frank India. Prices in the NCR, with an exception of Faridabad and Delhi, too have witnessed a correction of up to 25%, says a senior Unitech executive, adding that transaction volume has dried up. Land prices in Faridabad have risen 10-30% in the past 3-4 months.

However, Faridabad is just catching up with its neighbouring locations. The prices in Faridabad are still lower than in Gurgaon or Noida and the current price rise is more towards building a parity with them. Land prices in Delhi are said to be stable.

Read the ET story here

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