Premium localities sell well in Delhi, Chennai

A weekly snapshot of some big-ticket city deals.

Delhi-NCR
An apartment admeasuring 3,700 sqft located in Malcha Marg was leased out for a monthly rental value of Rs 3,75,000. The rental values in this location range from Rs 2,75,000 4,25,000 per month and this apartment is well within this range and has seen an appreciation of around 12% over the previous year due to restricted supply and high demand, especially from expatriate community.

Malcha Marg is one of the citys most sought-after residential locations, due to its strategic location being equidistant from the established CBD and new business district of Gurgaon. Additionally,the location, due to excellent town planning,offers congestionfree traffic movement.

Chennai
An independent house located at Rambagh, Besant Nagar, was taken on lease by a major corporate. The house admeasuring around 5,000 sqft is located in the prime residential boulevard of the city. The monthly rental of Rs 3,00,000 per month is moderately higher than the prevalent rental for high-end residential units in the area, due to the fact that its location is equidistant from the central business district (CBD) of the city as well as from other emerging business locations. The area, by virtue of being an established residential location, also has good social infrastructure, including retail and entertainment, education and healthcare.

Pune
A three-bedroom apartment unit, admeasuring 1,441 sqft was sold in Chinchwad for a total cost of Rs 49,05,871. The per square foot value of this property is around Rs 3,400 per sq ft, which is in line with the current prevalent values in the location. This mid-ranged apartment complex is located in the suburban location of Pune, which is currently going through a transformation, with many apartment complexes and gated development being planned in the location. The area has been gaining importance due to its convenient location and good access to various office and commercial locations across the city.

Hyderabad
A residential apartment admeasuring 3,170 sq ft was purchased in an under-construction project in Madhapur, Western Hyderabad,at a capital value of Rs 4,250 per sq ft. The property,being built by a prominent national developer,houses apartments ranging from 2,200 sqft to 4,375 sqft in the configuration of three and five-bedroom units. The apartment is located in Madhapur,a part of Mindspace IT Park and adjacent to Westin Mindspace Hotel,in the Western part of Hyderabad. This area has seen a growth in demand for residential units owing to the fact that it is a prominent office location. The location has, due to a steady increase in demand, seen a growth of around 6% in capital values over the past three months. Being located in close proximity to work places, this premium project is expected to garner significant interest from end users. Source: MagicBricks

275-metre ritzy tower to come up in Prabhadevi

15 Mar 2010, 1422 hrs IST, Alka Shukla, MUMBAI MIRROR
Have you ever wondered what it would feel like living at the height of Eiffel Tower’s highest observation deck, which stands at 276 metres? If 
you have Rs 50 crore in your kitty, you may be a proud owner of just one such celestial home in Mumbai.

For, Prabhadevi is all set to witness the rise of a 275-metre tower on a one-and-a-half acre plot. Touted to be one of the most expensive upcoming apartments in Mumbai, the tower will have villa-like apartments sprawling across 12,500 sq ft and 7,500 sq ft.

With an average height of three metres per floor for residential complexes, 275 metres would come to 90-odd floors. But the skyscraper in Prabhadevi will have only 24 apartments.

According to Lalit Kumar Jain of Kumar Urban Development, which is building this property, this is to give each floor a feel of exclusivity. “This is an extremely high-end project with the sea link in view. We decided to maintain a distance of 50 feet between two floors to create an air of exclusivity,” he said.

Each 12,500 sq ft apartment will be a triplex with a 4,000 sq ft terrace on the first level that will have a mini putting range leading to a living room and a guest bedroom. The other two levels will have a living room, space for a gymnasium, more master bedrooms and family rooms. Each apartment will also have an individual parking space with a capacity of around five cars on the apartment’s first level with two special lifts for cars.

The 7,500 sq ft apartments will be duplexes. “The 7,500 sq ft apartments at the lower levels would cost around Rs 20 crore. But the price obviously increases as you go higher, with the most expensive apartments falling in the price range of around Rs 50 crore,” said an industry source. The lowest apartment will be at the height of 18 meters.

Though the city probably does not have any other luxury triplexes launched yet, high-end duplexes are certainly on the rise. Orbit Corp, for instance, is selling 4,500 sq ft bungalows at Napean Sea Road for around Rs 25-30 crore.

“We had earlier planned villas of 12,000 sq ft, but later changed it to independent bungalows as we think there is more demand,” says Pujit Aggarwal, Managing Director of Orbit Corp. Other high-end duplexes on Napean Sea Road include Lotus Villas, the cost of which is under wraps.

In Lower Parel, 5,000-6,000 sq ft duplexes at Lodha Bellissimo are going for Rs 20-25 crore. On the other hand, two 60-storey Indiabulls towers – Sky and Sky Suites — that come with a combination of smaller apartments, duplexes and penthouses are commanding anywhere between Rs 7.5 to 25 crore, depending on the size.

“Sky is sold out while Sky Suites is 45 per cent booked. It’s the value being created that is important. I strongly believe the real estate market has bounced back,” said Gagan Banga, CEO, Indiabulls.

Recovery in Realty

14 Mar 2010, 1134 hrs IST, Prabhakar Sinha, Source: ET Bureau

Residential markets across major cities of India have seen significant appreciation in values towards the close of 2009. This trend is most prominent in NCR and Mumbai, the two key residential markets in India, where values in Oct-Dec 2009 appreciated, compared to the same period the year before, says Cushman and Wakefield in a report. 

The report said that recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010. However, it would be premature, the report adds, to predict a bounce-back for the entire sector. The other markets which are still witnessing some correction are expected to stabilize only in the next 3-6 months. These are expected to see positive signs of recovery by the middle of this year, when values across the board would stabilise but will remain within acceptable range. 

The average increase in capital values in various micro-markets in these two metro areas has been in the range of 3% to 25% over the previous year, the report shows (see chart). Most micro-markets in these two cities have recorded stable to appreciating capital values over the last quarter as well. 

NCR and Mumbai have shown a faster recovery than other cities due to the fact that these are high-demand markets, both from end users and investors, who were holding back their requirements as a result of economic slowdown , which created a kind of uncertainty in the job markets. The best outcome of the slowdown is the emergence of affordable housing in the country. 

At the same time, the strong recovery in the economy led to sharp upward correction in the capital values for mid-ranged housing due to the quantum of demand and affordability. 

Certain broad trends that were noticed across cities were that peripheral and the suburban markets witnessed the highest correction but were also one of the first markets to bounce back, C&W says. Another shift in the trend is the rise in demands for properties under construction. 

The report said, there was a clear shift towards readyto-move-in properties during the beginning of the year, when there was uncertainty on the capability of a developer to complete a project. But that has receded now resulting in a rise in risk appetite for properties under construction. 

In the NCR region, demand for affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood from the fact that a number of projects completely sold out within a couple of days of their launches. Recently, in Noida, Supertech , which launched apartments for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could sell around 500 apartments in a couple of days. 

The new trend has led to increase in the volume of transactions. Supertech CMD, R K Arora, says that the developers have now shifted to high-volume business from high margin ones. However, he also pointed out that this became possible because of the relaxation in the density norms (number of apartments allowed to be constructed on a given area). Therefore, the construction activities are set to rise in 2010. 

Due to focus by developers in 2006 and 2007 on luxury housing, high-end properties in most cities suffered a steep correction when slowdown impacted the sector, as compared to mid-end properties. This left a large unmet demand in the mid-end market. As favourable conditions have come back, the sector has witnessed resurgence of demand. 

However, for the trend to continue, the government should not put extra burden on it. The budget announcement of 10.3% service tax on the sale of apartments before completion is expected to have the highest impact in the real estate market. This may hamper the attractiveness of the projects under construction. 

The scope of service tax is extended to the construction of complex service, wherein the developer/builder is likely to pay service tax on construction services while the project is under construction. The levy would cover all construction of complex service or commercial or industrial construction services resulting in higher cost of properties under construction. 

The service tax of 10.3% will be levied and also be charged on additional services provided in residential developments such as preferential location charges, internal or external development charges, etc. It is estimated that service tax of 10.3% will be levied on approximately 33% of the value of an apartment, which is likely to escalate the price of real estate and put further pressure on the housing affordability. 

In the short term, the report says, real estate prices across most cities are expected to continue to strengthen. However, it also warns that a significant increase could result in demand drying up and lead to stagnation or further correction. Rental values are expected to remain stagnant, especially in the luxury/high-end segment with certain mid-end properties witnessing buoyancy.

Developers are likely to remain cautious and launch new projects at attractive price points, the report says. Due to prevalent demand for mid-income housing, most developers are expected to focus on new projects in this category, over short- to medium-term, with very few niche projects in luxury category with strong differentiation factors.

Residential market to lead realty recovery in 2010: CRISIL Research

A recent 10-city CRISIL Research report on the real estate market indicates that demand in the residential market is expected to turn positive in 2010 owing to improvement in affordability, steady economic growth and greater liquidity. However a decline in the currently over-priced capital values of all the three real estate segments - residential, commercial and retail - will persist through 2009. Further the commercial and retail markets will continue to witness erosion in lease rentals through the next two years.

The CRISIL Research City Real(i)ty Report provides comprehensive information and analysis of more than 400 areas across 88 micro markets in 10 cities - Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai-MMR, NCR and Pune.

Mr. Sudhir Nair, Head, CRISIL Research says, “Accelerated growth of Indian economy, recovery of global
economy, improved liquidity and expected fall in interest rates are key factors that will signal demand revival in the residential segment. This segment is likely to see a much faster revival due to strong underlying demand for housing and supply coming at attractive price points.”

Sudhir further adds, “Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak offtake.” The CRISIL Research City Real(i)ty report indicates that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March 2009 due to a slowdown in both the domestic and global economies, and also due to real estate becoming unaffordable. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities.

The situation is expected to continue through 2009 and 2010, particularly so for the commercial and retail segments. However CRISIL Research believes that demand for houses will improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy. Hence, capital values are likely to stabilise in the first half of 2010, and increase during the second half of the year.
CRISIL Research feels that the pace of economic recovery and confidence revival will have an impact on
sentiments across all the real estate categories and will be an important variable to watch out for.