IndiaBulls Sells prime land in Mumbai

British Council (BCI) has bought a Lower Parel propoerty encompassing 15,730 sq ft of area of a commercial complex under construction from Indiabulls Real Estate. The deal is valued at Rs 30 crore, or Rs 19,000 per sq ft.

The company has received a under valuation and has also signed a leasing agreement with corporates like Reliance Capital, IDFC, Indusind Bank, Aditya Birla Group for the compensation of around Rs 175 per sq ft.

This funds raised will help the company to finish its incompleted projects.

The real estate sector is facing the heat because of current economic turmoil and lack of sufficient fund. The real estate prices have tanked by almost 50% in the past one year.

Buy Bangalore - Metro Rail Completion in Sight

The BJP Government after 11 months in Power in Karnataka has done only one Good Job which I can vouch for - Awarding part of Namma Metro or Bangalore Metro Tender to World class construction company - Punj Lloyd. Namma Metro is most likely to be completed within the next 18 months.

One thing I like about Punj is, they don't compromise on the work and is known for state of the art execution across the world. Buy Property in Bangalore which is located at the convenience of Metro as they will Zoom now.

Now if you are a regular reader of this blog, you will have noticed me trashing the local government for poor and pathetic infrastructure. However, Punj along with others will solve our biggest Hurdle, conveyance reducing half of our tension in daily life within the next 18 months.

Latest Prices in Mumbai

The latest property prices in various projects of Mumbai is as follows. prices as quoted in the Property Exhibition. Planet Godrej @ Byculla has seen the steepest fall of 34% followed by Nirmal Lifestyle at Mulund 31.5%. Click on the Image to Enlarge.

DLF Capital Greens - Shivaji Marg 85% Sold Out

We did a case study on DLF Capital Greens located at Shivaji Marg, 8 Kms from Connaught Place. Here is the excerpt of the study.

DLF bought this land in 2H07 at Rs16 bln. Late 2008, DLF launched a part (1,400 apts, 1.8 msf) of its Delhi (W) residential project. It appears to have received good customer response, and 85% is likely sold. This is one of the high profile projects in DLF’s land bank, we believe.

Overall project size is roughly 5msf, of which 1msf of commercial/retail space was sold last year; the balance is planned to be used for residential purposes.

Aggregate pricing was Rs6,000 psf (Rs5,000 excluding car parking), 25% discount to neighborhood, and appears to be at the lower end of our expectation. The company used innovative strategy to attract customers by showing low base selling price, and made up some ground by higher Car parks.

We estimate Rs4,300-4,400 psf cost of the project, implying 25-30% EBITDA margins, which according to some builders is on the lower side considering the quality of the land bank. Since the heydays are behind us, DLF is doing a good job leading the Realtors to significantly mark down the prices and unload them.

Correction and Recovery of Property Market - Jones Lang LaSalle Meghraj

We present to you the views of India's leading Realty Consultant - Jones Lang LaSalle Meghraj [JLLM] on the ongoing correction and Recovery of property market. JLLM study includes the cities of Delhi NCR, Mumbai, Bangalore, Pune, Hyderabad, Chennai and Kolkata. JLLM has divided the city into different areas depending on various factors and they are cateogrised as follows,

• Resistant - Despite low supply and lower historical rental appreciation, a sentiment-led correction of 10-20% is expected in these micro-markets. Recovery is expected in mid 2010 and expansion in mid 2011
  
• Fast Movers - Although micro-markets in this category are not looking at a huge supply
  pipeline, their rentals have reached unaffordable levels due to high historical appreciation. High price volatilities and negative sentiments are expected to push the rental envelope inwards. 20-25% Expected Correction. Recovery is expected in mid 2010 and expansion in mid 2011
• Followers - The followers are expected to witness a correction of 30-35% due to the huge supply that is under construction in these micro-markets. These are mostly the suburban
  micro-markets. Recovery is expected in mid 2011 and expansion in mid 2012.
• Aggresors - The aggressors are characterised by high supply as well as significant historical appreciation in rentals. Good infrastructure and proximity to the city led developers and occupiers to believe in the growth potential of these areas. 30-40% correction is expected. Recovery is expected in early 2011 and expansion in late 2011

Now we will see the areas that will fall under the above mentioned categories.

• Resistant - The suburban micro-markets of Bangalore - Whitefield and Electronic City. CV Raman Nagar, Bannerghatta Road, Inner Ring Road, Koramangala, Airport Road,
  Banashankari, Audgodi. CBD of Bangalore, Hyderabad [Begumpet, SP Road, Punjagutta, Raj Bhavan Road, Somajiguda] and Chennai.
• Fast Movers - Banjara Hills, Jubilee Hills, Ameerpet in Hyderabad. Nariman Point, Cuff Parade, Fort, Ballard Estate, Bandra Kurla Complex, Kurla, Kalina in Mumbai. Connaught Place and surrounding roads in Delhi. Park Street and surrounding roads in Kolkata
• Aggressors - Pune Cantt, Bund Garden Road, Shivaji Nagar, Deccan, Koregaon Park, Senapathi Bapat Road. Ghatkopar, Vikhroli, Kanjurmarg, Powai, Worli, Parel, Prabhadevi, Lower Parel, Dadar in Mumbai. Nehru Place, Jasola in Delhi. NH-8, MG Road, Golf Course Road, Sohna Road in Gurgaon.
• Followers - Old Mahabalipuram Road (OMR), GST Road in Chennai. Madhapur, Kondapur, Hitec City in Hyderabad. Salt lake and Rajarhat in Kolkata. Noida City, Noida – Gr Noida Expressway. Hinjewadi, Pimpri, Chichwad, Balewadi, Wakad, Pashan, Fursungi, NIBM in Pune and finally Navi Mumbai and Thane.

This is one of the best source os information based on intensive reasearch by JLLM on the Indian property market for its clients who are not just corporates but investors as well.

Mumbai Oversupply + Gurgaon Problem of Plenty in Next 18 Months

On our last count, we estimated ~32 new towers to be delivered in the mid Mumbai micro market over the next few months. These include Beau Mont (3 towers, Prabhadevi), Planet Godrej (5, Mahalaxmi), Ashoka Towers (4, Parel), Bellisimo (2, NM Joshi), RNA/Raheja/Atlantis/Harmony (all Worli) (details inside). These could total up to ~6-7msf of supply, as compared to negligible deliveries over the last couple of years.

Deliveries have commenced for a few of these projects. We have already seen roughly 50% rental correction in Planet Godrej (from Rs 2 lk/month for a 3BHK in 3Q08 to Rs1.1 lk/month now), where only two out of five towers have been handed over. In the suburbs, Raheja Acropolis rentals have corrected from Rs60k/month to Rs40/month currently over the past year.

Residential supply in the next 18 months in Mumbai:
Project and No of Towers
Beau Mont 3
Planet Godrej 5
Ashoka Towers 4
Bellisimo 2
Casa Grande 2
Imperial Towers 2
Vivarea 3
Ashoka Garden 4
Sumer Builders 2
Vision Crest 1
RNA 1
Raheja 1
Raheja Atlantis 1
Lokhandwala Harmony 1

Residential supply in the next 18 months in Gurgaon:
Project and Area in million sft
Unitech Fresco 1.6
Unitech Harmony 1.1
Unitech Escape 0.7
Unitech World Spa 1.7
Unitech Close 3.0
Unitech Espace 1.1
DLF Magnolias 2.5
DLF Belaire 1.3
DLF Park Place 2.2
Emaar Meadows NA
Parsvnath Exotica 2.5

Property Brokers Poll - Expect Further Correction Across the Board

Edelweiss Research has been doing an excellent job conducting Property Brokers Poll across all the major Realty markets. Here is an excerpt of the findings.

• 99% brokers believe prices have fallen over the past three months
• 87% brokers have seen a drop in transactions over the past one month
• 76% brokers expect price trend to be negative over the next three months
• 53% brokers expect price trend to be negative over the next one year
• Bangalore is the least pessimistic market with 32% brokers having negative outlook
  over the next one year
• Chennai remains the most pessimistic with 73% brokers having negative outlook over
  the next one year
• Brokers in Bangalore and Chennai have turned negative from their steady outlook for
  property prices in the next three months
• Mumbai and NCR brokers' outlook on property prices in the next one year has turned negative from positive earlier
  

This gives you a fair idea on where the market is heading. If its your Dream Home, you should be on the lookout. Negotiate and bragain until the developer comes to your price.

Hyderabad Blues for SEZ Developers - CLSA

CLSA in a report said that their view is incrementally negative on the Information-technology special economic zone (IT-SEZs) leases, which have witnessed net cancellations over the past six months. New enquiries are weak and IT-SEZ vacancy rates are set to jump to 40%-plus in six months.

From the peak of Rs45/sf/month in 2007, IT-SEZ rentals have come off 18% to Rs37/sf/month, and our sources suggest that it will further go down to about Rs33/sf/month in another 3-6 months. This is because IT-SEZ vacancy, now at 32%, is like to cross 40% in another six months.

Institutional brokers suggest that SEZ developers in Hyderabad are in a panic situation, with nearly 7-8m square feet (sf) of IT-SEZ space in the market for leasing, which, at the absorption rate of 2008, will take 6-7 years to clear. The three SEZs we visited - Raheja Mindspace, DLF Gachbowli and Tishman Speyer Gachibowli - have an unleased space of 3.7m sf, with deliveries due over 3-12 months. Raheja has got the land virtually free and can potentially undercut competition by driving the rates further down.