Hyderabad - Commercial / Office Realty review

High level of interest from Indian and multinational companies in the IT/ITES sector has been driving the demand for office space in the city over the past few years. Madhapur, Manikonda, Gachibowli and Raidurga are the technology hubs. Office space supply has increased from 1.6 mn sft to 12 mn sft in 2010.

Commercial / Office Space Rentals INR /sft /Month are as follows,

• CBD (Begumpet/ Raj Bhawan Rd, Banjara Hills) Rs 65
• Secondary market (Jubilee Hills, parts of Banjara Hills) Rs 55
  
• IT Corridor – Madhapur, Gachibowli, Hitec City - Rs 42
  
• Suburban – Himayat Nagar/Ameerpet/ SD Road - Rs 35
  
• Gachibowli, Hitec City Shamshabad, Pocharam - Rs 30
  

Expect rental/capital values to correct in prime suburban and peripheral locations, owing to slowdown in demand and near-term supply pipeline. Vacancy levels are likely to increase further over the next few quarters on completion of the large planned projects.

Should Govt Bailout Realtors ?

The Economic Times asked whether the Government of India should bailout Real Estate Developers and a whopping 79% of Indians said "No". Our Government if it bails out Realtors will be one of the shameless Govt to do so. Not a dozen, Not a hundred but tens of thousands of Home Buyers face the ire of delayed handover of residential projects anywhere between 10 to 16 months. Where the F*ck is our Government to protect the interests of Home Buyers ? Shouldn't all Home Buyers be protected by a powerful regulatory body like SEBI ?

Review of Hyderabad Residential Market

Today we are going to have a look at Hyderabad's Residential Market.

• Central Zone - Areas under this zone are Begumet,, Banjara Hills, Jubilee Hill, Ramkti etc. Most of these locations, in and around Hussain Sagar Lake, are the traditional residential hubs of the city. Locations like Banjara Hills and Jubilee Hills are considered prime residential areas, catering to the high income segment. Prices have mostly held their ground. Most of the developments are stand-alone projects as opposed to townships due to scarcity of land parcels. Majority of these are redevelopment of existing properties in inner roads of Banjara Hills. Key upcoming notable projects include Aditya's Green park in Jubilee Hills, RRS towers on Raj Bhawan Raod and Prajay Riveria at Banjara Hills.
• Northern Zone - Areas under this zone are Nizamet, Kompally, Bowenpally, Qutbullapur - Region is witnessing an even mix of both apartment and villa projects. Considerable amount of demand is investor-driven. Many prominent developers have taken up projects in the region as there are large tracts of land available along with excellent infrastructure. Noticeable projects in the region include Ambience Neighborhood by Ambience Group, Casa Estebana (54 villas) by Koncept Ambience Group, Aditya's Grand Ville and A la Maison.
• Eastern Zone - Areas under this zone are Shameerpet, Yapral Cherlapalle, Pocharam abd some parts of Secundarabad. Region mainly consists of gated communities and villa development. Northern half of this region is witnessing active real estate development (Shammerpet, Yapral). Prajay Celebrity Villas and Prajay Boomingdale are two large projects in this micro market
• Western Zone - Areas include Cyberabad locations like BHEL, Madhapur,Gacchibowli etc. Majority of demand in the region is end-user-driven, primarily from people working in Hitec City. Bachupalli, Borampet are witnessing villa and row house developments whereas Gachibowli and Kukatpalli are witnessing more high-end residential apartments. Noticeable projects in the region include Hill Ridge in Gachibowli and Lanco Hills in Manikonda, Raintree Park at Kukatpaali on 35 acres, Silicon Country at Madhapur, Prajay Ridge Wood at Nagagandala and Maytas Hill Country at Bachupalli.
• Southern Zone - Areas include Himayat Nagar, Shamshabad, etc. Plotted sales are high in the region. These locations primarily cater to mid income housing at price point

Here is the List of Pricing which we have obtained from various Developers. We didn't ask for any bargain or discount, so be sure to negotiate by atleast 20% when you Talk to them.

Sobha Developers Offering 8% Discount

Its raining discount here in Bangalore on residential projects being developed by Sobha Developers. Residential demand in Bangalore is currently sluggish. Although the company plans to launch one new project in Bangalore in FY09, given the slowdown in demand, the company has pushed back time lines of its other planned projects. The company is evaluating plans to offer homes with smaller ticket sizes of about 1,000 sq ft at an average price of about Rs3,200/sq ft.

We have obtained the price list of various projects of Sobha Developers in Bangalore and Pune and they are offering 8% discount on the prices mentioned in the list. [PDF]

Mumbai - BKC Rentals Come Crashing Down:
With increasing supply and stagnating demand, overheated rentals are bound to correct . However, the corrction has now touched 50%. BCK, deals are now happening at Rs250-225/sq ft vs. Rs450-500/sq ft earlier, according to Mr. Panay Vakil, Chairman of Knight Frank India

Unitech Management Selling Own Shares ?

Unitech: Are Mutual Funds / FIIs selling Unitech Stock or is it the management selling its own shares and delivering in the market ?

Trading Statistics of Unitech:

Unitech Limited-Promoter Stake 74%

Traded Volume BSE on November 24th: 1.6 crore shares
Delivery Volume: 27 per cent
Delivered Quantity: 50 lakh shares

Traded Volume NSE on November 21st: 4.6 crore shares
Delivery Volume: 29 per cent
Delivered Quantity: 1.36 crore shares

Who Delivered 1.86 crore shares except the Management? Or is it HSBC/LIC?


Unitech Ltd:
Shareholding belonging to the category
"Public" and holding more than 1% of the Total No.of Shares

No. Name of the Shareholder No. of Shares Shares as % of Total No. of Shares
Seepa Investment Consultants Pvt Ltd 39,789,360 2.45
Mukpreet Business Solutions Pvt Ltd 37,775,790 2.33
Narnil Infosolutions Pvt Ltd 32,698,770 2.01
HSBC Global Investment Funds A/C HSBC 26,338,690 1.62
Life Insurance Corporation of India 21,732,016 1.34

Highest + Lowest Fall Residential Prices

Which Pockets of your city have witnessed the highest and Lowest Fall in Residential Realty prices ? Here is how the data stands at the end of October-2008.

Highest Fall in Residential Property Prices:

• Bhayander, Vasai Road, Nallasopara and Virar in Mumbai West.
• Dombivili, Kalyan, Ambernath, Chembur, Ghatkopar, Mulund, Thane & Vikhroli in Mumbai suburbs and central.
• Noida, Ghaziabad, Gurgaon -Sohan Road, Gurgaon-Golf Course/DLF City and Faridabad in the National Capital Region / NCR
  
• Whitefield, Marthalli, Old Madras Road and Outer Ring Road - Sarjapur in Bangalore witnessed steep corrections. We CAUTION readers about the Prestige Shantiniketan located in Whitefield Bangalore.
• Baner, Aund, Pashan and Hinjewadi in Pune have suffered the worst

Lowest Fall in Residential Property Prices:

• MG Road, Brigade Road, Brunton Road, Lavelle Road, Richmond Road, RMV Extension, Sadashivnagar and Malleshwaram in Bangalore
• Chanakyapuri and Vasant Kunj in Delhi
• Marine Drive, MG Road and Banargee Road in Kochi
• Banjara Hills, Jubilee Hills in Hyderabad and Sainikpuri, Maredpally in Secundarabad
• Adyar, Saidapet, R K Puram in Chennai

You are welcome to share more data if you have.

Historical Residential Property Prices of Indian Metros

The following chart shows Historical Grade-A Residential Prices in Delhi, Mumbai, Chennai and Kolkata between 1992 and 2007.
Source: Knight Frank, Goldman Research

Property prices may need to fall by up to 30% in some markets for affordability to improve. But this does not guarantee that they will begin to start moving up again and at the best arrest the FALL.

Past Fall and Recovery analysis in the past decade

In the previous housing downturn in 1996 when real residential prices fell 40% over three years following which the market witnessed a prolonged slump over five years before recovering. Although a sharp slowdown appears underway, mitigating factors such as favorable demographics, low mortgage penetration, falling interest rates and ongoing infrastructure demand may keep the downturn from being protracted.

Risks of a significant correction in primary residential prices mainly due to low affordability in residential sector.

The Real Estate Cycle - Fall and Rise of 10 Years in Mumbai, Delhi, Chennai, Bangalore, Kolkata and Pune
Source: Knight Frank, Goldman Research

What is the Likely Scenario of Correction this Time ?
Some arrogant Realtors are still licking the A$ of FM without any reduction in property prices. Like I said in my previous post, liquidity is really really tight for Realtors and Banks have said that they will not restructure the loans and want them to be recovered before Feb-09 otherwise they will end up as NPAs in bank's books closing March-09.

The big buyers in Indian Realty was the NRI community, first home in US / Europe, Second and sometimes even Third for speculation in India. But please be assured for now, NRIs are busy protecting their own jobs, forget about them BUYING in Indian Realty.

As we end 2008, Realtors will be under increased pressure and will start liquidating. Caution - Do not opt for the low cost housing which they have started to market [when they will be ready ? god knows]. Go for projects ready to occupy or atleast under execution but at your / CONSUMER rates :-)