Month: August 2013

Housing prices begin to fall as slowdown bites

NEW DELHI: The rising interest rates, liquidity tightening in the banking system and slowing down of economy have badly affected the real estate sector. As the demand for residential real estate has softened, its prices across the markets in India have started showing a declining trend.

According to National Housing Bank residential index, the prices have shown a declining trend in 22 out of 26 cities in the April-June 2013 quarter compared to the January-March quarter. Real estate prices have softened in major cities like Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Pune. (see chart)

Real Estate Price Fall Index
Real Estate Price Fall Index in Major Cities

R V Verma, CMD of NHB, said rising interest rates have adversely affected the demand from end-users, which led to rise in the inventory of unsold property. As builders have to meet the loan repayment liability as well as complete the already started projects, they find it more prudent to cut prices to sell the units and generate cash.

Sanjay Dutt, joint MD at Cushman and Wakefield, a property consultancy, said the decline in prices is not sufficient enough to attract the buyers. But, the good thing is that a beginning has happened. He felt if the economic conditions do not change, the trend will continue and it will provide a good opportunity to the end-users to buy a house. Dutt said as the sentiment is subdued the investors are also absent from the market.

Verma too argued that the declining trend in the real estate prices is good for both builders as well as end-users. As the cost of money has gone up and the chances of making money in the short-term are not very bright, the investors are absent. This will be a positive for end-users to buy house.

Verma added that if prices come down, transactions will increase, which would improve the cash flow in the sector. In 2008 and 2009, when the entire country was reeling under the global financial crisis, real estate came out of it unscathed mainly because of its strategy to cut prices and increase turnover.

Source: The Times of India

City of Joy, Kolkata – where to purchase Real Estate Property

The ‘City of Joy’ – Kolkata, has continued been hailed as the cultural capital of the country. Now, Kolkata is making news for its infrastructural growth and redevelopment. The city has all of a sudden awake to bigger growth and this is smashing the property affairs of the city. Capital amount for land and rental costs are 50 to 80 percent affordable in Kolkata as compared to added metros like Mumbai and Delhi. Excellent residential adaptation is easily accessible in the city. As the property rates are accomplished for localities like Alipore, Ballygunge and Centre City about Park Street. These are aswell the hub of the city’s nightlife and are near to all the excellent arcade areas in Kolkata. Added adorable residential options are broadly accessible in urban and suburban areas.

The appeal of real estate Kolkata is nourished by the advancement of the Information Technology Enabled Services and Information Technology sectors. Affordable housing facilities are easily accessible in the Salt Lake area. Incidentally, all Information Technology accompanying activities are settled in the New Kolkata Township of Rajarhat that is being developed adjoining to Salt Lake. More Information Technology accompanying developments are advancing up in the colonies forth closeby Eastern Metropolitan Bypass and VIP Road.

The costs of Real Estate Property in Kolkata have apparent an abrupt advancement graph. As the land value have increased appreciably in localities of central and south Kolkata. The factors abaft such an abrupt acceleration in selected localities are the bound availability of realty options, acknowledged retail and industrial projects and excellent connectivity with roads. Different areas that are observing bang are the Eastern Metropolitan Bypass area and the new Rajarhat township. The flow of Foreign Direct Investment has aswell led to an acknowledgment of the all-embracing superior of realty projects. Movement in real estate market has accustomed advance to hospitality industry too.

North Kolkata Real Estate is becoming expensive due to scarcity of land here. A lot of of the North Kolkata residents who have been staying there for decades do not wish to leave this place as said by one of the advisors. Abounding of the North Kolkatans’ children have migrated and are located overseas but the rest wishes to stay back. Due to less availability of excellent land and the fact that inhabitant still wish to stay here, North Kolkata’s property values have registered a hike. As per one of the renowned property portal value chart, the apartment capital value at an archetypal North Kolkata locality of Baghbazar has observed approx 6% acceleration in values in the previous three months from Rs 2500 to Rs 3000/ sq. ft in Jan. 2008 to Rs 2700 to Rs 3100/ sq ft in March, 2008.

North Kolkata is over crowded and accordingly the costs of the property have also gone up. One can’t even widen the roads here as there is no scope for broaden it. The abode abounds in small builders having up to 3 to 4 kathas of real estate and they have been architecture structures of G+3/4 storey buildings. There are no accustomed or big real estate builders in here unlike South Kolkata and the market is basically composed by small local builders. Some of the realty Developers in Kolkata, anticipating appeal in the closeby approaching have combined industrial land at the adjacent Jessore road, in the hope that it will be convinced from residential to commercial in the future and then they will be able to acquire returns.

Source: Articles Bud

Residential real estate scenario looks promising for Kolkata in 2013

Kolkata is the commercial, cultural and educational capital of east India. It is a city that has many faces and has the oldest working port in the country. This is the city that served as the gateway for the East India Company in the early 17th century. One of the most important political centers of power in the colonial times, Kolkata was the capital of the country till 1912 and also the seat of the Supreme Court. It is located on the banks of river Hooghly and has a geographical spread of 185 km. The population is around 5 million, which makes the city one of the densest cities of the country in terms of number of people per square kilometers This urban conglomeration includes a whopping 72 cities and 527 towns governed by three municipal corporations and 39 local municipalities. It is growing metropolitan city well supported by an efficient public transport system, infrastructure like an extensive network of roads and bridges, an international airport, a river port and multiple railway stations.

Current Trends in Residential Real Estate
There is a heavy demand of apartments for the mediam income level group where the pricing is in the range of INR 25 lakhs to 30 lakhs. It is a heavily user end driven market where the end user presence is approximately 65 percent. Rajarahat is the current center of attention due to its potential IT growth in the future. The political turmoil in the state is keeping the realtors in wait and watch stance. New entrants in the realty sector are more inclined towards smaller realty projects owing to the quick entry option it provides. Lack of interest in developing bigger projects can also be owed to the small sections of land and regulatory clearances issues.

Kolkata Residential Real Estate for the year Ahead (2013)
Keeping with the trends of the previous year the real estate market in Kolkata is looking forward to an even better 2013. The state government is taking new initiatives to fasten the clearances process which has ignited hopes for a good year ahead in real estate developers and builders. According to estimates the market is going to expand by 10 to 15 percent in 2013. The residential segment will witness less of the volatility that was prevalent in the previous year. Further, the commercial space will also have a good take off and lower interest rates will drive the consumer confidence to greater levels. Property in Kolkata do not expect to show a speculative price movement and the actually buyers will dominate the market. With rising inflation, raw material will be more expensive and consequently the cost of construction will also rise. The situation was similar in 2012, where a 30 percent of increase in the input costs reflected in the form of 10 to 15 percent price movement in the residential housing segment.

The average rates across the urban areas of city will be in Rs. 3,000-4,500 per square feet range while on the peripheries this rate will be between Rs 2500 and 3,500. Price rise in the residential segment will also be due to supply constraints as there will be limited supply of new housing units. The biggest realty developers active in the city blame government for slowdown in the new project launches. However, these developers promise to come up with new projects in the coming year. Ambuja Realty and Pasari Group will launch two of the biggest residential projects in 2013. The main focus of realty developers would be on areas like Behala, Rajarhat Diamond Harbour Road and EM Bypass. Areas with metro connectivity will remain a major draw for real estate developers.

Source: Article Ratings

Kolkata suburbs witness rise in property rates

It was expected that the price of apartments in the fringe, or peripheral areas, of Kolkata would ride piggy back along the Metro Railway network. But areas which do not fall along the Metro routes or are dependent on a suburban railway system are now witnessing a steady rise in real estate prices.

Towns such as Uttarpara or Konnagar (around 40 minutes’ drive from Kolkata), north of the city, and Sonarpur and Rajpur (some one-hour drive to the South East) – that are still dependent on the suburban transport system – are witnessing a steady increase in supply of condominiums.

According to market sources, these suburbs have seen a 25 – 30 per cent rise in property prices over the last one year.

“In the last one year, property prices in the suburbs have moved up by an estimated 15 – 20 per cent,” Manish Mehta, Vice-President, IndiaHomes, a real estate advisory company, said.

According to Mehta, Kolkata had been one of the slow-movers when it came to infrastructure development in fringe areas. The National Capital Region and Bangalore have seen a much faster uptake of properties in the periphery compared to Kolkata.

The entry of big ticket developers (from Kolkata) too has led to an appreciation in real estate value.

BIG LAUNCHES

Once dismissed as non-lucrative areas, these areas are now witnessing a steady inflow of big realtors. Lower land prices compared to the city and an available catchment area due to closed factories remain key factors.

Along the northern fringes, RDB Realty and Infrastructure is already carrying out development in Konnagar. Kolkata-based Unimark Group will launch its 500-apartment (for mid- and premium segments) project (Unimark Riveria) in Uttarpara. Keventer’s already has a project in Rishra.

Accordingly, rates along Uttarpara and Konnagar at present stand at Rs 2,500–4,000 per sq foot ; in some cases, more or less at par, if not higher, than some areas south of Kolkata.

South Kolkata fringe areas, such as Sonarpur, Rajpur, Baruipur, are commanding a price of around Rs 2,750 – 3000 per square foot .

Backed by an announcement for extension of the EM Bypass (connecting north and south Kolkata), Narendrapur witnessed an appreciation in price. It now commands price of around Rs 3,000-4,000 a sq ft. Kolkata-based Rajwada Group has announced the setting up of premium condos there.

“Big ticket investments along fringe areas have often not been successes because of infrastructure issues,” said Mayank Saksena, Managing Director, Kolkata, Jones Lang LaSalle.

Source: The Hindu Business Line

Tax benefits on home loans may boost Kolkata real estate market

The recent Budget proposal which links tax benefits on account of home loans up to Rs 25 lakh may invigorate the Kolkata real estate market more than any other major metro city.

This year’s Budget gave additional tax deduction on interest of up to Rs 1 lakh for first time home loan of to Rs 25 lakh, and property value of Rs 40 lakh. Interestingly, among the four metro cities of Delhi, Mumbai, Chennai and Kolkata, it is only in Kolkata that Rs 40 lakh can still buy as much as 1,000 sqaure feet home, that too not very far from the city.

While Kolkata may not have seen many mega housing projects in city proper, city fringes are likely to see a multitude of small housing projects in areas like Rajarhat, E M Bypass, Diamond Harbor, Garia and Kona Expressway over the next twelve to eighteen months.

According to data from magicbricks.com, the lowest prices for property around Kolkata range between Rs 1,500 to Rs 2,500 per square feet. In fact, Kolkata seems to be the only market where residential real estate development in some areas is still selling at prices less than Rs 2,000 per square feet. For example, property prices in Amtala, about 20 KM away from Kolkata at present is close to Rs 1,500 per square feet, while that in slightly more developed areas like Airport is about Rs 2,723 per square feet. A 1,000 sqaure feel house within a Rs 40 lakh budget gives ample options for home buyers in areas like Bangur, Bransdoni, Behala and even in the IT hub of City Centre New Town area. The highest property prices in Kolkata is at Alipore area, its costs Rs 12,000 to buy a square feet of residential block.

However, the highest in Kolkata could buy one average property in terms of locality in Mumbai. According to information at magicbricks.com, per square feel residential real estate in Altamount Road in Mumbai sells at Rs 64,778 per square feet. Residential property prices in Borivali East and West is about Rs 12,000 per square feet, a price equivalent to real estate price in the high street locality of Aliopore in Kolkata. In Delhi too, the property market is not much different from that in Mumbai. The lowest property prices in Delhi seem to be nothing less than Rs 8,000 per square feet. A property price in plush areas like Defence Colony is as high as Rs 32,000 per square feet, according to magicbricks.com.

In Chennai, a sub-Rs 40 lakh budget gives a buyer many options, but not as many as in Kolkata. However, nothing much would be available at below Rs 3,000 per square feet price.

“Kolkata could see a higher number of real estate transactions over the next few months due to the Budgte proposal. It will have more impact in Kolkata than in cities like Delhi, Mumbai and Bangalore,” said Jitendra Khaitan, chairman and managing director, Pioneer Property.

Traditionally, Kolkata has been regarded as an end-users, rather than investors market, which has kept the real estate sector immune to sharp price movements in other parts of the country.

In spite of a number of small projects lined up to be launched, land is posing a problem in launching big projects.

One of the biggest hurdles in developing new townships in West Bengal is the the Urban Land (Ceiling and Regulation) Act (ULCA), 1976. According to the Act, the ceiling limit on vacant land in a category ‘A’ city like Kolkata is 7.5 cottah or about 500 square meters.

West Bengal is one of the few states in the country to have a legislation like the ULCA.

Recently, the West Bengal government had formed a task force to look into the issues related to allotment of large land.

Source: Business Standard