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

Make security measures must in buildings: Citizens

PUNE: Over 15,000 citizens, including members of civic organizations and political parties, have asked the Pune Municipal Corporation (PMC) to amend the draft Development Control (DC) rules to make security measures mandatory for new and existing buildings in the city in the wake of recent terror attacks.

The views were received through suggestions and objections to the draft Development Plan (DP) for old city areas.

“Pune is vulnerable to terrorist attacks. The state government’s suggestions, which recommend setting up security outposts, fulfilling fire safety requirements and constructing blast-resistant buildings among other things, need to be implemented. Neither the DP nor the DC rules suggest enough steps to meet these requirements,” stated a suggestion.

Following the blast at German Bakery in 2010, the PMC officials had said that the civic body would amend the DC rules making it mandatory for existing and new buildings to have security measures in place. However, no steps have been taken so far.

“Pune is no longer insulated from what’s happening around the world. First it was the attack on German Bakery and then multiple blasts happened on JM Road. Out city faces major security concerns. We insist that the PMC amends the draft DC rules and make required provisions to tackle such attacks on establishments and citizens,” said Rajya Sabha member and NCP city chief Vandana Chavan, adding that the NCP has incorporated this demand in its suggestions and objections document.

A few years back, the state government had appointed an expert committee under former principal secretary of the public works department M V Merani. The panel suggested certain regulations to be followed to ensure better safety in and around buildings. The special regulations envisage security outposts, approach roads with sufficient restraints to prevent direct movement of vehicles towards structures, a control room for security and electronic surveillance operations, light controls, fire-safety requirements and buildings with blast-resistant designs.

The Merani committee’s suggestions were discussed by party leaders in the PMC following German Bakery blast in 2010. One of the suggestions was to make it mandatory for developers to provide their own security set up and make it mandatory for them to submit a security plan with the building permission proposal.

A PMC official admitted that no concrete steps have been taken because the corporators and the civic administration have failed to reach any logical conclusion on the implementation mechanism to be followed.

“The panel appointed to hear suggestions and objections to DP should consider views that recommend improvement in security set up of the city. It is necessary to protect lives of common citizens,” said Ramesh Punde, a witness to blasts on JM Road last year.

City engineer Prashant Waghmare said, “The Merani committee’s suggestions are for public places. However, the PMC has already made it compulsory for housing societies to install CCTV cameras. The PMC will make every possible effort to ensure that security measures are incorporated in the draft DC rules. There are many logistics like cost and maintenance involved in making security measures mandatory and we have to work out the details.”

CCTV proposal still on paper

The PMC had recently approved amendments to DC rules making it mandatory to install 24×7 closed circuit television (CCTV) cameras at public places in the city. However, the PMC is struggling to implement the proposal. As per the proposal, shopping malls, market places, religious and historic structures, hotels, important tourist destinations, exclusive business buildings and offices of government and semi-government organisations would have to install CCTV cameras and make strctural changes to improve fire safety and security on their premises. The PMC has failed to work out implementation mechanism in this case.

Source: The Times of India