Real estate developers jack up prices despite a pile-up of inventories
Despite a much improved market scenario, real estate inventories are piling up with builders. Undeterred, they are launching new projects. In the second quarter of this financial year (Q2 FY10) inventories have gone up by 20%. Last quarter (Q1 FY10) the inventories in six cities (Mumbai, NCR Delhi, Bengaluru, Pune, Chennai and Hyderabad) were a total of 2,82,999 units.
 
“From October onwards you will again see a drop in price of properties by 15%-20% as the developers have lot of inventories logged up. On top of that, they are increasing prices, encouraged by a more buoyant market,” said Pankaj Kapoor, founder and chief executive officer, Liases Foras, a property research firm.
 
In Mumbai as many as 68,000 units are unsold. In NCR Delhi it is 70,000 units, Bengaluru has 48,000 unsold units, Pune has 44,000 unsold units, Chennai has unsold units of 21,000 and Hyderabad has 31,999 unsold units.
 
Thanks to a slight recovery in the real estate sector, most of the builders increased prices by 10%-20% which has subdued sales. “In Pune, around 200 new projects have been further launched between June 2009–September 2009. We are foreseeing the same kind of situation across the six cities,” said Mr Kapoor.
 
During Dushera to Diwali most of the developers launch new projects. The inventories are increasing sharply and to reduce the inventories, the developers have to cut down on the prices and make their properties more affordable for the masses.
 
In Mumbai, properties beyond Borivali, were selling at Rs 2,000 per sq ft. The left-over properties are now priced at Rs 2,800 per sq ft. In central Mumbai properties sold at Rs 13,475 per sq ft, but the left-over properties are now priced at Rs 24,950 per sq ft. “Until developers do not bring down prices, properties are not going to sell,” said Mr Kapoor.
- Pallabika Ganguly [email protected]
 
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Prozone to earn Rs 40 crore-Rs 50 crore lease rental from Aurangabad mall
Prozone Enterprises (P) Ltd, a retail real estate development company and a wholly owned subsidiary of Provogue India, will be earning lease rental revenue of Rs 40 crore-Rs 50 crore per year from the first mall at Aurangabad, assuming that the lease rental is between 6%-10% of total annual revenue, according to industry sources. The project is built on8,30,000 sq ft area of retail space.
 
According to Nikhil Vora, managing director-research, IDFC SSKI Securities Ltd, “the mall will generate Rs 500 crore-Rs 600 crore of revenue per year.”
 
“The handovers of the stores will commence from beginning of 2010 and the occupation in the mall will start by July 2010,” said Nikhil Chaturvedi, managing director, Prozone Enterprises (P) Ltd.
 
The company is planning to build 50 Prozone shopping malls with an investment of $1 billion over the next five years, said Chaturvedi. The company is developing more than 12 million sq ft of modern retail space in India, primarily in tier-II cities such as Raipur, Jaipur, Indore, Mysore and Aurangabad.
 
The anchor tenants (Hypercity, Shoppers Stop, Globus, Westside, and Big Cinemas) are satisfied with the structure of the mall. “The structure is built up in a unique way keeping in mind tier 2 cities. I think it should do very well in these cities,” said B S Nagesh, vice-chairman, Shoppers Stop.
 
The company has already sold 80% of the stores in the mall. “After the success of their project at Aurangabad, the company will be soon be coming up with malls in Indore, Jaipur and other tier-II cities,” said Mr Chaturvedi.
 
 
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COMMENTS

imran khan

8 years ago

Superb, u gave a new look 2 aurangabad thanx.

Harshith

8 years ago

when will u finish the construction of prozone mall in mysore??????

Protecting
'Unauthorised development' in Delhi was given official protection instead of punitive action by the Delhi Government through Section 3(2) and (3) of the National Capital Territory (NCT) of Delhi Laws (Special Provisions) Act, 2009, says Shailesh Gandhi, a central information commissioner (CIC) under the Right to Information (RTI) act.
"I had heard about mafia protection for illegal activities, but am surprised that protection is offered by the Government under the garb of a law," he says relating the following story.
 
Such official protection has been revealed through RTI queries. For instance, one citizen asked for proof of whether a mobile tower erected on top of an existing building had been given permission as required under the law by the MCD. Only after some coaxing it was revealed that no permission was given. Despite a complaint to the municipal commissioner and police commissioner and a promise of action by the public information officer (PIO) there was no action for several days to bring down the tower which could pose a hazard, endangering the lives of people staying in those buildings.
 
The additional commissioner (engineering), says Gandhi, has revealed the fact that out of 4,532 mobile towers in Delhi only 2,015 have the requisite permissions and 2,517 are without MCD permission! Thus large corporates are putting up the mobile towers on the terraces of existing buildings without legal permission.
 
The additional deputy commissioner of police undertook an inquiry and came to the conclusion that the police cannot take any action since all 'unauthorised development' in Delhi has been given official protection by the Delhi Government under Section 3(2) and (3) of the NCT of Delhi Laws (Special Provisions) Act, 2009.
 
What’s more stunning, he says is the grave potential misuse of the process. To install a mobile tower, MCD has specified that stability certificate will be accepted only if it is issued by one of the five agencies approved by it to ensure that the building is not likely to be endangered by putting additional load on top. One of the approved agencies is IIT Delhi. 
 
In one such hearing at the information commission, this is what was recorded: "The Appellant had pointed out there are two certificates issued for the same address. The PIO has stated that the faculty members in IIT issue a stability certificate based on the drawings provided by the client in which the address is mentioned. The PIO also states that no records are maintained by the IIT of the drawings.
 
The stability certificate provided by IIT states, ‘This building is safe and capable of resisting the forces and moments which may be increased or altered by reason of the additional structures for 15 meter three-legged tower with GSM and MW antenna.’
The wording of this certificate appears to indicate that it is certifying the stability as existing whereas the PIO described that it is a certificate based on a drawing with an address which is not verified at all. Given the fact that the IIT does not maintain any copy of the drawing with itself, this process appears to have great potential for misuse.
 
Statutory bodies which permit these towers and IITs would do well to take a look at these practices which may have the potential of endangering safety. Alternately people may discover that there is no need for such certification in which case it would be done away with."
 
Although this is just an example, it gives an indication of some fundamental reasons for the steady decline in the rule of law and decadent governance. Some key elements for this decline are flouting of the laws by major corporates, who operate without permission in over 50% of cases. MCD will not take action against these corporates while the Delhi government offers legal protection to unauthorised activity by major corporates and a premier academic institution issues safety certificates in a manner which is completely flawed, says Gandhi.
 
The CIC further says this is a potent combination whereby conscious collusion and inactive passivity leads to a society where the rule of law is effectively subverted by the powerful, leading to a decadent governance structure and institutions and citizens need to find ways to correct this.
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COMMENTS

M K TYAGI

7 years ago

Section 3(2) and (3) of the NCT of Delhi Laws (Special Provisions) Act, 2009.
should be agitated in Legislative Assembly. Alternatively Centre for Public Interest Litigation should come in action.

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