City turns costlier, house prices up by 30% since last September

CHENNAI: Residential property rates have been going through the roof for months but new data shows that the spike for the quarter ending September was 30% more than the same period last year.

Chennai's central business district saw the highest price increases due to surging demand, according to NHB Residex, an RBI-supervised mechanism that tracks housing prices in 15 cities. However, prices in North Chennai - Tondiarpet, Perambur, Dr Radhakrishnan Nagar and Narayanappa Garden - saw a fall due to slow infrastructure development.

Despite the economic slowdown, high interest rates and inflation, prices of houses in the city's hotspots -- Anna Nagar, Kilpauk, Nungambakkam, T Nagar and Adyar -- have been rising. Prices in areas close to Nehru Nagar, Chepauk and Marina rose 62% compared to the quarter ending this June. "Chennai's residential market is expected to see unabated growth during the next few quarters. Active demandwillbeconcentratedin locations closer to the city centre," a recent Cushman & Wakefield reportsaid.House pricesin Chennaihavejumped 9% in the third quarter compared to the quarter ended June.



Prices in Virugambakkam, Anna Nagar, Kilpauk and Nungambakkam have quadrupled since 2007, when the National Housing Bank (NHB) begun the Residex for Chennai. The demand for residential units in Chennai is likely to see a compounded annual growth rate of 11% during 2011-2015.

Real estate consultants blame limited supply and huge demand for property for the surge in prices in the central business district. The city, awaiting the metro rail, monorail and extension of MRTS,willcontinuetosee demand for property near these infrastructure developments, and a surge in prices seems natural.

"In areas like Adyar, Anna Nagar, Boat Club and Nungambakkam demand is high because people want to buy property in places they have been living in for a long time. Another factor that boosts demand and reflects in pricing is the premium schools in those areas. Supply in these areas is low compared to the demand and so prices have shot up.

In Chennai, schools play a big role in residential demand and people are ready to pay premium pricesfor those areas," said S Ramaswamy, associate director, Recs Group, a real estate consultant.

Prices in Delhi have increased the most followed by Chennai and Mumbai, while Kolkata witnessed a decline over the previous quarter. Prices in tier-2 and tier-3 cities like Kochi, Lucknow, Ahmedabad, Surat and Bhopal saw a quarter-over-quarter decline.


timesofindia.indiatimes.com/city/chennai/-City-turns-costlier-house-prices-up-by-30-since-last-September/articleshow/10851683.cms

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Will property prices come down now?

The residential real estate sector is set to decelerate, according to a report by Nirmal Bang Institutional Equities.

One of the main reasons is that the inventory level is expected to go up over the next one year because of declining sales amid increased launches of new projects.

The consequent weakness in transaction volumes will exert pressure on developers in servicing their debt.



This could lead to a softening of prices as banks could force realtors to cut their inventory levels to repay the debt. Here are some excerpts from the report:

4 factors to consider before buying a residential property | Should you cut your property price if you can't sell it?

Residential demand likely to decelerate further because ...

a) Sales volumes have come down: Transaction volumes in the first quarter of 2011-12 declined across cities on a sequential basis, while a few cities, such as Mumbai, Gurgaon, Hyderabad and Kolkata, reported negative growth year-on-year (YoY). This was mainly due to the subdued project launches, the lowest since March 2010, on account of the delay in government approvals and low demand because of higher prices and interest rates on home loans.



 b) Salary growth lags behind rise in property prices: The salaried class, which accounts for around 70% of the total residential demand, has witnessed a 10-13% CAGR in salary over 2009-11, according to industry experts such as Aon Hewitt and Mercer. However, property prices in cities like Mumbai and NCR, which account for more than 40% of residential demand, have gone up by 60-80% from their 2008-9 lows.

Hence, transactions in these cities have been hurt the most over the past few quarters. Also, the rising inflationary pressure since the second half of 2010-11 has dented the purchasing power of buyers. Other cities, such as Chennai and Kolkata, have also seen a rise in property prices by 25-40% since 2008-9, but the prices in Bangalore have moved in line with the salary growth.

 Inventory levels to go up further

According to industry sources, the residential inventory level is still 42-80% off its peak (2008).

Over the past few months, the inventory has been stable at around 9-15 months across cities despite the slowdown in transactions, as against its peak of 30-55 months in December 2008.

This is largely on account of subdued new launches in cities like Mumbai, Noida and Chennai. On the other hand, the inventory level has moved up slightly in Bangalore due to aggressive new launches. All this has resulted in prices remaining firm across cities despite the subdued demand.

Affordability has taken a hit

Affordability has taken a hit with the loan-to-value ratio falling from 90% to 80%, thereby increasing the down payment for buyers. The increase in interest rates by the RBI has also led to a rise in home loan rates. If the rates come down, it will give some respite to buyers, but residential demand will be driven more by affordable prices and salary growth.



 Funding to the realty sector is moderating

Credit growth, which had witnessed a sharp acceleration in 2010-11, moderated in the first quarter of 2011-12 on a y-o-y basis, partly reflecting the effect of higher lending rates and partly the base effect.



Bank lending to the real estate sector moderated from 22% growth y-o-y registered in April 2011 to 17% in July 2011.

This was on account of the RBI's directive to banks to slow down their lending to real estate projects as a precautionary measure to avoid loan defaults.

 Rising interest rates

The average cost of debt for the realty sector has gone up by 100-500 basis points (bps) since 2009-10. Fresh loans are now offered at 12.5-15%.

In case of companies, it has gone up by 20-100 bps in the first quarter of 2011-12, and the recent hike by the RBI will further increase the interest cost this year.

Most of the mid-sized developers are rushing in for non-convertible debentures (NCDs), which are dearer than bank loans, as banks have become more cautious about lending to the realty sector.


articles.economictimes.indiatimes.com/2011-11-21/news/30424695_1_property-prices-residential-demand-transaction-volumes

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Brand Noida Vs Brand Gurgaon: Where would you put your money in the battle of the burbs?

Gurgaon's zooming real estate prices underline the fact that it has arrived as a leading commercial and residential hub while Noida and Greater Noida continue to lag behind. Commercial space in Gurgaon today fetches a monthly rent of between Rs 120 and Rs 140 per square foot. In Noida, the same space is available for a paltry sum of Rs 35 per square foot.


The same story holds for residential space. Gurgaon's new sectors command a handsome price of Rs 4,000 per sq foot but in Noida, the price is between Rs 2,000 and Rs 2,500 per square foot. But Noida developers are building big for the future. A large number of high-quality commercial and residential projects are being developed on the Noida-Greater Noida Expressway.

A couple of upmarket residential projects are being constructed around 18-hole golf courses, which can rival any similar projects in Gurgaon. A residential project in Greater Noida by Jaypee Greens on 452 acres with an 18-hole golf course at the centre provides a world-class residential option to top corporate honchos. Gurgaon, on the other hand, has only the DLF golf course to boast of.

EAT & SHOP : If you're the kind who needs a 'special' coffee place, eat out every other day or just unwind with a pitcher of freshly brewed wheat beer, then Gurgaon is just the place for you. Whatever else Noida may have on Gurgaon , its Haryana counterpart steals a march when it comes to entertainment and eating-out options. There are over 40 malls spread all over Gurgaon with cinema halls, restaurants and international brands. Compare that with Noida where all the action is centred around Atta Market or Sector 18.

If spending a weekend at the mall isn't your scene, then Gurgaon has plenty of fine-dining restaurants — standalone and in hotels — late-night dhabas, quiet coffee places, a superb bakery or even ahatas where you can take your booze, order some food and sit back while a Jimi Hendrix concert plays on the big screen. Innumerable microbreweries have sprouted in Gurgaon giving beer drinkers reason to cheer. Clubs in Gurgaon remain open till at least till 3am. Even liquor shops are licensed to stay open till 2am and some will even deliver at your doorstep. There is culture, too, with venues like Epicentre hosting some of the best theatre groups in India.

METRO MATTERS: When it comes to Metro rail-based connectivity, Noida scores over Gurgaon. The authorities have collected money from end users and created a huge corpus of around Rs 9,000 crore for extending the existing lines up to Greater Noida. But, there is no similar mechanism available in Gurgaon.

SADAK, BIJLI, PAANI : Gurgaon's swankiness is confined to indoors. The sewage main lines are missing in most localities, especially in the new Gurgaon sectors where sewage is dumped in vacant plots. The Haryana Urban Development Authority has adopted the Greater Noida model in developing sectors, with private companies constructing and maintaining the infrastructure. On the power front, both witness power outages of around 8 to 12 hours during summer. Water is where the east scores since it has more groundwater availability. Future plans for Gurgaon envisage a sufficient quantity of water from the NCR channel. Noida, on the other hand, has plans to provide 100% Ganga water by 2020.



PARK AND RIDE : Cyber City is where the very centre of corporate razzle-dazzle in Gurgaon lies, though you wouldn't have guessed it if you go by the pockmarked and water-logged roads here. In Udyog Vihar, the region's industrial hub, with over 2,000 manufacturing units doing thousands of crores worth of business, there's no sign of a parking facility. Drive through the plushest of residential colonies, Sushant Lok, and marvel at the great heaps of garbage lying uncollected for months. Noida, on the other hand, follows a better approach to town management. The suburb has well laid-out sectors with wide roads, flyovers and under-passes and plenty of local shopping complexes in each sector. The Noida Authority recently announced the allocation of Rs 4,997.65 crore for development projects.

HEALTHCARE: When it comes to education, Gurgaon boasts of bigger names like Sriram and Heritage. But in terms of hospitals, they are about equal. Large facilities like Medanta, Fortis, Artemis and Paras are coming up in Gurgaon. Noida has its share of hospital chains like Fortis, Max Healthcare, Apollo, Metro and Kailash.

BRAND WARS : Driving the Noida story is Mayawati, who has moved beyond her Behenji image, and is burning a lot of rubber to win the race. Team Hooda has the advantage of a pole position. Even if they seem a bit out of form now, maybe, a pit stop is all they need. Perception plays a huge role on track as well as off it. Till recently, Gurgaon was seen as a VIP city. Noida was still a middle-class suburb, notorious for crime.

The future looks great for Greater Noida, while nothing is new about New Gurgaon. Noida, supplied less than onethird the properties as Gurgaon till 2007, now supplies six times more properties than its competitor. It has better connectivity with three expressways and has successfully hosted the F1. But all is not well with Noida. More than 50,000 apartments were put at risk during the Noida Extension land dispute, which is yet to be resolved. If the realty bubble bursts, middle-class investors will be the biggest sufferers. The chequered flag is still out of sight. Which city would you bet on?


articles.economictimes.indiatimes.com/2011-11-16/news/30405544_1_gurgaon-noida-scores-residential-projects

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Formula One: Grand Success

Red Bull Formula One driver Sebastian Vettel of Germany drives during the Indian first F1 Grand Prix at the Buddh International Circuit in Greater Noida, on the outskirts of New Delhi, October 30, 2011. (Reuters Photo/Adnan Abidi)
New Delhi. The success of India's inaugural Formula One championship over the weekend won over not only skeptical Indians but also the F1 establishment, which till just a few weeks ago had expressed doubts about how the race would turn out.

To the collective surprise of Indians, the race organizers and the F1 management, the three-day event - which drew 95,000 spectators on race-day Sunday - went smoothly, helping the country to put behind it memories of last year's Commonwealth Games, which were mired in project delays and bloated costs.

It was a welcome relief to a nation worn down by months of negative headlines, brought on by high-profile corruption cases, a stagnant government and a slowing economy.

Congratulatory backslapping was evident the day after the race.

"Finally, an international event flawlessly executed and delivered by India," said the Times of India. There was favorable press treatment overseas as well. "Victorious Sebastian Vettel praises India and the Indian Grand Prix," said British newspaper The Guardian, which had written several articles critical of last year's Commonwealth Games.

Rohini Suri, a businesswoman, who was at her first F1 race said: "What makes me feel good as a citizen is that there was no bad press and no mess."

However, the event in Uttar Pradesh, one of India's most backward states, was not totally without its share of glitches, some of which will likely be revisited now that the dust has literally settled.

An angry crowd of 30,000 trashed the stage at a Metallica concert in Gurgaon last Friday after it was cancelled over security fears. Too many tickets had been sold for the concert which, although not organized by F1, was one of the events associated with the race.

Several concert-goers were injured.

"I'm glad my sons got out from the Metallica madness unscathed. Why can't we organize an event without drama?" tweeted Jammu and Kashmir Chief Minister Omar Abdullah.

In a country where private companies have been credited with fueling India's economic growth, the F1 race was a private effort brought by the Jaypee infrastructure group, which bought land from the Uttar Pradesh government to build the F1 track and residential properties around it.

But farmers have been vociferously protesting against the land acquisition, which they say was rushed and provided them with low compensation.

Indian media reports said 500 farmers were given passes to watch the race and some paused their protests last weekend in deference to the 'international event'. A handful protested by playing cricket and Indian sports like kabbadi near the track, and were detained.

Land troubles aside, the Jaypee Group has admitted it will not make up costs in the initial years. But it hopes to avoid the fate of other circuits from Shanghai to Malaysia, which are suffering from financial losses and failing interest, by focusing on selling property pegged to the F1 brand.

It has also opened talks with MotoGP and other race series to make up for the limited profits from F1, which are confined mainly to ticket sales. The venue, which had a capacity of 120,000, was less than half-full for last Saturday's qualifiers and 79 per cent full on Sunday.

And though the inaugural race, which was telecast to 550 million viewers in 200 countries, has been declared a success, sports experts said it was too early to predict the future of F1 in India.

Organizers hope that the 12.5 million Indians who regularly watch the Formula One championship on television, according to last year's figures, and newer fans will continue to sustain interest in a country where the middle class equals the size of a European country.

Indeed, the race also highlighted the chasm between its well-heeled spectators and the poverty around them.

A well-known athlete said it was a 'criminal waste' for a country where 99 percent did not understand what F1 was.

Ravinder Singh, who works as a driver for 8,000 rupees (S$205) a month, the price of an average F1 ticket, was one of those who did not quite understand what the fuss is about.

"They have been showing it on TV," he said. "But I like watching cricket."


www.thejakartaglobe.com/sports/formula-one-grand-success/475727

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