Category: Realty

Categories
Mumbai Realty

Is Mumbai in a real estate bubble?

Had an opportunity over the last few days to check out a few realty projects in Mumbai

One project I checked out was L&T Realty at Parel.This project was launched in Oct 2012 and was sold out in a couple of days.The launch price was 16000 Rs psf and is now currently quoting at 19000 Rs psf.Of course, this does not include many other charges such as floor rise (Rs 100 psf per floor) etc.They have one 2BHK available on the 37th floor which has a ticket price of 3.8 Crores !!

The area around this project used to be where the textile mill workers used to stay.Wonder how they feel about the gentrification of their neighborhood.Am reminded of this song from Shanghai which aptly captures what is going on

Now funny thing is possession of these hugely expensive flats is in 2017 !!When I asked the sales person what price does he expect the prices to be on possession, he replied that he expected the prices to double !So will a 2BHK of around 700 sq feet carpet in Central Mumbai cost 8 Crores in 2017?The mind boggles.

The next project which is creating waves in the Mumbai realty market is Lodha at Worli.The presentation is enclosed below:

[gview file=”https://alphaideas.in/wp-content/uploads/2013/01/Codename-Lodha-Blue-Moon.pdf”]

Now, the interesting part of this project is that buyers will not be able to do the site visit during the pre launch phase.There are no layout plans nor any site plans shared with the buyers.So effectively, buyers are booking flats like cinema tickets.You don’t know whats in the movie but you are hoping something good will happen.

Also, there is a lockin clause till possession ie buyers can’t sell the flat during the construction phase.And finally, the expected possession is 2017.

Despite these onerous conditions, this project is expected to be a grand success.Some realtors have told their clients to book blindly saying there will be atleast a 25% appreciation by April 2013.

And the party continues….

Categories
Realty

Off to the races with realty stocks

I had commented on realty stocks earlier.Crisil had conducted a webinar on realty stocks.For those who missed it, the presentation is enclosed below:

[gview file=”https://alphaideas.in/wp-content/uploads/2013/01/CRISIL-Research_Real-Estate-Webinar-Article.pdf”]

Categories
Realty

Who’s got the money now?

Purchases of London’s prime property shows who’s got the money now (src: FT)

Categories
Observations Realty

The retail investor is dead.Long live the retail investor !!

As per Moneylife,

August was a terrible month for the mutual fund industry. Equity funds suffered massive redemptions amounting to Rs5,671 crore and with sales of just Rs3,385 crore, the net outflow of as high as Rs2,286 crore. This has been the highest outflow since February 2012 which saw an exodus of Rs2,809 crore.

 

In a recent article in BS, the national sales head of a large fund house bemoaned “Understanding investors’ sentiments is not easy. It has now become an every-month phenomenon, despite making all possible efforts to retain clients.”

So we have the retail investors deserting stocks and mutual funds in droves.

Now consider the recent press release of Godrej Properties dated Sep 12, 2012,

In a single day, the Mumbai-based real estate developer sold over 1 million sq. ft. of space in its residential project in Sector 104, Gurgaon.
Godrej Properties Ltd. (GPL) (BSE scrip id: GODREJPRP), the real estate development arm of the Godrej Group, today announced that it has sold the entire 1st phase of its residential project, Godrej Summit, in Sector 104, Gurgaon. The first phase of this project had 695 apartments across 1 million sq. ft. of space.

 

As can be seen from the pictures, there is a queue of investors waiting in line to give their cheques.With the current prices of around 5500 psf, Godrej Properties has booked sales of 550 Crores in one day !!

So I guess the retail investor is alive and kicking.

He prefers to stand in line for realty rather than call his broker for equity !!

Categories
Realty

How real estate fortunes are made in India

In the meantime, Gopal Kanda also became friendly with a powerful IAS officer, who took him along to Gurgaon when he was posted there in 1997-98. It was he who arranged the first tranche of cash (Rs 25 lakh) and a list of few properties that were disputed. Kanda opened an office in Sector 14, Gurgaon, where he dabbled in a readymade garments business as well as real estate. The garment business failed but realty turned out to be Kanda’s calling in life and he never looked back since. Kanda acted as the front man for the IAS officer.  His modus operandi was to buy disputed land for a low price, settle the dispute with the help of the IAS officer, and then sell the property for a premium.

 

“The IAS officer was not the only one. When Kanda came to Gurgaon, the Bansi Lal government was in power and his relative Ajit Singh was the local tehsildar. Kanda became close to him. You cannot dabble in such business without support from powerful people. Kanda worked with him for close to two years,” says former Haryana deputy speaker and INLD leader Gopi Chand Gehlot.

 

IN 1999, when Om Prakash Chautala became the chief minister, fortune smiled on Kanda. He rose to dizzying heights during this period under the alleged protection and tutelage of Abhay Chautala. The senior Chautala’s tenure also coincided with the property boom in Gurgaon. The IT sector and the call centre industry came to Gurgaon at around the same time.

 

Kanda made a killing in influencing the change of land use, from agriculture to residential and commercial, which was the single biggest reason behind the astronomical growth in the wealth of politicians and landholders. For example, land that was bought for Rs 25 lakh per acre in 2002 became worth more than Rs 5 crore in just three years. Till 2005, it was alleged that Kanda was Chautalas’ front man, who took care of almost every big deal that happened in the satellite city.

 

–From the Tehelka