Trivendrum

Kozhikode

Offers are Invited for establishment of Engineering/ Medical/ Vocational Institutes, Centres of Performing Arts, Social & Cultural Centres, Hospitals, Entertainment/ Leisure Complexes, Corporate Plazas/ Office Complexes and any other specialised Institutional/ Commercial activities in Greater Noida area for 90 years of lease on "As is Where is" basis.

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The speculative fervour in the mid-90s had been generated due to lack of implementation of policies and and very high expectations of the people from the economy in the post-liberalisation phase.

Professor Marsh was speaking at a seminar on Indian property market organised by India Property Research —the Indian arm of London Property Research—in collaboration with real estate consultants Chesterton Meghraj and developers TCG Developments India. The seminar also marked the launch of a comprehensive research report on Delhi brought out by India Property Research dubbed Delhi Property Market 1999-2000

The seminar was also addressed by N S Venkatesh, head, Crisil Advisory Services who dwelt on realty rating and Ajoy Kapoor, head, facilities management, Standard Chartered Bank, who waxed eloquent on real estate management in corporate planning. In terms of specific market performance, Professor Marsh felt that in commercial property, longterm office costs have fallen as a proportion of total operating costs. In Delhi alone, Marsh projects demand for commercial property to grow five-fold over the next five years. However, the price-rise would be low since there exists three years’ oversupply. ``Property pricing at the end of the day must reflect the capcity of the local economy to pay, rather than the investor aspirations or short-term distortions,’’ Marsh points out. Marsh was gung-ho about retail property which offers developers immediate opportunity since there is an yawning demand-supply gap. ``Given the increasing level of disposable income and propensity of consumers to go for branded products, India can support at least 250 shopping centres over the next five years. Only a handful exist right now.’’ pointed out Professor Marsh. He also anticipates that long-term residential values will rise as a function of greater disposable incomes and aspirations of families. He thinks that residential property is usually a year or two ahead of commercial space in a real estate cycle.

When queried on property research (or the lack of it in the Indian market), Marsh replied realty esearch should try to identify information gaps, build databases, and sell databases.

CRISIL will formulate a code of ethics and shall also set up an ombudsman to investigate any infringements of the code.

Capital Values: The last three months have seen a swing of mood towards optimism in the Indian conomy. After dire predictions of a looming recession, a revival in cyclical industries such as cement, steel and automobiles has provided a sense of relief. With industrial recovery in the offing, the economic growth rate has been revised to a realistic 6%. Rural income in FY'99 have estimated to be substantially higher than the previous fiscal (by around 10 bln U$), mainly due to a bumper crop in Apr.-May'99.

Inflation as measured by the wholesale price index continues to remain at a 17 years low at under 2% level on a year on year basis. This continues to give the Reserve Bank the flexibility to reduce the cash reserve ratio and also to maintain flat interest rates.

The industrial growth rate at 6.3% in April- May'99 is a reflection of demand picking up. With increase in demand, investments are also expected to pick up. One of the major thrust areas is expected to be the housing construction sector. This coupled with flat interest rates as also tax incentives provided to the housing finance sector, has seen a 25% to 30% increase in disbursements for major housing finance companies.

Overall, with the economy looking up, the real estate market, after having bottomed out, is set to see heightened activity in the coming quarters and prices are unlikely to decline any further.

Supply: By the end of the year, an additional supply of 4.5 to 5 mln sq ft of office space is expected to be created in the CBDs of the four major metros: Mumbai, Chennai, New Delhi and Bangalore. In Delhi, the vacancy rate is expected to increase from approximately 12% to 15% in Connaught Place and it is likely that rentals will remain under pressure for the next 18-24 months.

Demand: Demand is picking up in non-CBD areas such as Bandra-Kurla in Mumbai and Gurgaon in Delhi, where corporates continue to relocate in an effort to consolidate all their facilities under one roof.

Rents, Capital Values and Yields: Since 1996, rentals and capital values have both seen a decline all over the country. Investors have been predominantly out of the market and annual yields have decreased from 14-16% to 11-12% within a time period of three years.

For the first time, since 1996, though, markets have shown signs of revival, prices are gradually gaining stability.

Capital Values: In Mumbai, the demand for outright purchase of commercial properties remains weak as compared to the previous quarters.

The Worli area is gradually losing out to Bandra-Kurla and Andheri- Kurla due to pricing advantage and superior facilities.

Bandra-Kurla has added new state of-the-art buildings, to the supply, which have generated considerable demand even in the construction stages. Some notable buildings are ICICI, Citibank, ILFS Tower, Wockhardt, Fortune 2000 to name a few.

Andheri-Kurla also continues to be popular as it provides office space both in the economy range as well as in the premium range. The new quality stock released is being absorbed at a higher rate than before, although off-take on stock under construction is still slow.

Rental values have shown a marginal decline in Cuffe Parade and Colaba, with prime buildings fetching between Rs 130 to Rs 150 per sq ft per month. Security deposits have reduced to 12 months' rent from the high values being commanded earlier.

Andheri-Kurla rental values have declined marginally, with the increase in supply to settle in the range of Rs 50 to Rs 80 per sq ft per month.

In the second quarter of 1999, the residential property market has witnessed an increased purchaser interest in the mid to high-end segment.

Significant sales of prime properties in South Mumbai were the highlight of the quarter, some of these being apartments in Maker Tower B in Cuffe Parade at Rs 23,000 per sq ft, Breach Candy apartments in Breach Candy at Rs. 19,500 per sq ft, Urvashi on Napean Sea Road at Rs 16,000 per sq ft, Everest Apartments in Malabar Hill for Rs 17,000 per sq ft and Lands End in Dongersi Road at Rs 10,800 per sq ft.

Whilst there continues to be interest in new properties, buyers still consider projects which have ready to move in unit sort hose in their final/completion stages.

Even though some companies have reduced budget allocations for expatriates or cut down on the number of expatriate staff, the leave and licence market continued to be active in the last quarter.

At the upper end of the market, the occupancy rates continued to be high in certain prime buildings, thus creating a price-quality equation which pushed rentals up in this segment, in this quarter

Therefore, even though there has been an overall bottoming out of property prices, a few premium apartments either retained their values or have been leased at rentals higher than the current market levels.

Capital values are still subdued in Gurgaon, as there has been an increase in the supply available, with new projects being undertaken by various developers. Some of these are DLF's Plaza Towers, TCG's First India Place and Unitech's Global Business Park and Business Floors.

Rental values: There has been a drop of 5-7% in rental values of prime commercial properties in the last quarter. We expect a continued weakening for the remaining half of the year.

Prime buildings at Connaught Place fetched effective rentals in the range of Rs 120 to Rs 175 per sq ft per month. Lease rentals for prime buildings in Nehru Place were in the range of Rs 75 to Rs 175 per sq ft per month while those in Gurgaon were between Rs 40 to Rs 75 per sq ft per month.

With heightened corporate activity in Gurgaon, several private developers have announced residential projects, which will create additional supply in the market.

With more options being generated in a supply heavy market, the end user has become more discerning with value-for-money being sought and additions such as better amenities and conformity to Vaastu are catching up.

Most tenants have renegotiated the security deposits and the advances charged, with there being a downward revision in the upfront money taken by the landlords, thus bringing down the effective rentals by 5-7%.

While the rental values weakened in most of the areas, values in prime areas of Malcha Marg, Chanakyapuri and Shanti Niketan have remained stable in the range of Rs 50 per sq ft per month to Rs 60 per sq ft per month.

Demand for farmhouses in Chattarpur and Pushpanjali areas have increased with a number of multinationals having taken up office space in Gurgaon. Rentals for farmhouses, having areas between 2.5 acres and 5 acres, vary in the range of Rs 1.75 lacs to Rs 3 lacs per month.

A number of software companies are moving into larger facilities in an effort to consolidate their various offices under one roof. This has led to companies looking at Koramangala, Indiranagar and Hosur Road as viable options, where capital values are as low as Rs 1,500 to Rs 2,500 per sq ft.

Capital values have bottomed out and business is looking up as compared to last year. Capital values in the CBD vary between Rs 3,000 to Rs 4,500 per sq ft.

Though an additional supply of 50,000 sq ft is expected to come into the market, prices are expected to hold, as 60% of the supply has been pre-committed by companies such as 3M. Macmillan etc.

Shortage of quality stock in the CBD has led many corporates to look for fully fit out places in SBDs.

Effective rentals have remained stable around Rs 35 to Rs 65 per sq ft per month in prime buildings on M G Road, while on Airport Road, rentals have fallen to around Rs 20 to Rs 25 per sq ft per month. Rental values have also fallen within a range of Rs 15 to Rs 25 per sq ft per month in traditionally residential areas like Indiranagar and Koramangala which are increasingly being used commercially.

The present vacancy rates in the CBD is around 10%, but with additional space coming up, we expect the vacancy rates to go higher over the next couple of years.

In the coming year, the supply of flats ranging between Rs 15 lacs to Rs 25 lacs are expected to go up with around 3,000 flats nearing completion.

Capital values of apartments are expected to fall marginally within a band of 5-6% in the next quarter.

The demand for leasing is mainly restricted to three areas viz., Koramangala, Indiranagar/ Airport Road and Palace Orchards. This is primarily because most of the offices are situated here.

There is a shortage of good independent houses in Bangalore for residential purposes as most independent bungalows have been taken up by small software companies as offices.

While demand-supply mismatch continues to drive prices of commercial property lower, the retail property segment continues to command a premium.

Capital values for commercial properties were quoted between Rs 2,500 to Rs 3,300 per sq ft, in areas such as Mount Road, Nungambakkam and Cathedral Road, marginally lower than the last quarter.

Heightened demand is expected in the mid-range price segment for retail showroom spaces as more and more corporates are looking at Chennai as a favourable destination to start their retail ventures.

Rental Values: The mid-sized local software companies working towards developing software for international markets have created a demand for fully furnished and moderately priced office spaces, to save themselves on start-up time.

Depressed market conditions prevail, with capital values declining across all the prime residential areas. There is a decline of around 5% in the capital values for all prime residential areas

Prime locations such as the Boat Club and Poes Garden have capital values in the range of Rs 2,200 to Rs 3,000 per sq ft, where as Anna Nagar commands prices in the range of Rs1,500 to Rs 2,200 per sq ft.

In areas of Alwarpet, Nungambakkam and R A Puram, effective rentals are in the range of Rs 8 to Rs 14 per sq ft per month for apartments and marginally higher for bungalows.

Rentals are expected to weaken further over the next 6 months.

Real estate valuation in India today is extremely unscientific and suffers from a lack of parameters, adjusters and experts. But as financiers and companies get aggressive, there’s change in the air.

Have you bought or sold property recently? If so you may have been completely at the mercy of property dealers in the city who are de facto valuers today.

Prices of properties to be bought and sold are largely determined by the dealers in the absence of any fool-proof valuation system in the marketplace. Official valuers, say insiders, are largely used to getting whatever values are convenient to you, ratified formally. How many buyers or sellers, for instance, would go to a valuer to get their property valued officially before ffecting a sale? But there is hope for new entrants to this extremely arbitrary market. There is definitely method in this madness and it is best to be armed with a lot of prior information before jumping into the fray.

Today it is very important to have clear legal titles. Having freehold property is a definite plus. If it is in a housing society also check out power of attorneys. Builder agreements must be checked in the municial jurisdiction areas. Check out agreements to sell if the flats have been purchased from builders. Before you put your money into a property see that it is mutated in your own name. The titles should be clear. the best way is to check out government records to check whether the plot had been on power of attorney earlier. It pays to check out the city’s building bye-laws and ask somebody like an architect or even the authorities whether the building conforms to it. A 500 sq m plot, for instance, is allowed only one flat per floor. If there is more than one kitchen per floor, it gets classified as more tan one flat on that level and violates building bye-laws. Check for completion certificates which are to be obtained by the builder. After he’s sold the flats to different individuals, it becomes very difficult to obtain individual certificates. The purchaser has to execute a sale deed and pay 8 per cent stamp duty on it, if in Delhi, 12.5 per cent in Haryana and then mutation is done.

Delhi’s property market has a significant cash component in the sale price because the property taxes are computed on the basis of sale values. If an alternative system was devised whereby property and land taxes are calculated on the basis of official market value are are delinked from sale values, there is a greater likelihood of above board sales. The neighbourhood in which the flat, house or commercial property is located is very significant in getting it valued. It commands a premium if it faces a main road, park or school, hospital etc. Availability of local infrastructure such as grocery etc also contributes to upping the value. Burma teak, teak or rosewood work is a positive as also are good kitchen fittings. Balconies are another positive. Parking space open or covered adds value to your property. Parking in fact, is a very sensitive issue in a city like Delhi. It can push up values to the extent of Rs 50,000-1,50,000,’’

MNCs drive southern real estate

BANGALORE, Chennai and Hyderabad have all continued their evolution as specialised real estate sectors, attracting distinct corporate space users in each city.

While each city is actively competing to become India’s main centre for information technology (IT) and software related activities, Bangalore maintains its position as the leader in this field. Hyderabad, on the other and, continues its growth as a progressive research and development hub. It is also seeing a good growth in the commercial sector. Chennai, an important manufacturing and vehicle assembly location, is now becoming increasingly important to the evolving white-collar service sector.

Of particular note is the recent interest shown in all three cities by major multinationals for global back office or call centres and other service centres. According to CB Richard Ellis’ outlook the real estate industry in South India for the third-quarter 1999, remains subdued, but positive. Demand for office space is expected to grow, reflecting the fact that an increasing number of multinationals consider India a cost efficient base for establishing global or regional back office operations. However, all markets are likely to witness the addition of a substantial supply of office stock in the next 6 to 12 months, which could nullify the impact of the increased demand. Value enhancements may still be quite a way away. A recovery in the country’s economy and earnings, increasing domestic inflows, appreciating stock prices and low inflation rate are also likely to be key market drivers.

Bangalore Office Market: Rents have remained stable throughout the last quarter across all micromarkets. This relative stability in rates has been comforting to companies who were delaying expansion or consolidation plans. With these moves happening now, transactions have increased. The CBD in Bangalore still enjoys the advantages of high visibility, good image and accessibility from all parts of the city and remains he favoured location for smaller space users across all industry sectors.

Hyderabad office market: While real estate prices in other metros witnessed a general decline since 1996, Hyderabad had shown remarkable stability in prices. However, in the last quarter, the twin cities of Hyderabad and Secunderabd have seen a general reduction in rental values, reflecting an over supply of Grade B space across all micro markets.

Chennai office market: With an effort to consolidate its position as an important informational technology destination, software companies continue to account for the majority of market activity, representing over 50 per cent of all property transactions in the last quarter. It is estimated that over 1,700,000 square feet of Grade A and 900,000 square feet of Grade B office will enter the market by third-quarter 2000. It is unlikely that the rate of space absorption will match new supply addition and therefore rental values will remain volatile until equilibrium is restored.

Ans. First of all, you write down your specifications what you really want, in which area you want and what is your budget for it.

1. Than ask your friends, neighbour, colleagues, if they themselves know about any such property or they might know some one who can guide you in your property search.
2. You can also search for professional realtors in yellowpages, newspapers, advertisements, who can assist you in a professional manner in searching and finalizing the property deal for you.

1. First check up from your friends, relatives, if they know some realtor with whom they have dealt with and realtor acted as he was supposed to act.
2. Meet your prospective real estate agent and ask about his background, references etc.

1. You must get the papers of the property verified from a Competent Solicitor.
2. Ask if the property can be transferred on your name or will it be on Power of Attorney.

Ans. First a token amount is paid; thereafter payment stages are fixed during which seller as well as buyer have to fulfil certain statutory obligations. Once both the sides meet these obligations, part payment can be made. Third and final stage of payment is at the time of possession of property and execution of documents is favour of purchaser.

Ans. The property has to be mutated in your name in the books of relevant local authorities.

1. Best Bargain Price: Builder or developer promises you at attractive lower price than his competitor! Check out his track record, credentials and market reputation.
2. False or Defective Titles: Check up the records and cross verify them from concerned Government authorities.
3. Delay in giving possession of the property: Builders keep rotating your money from one project to another in making a quick buck, and your money gets struck.
4. Misrepresentation of facts, concellentment of actual specification: Another common tactics to extract more money from you, than you should pay.
5. Paying you attractive price and excellent payment terms: Watch out for this, if you are selling or leasing your property. Because of your greed to extract the maximum from a prospective purchaser or a tenant. You get hooked. Best is to go for a reasonable and market price.
6. If you pay peanuts you will get monkeys: Pay your broker his commission and due charges as per the market practice to take care of your interest. If your bargain or pay less, they are smarter than you in extracting through other methologies, which you may not be even be aware off.