‘Slash mid-level property rates or face stagnation’ - Source TOI
Mumbai: If residential realestate rates drop between 20% and 25% in the mid-level and high-end home segments, the market will see a return of the “previous effervescence’’, global property consultant Jones Lang LaSalle Meghraj (JLLM) has said.
But it also warns in its report, Predictions for Indian Real Estate 2009, that if this does not happen, developers will put their expansion plans on hold. “This would lead to a clear shortage over 2-3 years, which would not be addressed as there would be neither buyers nor sellers. In such a scenario, we will see complete stagnation in residential real estate,’’ the report stated.
In terms of sales volumes and market recovery for 2009, there are two distinct and equally possible scenarios.
The first possibility is that buyers, who have been waiting for rates to drop to levels they can afford, will make their moves when rates fall into their budget range. “If this happens, developers will be able to move on to more projects and pull the market out of stagnation,’’ the report said.
The second scenario, it added, was that buyers would continue to wait for the period that would deliver the best rates; but this could be a point that might come and go without them being aware of it.
“They would, in other words, act more in the capacity of investors rather than end-users. The fact that the p u r - chased properties will appreciate over time in any case will be ignored in such a scenario. If this happens, market recovery for residential real estate will be further delayed,’’ the JLLM report said.
Developers have only now begun to come down on their rates and a lot depends on how many of them follow suit in 2009. The much awaited drop in interest rates for home loans has happened but not at a level sufficient to pull the residential sector out of the doldrums entirely.
“In response to the considerable demand for such formats, we anticipate more national players to launch affordable housing projects in 2009. However, as different cities will have different costs for land and construction of such homes, developers will have to define affordable housing at a city level,’’ it added.
In the luxury segment, the overall demand still remains muted. JLLM said there was a significant NRI component to the overall buyer corpus but the watch-and-wait stance was still evident. “A certain number of transactions in the luxury segment, that have remained on hold due to conflicting rumours concerning the optimum time to buy, may crystallise in 2009,’’ the report predicted.
In the retail sector, 2009 is expected to be a year of consolidation. “Given the market malady being faced by developers and retailers alike, it is possible that partnership models of growth through mechanisms such as revenue sharing would become more prominent. More deals are going to get renegotiated as priced drop in overpriced locations. The process of rationalisation should reach its peak by March,2009,’ said JLLM. Pan-India mall developers, too, are expected to look at more practical rentals in 2009.
‘Low TDR to affect projects’
Asudden slump in the value of Transfer of Development Rights (TDR) following the economic slowdown could spell doom for resettlement and rental housing projects initiated by the MMRDA. Metropolitan commissioner Ratnakar Gaikwad admitted that the value of TDR, which was around Rs 3,000 a sq ft in the city when the realty market was at its peak, had now fallen to its lowest mark. Officials said the value of TDR was somewhere around Rs 800 a sq ft at present. Experts told TOI that the low TDR prices would adversely affect resettlement colonies for projectaffected people. Senior MMRDA officials said the rental housing scheme outside Mumbai might have its takers but there was less enthusiasm within city limits. TNN
Affordable hsg in Karjat
The first tenement in the much-hyped low-cost rental housing project, aimed at creating 5 lakh tenements across the Mumbai metropolitan region, will be ready in Karjat and handed over to the aspirants by March. The first project, in Tanaji Malusare City, would account for 2,000 flats, MMRDA commissioner Ratnakar Gaikwad said, adding that there was no question of selling the tenements outright to buyers. “Priority will be given to those domiciled in Maharashtra,’’ he said. The terms and conditions of leasing out the tenements state that the aspirants should have a minimum monthly income of Rs 5,000. Construction of some other projects has taken off in places like Dombivli (35,000 tenements) and Kalyan (50,000 tenements). TNN