While most of the central places in Mumbai seem to be out of reach of the Middle classes, a place that has become increasingly popular for real estate is New Panvel. There are plenty of up coming residential projects by builders such as Neel Group, Harware, Marvel Realtors etc.
Much like Singapore, who are facing a construction cost crisis, and Dubai, which has access to what amounts to a slave labor force, India is facing the problem of increasing construction material costs along with falling real estate prices meaning corners must be cut somewhere. Singapore has just relaxed their labor laws in an attemopt to follow Dubai’s lead, but labor is already cheap in India, so pre-fabrication is the direction chosen by many developers. Akruti City plans to use pre-fabricated slabs in future buildings, saving 15-20% over manually-laid slabs. They are also exploring new techniques to build walls and pillars that could save up to 20%.
More on Falling Property Prices and Increased Construction Costs in India
A common problem found in new buildings in Mumbai these days is that of leakage. This is a problem that used to be traditionally found with old building as they begin to weaken. Finding this in new houses is just an example of shoddy or overlooked construction. More often when repaired it becomes worse.
An opinion on why this happens by a builder, is that the materials used for construction in Mumbai have a large amount of salinity. This has to be negated before these materials are used in the construction of the house. If this is ignored then the salinity makes the walls leaky. In the case of a house already built with such materials, there is a chemical method of treating this, which if done right can solve up to 95 per cent of one’s leakage problems.
Chennai is emerging as a vibrant and healthy Real Estate Market across all Segments for South India.
Office Space Market: The last 2-3 years have seen considerable demand increase in the Chennai Office Space Market. A whopping 65% of the total Office Space demand originates from the IT/ITES industry, having grown almost 7 times since the year 2002. This trend is due to a search for alternative locations, better infrastructure, low attrition levels, and a large pool of qualified personnel. With an increase in the demand, the rental and the capital values have also recorded a marked increase of 8%-10% and 5%-15% respectively. At present, this commercial is chiefly concentrated around peripheral locations of Guindy, Anna Nagar, Ambattur, Adyar and IT Highway (Old Mahabalipuram Road) due to availability of land from the Government and private land owners. According to Official sources, around 80 IT parks have been given permission to set up in the last 12 months.
Mumbai flat owners, beware. If you own a rental property, it is time to keep your leave and license agreement within sight. Or get the agreement prepared and registered if you haven’t already.
The hottest commodity in the Indian economy today is investment property. In Mumbai, property prices are growing at a rapid pace of 30-40% per annum with more foreign companies getting into joint ventures with Indian companies. The demand for commercial space has been boiling. The other factors that contribute to the fire are the retail boom, aged properties being re developed and demand for residential space. India’s retail real estate market is believed to touch a whooping figure of approx USD 450 billion by 2010. Textile mills occupying prime locations in Mumbai are being converted into retail spaces.
Last year, a study conducted by ECA International, an international human resource organisation, declared that India’s financial capital, Mumbai, is the world’s seventh most expensive city, thanks to its ever-increasing property cost. This year, experts predict that the demand for real estate in Mumbai will increase by 30% to 50% from the month of March. This will eventually result in an enormous hike in the property prices in the city.
The present real estate situation in Chennai is characterized by skyrocketing real estate prices. It is estimated that this increase amounted to 8-15 % over the past few years and the situation is likely continue. A number of factors have contributed to this development. The deciding factor that gave rise to this condition is the emerging BPO and ITES companies that are mushrooming all around the famous city. These are causing rental values to go through the roof. An atmosphere favoring rapid industrialization is also playing its part in the promotion of this state of affairs.
For the past few years, mostly since the IT boom and lot of NRI’s pumping money into real estate in India, prices, especially in the major cities, have skyrocketed. Chennai is no exception. Chennai, located in South India, where most of the IT companies started booming, witnessed a very high appreciation in property prices over the last few years. Flats are being priced at around 4500 per sft in areas like Egmore.
Budget 2008 has not done much for the real estate sector in India, but the change in income tax rates, mean that there will be more money in the hands of the prospective home buyer. Coupled with this, construction costs are expected to come down on account of reduction in duty and Cenvat. But Housing loan interest rates have not come down meaning that EMIs continue to worry prospective buyers. Will all these translate into a higher demand for housing in Mumbai? The last four years have seen a tremendous price hike in retail housing sector on account of demand far outweighing supply. Out of the 90 lakh homes on sale in Mumbai, only 30% have been built. Prospective home buyers may start scouting for affordable property in surrounding areas like Nasik and Pune. A recently released report on the ‘Housing ‘un’affordability in Mumbai’ by CRISIL underscores the fact that owning a home in Mumbai remains out of reach for more that half the population of Mumbai. While buying a home in Mumbai will remain a dream for the lower middle class, prices for properties in the range of Rs 40 – Rs 50 lakh should see a much needed correction.
