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Hyderabad Realty In A Flux
Posted by Pradeep Sadanapalli | January 31, 2009 | 1,120 views
(2 votes, average: 2.5 out of 5)
Loading ...The real-estate market in Hyderabad continues to be in a state of flux with the slowdown taking a toll on the sector, even as the Satyam scandal has cast a shadow on real-estate projects as well as land deals. With thousands of acres around the city now put under the scanner, developers have become extra cautious.
Some of the major infrastructure and real-estate companies, which purchased sites paying high rates a couple of years ago, have hinted at delaying their projects, including special economic zones (SEZs).
According to industry players, the recent measures by the Central Government and Reserve Bank of India to bring in more liquidity into the system and also the slashing of home loan rates to woo buyers again, have begun to yield some results.
However, one area where there is demand for both apartments and independent homes is the Rs 20-30 lakh segments and this is in short supply in Hyderabad, like other major cities in the country.
This is because most project developers sought to focus on luxury apartments, priced at Rs 40-50 lakh and above.
According to Mr Aditya Verma, Business head, Makaan.com, âthe current supply in sub-Rs 30 lakh housing segment in Hyderabad is low. With the expected revival in demand, we can expect an end in price correction in the segment. However, the correction will continue in the higher price segment, at least for now.â
Though builders do not admit publicly, the rates have come down by about 20-25 per cent, opening up scope for discussions on prices.
âBelow Rs 40-lakhâ budget
A survey conducted by Makaan.com finds that about 77 per cent property seekers in Hyderabad are looking at homes below the Rs 40-lakh budget. The survey sounded out 13,426 property seekers, providing interesting insights.
Mr Verma feels developers in Hyderabad need to rethink their pricing strategy and focus more on the affordable segment to bridge the demand-supply gap and bring the much-needed bounce back into the real-estate market.
Most property seekers are playing a wait-and-watch game. Forty-three per cent property seekers from Hyderabad expect further price correction in the coming months. Significantly, about 13 per cent are holding back due to prevailing job insecurity.
Another 8 per cent have opted to defer their decisions due to high home loan rates. There is general expectation that home loan rates would come down further. And the decision by another 30 per cent of the respondents to hold back purchase is influenced by all of the factors.
The Chairman of MAK Projects, Mr Murali K. Reddy, said that several of the developers are finding it difficult to market their apartments in the Rs 50 lakh and above category due to tight market conditions. Significantly, they are also not in a position to bring down prices much because the land purchase was made when the market was at its peak.
âMost developers purchased lands at high prices as if there is no tomorrow. With the real-estate sector now mirroring the harsh market conditions, it has created unmanageable burden on the entire system. The interest rate at about 11 per cent was high till recently and the recent downward trend in rates is welcome news,â he said.
Lower interest rates for apartments of up to 1,200 sq.ft and loans for less than Rs 20 lakh apartments and houses are expected to spur some activity. But the market is woefully short of supply of such properties.
The Vice-President of IJM (I), Mr Manjit Singh Brar, said most discussions around projects and properties are failing to materialise into deals due to hard bargaining by prospective buyers.
Buyers of new properties start with this line: What discount are you offering? Anything less than 20-25 per cent is not appealing to new buyers given the current market conditions.
For builders who have developed project on, say, a margin of about 15-20 per cent it is not possible as they acquired the land when prices were ruling high, said Mr Brar.
Looking beyond tech staff
Significantly, developers are looking at the affordable housing segment where there is heightened interest. Any apartment priced at more than Rs 2,000 per sq.ft and above is being approached cautiously. Buyers continue to discuss but postpone, hoping prices will come down further, he said. Asked about freebies, Mr Brar countered with, âhow can one offer freebies such as car or discount? A builder will have to make good this amount from somewhere to offer such a deal.â
However, Mr Reddy said some of the projects slated to take off now are better placed because they factored in the current slowdown and market conditions. Those getting into land deals now are able to get nearly half or one-third of the price sold about a year ago.
Significantly, there is a small segment that is not deterred by prices. These are the ones that do not hesitate to invest, say, a crore or two on houses and are also not affected by the general economic slowdown. Such villa projects continue to command buyers but prices have been affected there too, as buyers look to drive a harder bargain, Mr Reddy said.
At least half a dozen developers have unveiled plans to develop apartments and houses for the affordable segment, looking beyond the IT sector staff. Due to the impact on the tech sector, builders too are looking at other segments. New projects will take about 12-18 months for implementation.
Developers such as Indu Projects argue that it is not just the IT sector but employees of other sector that they plan to cater to by developing houses in the âaffordableâ category.
SOURCES:
Business Line
Topics: Real Estate |
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