At last! With spring comes hope For a good deal: Cor­po­rates sell­ing sur­plus as­sets

There are green shoots of re­cov­ery in the prop­erty mar­ket with deals be­ing fi­nalised in south Delhi and NCR mar­kets

HT Estates - - FRONT PAGE - Van­dana Ram­nani Van­dana Ram­nani

It has been a long win­ter af­ter the gov­ern­ment’s Novem­ber de­mon­eti­sa­tion move but as spring ap­proaches, hope seems to be spring­ing in the home­buyer’s heart. Most of them seem to have mus­tered up the con­fi­dence to con­tem­plate pur­chase of prop­erty, largely be­cause of re­duc­tion in in­ter­est rates, a 10% to 20% cor­rec­tion in prop­erty prices and the fast ap­proach­ing dead­line for states to im­ple­ment the Real Es­tate Reg­u­la­tory Act.

In the last three months, fence sit­ters wait­ing for months have started con­clud­ing trans­ac­tions. While real es­tate prices and dis­counts dif­fer from deal to deal, end-users look­ing for prop­er­ties are tak­ing ad­van­tage of cor­rec­tive val­u­a­tions and clos­ing deals in Delhi-NCR, mostly for readyto-move-in prop­er­ties or where the pos­ses­sion date is near. Plot­ted de­vel­op­ments in south Delhi are also be­ing con­sid­ered. The mar­ket over­all is look­ing up­beat, say real es­tate ex­perts.

Even in the sec­ondary mar­ket, there are now enough mo­ti­vated sell­ers rec­on­cil­ing them­selves to the cor­rected prices and to the fact that th­ese are not likely to go down fur­ther. The re­sale mar­ket, too, is grad­u­ally pick­ing up in Gurgaon, Cen­tral Delhi.

A re­cov­ery in end-user ac­tiv­ity now looks very likely and peo­ple ear­lier hes­i­tat­ing to in­vest are now con­clud­ing trans­ac­tions. Prices and dis­counts dif­fer from deal to deal. End-users who were on a look­out for prop- er­ties are tak­ing ad­van­tage of cor­rec­tive val­u­a­tions and the mar­ket is look­ing up­beat. There is a 15% to 20% dif­fer­ence from the bench­mark price, de­pend­ing on the lo­ca­tion of the prop­erty.

Mar­ket sources say t hat the re­sale mar­ket is grad­u­ally pick­ing up in mar­kets such as Gurgaon and Cen­tral Delhi. A high- end deal was re­cently struck for ₹ 42 crore in Malcha Marg for a 375 sq yard plot. Be­fore de­mon­eti­sa­tion it would have been sold for about ₹ 50 crore.

Apart­ments that are readyto move in or near­ing pos­ses­sion are now avail­able for the same price at which they were avail­able two years ago. What this means is that prices have more or less re­mained static since then. The 15% to 20% cor­rec­tion is ac­tu­ally re­flec­tive of in­fla­tion- cor­rected prices, ex­plains Shveta Jain, man­ag­ing di­rec­tor - res­i­den­tial ser­vices at Cush­man & Wakefield.

The south Delhi plots mar­ket is also see­ing some ac­tiv­ity. While many de­vel­op­ers went in for joint de­vel­op­ment or out­right pur­chase a few months ago, there has been a slight change in the model af­ter de­mon­eti­sa­tion, espe­cially with re­gard to pay­ment. Ear­lier, builders who would en­ter into col­lab­o­ra­tive agree­ments with own­ers of plots paid own­ers for it im­me­di­ately. They are now, how­ever, opt­ing to go in for a stag­gered mode of pay­ment stretch­ing for about 12 to 18 months which is ac­cept­able to own­ers.

For own­ers of plots in south Delhi, this is a great way of mon­etis­ing their as­sets. They are open to stag­gered pay­ment by builders over out­right pay­ments be­cause the ve­loc­ity of sales is slow in the mar­ket right now. What this means is that since they are un­able to get a buyer for the plot sell­ing at ₹ 30 crore to ₹ 40 crore and that too out­right pur­chase, they are in­stead find­ing it a lu­cra­tive op­tion to give it to a builder to con­struct apart­ments that can be sold for say around ₹ 6 crore each (some of which they are keep­ing with them and sell­ing the rest to the de­vel­oper). Most plot own­ers are hold­ing on to their share of apart­ments to be sold later when mar­ket sen­ti­ments im­prove, says Jain.

De­mon­eti­sa­tion had hit the mar­ket hard, bring­ing down deals in the plot­ted de­velop- ment mar­ket by 50%.Now there is more sup­ply in the mar­ket and re­al­is­tic pric­ing, she says.

Ro­hit Cho­pra, SanD Ad­vi­sory Pvt Ltd re­ports a mo­men­tum in the South Delhi mar­ket since the last three months. Most peo­ple have bought units at a dis­count of 4% to 8% in Jor Bagh, De­fence Colony, Vas­ant Vi­har and GK 2.

In De­fence Colony there was an out­right sale of a 325 sq yard plot for ₹ 25 crore which be­fore de­mon­eti­sa­tion would have sold for about ₹ 27 crore. In Jor Bagh a 4BHK flat which would have oth­er­wise gone for ₹ 22 crore be­fore Novem­ber 8, 2016, was sold for₹20 crore. In GK 2, a flat lo­cated in a plot of 250 sq yard was sold for ₹ 4 crore. Al­most four months af­ter the gov­ern­ment’s de­mon­eti­sa­tion move, many multi­na­tional com­pa­nies are look­ing at sell­ing as­sets they have owned for sev­eral years or per­haps ac­quired by way of merg­ers and ac­qui­si­tions.

This week an in­ter­na­tional real es­tate con­sul­tancy ad­ver­tised for the sale of prime res­i­den­tial flats in Mum­bai and a bun­ga­low in Delhi, both of which are owned by multi­na­tional com­pa­nies. The first ad­ver­tised the sale of a 4BHk bun­ga­low at Sar­dar Pa­tel Marg in Delhi and the sec­ond in­cluded three apart­ments in south Mum­bai.

“Some mo­ti­vated sell­ers in to­day’s prop­erty mar­ket in­clude fi­nan­cial in­sti­tu­tions sell­ing off prop­er­ties that are ei­ther non­per­form­ing as­sets or prop­er­ties owned by big cor­po­rate ac­quired by way of ac­qui­si­tions and merg­ers. Th­ese are all part of sur­plus as­sets owned by them. Sell­ing prop­er­ties for th­ese com­pa­nies is more of a busi­ness de­ci­sion. Most of them are avail­able for­re­al­is­tic prices,”say real es­tate ex­perts.

“We have re­ceived more than 40 se­ri­ous queries. Buy­ers who were ear­lier only win­dow shop­ping are now se­ri­ous about mak­ing a pur­chase. For the well­heeled end- buyer or in­vestor who has knowl­edge of the mar­ket, there is still a lot of in­ter­est in in­vest­ing in real es­tate,” says Shveta Jain, man­ag­ing di­rec­tor - Res­i­den­tial Ser­vices at Cush­man & Wakefield. Last year, a lead­ing cor­po­rate gi­ant had sold its iconic south Mum­bai guest house Al­ham­bra, which was built by the sul­tan of Darb­hanga, for around ₹ 170 crore.

SAN­JEEV VERMA

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.