The third quarter of the year has seen Delhi and Mumbai coming out of the Realty Slump. Price is said to have moved up by 15% with respect to the lows of January /Feb 09.
Hyderabad and other metros (Bangalore, Chennai, Kolkatta) remain cool. There is hardly any movement with respect to yearly low. Prices have been stable. The off-take of available inventory is very slow and hence price may remain stable for few more months
2.0 Realty Expo at Taj Deccan
Builders had hopes of a turn around in September. Expecting good return, they dumped money on recent Realty Expo at Taj Deccan (12-13 Sept), organized by Times. The exhibition halls were fully booked by major city developers with large residential projects (Aparna, Aliens, Ashoka, PBEL, SMR, Ramky, Ambience etc..)
Unfortunately customer footfalls were ominous by their absence! Instead, the halls echoed the worried footsteps of marketing executives who were forced to stare at empty booking sheets. The only guys who made money were the event organizers.
This was in stark contrast to exhibitions in 2005 / 06 and even in 2007, when buyers used to swarm the stalls.
3.0 Why does Hyderabad remain Cool?
Unlike Delhi or Mumbai where the sales are driven by residents, the Hyderabad Real Estate market largely survives on the largesse of Non Residents. Almost all good projects have more than 60% NRI Owners. With NRIs staying back and the local buyers in no hurry to commit money, fresh purchases have dwindled to a trickle.
The available units in projects under construction or launch stage is so large that it may take several months for demand to overstep supplies.
4.0 What Rates have been seeing Sales?
The market is rigid but still some projects have seen Sales (for example Ashoka Cyber City, Manthri). That would give us an indication of the market accepted pricing at specific locations. In effect, if buyers are able to get apartments around this rate or lower at other projects in the vicinity.
Ashoka's Rate including amenities is around Rs.2750/sft including car park and amenities. Location is beside Kukatpalli Housing Board. We have to cross the Railway Line while going from Hitec City. Its about 2Km from MMTS Station.
Obviously, Rate for Flats with or without amenities would be higher in and around Hitec City/ Madhapur has to be higher than Rs.2750/sft.
Manthri's project is right in the middle of Gachibowli Financial Dt. and hence it's in a terrific location. Though project has drawbacks like average quality spec, high concentration of flats, larger common area percentage, it has seen very good response due to Location. The base rate is Rs.2950/sft and the overall rate including amenities adds upto around Rs.3300/sft. Is that rate low, considering current market conditions? Its not but still Manthri has sold 3 blocks and the fourth one is under booking.
If we were to look for buying around central Gachibowli area, we can take Manthri's current rate as reference rate and see how much saving we can get in competing projects.
5.0 Can Rate Fall Further??
The lowest rates for apartments were achieved in Jan-Feb 2009. Since then the rates have stabilized. The general economic condition has meanwhile turned mildly positive. The employment scenario is definitely better.
There is no longer whispers about job loss. Though it may take time for market to turn positive and rate to go up, it may not be wise to wait longer, if someone has intention to buy an apartment. This is the right time to evaluate coolly and pick the right property. Why rush later when prices start creeping up and be subjected to high handedness of builders ?
6.0 Times of India Publishes Apartment Rates of Major Builders?
Last week, Times came up with a list of Projects and their Rates. Its not clear whether this was as agreed with Builders. Lot of potential buyers may not contact certain Builders at all, since they find published rates high. In effect, their enquiry pipeline gets stiffled.