Since we have returned to the phase of the buyer being the king, actual users must decide if they are getting what they want at the right price
When I sit to write this weekend's column, I seem to find myself repeating my thoughts and views in my head. I guess like most things in life need 'time' to seep in or to deal with, changes around us and in worldwide economies will eventually lead to change in 'time' within our thinking here in India too.
I guess the effect of the bull run to a bearish scenario is evident in equity markets sooner and the impact of that comes in much later into the property market. I was amazed to read an email from a colleague broker from south Mumbai who listed a twobedroom property of 1100 sq.ft (carpet area) for Rs 7 crores in a B + grade building at Malabar Hill last week and on Monday, March 2, revised it again to six crores. The comment highlighted was that the original quote was Rs 8 crores
Similarly, on February 27, we received a listing of a three-bedroom apartment, once again in a B+ grade building, off Breach Candy with no view to boast of, but tree top view, quoting Rs 15 crores for built up area of 2532 sq.ft. This brings us to a rate of almost Rs.60,000 per sq.ft on built up area calculation. While the property above on carpet area works out to approx Rs.55000 odd per sq.ft.
Now if these are rates quoted by B or B+ grade buildings then what should be the rate in an A or A+ grade building? As much as the seller and broker might hate my comments and my guts, I don't think both the properties deserve a rate more than Rs.45,000 to 50,000 on carpet area calculation. Knowing the brokers for the Malabar Hill property, I am sure they are doing their best to guide the sellers and are not very off from quoting realistic rates.
To simplify, what we feel should be as benchmark, have a quick glance at the rate chart provided with grades and locations. These ten odd locations like I have mentioned several times before are like the BSE 30 Index that direct the market sentiments. Moving on to the under-construction segment certain developers have been innovative by offering 'price assurance". Which means if the price that you purchase at comes with an assurance of being stable and if they come down, let's say, by 10% the developer will compensate for it? I am not sure who will "Arbitrate" this in case of a dispute. The developer could maintain that, while the market rates may have reduced, his property prices are stable. Another developer has offered to accept 20% against booking and balance 80% against completion. This method I like.
In an under-construction commercial property development at Andheri west, which we have taken up for marketing and sales; the rates quoted in September was Rs.12,000 per sq.ft... In late November the developers "corrected" it to Rs.10,000 and now in March have "dropped /reduced" it to Rs.8,000. To further boost the confidence of buyers and investors we are looking to add more options. But it is important to safeguard the interest of both seller and buyer. In some cases a buyer may not be able to pay instalments and in some the developer may not be able to complete the project for lack of funds.
Since we have returned to the phase of the 'Consumer/ Buyer' being the king, what is needed finally, is for actual users to decide if they are getting what they want, at a price they are willing to pay with the security of timely possession.