Wrap: Is South Delhi finally a buyer's market?

Is recession-proof South Delhi finally turning into a buyer’s market?

With PE investors exiting realty investments in an overpriced market and end-users demanding ready-to purchase property, Delhi builders may finally be willing to settle for less in order to cut their massive inventory build-up.

A report in the Economic Times today said that property prices in South Delhi’s Greater Kailash, Defence Colony, New Friends Colony, Pancscheel Park etc have seen a 20 percent drop as only a sixth of the 368 apartments that came into the South Delhi market in the last six months have been sold.

[caption id=“attachment_410424” align=“alignleft” width=“380”]  Transactions in south Delhi have come down, but builders maintain that property prices have not softened.[/caption]

Hardening of interest rates, and global economic uncertainty are keeping investors at bay in this recession-proof market where prices have risen around 20-25 percent annually in the last three years. For example, a bungalow that cost Rs 50 crore in Pancscheel Park last year now costs around Rs 75 crore. The report added that transactions in south Delhi have come down, but builders maintain that property prices have not softened.

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Delhi’s water problem finds solution in PPP

Delhi government will introduce reform in water sector through a Public Private Partnership (PPP) project on a pilot basis and will initially begin in a few areas of South Delhi within the next month covering a population of 6 lakh and then cover the remaining parts.

The government had last week approved a long-pending proposal to involve private entities in management, maintenance and supply of water in several areas of the city.

The reform has been initiated in consultation with the Planning Commission which had identified water sector reform as a priority area for the city.

They said the private sector would be involved in water distribution, management and maintenance of DJB’s infrastructure in Malviya Nagar, Vasant Vihar and Nangloi areas in PPP mode and they will be paid a “fee” for their services.

624 colonies in Delhi to be regularised in the first phase

The Delhi government plans to regularise 624 unauthorised colonies out of 1,639 such settlements in the first phase of regularisation which is likely to be completed soon. Urban Development Minister A K Walia said Government has decided to regularise 624 unauthorised colonies in the first phase as all concerned agencies including ASI, Forest Department, DDA , Revenue Department and MCD have cleared their regularisation.

The government in June finalised boundaries of over 1,018 unauthorised colonies paving the way for their regularisation, a key poll promise of the Congress government which is due to face assembly elections in 15 months.

Chennai predominantly end-user-driven market, with 60-65% of the buyers being people purchasing for self-use.

According to Badal Yagnik, Managing Director - Chennai & Coimbatore, Jones Lang LaSalle India Chennai realty is witnessing considerable demand in the affordable segment - specifically for units in the price range of Rs 35-60 lakh - in locations which offer an acceptable degree of social infrastructure. Overall, Chennai’s approximate absorption of residential units is between 28000-30000 per annum, with most of the absorption taking place in the OMR and near the IT corridor.

Secondly it is still a predominantly end-user-driven market, with 60-65% of the buyers being people purchasing for self-use. Residential space investors in Chennai tend to take a long-term view, the modus operandi being to look at off-loading their holdings within an average time-span of 5-7 years. This attribute further strengthens the market’s end-user behaviour.

Mukesh Ambani, Oberoi to develop 15-acre Navi Mumbai land

The Oberoi Group is planning a Trident-brand hotel in Navi Mumbai in Maharashtra on land owned by Reliance Industries Ltd. Reliance owns 15 acres of land in Navi Mumbai which the partners are now looking to develop as a mixed-use property. This may include a 160 to 180-room hotel and luxury apartments as well, EIH Ltd chairman PRS Oberoi said on Tuesday.

Reliance Industries Investment Holding Pvt holds a stake of about 18 percent in EIH and was brought in as a strategic investor in August 2010, in the wake of ITC steadily increasing its equity holding in EIH.

DLF net dips 18%, big-ticket asset sale to garner Rs 5,000 cr

India’s largest listed realty firm DLF reported 18.30 percent decline in its consolidated net profit for the quarter ended June 30 at Rs 292.79 crore, mainly due to higher interest outgo and lower sales.

During the quarter, DLF’s sales booking fell by 41.74 pe cent at 1.34 million square feet area compared to 2.3 million square feet in the year-ago period due to no fresh launches, weak leasing run-rates and repeated cancellations.

During 1QFY13, DLF concluded the divestment of DLF Hotels and Hospitality Ltd with transaction value of Rs 567 crore and received the final tranche of Rs 200 crore which has been the major contributor of its Rs 365 crore worth of divestments during the quarter.

DLF said its debt reduction will be largely based on three to four big-ticket divestments. The company said it hopes to mop up Rs 5,000 crore through the sale of its non-core assets by the end of this fiscal.

Most analysts estimate DLF’s planned launches including Magnolia 2 is likely to be pushed back to 2HFY13 due to impending weak “no home buying” season.

“Given that the divestment proceeds have largely been utilized to bridge operatingcash deficit, net debt remains unaltered at Rs23500 crore,” said brokerage Motilal Oswal in a report. Moreover regulatory headwinds such as CCI penalty and ITA tax claim continue to remain key concerns.