Changing face of real estate - Market consolidating with Big + Local builders

Indian real estate has seen several waves of set backs in the last 3 years

Wave 1 - Demonetization
Wave 2 - Removal of tax benefits on home loans - losses against interest payment limited to 2 lakhs
Wave 3 - GST
Wave 4 - RERA - Real Estate regulatory act
Wave 5 - Real estate company bankruptcies in North India
Wave 6 - Accounting changes to Ind AS 115 from Ind AS 18 - Not so relevant to consumer

All the above waves has made only a few locally strong & branded & financial sound builders dominant in the respective markets.
Landlords and consumer's bargaining power is coming down

Positives

Land owners could lower the expectations as only these reputed builders whose projects are sale-able would dictate terms.

Land price component coming down would encourage builders to launch projects at a lower price to facilitate faster sales.

Newer projects can come at prices quoted last year or even lower.

Builders will bank on volumes rather prices as overall costs - financing, land and construction (modern techniques) - come down. The companies will be akin to manufacturing factories.

More affordable housing stock due to government incentives under PMAY

A good 10 years of hibernation for real estate seems to be finished with the MEN coming out stronger and the BOYS perishing.

Real estate landscape is altering and is presenting a much more consumer friendly and professional face.


 

My Home new project - Kondapur - My Home Mangala - 15 floors, 11 blocks

The project is coming up along the double road leading to Vishali Nagar which has Camelot layout and Arbor school. Behind Chirec.

Status - Earth work in progress

The road leading to Vishali Nagar is expected to be a 100ft road opening up a lot of opportunities for the area. The road will connect Manjeera Pipeline road (Sairam Towers and My Home Jewel back road) to Botanical + Maseed Banda Road

My Home Constructions Private Limited, has proposed to construct Residential Complex in an
Area of 20.32 Acres
Built-up area of 4,02,609.9 Sq.m
Address Survey Nos.98, Kondapur village, Serilingampally Mandal, Ranga Reddy District, Telangana.
The built-up area includes 11 blocks (G + 14 floors + terrace) + amenities block (G + 4 floors)

Unique additons

Terrace Solar plant for common electricity requirements
Electric charging facility for both two and four wheelers
Parking provision for bicycles

Parking space of 49.8% of total floor area will be provided against the norm of 22% as per G.O 168.

Rera ID -  P02400000281

Completion date (RERA) - 18 Jan 2025

Be careful - Hyderabad Real estate market is heating up fast

August 2018

Hyderabad market prices have gone up by 40% in the last one year. This was expected since Hyderabad was an under-priced market because of economic slowdown and statehood issues. But, the prices now are only 15% away from Bangalore, which has 3 times the IT workforce compared to Hyderabad. So, caution is advised.

Anybody buying at 4,500/- per sqft should not expect his money to double in 5 years. I have been very supportive of buying the Hyderabad story in 2015/16/17, but not so much in late 2018.

There are certain reasons to keep expectations in check.

1. GST - The 12% GST overload on base price is making almost all properties in Hyderabad west beyond 4,000/- per sqft. Buyers are having a sticker shock.

2. Second hand market and ready to move in flats are coming back into vogue as they don't have GST component. So, it is a struggle for builders to sell under construction flats.

3. Given the above scenario of preference for ready to occupy flats, builders need more than 50% of the cost of the project to be borne by them compared to 20% of the project cost + helped by ongoing sale proceeds from buyers buying early into the project.

4. RERA - The RERA act will weed out many small time builders from the market since they might not have the increased financial resources because of the scenario sighted above to adhere to the timelines promised.

5. As bigger builders nudge smaller ones out of the market, land owners are at the mercy of big builders with required resources. Land prices might come down and big builders could keep offering flats at the same price as today for the next 3-5 years. Obviously, they will collect higher prices if market is willing to pay and better their margins. But, at the same time, they have the option to keep prices flat, without hurting their margins, if buyers don't open the purses.

So, keeping the above factors in consideration, plan your purchases with 'margin of safety' and 'downside protection' in mind.

Note: I am not talking about 2007-2012 correction in real estate to make my point because many first time prospective buyers have no idea of what it is. History is funny, in the sense, economic cycles happen in spite of evidence available all around on how a pricing story could derail. It is just human nature. So, I will save the story of real estate cycles for another time. Atleast, I hope the readers in their 40s would not believe in the story that real estate and land prices go only one way - UP.

HMDA auctions Apr 2018 - Bidders go ballastic

Nallagandla sees 72,000 per sqyd
Tellapur - 41,000 per sqyd
Mayuri Nagar Miyapur - 66,000 per sqyd
Shankarpalli/ Bhanoor - 17,000 per sqyd

P.S. : Remember the auctions of 2006/07. Hope the market has learnt some lessons from that fiasco or the Mr. market is lucky to get a new set of investors with no bad taste of those years.😄