IndiaAssociates.com – Property & Real Estate in Delhi, Noida, Greater Noida, National Capital Region (NCR) New Delhi India Real Estate

Is it a good time to buy or sell in the real estate market right now? Chances are that as a prospective buyer or a property owner, you may be facing a serious dilemma. Industry players feel that while it may be a good decision to buy in certain locations, a sell off needs to be given a few more months till the market picks up completely. So which are the best places to buy in right now? According to global real estate consultancy Cushman & Wakefield (C&W), in Delhi NCR, it is Noida, Greater Noida Expressway and areas in Gurgaon along the Golf Course Extension Road. In Mumbai, central Mumbai and western suburbs such as Bandra, Kalina and JVLR are good bets. New emerging destinations in Bangalore such as Sarjapur Road, North and central Bangalore, apart from a few projects within the city can be considered.

Aditi Vijayakar, executive director, residential services India, C&W, says that this is a good time to buy a property for self use as prices have corrected considerably over their peak in 2007-08. “Buyers at this time can take advantage of lucrative interest rates on home loans. However, for investors entering the market, this time should be evaluated keeping the various arbitrage options that they can take advantage of in the current scenario. As far as selling is concerned, this is not a sellers market. The decision should be taken when the owner is confident of achieving the expected appreciation of the capital value of that property.”

While developers such as Vipul, Realtech, Raheja Developers and SVP Group say the market is picking up and one should look at buying, they don’t sound equally enthusiastic about selling off one’s property at this time. The fact that prices have corrected to far more realistic levels today makes buying a much better bet in these times, feel many developers. Says Punit Beriwala, MD, Vipul, “Whatever correction was possible has already happened and the properties are available at best prices today. From the investment view point, buying a property and holding it for few years is a good option. The demand for housing in mid and affordable segment is on the rise and definitely is an appropriate buying option in these times.”

However, on selling the property at this juncture, many are of the view that it’s better to hold on for some time. Harinder Dhillon, GM, marketing, Raheja Developers, says one should refrain from selling right now as the market is bouncing back. “A lot of projects recently launched have generated a fantastic response in the market. Rates have already started climbing up in select areas, and the rest are poised for growth in the next few weeks. One should wait, as in a few months’ time, a seller will get a much better rate for the property.” Agrees Vijay Jindal, CMD, SVP Group. He says that to reap the benefits in the seller’s market, one should wait as the market is really down. “It is better to wait. The reason is that property in the primary market is much cheaper than property in the secondary market. People are preferring to invest in new projects rather than going for the secondary market.”

However, keeping a few basics in mind will work well in this scenario. Rohit Malhotra, CEO, Realtech, feels that in both the cases one should consider key factors. “For those buying, it is prudent to look for better prices (as liquidity is still an issue) and they can drive better bargains. For sellers, depending upon the need to liquidate the assets, it is better to hold on for another six months and take it from there.” Be sure not to overlook the primary do’s and don’ts whether you are buying or selling off in this market. In the case of buying activity, analyse your requirement before going in for any transaction in the market, adds Mr Dhillon of Raheja Developers. According to him, if the requirement is for a ready-to-move-in property at a prime location, prices have already started firming up so it is better not to delay any further.

Legal issues together with well drafted documents relating to broker agreements must be thorough. Varied financing options must also be explored completely before finalising a property deal. Apart from the location, an important aspect to look into is the project, adds Vijayakar of C&W. “Factors such as credentials of the developer, construction time line and actual location vis-a-vis surrounding infrastructure should be taken into consideration before finalising any purchase. This is especially true in the case of purchase for investment purposes.” Make your decision after careful consideration of all the factors in play. As long as your judgement to buy or sell is a well thought out one, it is bound to give you a profitable edge.

In a move expected to give a big push to the housing sector in Gurgaon and Faridabad, the Haryana Housing Board is in the process of inviting expressions of interest for building 8,000 flats in these cities and some other places in the national capital region areas. This is in addition to the 38,000 housing units, majority of them in NCR, planned in the next two years. Under the latest project, the state will enter into an agreement with real estate developers to provide affordable housing to middle and lower middle class under the public private partnership mode.

“Since we do not have land in Faridabad and Gurgaon, we will be joining hands with private colonizers whose projects have been stuck due to the (economic) slowdown. We’ll prefer those who have the licence, and then those who have enough land,’’ said S P Gupta, chief administrator of the housing board. The announcement follows chief minister Bhupinder Singh Hooda’s assurance to developers that steps will be taken to counter the slump in the real estate market. It will also fulfil his commitment of providing cheap housing to locals, especially those in NCR cities of Gurgaon and Faridabad. Among the other areas selected for the project are Bawal (in Rewari district close to Gurgaon), Badhi (Sonepat) and Karnal.

Officials claim that around 828 units would come up at Badhi, a township to the north of Delhi. While the board is still working on the number of flats to be offered in Gurgaon and Faridabad, it plans to build 400 units for the lower middle class in Bawal. The housing board will share 50% cost of the project and forego profits. “We’ll also have some guidelines as far as profits of joint venture groups are concerned,’’ Gupta added. Earlier, the state had announced that as many as 38,000 houses would be built for all sections of society by 2011. Though the exact number of houses to be constructed close to Delhi hasn’t been worked out, it’s believed that most of these units will be in NCR where the demand is the highest.

Large realty firms are likely to report lower revenues and net profits in the three months to June from a year ago because of lower demand, lower prices and huge debts. Analysts, however, expect that when the companies report results for the June quarter, there might be some improvement from the preceding three months, signalling that demand might have returned slowly and financial restructuring has helped. The average of five of these shows that DLF is expected to post a net profit of Rs566.16 crore on revenue of Rs1,356.02 crore in the three months to June.

The average of five of these shows that DLF is expected to post a net profit of Rs566.16 crore on revenue of Rs1,356.02 crore in the three months to June. An economic revival and strong demand for budget housing are driving the upturn, Kunal Lakhan, an analyst with Kisan Ratilal Choksey Shares and Securities Pvt. Ltd (KR Choksey) wrote in a recent report. Transaction volumes in housing have picked up as developers launched projects at prices 25-40% lower than market value, he wrote. The response to recent mid-income housing launches, too, has been positive, resulting in developers launching a record 35 million sq. ft of projects in the last few months, wrote analysts Siddharth Botra and Mansi Trivedi from Motilal Oswal Financial Services Ltd in a report this week.

Of this, firms including DLF Ltd, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd (HDIL) have sold 16 million sq. ft of residential area since March, which is 44% of the launched floor space. Demand for office space in the June quarter is also seeing a revival, recording a growth of nearly 65% over the preceding quarter, a report by real estate consultant Cushman and Wakefield Inc. earlier this week noted, with hotspots being Bangalore and Mumbai. The average of five of these shows that DLF is expected to post a net profit of Rs566.16 crore on revenue of Rs1,356.02 crore in the three months to June. Although that represents a 64.74% fall in revenue and a 69.62% fall in net profit for India’s biggest realty firm by market value on a quarterly or sequential basis, the developer will see a marginal 0.37% increase in revenue and a huge 255.96% increase in net profit. Median estimates peg the year-on-year contraction at 69.89% for sales and 78.84% for net profit.

“We expect fall in revenues (from a year ago) owing to absence of DAL revenues,” Rupesh Sanke, an analyst with Centrum wrote in a report. Still, volume offtake in affordable housing projects at Bangalore, Gurgaon and Chennai is expected to help revenue numbers, he wrote. DAL, short for DLF Assets Ltd, a company owned by the promoters of DLF that used to buy the realty firm’s completed assets, used to account for up to 40% of the listed realtor’s revenues until December. DLF expects to report results on 31 July, a spokesman said, but this has not been finalized. Indiabulls is expected to see a ninefold jump in earnings to Rs61.7 crore In the quarter gone by, Unitech may see a 42.45% decline in revenue to Rs606.72 crore and a 57.18% decline in net profit to Rs201.1 crore from a year ago. Median estimates put the fall at 71.63% and 46.13%, respectively. On a sequential basis, average sales and earnings could have risen by 57.18% and 28.10%, respectively.

Asset sales at Unitech—which sold its main office building in south Delhi for Rs500 crore and a hotel in Gurgaon for Rs200 crore—in the June quarter “may result in reported numbers being higher than our expectations”, Centrum’s Sanke wrote. In the last few months, realty firms have restructured debt and infused fresh equity. Unitech, for instance, raised $900 million (Rs4,383 crore) through two sales of shares in the June quarter. The average debt-equity ratio of key real estate companies has declined significantly from 1:1 to 0.4:1, Motilal Oswal analysts wrote.

HDIL is likely to post an average net profit of Rs147.36 crore on revenues of Rs356.23 crore in the April-June months—a fall of 37.50% and 53.66%, respectively, from a year ago, show three analyst estimates. Indiabulls Real Estate, India’s third largest listed developer, could stand out in its June results. It is expected to see a ninefold jump in earnings to Rs61.7 crore, according to the average of five brokerage reports. This performance comes on the back of brisk sales in Gurgaon and Chennai, H. Nemkumar, an India Infoline analyst, noted in his report.