Loan defaulters rights

What a change of headlines in the Economic times. From buy before you get priced out, to "How do you pay the loan on the property you thought was going to double ?" . Ofcourse the black money operators don't have to worry ;)

Defaulted on home loan? Be aware of your rights

MUMBAI: Almost every home loan borrower has this niggling fear: What if I default? Higher interest rates could hit those with floating rate home loans, triggering a rise in defaults.

A loan, which could be comfortably serviced at an 8% floating interest rate could cause substantial discomfort after the rates rise to around 12%.

For some, it could even lead to a problem in repayment. This scary scenario isn’t all that rare. According to rating agency Crisil’s forecast, the share of bad loans is likely to swell to 4% of banks’ total loans in the next two years.

In case of a default, it is best to approach the lender for an amicable settlement. If all the efforts undertaken for repayment fail, the lender is likely to take over and sell the mortgaged property.

No doubt, it is very painful to let go of your prized possession, which you may have acquired with your lifetime’s savings. However, in such circumstances, borrowers need to keep an eye on their rights, which provide adequate opportunity to repay.

As regulated entities, there are certain limits that banks cannot cross. For instance, RBI guidelines do not allow a lender to repossess without proper notice.

The central bank also has norms that are taken into consideration under specific circumstances. There is a well-laid out procedure for taking possession of the security, provisions regarding a final chance to repay and a procedure for sale. These are in addition to the strict guidelines for recovery agents.

Usually, banks invoke the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (Sarfaesi) Act for a quick recovery. This involves a 60-day notice period. But the Act states that such a notice cannot be issued until the borrower’s account is classified as a non-performing asset; that is, when it is 90 days overdue.

“If the borrower fails to repay even after the notice period, the bank can go ahead with the sale. However, in order to sell, the bank has to serve another 30-day notice mentioning the sale,” Abhay Debt Counselling Centre debt counselling head VN Kulkarni said.

Further, if your mortgaged home has to be sold, the bank has to publish a notice regarding the same in two leading newspapers specifying the reserve price. The sale has to be a private treaty sale, based on conditions mutually agreed upon by the bank and the borrower.

“If you feel the property is undervalued, you can raise an objection. However, in case the auction is done through the court, an independent valuer is appointed for carrying out the valuation,” said Poorvi Chothani, proprietor of law firm LawQuest. “You can even sell your own house in order to repay the loan.

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Real estate crunch forces IIM-B to experiment with off-campus housing

Interesting to see that the builder has opted to rent out apts instead of selling them off at discounted prices . Is it a sign of the times ? If we go by the yield calculation, the builder is getting a paltry amount in rent as opposed to selling it off and getting 10% in fixed deposits.

Real estate crunch forces IIM-B to experiment with off-campus housing
Archana M Prasanna / Bangalore October 31, 2008, 0:22 IST

Faced with the prospect of escalating real estate costs and the lack of adequate finances, the Indian Institute of Management-Bangalore (IIM-B) is experimenting with “off-campus housing” to accommodate additional students from the next academic year. If the experiment works, it may set a precedent for other IIMs.

With its campus in Bannerghatta already brimming, the institute has decided to take 50 apartments (150 rooms) on lease in a nearby residential building called Ajmera Complex. The plan is to lodge students from the one-year full time Executive Post Graduate Programme in Management (EPGP) — to be launched in April 2009 — in the leased apartments.

“Unless we experiment, we wouldn’t know if this is the way ahead,” reasoned Pankaj Chandra, Director of IIM-B, on the initiative.

IIM-B may also accommodate some students from the Post Graduate Programme (PGP) and doctoral programme at off-campus locations. The institute is planning a bus service from its premises to the off-campus housing to make it convenient for students to travel.

In its recent report, the IIM Review Committee — led by Maruti Suzuki India Chairman RC Bhargava — suggested that IIM faculty and administrative staff residences could be moved to off-campus sites, and accommodation bought/rented there so that “the existing infrastructure could be more intensively used”.

Chandra said the institute had received Rs 29 crore from the human resources development (HRD) ministry for the OBC quota expansion, but the overall expenses of accommodating new faculty and students is expected to be much higher than that. Subsequently, the institute is keenly looking at financial support from corporate houses and alumni.

Unlike IIM-Ahmedabad and IIM-Lucknow, which have two campuses, IIM-B hasn’t had any major construction activity in the last 10 years. Chandra added that the institute has taken up the off-campus option despite plans to commission some construction from this December. The institute has hired an architect for a new hostel facility, 10 classrooms and 24 faculty homes.

The institute has over 950 students from various programmes on its campus at present. From the academic year of 2009-10, the number of students in the PGP and doctoral programme is expected to go up from 640 to 690, the Post Graduate Programme in Public Policy and Management (PGPPM) will have an increased intake of 63 from 33, and the one-year EPGP is expected to have 75 seats, making it an intake of 150 new seats at the campus.

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Mumbai's super bubble

Here is an advt for an apt in Mumbai which sent my head spinning. At 55000 Rs a sq/ft it is the highest I've seen advertised. A 4 crore price tag will buy you 875 sq/ft of super builtup area. The seller is kind enough to remind you that newer apts in the locality come in larger sizes at 1500 sq/ft which would make it unaffordable to a normal resident. Also maintainence is higher in other apts, so the buyer better worry about paying Rs 10k extra a month. Once the buyer buys this 4crore apt, he has the option to commute using the conveniece of the local train and rub shoulder, noses and oily hair with thousands of other local residents by paying 10 Rs for a ticket. This is the peak of a massive bubble in Mumbai which is destined to collapse under its own weight.

NR39500000 Racecourse View From All Rooms-2BHK. (Mahalaxmi)
Centrally located 2 BHK, 875 sq feet(a size which is not available nowadays in 2bhk,since most new constructions are over 1500 sq feet and above charging about 55000 per sq feet in the same area, making the flat not affordable for many buyers), one bedroom with attached bathroom, and one with a bathroom outside,large living room with dining area,ready with high quality flooring as well as well painted walls and with 24 hours water supply,electricity backup,children's garden,and a garden to walk in as well,with 1 parking space which will be sold separately. The flat is located on the 9th floor in the B wing,Flat no 902, Is Vastu Compliant and has sea view from all rooms and also a full race course view,It is located in such a way that no construction will ever be coming up in front of it to obstruct the view. The flat is a 2 min walk from Mahalaxmi Station,15 min drive to Vt station via J.J Flyover,15 mins to churchgate by train,10 min drive to phoenix mills,10 min drive to worli seaface which will be helpful to travel to the suburbs in the next year via the sea link.Besides all of this the property is in an area which is suitable to any sort of occupants even the ones who travel to thane and lonavala and pune since it is a 2 min drive to dadar from where the western express highway begins. Also it is 5 mins away from the newly built five star Four Seasons, and also 10 mins away from ITC GRAND MARATHA Sheraton at dadar. Basically its an all gain flat which has to be sold due to the occupants moving to another country and there are no other properties up for sale in the same building or in the neighbouring buildings except for in Planet Godrej which has high maintainance as well as larger flats which are sold at prices which dont lie in anyones budget.

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Real estate presses panic button in Mysore

MYSORE: When Bangalore sneezes, Mysore catches a cold, says a veteran developer borrowing a popular cliché.

He is referring to the sudden fall in property demand in Mysore. After Bangalore, Mysore has been the most attractive real estate investment venue for the moneyed Mumbaikars and Bangaloreans.

Despite claims to the contrary, Mysore realtors suddenly find themselves in an unenviable situation. The value of the sites and apartments, according to reliable sources within the industry, has come down by 15 - 20 per cent in just about three weeks.

Mysore has, in the recent past, been drawing investors in droves from within and outside the states after property prices of Bangalore had hit the roof. Even the "neo-rich" IT personnel found Bangalore property scalding. There then took place a race for prime plots in the nearest "Heritage City." In terms of 'quality of life' such as greenery, good roads and less crowd, Mysore beat Bangalore and the big players like Sobha Developers, Brigade Group and Leo Builders made Mysore their home.

Sources with Mysore Chapter of Builders' Association of India (BAI) told DNA the enquiries for apartments and luxury villas have gone down by 30 per cent since October second week. This has left them wondering what was happening. Have they made a miscalculation or is it a temporary slump, nobody really know.

Pradeep, a real estate dealer who has been in the business for the last two decades says, "Mysore never saw the kind of demand it witnessed in the last few years. Sites were sold before they hit the advertising board, just five years ago.
Plot after plot, even in suburbs, was blocked by potential builders who wanted to cash in on the growth. But the fall in demand taking place in the past few weeks is alarming."

Sub-registrar's office which otherwise used to be doing brisk business with 8 to10 registrations a day, now has just one or two," he said. This, he points out is despite this being a festive season when people planned major investments.

"Last year this time, registrations touched an all time high with an average 30 a day." said a lady clerk working at sub-registrar's office.

According to BAI sources, the situation was aggravated by many factors, besides the psychological slump. Nagesh, who has been working closely with BAI says, "When land was earmarked for SEZ near Mysore, industries rejoiced. But, the power scarcity proved a big blow. Slow progress of infrastructure development and political instability added to the woes. It was thought, Mysore, which had earned a major chunk of funds up to Rs 1,800 Cr under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) would wean away many big real estate players from metros. An airport was also thrown in to woo investments. But, nothing seems working.

Now, Mysore has turned into an investor's nightmare with sharp decline in prices at the peak of the season. Apartments or luxury villas find no takers," Nagesh adds.

The nearby Hassan district, which too witnessed a similar growth as Mysore in the recent years has also witnessed a fall in demand and consequent prices.

Developers seem indeed perplexed at the situation. Apart from announcing lollipops and hoping that situation would improve, they are devoid of any fresh ideas.

"We have announced attractive plans and packages with great returns. We just hope the markets will get better," Nagesh says.

The upshot of it all is that realtors are unwilling to climb down, and investors are equally vehement. The result is stalemate.

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Experts speak : All is not lost

A 90% drop in real estate stock market values is now a reality. Moneycontrol.com has list of current stock price and its annual performance. All we need now is a price reduction in selling prices, not gimmcks like free car, free flat or free plots. We are not stupid guys. How long will it take for you to realize this ?
Expertspeak: All's not lost
27 Oct, 2008, 0000 hrs IST, ET Bureau
Every cloud has a silver lining if seen from the perspective of equity analysts. Forget the fact that the Sensex has dropped 70% and many stocks dropped 90%, the experts are trying to reason and assure the investors that all is not lost. Ofcourse all is not lost. A 10L portfolio is still worth 2L even today, but as the Unitech chariman said on CNBC, they have not reduced housing prices, inspite of borrowing at 2.5 per month from legal sources. Many builders are borrowing at 3-5% per month. How can they recoup their losses when the buyers have vanished from their 1cr+ properties. The end is near as far as the housing bubble is concerned. Stock prices are a leading indicator of the days ahead. The housing companies used absurd metrics to value their property and investors lapped onto their lofty projections, some due to greed others due to ignorance.

MUMBAI: Chin up when the chips are down. The climbing fear index (43 during the 1929 Great Depression and 75 in October 2008), is more disturbing
than the slipping Sensitive Index. It took a good two-and-a-half hours and four of the country’s best stock market analysts to reassure an 800-strong audience of Mumbai investors on Thursday that all’s not lost. Every dip brings in a new buying opportunity was the message.

The Economic Times, Gujarati, last week kicked off its latest initiative “Managing Financial Turbulence” by bringing the fourth edition of “Sensex Ni Sangathe” (In Tune With Sensex), a popular series of investor camps, to Mumbai. Eminent stock market experts Nilesh Shah, joint MD, ICICI Prudential Mutual Fund, Nipun Mehta, ED of Society General India Private Banking, CS Nanda, CCM, financial market investors protection committee, ICAI and Madhusudan Kela, head of equity investments, Reliance Capital Asset Management, reaffirmed their faith in the India growth story. The meet was jointly organised by ET (Gujarati) and ICAI, Western India Regional Council, at Bhaidas Hall in Vile Parle on October 23.

What they said...

Forced liquidation is happening in the market. Fear (among investors) is at the highest level. This is the worst situation in the past 100 years and so an overnight recovery is not on the cards. While the Indian economy is growing at 6.5-7.5%, the world is already talking of a negative growth rate of 0.5% and 1.5%.

Madhusudan Kela
Head of equity investments, Reliance Capital Asset Management

There are some good developments which the market has ignored. This year, we had an average monsoon, Indo-US nuclear deal is now a reality, we received FDI worth $10 billion during the past two quarters, crude oil prices have fallen and inflation is expected to ease out in the coming days. It is just a matter of time when FIIs will be forced to back the winning horse (India).

Nilesh Shah
Joint MD, ICICI Prudential Mutual Fund

Prices are indeed attractive. It’s like the latest McDonald ad campaign ‘Aap ke Jamaane mein, baap ke jamaane ke daam’. Lot of Indian global acquisitions happened at peak prices, and now fund raising has become difficult for these companies. Still, impact on the Indian economy will be limited. Investors need to have a longer time-horizon and take a fresh look at their portfolio holdings.

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Realty funds bear the brunt of the ball

New Delhi: Shares of real estate firms were the worst hit on Friday after concerns of a liquidity crunch in the business drove the sectoral index, the Bombay Stock Exchange’s (BSE) realty index, down nearly one-fourth.

Shares of Unitech Ltd, India’s second largest developer by market value, fell by a record 51.29% to close at Rs30.10 each after intra-day trading took it down to an all-time low of Rs26.60.
Bangalore-based real estate developer Puravankara Projects Ltd, which saw its shares closing 44.32% lower, also touched a record low of Rs42.20 in day trade.

“People are concerned about cash provisions and where will real estate companies get money from,” said Sandeep Mathew, an analyst at BNP Paribas Securities in Mumbai.
An analyst with a domestic brokerage firm, who did not want his or his employer’s name to be used, said, “...people are exiting at any price because there are no buyers for realty stocks”.
There is an aversion towards real estate stocks among “investors (who) are now shifting from net asset value-based valuation to cash flows of the company”, he added.

Shares of DLF Ltd, the largest developer in the country, shed 23.96% to close at Rs203.90. Parsvnath Developers Ltd fell by 20.70% to close at Rs45.20.
BSE’s benchmark index, the Sensex, shrank 10.96% while BSE’s realty index, which consists of 14 real estate stocks, fell by 562.31 points or, 24.4%.

“Real estate stocks have been correcting mainly because developers have not reduced home prices despite a slowdown in sales,” said another analyst with a domestic brokerage firm. “In Unitech’s case, the stock has corrected because the company is heavily leveraged.”

mint reports on 30-50% drop in prices if you are willing to pay cash instead of staggered payments.

New Delhi: As the Indian economy faces a liquidity crisis, banks remain wary of lending money to the real estate sector. The developers, facing deadline pressures for delivery of projects, are forced to tap private money lending sources. Consequently, they have been forced to borrow money at steep rates.

According to Sanjay Khanna, managing director of Kailash Nath Associates, this rate could be as high as 5% per month. A rate of 5% interest per month translates to a whopping 60% per annum. It means that a developer will have to pay Rs6000 for every Rs10,000 it raises. Builders do not have the money to construct and have approaching delivery deadlines. Real estate experts fear that some builders may even default.

Santhosh Kumar, deputy CEO of property consultants and brokers Jones LaSalle Meghraj agrees with Khanna but says that players with better fundamentals may still find money at 15-20% rate of interest. “But others may have to pay upwards of 30% as well,” he says.

As demand slows, the price of residential and commercial real estate in the country has been sliding. It has fallen by 15-20% across metros over the past nine to twelve months and is expected to fall by another 30-40% over the next few months. In such a scenario, developers who went aggressive on land acquisitions, based on the presumption that prices will continue to rise, find themselves in a tight spot. They are now forced to borrow money from the market at unsustainable rates.

Ashish Mathur, Head-Business development and marketing for Mahindra World City says, that some small developers may have to exit the business all together if the market does not pick up soon.

The problem is worsened by a slowing economy and over supply of office space and it’s slow off take as reported by real estate consultants Cushman & Wakefield and CB Richard Ellis among others. Expensive home loans have turned away the residential buyers as well. Almost 90% buyers use bank finance for home purchases. Santhosh Kumar says that developers are expected to cut prices by 30-50% or more to boost offtake in the coming months. He warns, there may even be distress sales by developers.

The bad news for realtors extends to the stock markets as well. The BSE realty index fell 24% on Friday on worries that the real estate sector is heavily leveraged. As the economy slows down and money gets dearer, the pain is only expected to get worse for real estate developers.

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Happy Diwali from the Finance Minister Mr Chidambaram

Dear Fellow Citizens,

On behalf of the Congress party, Manmohan Singh, Sonia Gandhiji and Mr Rahul Gandhi I would like to extend my warm wishes to the citizens of India on the eve of Diwali 2008. It has been a tumultuous year for the markets and as we have seen things have been going as per plan. We had a plan for 9% growth, however we came close to it at 8% and got a bonus 12% in inflation. We also managed to bankrupt a lot of the speculators and investors, some of who were senior citizens who lost their retirement saving in the market .

When the congress came to power in May 2004, the Sensex was 5000, now after 41/2 years it is at 8500, A stellar gain of 70% over a 4.5 year period as opposed to a 40% compounded gain if you had invested in safe fixed deposits. However if you had invested exactly a year ago, the return would be a -70%, a warning to speculators that India will not tolerate short term investors.

We are also happy to report that the rupee has breached Rs 50, so now your NRI brothers and sisters are given a welcome bonus this Diwali. The Foreign investors who have dumped the rupee and fled like rats will now have a greater incentive to return back, now that they have gained 20% over a period of 1 year. As you can see we are trying hard to please all sections of society and we look forward to continue this good work in the year five years under the astute leadership of Shri Manmohan Singh and Smt Sonia Gandhi.

Having seen the turmoil with the Italian Lira, we have superb leadership at the top which understands the economic consequences of pandering to the common people. I have instructed the SEBI and the RBI to take strict action against market manipulators who have been trying to create a illusion of wealth in the Indian stock market. Thanks to their efforts the Sensex has been brought down from 21000 to 8500, a level which will hold for a few more days, before we bring it down further to 6000 so that it is affordable to the common man.

It has also been an very happy Diwali for some of our Foreign short sellers who were allowed to participate in the merry making outside the borders of the country, thanks to a recent directive by SEBI, a brilliant move by the SEBI chairman.

With reference to housing we have managed to create a spectacular bubble where land prices have soared to the heavens. Some of the property where I live is now worth Rs 50000 per sq/ft. Even developed countries like the US and UK don't have the prices we have. We have asked our banks to make sure that the citizens are working hard to pay off the EMI's on the house/car loans for their highly prized properties. These banks are creating thousands of recovery agent jobs each month to make sure borrowers don't default on their loans.

As a consequence of the soaring housing prices, the congress party and other political parties have had great success in raising funds for the upcoming elections. Unlike the US which has a lobby system, the Indian political system depends on builders to finance their political activities. We prefer black money to avoid scrutiny of the Income Tax bureaucracy and thereby reduce corruption in the system.

Some of the builders have defaulted on their payments to government authorities and banks, and as a penalty, we will be confiscating their assets and then auctioning them over to our brothers in the Gulf, some of who have nefarious designs against our great nation. By doing so we will establish an ownership society where all the prime land is owned by our enemies, so they will have no vested interest in creating turmoil, riots or exploding bombs in our cities and towns.

In closing, I wish all citizens a very happy Diwali and hope that the next five years are even more prosperous then ever before.

Sd

Mr P.C Chidambaram

Finance Minister

Government of India

New Delhi

Samvat 2050

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Prestige Shantiniketan - Roof collapse.

Four injured as Prestige group’s 15-storeyed structure collapses
S. Rajendran and M.T. Shivakumar
The cement slab of the top floor collapsed first and then the rest crumbled

— Photo: Bhagya Prakash K

CASCADING EFFECT: One of the structures at Shantiniketan, Whitefield, which collapsed in Bangalore on Thursday.

BANGALORE: Four persons were injured and another 100 construction workers had a providential escape when a part of a 15-storeyed concrete structure under construction of the Prestige group crashed at Whitefield here on Thursday.

The block which collapsed is part of the 20 blocks under construction by Prestige in a joint venture with Shantiniketan. The top floor slab which collapsed first was laid only a few days ago.

The police told The Hindu that the accident occurred around 5 p.m. when a small portion of the top floor collapsed resulting in the slab of the floor below it collapsing in a short while. Owing to sheer weight, the slabs of the lower floors collapsed subsequently, all in a span of 50 minutes, although the embedded steel rods prevented the slabs from falling in a heap.

The injured were identified as Srinivas (20), Dasharat (25), Mahendra Prasad (25) and Dadudar (30). Dadudar is said to be a native of Bihar and the other three residents of Kadugodi and surrounding areas in Bangalore. They sustained minor injuries when they were running out of the building, and were initially taken to Vydehi Hospital and after first aid were reportedly taken away by the site engineers for further medical attention. The workers were evacuated from the site. Complete information relating to the building collapse is yet to be made available to the police. The Prestige Shantiniketan complex comprises several towers, each of them of several storeys and located in the vicinity of the International Technology Park. There is no information on the strength of the work force at the construction site. A Malaysian construction company (IJM) was building the superstructure for the Prestige Group, which has undertaken the joint venture project with Shantiniketan (Chaitanya Properties) of D.K. Audikesavalu.

Nayeem Noor, vice-president (public relations) of the Prestige group said the collapse occurred after the top floor slab was cast. “The super structure is intact and there are no casualties.” A head count at the construction site has been conducted and it is confirmed that there is no casualty including injury suffered by any person, he added.
Enough time to escape

N.M. Nachappa, security guard at the site, told The Hindu that “the entire building crashed in 50 minutes. There was enough time for all the workers to escape.”

According to an eyewitness, around 4.50 p.m., the slabs of the building started to collapse. Then there were around 120 people, including women and children. “Immediately after the incident, the workers at the construction site had left. Very soon they were sent to isolated places in a few trucks.”

“A Few officers, perhaps from the contractors side, had shifted all the workers to some other location immediately. They instructed the security guard and other workers at the construction site not to answer the media or the police,” he said.

The Bruhat Bangalore Mahanagara Palike has taken a serious note of the accident. Directions have been issued to stop construction pending an inquiry.

Several superstructures are under construction in the vicinity of the ITPL.

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Dark Diwali: Pink slips, pay cuts await realty staff

Observer,
Here is the post following up on your comment about the reality layoffs. Some of your other comments have some good advice which I will collate and post as a new article.
For Anil and other realty touts, this is the writing on the wall. Your jobs are no more secure then the IT/ITES folks, so better tighten your purse strings.
Also regarding the comment regarding the plot which Anil bought for Rs 150 in Pune and then later sold for Rs 5800 is pure BS. Baner-Pashan apts were at Rs 1800 3 years ago and now they are Rs 3300. So cut the crap and try selling the Taj Mahal to somebody else.
NEW DELHI: It’s not going to be a happy Diwali for people working in the real estate industry. Even as sales failed to pick up this festive season, most realty firms including DLF, Unitech, Omaxe, Parsvnath and BPTP, now plan to lay off staff in significant numbers soon after Diwali.
While spokespersons of all these companies denied there were plans to cut jobs or salaries, executives in these companies told ET that job cuts were in the offing and salaries have been delayed in some of these companies.

“All real estate players, including us, will have to reduce manpower cost significantly if we are to survive in the current hostile market conditions,” says a top executive at a Delhi-based listed mid-size realty firm, which plans to reduce manpower by almost 20%. The job cuts will start happening soon after Diwali.

Executives at many other real estate firms also confirmed companies plan to offload people and a list of staff was being prepared, who would be asked to leave soon after the festive season was over. Developers are waiting for Diwali as they didn’t want to dampen sentiments further.
“Job cuts at Jet Airways became a big issue also because it was done before Diwali. Developers are wary of raking up any political controversy,” explained a senior executive.
Also, realty firms needed large number of sales staff for the festive season. But now that their price discounts or other freebies have failed to stimulate the home market, developers feel they can cut back on staff. The developers have already started easing off some staff. Many developers, including DLF, had already asked around a few hundred employees to leave.
And sources say more job cuts are in the offing at DLF, as construction pace slows and expansion plans are put on hold. Unitech, Omaxe, Parsvnath and BPTP too prepare to issue pink slips.
Salaries have been delayed at many mid-size and small realty firms, even as management is asking employees to take salary cut. Even though he denies salaries are being delayed or cut at his company, Parsvnath chairman Pradeep Jain supports the idea of salary cut.
“Employees’ salaries have risen so much in the past few years that I see no harm in reducing it a bit,” says Mr Jain.
“Salaries at the top management level have already started to come down. A number of real estate players are already renegotiating salaries with staff so that overall wage bill comes down and not many jobs are lost. Companies are preferring to retain the jobs of those capable of multi-tasking,” said Executive Access MD Ronesh Puri.
Employees at most real estate firms are in a state of panic as job loss fears mount. Too many resumes have been floating around in the market. “Earlier it was extremely difficult for a smaller developer like us to hire talent. Now we are flooded with CVs. Surely, people are being fired somewhere else,” says Ambience group chairman Raj Singh Gehlot.

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Crisis of the mind

IBN live reports on a suicide/murder by a stock broker who is unable to make good of his losses and take care of his family and buy a flat. As we have discussed, investors have huge losses where they are losing all their capital which they have built up over the past 3 years, plus many have taken loans against the stocks/margin which the banks are asking them to pay back. Added to that they have EmI's on houses. The whole bubble was created on a house of cards and the deck has collapsed.

One of the readers mentioned about an apt which he had purchased for 30L which is now 1.2 crores in 3 years. This is a fantastic investment if he is able to liquidate it at 1.2 Cr. If he does he has found a sucker and more power to him. If he does'nt then I guess he is the sucker, since he wont see 1.2Cr for a very long time. Just as the Sensex has retraced all the 100% return over the 3 year period and stocks are down 70%,80%. so will the housing market retrace to lower levels. No bubble exists in a vaccum and this is no exception.

Also having lived in Bangalore and mumbai with mumbai being my hometown, I can say that Bangalore has many more opportunities for higher paying jobs then mumbai. Housing is also way too cheap as compared to mumbai and with newer societies with all amenities which have sprung up over the past 5 years, things are better in Bangalore then before. The locals complain of the spike in traffic but then mumbai has equally bad traffic so to a mumbaikar there is no difference, but the housing cost and the pay packet, both which work in his favor.

There will be some people who will argue the black money aspect of housing and I can only say that the house of cards was created on EmI availability which generated more black money for the builders. Now that the generator fuse has been shorted, so will the output.

One last point I'd like to make is the psycology of builders who want to keep raising prices even if they can make a handsome profit by selling 10% below their current prices. It achieves the following purposes

1. Creates an illusion that prices are rising prepetually for the buyer who is seeking appreciation.
2. Provides mental comfort to existing owners that they are in the money and they dont need to sell
3. Traps NRI's and other high net worth people who has disposable income and/or black money
4. Enforces the notion that real estate is a growth asset as opposed to an income generating asset. If you looks at the P/E it is abysmal in mumbai
5. Sells the mantra of moving up the chain as real estate always builds equity.

All these things work in the long run if you have a good entry point. In a bubble economy, all bets are off and the last man standing will face the music.

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Don't buy unfinished homes

The news is coming thick and fast. DNAIndia is finally doing some realistic reporting. The game is simple. Its a buyers market and the buyer can demand a 40% reduction of a completed property. A deal will only happen if both parties agree and today there are no deals since there is a disconnect. Greed is good but only for a limited time. Now it is the buyers time to get greedy. As the article rightly points out, going for an under construction property is a disaster waiting to happen. There are thousands of new projects which are launched in 2008 and most of them will be delayed by 2-3 years beyond their projected dates. Already Raj Thackrey's campaign is having an effect on mumbai's and Pune's construction market where builders are attributing him to delays. They are also invoking the Force majeure clause which allows them to disown responsibility for building delays. 99acres.com and magicbrics.com have thousands of properties for sale and half of them are ready to occupy. It is a buyers market like never before. So if you have cash, you are king.

Liquidity crunch delaying projects, only 30% price cut can help: Experts

MUMBAI: Want to buy a home this festive season? Then don’t go for a one that is still under construction, warn experts in the realty sector. The global slowdown and crash of financial markets has left builders with little money and they are struggling to wrap up even the half-finished projects, let alone going for new ones, according to industry analysts. Experts warn that the financial strain on realtors is causing indefinite delays in the completion of many projects.

“Those who intend to buy property should go for only completed flats. It’ll be too risky to buy properties under construction,” said an analyst with a foreign brokerage who did not wish to be named.

Real estate is an end-user sector where the money mainly comes from home buyers and development happens in phases.

“But developers across the board raked in money from initial public offerings and invested them in buying land parcels paying huge premiums. Now, banks have stopped lending, money from private equity is very costly and unorganised lenders are charging interest rates as high as 30%. So how can developers complete projects profitably,” asked the analyst.

He cited the example of a Mumbai-based realtor whose high-end residential project in Lower Parel, one of the city’s commercial hubs, was to be completed in 2006 but has now been delayed till 2009. Uncertainty looms large over whether even this deadline will be met, he said.

An official of the realtor in question had earlier told DNA that the project would be rolled out before Diwali this year. An email sent seeking clarification on the new deadline remains unanswered.

This isn’t an isolated case. Analysts say delays of three to four years are likely in under-construction projects.

Despite the headwinds, developers have stubbornly stuck to their pricing. This could be one of the reasons why sales have failed to pick up, even though builders are offering freebies such as free stamp duty registration and parking space, modular kitchens and interiors, and interest-free EMIs till the buyer gets possession of the flat.

“A price correction of a minimum of 30% is required for sales to pick up. If this correction does not come in six months then some listed developers will end up being negative cash companies. Even if buyers are desperately looking for houses, they should wait for a minimum of three months before taking the plunge. Also, they should look only for properties that are ready and available for possession,” said an analyst of a domestic brokerage.

Vikas Oberoi, managing director of Mumbai-based developer Oberoi Constructions, agrees. “Buyers should be wary of under-construction projects because developers who are overleveraged will not be able to complete their projects. So a buyer should look at a developer’s past projects. At these times, it’s all the more important for people to be careful about where they invest,” he said.

And though the slump is pinching, consolidation in the industry is not seen coming. An analyst said, “Even if a developer gets land at a discount of 35-45%, he will not buy it to save money for construction. Those who haven’t seen free cash flows in the last 6-8 months will halt their launches and sit tight till the tides turn in next 18-24 months.”

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Time reports on the Indian realty meltdown

I guess to all the ostriches, this article is one more nail in the coffin. Drop prices 30-40% or go bankrupt, seems to the mantra come Janurary. The only hope is the centuries old tradition of praying to Goddess Lakshmi for wealth and prosperity. In the Indian secnario, the developers who are leveraged to the hilt are the sub-prime of India.

Mirroring the US, India's Real Estate Sector Melts Down
By Madhur Singh / New Delhi Monday, Oct. 20, 2008
The new moon of the lunar month of Kartika marks Diwali, the Indian festival of lights, when Hindus across the country worship the goddess of wealth, Lakshmi. But divinities know full well the laws that govern finance and Lakshmi may not be a little tight-fisted about circulating her riches amid the ongoing global credit crunch.
Indian tradition decrees that it is auspicious to make purchases during the days leading up to Diwali — which falls in October or November. With faith meshing so effortlessly with commerce, the season sees sellers, advertisers and marketers urging the devout to spend money with a religious fervor, hawking everything from chocolates and consumer durables to gold and houses. Buying a home is considered especially propitious. What better way to welcome the goddess of wealth into one's life than by inviting Lakshmi into one's new abode? So much so that the period from just before Diwali through March is usually a bonanza for the real estate industry: usually 70% of the annual business is conducted at this time.
Not this year. With just about a week to go until Diwali, the mood is decidedly downbeat. The demon of impending economic doom refuses to die, and as tightened liquidity makes people put off larger purchases, the real estate sector is facing the worst attack. "This time last year, I was selling 10 to 12 properties every day," says Alok Gupta, who runs Advanced Real Estate in the New Delhi suburb of Noida. "This time, I haven't sold a single property all month!"
Considered the barometer of economic growth, the real estate sector in India has grown 30% to 35% during the last five years, reflecting the rapidly-increasing demand for office, commercial and industrial space, as well as bigger homes now considered within the range of India's prospering working classes. But the economic juggernaut has been slowing since earlier this year due to double-digit inflation, a severe liquidity crunch as a fallout of the U.S. sub-prime crisis, and now, the possibility of economic activity shrinking as part of a global slowdown. The country's growth estimates of 9% at the beginning of the year have been revised to well below 7%, and the effect is directly visible on the realty sector. "No one's buying any more," says Ashwani Shukla of New Delhi-based Triveni Associates, "Two years ago, 25-year-olds earning fat pay packets from [multinational corporations] were buying high-end apartments. Now, there are no takers for flats selling at 20% markdowns. Estate agents are finding it difficult to even meet daily overheads."
Shukla himself has branched out of real estate and started selling insurance six months back, "to pay the bills." According to various estimates, sales in cities like Mumbai and Chennai are down 30% to 40%. Hoping to induce buyers at Diwali, realtors are advertising cash discounts of 5% to 10% for down payments, and as much as 25% discounts if buyers are willing to wait two to three years before taking possession of the property. "But there is no liquidity with the end user," says Arvind Nandan, director of consultancy at real-estate consultants Cushman & Wakefield India, "Home-loan rates have hit the roof, and people's investments have lost value at the stock market. No one has the money to buy."
Shukla says if the situation does not improve, there could be distress sales within the next six months. The realty sector was heading for a cyclical slowdown even before the current economic slump. Over the last few years, increasing demand had pushed up prices, with speculators jumping in to further inflate the market. Eventually inventory piled up when buyers refused to pay unrealistically high prices. "So many transactions were taking place between speculators and investors that no one bothered to find out what the end-user, the family who would eventually live in the house, would be willing and able to pay," Shukla says. And those prospective home owners are the biggest target of India's real estate industry: almost 80% of real estate developed in the country is residential space.
This all comes at the worst possible time. Even as buyers refused to bite, inflation passed into double digits in June this year, raising prices of construction material. Realtors overran their budgets and projects stalled, leaving skeletal structures dotting the landscape across big and small cities all over the country. Then came the liquidity squeeze as the government sponged away cash from the system to control inflation. Home loan rates went from about 7% to over 12%. People who bought struggled to pay, and potential buyers kept away.
Realtors like Shukla and Gupta may have little reason to light firecrackers this Diwali, but their prayers to Lakshmi, the Goddess of Wealth, will definitely be more fervent, especially as experts predict things will get worse before they get any better. "This was a much-needed correction," says Nandan of Cushman & Wakefield India, "And it isn't complete yet. I expect the market to go down further, and it's hard to say when the recovery will begin."
Yet, no one is entirely pessimistic. Experts and industry insiders believe once the storm blows over, demand is bound to rise back up for the same reasons it did last time — a large, young workforce; gradual but consistent liberalization reforms; and a high rate of consumer and private sector savings. "The silver lining is that once this phase ends, land and property prices will be corrected to rational levels, speculators will be out, and the sector will have stronger fundamentals," says Shukla. If everyone's prayers go right, the goddess will eventually be propitiated and her blessings will issue forth once more.

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State of Denial

Mint has a couple of good articles on the denial of the Indian builders to accept the reality of a slowdown. The Sensex has crashed 50%, midcaps 60%, small caps 70% but India real estate developers think that the word correction applies to everyone but them. Like Marie Antonette said "If you don't have bread, eat cake" the Raheja's are pricing villas for 6crores. God save the ostriches. The articles are below

Mumbai: Bhav gira kya (Has the price fallen)?” the prospective buyer asked.
“Bhav chada hi nahin girne ke liye (It needs to rise before it can fall),” came the stoic response from across the counter from the Housing Development and Infrastructure Ltd, or HDIL, representative.

That exchange more or less sums up the current dynamic between discount-seeking buyers and reduction-resistant sellers in India’s real estate market, a chasm that was apparent at Property 2008, the 13th real estate and housing finance exhibition, a four-day event held last fortnight at the Bandra-Kurla complex in Mumbai.
A dozen signboards outside the site of the expo screamed, “Take the right decision. Buy now”, but buyers seemed indifferent to that message, even though they flocked to the exhibition in droves on Saturday.
Even as analysts caution that the days to come will be critical for developers as their inventory of unsold houses increases, real estate firms put on their bravest faces at the exhibition and said they wouldn’t consider reducing prices.
Under pressure: Real estate development in the country, including housing projects such as this one in Ghaziabad, is heavily dependent on population migration due to rapid urban growth. Harikrishna Katragadda / Mint
Everyone has got it wrong, they insist. “Make up your mind, this is the right time. The economic cycle is maturing and, by January next year, apartment prices will go up,” said Vinod Manwani, marketing head at the Nahar group, which is developing more than 100 acres in the heart of Mumbai, near Powai lake.
Analysts say real estate firms aren’t helping themselves with this attitude.
“The current slowdown in demand for realty, coupled with declining internal accruals and reduced funding options, exposes them (real estate firms) to the downside of this aggressive strategy; there are large amounts of debt already on their balance sheets and, (with) external funds increasingly hard to come by, we foresee delays on their many ongoing and planned real estate projects, thereby leading to the possibility of sale of projects or even enterprises,” said Akash Deep Jyoti, head of corporate and government ratings at Crisil Ltd, a Standard and Poor’s company.
A report in Monday’s The Economic Times said banks and finance companies have begun pushing developers to sell cheap.
To make matters worse, many companies have borrowed from outside the banking system at much higher rates.
The best way out is for them to sell assets and offload completed projects, said Jyoti.
Builders also need to get realistic on pricing, as a significant correction is yet to happen, added Jyoti.

Bangalore: Real estate entrepreneur Vijay Raheja has lined up a raft of projects in Mumbai and Bangalore for the next six months to a year—braving a slump in the property market after splitting the family business with his brother in July—and started with a development targeted at the rich. His company, V Raheja Design Construction launched its first project post the split on Dussehra—the Verena luxury villas spread over five acres in east Bangalore’s Whitefield neighbourhood where each unit has been priced at Rs6 crore. Exclusive: V Raheja Design took over construction of the new JW Marriott hotel at UB City in Bangalore in July. Hemant Mishra / Mint“There are 40 villas, and all will be sold by invitation. Other residential and commercial projects will be launched gradually,” said a senior official at the company who manages the Bangalore operations, but did not want to be identified. Raheja is working on projects including an IT park, Gigaplex, a residential project, Buena Vista, and a commercial property, Raheja Chambers, in the city. In Mumbai, an information technology park is under construction. Raheja and his younger brother, Deepak, split the 56-year-old B Raheja Builders between themselves and founded their own companies, ‘Mint’ reported on 7 July. The properties and projects of B Raheja Builders were divided between the brothers, with V Raheja Design taking over the construction of the new JW Marriott hotel at UB City in Bangalore. “A Rs6 crore villa is overpriced where builders are unable to sell Rs3 crore houses in the same area,” Naresh Dandapat, regional director (south) at property consultancy Knight Frank India, said of the Verena villa project. But the official defended the pricing, saying, “They are exclusive and contemporary, and have been priced accordingly.” Analysts say builders need to get realistic about pricing, sell assets and offload finished projects

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Revisiting the first post of this blog

Rewiding almost 3 years into the past, I found my original post. Most of the observations made then have been vindicated by the turn of events. Three years later, the stock market is up 10% and looks very likely to go below 9k in the following weeks, thereby wiping gains for 3 years. The FII's have taken the Indian investor for a ride down a a tunnel of hell. As everyone reads the bad news, I'm thinking of what could be good prices to pay for apts in the year ahead ? Anything over 3000 is steep by any standards. Black money can chase other black money, however loans are in short supply so they cannot chase other loans. If a black money operator buys an apt paying 1cr, immediately the Income Tax folks will get alerted and will be on his case. The only place where they can hide money is to buy land/plots where there is a substantial portion in black. As state governments keep raising gudiance value, this avenue is closing as well. In Chennai the guidance of OMR road is up 10 times over the past 3 years. Hence speculation here attracts the Income tax bugs. The only avenue black money folks have is to fund builders, however given the state of the loan market, they will be unwilling to do so. The goal of every black money operator is to convert the black to white, but as avenues for the conversion evaporate due to increasing risk, storing black money under the matteress or in hidden cabinets seems to the only way. Any builder who is looking for money is paying 30% interest, this used to be the case in 2003. So the market is dull, people have lost money in the market upto 80% in many cases. How long can 10000 per sq/ft hold ?
and I just got this in the mail and couldn't come at a better time. A drop of 40% from the existing rates, However to take the risk of execution during a time of financial crisis is foolhardy. We will see these prices for ready to occupy apts soon.

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Friday, December 09, 2005
Asset Bubble or not ?
As the Indian economy grew by 8% as stated by the finance minster(12/9/2005), the sensex hit an all time high of 9057 and housing prices have continued to skyrocket in major metro areas.

One of the worrisome aspects of this growth is that low interest rates have helped companies in BIFR(chapter 11 for India) to come back with healthy balance sheets specifically due to debt-refinancing. (18% to 11%). The productivity growth or job growth is not wholly responsible for the growth. Also many of these restructured companies might pay themselves dividends or buy back shares thereby increasing the wealth of the directors, and owners and thus balloning the stock market beyond fundamental basis.

The white collar worker has to deal with the consequences of this semi-illusionary growth in the form of increasing property prices (10-20% year-over-year) and is borrowing heavily thanks to low interest rates.

As property prices push higher, the risk of default of these small apt buyers increases as global interest rates rise, energy prices push higher , inflation increases and the rupee devalues as the external debt mounts rapidly

Most Indians in the market for a apartment now have never experienced a downturn in the economy so they might find themselves highly shafted if they over-leverage themselves on the loans as well as the floating interest rates.

Unfortunately unlike the developed west , India has no reliable source of data available for real estate prices and transactions and most prices are rigged by a cartel of builders. I'm also skeptical of the media in reporting the truth since they too dont have any reliable data to go from and finally real estate agents, the less said about them the better.

This blog attempts to understand area development and price movements and if people contribute uncover hidden unsold inventory. I'll post information about Mumbai/Pune/Bangalore over which I can get anecdotal evidence or as I browse the news papers and talk to real-estate agents and builders. All articles and comments are welcome. I'll be the moderator of the comments so that the spammers dont take over.

This blog is inspired from a similar blog http://thehousingbubbleblog.com/ which is now a reliable source of data for various US housing markets.

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Equity Funds attacked by bears

I was curious to see what the year to date performance could be on mutual funds on 10/15/2008 and here is the snapshot of the query. Not one diversified equity fund has shown any gains over the past 1 year. Attached is the picture which says it all. You can run other queries on the Mutual fund screener tool and find out the top losers over the past year or two but the amount of money lost this year is over 30% so all the gains made over the 3 year horizon are wiped out in half. If someone had put the same amount of money in a fixed deposit, they wouldn't have done too bad. The FII's have scooted with the gains and the brokerages have to be squarely blamed for deceiving the common Indian investor of their life savings.

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Run on FMP's causing panic

This could be India's subprime and credit crisis which will affect the realty industry the most.

Sucheta Dalal & Debashis Basu say that withdrawals from Fixed Maturity Plans can turn into a huge problem

A full blown panic in the real estate and financial services sectors has led to the withdrawal of nearly Rs 30,000 crore from Fixed Maturity Plans of Mutual Funds in the past week alone. These funds are meeting all redemption demands by borrowing money at high rates of 20% to 24%. This may end up destroying parts of their corpus and may lead to losses for retail investors. Retail investors have (as usual) foolishly remained invested in FMPs lured by their pitch which touted them ‘safer than fixed deposits and offering higher returns and lower taxes’, on the assurance of ‘indicative’ returns, although MoneyLIFE magazine (FMPs Lose Shine) had repeatedly pointed out that the risks of FDs and FMPs are so vastly different that comparing them are like comparing oranges and apples. FMPs may end up being like the unregulated Overseas Corporate Bodies of the previous market decline. Someone needs to urgently look at what is going on inside them. Unfortunately, SEBI does not even gather data about the FMPs issued by mutual funds or the quality of securities in them.

The other problem today is super-liquid schemes that invest in the call money market. There was no regulatory oversight on these schemes and they have been allowed not to mark their investment to market and could claim to hold them to maturity even when it was a one-year paper. This has created a very dangerous situation today.

Finance and realty companies are the weakest link in the chain. Many FMPs have subscribed to short term AAA rated paper of finance and realty companies. The credit rating of these papers now looks doubtful. One finance company (belonging to the bluest of the blue chip business house whose previous finance arm was deeply involved in the 2001 scam), has also renewed its paper at an exorbitant rate of 32%.

The smarter, corporate investors are taking no chances and pulling out funds and exacerbating the salutation leading to panic. No regulator has bothered to collect data on the investment pattern of FMPs and liquid schemes and keep tabs on it. As result, the systemic risk posed by the redemption runs on these schemes and the shaky underlying debt securities in their portfolio is suddenly upon us and nobody knows whether the RBI should look into it or SEBI or both. Mutual funds that are borrowing to meet redemption are refusing to utilise their bank credit for this emergency, because they feel that it will only put information in the public domain and cause a run on the fund.

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Bldrs tread cautiously on realty street

Bldrs tread cautiously on realty street
Nauzer Bharucha | TNN

Mumbai: Some of the tastefully done-up stalls at the property exhibition at Bandra-Kurla Complex (BKC) are as large as one-bedroom apartments. Smart marketing girls move around with glazed brochures, pitching upcoming residential projects to prospective home buyers.
In the adjoining seminar hall, there is much bonhomie among the assembled builders, gorging on a lavish vegetarian spread. To many, it may seem to be business as usual for Mumbai’s property czars. But behind the broad smiles is a growing concern about the stormy days ahead.
The construction industry is suddenly down in the dumps and builders are still unwilling to say when they will relent and reduce prices. But across the city, massive cranes, which were once swinging at frenzied pace, have slowed down considerably.
“Developers have drastically cut down work on their under-construction projects. For instance, if a builder was laying one slab a month, the pace has slowed down to one slab in three months. When flats are no longer selling as briskly as they used to, there is little point in speeding up construction work,’’ a leading builder confessed privately to this newspaper recently.
Some of them are also believed to have postponed launching new projects. Banks and financial institutions have also turned on the screws. A couple of years ago, they stopped lending money to builders for land acquisition. Now, even loans for construction has virtually come to a halt since the past three months, industry sources said. “Banks have become extremely choosy about lending money to builders,’’ they said.
In the residential segment, prices in some of the upscale projects coming up in Malad and Goregaon are in the range of Rs 9,000 to Rs 10,500 a sq ft. In Juhu, the rate is anywhere between Rs 15,000 a sq ft to Rs 21,000 a sq ft in upcoming projects. In south Mumbai, there is an eyeball to eyeball confrontation between buyers and sellers of premium apartments. “The seller is still adamant and refuses to lower the price, while the buyer is still not falling for it. In the past six months, the same flats which were put up for sale are still circulating in the market,’’ said a CEO of a real estate company, not wishing to be identified.
At Pedder Road, a builder who has just finished an upscale apartment block, is finding no takers. “He has been demanding a whopping Rs 80 crore for each apartment, which is spread over 8,000 sq ft super built up area. Not a single unit has been sold at this price,’’ said market sources.
“Confronted by a bleak scenario, builders are twiddling their thumbs and waiting for the real estate market to revive,’’ said an insider. A handful of developers who are sitting on large chunks of land since many years, and who have little exposure to banks, are in a comfortable position at present. The rest are finding the going tough while some who had purchased land at unrealistically high rates, are finding the noose tightening.
According to the market grapevine, the brother of a prominent developer from the eastern suburbs, who has branched out on his own now, is stuck after a US-based bank allegedly stopped funding his projects in Hyderabad and Chennai. Another developer with residential projects in Goregaon, Virar and Thane finds himself pushed into a corner after taking a Rs 100 crore loan from a Kutchi industrialist at hefty interest rate of over 40%.
One builder, who shook the property market last year after he paid a phenomenallyhigh price for a plot in BKC, is also believed to be now on the edge. “His investors are breathing down his neck and even the nationalised bank which funded him, now wants its money back. His desperation is now evident because he has started offering brokers a 4% brokerage for getting clients,’’ said sources.
In the commercial segment, the lease rental prices in BKC has come down from an average of Rs 450 a sq ft to Rs 325-Rs 350 a sq ft over the past three months, it is learnt. “Developers setting up IT parks are also getting worried as they are not getting the price they were expecting,’’ said a broker.
According to housing experts, about $4 billion has been pumped into the Indian real estate market by FIIs and venture capital funds. Another $12 to $14 billion was to flow in within the next 18 months. This will not come any more.

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Pune : Kondwa gets a bad name

With prices over 4000 per sq/ft here on the outskirts of Pune, Kondwa seems to be the new terror hub

Kondhwa: Pune's emerging terror nest
8 Oct 2008, 0344 hrs IST,TNN

PUNE: The arrests of four suspected Indian Mujahideen (IM) members from the Kondhwa area of Pune and the revelation that they had used a plush fla
t at Ashoka Mews to fine-tune their plans to send terror emails and hack into WiFi networks has left local residents shocked.

"This is unfortunate. We are feeling insecure. This is giving a bad name to the entire Kondhwa area," said B Nair, a senior citizen who stays in a building near Ashoka Mews, a complex which houses 12 buildings and 28 row houses.

Another resident, Shrilekha Menon, said that she had purchased a flat in Kondhwa three years ago as the area was peaceful then. "But now we are feeling uncomfortable and may shift," she said.

Her fears are not unwarranted. This is the second time in the last couple of months that the police have arrested suspects from Kondhwa for their alleged terror links. On August 16, one of the three youths picked up by the Anti-Terrorism Squad was from Kondhwa. Police have questioned several others in the area.

In August, Pune police commissioner Satyapal Singh had said that the number of suspected Simi activists in the city had increased from 47 to 300. Though Singh had not revealed the pockets and areas from where these activists were thought to operate, police sources said that a majority of them were located in Kondhwa.

"We are concerned by this grouping of Simi activists in one locality. Earlier, they were scattered at Kasewadi, Bhavani Peth and Kondhwa. Now a majority of them have shifted their base to Kondhwa," said a senior police officer.

The officer said that there could be several reasons, including cheaper rentals and, until recently, weaker surveillance.

Speaking to TOI on Monday, deputy commissioner of police (DCP) Jalindar Supekar (zone IV) said that two special teams comprising 10 policemen each from the Kondhwa and Hadapsar police stations have been formed to look for suspected Simi activists taking shelter in places like Kondhwa.

The teams, formed three days ago, are headed by senior police inspector R B Gaikar, who is in charge of the Kondhwa police station. The activities of the teams, which started functioning from Sunday evening, will be supervised by Supekar and assistant commissioner of police (ACP) Ramesh Biwal (Wanowrie division).

According to Supekar, the team has been given a special task of identifying suspected Simi activists, keeping a tab on their movements and collecting intelligence.

Biwal confirmed that the Mumbai crime branch and Bangalore police had earlier visited Kondhwa for questioning suspected SIMI activists, but he claimed that the outcome of the interrogation was not known because no information was shared with the city police.

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Shah Rukh glamor doomed in the Gulf

Shah Rukh Khan or SRK needs to start reading this blog :). Sabbal Seshu and Ashish will get him black money rich clients for his high end gulf properties. Alas Mr SRK you might be a good businessman with Knight Riders and IPL, however this one is destined to end up 'deserted'.

Bollywood Star Hopes Glamour Will Rub Off on Gulf Properties

By Ayesha Daya
Enlarge Image/Details

Oct. 7 (Bloomberg) -- Shah Rukh Khan, the star of Bollywood hits such as ``Om Shanti Om'' and ``Chak De India,'' hopes his glamour will rub off on the real-estate fortunes of a little-known Gulf emirate.

Khan will help Ras Al Khaimah, a rocky outcrop of 168 square kilometers (65 square miles) and 250,000 people, to sell an 8 billion-dirham ($2.2 billion) beachfront development that will include an underwater disco and lounge. He presented the project, called Shah Rukh Khan Boulevard, in Dubai on Oct 5.

``I'm a believer in a place where things grow fast,'' Khan, who has visited Ras Al Khaimah only once, said in an interview after the briefing. Khan, 42, has endorsed products ranging from PepsiCo Inc. soft drinks to Hyundai Motor Co. cars.

Ras Al Khaimah, the most northerly of the seven sheikhdoms in the United Arab Emirates, aims to emulate Dubai, whose booming property market has attracted endorsements from celebrities including Brad Pitt and Boris Becker. The developer, TSA Group, is trying to lure foreign investors including Khan's fans from the Indian diaspora.

As oil and gas reserves dwindle, the emirate hopes tourism will generate independent sources of income and supplement contributions from hydrocarbon-rich Abu Dhabi that provide basic infrastructure, power and public services.

The Shah Rukh Khan Boulevard will be built on the man-made Dana Island that is being developed by the government's real estate unit Rakeen. The Boulevard will comprise townhouses and ten towers spread across an area of 600,000 square feet and is due to be completed in 2012.

Design Ideas

Khan has offered design ideas for the project, such as a glass gate at the entrance and big screens on the beach where people can watch movies, besides the underwater attractions.

``For me, this is the first step to have the freedom to express myself in stone,'' said Khan, who isn't planning any other developments. The Mumbai-based actor will start filming ``My Name is Khan'' on Dec. 15.

Khan said the project won't be hampered by a slump in the local real estate market brought on by the global financial crisis and the prospect of a worldwide recession. ``This is not the first time I'm experiencing recessions,'' the actor said, adding that the project won't be ready for another five years.

In Dubai, Brad Pitt is helping to design an 800-room hotel and resort with Zabeel Properties, while towers have been named after former Wimbledon tennis champion Boris Becker and ex-Formula One driver Michael Schumacher.

Dubai's other projects include a 1-kilometer-tall tower and surrounding developments that will cost about $40 billion, a 300- island project in the shape of continents called The World, and the world's biggest mall.

Dubai Real Estate

Home prices in Dubai, the second-biggest of the country's emirates after Abu Dhabi, are likely to remain little-changed until 2010 after five years of gains, Colliers CRE Plc said in a report Oct. 5. Emaar Properties PJSC, the Middle East's biggest publicly traded real-estate company, lost the most since 2000 on Oct. 5 on concern that the U.S. bank bailout won't prevent the global credit crisis from reaching Dubai.

``There is very little to go on with regards to the fundamentals behind the Ras Al Khaimah market,'' said Robert McKinnon, managing director of equity research at Al Mal Capital PSC. ``But I do expect it would correct along with the rest of the U.A.E.'' if this happens.

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