Searching the blog and other things

Someone asked me on how to search the blog effectively to find out articles related to duping of buyers by the builders. I've tried to tag all such articles with various tags like fraud etc. Look at the bottom of this posting and you will see those tags. Click on those tags and you will find the relevant articles.
On another note, due to some personal commitments I am unable to follow the market and post articles on a regular basis. I would urge some other folks to take up this mantle for the benefit for all concerned parties. I had given some folks posting rights in the past and I can give some more folks who would like to take up the cudgels from me. We have a good audience and the bull bear story will continue for a long time before everyone is exhausted.

As I see the market in Mumbai, speaking to friends everyone tells me the money has dried up. Some businessmen friends have drops of upto 40-50% in their sales. Rents have dropped. I was shocked to see some rentals going for 32k, which were quoting 50-60k last year.

We are in a deep protracted downturn, specially Mumbai. As I have said repeatedly, be it Mumbai, Pune, Chennai, Bangalore, affordability for Indians or NRI's is upto 4,000 per sq/ft. Anything above is for the politicians and black money operators. Anyone who pays more then that is going to suffer for a long time.

Lastly I spoke to a loan banker who said that most builders have reduced rates but still some are holding on. He does not see any hope for anything more then 7k. He is bit more bullish them I am :)

the areas I was referring to in this and previous posts is in Santa Cruz and Vile Parle.

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DLF customers gang up, pressurise developer to commit refund

Latest developments in the DLF's chennai project from ET.

DLF customers gang up, pressurise developer to commit refund
29 Mar 2009, 0633 hrs IST, ET Bureau

CHENNAI: Customer pressure seemed to have got the better of India’s realty giant DLF. Nearly 300 such buyers, who have backed out of the company’s prestigious ‘Garden City’ project in Chennai, refused to leave its premises till they got a written assurance that their money would be paid back in full.
Consequently, DLF has assured them that the formal refund letter addressed individually to the exiters would be given by April first. In its communication dated March 28, 2009, DLF Southern Homes, the special purpose vehicle executing the project on Old Mahabalipuram Road, said "the process of full refund will commence from 1st April, 2009, and will be completed before 30 September, 2009. The priority of disbursement shall be based on the order of first exit letters received and will be intimated by 10th April 2009."
For over a year and more, problems for the country’s largest listed developer have only been mounting. It has been facing the ire of customers, who made bookings in the 3,493 apartment Garden City project on 53 acres, which marked the Gurgaon-based realty biggie’s maiden entry in the city.
Apparently, the total number of exiters from the project was pegged at 580 out of its existing base of 1,800 customers. DLF Southern Homes was to have given a letter outlining the timeline of refund for all the exiters. But that did not happen, provoking angry reactions from the exiters, who refused to leave DLF premises until they got one.
The buyers, who advanced payments, have organised themselves into a Google Group, constantly monitoring the builder’s progress. Last month, as part of the attempts to appease its customers, wanting to exit from the project, DLF had brought down the prices from Rs 2500 to Rs 2600 per sq ft against Rs 2800 to Rs 3200 per sq ft for its existing customers. For new customers, the basic price was fixed at Rs 2750 per sq ft.
But this too seems to have not made any headway. For, on Saturday evening, nearly 300 buyers converged at the DLF office, seeking a written assurance from the developer to refund their money paid as advance for the project.
Earlier this month, the realty major had expressed its commitment to complete the project on schedule. This was in the wake of reports about consumers shooting exit letters.
If delayed approvals triggered anxiety and panic among existing customers, DLF Southern Homes MD K K Raman allayed the fears stating that "the construction activity is in full swing and we are well on schedule. We are committed to hand over the homes by April to June 2011, as originally committed."
"We do not foresee any problem in adhering to the timelines as we are adequately capitalised," DLF ED J Subrahmanian further said.

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Bringing down the house

DLF Chennai buyers have shown how group activism can cause builders to buckle to their knees. Developers have been milking the buyer for too long with overnight double digit price increases. It is time they get paid back in their own coin. I particularly like the line
"It is an unfortunate situation in which buyers are going back on a signed contract,” a senior representative of the developers’ association said. If customers take unfair advantage of the market situation then they would have to face the consequences of the breach of contract"

If the market was still in the bullish phase, developers would care less and cancel lower priced bookings and resell at a higher price. We need a lawyer to clarify what is a breach of contract ? What happens if someone cannot make payments due to job loss ? The Hindu has to be commended for its quality reporting.

Bring down prices or else….’

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A worrisome trend developers are facing is of buyers wanting to pull out of a contract after construction has started.

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Breach of contract fears.

R. Balaji

“During two decades of our doing business in Chennai never have buyers wanted to cancel after a contract was finalised and construction started,” says Mr R.V. Shekar, Managing Director, Lancor Holdings.

A leading developer in Chennai , Lancor Holdings is among those feeling the heat of a slow market in the form of buyers trying to back out of a deal midway.

Breach of contract

Earlier, the company has accommodated buyers who wanted to back out because of personal or professional problems. But now Mr Shekar says it is the ease with which customers are considering a `breach of contract.’ Their demand is: Bring down prices or else… they threaten to walk out and take others. And these are people who have signed on the dotted line and made more than one initial payment.

As of now it is not a major issue for Lancor but is certainly worrisome. Developers and buyers may end up spending time and money on litigation, says Mr Shekar.

For instance, at a Lancor project on NH 45 where over 230 of the 640 apartments planned have been sold, all the approvals are in place and work has started. Over 150 buyers have signed the agreement and the property has been registered for 58 more customers. But about 30 buyers want to back out even after making a firm commitment, he says.

The reason: if one developer cuts down on prices why cannot another?

Mr Shekar has explained to the customers the rationale behind the pricing — basic price of Rs 2,100 and an all-inclusive (covered car park, registration, club membership, taxes) price of Rs 2,640 but some are in no mood to listen.

When there is a proper contract in place and the company is keeping to its commitment, the law will have to take its course, he feels.

Lancor is among the victims of the fallout of DLF Homes’ controversy where a large group of buyers have come together to enforce a price cut. An unprecedented event in Chennai that has grabbed wide attention. Leading builders dismiss the DLF issue as an aberration. But if it sets off a trend then they would have to depend on the judicial system to come to their aid, they say.

According to representatives of the Confederation of Real Estate Developers Association of India-Tamil Nadu, developers are now keen on having an arbitrator in place. Next week the association hopes to empanel an independent body headed by a senior advocate to look into buyer-seller disputes. “It is an unfortunate situation in which buyers are going back on a signed contract,” a senior representative of the developers’ association said. If customers take unfair advantage of the market situation then they would have to face the consequences of the breach of contract.

‘Time delay’

According to Mr Chitty Babu, Chairman and Managing Director, Akshya Homes, a developer who has delivered over 600 apartments on the OMR , the problem is partly due to the delay in statutory approvals and due to builders and buyers transacting unapproved projects.

A major factor is the time delay when the customer makes the initial payment in an unapproved project. When there is a long wait customers develop cold feet. If approvals come on time, the banks clear the loan and start sanctioning funds and the customers will be fully committed. Fast approvals will save nearly a fifth of the project cost for the customer, he says.

A Bill Maher video on the how badly F**** the US economy is

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