Lotus Temple, New Delhi

On the difference between the ideals of “architecture” and mere “construction”, the renowned 20^th century architect Le Corbusier wrote: “You employ stone, wood, and concrete, and with these materials you build houses and palaces: that is construction. Ingenuity is at work. But suddenly you touch my heart, you do me good. I am happy and I say: This is beautiful. That is architecture”.

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Mumbai, Delhi could see 10% correction in real estate prices

Residential prices are expected to see a 5-15% decline in Gurgaon, Noida, Pune and Bangalore because of a surge in supply that outstrips demand in these overheated property markets, according to a report by Macquarie Research.

At present, prices in Gurgaon, Noida, Pune and Bangalore are between Rs3,500 and Rs7,500 per sq. ft. In South Mumbai, the limited scope for new supply will either see prices remaining flat or increasing by about 5%. This is however less than the 5-15% increase in prices the region has seen in the last 12 months.

Some areas in Mumbai’s suburbs and Delhi could see a 10% correction in prices. “If demand is hit and if the expected supply does come up, we will see a reasonable correction in micro markets in some cities,” Abhishek Gupta, Head, Research, Jones Lang LaSalle Meghraj, a real estate consultancy firm said.

Cities such as Hyderabad, Chennai and Kolkata are expected to see a 5-15% increase in prices in the residential segment because of the low or moderate levels of prices in the region. Tier II or smaller cities such as Ahmedabad, Chandigarh, Indore, Jaipur, Mangalore, Mysore and Raipur are also expected to see prices increase by 5-15%. However, this is less than the 10-25% price increase the cities witnessed in the last one year.

The study ranks Chennai and Kolkata as the most attractive markets in the residential segment and Gurgaon and Pune as the most unattractive markets.

Real estate prices in India have risen each year for the past five years as tax benefits for home ownership and rising wages helped more people buy homes. That, coupled with a rising stock market created wealth that went into property. However, rising interest rates and a decline in the stock market this year and dearer credit is slamming the brakes on this growth.

Retail rentals are also expected to see a correction in certain cities over the next one year. Lack of supply has driven rentals to a level where retailers find it hard to operate profitably. “With retail sector margins in the 3-5% region and rentals as high as 15-20% of sales in certain geographies, a rent correction is imminent,” the report says.

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The rise and rise of high end

By this time of the year, most people have begun to expect that the residential real estate prices in 2008 are only going downward, more so in the high-end real estate segment. The developers in Delhi-NCR are continuing to focus on the premium luxury segment, even though the segment is oversupplied.

Gurgaon-Sohna Road is one such area where more and more premium projects have come up in the recent times. This area, in general, has good infrastructure and the projects here are loaded with amenities. This is probably one of the main reasons that projects here command a high premium in the resale market as well.
On this road, in the list of all the existing projects, Central Park has added a new set of luxury apartments by the name Belgravia. The project, Central Park II, had been launched much earlier. Since then, the developer has been selling the apartments in phases. Apartments in the Belgravia towers are priced between Rs 1.70 and 2.73 crore. The area of the apartments ranges between 2,350 and 3,820 sq ft.
In the current phase, 3- and 4-bedroom apartments are being offered. B K Chaturvedi, CEO, Central Park says, “We are a little selective about the people who buy here. We target senior corporates, NRIs, people who have achieved excellence in field like literature and painting, business chiefs, and entrepreneurs.”

Tracking prices
Property consultant S P Tanwar of Varsha Propmart says, “Residential rates in an up-market area of Gurgaon like Sushant Lok are high. Prices on Gurgaon-Sohna are comparable to any of the high-end localities of Gurgaon.”
The current average rate of residential apartments in Gurgaon range between Rs 3,500 and 6,500 per sq ft. While the current average rate of the residential apartments on the Gurgaon-Sohna Road is around Rs 3,500 to 4,000 per sq ft. And for Belgravia at Central Park II, the basic sale price stands is Rs 6,250 per sq ft. But the developer has added preferential location charges, external development charges, and car parking charges, as extras. Thus the total rate for these apartments is roughly Rs 7,000-7,250 per sq ft.
Another real estate consultant in the area Bhavjot Singh of The Property Mart says, “The commercial as well as the residential prices are bound to increase in the area.” The plot rates on this road are high, around Rs 26,000 to 35,000 per sq yd. Singh adds, “These rate will touch new highs by the end of 2008.” Real estate consultants in the area predict that by the end of 2008, the prices, whether commercial or residential will rise 10 to 15 per cent.
Industry experts have a different opinion. Aditi Vijayakar, national head, transaction services - residential, India, Cushman & Wakefield says, “Areas with excess supply and ordinary quality, like some projects on Gurgaon-Sohna Road, might have to compromise on the pricing the sell the project.”
If one believes the experts, it is expected that the area might see some correction in the near future.
Yet, there is already an excess of supply in the premium category. There are many locations in Delhi-NCR where one would now find premium projects catering to the upper-middle class and the elites.
On the Gurgaon-Sohna Road one can find the high-end projects catering to the classes as well as apartments catering to the masses. This mix of quality and quantity makes the road a residential hub.
At present there are some 14 to 15 residential projects here, some of these are nearing completion and others are yet to be launched. To add to this there are some 10 to 12 commercial projects too. However, most of the commercial projects have not yet started.

Why is it hot
As one reaches the Sohna Road, next to the Central Park II, there is a mall being built by Omaxe. Construction of the mall is almost complete but possession has not been given to the retailers.
Other than this, there are certain other commercial projects coming up from Unitech, Spaze, and Vatika. The location of Central Park II is unique in the sense that it can be accessed from the main Sohna Road as well as the Netaji Subhash Marg. The main entrance of the project is from one the Netaji Subhash Marg.
The area will come up in a big way, once all the projects are completed and handed over. Right in front of the Central Park II would be projects from Unitech and JMD’s projects.
Apart from these there are many cooperative societies in the area as well. By 2009, it is expected that all the projects near the Central Park II would be complete.
As Chaturvedi of Central Park says, “There is no property on the Sohna Road that matches our standards. There will not be any correction on this road as most of the experts think.” He further adds, “Investors are a little shy and worried about investing in our property as only long-term investors can only survive in the market for such high-end apartment. Also, since we are selective about the buyers, more end-users are showing interests in our project.”
The developer is also planning to build service apartments inside the Central Park II. It will target business travelers and tourists. The apartments would be called Oakwood Apartments, the company has tied up with Accor Group for the management of these service apartments.

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