<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> <!-- saved from url=(0071)http://www.narains.com/Text-Residential-Article-Time-for-Correction.htm --> <html> <head> <TITLE>"News on the current upswing in Mumbai's real estate and also 100% FDI and its effects on the property market, Times Property by Chetan Narain  Narains Corp. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he would be allowed to dispose of the plots."</TITLE> <META content="News on the current upswing in Mumbai's real estate and also 100% FDI and its effects on the property market, Times Property by Chetan Narain  Narains Corp. The current property rates are overpriced if we take in account the infrastructure of Mumbai. It is difficult to sell in this scenario and a after a point , there will be stagnation where the seller usually has to accept the reality which he and the rest of the market will view as "prices have fallen". 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&nbsp;<br> Realtors&nbsp;</font></font></span></p> </div></td> <td width="71%">&nbsp;</td> <td width="12%"><div align="right"><font size="4" face="Tahoma"><font color="#404040"></font></font></div></td> </tr> </table> <div align="center"></div> <div align="center"></div></td> </tr> <tr > <td background="images/header-bar.jpg"height="10" align="left" valign="middle"" bgcolor="#847E7E"></td> </tr> </table> <table width="990" border="0" align="center" cellpadding="0" cellspacing="0" bgcolor="#7e7c7c"> <tr> <td><table width="990" height="31" border="0" align="center" cellpadding="0" cellspacing="0" bgcolor="#666666"> <tr > <td height="3" background="images/Top_Menu/tbar.gif" ></td> <td width="11%" height="3" background="images/Top_Menu/tbar.gif"></td> <td width="10%" height="3" background="images/Top_Menu/tbar.gif"></td> <td width="11%" height="3" background="images/Top_Menu/tbar.gif" ></td> <td width="10%" height="3" background="images/Top_Menu/tbar.gif" ></td> <td width="11%" height="3" background="images/Top_Menu/tbar.gif" ></td> <td width="13%" height="3" background="images/Top_Menu/tbar.gif" ></td> <td width="11%" height="3" background="images/Top_Menu/tbar.gif" ></td> <td height="3" background="images/Top_Menu/tbar.gif" ></td> </tr> <tr> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c" > <div align="center"> <script src="images/top_menu/_home_.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/aboutus.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/pressarticles.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/relatedinformation.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/incidentalexpenses.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/list_with_us.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/ourClients.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/contactus.js"></script> </div></td> <td width="11%" background="images/tbar.gif" bgcolor="#7e7c7c"> <div align="center"> <script src="images/top_menu/careers.js"></script> </div></td> </tr> </table></td> </tr> </table> <TABLE borderColor=#333333 height="1047" cellSpacing=0 width="990" align=center bgColor=#ffffff border=0> <TBODY> <TR> <!-- row 1 --> <TD colSpan=8 height=6></TD> </TR> <TR> <!-- row 2--> <TD width=2 height="1034">&nbsp;</TD> <!--col 0--> <!-- col 1--> <td width="10" align="center" valign="top" background="images/left-panel.jpg">&nbsp;</td> <!-- col 2--> <TD vAlign=top background=images/main2.jpg colSpan=2 height=1034> <DIV align=center> <P align=center><FONT face="Tahoma" color=#2c4756 size="4"><STRONG>Time for A Correction - </STRONG></FONT><STRONG> <FONT face="Tahoma" color=#2c4756 size="4">February 18, 2006. Times Property (Times of India) </FONT></STRONG></P> <FONT face="Tahoma" color=#2c4756 size=2><STRONG>With prices on the upswing and confusion reigning in the market, Chetan Narain answers a few commonly asked questions </STRONG></FONT> <p><font face="Tahoma"><BR> </font></p> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2><STRONG>What are the conditions under which 100% Foreign Direct Investments (FDI) has been opened for real estate and do you see a further upsurge in prices because of this? <BR> <BR> </STRONG>I commend the government decision on not allowing 100% FDI in Real Estate' unless they meet the minimum prescribed norms of developing 25 acres and upwards. We have enough local money chasing land and property and it is best to see undeveloped areas get developed through the FDI route and let rural areas get the same benefits as urban areas do. This would ease out the `affordable housing' issue, once we have self-efficient <STRONG>(DO YOU MEAN SELF-SUFFICIENT?) </STRONG>townships. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>FDI is permitted up to 100% under the automatic route in townships, housing, built-up infrastructure and construction-development projects, (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure). </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>The investor would not be permitted to sell undeveloped plots. "Undeveloped plots" will mean where roads, water supply, street lighting, drainage, sewerage, and other conveniences have not been made available. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he would be allowed to dispose of the plots. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government / Municipal / Local Body concerned. Now State Governments and Municipal Bodies, would be approving such projects, not the Central Government. FDI projects would be accorded national treatment on par with local developers. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2><STRONG>Given the infrastructure Mumbai has, are the current unreasonably high prices justified? <BR> </STRONG>The valuations that we see in Mumbai today would be acceptable if we had better road connectivity, sea links throughout the city, world-class metro transport / airports and we were exploiting our calm seas for water transport. The high court judgment on the airport modernisation should be applauded as a landmark decision for not allowing a `stay' on the project. Constant political interference and misuse of democracy is the reason for the delay in the seeing the ` India ' we all want to see. Having said that I must confess, that living in a small building (society) with few members where I do, five people from the managing committee cannot agree on a task, it takes six months to arrive on a decision on small/big issues and we expect our government to transform! </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>But, the fact that a lot of money is chasing little inventory justifies the `law of Economics'. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2><STRONG>At current high prices, are deals happening across the city? <BR> </STRONG>I am often asked in an over-heated market situation (like the one we have now): SBusiness must be great for you?! This is nowhere close to the reality. If you have a close look at the market, the only property sales that have happened in the recent past have made the news, if not the headlines. Amongst the property consultants it's an achievement if you can conclude a deal in today's market and that itself is `News'. Most deals for buyers and their respective brokers have fallen through because of fluctuations in price expectations. The fluctuations are the result of Sisolated or Sone-off or few such over-priced deals or transactions which add fuel to an already hot market. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>I have had the opportunity to query a few colleagues in the same business who are going through one the most testing times since the last six to eight months. Except for `rental' transactions most `consulting firms', including ours, are finding it difficult to see conversions. It's the same story across the city, expectation and sellers demand keep increasing on a fortnightly basis. Most people get carried away by hyped-up articles or stories on high value sales. Here is quote from an SMS sent to me by our business development manager, Jaideep Dey (HAS HE CHANGED THE SPELLING? I THUGHT IT WAS DE': SFirst casualty of the article the apartment at Nepean Sea road (building name withheld) is now quoting 3.10 crores as against 2.85 crores price at which we took an exclusive mandate three weeks ago . This was on the same day when an article talking about high price expectations was published. The article was well balanced but the impact on the seller was obvious. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>When you have to buy, you have to buy. In such deals affordability plays the most important factor. A small number of people will be able to afford to buy at peak prices and they might, then what? Stagnation! The writing is on the wall, sellers will expect the last achieved prices and buyers won't be able to afford it or may not want to pay such illogical premium. The classic part of such a stagnation situation is that the seller usually has to except (ACCEPT?) the reality which he and the rest of the market will view as Sprices have fallen . </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2>An expectation is an expectation not the `Reality'. `Falling' from expectation will be termed as correction. This if not now, is due soon. </FONT></P> <P align=justify><FONT face="Tahoma" color=#2c4756 size=2><STRONG>BULLETS POINTS </STRONG></FONT></P> <DIV align=justify> <p align="left"><FONT face="Tahoma" color=#2c4756 size=2> <img border="0" src="images/arrow_dgray.gif" width="7" height="7">&nbsp; These are testing times for those in the property business </FONT> </p> <p align="left"><FONT face="Tahoma" color=#2c4756 size=2> <img border="0" src="images/arrow_dgray.gif" width="7" height="7">&nbsp; Expectations of both buyers and sellers are going up </FONT> </p> <p align="left"><FONT face="Tahoma" color=#2c4756 size=2> <img border="0" src="images/arrow_dgray.gif" width="7" height="7">&nbsp; These often have little to do with the reality of the situation </FONT> </DIV> </DIV></TD> <!-- col 4 --> <TD vAlign=bottom width=1 height=1034>&nbsp;</TD> </TR> <!--row 3--> <!-- row 4 --> <TR > <TD height="6" COLSPAN=3></TD> </TR> </TBODY> </TABLE> <div align="center" class="style127"> <p> <!-- Start of StatCounter Code --> <a href="http://www.narains.com/" target="_blank" class="style127">Home </a>| <a href="Site-map.htm" target="_blank" class="style127">Sitemap </a>|<a href="narains.htm" target="_blank" class="style127"> About Us </a>|<a href="Our-Services.htm" target="_blank" class="style127"> Our Services </a>|<a href="News-Articles.htm" target="_blank" class="style127"> Press Articles</a> | <a href="list.asp" target="_blank" class="style127">List With Us</a> |<a href="iexpense.htm" target="_blank" class="style127"> Incidental Expenses</a> | <a href="relinfo.htm" target="_blank" class="style127">Related Information</a> | <a href="contactus.htm" target="_blank" class="style127" >Contact Us |</a><a href="Investment-option-India.htm" target="_blank" class="style127"></a><br> <a href="FDI(Foreign-Direct-Investments)-Real-Estate-Funds-India.htm" target="_blank" class="style127">FDI Real Estate funds India</a> | <a href="International-Properties.htm" target="_blank" class="style127">International Properties</a> | <a href="IT-parks-pune.htm" target="_blank" class="style127"></a> <a href="Exclusive-New-Projects-Mumbai.htm" target="_blank" class="style127">Exclusive New Projects Mumbai</a> | <a href="Distinctive-properties-Mumbai.htm" target="_blank" class="style127">Distinctive Residential Properties Mumbai </a><br> <a href="Distinctive-properties-Commercial.htm" target="_blank" class="style127">Distinctive Commercial Properties Mumbai</a> |<a href="IIRE.htm" target="_blank" class="style127"> About IIRE </a>| <a href="icrea.htm" style="color:#ffffff; 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