This fourth quarter, however, saw a massive slowdown in real estate sales in Chennai with a 55% drop in housing units sold year-over-year.
In Q4 of 2016, only 757 units were sold compared to 1,673 units in the same period the previous year. Number of project launches in the city fell to 58 from 93 in the year ago period.
“Demonetisation has definitely impacted sales in Chennai. The cash crunch along with cyclone Vardah were a downer when it came to people taking decisions on property,” said Sridhar Srinivasan, managing director, Chennai, Cushman & Wakefield.
However, this is part of an overall trend in Chennai real estate market, which got exacerbated with the cash ban. For instance, the fourth quarter of 2013 saw a high of 2,554 units being sold. After which there has been a decline to 1,629 units in 2014 to 1,673 in 2015.
However, Cushman & Wakefield expects the phenomena to be temporary and won’t last beyond the new two quarters.
As to the “cash” or “black money” component of real estate sales, Srinivasan said this has not impacted mid-segment sales. “Middle-level housing units have seen a high impact. The high-end and luxury segment, which use a higher component of cheque vs cash, saw lesser impact. We are expecting this trend to continue for the next two-three quarter,” he said.
Mid-level housing units saw a 21% dip to 662 units in the fourth quarter of 2016, compared to 840 sold units in the comparable quarter last year. High-end units, however, saw sales nearly double to 91 in Q4, from 49 in the year-ago.
Another reason as to why transactions are being hit is because of stamp duty and registration fee that need to be paid at offices. Given the role of the “cash” component in property deed clearances, demonetisation has definitely thrown a wrench in the works.
For the full-year, the number of projects in 2016 dipped 24% to 57 from 75 last year. The number of housing units also dipped 21% to 6,419 from 8,174.
Ashok Nagar has witnessed a rapid transformation in the last few years and it has become a major hub in the city today.
Situated in the southern part of Chennai, Ashok Nagar is a prime residential locality.
There are numerous schools, hospitals and religious institutions which makes it an ideal destination for home buyers. It is one of the well connected neighbourhood, with KK Nagar on the west, Vadapalani to the north and Said a pet to the south. Besides, areas like T Nagar, Koyambedu and West Mambalam are also in close proximity to Ashok Nagar.
Navin, the director of Navin’s, says, “One main advantage of Ashok Nagar is its location. It ticks the right boxes for most of the people. Physical and social infrastructure is fully in place. There is no reason as to why a buyer would not look towards investing in a property here. It is visible from the fact that the inventory keeps moving at a quicker pace here and there are no unsold inventories in this market. Most of the new projects are bought right away, while the upper-mid premium segment is doing well here.”
Echoing his views, Prabhakaran R, a real estate consultant says, “Connectivity provides a major boost to this area. One of the most prominent most prominent metro stations in Chennai is here. Besides, it is well connected to Koyambedu via the metro. Ashok Nagar is also well-connected to several parts of Chennai through MTC buses. Since there are many schools here and in the adjoining areas, many investors are choosing Ashok Nagar to settle down.”
Being a well-developed area, there aren’t huge land parcles available here for development but that doesn’t take away the options available to buyers. “Most of them are working class professionals and are choosy about the projects that suit their needs. Presently, the market is doing well and there are many new projects coming up. Land parcels are not available due to the overall development of this locality. However, there are many residential projects and one is spoilt for choice,” says Prabhakaran.
Speaking about the retail development in Ashok Nagar, Navin says, “A lot of small retail outlets, boutiques and restaurants are coming up in this place, though the main focus remains on the residential segment.’
The cost of buying a residential property would range from 11,000 to 13,000 per sq ft. The rental price varies from 20,000- 25,000 and 35,000 – 40,000 for a 2-BHK and 3BHK apartment respectively.
Infrastructure and connectivity seem to be the key points making Ashok Nagar a winner, so much so that it is soon becoming a self-sustained neighbourhood. “It is connected to the southern and western parts of Chennai. Broad roads, good infrastructure and connectivity are the main supporting factors. It is becoming an established place like Anna Nagar where we know that everything is available under the same roof,” says Kumar G, manager of Aroshree Realty.
“More development plans should be in place for Ashok Nagar. The government should take efforts to revive the real estate segment here. This will ensure a better urban planning, he says.
Shweta V, Times Property, The Times of India, Chennai
Keeping these points in mind will help you execute a smooth negotiation process with the seller.
The dictionary definition of negotiation is ‘a dialogue between two or more people or parties with the intention of reaching a beneficial outcome’. When applied to real estate, it would be ‘a dialogue between a buyer and a seller with regards to a property intended to benefit both when a deal is struck’. The buyer should be able to buy his house within his budget or at the best possible price, while the seller builder should be able to earn a decent profit on selling his product even after giving discounts and other benefits to the buyer.
Rational negotiation or senseless haggling?
There is serious negotiation and there is senseless haggling. Bargaining with a grocer for a discount of few rupees is very different from negotiating for a property. The latter involves a large investment grade asset and requires a carefully thought-out strategy which accounts for the abilities of a seasoned veteran negotiator on the other side of the table. There also needs to be sufficient acceptance room for alternate results to the discussion.
When to negotiate and when not to
Before embarking on the course of serious negotiation with a real estate seller, a buyer needs to do thorough homework. This would include a background check of the builder seller, the prevailing market conditions, the pros and cons of one’s own budget and the qualities and condition of the property one intends to buy. If it is a new project, the builder is likely to be comfortable with his prospect of striking a good deal on the units, as there are many potential buyers in the fray. In such a case, one can negotiate but not by much, and the price reduction may not completely be to one’s expectations.
The best deal
Negotiation has definite merits but a lot depends on the external factors. The most defining factor is whether it is a buyer’s or a seller’s market. In a seller’s market, there are fewer sellers and more buyers, so the chances of getting hefty discounts are minimal. In a buyers’ market, there are fewer buyers, so the probability of extracting major discounts and attractive deals from the developers active there is high.
How to negotiate
There is a science behind the art of negotiation, which can only be perfected after practicing it a few times. Let’s have a look at the basic procedure of negotiation:
Research: Do diligent research about the project. The launch price, current market price of the property along with prices of contemporary properties in the market should be looked into.
Opening Gambit: It is important to know that no developer will react favourably if one starts negotiating by quoting an unrealistically low price compared to the offered price. An average accept able figure is 15 percent lower than the quoted selling price.
What To Avoid: Never put down the property or point out its flaws while negotiating. Rather than focussing on any negative news or shortcomings of the project, focus on the positive aspects and how you can be a serious customer for the builder.
When To Stop Negotiating: Once a price which is close to one’s budget is arrived at, one should stop bargaining. Even if the final price arrived at is not the one which one has in mind, the builder may offer additional benefits not available in the public offer which can add very good value to the deal.
Before entering negotiation, study whether the builder seller is willing to bargain at all. Get a clear picture of his financial situation with the help of informed consultants and brokers. A brokers’ job is to get the best deal not only for the buyers or sellers, but for the sake of their own commissions and repeat business.
Ashwinder Raj Singh – CEO residential services, JLL India
Source: Times Property, The Times of India, Chennai
Precautions to be observed in a POA
1. Ensure that it is duly registered and the stamp duty prescribed by the State has been paid
2. Signatures and photographs of the principal and power agent must be affixed.
3. Check whether the principal has a valid title to the property and that his/her name is reflected as owner in government revenue records.
4. Verify whether a sale clause is mentioned in the POA
5. For availing loans based on a POA, check whether the power agent has the authority to sign loan documents and can create an equitable mortgage in favour of banks/financial institutions on behalf of the principal.
6. Ensure that as on the date of execution of any document based on the POA, the POA is in force and the principal is alive.
7. In case a POA is granted by a builder (private or public limited company) to their employee, ensure that a certified copy of supporting board resolution authorising the power agent is produced. In case the builder is a partnership firm, check whether all the partners have authorised in writing any specific partner or their employee to act as power agent.
8. If the POA is being executed abroad, ensure that it is either notarised or signed before Indian Consulate officials and then duly adjudicated within 120 days from the date of execution of the said POA.
9. Always check the availability of the original duly registered GPA.
10. You must also check whether the description of the property (schedule of property) is in order.
The writer is a Chennai-based advocate and author of ‘Property Registration, Land Records and Building Approval Procedures Followed in Various States in India’
Source The Hindu
Authority to keep check on realtors to be formed soon
State governments must frame rules to ratify the central act within six months after the act came into force on of May 1. The legislation aims at protecting the interests of buyers, stringent action against promoters delaying housing projects, single window clearance and establishing Real Estate Regulatory Authority to redress the grievances of consumers.
A high-level meeting of top officials representing various bodies attached to the state housing and urban development department was convened on July 2. The meeting discussed the recent draft rules of the union ministry of housing and urban poverty alleviation, official sources said. “The discussion was around the draft rules and provisions like establishing real estate regulatory authority. A sub-committee is likely to be formed for framing rules of the act,” a senior housing official said.
Another official said, “We would be framing the rules by October 31”. However, the Tamil Nadu government has not yet decided about the quantum of penalty to be levied on defaulting promoters.
The draft rules released by the Centre on June 24 say developers must pay 11.2 percent interest to buyers for delay in handing over apartments and homes. Any violation like increase in the size of apartments, change in layout and construction of additional towers in a project without taking consent from 70% of the allottees can lead to cancellation of registration. Though the Centre’s draft rules covers only five Union Territories without legislatures, states are at liberty to modify it or draw their own rules.
Senior officials including urban development secretary Dharmendra Pratap Yadav, representatives from the Tamil Nadu Housing Board and Chennai Metropolitan Development Authority (CMDA) participated in the meeting, sources added.
Meanwhile, CREDAI Chennai chapter chairman Suresh Krishn has sought the government to define the term “existing projects” and clear the air on date from which projects would come under the purview of the act.
Yogesh Kabirdoss, The Times of India, Chennai