The downturn is clearly for the masses. A residential plot of 1,112.4 square yards (or 10,011 sq ft) in New Delhi was bought by the Ahmedabad-based Torrent Group for `111 crore last week, at the rate of `10 lakh per yard. Located in Chanakyapuri, one of the most expensive localities in the capital, the property was bought by brothers Sudhir and Samir Mehta. They are expected to build a mansion on the plot.
Earlier, in June, the US Consulate in Mumbai sold its famous Washington House, a three-storeyed residential building built on 2,702 square metres (22,302.82 sq feet) on Altamount Road, to the Lodha Group for over `375 crore. There are rumours that the US Consulate is also planning to sell its Lincoln House, which used to house the office and residence of the US consul-general at Mumbai’s upmarket Breach Candy area, but there’s no confirmation on that yet.
The Washington House property was up for sale for two years but did not find takers till the Mumbai-based Lodhas entered the picture. The Group is learnt to have paid a token sum of `50 crore to cement the deal, and now plans to build luxury towers on the spot.
The going rate on Altamount Road, which also hosts Mukesh Ambani’s famous Antilla building, is pegged at over `70,000 per sq ft.
South Mumbai has seen some high-end real estate action this year. In August, steel tycoon Sajjan Jindal treated himself to a sea facing property on a half-acre plot on Napean Sea Road.
Jindal is believed to have paid approximately `500 crore to acquire the nearly 100-year-old Maheshwari House. As per the development plan, the new owner intends to reserve most of the space for a mansion for his personal use while super luxury towers will be built on the rest of the land.
Last year, the head of Monnet Ispat and Steel, Sandeep Jajodia, bought a house on a 2,000 square yard (18,000 sq ft) plot in Delhi’s Shanti Niketan locality for a neat `170.18 crore, at nearly `80,000 per square yard. The house that has been bought by Jajodia was built in 1968 at a cost of `72,000.
Jajodia, sector experts state, has paid an additional stamp duty of `10.21 crore for the property. Post the deal as per government regulations, Jajodia is allowed to build up to 29,000 sq ft on the plot, including about 7,400 sq ft of basement.
These are just some of the deals that have left the country in a tizzy even as it battles an economic down turn. Aren’t land deals affected by slowdowns or economic downturns?
“These properties do not follow the diktats of the markets. There is no set trend of sale for these properties which are exclusive and mostly supply driven,” says Anshuman Magazine, chairman and managing director for the South Asia region of CBRE. According to Magazine, there is always an appetite for property in prime locations, and there are buyers as well as sellers. The neighbourhood, infrastructure, neighbours and accessibility determine the price of such properties.
Though only four to five such deals happen in a year, they are enough to keep the cash registers of big brokerages ringing, say realtors. Consider Hindustan Unilever’s sale of its Gulita property at the Worli seaface in Mumbai to Piramal Realty, the property development arm of Ajay Piramal Group, for `452.5 crore. The Piramal group plans to develop villas and luxury apartments at the location, which earlier housed HUL’s training centre.
“Beyond doubt, the homes of the super-rich create a certain upward pressure on the price tags of luxury and premium homes in the immediate vicinity. However, it is also true that the real estate market in general is not affected by these sales, as these luxury developments represent a minuscule segment of the wider fabric,” says Anuj Puri, chairman and country head of real estate consulting firm Jones Lang LaSalle India.
“It must be remembered that the Indian residential property sector operates on three levels. The first is affordable or budget housing, for which the demand is constant and the highest. Such housing does not occur anywhere near the prime areas where HNIs tend to build their homes,” adds Puri.
“The next is mid-income housing, which is most sensitive to price movements. The third is premium and luxury housing, which does happen in the neighbourhoods in which India’s mega-rich build their homes. This rarefied segment caters to a class of buyers that is, to a large extent, insulated from the usual financial concerns of home loan interest rates and percentile increases in property rates,” is how Puri describes the three layers of the Indian real estate market.
For every deal that goes through, there are several other big-ticket deals that fall through, says Prakash Natrajan, director of Mumbai-based brokerage firm Realty Gyan, citing the case where actor-turned -parliamentarian Vinod Khanna paid an astronomical sum as token money for a Citibank property in South Mumbai, but then changed his mind about buying it.
There is no fixed pattern to very expensive deals as they take a long time to fructify, and a lot of market manipulations go into such deals making them far more expensive than they should be, says Natrajan. “Why these properties are priced so high remains a puzzle,” he adds, “but yes, there is a lot of snob value attached to these big ticket land deals.”
It is not just properties in Mumbai and Delhi that command such exorbitant prices. Bangalore, Hyderabad and Goa are also emerging as big-ticket investment destinations. “A sea-facing property in Goa today starts at `5 crore, and if it’s a bungalow on the beach with a garden, the price can go up to `30 crore,” says Goa-based Nakul Puri, director of Konkan Properties.
Puri has the last word. “The buyer is not a problem, the seller is. The demand is so vibrant that at times we fail to keep pace.” As for the buyers, it’s easy to categorise them as the 3Bs–bankers, businessmen and Bollywood.