The reduction in home loan rate will not boost realty sector as there are no houses available in large cities for less than Rs 30 lakh, while the cap for this lower interest rate is for loans up to Rs 20 lakh, says Prabhakar Sinha
The scheme of government to make available lower home loan rate to end-users remain a nonstarter. It will not help in reviving the sector, which is facing the worst downturn in the last 10 years, because of high interest rates.The small-ticket size of the loan that qualifies for the proposed low interest rate is the reason that will sink the proposed scheme.
Under the proposed scheme, government has asked banks to prepare a package to make home loan up to Rs 20 lakh available in the range of 7-8 per cent. According to banking sources, the banks are planning to offer home loan up to Rs 5 lakh at around 7 per cent and that of between Rs 5 lakh and Rs 20 lakh at around 8%. The present interest rate on home loan offered by public sector banks is around 10%.
But, the scheme is unlikely to benefit homebuyers in most cities in the country.This is mainly because there are hardly any apartments or houses available for up to Rs 25 lakh.Most of the properties available in the cities of National Capital Region, Mumbai, Chennai, Pune, Bangalore, Kolkata and Hyderabad are in the range of Rs 40 lakh to Rs 50 lakh.
Managing director of Unitech, Sanjay Chandra, said instead to fixing the cap at Rs 20 lakh across the country, the government should have fixed a different ceiling for different cities.He says a Rs 20-lakh-loan would be sufficient for small district towns,where land is not very costly.But in cities like National Capital Region of Delhi, land price is so high that even a 1,000 sq ft, 2-bedroom apartment cannot be sold at less that Rs 30 lakh in far flung areas. A threebedroom apartment in these areas will cost around Rs 35 lakh.
Thus, if one wants to take the benefit of low interest rate package of the government to buy a house, he will have to pay an upfront amount of Rs 10 lakh to 15 lakh from his own pocket. But, it has been found that most of the salaried people buying a house are unable to contribute more than 15 per cent of the total amount from their savings. That means, one can benefit from the government’s new package only if one were to buy a house costing around Rs 25 lakh. Even for this,one will have to dip into savings to make a Rs 5-lakh-payment upfront,and borrow the remaining Rs 20 lakh at special interest rates offered by the public sector banks.
It is learnt that a delegation of developers from NCR met government official recently to convince government to increase the ceiling of loan to qualify under the concessional rate of interest up to 8 per cent from the present Rs 20 lakh to Rs 40 lakh. They argued that this would help drive the demand in the sector.
Assotech CMD Sanjiv Srivastava said government is of the firm opinion that most of the loan seekers will be covered under the scheme. Finance secretary Arun Ramanathan has said that around 75 per cent of the loan is of less than Rs 7.5 lakh.
However, consultants say that most of these loans were taken before 2003, when the market was subdued. Besides, these loans were taken to buy houses in the small towns. In most of the large cities, prices of apartment and independent houses in the authorized areas are more than Rs 30 lakh. Srivastava says that if government increases the ticket size to Rs 40 lakh, the present scheme will help revive the sector. It will go a long way in arresting the slowdown in the economy.That fall in the interest rate from the present 10 per cent to 8 per cent and 7 per cent will go a long way in making the purchase of house affordable.
The fall in the interest rate by 3 percentage points on home loan up to Rs 5 lakh for 20 years will lead to reduction in EMI by 20 per cent from Rs 4,825 to Rs 3,876. However, on 10-year loan, the fall in EMI of Rs 5 lakh loan will be 12 per cent from Rs 6,608 to Rs 5,805.
But, if the loan amount goes up to Rs 20 lakh, the fall in the interest rate on 20-year loan by 2 percentage points will lead to reduction in the EMI by 13 percentage points from Rs 19,300 to Rs 16,729. In case of the repayment period of 10-year, the EMI will fall by 8 percentage points to Rs 24,265 from Rs 26,430.
In the case of Rs 40 lakh for 20 years loan also, the fall in the interest rate by 2 percentage points from 10 per cent to 8 per cent will lead to decline in the EMI by 13 per cent to Rs 33,458 from Rs 38,600. But, if loan tenure is reduced to 10 years, the EMI will fall by 8 per cent to Rs 48,531 from Rs 52,860.Therefore,the fall in the interest rates leads to fall in the EMI substantially, which will help drive the demand in the sector. This will increase the fund flow of in the sector, leading to rise in economic activities also.
Saturday, December 20, 2008
Zero Sum Proposal
The reduction in home loan rate will not boost realty sector as there are no houses available in large cities for less than Rs 30 lakh, while the cap for this lower interest rate is for loans up to Rs 20 lakh, says Prabhakar Sinha
The scheme of government to make available lower home loan rate to end-users remain a nonstarter. It will not help in reviving the sector, which is facing the worst downturn in the last 10 years, because of high interest rates.The small-ticket size of the loan that qualifies for the proposed low interest rate is the reason that will sink the proposed scheme.
Under the proposed scheme, government has asked banks to prepare a package to make home loan up to Rs 20 lakh available in the range of 7-8 per cent. According to banking sources, the banks are planning to offer home loan up to Rs 5 lakh at around 7 per cent and that of between Rs 5 lakh and Rs 20 lakh at around 8%. The present interest rate on home loan offered by public sector banks is around 10%.
But, the scheme is unlikely to benefit homebuyers in most cities in the country.This is mainly because there are hardly any apartments or houses available for up to Rs 25 lakh.Most of the properties available in the cities of National Capital Region, Mumbai, Chennai, Pune, Bangalore, Kolkata and Hyderabad are in the range of Rs 40 lakh to Rs 50 lakh.
Managing director of Unitech, Sanjay Chandra, said instead to fixing the cap at Rs 20 lakh across the country, the government should have fixed a different ceiling for different cities.He says a Rs 20-lakh-loan would be sufficient for small district towns,where land is not very costly.But in cities like National Capital Region of Delhi, land price is so high that even a 1,000 sq ft, 2-bedroom apartment cannot be sold at less that Rs 30 lakh in far flung areas. A threebedroom apartment in these areas will cost around Rs 35 lakh.
Thus, if one wants to take the benefit of low interest rate package of the government to buy a house, he will have to pay an upfront amount of Rs 10 lakh to 15 lakh from his own pocket. But, it has been found that most of the salaried people buying a house are unable to contribute more than 15 per cent of the total amount from their savings. That means, one can benefit from the government’s new package only if one were to buy a house costing around Rs 25 lakh. Even for this,one will have to dip into savings to make a Rs 5-lakh-payment upfront,and borrow the remaining Rs 20 lakh at special interest rates offered by the public sector banks.
It is learnt that a delegation of developers from NCR met government official recently to convince government to increase the ceiling of loan to qualify under the concessional rate of interest up to 8 per cent from the present Rs 20 lakh to Rs 40 lakh. They argued that this would help drive the demand in the sector.
Assotech CMD Sanjiv Srivastava said government is of the firm opinion that most of the loan seekers will be covered under the scheme. Finance secretary Arun Ramanathan has said that around 75 per cent of the loan is of less than Rs 7.5 lakh.
However, consultants say that most of these loans were taken before 2003, when the market was subdued. Besides, these loans were taken to buy houses in the small towns. In most of the large cities, prices of apartment and independent houses in the authorized areas are more than Rs 30 lakh. Srivastava says that if government increases the ticket size to Rs 40 lakh, the present scheme will help revive the sector. It will go a long way in arresting the slowdown in the economy.That fall in the interest rate from the present 10 per cent to 8 per cent and 7 per cent will go a long way in making the purchase of house affordable.
The fall in the interest rate by 3 percentage points on home loan up to Rs 5 lakh for 20 years will lead to reduction in EMI by 20 per cent from Rs 4,825 to Rs 3,876. However, on 10-year loan, the fall in EMI of Rs 5 lakh loan will be 12 per cent from Rs 6,608 to Rs 5,805.
But, if the loan amount goes up to Rs 20 lakh, the fall in the interest rate on 20-year loan by 2 percentage points will lead to reduction in the EMI by 13 percentage points from Rs 19,300 to Rs 16,729. In case of the repayment period of 10-year, the EMI will fall by 8 percentage points to Rs 24,265 from Rs 26,430.
In the case of Rs 40 lakh for 20 years loan also, the fall in the interest rate by 2 percentage points from 10 per cent to 8 per cent will lead to decline in the EMI by 13 per cent to Rs 33,458 from Rs 38,600. But, if loan tenure is reduced to 10 years, the EMI will fall by 8 per cent to Rs 48,531 from Rs 52,860.Therefore,the fall in the interest rates leads to fall in the EMI substantially, which will help drive the demand in the sector. This will increase the fund flow of in the sector, leading to rise in economic activities also.
The scheme of government to make available lower home loan rate to end-users remain a nonstarter. It will not help in reviving the sector, which is facing the worst downturn in the last 10 years, because of high interest rates.The small-ticket size of the loan that qualifies for the proposed low interest rate is the reason that will sink the proposed scheme.
Under the proposed scheme, government has asked banks to prepare a package to make home loan up to Rs 20 lakh available in the range of 7-8 per cent. According to banking sources, the banks are planning to offer home loan up to Rs 5 lakh at around 7 per cent and that of between Rs 5 lakh and Rs 20 lakh at around 8%. The present interest rate on home loan offered by public sector banks is around 10%.
But, the scheme is unlikely to benefit homebuyers in most cities in the country.This is mainly because there are hardly any apartments or houses available for up to Rs 25 lakh.Most of the properties available in the cities of National Capital Region, Mumbai, Chennai, Pune, Bangalore, Kolkata and Hyderabad are in the range of Rs 40 lakh to Rs 50 lakh.
Managing director of Unitech, Sanjay Chandra, said instead to fixing the cap at Rs 20 lakh across the country, the government should have fixed a different ceiling for different cities.He says a Rs 20-lakh-loan would be sufficient for small district towns,where land is not very costly.But in cities like National Capital Region of Delhi, land price is so high that even a 1,000 sq ft, 2-bedroom apartment cannot be sold at less that Rs 30 lakh in far flung areas. A threebedroom apartment in these areas will cost around Rs 35 lakh.
Thus, if one wants to take the benefit of low interest rate package of the government to buy a house, he will have to pay an upfront amount of Rs 10 lakh to 15 lakh from his own pocket. But, it has been found that most of the salaried people buying a house are unable to contribute more than 15 per cent of the total amount from their savings. That means, one can benefit from the government’s new package only if one were to buy a house costing around Rs 25 lakh. Even for this,one will have to dip into savings to make a Rs 5-lakh-payment upfront,and borrow the remaining Rs 20 lakh at special interest rates offered by the public sector banks.
It is learnt that a delegation of developers from NCR met government official recently to convince government to increase the ceiling of loan to qualify under the concessional rate of interest up to 8 per cent from the present Rs 20 lakh to Rs 40 lakh. They argued that this would help drive the demand in the sector.
Assotech CMD Sanjiv Srivastava said government is of the firm opinion that most of the loan seekers will be covered under the scheme. Finance secretary Arun Ramanathan has said that around 75 per cent of the loan is of less than Rs 7.5 lakh.
However, consultants say that most of these loans were taken before 2003, when the market was subdued. Besides, these loans were taken to buy houses in the small towns. In most of the large cities, prices of apartment and independent houses in the authorized areas are more than Rs 30 lakh. Srivastava says that if government increases the ticket size to Rs 40 lakh, the present scheme will help revive the sector. It will go a long way in arresting the slowdown in the economy.That fall in the interest rate from the present 10 per cent to 8 per cent and 7 per cent will go a long way in making the purchase of house affordable.
The fall in the interest rate by 3 percentage points on home loan up to Rs 5 lakh for 20 years will lead to reduction in EMI by 20 per cent from Rs 4,825 to Rs 3,876. However, on 10-year loan, the fall in EMI of Rs 5 lakh loan will be 12 per cent from Rs 6,608 to Rs 5,805.
But, if the loan amount goes up to Rs 20 lakh, the fall in the interest rate on 20-year loan by 2 percentage points will lead to reduction in the EMI by 13 percentage points from Rs 19,300 to Rs 16,729. In case of the repayment period of 10-year, the EMI will fall by 8 percentage points to Rs 24,265 from Rs 26,430.
In the case of Rs 40 lakh for 20 years loan also, the fall in the interest rate by 2 percentage points from 10 per cent to 8 per cent will lead to decline in the EMI by 13 per cent to Rs 33,458 from Rs 38,600. But, if loan tenure is reduced to 10 years, the EMI will fall by 8 per cent to Rs 48,531 from Rs 52,860.Therefore,the fall in the interest rates leads to fall in the EMI substantially, which will help drive the demand in the sector. This will increase the fund flow of in the sector, leading to rise in economic activities also.
Home Loan Interest: Still a Distantdream
The present reduction in the home loan interest rates is not enough to boost sales as it has to be matched with a correction in prices and rational pricing, says Shri Ram Shaw
The financial world may be facing uncertain times, much speculation could be going on over the rise and fall of real estate prices, but one fact cannot be ignored - land and property continue to be hot investment favourites.With banks decreasing their interest rates marginally on home loans and the real estate developers yet to oblige the appeals made by the former finance minister P Chidambaram (now home minister),NAREDCO and CREDAI to cut prices, a stalemate seems inevitable. Under the current scenario, consumers (home seekers) are in a fix.Several realty experts opine that the present reduction in the home loan interest rates is not enough to boost sales. It has to be matched with a correction in prices and rational pricing.
The move by the finance ministry and the Reserve Bank of India (RBI) to beat the slowdown and boost demand in real estate sector does not seem have borne any fruit, thus far.
The much-hyped cut in interest rate in home loan has not created any loan rush - for one single reason - it was inadequate. “It’s too less. Buying a house is still not affordable. Like inflation, rate of interest also should be brought down to the single digit level,” says Sunit Haldar, a resident of Mayur Vihar who is looking for a flat to accommodate his growing family.
The home-seeker takes a decision of buying a house, usually once in a lifetime. He thinks a hundred times before committing to a long-term liability of loan repayment, before approaching the bank, or negotiating with the developer. He knows his math better than anyone else. For him the real push to go for the flat would be if it were within his affordable bracket. But, in the case of recent rate cut, the reduction was lacklustre.
For example, the EMI for the loan amount of Rs 20 lakh for a 15-year-tenure at the earlier rate of interest of say 13.5% was around Rs 26,000. If the rate of interest is reduced by only 0.75% to the level of 12.75%, then the effective EMI would be around Rs 25,000. The recent reduction in rate of interest by 0.75% would reduce the monthly burden only by Rs 1,000. Now consider the same case from a different angle. If EMI is Rs 26,000, the monthly income of this person would have to be a t least Rs 60,000 to Rs 70,000. Will reduction of Rs 1,000 matter to this person? Will he be rushing to raise a loan to save just Rs 1,000?
Thus, one could not see a rush at the home loan counters as a result of banks lowering the interest rates. “High interest rates are choking the demand” turned out to be a weak argument as lower rates did not trigger any demand from the home seekers. RBI could pump in the liquidity but the affordability couldn’t be increased. Initiatives fell flat in pushing the home seekers to the site as they are still sitting on the fence, with no home, worth the value, in sight.
As far as developers are concerned, they have relented to the appeals of Chidambaram. National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) have asked their member developers to cut the prices in the range of 5% to 10%.
Rohtas Goel, chairman of NAREDCO, says that price cuts will help escalate real estate demand and reduce the burden on customers. According to Kumar Gera, chairman, CREDAI: “ We are advising the members across the country to make every effort in lowering prices to the levels possible.This will have a desirable impact and cascading effect on employment in the industry, as well as on more than 170 other industries. It will also have a telling impact on the economy and country as a whole.”
Addressing corporate heads and business leaders at the India Economic Summit in Delhi (organized by the World Economic Forum and the Confederation of Indian Industries), P Chidambaram said: “ Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two wheeler makers must cut prices.”
But the real estate developers have their own view. They say this won’t work until lending rates are also slashed. Whatever correction was to happen has already taken place. Today there is no cushion or margin for developers to further reduce prices.
“We have already cut prices, which has brought our margin down to 15% from 30% last year.If we cut prices further,our margin will get wiped out,” said Emaar MGF, MD, Shravan Gupta.
“Prices are a function of demand and supply. Today supply is far ahead of demand,” says DLF chairman K P Singh. A Unitech spokesperson said price cut was a “good idea”. The group has launched a number of affordable housing projects in NCR. Parsvnath Developers’ chairman Pradeep Jain says price cut is unlikely even though builders may focus on smaller size homes to bring down overall cost.
The financial world may be facing uncertain times, much speculation could be going on over the rise and fall of real estate prices, but one fact cannot be ignored - land and property continue to be hot investment favourites.With banks decreasing their interest rates marginally on home loans and the real estate developers yet to oblige the appeals made by the former finance minister P Chidambaram (now home minister),NAREDCO and CREDAI to cut prices, a stalemate seems inevitable. Under the current scenario, consumers (home seekers) are in a fix.Several realty experts opine that the present reduction in the home loan interest rates is not enough to boost sales. It has to be matched with a correction in prices and rational pricing.
The move by the finance ministry and the Reserve Bank of India (RBI) to beat the slowdown and boost demand in real estate sector does not seem have borne any fruit, thus far.
The much-hyped cut in interest rate in home loan has not created any loan rush - for one single reason - it was inadequate. “It’s too less. Buying a house is still not affordable. Like inflation, rate of interest also should be brought down to the single digit level,” says Sunit Haldar, a resident of Mayur Vihar who is looking for a flat to accommodate his growing family.
The home-seeker takes a decision of buying a house, usually once in a lifetime. He thinks a hundred times before committing to a long-term liability of loan repayment, before approaching the bank, or negotiating with the developer. He knows his math better than anyone else. For him the real push to go for the flat would be if it were within his affordable bracket. But, in the case of recent rate cut, the reduction was lacklustre.
For example, the EMI for the loan amount of Rs 20 lakh for a 15-year-tenure at the earlier rate of interest of say 13.5% was around Rs 26,000. If the rate of interest is reduced by only 0.75% to the level of 12.75%, then the effective EMI would be around Rs 25,000. The recent reduction in rate of interest by 0.75% would reduce the monthly burden only by Rs 1,000. Now consider the same case from a different angle. If EMI is Rs 26,000, the monthly income of this person would have to be a t least Rs 60,000 to Rs 70,000. Will reduction of Rs 1,000 matter to this person? Will he be rushing to raise a loan to save just Rs 1,000?
Thus, one could not see a rush at the home loan counters as a result of banks lowering the interest rates. “High interest rates are choking the demand” turned out to be a weak argument as lower rates did not trigger any demand from the home seekers. RBI could pump in the liquidity but the affordability couldn’t be increased. Initiatives fell flat in pushing the home seekers to the site as they are still sitting on the fence, with no home, worth the value, in sight.
As far as developers are concerned, they have relented to the appeals of Chidambaram. National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) have asked their member developers to cut the prices in the range of 5% to 10%.
Rohtas Goel, chairman of NAREDCO, says that price cuts will help escalate real estate demand and reduce the burden on customers. According to Kumar Gera, chairman, CREDAI: “ We are advising the members across the country to make every effort in lowering prices to the levels possible.This will have a desirable impact and cascading effect on employment in the industry, as well as on more than 170 other industries. It will also have a telling impact on the economy and country as a whole.”
Addressing corporate heads and business leaders at the India Economic Summit in Delhi (organized by the World Economic Forum and the Confederation of Indian Industries), P Chidambaram said: “ Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two wheeler makers must cut prices.”
But the real estate developers have their own view. They say this won’t work until lending rates are also slashed. Whatever correction was to happen has already taken place. Today there is no cushion or margin for developers to further reduce prices.
“We have already cut prices, which has brought our margin down to 15% from 30% last year.If we cut prices further,our margin will get wiped out,” said Emaar MGF, MD, Shravan Gupta.
“Prices are a function of demand and supply. Today supply is far ahead of demand,” says DLF chairman K P Singh. A Unitech spokesperson said price cut was a “good idea”. The group has launched a number of affordable housing projects in NCR. Parsvnath Developers’ chairman Pradeep Jain says price cut is unlikely even though builders may focus on smaller size homes to bring down overall cost.
Home Loan Interest: Still a Distantdream
The present reduction in the home loan interest rates is not enough to boost sales as it has to be matched with a correction in prices and rational pricing, says Shri Ram Shaw
The financial world may be facing uncertain times, much speculation could be going on over the rise and fall of real estate prices, but one fact cannot be ignored - land and property continue to be hot investment favourites.With banks decreasing their interest rates marginally on home loans and the real estate developers yet to oblige the appeals made by the former finance minister P Chidambaram (now home minister),NAREDCO and CREDAI to cut prices, a stalemate seems inevitable. Under the current scenario, consumers (home seekers) are in a fix.Several realty experts opine that the present reduction in the home loan interest rates is not enough to boost sales. It has to be matched with a correction in prices and rational pricing.
The move by the finance ministry and the Reserve Bank of India (RBI) to beat the slowdown and boost demand in real estate sector does not seem have borne any fruit, thus far.
The much-hyped cut in interest rate in home loan has not created any loan rush - for one single reason - it was inadequate. “It’s too less. Buying a house is still not affordable. Like inflation, rate of interest also should be brought down to the single digit level,” says Sunit Haldar, a resident of Mayur Vihar who is looking for a flat to accommodate his growing family.
The home-seeker takes a decision of buying a house, usually once in a lifetime. He thinks a hundred times before committing to a long-term liability of loan repayment, before approaching the bank, or negotiating with the developer. He knows his math better than anyone else. For him the real push to go for the flat would be if it were within his affordable bracket. But, in the case of recent rate cut, the reduction was lacklustre.
For example, the EMI for the loan amount of Rs 20 lakh for a 15-year-tenure at the earlier rate of interest of say 13.5% was around Rs 26,000. If the rate of interest is reduced by only 0.75% to the level of 12.75%, then the effective EMI would be around Rs 25,000. The recent reduction in rate of interest by 0.75% would reduce the monthly burden only by Rs 1,000. Now consider the same case from a different angle. If EMI is Rs 26,000, the monthly income of this person would have to be a t least Rs 60,000 to Rs 70,000. Will reduction of Rs 1,000 matter to this person? Will he be rushing to raise a loan to save just Rs 1,000?
Thus, one could not see a rush at the home loan counters as a result of banks lowering the interest rates. “High interest rates are choking the demand” turned out to be a weak argument as lower rates did not trigger any demand from the home seekers. RBI could pump in the liquidity but the affordability couldn’t be increased. Initiatives fell flat in pushing the home seekers to the site as they are still sitting on the fence, with no home, worth the value, in sight.
As far as developers are concerned, they have relented to the appeals of Chidambaram. National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) have asked their member developers to cut the prices in the range of 5% to 10%.
Rohtas Goel, chairman of NAREDCO, says that price cuts will help escalate real estate demand and reduce the burden on customers. According to Kumar Gera, chairman, CREDAI: “ We are advising the members across the country to make every effort in lowering prices to the levels possible.This will have a desirable impact and cascading effect on employment in the industry, as well as on more than 170 other industries. It will also have a telling impact on the economy and country as a whole.”
Addressing corporate heads and business leaders at the India Economic Summit in Delhi (organized by the World Economic Forum and the Confederation of Indian Industries), P Chidambaram said: “ Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two wheeler makers must cut prices.”
But the real estate developers have their own view. They say this won’t work until lending rates are also slashed. Whatever correction was to happen has already taken place. Today there is no cushion or margin for developers to further reduce prices.
“We have already cut prices, which has brought our margin down to 15% from 30% last year.If we cut prices further,our margin will get wiped out,” said Emaar MGF, MD, Shravan Gupta.
“Prices are a function of demand and supply. Today supply is far ahead of demand,” says DLF chairman K P Singh. A Unitech spokesperson said price cut was a “good idea”. The group has launched a number of affordable housing projects in NCR. Parsvnath Developers’ chairman Pradeep Jain says price cut is unlikely even though builders may focus on smaller size homes to bring down overall cost.
The financial world may be facing uncertain times, much speculation could be going on over the rise and fall of real estate prices, but one fact cannot be ignored - land and property continue to be hot investment favourites.With banks decreasing their interest rates marginally on home loans and the real estate developers yet to oblige the appeals made by the former finance minister P Chidambaram (now home minister),NAREDCO and CREDAI to cut prices, a stalemate seems inevitable. Under the current scenario, consumers (home seekers) are in a fix.Several realty experts opine that the present reduction in the home loan interest rates is not enough to boost sales. It has to be matched with a correction in prices and rational pricing.
The move by the finance ministry and the Reserve Bank of India (RBI) to beat the slowdown and boost demand in real estate sector does not seem have borne any fruit, thus far.
The much-hyped cut in interest rate in home loan has not created any loan rush - for one single reason - it was inadequate. “It’s too less. Buying a house is still not affordable. Like inflation, rate of interest also should be brought down to the single digit level,” says Sunit Haldar, a resident of Mayur Vihar who is looking for a flat to accommodate his growing family.
The home-seeker takes a decision of buying a house, usually once in a lifetime. He thinks a hundred times before committing to a long-term liability of loan repayment, before approaching the bank, or negotiating with the developer. He knows his math better than anyone else. For him the real push to go for the flat would be if it were within his affordable bracket. But, in the case of recent rate cut, the reduction was lacklustre.
For example, the EMI for the loan amount of Rs 20 lakh for a 15-year-tenure at the earlier rate of interest of say 13.5% was around Rs 26,000. If the rate of interest is reduced by only 0.75% to the level of 12.75%, then the effective EMI would be around Rs 25,000. The recent reduction in rate of interest by 0.75% would reduce the monthly burden only by Rs 1,000. Now consider the same case from a different angle. If EMI is Rs 26,000, the monthly income of this person would have to be a t least Rs 60,000 to Rs 70,000. Will reduction of Rs 1,000 matter to this person? Will he be rushing to raise a loan to save just Rs 1,000?
Thus, one could not see a rush at the home loan counters as a result of banks lowering the interest rates. “High interest rates are choking the demand” turned out to be a weak argument as lower rates did not trigger any demand from the home seekers. RBI could pump in the liquidity but the affordability couldn’t be increased. Initiatives fell flat in pushing the home seekers to the site as they are still sitting on the fence, with no home, worth the value, in sight.
As far as developers are concerned, they have relented to the appeals of Chidambaram. National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) have asked their member developers to cut the prices in the range of 5% to 10%.
Rohtas Goel, chairman of NAREDCO, says that price cuts will help escalate real estate demand and reduce the burden on customers. According to Kumar Gera, chairman, CREDAI: “ We are advising the members across the country to make every effort in lowering prices to the levels possible.This will have a desirable impact and cascading effect on employment in the industry, as well as on more than 170 other industries. It will also have a telling impact on the economy and country as a whole.”
Addressing corporate heads and business leaders at the India Economic Summit in Delhi (organized by the World Economic Forum and the Confederation of Indian Industries), P Chidambaram said: “ Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two wheeler makers must cut prices.”
But the real estate developers have their own view. They say this won’t work until lending rates are also slashed. Whatever correction was to happen has already taken place. Today there is no cushion or margin for developers to further reduce prices.
“We have already cut prices, which has brought our margin down to 15% from 30% last year.If we cut prices further,our margin will get wiped out,” said Emaar MGF, MD, Shravan Gupta.
“Prices are a function of demand and supply. Today supply is far ahead of demand,” says DLF chairman K P Singh. A Unitech spokesperson said price cut was a “good idea”. The group has launched a number of affordable housing projects in NCR. Parsvnath Developers’ chairman Pradeep Jain says price cut is unlikely even though builders may focus on smaller size homes to bring down overall cost.
Quality Matters in Reality
Developers have realised that ensuring quality is the best means to boost sales, says Deepika Mital
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Quality Matters in Reality
Developers have realised that ensuring quality is the best means to boost sales, says Deepika Mital
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Quality Matters in Reality
Developers have realised that ensuring quality is the best means to boost sales, says Deepika Mital
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Quality Matters in Reality
Developers have realised that ensuring quality is the best means to boost sales, says Deepika Mital
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
Recession or no recession, home buyers today have become increasingly quality conscious and are ready to scout around endlessly till they find the projects which measure up to their expectations. Every consumer today is extremely aware that what goes into the construction in terms of materials and processes will reflect in the finish and longevity of the product. Mumbai's developers are doing their bit to differentiate and improve their product as they realise that ensuring quality is the best selling proposition and any compromise on this count is fool-hardy.
Architect Bobby Mukherjee says, "Wherever I have taken a stand and enforced quality in design and construction, such projects have reaped big rewards." He goes on to recount, "We did a project for a big developer in Thane, which became the most sought after complex in the area, it had really good design and quality club facilities, lighting, landscaping. When these are provided it is greatly appreciated by the end user and it helps in selling the product much faster. It was priced over the market rate by a few thousands, but still went on to sell very fast. Better pricing in the end product can be achieved thanks to better R&D and better sourcing of materials of better quality from across the world. This matters even more when it is a medium range of project, in terms of lighting fixtures, and other materials used in a planned manner which can achieve cost efficiencies."
Mayur Shah of Akruti City says, "The ISO certification basically indicates that whatever we promise, we deliver. Quality checks are conducted at all our sites. R&D is conducted at the head office, but in terms of cost - bringing down the construction costs without compromising on quality. We test different materials to check if the price points can be reduced by using cheaper materials, thus reducing overall costs. We don't have too much of choice in terms of the materials - those are the same for everybody. Quality also lies in the simple things like a perfect slab, good drainage slopes - after all the building cannot be re done at any point after it is made. We also have our own institute where we send our engineers and workers for regular updation for two or three-day programmes.
Explains Bobby Mukherjee, the stress should be laid at the planning stage itself when all the specialised consultants like the architect, interior designer, landscape architect and lighting and service consultant should work together. Only if they are brought on board at an early stage can one realise international standards of design. It is the mind set and knowledge of the subject that is very important to fulfil the quality criteria and achieving good sales. The savings via this can translate into a better sale price, especially in this market. For instance, in the project Kalpataru Horizon, the professionalism with which the project was executed to the last detail helped in getting it very good prices and making it the most sought after address in South Mumbai.
In ordinary middle income projects one needs to focus on the quality of the compound wall, flooring, paving of the driveway with tiles rather than cement and concrete, lighting, greenery, a sophisticated entrance lobby, good elevators, doors, bathroom fittings. Cheap fittings are counter productive. It is better to reduce specifications rather than to compromise on quality.
Speaking to Kaizad Hateria, GM, sales, marketing and customer relations of Keystone Group is an eye opener. He says, "We have a system of conducting spot checks through our mobile vans which can be seen at one or other of our construction sites. We employ 12 to 14 'concrete boys' on each site, whose only job is to check the quality of the concrete, which is vital to the construction. We also have a quality manual for customers, which explains the 300+ quality checks that our projects undergo. Internally to keep up with trends and best practices, our managers, architects and engineers are updated through exposure to foreign exhibitions, manuals and seminars. Our monthly review meetings are specifically meant to address any lapses that might occur at the initial stages as this business is an ongoing process.”
Surendra Hiranandani, MD, Hiranandani Constructions says, "Quality assurance is fundamental to our business. We were the first to introduce voluntary quality checks and better materials. We introduced the concept of copper plumbing in 1992, much before it was required. We also introduced recycling of water in the late 80's and the use of fly ash and high performance concrete in residential and commercial buildings, much before the BIS laid it down in 2000.
“More than 50% of the management's time and effort is directed toward training and R&D, it has always been a focus area for Hiranandani Group."
Answering queries on whether this pushes up the costs for the end user, he says, "Cost is always an issue, we would like to balance out the costs and call it value for money. Lifecycle costs and a low maintenance regime balance out this whole expenditure, which is a definite advantage to the end user. We have always focused on design, materials, planning and construction - all the crucial stages in the sector."
Having worked on projects across the country, architect Bobby Mukherjee says, "Quality in Mumbai is given a special emphasis and effort. Interestingly, second and third generation developers are more quality conscious than those who are first generation - this also I have experienced across the country. R & D mainly needs to be done to improve the quality of the product, be it commercial, retail, residential or hospitality. Good product, good quality design, once both these parameters are satisfied you have the recipe for success. Whether it is Thane or the heart of Mumbai city, these will be the hottest properties."
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