If one can’t afford a home, then they should not buy one!

Journalists are misleading the home buyers, said the savvy second-generation developer, reclining on the deck of his corporate yacht, anchored off the Gateway of India, sounding truly concerned about the fate of middle-class Mumbaikars. With all sincerity, he explained how the prices of land have gone through the roof, how the cost of material has shot up and how even the labour cost has nearly doubled. Of course, he didn’t talk about increasing profit margins. “When all input costs are going up, how can the price of real estate go down? By writing reports that realty rates could go down, you are only delaying their decision. And finally, they will have to pay an even higher price for the delay,” the young turk clad in designer suit said, adding as an afterthought, “Do they have a choice?”

I think they do. The choice of not buying a home at all; the choice of renting it out! What does rising input cost and galloping interest rate mean to someone who opts out of the realty acquisition spree? Like this friend, who owns a 1BHK apartment in Seawoods, New Mumbai, and has for long been planning to move into a bigger home. A 2BHK apartment in the nearby Seawoods Estate costs upward of Rs1.4 crore and even after selling the existing flat, he would have to take a loan of Rs1 crore to move into his dream house — with a monthly instalment of at least Rs1 lakh dangling on top of his head like a sword. The monthly rent for the same apartment is just Rs20, 000 — a saving of Rs80, 000 every month, not to mention the pressure of servicing a gigantic loan. It would be a pity to buy your dream home, and lose your sleep over it.

In these days of fluctuating fortunes and unstable jobs, locking into a lofty home loan may not be the best idea and living on rent may well be a smart move. Leave aside complicated calculations and the conventional wisdom that realty prices only go up, and living on rent makes better economic sense too. Imagine paying a fat instalment for five years, and finding that the price of your flat has remained the same, or even worse, gone down by 30%. Live on rent and not only do you get to keep all that money which would largely make the interest component of your home loan, but you also have the flexibility of moving to a new address, or a new city.
Not that we are new to the concept of living on rent. A good percentage of the population in the west lives on rent, as did a good percentage of Mumbaikars too, till just 25 years ago. Very few people had the resources to buy a house, and one’s own home was a result of a lifetime of hard work. The rest rented it out, and home loan companies did not even exist.
Should every Mumbaikar make the choice of living on rent, the young Turk on the yacht has a lot to worry about  not only about repaying his creditors, but also the fat installment for that anchored yacht!

 

Mumbai high street rentals see biggest crash

As the global slowdown pushed consumers to stay at home, retailers halted expansion plans and checked out of expensive high-street locations. Rental rates at high street locations across the world crashed, with the biggest crashes in Mumbai.
Among the exceptions were Bangalore’s two iconic retail hubs, Brigade Road and Commercial Street, and Kolkata’s Camac Street.
Mumbai’s leading highstreet locations—Colaba Causeway, Linking Road and Kemps Corner—also reported the largest declines in rentals across the world on a year-on-year basis—63.5%, 63%, and 60% respectively.
As per the annual global survey, Main Streets Across The World 2009, by global real estate consultants Cushman and Wakefield, over three-fourth’s of the world’s most prestigious shopping streets saw rentals crashing anywhere between 17% and 63.5%. Around 18%, however, recorded a growth.

Weaving character into homes

Bringing character to a home is the latest mantra, at least in the luxury format.
Designer Mr Sabyasachi Mukherjee will work on six of the two hundred limited edition homes Samira Habitats is developing at Alibagh. These would cost upwards of one crore rupees each.
The designer will work closely with the project architect to ensure structural compliance of the masonry, while filling in with his craft and elements.
The purpose is to lend individuality and embed creativity that the designer exhibits in his apparel on the ground.
Further he said, “When I decided to extend my love for visual aesthetics, form and color to interiors, I chose Samira Habitats because of their offerings of finely crafted homes close to nature. Their eye for opulence and detail is a vision I passionately share”.

Realty revival lifts home retail

Better times are gradually returning to the home retail segment, among the categories worst affected by the slowdown. The segment, which saw a decline of 15-25% in sales, is witnessing a spate of revival, hand-in-hand with the returning stability in housing market.

Leading players in this segment like the Future Group, Godrej Interio, Welspun Retail and HomeStop are hopeful of the trend gaining  further momentum, with the festive season right around the corner.

Confirming the trend, Retailers Association of India CEO Kumar Rajagopalan said, “With the housing sector slump, home sections of retailers found themselves in big trouble. But now that there are signs of a recovery in the housing market, home retail is also picking up. Both hard and soft furnishings have shown an increase in sales of anything between 10-15 percent over the past quarter. This segment had seen sales decline by 20 percent.”

Godrej & Boyce, which runs 50-odd ‘Interio’ furniture stores, has been witnessing a revival from May. Mr. Subodh Mehta, senior GM (home business), Godrej Interio said, “While some home retailers may have been downtrading by giving massive discounts, we restricted ourselves to normal promotion. Even though sales are yet to reach the 30-35 percent growth rate as in the pre-slowdown days, it is still growing at a double-digit rate”.

HomeStop, the home concept format owned by Shopper’s Stop, expects sales to grow from September-October onwards. Shopper’s Stop executive director & CEO Govind Shrikhande said, “Though we did not experience a steep decline in sales, our expectations are that sales will again reach its peak in the last quarter”.

Future Group, one of the largest players in home retail with multiple stores like Home Town, Collection-I and Furniture Bazaar, has been reporting a negative same store growth in this segment since the slowdown hit India. The group reported a 10% drop in same store sales till March, slumping further to 28% in April and May, and 34% in June. Group officials feel the fall in same store sales has bottomed out last month.