REAL ESTATE IN GOA
BY GLENN COSTA
Goa used to be an emotional buy earlier but in the last two years it has also become good financial sense to invest in the state as the property market is giving a rate of return equivalent if not better than most metros.
Goa has seen three types of buyers: the speculative; on a budget; and those for whom money is no problem.
Goa has seen a gradual price rise beginning from mid 2005 to mid 2006. For example in Dona Paula a sale deed of a 500 sq mt plot was made in November 2005 at a rate of Rs. 5,000 per sq mt.
Then from mid 2006 to mid 2007 there was a sudden and sharp rise and prices went through the roof with plot prices touching Rs. 30,000 in 2007. However, prices from mid 2007 to now have stabilized to a large extent.
Along with this general trend consideration has to be given to the phenomenon that in December prices generally tend to rise. Today the prices at that place are averaging around Rs. 20,000.
Says Mr. Prashant Naik, a real estate consultant, “Rates have not crashed but stabilized as the market is getting corrected and absurd rates are getting controlled.” He adds that today’s clients are looking for value for money and feels that this will result in fly-by-night operators being forced out of the market.
However Mr. Mahesh Adwalpalkar from Adwalpalkar Constructions argues that prices are still quite high and demand for flats is still higher.
He says, “Initially in Taleigao flats used to sell at around Rs. 12,000. However, the rates have risen quite a lot since then and I have finalized the sale of a flat on January 22 at Rs. 25,000 per sq mt,” adding,” In Chimbel the rate is Rs. 28,000 per sq mt and at Merces sales are being finalized at Rs. 26,000 per sq mt for flats.
He is of the opinion that the people “ who are buying today intend to make their homes in their purchased properties”.
Mr. Joel Rodrigues from T R Construction agrees. “Teleigao buyers are mostly need-based Goan clients and outsiders settled in Goa, generally from the higher middle class,” he says, adding, “Five years back we were selling at Rs. 10,000 per sq mt. Today plots in and around Taleigao which were Rs. 4,000 to Rs 5,000 per sq mt one year back are averaging at Rs 7,000 to Rs 9,000 per sq mt and built up is around Rs 25,000 to Rs 27,000 per sq mt.”
Both agree that hardening of interest rates have not affected the market much.
Mr Adwalpalkar says, “Loan rates going up has not made a difference and people take loans for the tax benefit. Also loans are freely available and banks have become proactive in giving loans.” He feels that the future is rosy as people need a place to stay and their income levels are going up.
Mr. Rodrigues says, “ I feel that the sale price has risen over the past year and people are willing to pay the price if you give them good value for the money.” He believes that people have become quite particular about what they are going to be getting for the money they are paying and want facilities like elevators and generators.
He says, “People generally pay the first few installements out of their own funds and then approach a bank in case they need extra funds. Interest rates so far have not proved to be a deterrent.” However, he is of the opinion that the rates will not go much higher as then they will be beyond people’s spending power.
Mr. Naik also feels that earlier only NRIs could afford to buy at such rates. He says, “ Today spending power of locals too has gone up. This is because income levels have gone up due to both the husband as well as the wife working.”
Analysing the rates in other parts, the rates in Porvorim in mid 2005 was Rs 1,500 fo an average sized plot and from 2006 onwards there was a gradual increase and today it is averaging at about Rs. 5,000 to Rs 6,000 with built up around Rs 20,000 to Rs 25,000 per sq mt.
In Calangute after the crash of 1995 the markets recovered gradually till in 2005 the rate had reached around Rs 18,000 to Rs 22,000 by mid 2005.
Today the built up rate is about Rs 30,000 to Rs 45,000 per sq mt. In the Benaulim-Vaca belt plot rates range between Rs 5,500 to Rs 6,000 and built up rates are averaging at Rs 27,000.
The reasons for the stabilization and in some areas slowing down of the sale and decline in prices is manifold.
Some analysts feel that it is due to the Goan atmosphere changing from anything can be done to one of uncertainty and this has led to the flight of speculators from the market.
People, who have bought land to convert it and make a killing later, are stuck with it and those who are desperate are trying to slowly dispose it off. Also the end users realized that the prices had reached beyond reasonable limits or properties were overpriced.
Surprisingly interest rates have not been a factor at not only for top end market but also for need-based buyers who take loans. A reason could be that the top end buyer has made his money in the stock market and decided to remove it and invest it in real estate.
Another indicator of prices being unreasonable is that rentals are not commensurate to the selling price.
BY MINOO FERNANDES
Real estate has made great strides in the state so much so that the coastal areas of Salcete taluka have turned into gold mines for real estate developers.
As a result, conversion of land from agricultural to non-agricultural for carrying out construction activities has reached its pinnacle and the builders have made the most of it by earning huge profits.
Though neither real estate developers nor those involved in construction business wish to come on record, unofficial land rates of properties in coastal Salcete gives an idea of how costly the land has become.
Land in costal areas of Benaulim, Colva, Majorda, Utorda, Betalbatim, Varca, Orlim and Cavelossim is sold between Rs 4,000 to 10,000 per sq mt. Some residents informed that land is also available at rates between Rs 3,000 to 3,500 per sq mt. The official rate however is said to be Rs 1,000 per sq mt in these areas.
Sources disclosed that a two bedroom flat costs around Rs 18 to Rs 20 lakh, while a bungalow having a built-up area of 150 sq mt costs around Rs 50 lakh. Given the fact that foreigners as well as people from outside the state wish to settle in Goa, the real estate market is projected to grow even further, say people connected with the real estate business.
Industry sources said that factors that have contributed to the rapid growth of real estate in the state are: large demand supply gap, demand fuelled by the availability of loans at low interest rates, tax incentives and growing middle class with higher savings, increasing demand for commercial space, especially from the rapidly growing hospitality sector.
BY AGNELO PEREIRA
The local builders are laughing all the way to the bank due to the booming Real Estate industry, in Goa, but the entry of “big daddies” in construction business is a matter of concern to the indigenous entrepreneurs.
Local entrepreneurs are all ears, as builders from outside the state are queuing up to have a slice of the business, in the state.
Although, the “outside” real estate developers are yet to set up shop, the indications are that the prices of land are showing a sharp rise in the state.
“The immediate fall out of entry of outstation developers like DLF, Gera, Rahejas, etc, into Goa, has led to heating up of property prices,” said Mr Abhay Kunkolienkar, a leading consultant in real estate, who is keenly tracking the real estate boom, in the state.
According to another perspective, the outstation builders may not make much of a dent to the prospects of local builders may not make much of a dent to the prospects of local builders.
At the most their entry will lead to increase in competition, which is expected to be furious. “They will mainly target a different kind of clientele, which of course will invole huge financial transactions,” observed Mr Vernon Xavier of Natural Real Estates, adding, “Competition is welcome. But it should be good, fair and honest.”
There was near unanimity on the fact that construction business was on the rise, although the ascent has slowed a little due to various factors.
“The construction business is yet to reach its peak,” Mr Niresh Naik, of Nanu Estates Pvt Ltd stated and added that the demand was very much there in the market. The steady rise in the cost of raw prices like steel, cement has inflated the construction cost and this has contributed to the slow down of the business, Mr Naik said.
Mr Kunkolienkar had a different view when he observed that real estate business has already reached its peak, in the state. He said the demand for flats and bungalows will continue to exist, however, the rate of the same will remain stagnant.
He referred to the global recession that recently sent the stocks on Dalal Street into a spin, which according to him will also affect the construction business. “With the recession in the market, NRIs may not be too keen to invest in real estate,” he claimed.
But Ms Shweta Phaldesai of Ms Yash Constructions was positive that construction business was on an upswing and would continue to rise. “People who are presently living ina two-bedded flat desire to graduate into a bungalow,” Ms Phaldesai disclosed whose Ms Yash Constructions concentrates on building duplex bungalows.
Locals may not have the money power compared to the NRIs but a significant number of them buy flats and bungalows, in and around the state. The trend shows that NRIs and foreigners prefer bungalows and row villas in the coastal belt, while local choose flats that are closer to the towns.
Accordingly to Mr Niresh Naik, NRIs prefer to buy property in coastal belt for two reasons: they have the money and secondly they use the place as a holiday home. Concluding with the view, Mr Kunkoliencar disclosed that non-Goan Indians have more purchasing power than an average middle-class salaried Goans.
“A lot of Indians are buying properties in Goa,” he disclosed and warned that the trend is bound to affect the middle class Goan who do not have that kind of money to buy flats.
“A double bed-room flat in Panaji costs nothing less then Rs 40 lakh. Will a middle income-level Goan be able to invest that kind of money?” he questioned, sounding the alarm bells.
Giving a conservative figure, most builders claimed that a two-bed room flat in Margao may cost nothing less than Rs 20 lakh, while a bungalow in the coastal belt will make a buyer poorer by Rs 75 lakh.
Obviously the prices of the construction will depend on the area and the location of the place. On the other hand Mr Xavier disclosed that consumers seek quality. “We target those clients who do not mind to pay,” he said and added that they were mostly NRIs and added that they gave first preference to NRGs.
The government should protect the interests of the Goans, Mr Kunkolienkar stated and expected the government to put an effective system in place to make housing facilities available to middle-class Goan, at cheaper rate.