About a month back in my post, 1 lakh crore, I wrote how Kolkata’s real estate scene is expected to see big-bang investments in near future. I also felt gung-ho about the fact that US’ Jones Lang LaSalle (JLL), world’s largest real estate and investment management company, has started a Kolkata office. [Image source left]
Seems not all of our readers share the euphoria. I received an anonymous comment that went thus:
Nice to see that Kolkata is attracting a lot of investment. It quite some time now (sic). But I should say that companies like JLL or any other foreign real estate consultancy always MISGUIDES buyer as employees working in such companies have no idea about real estate markets and eventually the buyer has to pay more than normal.
I felt a bit skeptical at the comment, but after reading a March 20 ET story (titled, It’s time for a reality check on land banks), I now appreciate the commenter to my post does indeed have a valid point. What does the ET article say?
Reputed international property consultants, eager to make a quick buck and not wanting to miss out on a hot growth sector, willingly oblige real estate companies in jacking up valuations and creating hype. An example given is that of Mumbai’s property developer, K Raheja Corp (excerpt below).
K Raheja Corp recently valued a 4-acre property in Bangalore’s upmarket Whitefelds area at a whopping rate of Rs.44 crore per acre. The actual going rate: Rs.7-8 crore per acre.
Another example by ET (excerpt):
Yet another company, just ahead of an IPO, valued its properties in Bangalore on what is called the macro analysis method. They calculated the value based on the average of the highest transactions in the city in recent times. Any responsible valuer would have done the valuation by visiting the properties, found out the actual rates based on location, approach and so on.
Clearly therefore, there is a growing nexus between property developers and foreign consultants, and as always the gullible investors are being taken for a ride. It doesn’t surprise therefore that all the recent real estate entrants to the capital market have seen their share prices nosedive as if there is no bottom.
ET report says that Sebi (Securities & Exchange Board of India), the stock-market watchdog, is alive to this alarming situation and will hopefully take corrective actions shortly.
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Booming markets invariably bring with it unsavory people, who try to make some quick money through dubious methods. This is more or less the state of India’s property market at this point of time. There are developers who sell the same piece of land to number of customers and there are those who sell land without clear titles or mandatory permissions from the authorities.
There are many fly-by-night operators and others in the unorganized sector who indulges in such fraud. So what should a buyer do? I would suggest buyers to investigate the background of any developer thoroughly. Believe me, if you are not careful, your life’s savings could be at risk.For more view- realtydigest.blogspot.com