Property giants perk up prices
International property giants Colliers Jardine and Brooke Hillier Parker, both of Hong Kong, have made an unobtrusive entry to the Indian property market.
Their presence is helping to nudge the sluggish Bombay property market into wakefulness.
Over the last year and a half, property prices in Bombay, which had risen to unrealistic heights by end of 1994, have dropped between 15 and 30 per cent.
The slide has been more pronounced for commercial property in the central business district in south Bombay, where prices had sky-rocketed at a compound annual rate of 40 per cent over the first four years of the decade.
Ownership rates for office premises at Nariman Point have come down from a high point of about 35,000 rupees per square foot (about HK$7,525) to a current range of 25,000-27,000 rupees per sq ft.
However, the recent entry of global property giants such as Colliers Jardine, Brooke Hillier Parker, Richard Ellis and Knight Frank (the last two from Britain) has caused prices to perk up again.
Colliers Jardine, for example, recently handled a huge 800 million rupees real estate deal in Bandra for the Shahs, owners of Mayfair Housing.
'I welcome the foreign entrants as they have brought professionalism into real estate,' said Nayan Shah, a partner in Mayfair Housing. 'I see maturity coming into the markets in the wake of these overseas entrants.' The multinationals claim to provide real estate services which include land brokerage, research, asset management, property management and valuation services. Some of them also act as 'escrows' and property consultants.
Most have of them joined hands with reputed Indian corporations to ease acceptance.
The multinationals have recently been the target of a protest by the Swadeshi Jagran Manch (SJM), a militant branch of the Rashtriya Swayamsevak Sangh (RSS), a nationalist party sympathetic to the cause of the Bharatiya Janata Party (BJP).
The SJM has received unexpectedly staunch support from a section of the domestic property industry.
'Blocking the entry of foreign estate brokers may sound unduly protectionist, but it is definitely in the national interest,' claimed Prashant Telang, assistant editor of Indian Architect and Builder , an industry magazine. 'After all, real estate is one of our costliest and scarcest commodities.' At a recent meeting between Indian and foreign brokers to clear doubts regarding the SJM protests against the global giants, both sides arrived at an amicable settlement.
It was agreed that all overseas entrants would be enrolled as members of the Real Estate Agents' Association of India before any further deals could be executed.
'This will enable strict transparency in all their deals and eliminate potential misunderstanding,' said Niranjan Hiranandani, director of builder Hiranandani Constructions.
Whether this step will now smooth the road for the real estate multinationals remains to be seen.
