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Big deals boom in realty slump

Big real estate deals are hot and happening despite slump in the realty sector, reports Lalatendu Mishra.
Hindustan Times | By Lalatendu Mishra
UPDATED ON JUN 16, 2008 09:05 PM IST

Big real estate deals are hot and happening despite slump in the realty sector. A few days ago, business baron Sajjan Jindal acquired Morean House, a bungalow in South Mumbai’s upmarket Altramount Road where Mukesh Ambani and Kumar Mangalam Birla live.

The building, which was sold for around Rs 125 crore, used to house the Belgian consulate. “Sajjan Jindal has bought Morean House in his personal capacity. It has nothing to do with group company JSW Steel,” said the Jindal group spokesperson who refused to give out the details of the deal.

A month ago, real estate consultancy Knight Frank India struck deal for a 5,000 sq ft top-end flat worth Rs 32 crore in a high rise at Altamount Road for a city resident. Three weeks ago, film star Vinod Khanna acquired a 2,500 sq ft flat in Malabar Hill through an auction by paying Rs 30 crore, a record price of Rs 1.20 lakh per sq ft. The buzz is that another large property in Alibaug, Mumbai’s weekend getaway for business executives, is being sold for Rs 80 crore, according to real estate industry sources.

These are other examples of high-end realty deals despite the slowdown in the property market, which is witnessing a lull due to lack of demand.

“Last month, we have closed a deal in South Mumbai’s Altamount Road for Rs 32 crore. We had expected a reduction in prices of high-value residential properties. This has not happened,” said Pravan Vakil, Chairman, Knight Frank India. “Deals are still happening. We expect the volume to improve from Diwali, otherwise prices will crash.”

Through the number of high-end deals has come down from last year, cash-rich individuals and corporates are closing deals without waiting for a correction. However, the three months from June are crucial, say experts.

According to experts, this segment is buoyant as expatriate Indians in Europe and the US are now investing heavily in top-end property. Flats going up for sale for Rs 40 crore are a normal phenomenon in Altamount Road, Carmichael Road, Malabar Hill and Napean Sea Road in Mumbai. Many rich individuals are now switching assets by selling their land in urban pockets and investing in high-end property in metros to avoid paying the capital gains tax. Similarly, individuals getting high bonus and people who used to park their surplus money in stocks are getting into top-end realty.

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