Tuesday, March 24, 2009

New Property at Virar / Drivers reaction

Last week (Friday), Ramesh (our property expert) and Nachiket went to check a property at Virar East - about 5 to 10 mins auto ride from the station - which is almost ready (about 3 of the 8 buildings are pretty much done with the rest to follow during the year). It seems that there could be about 100 flats available (of about 340 sq ft) which could cost about Rs 5.5 lakhs. This is slightly above our target price range - but having said that, when I asked some drivers to see the property - they actually wanted to buy the next higher value flat (which is priced at about 7.5 lakhs)! They were willing to put in 2.5 lakhs as margin and were quite comfortable with servicing the EMI on the 5 lakh loan required for 15 years. I asked them why they would take on this kind of additional pressure and why not just buy the smaller 340 sq ft 1 RK flat ? They all said that they had to plan for the future - for their children (extra room needed) and even for guests from the village. This showed both their aspiration levels and more importantly, affordability levels - the drivers were all earning in the region of 12,000 to 15,000 and so the EMI of approx 5,000 was not a problem.

Anyway, re loans against the property itself, MHFC is doing a soft launch - just circulating the possibility to people who have been asking us for some time about properties and loans - and it looks like we will have 100 buyers from just this personal reference list. We will be able to test our systems through this initial process - so treating this as a pilot.

Nachiket took some photos of the project itself which I am sure he will put up shortly.

Wednesday, March 4, 2009


Above: Near completion projects in Virar East
(we did not approve these, there is hardly any space between two buildings and there are new buildings coming up right in front)

Below are a few pictures from TMCity -
(A complete (mock) building and an overview of the current construction status)

Update on Builders

I think now be a good time to give everyone an update on where things stand today as MHFC gets ready to launch.

For starters, since we are project led, the most important update is on the builder/project front.

TM City:
Our team visited TMCity two weeks back and was really impressed by their progress. The last time I went there they barely had one mock building up (This was only 4-5 months back). Now almost 54 buildings are completed at foundation level and about 5-6 till the first floor. They are confident of completing about 3000 flats by the end of August and a 1000 more by December

Nirman Realty:
We recently met the promoters of the Nirman group. They are building about 228 flats in Neral (near Karjat, where TMCity is located). They also have land banks in western and central areas of Mumbai and showed great enthusiasm in partnering with us. The meeting reinforced our belief that the main cause of lack of housing is not really a lack of developers, but it is the lack of financiers for the end-buyers. Once the builder is assured of the take out funding, in today's market, he is more than willing to put up mass low-cost housing projects.

Virar / Nalasopara:
When we had gone last time to take a look at some of the near-ready properties, frankly we were quite disappointed with the lack of planning (inefficient use of FSI) and poor quality of construction. We realized that MHFC will have to be involved from an earlier stage in a project to ensure decent floor plans and good quality of construction. Our mission is to improve the quality of life of the urban poor - not lift them from a slum to put them back in a concrete slum. We have identified a couple of builders in the area and are in talks with them to be the almost the exclusive financier to the whole project. That will give us enough leverage to ensure a decent finished product.

There is positive news from Ahmedabad too - the two builders we were talking to have got their environmental clearances and are set to start their projects in April/May. We are planning to go visit the sites again next week - more update on that will follow.

Overall, all the builders seem to be realizing this is a recession proof business and are willing to work on lower margins and higher volumes.