Rentals crash Maharani bagh located at the Ashram Chowk in New Delhi
Its one of most glorified
colonies where the likes of Maneka Gandhi, The Modis (of Modinagar), IK
Gujral’s family lives. A colony founded in 1960s as residential farm houses by
one Sanghi (a Marwari), who had large and deep political connections with the
Haryana politics. His family now owns large 3000+ sq yard plots opposite to
Maharani bagh, in the kilokri area.
Currently this family is developing a plot on the edge of Maharani Bagh,
in the block A.
The colony of Maharani bagh is
divided by blocks, A to I. Each block has plots of 800 to 1200 and at places
1500 sq yards. Though at one time they were owned by large Delhi
industrialists, but as families have split and businesses have changed, so have
their fortunes. Now many of them have only properties to garner rents.
The over supply of properties
that can be rented has increased 10 folds in the area. Earlier unwilling to let
go of the precious lands, the large egoistic owners of Maharani Bagh have
finally relented and the large developers like Salcon and Uppals have grabbed
this opportunity to developed at least 10-15 projects of 800 sq yards, and
built almost 20,000 sq ft each on each one of these plots, since 2011.
So much development has happened
that the prices of the apartments which were about 11 crores each in 2010 built
on a 800 sq yard plot, admeasuring 3500 sq ft floor, is selling at the same
price even today, after 10 years. Taking an interest of 10% on the capital, one
of the owners of this investment says that it was his worst financial decision
to invest in a floor in Maharani Bagh. The floor-prices have not increased as
per the usual percentage in the Delhi NCR, rather as per money value declined.
Residents say that as the mix of families in
a certain residential apartment changes, the prices also do. Take for instance
the house at the T-point of B block. The rentals have crashed from as high as
Rs 3.60 lakhs per month for a top floor (building developed by Uppal
developers), to about 2.25 lakhs per month in just 2 years. In C block, or the
Southern Avenue Maharani Bagh, which was recently developed by Salcon (Saluja
Developers of Vasant Vihar) in 2014-15, the prices for a ground plus basement
have crashed from Rs 4.50 lakhs to just about Rs 2.75 lakh per month,
considering that it's a 8,100 sq ft of space.
And there are reasons why this
crash is happening. Oversupply of rental floors and kind of people who come to
live in them. In A block, stands an apartment building built about 15 years
back. You can find on sale an apartment on the top floor of it, for as low as
Rs 1.80 lakhs and month as rent (3000 sq ft space) and Rs 7 crores in value.
The reason is that jazzier apartments has come up in the same line, with better
interiors and architecture. The market for apartments in this category of
rentals and purchases is limited. With Maharani Bagh located only 15 min drive
from the best of South Delhi location, the family who come to rent here only
stay for not more than 2-3 years. For the landlords, their ego, the erstwhile
panache and the high headed dealings come in the way for long term rentals.
They are not so great business
people when it comes to inviting tenants to come and live in their residential
apartment buildings. Most of the landowners now have only their residential
apartment building as their only source of income. They are scary and very
strict on the collection of rents. Beware, any lapse from the tenant on any of
the conditions of rental invites a legal notice almost immediately. One of the
tenants quit in 8 months as they were served with 6 legal notices ranging from
delay in payment for only 4-5 days to non timely payment of electric bills due
to errors on the BSES and the terms use of space. Amazingly, the servants
quarter in each of these palaces is so small that a 3’ x 6’ bed would hardly
fit into it. The servants complaint all the time. Maids usually end up living
inside the main floor and the sevants quarters end up either with a male
servant only, or just storage. There is added problem on the high salary of the
sweepers, maids and the small staff who comes to work in these Maharani Baghapartments.
Developers have made a killing
in Magarani bagh as most of the owners don't have the cash to develop a
800-1200 sq yard plot on their own. With each new apartment retailing for about
Rs 11-12 crores, their building cost is not more than 7-8 crores. A good profit
is expected if they secure a development. There are 3 houses in B-block, 3-4
plots in I-block, 2 plots in H-block, 2 plots in A-block which are under
development and up for grabs as rentals or buyout. Each landowner has given one
floor to the builder towards the cost of construction. Vijay, a property dealer
who literally rents out 2-3 rental deals a year says the families come here to
rent for not more than 2-3 years. Most of the tenants are looking for an
interim place to stay as their Maharani bagh plots (or in the vicity
colonies)are being developed. Others come to stay for the peace and tranquility
of the area, only to be disturbed by the high headed dealings of their
landlords. Since both the tenant and landloards are high ranking people in
society, they tend to ego-clash which results in a new dip in the market.
Seeking new rentals then becomes a challenge for the landowners and the dealers
alike. The notion that we only want to rent out to foreigners and
multinationals is all gone in the last 2 years since they prefer locations like
Golf links, Jor Bagh, Malcha marg or Sunder Nagar, which are closer to Central
Delhi. Still, he says, its central Delhi which commands the best rentals inDelhi.
Initially about a years ago
Vijay adds, that a landowner would interview the prospective tenant and reject
at least 3-4 of them before accepting one as a tenant. With a very strict lease
deed compliance to the words, the landowners would spell out each condition and
serve legal notices to the tenants on very small matters which could have been
solved on polite conversation. Most of the land owners live in the building
that they rent out. Some who don't, have a connie manager on the plot, who
check each of the things. The guards are usually double paid by the land-owners
to keep a check on the activities of the tenants. Again each lapse is
photographed and the tenant called to rectify. Its only once the person who’s
from outside of Maharani Bagh and has come to rent a place here, Vijay adds,
that he understands who he is dealing with. He says that the landowners don't
care for the tenants or have least of respects even of they are paying upto to
Rs 50 lakhs a year as rent for just one family. And that's good for Vijay’s
business as he earns a 15-day commission from each party- the landlord and the
tenant, whether they stay the full term or not.
There are parks in Maharani
Bagh, which are very clean. RWA does a great job here. Raju Sanghi one of the
RWA persons, son of HK Sanghi, the founder of the colony, maintains these
parks. 3 years back there was a great tussle when a large sewer line was left
open by the warring RWA and one municipal official. That had made this colony a
laughing stock and a stinking hell to live in, for about good 2-3 years. But
now the drain has been covered with concrete after reaching a solution with the
Minicipal person. Local property dealer says that intervention of the local
politicians and cash had played a great role in it.
At one of the entrances of
A-block you can find a row of houses which have Mustangs, Rolls Royce, Bentley,
McLaren and S-class Mercs just lined up on the street. Each of the houses in
Maharani Bagh will have a top German or a British car. That's how you commute
here. People who come from outside just look in awe when they start living
here.
Major lure and a mirage of an
attraction for a prospective tenant is the exclusive LIFT and parking that they
get in each of the 800-1500 sq yard plot based residential complex. All
rentable houses have backup generator, VRV aircons and the best of home
security systems. On the edge the guard and trash services make a killing on
the new tenants. Drivers in Maharani Bagh cost at least 6-10k more a month than
anywhere else. One of the new tenants who recently vacated a 1000 sq yard plot
after a 2 years stay says that the landowner drove out his sick old mother
demanding a 15% extra for just 45 more days of stay, without any relent, which
seemed odd. Tenant has 550+ employees working for him and left to back to his
house in Lajpat Nagar. His experience of having 6 guards on a 800 sq yard plot,
with 4 apartment was harrowing since there were fights on jurisdictions, rules
on who can enter from where etc. With the owners ego running skyhigh at all the
times it became difficult to manage.
With the rentals crashed like
crazy to almost 2/3rd or even ½ of what they were for a new apartment
3-4 years back, the landlords now have a tough time time. Each time a new
apartment building comes up, tenants have to accept a lower rent. The existing
tenants have stopped renewing leases at a 5-15% increase on the last rent since
there is plenty of inventory in the rentals. Sale of plots had stagnated. A 550
sq yard plot in Maharani Bagh which was being asked for Rs 35+ crores is now
willing for a Rs 10 crore discount. Same is the case for a 800 sq yard plot on
the discount structure as compared to about 3-4 years back.
Here, the price of the apartment
loses its real estate value. On the rental side as each apartment gets older,
it loses its rental value by almost 20-30% of the earlier rental. Goel a
dealers in Sukhdev Vihar adds that since people are looking to rent only for
2-3 years in Maharani Bagh, there are no long term deals of 10-15 years here
and also the snootyness of the tenants restricts them since they don't find the
warmth, though no one is looking for it, but there is still a relationship in
any every business. Anf the plots are high priced, category A, hence all cheque
deals. One can find a matching place in D-Block New Freiends colony or the
Friends colony East or West, at 20% cheaper with the same social status. There
seems to be only one example of a family who has been living here on rent for
last 10 years, and they are related to Lakshmi Mittal somehow. Hence beware of
renting in Maharani bagh and go with your ego in your pocket. A mere Rs 50
lakhs a year will get you space with strict rules and a landlord like in the
movies.
Box Matter- 1.
Rental value-
3rd floor about Rs
45-55 per sq ft depending on the age of construction. 2nd or 3rd
tenant will get a 20-25% discount. If there is a new building coming up in the
same block then the rental decreases by about 10% due to competition and the
better looking new apartment.
Ground floor: 55 per sq ft for a
3500 sq ft apartment
Middle floors: Max 45 per sq ft
for a 3500 sq ft floor. Loses value each year by almost 15% a year.
Basement is only 20-25 per sq ft
and comes with the ground floor, above the stilt.
Box matter 2
As of June 2019 there are the
following rentals available and they could be had for as much as Rs 30-40 per
sq ft. These are floors of 800 sq yards to 1000 sq yards.
I-20, I-8, H-9, F-6, D-1, B-16,
A-16, 17-A, B-30 (very low rental deals), 10 Southern Avenue (not worth the
rentals being , C-8, D-10 and 9 Park Avenue are some of the deals avaialble.
Even if they are rented, the tenants don't last a full term. Usual terms are a
max of 2-3 years, so they can be solicited at any time.
The list of these rentals is as
of June 2019. Beware of the landlords who rent these places out. They may ask
for a full year rental in advance to promising area. Things to look out for are
servants’ quarters area, power consumption, fine lines in the lease deed
enumerating deductions from the security amount, irrational increase in rent if
the tenant over stays, etc. Usually many of these home owners are out of real
cash, and with the crash in rents in the last 12 months, they tend to adhere to
the contracts by the book.
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