Monday, June 01, 2009

Real Estate from a Landlord's point of view.

Hi All,

This is my first post on this blog, after having spent a great time as a reader and commentor. I am feeling a sense of pride at being 'promoted'. (Thanks Vik :).

This post will discuss an issue dear to my heart and my wallet:

Being a landlord in Pune (the financial equation).

Firstly, some background info:
I own 3 flats in Pune in good areas which are rented out. All flats are 2 BHK, rented out to software professionals.

The rent : emi ratio for each flat is approx 1:2. This is because one flat was bought when the boom in Pune was just starting, and other two flats are part of a duplex bungalow constructed on a plot owned by the family.

The going rates in these areas are currently so high that a flat bought now (in June 2009) and given on rent will have a rent : emi ratio of approx 1 : 4.

The landlord is not buying a flat for her own consumption, but for investment purposes. But she does not want to sell it immediately and turn a quick profit, so she is not a speculative investor.
She is a long term investor who is also interested in the betterment of the society and the neighborhood so that rents can increase.
In this sense, she has the same concerns as a homeowner.

Increases in rent generally are linked to income and standard of living. So only when the overall economy improves, rents increase.
Rents go down quickly in recessions.
Also, people like to rent the cheapest house which will "just support their lifestyle", as compared to buying the best house which will "enhance their lifestyle".

All this leads to a question (for which I don't have any good answers).
When house price increases without a corresponding increase in house rent, this is a speculative price rise. Should the landlord be happy?

The argument for being happy is that the high price is due to a bubble, and all bubbles eventually burst.
So the landlord should sell the flat now, being happy that she has sold it for more than its financial worth. Then buy it at a reduced rate when the bubble bursts. This is not as easy as it sounds.

The argument for being unhappy is that you can no longer expand your renting business.
The basic financial principal behind renting is
Positive Cash Flow. This means that the rent in hand should be greater than the emi + taxes + maintenance + downtime. If there is positive cash flow, the property becomes self sustaining and you can think of expanding your business (i.e. buying another flat and giving it on rent.)
But now in a bubble, positive cash flow is not achievable, so there is a limit on how much emi you can pay out of your other income (read: salary).

In today's real estate scenario in Pune, rent : emi ratio is usually 1:3 or 1:4. Investing in a rental property makes sense only when rent : emi ratio is 1:1.5 or lesser.

Builders are not reducing rates quoting construction costs, growth of the economy etc.
A person who wants to stay in his own home can disregard the financial equation and buy the flat for emotional reasons.
But can a rental investor disregard the financial equation?
If not, should she predict that property rates will fall at least 50% in Pune so that rent : emi ratio comes down to 1:1.5?
Or should she predict that rents will double in the next year, so that a 2BHK which on average rents for 10k will command a rent of 20k next year?

Even when my rental properties have been bought at prices 50% lesser than today's prices, still the rent : emi ratio is 1:2.
This leads to some interesting questions:
1. Does this mean that not only prices will fall to pre-boom levels, but go less than that due to recessionary fears of the consumer?
2. Does it mean that rents are less than reasonable and we can expect a 20% to 30% increase in rents? Even though as a landlord, I would love to see an increase in rent, I don't think that in this recessionary phase, increase in rents is a practical possibility.
3. The ratio will decrease if the interest rates come down to 7 - 8%, from current levels of 10 - 11%. Is this a possibility? As might be expected, the builder lobby is pushing banks and the govt hard for an interest rate decrease.

Abeer Bagul


Anonymous said...

There is a very complex relationship and interdependencies between Rentals and Ownership especially in the Indian markets. This leads to a lot of Ifs and Buts scenarios. Thus it becomes difficult to nail down cause and effect or give a logical conclusion. But we can analyze them better if we see them from a time based perspectives - shorter timeframes and longer ones. Here they are:

1) There will always be enough supply of Rental properties in India since people prefer buying more than renting. They buy for future use even if they have no plans of living, for their children, second home and last but not the least – as an investment. The last one has got to do with the mind-set; it won’t change for the next 30 – 40 years (till we become a fully developed economy). Thus they keep eating and swallowing properties till they suffer from indigestion  This reasoning is more apt for suburbs and newer areas of growth – New Bombay, Vashi, Kondhwa, Viman Nagar, Wakad, Pimple Saudagar to name a few. It’s different for downtowns like Walkeshwar, Peddar Road, Dadar Shivaji Park, Bandra west, Model Colony, Shivaji Nagar, etc.

2) In the long term the Rental yield will always be a blessing for first or early investors in those townships, areas or properties in particular.

So in effect to be a successful landlord invest in the best possible localities at the best possible prices. Timing here is very important (Sorry BB this class of Investors, read Landlords, has to Time otherwise they will become Land – Slaves). Then sit by the pond for a bout of rain for the fishes to swim towards the shores. It definitely rains money with this strategy.

Case in Point (Example) – Flat purchased in Shanti Nagar, Mira Road (western suburb in Bombay beyond Borivili) booked in the year 1982 – INR 75,000 possession in 1987 currently gets a rent of INR 5000 per month net of maintenance. That’s a neat rental yield of 80% per annum!!!!!!!!

Here’s an extract from an old article in Outlook Money that gives an insight into the Price discovery mechanism for RE using Rental yield method:

Rental yield. The typical historical yield of residential properties in India has been around 5-6 per cent. The rental yield is the annual rent that a property would command divided by its market price, multiplied by 100. During the boom phase, the rental yield in some cases had gone below 3 per cent. To give you an idea, around 2005, in Dwarka (West Delhi), you could have got a two-bedroom house (950 sq. ft), costing around Rs 22 lakh on a rent of around Rs 4,700 per month, thereby translating into a return of only 2.56 per cent. In other words, prices had possibly inflated on speculative interest.
So, before you settle on the price, get an idea of the rentals that house (which you are planning to buy) would command and the prevailing prices in the area. If the rental yield of the house is less than 5-6 per cent, then bargain further till you are able to get a price, which brings the rental yield close to the 5-6 per cent levels.

NT (Neutral Territory)

Anonymous said...

No one can deny that market has changed in last 3 months. Some analysts describe it as free fall to less worst & some describe it as the signs of recovery. I prefer to describe it as “resetting economy at lower level”. The changing economic scenario will create new opportunities & will discard old strategies. Of course it is one of the worst recessions in world which will change the direction of business & growth. Now the biggest concern is about unemployment & wage deflation. Which could give another dent to economy in 2010?

In the falling wage market how come, costly goods will get sold? It may not be outright deflation but definitely there will be a price correction to cope up with affordability. Looking at the past, some speculators are feeling that prices have gone down but affordability is still far away. Very important is that prices are decided based on future appreciation not on the past level. No wonder why PE has got away from deals. A closer look at the market capitalization of different sectors reveals that RE is still worst performer.

SAIL to recruit 600 freshers in FY'10 [1/6/09]

“Steel giant SAIL plans to recruit about 600 employees this fiscal even as global producers like ArcelorMittal and Corus are trimming workforce and salaries to stay afloat amid the economic downturn”.

SAIL's workforce likely to decline by up to 7,000 in FY'10 [28/5/09]

“We tend to continue our corrections and we will rationalise our manpower further by around 6,000 to 7,000 in the current financial year," Steel Authority of India Limited (SAIL) Chairman SK Roongta told reporters after announcing the company's fourth quarter results here”.

Market capitalization changes in last couple of months.

Sensex [21206.77 -> 14,840.63], Midcap [10245.81 -> 5,204.21],
Small Cap[14239.24 -> 6,196.78], Realty[ 13848.09-> 4,035.59 ], Metal[20494.62 -> 11,457.27], IT [8678 -> 3,115.97], FMCG[2569.72 -> 2,154.61],Consumer Durable[7119.69 -> 2,831.93],Power[4929.34->2,957.05], Tech [4187.63 -> 2,577.08] , Auto[5881.83 -> 4,700.05], PSU[11205.38 -> 8,557.93], Oil & Gas [14268.89-> 10,501.36],
Capital Goods [21020.97 ->12,004.84], Health Care[4602.15 -> 3,434.81],
Bankex [12678.98->8,188.21]

So guys let it fall then only pick up, minimum 50% price cut is guarantee.


Anonymous said...

VRecession of sentiments affects builders
By: Varun Singh Date: 2009-06-01 Place:Mumbai

Despite hoping otherwise, the rising Sensex has not translated into sales for builders

The rising Sensex has not only perked up investors, but has also energised builders. But real estate market experts have advised a realty check for the latter. Investors returning to the stock market will not necessarily translate into them investing in property, they pointed out.

Shobhit Agarwal, joint managing director (Capital Markets) at the real estate consultancy firm Jones Lang LaSalle Meghraj, explained that the real estate market is still not faring well because of a "recession of sentiments". "The negativity is purely psychological and not based on actual market potential, which is rather good at the moment. Buyers are waiting for a confluence of rock-bottom property rates, rock-bottom interest rates and added incentives. People are willing to take a risk with shares, but are not willing to do so with real estate," said Agarwal.

Echoed another expert, "Buyers are waiting for the prices to fall further." He added that job insecurity and pay cuts were the other factors keeping buyers away.

We shall overcome

However, builders remain undeterred. "When the Sensex rose last week, Realty Index moved up by more than 23 per cent, suggesting that now is the suitable time for purchasing real estate," said Rajesh Vardhan, managing director, Vardhaman Group.

Aditya Verma, business head,, added, "With the index in the share market going up, the real estate market is also making profits. Compared to January, more people are buying now, as the rates are affordable."

While Mihir Dhruva of Siddharth Builders echoed Verma, he also accepted, "The prices won't go back to the peak they had reached in 2007."

Buyer speak
While Khushal S, a software engineer, considers investing in shares a lesser risk than buying property, Shardul Kulkarni, a project engineer with an IT company, said, "I expect the prices to fall further with recession."

Gaurav Gupta, the operations head of a media company, said, "With high interest rates and lack of job security, I won't buy now."


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Anonymous said...

vulture keep up the good work

Anonymous said...


The India Real estate laws are so much in favor of builders.

Take the case of the concept of super built up. What the hell is this?

Do you have anything as such in any other country? NO. The reason being that the real estate lobby is more than half filled with crook politicians who do not want to do anything for the consumers.

Only if we remove the concept of super built up and built up and pay only for carpet area will the builders changes.

Take Mantri Park in Goregaon east. The idiot has a 50 % loading on the carpet area. Who would want to buy at such inflated prices?


The times of India is run by the builder lobby so it will not print any negative news about real estate.


Vik said...

Very good post Abeer. These are the ground realities you are stating. Moronic analysts should be looking at data from you and similar sources instead of crystal ball grazing. You have bought at the right time and unless you have a liquidity problem, you don't need to sell. This is what happens in matured areas where original residents have no plans on selling and whatever available property is on the market commands prices in multiples of what could be true worth. Newer areas with recent residents with loans are the most volatile in terms of drops. However many times transactions dont take place unless absolutely necessary and if they do, they command lower prices. The brokers can justify it and say distress sale, but the rate will be higher if you go to a regular seller. This is the classic disconnect which we are seeing. The only answer here is the if you buy what you can't afford, be ready to lose it.

Anonymous said...

What will happen if speculators enter wheat and rice. People like bindaas bhai will hoard all the grains and as a result people will die of hunger.

To counter this government placed all the black - marketing rules in the markets and is very strict with the speculators in food grains.

Roti kapda aur makaan. This is the basic needs for the human race to survive. Hope that Black-marketing laws will come soon. I hear that a proposal is biting dust in the Urban development ministry since last 12 years. It applies heavy taxes on houses purchased as an investment and high property taxes on 2nd and 3rd homes.

The law is still in dusts because of pressures from Dons , Bhais and builders. Sooner or later the law will come and doom the property.

As for the Ch123ya Bindaas bhai signature on Mumbai . In Mumbai within next 25 years due to global warming a lot of mumbai land will be lost to sea. Have fun with investments.

Anonymous said...

For Professionals in Real Estate Industry.
SEZ & Commercial Real Estate

Anonymous said...

third last para, last word must be "greater" not "lesser" talking ratios in terms of fractions.

Anonymous said...

Banks rule out drastic cut in lending rates
2 Jun 2009, 0730 hrs IST, ET Bureau

Print EMail Discuss Share Save Comment Text:
MUMBAI: Leading banks
have told corporates that there can be no dramatic reduction in lending rates. While the government is nudging banks to cut
India Inc
Top 10 Wealthiest CEOs
10 most admired cos
World's top 10 valuable brands

rates, lenders have told apex industry bodies that rates cannot be lowered to the extent that corporates are demanding.

In a meeting last week, the Indian Banks’ Association (IBA), an association of bank managements, spelt out its views to the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (Ficci).

“We have told corporates that lending rates can be cut by 50 to 100 basis points (bps) from the current level in the near to medium term,” said a bank CEO who attended the meeting.

Corporates have asked for a 400-500 basis points cut in lending rates in the near future. “We reminded them that most of the loans were given at rates below the prime lending rates,” he said. Most PSU banks have pegged their PLRs, which serve as benchmark rates, between 12% and 12.5% while private banks’ PLRs vary from 14% to 16%.

Also Read
→ Central banks communicating more with public: Global survey
→ RBI says banks can’t guarantee bond issues
→ Don't issue guarantees against bonds, debt tools: RBI to banks
→ India Inc tunes into FM to play those wishes
→ India Inc sees recovery signs, says days of high growth around the corner

The meeting followed a directive from the government that industry associations and banks should meet regularly to quicken credit flow to the manufacturing sector. The next such meeting will be held after finance minister Pranab Mukherjee meets chiefs of public sector banks.

The FM will meet bank CEOs on June 10 to review the performance of banks. Bankers feel that the minister may ask them to lower lending rates further. Several state-owned banks had cut rates in the first week of April.

It’s widely perceived that banks would cut rates by 50 bps by mid-June 2009.

Some of the PSU bank chiefs present at the meeting told the industry representatives that their PLRs were lower than those of many private and foreign banks. Moreover, three-fourth of the lending, they pointed out, happen at rates which are below their PLRs.

Large banks like Union Bank of India, Bank of Baroda, Bank of India, Canara Bank and Dena Bank have fixed their PLRs at 12% while SBI has fixed it at 12.25% and Punjab National Bank at 11%, the lowest in the industry.


Anonymous said...

Global stock market started rally since last 3 months due to 2 factors.
1. Signs of economy bottoming.
2. Fear of inflation.

The fear of inflation is so high that people didn’t evaluate the recovery & started big rally to cover for inflation. The analysts, who used to talk on deflation, are now talking about inflation. This is a clear indication of creating a swing in market by spreading deflation & inflation news.

The Big Inflation Scare

“First things first. It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger”.

So guys let it fall then only pick up, minimum 50% price cut is guarantee.


Anonymous said...

Dow is going back to 7000 in a few weeks. Moreover, it would have been down if they didn't take off Citigroup and GM from DOW and replaced with Cisco etc.

Sensex will follow course. It should go back to 8000 level in a few months.

There is no good news for the stocks to go up. There are mass layoffs, massive unemployment, housing has yet to fall 50-60% in both US and India, salaries are being reduced, consumers are not spending, countries are high on deficit, WTF is going on with stocks. Investors are on dope.


Desi Guy said...

Mr Abeer Bagul

Good to see a hands on RE investor in this blog – rather than reading all arm chair analysts!!

I have another take on the points you have mentioned.

To me, investing in any property that does not produce a Net cash flow is speculation or to put it bluntly gambling.

In fact I would go to the extent of taking a position that for a healthy investment point of view one should not only consider EMI but also take into account all the fixed and unavoidable expenses related to maintaining the property such as Tax, association fees etc.,

If the income does not cover the expenses plus some – then we are in a very tricky situation. Property values do appreciate over a long term horizon. But one can never time the market. So it is wise to choose the investment that gives net cash flow rather than invest for appreciation. It will avoid ulcers, insomnias and potential heart attacks!!

If the rent:EMI is 1:3 or 1: 4 – to me this is a ticking time bomb. How long can one sustain pumping money to keep the mortgages current? And continue to spend more money on other expenses such as Association fees , repairs, Tax etc.,

Calamity is just one step away from one misstep or one personal disaster. The best ratio to look at is not rent:emi but Income:Expenses. The healthy ratio should be better than 1:0.9.
This,in my opinion, qualifies for good RE investment - Any thing other than this is simple speculation/gambling.

Anonymous said...

Bharat said...
Dear Kulkarni,

While we wait for Vulture to respond, I thought I will add my two bits here.

The stock market will not go to 15K in 3 months. Its going to go down from here pretty soon. All the technical indictors are pointing to a sell-off...I would advise you to exit the stock market asap.

This was posted by bharat on 24th April 09

Anonymous said...

If the Sensex touches 18k by Diwali
What is going to happen to property market?.


Anonymous said...

Anon above:
If the Sensex goes to 18K by Diwali, it would be the worst gambling by investors. The Foreigners will walk away and Indians will lose a lot of money as the stock market has to go down to 5000-6000 level. This is all BS and an illusion. A big storm is coming. Things will take a double dip.

But, if you are so optimistic, please buy a lot of shares and that too on margin, buy some more flats. Your kids and your family will beat the shit out of you in the coming year.

Anonymous said...

Daily Layoffs in US. Check out the site below daily:

Anonymous said...

Property developers told to repay loans from QIP funds

“Real estate companies, which are raising money from institutional investors, are being told to use the funds to repay loans first, instead of taking up new projects, people familiar with the development said”.

Bharat said...

That's right the sensex "touched" 15K. I was wrong. Let's see how wrong I was in the coming days...

The higher up it goes the harder it falls. If you are trading in the market you want to sell out on the way up. Its difficult to time the top and usually the market gives drastic corrections from the top. I have booked my profits in the neighborhood of 14700. If it goes to 18K I would have missed something if not then I am waiting to re-enter at the bottom. BUT, I would not have lost anything :) except an opportunity and for a very short time. My money is still on a drastic crash from here. This is just a bear market rally with some "irrational exhuberance"..

Unfortunately, one cannot do the same with RE. One cannot sell on demand and buying is such a pain with so many intermediaries and so many looters waiting to fool you..So pls. make your decisions very carefully on that front. Do not enter when the market is running in a bull phase..

Anonymous said...

Prices have already appreciated by 10% in last 15 days in certain pockets of Mumbai especially where the builders had brought the prices down. ( Ekta, HDIL, Neptune)

Hands on experience will always pay. There is no point in cribbing once you miss the bus.

I was pretty confident that the prices will move up with this Govt.

Cheers !!! Now let us wait for the Budget if this Govt gives a cracking budget then trust me by Diwali we will see old prices resurfacing in most of the pockets of Mumbai.

Minimum 50% appreciation in 2 years for Mumbai.

Bindas Bhai

Anonymous said...

Bindas Bhai,

Tussee great ho.

Anonymous said...

If the real estate prices reach 2007 levels by a GOOD budget than I would say its a really "bad" budget.

A good budget breaks speculation and prevent asset bubbles.

Don't know about property prices but property supply is definitely increasing. Vacant plots, vacant flats coming all over the place.

Well made good money from the stock market and have exited from entire portfolio today, Would never have made such returns from real estate.

Bindaas Beta move swiftly from Call center job. Get a job in a another sector. Times are not good for BPOs. (I don't crack jokes when it comes to jobs.)

Retired Old Man

Anonymous said...

Should we trust Dumbass Bhai or Experts ??

What is your credentials Dumbass Bhai?

Anonymous said...

Should we trust Dumbass Bhai or Experts ??

What is your credentials Dumbass Bhai?

HA HA HA, Pls. keep reading reports and be happy.

Anonymous said...

Old man said

If the real estate prices reach 2007 levels by a GOOD budget than I would say its a really "bad" budget.

Tell me where in Mumbai it has reached 07 levels? Pls. do your homework before posting.

Old man said:

Bindaas Beta move swiftly from Call center job. Get a job in a another sector. Times are not good for BPOs. (I don't crack jokes when it comes to jobs.)

Sorry old man, this is what todays ET said. Pls. be more updated.

BPOs see business revival soon

Deepshikha Monga NEW DELHI

BPO firms, such as Genpact, WNS and EXL, say they expect a revival in business soon, as their clients see stability in their own businesses.
Genpact president and CEO Pramod Bhasin said the BPO’s clients seem to have hit bottom and are now on the path to recovery. “We are seeing clients stabilising. The resumption of business will take a little while longer,” he said. The country’s largest BPO firm by revenues counts GE, Nissan, Glaxo-SmithKline and Cadbury among its clients.
The BPO industry has managed to withstand the economic slowdown well, pointed out WNS Global Services CEO Neeraj Bhargava, with most companies reporting a decent growth in profitability recently. “The question now is how soon can the top line growth be restored. The deal pipeline is beginning to build up and we are in early stages of a pickup,” he said. BPO firms, such as Genpact and WNS, provide services, such as those for managing accounts payable, customer support, collections, claims processing and procurement, to their clients. These firms had seen project cancellations and delays in decision making by their clients in the wake of the global economic slowdown.
The BPO industry’s early signs of recovery are expected due to the non-discretionary nature of the work and a larger opportunity to cut costs than IT, said a sourcing expert. “Companies recognised BPO as a cost-saving initiative, but could not do anything earlier due to the uncertain environment. Things are settling down now, and new deals are being discussed,” said sourcing advisory firm Everest Group principal Nikhil Rajpal. New deals are also expected to come from the beleaguered banking, financial services and insurance (BFSI) sector, which was the worst hit by the economic slowdown. ExlService Holdings president and CEO Rohit Kapoor said clients in the BFSI space seem to have put the worst behind them. “Demand from these companies could accelerate,” he said.
BFSI sector is the largest contributor to the Indian IT-BPO industry’s export revenues. In FY09, the sector accounted for a 41% of the industry’s $47-billion export earnings.
Quatrro BPO Solutions MD Raman Roy said that clients are showing a greater willingness to discuss outsourcing deals, while they had been reluctant earlier. “It’s a good sign, but there is a long process after that. But things are improving,” he said.
For Mumbai-headquartered Intelenet Global Services, there has been an increase in the volume of work from existing clients, said its sales, solution and transition EVP Sandeep Aggarwal. “New clients need some time to clean up the mess,” he said.
But most clients are looking at either price-cuts or getting more work done at the same price. BPO companies have managed to tackle these pressures in the past by taking a scalpel to their own costs.

Old Man said

Well made good money from the stock market and have exited from entire portfolio today, Would never have made such returns from real estate

Poor old man, just dying to buy a property but at this juncture cannot afford. Very funny people find different ways to avoid people from not buying

Grow up old man, assuming all the guys in this forum don’t buy property, still the prices are bound to go up. Let me tell you atleast 80% of the readers from this blog will be on the ground looking to close the deal.

I know you are not an old man but i like to call you the same.

Minimum 50% appreciation in 2 years for Mumbai.

Bindas Bhai

Anonymous said...

Bharat said...

The higher up it goes the harder it falls. If you are trading in the market you want to sell out on the way up. Its difficult to time the top and usually the market gives drastic corrections from the top. I have booked my profits in the neighborhood of 14700. If it goes to 18K I would have missed something if not then I am waiting to re-enter at the bottom. BUT, I would not have lost anything :) except an opportunity and for a very short time. My money is still on a drastic crash from here. This is just a bear market rally with some "irrational exhuberance"..

What a liar this man is, when the market was 11700 he said that the markets will fall and advised everyone to exit and today he is making the above statement.

Pls. dont give bull shit and admit that your judgement on property has gone wrong.

Minimum 50% appreciation in 2 years for Mumbai.

Bindas Bhai

Anonymous said...

I'm amazed by Bindaas Bhai's perseverance, I think he is connected to builder's, probably a broker ...

Guys there seems to be a standoff, the outcome depends on who blinks first ... builders are trying to hold the prices, genuine buyers are not buying, investors are out (well almost) ...

Now is there any hope for the likes of heavily invested Bindaas Bhai's ... I'm not so sure ... at 7000 a sqft .. it's almost a crore for a decent 2 bhk, when u include parking floor rise etc ..

How many rupee millionaires (earnings above 10 lac) does india have ... I read somewhere not more than a lac (counting only people with pan card ) .. people with black money are nursing their wounds anyways ... (Bindaas bhai one of them i guess) ... at 10 lac per annum, how much loan can u get ? I guess not more than 40 .. so whats the affordability at this point ?

I work for an MNC and most of the people in my office already have an EMI ....

SO who are these buyers, that the likes of Bindaas Bhai is betting on ? Is the Black money still pouring in ? but then for how long, affordability is important, infact thats the key .... and some of the smarter builders have realized that ...
For an investors ... I would quote from a previous post ... "Buy Value" .. 50 Lac plus for a 2 BHK in any suburb in mumbai is not value. Period

Anonymous said...

Arre!! Ignore Bindaas Bhai. When he was a child he fell on his head and since that time he has this habit of being delusional or lying...Mother tried to thrash him and improve him but its a bit difficult he is a mental case does not take his meds too..what to do?

He has no property and no job. Just goes around boasting and talking big. He is just trying to fool people. Like I said before ignore him and also stay away from the lies of his friends/property agents you will be a happy person.

-Samajhdar Behan

Anonymous said...

Samajdar Behan,

No more visualisation :-) Good, now work hard, earn money and wait for a crash which may happen anytime in five years.

BTW you'r dream of Chembur house will only remain a dream. Change and understand the new ground realities if you want to buy a house.

Minimum 50% appreciation in 2 years for Mumbai.

Bindas Bhai

Anonymous said...

Bindaas Beta

Well I am retired that's true as I sold my company and called it a quit. May be after 2-3 years will start something new. You are right I am not old when it comes to age. But old when it comes to experience. Its same as when people like you who are physically grown up still have a kid's brain!!! Perhaps your hello namaskar job doesn't require more than that ! Pssting on a forum will not increase property rates. People should be able to afford that.

Whenever you are against the wall you try to hide behind some news article. A true sign of lack of judgement, logic and articulaion. Pathetic you sound in your comments.

You are naive when you feel that some people like me try to stop people from buying. Nothing can be funnier than that. People who need a house try to buy it. Only those who speculate act like you. As far as me dying to buy a property? No chance. I have sufficient space to live. However I am into real estate an I did buy an apartment .. however not in India but in US, not for investment purpose but for living.

Bindaas Beta.. The biggest asset one has is not the houses , stocks ,or gold. The biggest asset is the person himself. Those who invest in themselves rule. Better go study hard, tour places, gain experience and try to grow up. No point working night shifts and torturing your body. I see a lot of my colleagues who find trouble walking in mid 40s. What use ?

Invest in yourself and try to be more mature in your arguments.

Retired Old Man.

Anonymous said...

Bindaas Bhai is either an imposter from Builders or he is some call center person having 70% of his salary going in EMIs. hah ah
Dude your desperration is evident from your words.
I guess Bindaas Bhai went to some Bindaas Tantrik Baba.. who told him to write "50% increase in 2 years" some 1001 times for his troubles.
Guys somebody tell him the banckruptcy consultant address and help end his misery.

Anonymous said...

Hi I am the person who is looking property in Chembur.
If this BLOG says S'cruz is 7 K then chebur must be 5..
I stayed in Goregaon ,parents still have the place and I remember the days when we looked down to the people on harbour line. If I am not mistaken S'cruz was 2 to 3 times of chembur then ( I am considering Kalina to Juhu then)
So why I am not at all getting 3 BHK @ Rs 5000?
In fact due to som issues I am reducing my budget and lookin for 2 BHK around 55 - Peole is this too impossible...

Retd Old Man ,this is mumbai..... 15 years back when people just dremt of 1 crore Rs I saw properties of crore ( My friend used to stay at altamount road ,2500 Sq Ft V Old Building)

And mind well I am on soft lookout but this Crashed & educed Dream rate of 5000 PSF is still a dream.

Anyway my wife bouht a 1 BHK in Kharghar @ Rs 5.5 Lack in 2004....A agent approched us last month @ Rs 17 L Plus( In fact he was iving stories of 20 L which I do not beleibve)


Retired old man are you from mumbai?When you left and went to us?

Anonymous said...

I keep on and off from India n US. The property rates in India are not related on demand supply equation. They are simply ruled by corrupt politicians and Dons and Bhais whatever.

while in US the deals are clean and transactions are very fair. In fact the apartment in US has cost less than that of Mumbai and the infrastructure is far far better than mumbai.

I always preferred investing in countries like US and UK. This India story is a farce to bring back the black money back into India.

The black money stashed abroad does not give any returns. In fact the -0.5% to 1% is charged. So if the corrupt politicians or business tycoons don't invest abroad their money will reduce by 15% in 10 years!!

So what to do? They can't invest that money in US, UK, Europe etc. as the KYC norms are very strict over there. So that money takes FII/FDI route back to India and created asset bubbles in Stock markets and real estate.

Tell me how do you know that FII money doesn't belong to Indians? If that money was so pure why the government is still not doing something about P-Notes. Its only because once P-Notes goes off, everyone will be exposed.

In height of Bulls Run (Oct 2007) a small hint on blocking the P-Notes brought market to hit lower ciruit. this gives all indicationsa that its all black money. Congress govt. has till date not banned P-Notes despite RBI and SEBI recommendations.

In mumbai you have 200K USD pigeon houses with 15K USD annual salary. In US you have 300K USD houses with 60K salaries. India is far far behind.

Bindaas Beta you live in your 200K USD house with filthy stench and mosquitoes. Leave rest in peace. And trust me BPO jobs will be in trouble sooner or later. Upgrade your skills. Because you don't take calls from China you don't know that more than 2 million students in China are in schools being trained to take calls in English. I guess the first batch comes out in 2012. All the best.

Anonymous said...

11:43 Comment by Retired Old Man

Anonymous said...

Old man said..
Bindaas Beta.. The biggest asset one has is not the houses , stocks ,or gold. The biggest asset is the person himself. Those who invest in themselves rule. Better go study hard, tour places, gain experience and try to grow up. No point working night shifts and torturing your body. I see a lot of my colleagues who find trouble walking in mid 40s. What use ?

Old man, pls. read your old post and see the kind of language you have used, infact in this post you are still demeaning a BPO job. The kinds of post you have written in past makes me feel you are not an old man.

The kind of language you have written and getting personal is absolutely unwarranted. I would request you to go thru your earlier post before commenting. This is the first time I am getting personal and i don’t have to prove because my post has always been a reaction to your nasty language.

Not only you there are lots of other people including ladies who have got personal. I have no problem it is finally every individual’s fate. I speak my conviction and experience in this forum, I could be wrong but I have an open mind unlike lot of others over here.

Minimum 50% appreciation in 2 years for Mumbai.

Bindas Bhai

Anonymous said...


refer to your economic times article link on reviving BPOs , I read

Anonymous said...

Bindaas Beta

All my personal comments are against you and you deserved that.

I don't have anything against BPO industry or its people. It is a hard earned money fro those guys.

These are against people like you who don't have a single thread of knowledge and predict future of 2 years ahead. Bindaas Beta I am not old I am just in 40s. But you seem like a person with brains of a 10 year old.

-Retired Old Man

Anonymous said...

can we please stop these personal comments. they do not provide any value. thanks.

Anonymous said...

Hello all-
Let's not discuss Bindaas too much. He has right to his opinions. You can very well ignore them if you don't like them.

No matter who says what, India is on a trajectory for a downward trend. The way stocks have gone up again by like 8000 points to 15K level is another big bubble in the making. When it will fall, it will make a lot of people very unhappy.

As far as housing goes, the prices today are year 2025 prices. There will be a slow decline in prices for 4-7 years till they level out with inflation. A house worth 1 crore would be worth 40 lacs by the end of this burst cycle.

Keep your cash. Cash is king.


Anonymous said...

Hi Retired Old man ----
I am against view of BB and many are , but that does not give you right to ridicule housing condition in Mumbai and say US housing are so great.
Your Quote
"In mumbai you have 200K USD pigeon houses with 15K USD annual salary. In US you have 300K USD houses with 60K salaries. India is far far behind.

Bindaas Beta you live in your 200K USD house with filthy stench and mosquitoes."

More that BB your attitude suck man..

It is started in Austrelia and this treand may come to US too - TO SHOW YOUR PLACE IN WHITE MAN'S SOCIETY - AND IT BELOW THEIR A**.

Yes all is ery best in US - i understand - and you and your children will get best of us - like your son will turn gay and daughter will live-in with nice guys- different guy each day!!!

And someone asked are you fro Mumbai/ Why you ditched the question?

Cool Head said...

The recent Sensex reaching 15000 seems to be a case of all the "hot" money coming home from Swiss banks-since Obama govt is after all these tax havens. Due to this Rupee is also appreciating. Well, someday this trend will reverse (when all the money comes in). After that it seems to be a downhill slide as most companies earnings are/will be greatly reducing these coming quarters. Regarding the RE prices, the same hot money must be flowing into all these empty buildings-otherwise how will these builders be so cock sure about not reducing (in fact increasing) their rates? But ultimately, once all the money has come in AND there are no buyers , what will happen to RE? No idea-difficult to say.

Shriniwas K said...

Everyone please refrain from personal/indignant comments (including the regular people who comment - Vulture, Bhai, etc) or general Trolling

Also the current market rally is tied to the rally in Oil prices and commodities lead by the anticipation of spurt in Manufacturing. Also for the Sensex there is an anticipation of huge disinvestment in India's large PSUs like BSNL, LIC, Air India, Electricity boards, mining, shipping, NALCO, etc by the new McMohan j administration.

Last year's inflation bubble was lead by China preparing for Beijing Olympics and the Investment bank derivatives speculation (the CDS and other artifacts). As a software engineer I don't understand much of this but I am pretty sure that there is no recovery in the fundamentals. The Sensex has shot up way too much in the anticipation for a recovery. The ground reality says otherwise. No long term commitments, no job security, the whole nation is running hand to mouth and over 40 crore Indians are starving. It is shameless to talk about million dollar homes, when the weakest cannot eat a square meal a day. Had India been really booming, there would be at least some sign of rural prosperity and reduction in slums and homeless.

There is no reason for the economy to accelerate. At the same time there is no reason for it to decelerate any further other than our greed and speculation. I do not like the way people jump to conclusions. This time you dont have to worry that you will miss the Bus, after all that bus is going nowhere!

Play it safe - there is neither going to be a free fall, nor a steep hike, unless there is a catastrophic event like terror strikes, some new war, some big natural disaster. Unlike my previous comments there may not be a big lost decade, as the Indian family system rescues anyone going underwater. My humble advice is to make sure you dont leverage too much or put a lot at stake. You only mortgage the house, make sure you dont mortgage your life!

Desi Guy said...

What is the connection between BSE improving and the RE market ? Nothing. This is wishful thinking.

US SEs are improving which has lifted the sentiments in India - India was never in such a bad shape as in US to begin with.

US stock is improving not because RE there has improved dramatically. It is because the feeling is that the worst is over and stability is in sight and there may be recovery by END 2009 or BEGINNING of 2010.

US RE has started showing increase in sales for the past three months. Very good sign for RE trying to reach the bottom. But prices have not improved - In fact they are still falling. But the rate of falling is less marked - Again it is a good sign of stabilization - But price appreciation is yet to come It may take 12 months or more. But at least we are talking about a time line on price recovery.

So why do we get worked up on Stock market increase in Inida? How will it translate into RE improvement? Indian RE bubble was driven by FII money, Black money and Speculators. They have gone out. The bubble is deflating. It has still a very long long way to go to make housing affordable to the actual home owners who would live.

I am an investor - I am yet to see a property in India that can qualify for an investment. I don't bet on appreciation.

Stock market is never a serious factor in our calculation in valuing a property.

I am all for a healthy RE market - but Indian RE has a high fever - It has a still long way to go before it become healthy again.

Anonymous said...

excellent comment

Anonymous said...

Some people are persuading home buyers by constantly hammering with stock market news. Stock market is the leading indicator of economy whereas RE depends on trailing indicator unemployment.
For value investors volatile stock market has created lot of opportunities after bottoming out in 1st quarter of 2009. Now market has reached to another level where it is looking for next direction which could be a correction OR another up tick, till that time it will show horizontal trend only.

Unemployment & wage deflation has eroded the purchasing power of household. The cumulative unemployment is putting more pressure on wage erosion. For NRIs the situation is much worst. Whatever new jobs are coming in market are at much lower rate. One of the friend in US recently got a job at 40% less rate than previous salary. Same is true for Canada, UAE and Europe. Even though Indian economy will improve, from local salaries people can only afford lower segment RE. It means builders are still in trouble with old elephant maintenance.
Housings still have scope for further correction till unemployment rate reach to its peak.
Though liquidity has improved in international market, money is not flowing in household pockets. Household balance sheet is still in bad shape due to wealth erosion, dried cash flows & low credit availability.

Everyone knows who will benefit from RE sale? So you will see more advertising & blogging by RE punters to clear out the inventory. But wise buyers know how to bargain for 50%.

The Market's Formula: A Square-Root Rally

“After nailing a 40% surge since early March, Doug Kass sees "potholes" in the road ahead.”

Why Bernanke is right to be worried

Mr Bernanke acknowledges that, despite the “green shoots”, there are still question marks over which components of demand will kick into gear once the cyclical inventory pick-up runs its course, as it will inevitably do so over the next few months. Indeed, the chairman notes that businesses remain very cautious and continue to reduce their workforces and capital investments.

So guys let it fall then only pick up, minimum 50% price cut is guarantee.


Anonymous said...

A Tale of Two Depressions

To summarise: the world is currently undergoing an economic shock every bit as big as the Great Depression shock of 1929-30. Looking just at the US leads one to overlook how alarming the current situation is even in comparison with 1929-30.
The good news, of course, is that the policy response is very different. The question now is whether that policy response will work.

So guys let it fall then only pick up, minimum 50% price cut is guarantee.


shayna said...

He is one of my favourite correspondents, i've been religiously reading his articles for the last 2yrs. This what Ambrose-Evans-Pritchard has to say on the recent bear rally that some numties have been quoting in support of their analysis............

Merkel's inflationary fretting may wake the bears from hibernation
It is lonely in the diminishing camp of bears, says Ambrose Evans-Pritchard.

Published: 10:11PM BST 06 Jun 2009

Comments 33 | Comment on this article

Those of us who still question whether the world has purged its toxins are reduced to the same tiny band of moaning Druids from early 2007, when we shook our heads in disbelief as the carry trade swept Iceland to fresh madness and bankers laughed off sub-prime rot at Bear Stearns.

We learned then to thicken our skins with walnut juice, lie down in dark rooms, and dissent from Goldman Sachs. Such seclusion is called for once again as Goldman replays its BRIC anthem and raises its oil forecast to $85 a barrel this year, betting that the world will roar back on a tidal wave of liquidity.

Related Articles
Business as usual ? big bonuses for bankers
Savvy Gulf funds question global rally
Banks miss out on wider market rally
Rising reserves of unused oil put strain on storage
This moribund Government has returned to its miserable youthIt is perhaps unkind to mention that Goldman issued a $200 call at the top of the speculative frenzy last year, just before oil crashed, but they have broad shoulders.

Note that Total's Jean-Jacques Mosconi said markets are awash with so much crude that almost 100m barrels (a near record) are stored on tankers at sea. Note too that May electricity use fell 10pc in China's industrial hub of Guangdong from a year earlier. This is revealing, given that China's fiscal boost has reached peak and will fade later this year.

For guidance on where we are in this long-drawn saga, I look to Berkeley's Barry Eichengreen, author of the Great Depression classic Golden Fetters – which avoids the error of viewing the 1930s through a US prism.

He has crunched the latest data with Trinity College Dublin's Kevin O'Rourke for VoxEU, concluding that the global rupture over the last nine months has been more violent than in the early slump. This is logical. Global debt leverage is much greater this time.

The fall in industrial output has been roughly equal to the 1929-1930 stage for Germany and the Anglo-Saxons, but worse for Japan, France, Italy, and Eastern Europe. The collapse in world trade has been swifter: the global equity crash has been twice as bad. "It's a depression alright. The good news is that the policy response is very different. The question now is whether that response will work," they said.

The elastic was bound to snap back, just as it did in the bear rally of early 1931. Whether the underlying economy has begun to heal is another matter. World Bank chief economist Justin Yifu Lin said capacity utilization is running at an historic low of 50pc-60pc. Companies will have to fire a lot of workers. This is where the danger lies, and why he fears that deflation is creeping up on us.

Trade data from Asia are flashing warning signals again. Korea's exports were down 28.3pc in May, reversing the April rebound. Malaysia has slipped to -26pc, and India has touched a new low of -33pc.

US freight data is getting worse, not better. The Association of American Railroads said traffic was down 22pc in the third week of May from a year earlier. Canadian freight was down 34pc.

The American Trucking Association (ATA) said it saw fresh drops of 4.5pc in March and a further 2.2pc in April. Tonnage is down 13pc over 12 months. Bob Costello, the ATA's chief economist, said companies have not cut inventories fast enough to keep pace with declining sales. The contraction in truck volume has "accelerated".

Anonymous said...

Anonymous said...

Anonymous at 10:28 AM Said:

"It is started in Austrelia and this treand may come to US too - TO SHOW YOUR PLACE IN WHITE MAN'S SOCIETY - AND IT BELOW THEIR A**.

Yes all is ery best in US - i understand - and you and your children will get best of us - like your son will turn gay and daughter will live-in with nice guys- different guy each day!!!"

Well this is taking personal vendetta to a new heights by including families. Well you have targetted mine.. but I will not respond to that.

Now coming to that racial thing that is in the limelight.
Let me ask you one thing.. Have you felt racially abused in Australia or US or UK. Perhaps not. And Given a choice 90% of educated class on this forum would give anything for comforts of US or Eurpoe.

You say Aus , UK , US etc are rascicts . But I feel Indians are the biggest rascists. We not only discrimate on skin colour, but caste, sex, creed, Family background, Money, education, religion and what not. In no society I have heard the word 'untouchable' but It exists in India. Even marriages in India happen by looking at Bank Balances.

Check your definition of Rascism.

As for your comments targetted to kids and all. there is only one word PERVERT.

Shriniwas K said...

I already have requested to refrain from personal comments, especially like the one started by anonymous @ 10.28 AM.

Everyone here is coming from decent families and humble origins. We all have endured the crowded bus/local, the rain drenched motorbike rides, the banana peels on the footpath, the dug up roads for cable/water, the flies on our lunch, the 50 rupee recharges, long lines at admission centers, etc etc etc and have fought many battles through life. It is expected that you do research and discuss before you commit your hard earned money for a house.

(If we filthy rich, we wouldnt be debating over saving a few hundred rupees per sq ft.)

About racism, casteism, etc -

Everybody in the world is selfish. So sometimes it converts to racism, sometimes to caste, sometimes to crime, sometimes to revolution and sometimes to war. This blog is not for any discussion other than Real estate. i.e. Tangible asset permanently affixed to land.

As for living abroad -
US, UK+Ireland, Aus, Canada, NZ form the anglosphere which needs variable number of people needing to run day to day business speaking english and Indians fit well in that role. The infrastructure in the developed world is immensely well built. If Indian cities are to replicate even 50% of the infra here, I would see a drastic drop in foreign bound people from India (students or pros). Give me 24*7 electricity and water, 2-6 Mbps affordable bandwidth, less congested, better paved roads and highways, ample parking and comparable security for my family. I would not go abroad. Maharashtra (minus proper Mumbai) and Gujarat and parts of Karnataka and Goa are inching towards better infrastructure. The others will soon catch up, it will take time though! So dont fight on who does what where. It is just one planet and you cant leave that.

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