Thursday, July 23, 2009

Price rise is realtor strategy, not indication of market lift: report

Price rise is realtor strategy, not indication of market lift: report

A July 2009 report by HDFC Securities notes that over the last three months, there has been an average price rise of 3 to 8 per cent in Mumbai. “We believe this increase, by a few hundred rupees per sq ft, is being used as a tool to sway potential buyers to close deals,” it states. It notes that banks providing home loans have reported a significant increase in home purchases and approvals in disbursements have been peaked in the central suburbs.

Between May and July, Kalpataru has increased rates for its projects in Thane, Ghatkopar and Kandivli in the range of 5 to 8 per cent, Nahar for its Chandivli project by 7 per cent, RNA Corp for its Kandivli project by 10 per cent. A few like HDIL and Lodha, which had launched projects at relatively low rates, have hiked prices now, HDIL by 23 per cent at its Kurla and Versova projects and Lodha by 20 per cent at Dombivli.

31 comments:

Anonymous said...

Price rise OR Sales Trick?

Price hike is nothing but another trick to fool panic potential buyers. After having economic positive news, RE punters started spreading the price rise news. Long waited buyers are
thinking that now recession is stabilizing so market will again start it’s bull run. But RE correction is on its way so patience is the only winning key.

Now who is buying?
Even to pay owner’s equity, buyer must have saved since last 5 years. Last 4 years market was good & they were able to accumulate the down payment amount. Now in today’s market condition, it will take substantial amount of time to accumulate the same amount. This assures that there will be much bigger slump in forthcoming years.

Sellers who were waiting for market stabilization are now advertising properties, means more & more supply is coming in market. [Refer the increase in online ads.]

In last 2 quarters we heard news about companies; now see the effect on household. The loan default rates are rising; unemployment is going up, credit card default rates are going up.

Indian State-Run Banks’ Bad Loans Rose 9.9% in Year to March

“India’s state-run banks reported a 9.9 percent rise in bad loans for the year ended March 31”.

http://www.bloomberg.com/apps/
news?pid=20601091&sid=aFpnj2QvzS1Q

Citi sees credit deterioration in India in Q2

"Card net credit loss rate increased to 6.0 cent from 3.4 per cent in the prior- year period. Credit deterioration was particularly apparent in the card portfolios in India and Korea," the firm said”.

http://economictimes.indiatimes.com/Economy/
Citi-sees-credit-deterioration-in-India/articleshow/
4790560.cms
So guys let it fall then only pick up, minimum 50% price cut is guarantee.

Vulture.

Anonymous said...

Realty April-June net seen slumping as sales dip


"Mid-cap real estate developers are expected to show a slump in sales by half to as much as 90 percent in the June quarter, as home buyers
stay clear of purchases, according to a poll of brokerages".

http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-April-June-net-seen-slumping-as-sales-dip/articleshow/4807590.cms

Vik said...

Lots of frustrated sellers seem to dominate the comments sections. As of now I'm scouting for properties in Mumbai and after speaking to brokers I've come to conclusion that the cash is king. Some property rentals have dropped 50% from a high of 1L to 50k. Free money has left the system. There is lot of cash still there but there is lot of fear. People are reluctant to spend more then 30-35k for rentals. Corporate rentals are very limited. Landlords are living in 2007, however many are coming around.
If you talk to a real estate agent, just drop prices by 50% for rentals and 35% for sales. There is enough inventory in the market to cause property to drop 30%.
Check magicbricks.com and look for individual sellers instead of agents. Indiviual sellers are selling at 30% discount to real estate agents. If you have cash, you are the king.

Since am in Mumbai with my ears to the ground, I see zero activity for properties quoted more then 8k.

There is a market for sellers who own apartments older then 28 years since the BMC redevelopment plan is gaining a lot momentum.

Every other building older then 30 years is looking at builders so there any existing apt owner will see an upside of minimum 25% of carpet. So a property of 60L current value can easily be worth 80L once the new building comes up. This is the new cash cow for the builders, however it is a lifeline to residents of older buildings. I see many buildings in my area who have the BMC warning for evacuating premises due to the unsafe building structure. I will make a new post soon on what I see.

Anonymous said...

In 2005 my colleagues in the US used to say that I've been priced out of the market as the property prices almost tripled in our area. One guy who used to work for me bought 6 houses and said that he knows how to do business.

I insisted on my gut feeling that it wasn't real and listened to all bad things for me as I wasn't buying and couldn't afford anymore from my colleagues, family and friends till 2008 end.

FInally, I bought a house at my price, 50% lower than 2006 peak price. All my friends and relatives now say that I was the smartest and many have even declared bankruptcy as they couldn't aford payments or didn't want to make payments on houses that have decreased in value.

In the duration from 2005-8, I saw builders and realtors coming up with all gimmicks like free options, cars, vacations etc. with new houses. Moreover, media and ads were in plenty toallure buyers and the Govt. had interest rates lowest in the history. Still the market collapsed and is still going down in many parts of US.

Now, someone compare Indian market to US. I know people in India talk about black money and other points to convince them. Well, black money would be lost the way it was stolen. All people dealing in black must know that it is stolen money from the Govt. of India. Someone in the last blog said Jai Hind etc, well, why do you steal from your own country when you really love it.

Pay proper taxes and do dealings in white money. Black or white, prices will go down by 60-70% in 2-3 years.

Anonymous said...

http://www.livemint.com/2009/07/22213217/Developers-move-to-new-project.html

Bindas Bhai said...

Vik said...
Lots of frustrated sellers seem to dominate the comments sections. As of now I'm scouting for properties in Mumbai and after speaking to brokers I've come to conclusion that the cash is king. Some property rentals have dropped 50% from a high of 1L to 50k. Free money has left the system. There is lot of cash still there but there is lot of fear. People are reluctant to spend more then 30-35k for rentals. Corporate rentals are very limited. Landlords are living in 2007, however many are coming around.

Vik you are right the rentals have dropped. I have a spare house in Chembur/Deonar (Raheja Acropolis) which i had extended lease for one more year on March this year,(earlier lease was 40k and i had to renegotiate to 30k this march) On June 16th the tenant requested to terminate the lease. The reason he gave me was that he had brought a house in Raheja for 10k. I believe him.

People are buying houses instead of leasing. Govt across the world have printed currency to avoid recession. Old Money which was sucked out as well as the freshly printed money is slowly flowing into the system Globally. It is just matter of time there will be excess liquidity. All asset class be it Gold, Equity, RE or Commodity will shoot up.

People sitting with cash will cry in coming months. Kindly do not abuse me if you dont like my comment. Pls. ignore my comments if it does not suit you.

I would request all the bulls and the bears not to abuse and spoil this forum.

Vik, you are doing a fantastic job and would request to continue.

I would request people to do actual ground work and not to believe anyone. It always pays if you take an informed decesion.

Bindas Bhai

Anonymous said...

Thank you BB for coming back.
To keep this forum focussed we need to keep it clean. Dont misuse democracy

Anonymous said...

Liquidity and purchasing power is the crux of RE movement. We all need to do some work on this I am no expert and would request people to contribute to this forum so that people can take home something valuable.

I would also request the forum to give more details in and around the area the current price trend. Kindly be more specific and also genuine. I am quiet sure in comming times we can take informed decisions instead of speculating and being emotional.

We need to help people who are looking at buying or selling to get fair deal and only then we can truly understand the dynamics of Market.

Chembur before the election results were out around Diamond garden area the prices had dropped and was ranging between 8.5k to 9k,(peak 12k) today the same is at 10k to 11k/.

If anyone knows more about chembur pls. contribute with specifics.

Shubam Builder have launched two new projects at Chembur one opposite St Gregorious School, second near AFAC school and he quoting 10k types. pre launch price was 9.250k

Pls be careful of this builder as your project can get delayed indefinitely, this fellow likes to over trade. He gives lovely interior but his project near UTI bank is a total sham the construction is pathetic.

Just thought this piece of information could be useful to our readers.

Bindas Bhai

Anonymous said...

Here we go again about Chembur!
what I know :
new project near Mangal anand hospital chembur naka quoting 9k its just started construction.
some under construction buildings near station 7.5k, under const single building in diaomond garden 8k.
Ready buildings more 1-1.5k more.

when is this bubble going to burst !

Anonymous said...

All I can say is Patience and Cash is King!

Excess money printing will not destroy your cash value..excess money printing is being done to restart growth. But this is a mistake and globally noted economists have laughed at this approach by governments.

All this money printing will only result in a small bump before we start seeing the decline again..the pain is still not over and we will see US and Europe faltering soon. The decoupling theory and domestic consumption theory has been debunked. So its a matter of time before India and China follow suit. China especially will be hit really hard..Indian Realty is a soap bubble and a pin prick can burst it.

No use buying something at 20% discount when the real value is at least 50% below if not more. Chembur is a garbage dump..avoid paying a lot of money for garbage.

Anonymous said...

Let us talk about Inida no point in ranting about US & Europe. Todays paper is talking about 6.5% core sector growth in India.

We must talk about India and not get carried away by other countries. I do agree it makes difference but how much is the question?

Anonymous said...

You want to talk about India:
Okay: how many people live under poverty?
how many people can really afford loans?
how many people depend on jobs created by the US and Europe?
hoe many people who are really buying are in MNCs?

Do not trust media. Follow your instinct. Media is paid by interest groups and ads.

India would be losing jobs in great numbers, salaries would be slashed and money would evaporate from the market. Why? Because of US and Europe. You cannot isolate India from the World scene. If the growth is global, losses are also global.

Anonymous said...

Anon:7:52
India would be losing jobs in great numbers, salaries would be slashed and money would evaporate from the market. Why?

I know naughty boy because you want to buy house :-) smart boy.

Recovery has already started as per all the media. Let us wait n watch.

Anonymous said...

Excess Money Printing Sermon?

This is a typical sermon given by Fund Managers & we also listen every day.
Is this the home work?
Have they told you when it will happen? Today, tomorrow?
US has printed large amount of money, still why US RE didn’t find it’s bottom?

Definitely the excess liquidity in the system is not a concern for a year. Looking back
at past excess liquidity has lead to the current crisis. People, who couldn’t afford, bought
the properties at unrealistic prices because foolish lenders were available.
If you are still not convinced, please lend me some from excess & I
will bet on RE. If prices go up, I will book profit if it goes down keep it as collateral.

In any recession, businesses first feels the heat then household. In current phase
businesses are adjusting with cost cutting & household is feeling the heat [unemployment
rise, default rate rise].As RE is directly dependent on household, now it is getting real
beatings. There may be some movement in market due to people who are sitting with
cash since last 2 years, but after this capitulation there is a long stagnation period to go.

If 9% domestic GDP growth didn’t support RE, how 6% growth will support it?

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

Vulture.

Anonymous said...

Vulture,

GDP growth it 6% or 7.2%?

Anonymous said...

Anon @5:24

I'm not interested in buying a house in India as I left India 17 years back. I need one house for my family and I've that in UK where I live.

After seeing housing bubbles in Spain, South Africa, France, Australia, Canada, USA, S. Korea and many other places, I put in 2 pence of my thoughts that India is also in a massive bubble.

Bte, see news from South Africa. There is massive recession and a civil unrest has started there. South Africa was one of the most high housing bubbles countries.

Anonymous said...

Here's the first couple of paragraphs of an article:

"Till a few months ago, IT professional TV George was earning Rs.70,000 per month, plus perks. But after losing his high-paying job, and being unemployed for three months, George, 31, has started giving tuitions in mathematics and physics to aspiring engineering students in his neighbourhood.

"Now, I am earning Rs 15,000 per month. It's been hard. I got married only a few months before losing my job. So, when I lost my job, I was in a difficult position. Thankfully, I had some savings. With the savings, I am paying my rent and for a few other necessities," George, who was employed with a top US IT company, told IANS.

"After losing my job, I tried my best to get a new job. But I remained unlucky. So to help run my home, I decided to give coaching classes to aspiring engineering students."

George is not alone. Recession has hit the IT sector in Bangalore, with scores of techies losing their jobs. Some have been forced to take up low-paying jobs as they wait to bounce back when the recession ends. Dipankar Dutta, 27, working with an Indian IT company as software engineer, lost his job almost eight months ago.

Today he has a job, but as a content writer in a tech firm"

Read the rest of the article at the link below:

Recession-hit Bangalore techies settle for low-paying jobs

Cool Head said...

The rents have really crashed in Thane. On GB Road, the epicenter of the current bubble, before its started slowly fizzing out the builders were increasing rates daily and were arrogant. 2 BHK flats were being sold for any thing like 25- 30 lakhs. The area has pathetic public infrastructure (except the big GB Road). Now the rentals for these 2BHK has come down drastically to Rs. 5000 pm! Imagine, you can stay in a 30L priced flat for a measly 5000 pm.
The renters are having a field day, as there are simply too many owners hunting for renters to take off partially the pressure of meeting the EMIs.
Also those who say the rates have not dropped please refer to the TOI Property Times Saturday rates published by Narains. These current rates are definitely much lower than what used to appear earlier with a further "small print twist". It says the present LOWER rates are for CARPET area. This means if the earlier higher rates were for built up/super built up area and the present lower (at least 20% lower) rates are now for carpet the actual fall has been more than 35% at least!

Anonymous said...

18,000 People On The Bench At Infosys

“[The] problem is, all of these initiatives are expensive. If the global economy doesn’t bounce back in a year or so, India’s outsourcers could find themselves saddled with legions of employees who have little to do. Infosys offered jobs to 18,000 college graduates last year and plans to hire more this year. But with scant work to give them, the company is doubling the length of their training to six months and assigning them mock projects to hone their skills. Though that’s not cheap, Infosys says it’s worth the investment.”

Read the full article here from Business Week: India’s Outsourcers: Using the Slump to Get Bigger.

I can’t help but wonder what these 18,000 people are doing! Are any of you out there who can enlighten us?

http://www.sramanamitra.com/2009/07/26/18000-people-on-the-bench-at-infosys/


-- Kannan

RE-Search said...

Chembur again!

For Raheja Acropolis, unless the guy bought in Avalon or other Phase I buildings, the rate of 10K is possible, but not in Phase II which was at 7250 in May-June. At this rate, brokers were getting 2-4% commission too.

In terms of new launches, Hiranandani had launched Maitri Park (redev) at 14k. Construction is on.

I went and inspected HDIL Galaxy in Kurla East a couple of months ago. The project is in a place called Kasaiwada, and the approach road is simply the best that I have ever seen since Michael Jackson's thriller video.

Also, not sure if apart from the abundant slums, people are aware that the Mithi is just a stone's throw away.

Anybody heard anything on Runwal Capitaland - Orchard Residency?

Anonymous said...

Hi above,

as far as I know, only the last building Aphrodite is at 7.2k, the others in Phase 2, ie. adonis and augustus are quoted as 8.2k plus floor rise by the investors. Have you got better rates from the dealers ?

Will find out about Runwal Capitaland - Orchard Residency and post here.

Anonymous said...

@RE-Search,
Kasaiwada was till recently a sort of no man's land (no ordinary man ventured there). It is actually a butcher colony (hence the name kasai- wada) that has a lot of illegal abbatoirs. When I was a kid, during the Mumbai riots it was said that even the cops were afraid of venturing there.(I used to stay near Sion, about 4-5 Kms away). Apparently it was very easy for the goons to make somebody "disappear" amongst the pile ups of cut meat and skinned animals.
I am amazed that this is that HDIL's location! I always thought it was near the old Premier Automobiles near Kurla village ( a far far better area).

RE-Search said...

Anon @2.04

ur absolutely right, I was referring to Aphro..

Will wait for info

Anon @ 2.31

That's HDIL Premier Residences, another project.. the PAL factory, next to Kohinoor City.

Anonymous said...

18000 ppl on bench next year is not a big number.

TCS has around 40000 employees on bench, NOW.
I work in TCS, chennai and the figure quoted is absolutely correct.Anyone working in TCS will know it.

And the trouble is, if these 40000 employees do not find a project in the next 6 months, they will be laid off.A lot will depend on the first six months of 2010.

The future is either status quo or layoffs. Neither of them seem attractive.

K.Gokul

Cool Head said...

@ Gokul
That's a very high figure (40,000)! What is it in terms of percentage amongst total number of "productive" employees (not counting the administration/finance/etc functions)? About 25%? Since in a software company these people are the machines, it means capacity utilization of TCS is only 75% or so? Or are the figures even worse?
I a traditional manufacturing type firm, a capacity utilization rate of 75% is not so bad (unless the breakeven is too high like 80-85%).

Anonymous said...

@coolhead

The TCS bench figure in percentage is a tad over 30%.Everyweek we see a few people missing.Maybe they leave because they get another job, but I doubt it.

The procedure is you would be called to HR and given a choice.You can either resign giving a resignation letter dated a month before and stop reporting to work from the next day. Or you will be fired when they will give you a month notice.Mostly people do not want to be fired, so they give in and go for thw first option.

As I said, things are are far from pretty.Its time to tighten the seatbelts and brace yourself for a hard ride, the outcome of it,uncertain.
The first six months of 2010 is quite scary. If things dont improve, a lot of people are going to be laid off. A LOT.

K.Gokul.

Cool Head said...

@ Gokul
Thanks for the info.
That's really bad and sad.It must be really scary to work with a sword of Damocles hanging over everybody's head.
You never read any such things in the mainstream media. Instead,
I read today the FM has announced a stimulus package for RE where a person can get a 1% rebate on interest provided value of house is < 20 lakhs. Too little too late.
If the creditworthiness of the loan taker is itself under a cloud the 1% rebate is meaningless.

Anonymous said...

Actually speaking, the 1% rebate announced by the Govt is not bad or corrupt as people are making it out to be. It is an indirect nudge to the builders to reduce the prices to below 20 lakh so that people will be eager to buy alongwith the 1% subsidy sweetner.

But are the builders lowering the price...That is a different question.

--Jumble

Anonymous said...

Hi
Have 50 L + max 15 L Can bearranged
In chembur,Deonar 3 BHK possible with 2 parkings??
BB & VIK following this blog for almost an year - N other ppl
Have not seen drop as expected!!!

BB think u r right about chembur.. anyway runwals new project si 10 K plus!!~

naz said...

I'm planning to buy a bedroom house in HDIL's Premier residences. Is it a good place to stay..I mean are there slums around the place. I read somewhere that they are builing houses for the Slum Rehabilitation people around the same area..is it advisable to buy house there?

rajni sharma said...
This comment has been removed by the author.