Thursday, October 08, 2009

AP and Karnataka Flood relief

While we can endlessly debate the pros and cons of buying real estate and blame the politician-builder nexus and black money on the irrationally high value of real estate in Mumbai and metro cities, I think it is time to pay attention to the calamity which has unfolded in AP and Karnataka. These areas went from having a deficit of 60% in the annual rainfull to a surplus of 100%. The images on the temple town of Mantralayam in AP, the samadhi of Sri Raghavendra Swamy are surreal. I hope there are some readers which can spare a thought for the millions of Indian's which have been rendered homeless due ot these floods. Katrina looks like puddle when compared to the bay of bengal which seem to have descended on land-locked interior AP and Karnataka. The Kanrataka CM has a relief fund and so does AP. Please contribute generously and banish the thought of mis-appropiration of these funds. We all know about how corrupt the process is when buying real estate. Here it is a drop in the ocean(pun intended). I've already done my part, now it is your turn.

34 comments:

Anonymous said...

Roubini says housing market hasn't bottomed
On 12:16 pm EDT, Thursday October 8, 2009

NEW YORK (Reuters) - U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday.

Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said massive losses in commercial real estate loans will add to the problem, forcing banks to raise more capital.

"The stress is moving from residential mortgages that are still in deep trouble, to commercial real estate, where they are just starting to recognize that they're going to have massive, massive losses ," Roubini of RGE Global Monitor told reporters after a presentation for a World Economic Forum report on the global financial system.

One of the main risks next year may be from losses on some $2 trillion in outstanding commercial real estate loans, the economist predicted.

Anonymous said...

No offence but Katrina death toll was 1800+ and AP/Karnataka flood death toll is estimated at 300 so far (hopefully it does not increase much further). 1 million were displaced by Katrina and 2.5 million by the AP/Karnataka flood. I don't think Katrina qualifies as a puddle using these numbers.

Preeti said...

Dear BB,

What level you think Chembur will reach and when do you think it will crash?

Anonymous said...

Hi
Vashi Hunter Here
Looking at 2 to 3 BHK in sanpada and palm beach
Can arrange 47 lack white in 1 go ( No bank loan) but NO Black

Can pay 2% Commission to agents

Need all title clear flat,cidco tender plot built...already rejected Moraj Residency
No Ground floor NEED 2 parkings least 1
Sellers Dealers welcome..

Mail - mumbai10000@gmail.com

Anonymous said...

Folks,

Sundaas Bhai posting more shit under the names of preeti and vashi hunter...

Kindly shut your nose and step around it...

:)

shailesh said...

Our thoughts and prayers to folks affected by floods. Request to everyone to do whatever they can to help out.

shailesh said...

Bank credit growth needs to accelerate, says Parekh

We didn’t find too many real estate firms in our top list of winners this time around. Do you think the worst is over for the sector or are you still uncertain?

I am still a little uncertain, I will tell you, on the real estate sector and I am convinced, I have gone around the country to big cities, and my view is that commercial real estate is very surplus today. I was in Hyderabad last week and I saw 4 million sq. ft of commercial real estate...completed and ready to move in, but no takers.

Unsold?

Unsold and untenanted. Similarly, the figure is slightly lower in Bangalore and Chennai, but even in Mumbai, in Pune, you find ready buildings with very few takers.

Do you think the markets are ahead of themselves?

The markets are ahead of themselves, the volatility in our markets has significantly increased... the increase in markets has been too fast and I don’t know whether it is sustainable.

shailesh said...

Buy or rent a house? How to decide!

Another BS report by rediff.

shailesh said...

‘We can help India with infrastructure’

“It took me two hours to get here from the airport. It is confirmed. You have lousy infrastructure.”

This is not just another foreign visitor grumbling about the roads in Mumbai. It is the first impression of the Deputy Prime Minister of Thailand, Korbsak Sabhavasu on his first visit to the city.

The Thai deputy PM was in India to discuss possibilities of increasing bilateral trade between India and Thailand. He was in New Delhi on Wednesday and in Mumbai on Thursday.

“Things need to be done here and you can’t do it alone,” said Sabhavasu, addressing a gathering of businessmen at the Taj Mahal Hotel in south Mumbai on Thursday. “(Industries) Minister Kamal Nath said he is looking for help on better infrastructure. We can do just that for you.”

Anonymous said...

Shailesh,

Even Mauritius or Maldives can help India with Infrastructure.

The problem is not planning or execution but rampant corruption and abundant buffonery at the administrative and governance level. The reason for the existence of these cretins are policies of socialism, nepotism and demagoguery...

That is the problem someone needs to help India resolver..the rest we can take care of ourselves.

Shriniwas K said...

I actually belong to the SRS Mutt monastery. I am donating relief at the local Arizona Mutt. AFAIK, the breach warning was issued for the last 10 years. I guess the embankments have been weakened due to heavy dredging of shores for sand for construction purposes. So I guess this post does pertain to the Housing sector ...

Anonymous said...

Foreclosures mark pace of enduring U.S. housing crisis
REUTERS Thu Oct 8, 2009 11:18am EDT
By Tom Brown


MIAMI (Reuters) - Every 13 seconds in America, there is another foreclosure filing.

That's the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.

There are more than 6,600 home foreclosure filings per day , according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.

If anything, the country's worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment.

In congressional testimony last month Michael Barr, the Treasury Department's assistant secretary for financial institutions, said more than 6 million families could face foreclosure over the next three years.

"The recent crisis in the housing sector has devastated families and communities across the country and is at the center of our financial crisis and economic downturn," Barr said.

A September report by a foreclosure task force appointed by Florida's Supreme Court pointed to a shift in the root cause of foreclosures: "People are no longer defaulting simply because of a change in the payment structure of their loan. They are defaulting because of lost jobs or reduced hours or pay."

A recent pickup in sales and home prices in some regions has been heralded as a sign that the crisis in residential real estate may be close to bottoming out, after the steepest price decline since at least 1890.

But nearly half of recent sales have been attributed to foreclosures or "short sales" at bargain-basement prices.

Anonymous said...

Indian Residential property prices rise 15%

http://www.marketoracle.co.uk/Article14114.html

Anonymous said...

This may be the last 'fall season' for India Inc
10 Oct 2009, 0606 hrs IST, ET Now

http://economictimes.indiatimes.com/news/news-by-company/earnings/This-may-be-the-last-fall-season-for-India-Inc/articleshow/5108680.cms

Anonymous said...

House that! Realty deals go through roof
Rajiv Shah, TNN 10 October 2009, 05:26am IST

http://timesofindia.indiatimes.com/city/ahmedabad/House-that-Realty-deals-go-through-roof/articleshow/5108585.cms

Anonymous said...

Office rentals stabilise as biz confidence revives
9 Oct 2009, 0023 hrs IST, ET Bureau


http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Office-rentals-stabilise-as-biz-confidence-revives/articleshow/5103755.cms

Anonymous said...

Residential realty prices moving up
Prabhakar Sinha, TNN 9 October 2009, 01:11am IST

http://timesofindia.indiatimes.com/business/india-business/Residential-realty-prices-moving-up/articleshow/5103968.cms

Anonymous said...

Indian commercial realty gaining ground: CBRE
on Oct 9, 2009


http://www.constructionweekonline.in/article-5587-indian_commercial_realty_gaining_ground_cbre/

Anonymous said...

In India all the thieves (real estate builders) in collusion with the dacoits Banks are running amok and taking the home buyers for a ride. There is no accountability because they have the patronage of Reserve Bank of India and corrupt political system.

Please check below YouTube video to know how in USA, the government system is held responsible and exposed in the Public.

Alan Grayson: Is Anyone Minding the Store at the Federal Reserve?

Going forward, expect more questions about the abuse of cheap money. This will lead to a cleansing of the system and burst of all bubbles.

Cool Head said...

@Anonymous 5:34 onwards to 05:41-you same to be the same person giving links of Times Group newspapers that say that realty prices are going up. Everyone knows that TOI group is heavily into promoting builders, so nobody believes their realty news anymore. Whatever they may say, in Mumbai and Thane there seem to an awfully large number of buildings that are complete but almost empty and many more that are "under construction" but hardly any work seems to be happening. It appears to be the final breath before the whole thing keels over and collapses, perhaps by the end of the next quarter-the time is not far off it seems...

Anonymous said...

Repost - Crooked Banks

There has been a lot of talk about the nexus between builder & politician. These are petty criminals but the bigger one is out of sight. Let’s explore the nexus between bankers, brokers (real estate developer/company) and government machinery.

During the boom period (2001-2008) the prices of the assets most notably residential/commercial real estates (lands) zoomed.

In spite of knowing that it was a speculative bubble, the banks lent the money loosely. So why did the banks take the massive risks? There comes "Moral Hazard" into picture. The party which is taking risk knows very well that there are high chances of investment going bad but should it go bad, it would pass the risk to somebody else.

Lets take the example of a project. The bank manager sanctions a big loan to the developer. The bank knows very well that the valuation quoted by the builder for the land doesn’t justify the actual value also the assets if at all pledged by the borrower doesn’t hold a real value. The bank takes a risk. The builder starts a project. Now the speculators who have made a killing in the stock market will put notional money and buy the flats. They constitute about 50-60% of the buyers. The speculator is going to flip the property once he finds a gullible home buyer. The builder advertises that 50% of flats are sold out and trap the genuine buyers. All goes well. The real problem here is that now the home buyers which bought the overpriced flats will work throughout their life to repay the loan. They are the one who are going to make sure that the gamble played by the Bank is awarded handsomely.

Now reverse the case. The bank has sanctioned a huge loan and builder (real estate company) launches a project with grandiose claims about the amenities and finds that there are no buyers in the market. The bank goes panicky and starts demanding the money back. The builder tells the bank that he has already spent that money on purchasing some other land instead of using it for the intended purpose. So the builder offers to return the land. Make no mistake, the bank is not fool because it knows very well that it will get only peanuts for the foreclosed property. (the Bank is already having a few foreclosed properties and has incurred heavy losses.) One more reason why the banks can’t accumulate the foreclosed properties is that if it brings all the foreclosed properties at a time in the market it will further drive down the prices. So it takes a calibrated approach. Introduce a few properties a time and taste the blood.

So the bank gives leeway to the builder and converts a short term loan to a long term loan. This does soothe the headache of the borrower but plants a long term residual pain. The bank has pushed the risk for the time being and will explore other avenues e.g. teaser rate. The banks will come up with new loan product of very low introductory to sucker in new buyers. So this is not the story of a single builder and there are multitudes of them. The bank will request the Central Bank (Government Machinery) to lower key rates e.g. CRR, Repo rate. Forget about the lowering the interest rates of the existing borrowers.


Now the central bank doesn’t have to deal with the single bank which has taken a massive loan. -:)

So the builders, politicians are just the pickpocketers, chain snatchers compared to the Banks aka Dacoits.

It will be interesting to know how far the crooked banks can help their real estate friends.


-- one sincere request lets not spend our hard earned money to pay for the risky gamble played by somebody else...

Anonymous said...

@Coolhead,

I have a sneaking suspicion that those links from EcoTimes and TOI etc...have been posted by Sundaas Bhai incognito.

Same shitty modus operandi...Will not be surprised if another Anon like Vashi Hunter comes up and claims responsibility or derides you and me..or Sundaas Bhai himself shows up all innocent looking..moi??!! mea non culpa...etc. etc..

Anonymous said...

Can Real Estate prices Crash 70%?

http://www.moneycontrol.com/news/mf-experts/can-real-estate-prices-crash-70-_418221.html

Anonymous said...

Home buyers who have booked properties this calendar hoping they would get their homes in the next two years may be left disappointed.
That's because real estate developers have used up the money paid upfront by home buyers to repay debt rather than to build houses, a senior research analyst from an international institutional brokerage said.

insightfully article from DNA - link to article which pls don't expect such views from TOI (Toilet paper of India)

- Anil

Anonymous said...

Whenever there are issues and problems media jumps in (with their capacity most of the time to help society) but seems it is also being exploited by many prominent media houses in exchange of ad revenue and their other interests. When I follow CNN Money they gives true pic of economy and their reporters are seen, known and regular and accountable to their profession as compared to here in Indian context. Well, this kind of Sponsored journalism is not new and we have been observing since long especially in politics but its working actively in core issues where common man is struggling such as their basic need of housing. many times I have written about our TOI (you know what I mean) but other media is not behind.

I would add media in well know three word term builder-politician-banker-media. Its just matter of time when social media will challenge this age old monopoly which in fact happing in form of blogs, social networking sites etc. Most of Newspapers in US and western world is already started seeing record decline in circulation. This I suppose should be a wake up call for them.

- Anil

Shriniwas K said...
This comment has been removed by the author.
Shriniwas K said...

@Anil - I totally agree. The news media is becoming desperatenow to make money. People (at least smart people) have Stopped relying on the Media for deciding major decisions. With the Internet, all controlleed media has become irrelevant. It is only used for morons who dont know how to use technology. To be honest you can learn much more from blogs, peer to peer groups, forums and from people on the ground doing actual construction projects etc about property rates etc than the media. Print media is already dying in USA and almost every major newspaper in US has shut shop or moved to online only version. In India the 300 crore educated and middle class will soon stop buying newspapers - then Toi will automatically die... The days of powerful media barons are over ... So stop worrying about any channel/newspaper. Just do the ground work and stick to real information from credible sources.

For example Ravi Karnadeekar from Pune has done a fairly good job tracking new projects and status of existing ones in entire West.
Pune

http://www.ravikarandeekarsblog.blogspot.com

Anonymous said...

Why prices will fall. This paper is really good and not like Toilet paper of India.

http://epaper.dnaindia.com/epaperpdf%5C12102009%5C11business-pg6-0.pdf

Anonymous said...

Cheers!!!

Aug IIP hits double-digits; at 10.4% vs 6.8% MoM

http://www.moneycontrol.com/news/economy/aug-iip-hits-double-digits-at-104-vs-68-mom_418997.html

Bindas Bhai

Anonymous said...

Homeward Bound
The real estate buzz is so loud that you could not have missed it. Go ahead and buy if it’s your first house. But Wait, if investment is your purpose
Pankaj Anup Toppo , Anagh Pal , Tejas Vahalia , Kavya Balaji

http://money.outlookindia.com/article.aspx?262039.

Bindas Bhai

Anonymous said...

Avant garde
The Rules Of Realty
Buy your first home as soon as you can and don’t bother about its real worth
Mohit Satyanand
PRINT SHARE COMMENTS



One of the more frequent questions I get asked is, “Is real estate going up?” The truth is, I don’t know. But that’s not how I typically answer. Instead, I ask a question in reply: “Why are you asking?” The other question I could ask is, “Over what time-frame?” Those two questions, in short, set my perspective on real estate—the nature of your interest in real estate and your time-horizon. Let me explain.

Real estate in urban India is an excellent investment and will continue to be so. India is one of the least-urbanised countries in the world, but that is changing fast. Urban planners project that Greater Delhi, for example, will become the largest city in the world by 2020. People make more money when they interact with each other, and the infrastructure of cities makes that possible. The desire to move to the cities is virtually universal among our village youth. If you plan to spend the bulk of your active life living and working in urban India, put money down for a home as soon as you can. EMIs and other terms of the housing loan industry will, I hope, ensure that you do not overextend yourself. If you are married, and both of you are earning, make sure that the monthly payments will be covered even if you plan to have a child soon, and one of you then take a longish break from work.


Investment in real estate are indivisible. To invest your spare cash, find a less stressful vehicle


The first house you buy may not be the home you would like to have when your children need more space for themselves; but don’t wait till you can afford that dream home. One or two upgrades in the course of an adult life is par for the course. So, real estate offers great returns. After I have acquired my own home, why not invest in property as a retirement fund? In the best-case scenario, it works. Irrespective of the swings in property markets, thanks to the macro scenario in India, the property will eventually fetch you a good return.

In a growth market like India, unless you pick a real dud, investments in both real estate and listed companies usually pan out, and offer comparable returns. But, price cycles in Indian real estate are pretty long—12 years or so from peak to peak, or fi ve to six from top to bottom. If you need to cash out of real estate when the markets are dropping, fi rstly, you are looking at a substantial loss; secondly, when prices are dropping: you could wait for months before you fi nd a buyer, even when you are willing to take the market price.

The second problem with real estate investments is that they are expensive and messy—expensive because registration fees are high; messy because titles are not clear, real estate developers never deliver on time, and the brokers, the less you say about them, the better. I have been intimately involved with at least 10 real estate deals in the last as many years, and all except one had my blood pressure way out of control. In contrast, want to sell equity worth one thousand, or one crore? Make a phone call or press a key on your keyboard. Within 48 hours, the cash will be in your bank account.

Which brings me to the last point—if you need money, investments in real estate are indivisible. Meaning that, if you have a crore in shares, you can withdraw one lakh or fi fty with equal ease. But, if that same amount is invested in a fl at, and you need, say Rs 20 lakh, you need to sell the property, incur the selling costs on the whole amount, and then fi nd a lucrative way to reinvest the amount not immediately required. In other words, ignore the ups and downs of real estate prices. Buy your fi rst home as soon as you can, and don’t bother to fi nd out ‘What it is worth’.To invest your spare cash, find a vehicle that is less stressful.


http://money.outlookindia.com/article.aspx?261979

Bindas Bhai

Anonymous said...

Sundaas Bhai,

This joker you are quoting is really confused. First of all I don't know why he should be treated as an expert and what his claim to fame is...

Secondly, India being urbanised and growing to trillions of dollar economy etc..never justified the fantastic prices being quoted. Its a story and what we are getting sold is emi slavery. When one is shown the golden peacock as a reward one also needs to ask the question - what is it that I am committing?

What will be the price in 2020? Will we be alive? What will our needs be? etc. etc.

Then he goes onto state the obvious that if you commit money for buying a flat you could end up with an heart attack and your family could end up in the streets...when interest rates shoot up and you realize that you have lost your job plus the dream home to foreclosure..That is a high probability outcome too. Or you might survive but realise that the fancy price you paid for your house did not survive plus you have zero savings and the cost of interest rates going to 14%, maintenance, property taxes, misc. headaches etc..have been wearing you out, so after 15 years you wish you had not taken the overhead of this white elephant. If only you had waited 2 years more you would have been able to pick the same flat at the bottom and you would have had savings plus been free from EMI in 10 yrs instead of 15..


Finally this joker you are quoting goes on to say all the reasons why investing in houses makes zero sense. Why? The returns probably do not even beat inflation!! and how illiquid it is...

But in the end he says go buy a house!!! man, is this moron confused. Maybe he is as shitty a character as you? Just trying to pump the market and sell gullible middle class people at the peak...Trying to make your crores by robbing innocent hard working people? Shame on you! But then you are Sundaas......

Anonymous said...

Thank you @ Anil (11:08 PM) for the link to the eye-opening article. Below are the snippets

~ Interestingly, this outstanding amount includes an interest expense of Rs 200 crore -- the same as the company's earnings before interest, tax, depreciation and amortization.
This means, whatever money the company earns will basically go towards servicing the interest on the debt, the analyst said. "How will they go around building property, for which they have already taken money?"

~ "One way is to sell their land bank, but they haven't been able to find any buyers for that," the analyst added. Talk about Ponzi schemes, wherein money brought in by new investors is used to pay off existing investors and no business model whatsoever is in place to generate returns on the funds collected.

~ Going by analysts, the situation is the same for a number of real estate developers.

~ If Indian government wouldn't have come to the developers' rescue, then some of the listed players would have had to file for bankruptcy. The real challenge now in real estate would be the next two years as now they have to tide through the market purely on the strength of selling.


So by all means the Real Estate has collapsed and is almost dead. The Government of India and QIB (Qualified Institutional Buyers) are administrating the dose of morphine to the zombie. Let these QIB burn their cash because most of the builders are using the money to pay the debts and new revenue is drying up.


Collected the following information about the QIP

What is QIP?

Qualified institutional placement (QIP) is a capital raising tool, whereby a listed company can issue equity shares,
fully and partly convertible debentures, or any securities other than warrants, which are convertible into equity shares, to a qualified institutional buyer (QIB). Apart from preferential allotment, this is the only other speedy method of private placement for companies to raise money. It scores over other methods, as it does not involve many of the common procedural requirements, such as the submission of pre-issue filings to the market regulator

Why was QIP introduced?

To enable listed companies raise money from domestic markets in a short span of time, market regulator Sebi introduced the concept of QIP in 2006. This was also done to prevent listed companies in India from developing an excessive dependence on foreign capital.

Why there is a sudden rush for QIPs?

Several companies, especially real estate, were starved of money in the recent slowdown and were finding it difficult to stay afloat. The revival in market sentiment came as a boon to these companies, which are rushing to raise money, mainly to retire expensive debt and restructure their balance sheets. In over a month, funds raised through QIPs by companies has already exceeded the total amount of roughly Rs 3,500 crore that was raised in 2008

How is the fund going to be used?

The major portion of the money would go into paying the debts of the company which means you should avoid that stock. The reason is they have diluted their own stake in the company to pay the so called liabilities. Thing like selling oneself to pay the debt.


Let our collective will and sense prevail not to loose the hard earned money to the crooks i.e. builders, bankers, politicians, brokers, QIB (Qualified Institutional Buyers). Let these gamblers (Buy Hold Sell Buy ) risk their money among themselves.

rajni sharma said...

Hey this is really very nice post...
Nd one of your best post...Thanks
Flats in kolkata