Saturday, August 08, 2009

Investors may have lost one-third investment in real estate

If Deepak Parekh is right investors have lost close to $8 billion dollars. There are numerous purchases made in the Bandra Kurla complex area which will end up as null and void with the buyer forfeiting on the token amount. Jet Airways is a good example where they don't have the cash to pay up 825 crores for the land which could now be worth 600 crores, a drop of 225 crores.  A huge bubble in QIP/HNI/AIM/Hedge fund real estate speculation has ended with a thud. Hirco.L is quoting down 70% from peak. How the mighty have fallen. 

DNAIndia reports

Mumbai: "Investors have pumped in $25 billion into the Indian real estate market over the last three years but with land values having gone down they could have lost a third of the value of their investment,"said Deepak Parekh,chairman,HDFC, in a letter to shareholders.

Parekh said that the $25 billion are invested through IPOs, QIPs (qualified institutional placements), AIM listing (alternate investment market) and foreign direct investment. A large part of these funds were used for buying land at exorbitant prices.

"With land values having come down, my estimate is that investors could have lost a third of the value of their investment," he said. Advocating caution, Parekh said investors in real estate have to be more discerning. They should be more realistic on valuation expectations and not throw caution to the wind, he said. He also criticised the recent trend where housing loans are offered at attractive interest rates in initial years.

"We are seeing some variations of teaser type housing loans being offered. The lure of low interest rate at the start of taking a housing loan is enticing. But are customers being made aware of future implications," he asked.

Wednesday, August 05, 2009

Its Official: Property rates in Pune have started to fall

National Housing Bank is the Apex Institution for Housing Finance in India. It is wholly owned by the Reserve Bank of India.
It maintains an index of real estate prices from all over the country.

Look at the data and charts for Pune: property rates have started to fall!

You can check the trends in 15 cities across India.

This is as official as it can get!

This just confirms our observations and conclusions that the real estate bubble in India is going to burst.