Saturday, September 19, 2009

Slow demand crimps India property rebound: PE fund

Finally people are getting the fact that the Indian bubble has popped. The unwinding in high priced locations will be slow just like air leaking out of a balloon. and this is the Economic times reporting. Good job guys to report the ground reality. Full article here

Sourav Goswami, managing director of Walton Street India Real Estate Advisors, sees the most potential in middle-income and affordable housing in top-tier cities and expects land that was initially earmarked for high-end development will be shifted to lower-cost housing as strapped investors sell at a loss.

"There are deals in the marketplace now where funds are offering to sell down some of their land positions at 50, 60 cents on the dollar. And once they do that, the next fund that's buying in at a much lower basis has the ability to sort of re-engineer, sort of reposition the product," he said.

Chicago-based Walton Street manages $3 billion globally. It has invested $200 million in India, including a position in a high-profile township project in Kolkata.

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Once-soaring property prices in India tumbled by as much as 50 percent during the global financial meltdown as an asset price bubble collapsed, and while prices have crawled back by roughly 20 percent, Goswami said they have a long recovery ahead.

"I really think that even the 20 percent recovery from the lows may have gotten ahead of itself a little bit, and I think maybe you'll just see it stall here for a little bit before it starts to pick up again," he said in an interview.

Much of the bubble was driven by high-end, high-margin projects, and Goswami said the pool of buyers for such offerings has shrunk in the wake of the global financial crisis.

"To really sell into the marketplace you need to make sure that you're building something that the local population can afford," or a monthly mortgage of about 40 percent of a buyer's income, he told Reuters TV.

Monday, September 14, 2009

Action hots up in premium realty market

Another meaningless article from Economic Times. In a city of 20 million residents, these morons trumpet the realty purchases of few unnamed HNI and NRI's when in other articles they have quote studies which put the number of slum dwellers at 54%. Absolutely retarded reporting by the most moronic newspaper in India.

MUMBAI: With the revival in the residential portion of the real estate sector gaining ground, developers in Mumbai are focusing on the premium
category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations too find takers.

Developers point out that big-ticket deals are in the range of Rs 5 crore to about Rs 35 crore, with the price on a per sq ft basis starting from Rs 25,000 to almost Rs 1 lakh.

Among the properties that attract huge interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi too are witnessing interest from potential buyers.

Prices in both South and central Mumbai did not drop during the slowdown. Read more here

Sunday, September 13, 2009

Can you wait till after Diwali 2010 to buy your house?

Last month, a friend of mine called up asking for my help in looking for a 1 BHK flat in Pune area. He is thinking of closing the deal by Diwali. I suggested him to wait for one more year, more specifically till Diwali 2o10.

In my opinion real estate market in Pune is a game of "who blinks first". Builders who are sitting on ready possession homes are still quoting the astronomical prices from last year (30L to 50L). Builders who are quoting around 25L for a 2 BHK are promising castles in the air (i.e. new projects launched now and will complete god knows when). Real estate nerds (and investors) like us think these projects and builders are sub prime and will crash anytime soon.

For a genuine home buyer who wants to buy a flat and stay in it, this is a dilemma.

This is not a purely financial decision. Buying a flat which is going to be your home is a great emotional high. It means security and stability, freedom from increasing rents, not having to search for a new flat to rent every 2-3 years.

On the other hand, no one likes to buy a flat for 35L and see its value drop to 25L in 2 years, even though they planned to stay in it for the rest of their lives!

So here is a question for the person who actually needs to buy a flat and settle down:

Does it make sense to wait for one more year and see where the real estate market goes in Diwali 2010, or is it better to go for a deal today if you can afford it?