Sunday, May 16, 2010

Mumbai, Delhi realty rates on way down

Real estate prices for new bookings in Mumbai and NCR Delhi are expected to be 10 to 20 per cent lower than prevailing market rates feel analysts as developers are still bogged down by unsold inventory in projects in these areas.

In Virar prices for new launches are likely to come down to Rs 2,200 from the existing Rs 2,800, in Panvel from Rs 5,000 a sq ft to Rs 4,000 for new launches and Andheri West to Rs 7,500 per sq ft from Rs 11,000 in existing project — perhaps the sharpest cut — according to the Religare report.

Developers say that there is nothing unusual about price cuts for new projects.

“As a company policy we sell the first 20 per cent of the apartments at cheaper rates and as we go on constructing prices go up,” said Hemant Shah, CMD, Akruti City, a Mumbai-based realty company. “Otherwise we may have to pay out heavy interests to banks for borrowed funds.”

Article Link

60 comments:

shailesh said...

Wait for few more years and you will see many of these projects languish for lack of funds. Instead of getting delivery in promised 2 year, the delivery will take 5+ years. That is main reason, no one will take plunge in new projects.

Basically this says clearly, Real Estate is dead. Anyone wishing to cash out, do it asap and aggressively cut expectations. If you wait, prices will be way down. Buyers - Don't catch falling knife.

Anonymous said...

Some people with vested interests are spreading false news. As far as Mumbai is concerned, there is no indication that prices are reducing. I've been house hunting for the last 2 years and have seen no decline. Just yesterday, I was in virar and to my disappointment I found that asking price of ready to occupy flats are in the range 2700-3700 per sq ft. All the buildings I visited were sub standard and couple of them plastered because of cracks.

Jayant said...

It is the sacred duty of the bankers to obfuscate lies in the arcane jargon and continue cheating under the patronage of political class. The efforts of pulling the Real Estate Industry from the verge of collapse have proved futile and this is clearly reflected if we decipher (or try to) the cryptic statements issued to media. In case of one of the banks, the loans were restructured to the tune of whopping Rs 16,796 crore with the permission from Central Bank aka Reserve Bank of India.

Will these crooks restructure my monthly EMI so easily without a blink? I doubt. Guys, please be patient and let this unseemly drama being played by the Banks and Real Estate Builders/Realty Companies unfolds. Let the RBI help their friends, let the media (TOI) try pushing the virtues of Teaser Home Loan Rates, Affordable Homes push down your throat but please don’t squander your life savings, hard earned money.


SBI net profit drops 21%
BS Reporter / Kolkata May 15, 2010, 0:37 IST


The country’s largest lender, State Bank of India (SBI), today reported a 21 per cent drop in consolidate d net profit for the quarter ended March on the back of higher provisions and operating expenses. On a standalone basis, net profit fell almost 32 per cent.


The bank's provisioning coverage ratio in the last quarter stood at 59.23 per cent, against 56.19 per cent in the quarter ended December 2009.

The Reserve Bank of India (RBI) has asked banks to raise the cover to 70 per cent by September 2010.

“We are in dialouge with the RBI on time period. Roughly, the provisioning requirement will be between Rs 3,500-4,000 crore ,” said Bhatt.

Last quarter saw Rs 1,062 crore of fresh NPA addition from corporates, while on the retail front, NPA reduced by Rs 332 crore.

Out of the standard restructured assets of Rs 16,796 crore restructured under RBI dispensation, Rs 1,616 crore slipped into NPA category up to March 2010, taking the slippage ratio for these to 9.62 per cent, the bank said in the statement.




Provision coverage ratio : It is a measure that indicates the extent to which the bank has provided against the troubled part of its loan portfolio. A high ratio suggests that additional provisions to be made by the bank in the coming years would be relatively low (if gross non-performing assets do not rise at a faster clip).

NPA ratio : The net non-performing assets to loans (advances) ratio is used as a measure of the overall quality of the bank’s loan book. Net NPAs are calculated by reducing cumulative balance of provisions outstanding at a period end from gross NPAs. Higher ratio reflects rising bad quality of loans.

Vik said...

Here’s good news for those planning to buy new flats. Henceforth, you will get to buy what you see, as it is now mandatory for developers to mention the carpet area or actual constructed area of each flat while submitting their project plan to the Brihanmumbai Municipal Corporation (BMC).


According to a senior civic official, staff in their Building Proposal Department have been instructed to ensure that the carpet area of each flat in new residential buildings is declared.

The builder has to sell the flat on the basis of the actual constructed area.

“Earlier, builders did not mention carpet areas of their flats in the project. Developers sold flats after mentioning the built-up area that included the staircase, lift, play grounds, parking lots and service area.

As a result the buyer would get less space for real use,” said an official of the department, who did not want to be named.

As per the Maharashtra Ownership Flats Act, developers not only have to mention the carpet area of each house in the plan, but also have to sell it on the basis of this.



If the builder fails to mention carpet area of each flat in the plan, it could be rejected
(Picture used for representation)


It is learnt that the civic body has asked its officials to issue commencement certificates only after assuring the carpet area is mentioned in the plan.

“If the developer fails to mention carpet area of each flat in the plan, we will reject it under Intimation of Disapproval.

Even clients and the State Government’s registration authority need to ensure that they will purchase and get the flats registered on actual constructed area.

“As an executive authority, we can make sure that developers will construct flats as per the carpet area. But the State has to take action, if the builders continue to sell flats after mentioning the built-up area,” the official said.

Maharashtra Chamber of Housing Industry secretary Sunil Mantri welcomed the civic body’s move.

“I will appeal to all city developers to start mentioning the carpet area of the flat in their brochures, to ensure transperancy.

This will not create confusion and lead to a dispute between the customers and developers. It is the customer’s right to know the actual carpet area of the flat which he is purchasing,” said Mantri.

Anonymous said...

These theives will find some other loophole to get around this.

Looks like the Finance Minister is getting a lot of money from 3G which will prevent the current downgrade of India's debt. But for how long?

Anonymous said...

The telecom minister A Raja has siphoned of more than $1 Billion equivalent for the 2G licences. His party has benefited immensely. When the scam was exposed his party chief Karunanidhi flew to Delhi and told the PM not to sack him, even though proof to do so. They played the Dalit Card. How the fuck a so called upper caste be poor and a Dalit be a Billionaire and still get away with it. This fucking sucks....

Anonymous said...

There is a rumour that property prices will fall. It wont. They are flush with funds, it might stablise, but fall it wont. Dont dream.

Anonymous said...

Anon above:
True RE prices will not fall. Why don't you buy more flats. I'll wait. It doesn't make any sense to buy when I can rent for 1/5th the EMI. Good luck to you. Buy more. Make this buble even bigger.

Anonymous said...

It is so funny to see a lot of people who are invested are still in denial mode thinking that RE prices will not/bever fall. Reasons:
--India is different.
--India is growing fast.
--Black money component.
--IT salaries growing fast.
--Outsourcing increasing.

I think that none of the above factors would be able to prevent a freefall of RE prices. When it happens, it will happen so fast that people would not be able to offload their investments and would get stuck for a long time.

This risk is so high, many people would lose their lifetime savings or would keep paying the banks for a lifetime. The current RE prices are that of year 2025. There would be a deep dip and the prices will start to go back up by 2022 or so.

Don't believe it, keep waiting and watch the movie.

Anonymous said...

If Euro slumps further, which it would...growth in India is screwed. USD will rise high and Dow, Sensex will go down by 20-30%.

Gold will go high due to inflation fears as all Govts are just printing money. To curb inflation, interest rates would go high, which means stocks to lower again. RE would start a crash during this time.

Anonymous said...

I would say, sell...sell...sell...

all RE and stocks...unless you had stolen money and can't park it anywhere else.

Anonymous said...

Sensex to lose close to 500 points today. Sell...sell...sell....

Anonymous said...

Reality Prices will not fall more then 10-15% EVER. However, they will NOT GO UP. They have grown by 25% since jan 2010 whem you guys was busy posting crap. Buy if you want to live in house, prices will not go down more then 10-15% EVER.

Builders are getting nearly 50% booking before they even start project, its not financial institutes who are funding these project, these are investors. Builders are selling homes 25% cheaper when they start projects, as building grows up, price is also pushed higher insuring 25-40% returns for investors.

Jay

Anonymous said...

I agree with Jay.

The people who talk about Euro, Sensex, bla bla bla are mildly schizophrenic and don't realise it

Anonymous said...

Jay sounds exactly like what lehmann bro experts were saying to investors and outside world.

It falls when you are least expecting. Thats how all bubbles were burst in history.

People are now least expecting any price fall and thats a danger sign as current boom is on borrowed money and not owned money. This scenario is not sustainable.

Pandurang said...

I too agree with Jay. The booking prices for new apartments may come down a bit but not to the extent that some people predict. People flush with money invest in real estate and this will continue.

All the bull crap about western countries, text book quotations etc are not applicable to our black economy. Corruption is the way to riches and the rich will continue to invest in real estate. Population in urban areas has been increasing at 10% per year and not all the 10% will be living in shanties. Therefore, your goal should be 'make hay when the sun shines'. Dont worry about poor western countries, lehman brothers, this equation, that equation & bubble. If you don't have enough money to buy in the city, buy in suburbs. The more you wait, the costlier it is going to be

In the mean time, don't spend sleepless nights worrying about Greece, UK, China and Australia. They will take care of themselves

Jai Maharashtra

Anonymous said...

Pandurang says ignorance is bliss and blind belief is the best way. People like him are people who believe in herd mentality and suffer from recency bias. Which means, beliefs like -
1. It has been going up and therefore will keep going up forever!
2. Everyone is buying and making money, let me also go and buy else I will be left out...

Why will it continue to go up? People in ancient times used to believe in black magic....people like Pandurang believe in Black Money!!

It's funny! Intelligent people stay away from this belief in mumbo-jumbo...Stupid people go jump in to the bubble..

Anonymous said...

I just enquired last week @ Runwal Greens in Mulund west Mumbai . A 2 BHK starts from 82 Lacs , with Carpet 750sq feet

Rs50 floor rise.

3 BHK are in range of 1.2 crores.

My friend just bought a nice house in Boca Raton , Florida, USA for $180K. which has 4 rooms a backyard , garage etc

Where are we as a country heading ???

If India needs to be called a developed country we need to have sensible housing & a world class transport.

Electricity is getting tougher in Mumbai with the elite south mumbai barely escaping power cuts. With the range of houses coming @ 80-90 lacs all houses have AC/cars , bikes.

The traffic sucks. To reach from Andheri to Mulund takes 1.5 hours bare minimum.

The water shortage is just going to increase with Pools in all complexes, Shower Baths , No civic sense.

WHERE THE FUDGE IS THE INFRASTRUCTURE TO SUSTAIN.... THIS IS MY FUGDING QUESTION??

Anonymous said...

Don't worry about infrastructure. Just follow what Pandurang has to say. Pay now are be priced forever. RE will never go down in India as per fools.

I would say that wait and watch the game. People will realize how much money is 1crore when the liquidity is dried up by rate increases and Sensex goes down by a few thousand points.

In US, people used to think just 500K in bubble times. Now 500K is again a big amount in US. Indian RE and herd mentality is waiting to get a shock of lifetime.

Anonymous said...

Properties in Delhi are set to get more expensive.

The Delhi cabinet on Monday approved the revision of registration fee, increasing the sum from the current Rs 100 to one per cent of the sale amount (or the circle rate of the area concerned). The government has, however, set a Rs-50,000 cap on the fee.

So, if you were to buy a house for Rs 40 lakh, you will pay Rs 40,000 as registration fee.

“The registration fee has been in implementation since 1964. It was due for revision,” Delhi revenue minister Rajkumar Chauhan said.

Anonymous said...

Mumbai is the finance capital of India. You cannot compare boca raton with Mumbai.

Anonymous said...

Pandurang mama has a point.When demand exceeds supply, the prices naturally go up. People with money grab whatever available thus allowing prices to spiral.

Anonymous said...

What jokes! Looks like some bunch of morons or one moron is posting some stupid comments.

You cannot compare Mumbai to Boca Raton? Mumbai is better!! Panu mama is right?

Anonymous said...

The name of Mumbai should be changed to Slumbai. In a nutshell, one can call it a giant toilet with broken drainage

Anonymous said...

Anon:
You said:
"You cannot compare Mumbai to Boca Raton? Mumbai is better!!"


I've seen both Mumbai and Boca Raton, Fl. I'll prefer to live in Boca Raton and would not take even a free flat in Mumbai.

You should first try to get a visa to US and visit Boca Raton before talking nonsense sitting in Mumbai.
You cannot compare darkness unless you have seen light.

Jai Hind

Bindas Bhai said...

Have Mumbai realty prices risen too fast?
The RBI report says: “There has been a general upward pressure on housing prices in the recent period, which broadly co-terminates with the rise in stock prices”

http://www.livemint.com/2010/05/05224322/Have-Mumbai-realty-prices-rise.html

Interesting article!!!

Bindas Bhai

Anonymous said...

The return of the smelly sundaas bhai!

What does the article prove? The GDP itself is dependent on RE! Why compare prices to GDP? Where has it been done before? with what effect? What's the rationale?

The article is cooked up and I first saw this joke of an article in Economic Toilet Paper of India..

The joke is statements like - Land is scarce in Island city of Mumbai!!What does that mean? How scarce? What's the demand? At what level?...this article is just a joke...not worth thinking about...

shailesh said...

3,449 cheap houses, over 3 lakh hoping to buy them

In what might be their only chance to own a house in Mumbai, over 3.28 lakh families will vie for 3,449 affordable homes on Tuesday when MHADA’s Mumbai Board draws lots at Rangsharada Hall in Bandra.

With residential projects by private developers getting forever costlier, the demand for MHADA’s modest flats has been increasing by the year.

Pandurang said...

I've been proven right again. The supply: demand ratio is 1:1000 in Mumbai. How can you expect the prices to decline. If you cant afford to buy in city, buy in suburbs where rate are reasonable.

If you are Maharashtrian ,I'd suggest you join either Shivsena or MNS where you can extort money from builders, banias, UP hawkers etc which will eventually make you a home owner in Mumbai. When supreme court chief justice nominee can amass crores or bribes, why can't we. This is our logic.

Jai Maharashtra

shailesh said...

Opinion: India vs China

There is little doubt about the scale of the new markets in India and China unleashed by the pace and scale of their urbanization. But businesses still need to be able to serve these markets in practical terms. The way cities are run—and the productivity that results—is a major factor for companies. Here, China is in much better shape than India. While India has barely paid attention to its urban transformation, China has developed a set of internally consistent practices across every element of the urbanization operating model: funding, governance, planning, sectorial policies, and shape. India has underinvested in its cities; China has invested ahead of demand and given its cities the freedom to raise substantial investment resources by monetizing land assets and retaining a 25 per cent share of value added taxes. While India spends $17 per capita in capital investments in urban infrastructure annually, China spends $116. Indian cities have devolved little real power and accountability to its cities; but China’s major cities enjoy the same status as provinces and have powerful and empowered political appointees as mayors. While India’s urban planning system has failed to address competing demands for space, China has a mature urban planning regime that emphasizes the systematic development of run-down areas consistent with long range plans for land use, housing, and transportation.

The starkest contrast between the two countries is that China has embraced and shaped urbanization while India is still waking up to its urban reality and the opportunities that its cities offer for economic and social transformation.

However, if India fixes its urban operating model, it has the potential to reap a demographic dividend from the increase in working age population of around 250m expected in the next decade. This demographic dividend is even larger than that in China, as China is aging rapidly. By 2025, nearly 28 per cent of China’s population will be aged 55 or older compared with only 16 per cent in India, whose population profile is much more youthful. If India optimizes the productivity of its cities and maximizes their generation of GDP, the economy could add over 170m urban workers to its labour force between 2005 and 2025 compared with 50m in China over the same period. The stakes are high.

Anonymous said...

Looks like Montek Singh Ah. is playing a similar role what Greenspan did in US. Just blab in a way to not tell the truth. If he is talking about Greece, why doesn't he talk about the current debt to GDP ratio of India and what can happen in the next few years if the country doesn't stop borrowing.

Greece crisis may have only short-term impact: Montek

Anonymous said...

People who are sitting on high priced investment properties are soon going to get a shock. They are so dumb, that they cannot understand economics and the game being played. In fact, they don't want to listen to any news about RE going down. They just believe in the shit circulated by biased news media and Govt. officials who don't want to rock the boat while they are in power.


Crashis inevitable. 60% price cut is going to happen in all metro areas especially NCR and Mumbai. A lot of pain is ahead in the coming years.

People are fools who don't take lessons from west and Greece. What a shame and arrogance.

DhImAn said...

Hey, has anyone seen the falling Rupee? As of this moment it stands at Rs 46.30 to the dollar, and an astounding Rs 1900 to the gram of gold.

It doesn't matter how much RE goes up in Rupee terms, the Rupee is losing value at an alarming pace.

So sit back and enjoy the show - if RE doesn't collapse, the Re (Rupee, for those who remember Re 1 used to be one rupee) will.

Anonymous said...

What should we do, keep the money in Bank and wait it to further devalue or buy gold?

Anonymous said...

I tend to disagree on Rupee value. In 1980 the rupee was 38.4 per dollar and it slid down to 44.5 in 2000 due to the retrograde trade policies of the old governments. Since 2000, the value has been fluctuating between 44 and 46 just like any major currencies. It is very unlikely that Rupee is going to slide as our economy is sound, in fact better than industrialized countries.

The phenomenon of high real estate prices are due to high demand. This is likely to continue.

Indians have herd as well as hoard mentality and currently real estate has replaced gold as an investment because of the high returns.

To a marwari, if 100 crore RE investment suddenly slumps in value to 1 cr. wont give a shock as it has little effect on his life style. What he needs is few thousand rupees to survive.This os the Physche of some moneyed people in India.

Anonymous said...

All merry in RE sector is because loans were allowed to get restructured last year.

If this is contined this year, then no one can save India from economic disaster.

If this is not continued this year, India will be saved a bit but tough time for builders

http://business.rediff.com/slide-show/2010/may/19/slide-show-1-builders-in-trouble-as-rs-25000-crore-debt-payment-looms.htm

Anonymous said...

Anonymous 3:35,

Govt just made 17,000 cr from G3 auction. My point is that 25000 cr is nothing to a economy like India

RE will flourish as long as black economy flourishes. Make no mistake about this. People who have been starving will continue to starve wher as all the fruits of development are pocketed by few who hold people like us to ransom.

Who will believe that a apartment ina shithole place like bhandup costs 1 cr. That is $220,000 US.

Anonymous said...

I guess when builders charge 1Cr for 750sq. ft. carper in areas like Mulund, Bhandup, Kandivli, Borivali and Thane then the time has come to call it a bubble. The heart of the city BKC is a good 15Kms from these places and the Financial Center (NP and Cuffe Parade) is a good 35Kms away from there. There is no way apartments should be selling for 1Cr. This is insane and no matter how much people talk about black money, these prices cannot be sustained. Even if someone buys a flat with black money he will need to sell it one day. All the investors booking flats in per-sales know that there is a good 3 years before construction is complete. That glut will come in 2011-12 which is flats from the launches of 2008. This will bring down prices. After all an investor will gain only when he sells a house right? Or does he forever look at paper profits???

Anonymous said...

Quote "I guess when builders charge 1Cr for 750sq. ft. carper in areas like Mulund, Bhandup, Kandivli, Borivali and Thane then the time has come to call it a bubble "

*Builders don't force anyone to buy. In fact, it is the buyers who decide to pay. At least in Mumbai, speculators/investors aren't driving the prices up. In fact, there are no speculators/investors. People are buying homes for their primary/secondary uses.* How can anyone call this scenaro 'bubble'

Unlike west, people in Mumbai dont move from one flat to another. Investment in a flat is a life time investment and it is unlikely that they are bothered about the increase/decrease in prices.

As someone mentioned earlier, this whole thing is related to demand and supply

DhImAn said...

It amazes me that there are so many people here who, like ostriches with their heads buried in the sand, keep putting forward the argument - "Because it is like this today, it will be like this forever" and completely ignore any rational thought that may even indicate a possibility that tomorrow might bring something different.

So because there may be black money, and corruption, and supply and demand, and prosperity and wealth today they draw the logically fallacious conclusion that it will remain that way forever.

That is no different than saying that because you are young and alive today, you will be immortal and never age.

If you believe that, then honestly, I have nothing to say to you. Do what you will - and don't go crying to Mommy when the inevitable hand of time and change is stuck so deep in your backside that it chokes you all the way to your financial doom.

Anonymous said...

Anon above:
You said"As someone mentioned earlier, this whole thing is related to demand and supply"


My dear, if this basic supply and demand theory were true, the rents would have have been very high. Anytime there is real demand, rents should go high as high as monthly mortgage. If rents don't increase, then it is speculative demand created by infestors.

Do not try to convince yourself by basic finance theories. There is massive speculative demand created all over India by infestors and it is bound to crash the RE market.

If you do not believe, buy more flats. Borrow more and inflate the bubble even bigger.

Anonymous said...

Houses in India are same price as US. People say that's fine and India is growing. Here is a breakup of equivalent costs for India:
--Minimum wage in India is Rs.350 per hour almost same as US. It means all labour people would make Rs. 3,500 per day for a 10 hour work day.
--The insurance cost for cars is Rs. 5000 per month or Rs. 60,000 per year per vehicle same as US.
--When the cost of One tomato of normal size is Rs.50.
--When the cost of eating out in a normal low grade restaurant is Rs.1500 for 2 people same as US.
--When only poor people flock to McDonalds and Pizza Hut as in US or for cheap meals.
--When RE tax is Rs. 10 lacs per year for a 2 crore property and 5 lac per year for a 1 crore property, same as NJ, US.
--When the monthly cable bill is Rs. 5000.
--When the monthly electricity/gas bill is Rs. 10,000 per month.
--When the tuition fee for a child is Rs. 1.5 lacs per month.
--When the college fee is Rs. 50-70lacs for a degree plus living expenses.
--Salaries in India are already very high for a lot of people but the above costs will put in a infrastructure that would take away 40-50% of their salaries plus taxes another 40%. Net savings would be not more than 5%.
--On top of this, no cheating and no black money. If someone is caught even with a traffice violation, fine is Rs. 10,000. Jail time is very common for even small offences.

The point is that people in US make money and the salary pizza gets distributed right away for expenses. The RE prices are adjusting for the common man in US.

In India also, RE will adjust for common man in future. All this talk about Indias riches is nonsense based on inflated RE values.

Jayant said...

Drunkard (Real Estate Companies) was bailed out once by the Government of India through Public Sector Banks. Let us see how many times he maxes out the credit card and get a new card. Ultimately he is going to hit the wall.


Builders in trouble! Rs 25,000-crore debt payment looms

Last updated on: May 19, 2010 11:58 IST

Raghavendra Kamath in Mumbai


According to Reserve Bank of India estimates, developers have piled up debt of Rs 75,000 crore (Rs 750 billion). Public sector banks restructured debt worth Rs 10,000 crore (Rs 100 billion) in 2009 and allowed them a roll over.

By March 2011, developers need to repay this amount. An additional Rs 15,000 crore (Rs 150 billion) will be due this year, says a recent report by Kim Eng Securities. What has made matters worse for developers is that the Reserve Bank of India has already ruled out fresh restructuring for them.

Equity route risky

The equity route, earlier a hot favourite of property developers to repay debt and fund projects, is turning out to be tough. After developers such as

~Omaxe could not raise fresh equity,

~Delhi-based Parsvnath had to cut its Qualified Institutional Placement size by half, due to poor investor response.

~Sobha Developers had to reduce the amount expected from a QIP after it failed to raise funds in its first attempt last June.

Though at least 10 public issues by developers such as Emaar MGF, Lodha Developers, Oberoi Realty, BPTP and others, worth over Rs 10,000 crore, have got the nod of capital markets regulator Sebi, they are yet to announce offer dates. And, most of them are banking on their IPOs to repay a significant amount of their debt.

Anonymous said...

@Anomymous 2:17

I too live in US and visit India often. Your sarcastic parallels between these countries is like comparing yourself with someone in a remote village in India.
India is different. If you are fair complexioned and look like a ghora, most dark indians consider it a privilege to eat your shit. Starting at the arrival airport, everyone begs for money including top official. India is ruled by feudal s and all the democracy talk is a sham. The elite want the people to live in slums and lick their ass. I stayed a few days in a hotel called President in Mumbai which was supposed to be 5 star, and I saw all the moneyed niggers from south treating the waiters so badly.

Boy, India may need another 200 years to develop and reach the current US standards. Thjerefore, don't compare a country like India to US

I'm glad that I left this country for good

Anonymous said...

Well, I know of only one person who went back to India for good in the last 15 years I've been away from India. And this person didn't go by his choice but had visa issues and had to leave the country.

I don't think India will need 200 years to parallel, but maybe 50-60 years. All India needs is a new generation of thoughful and logical people and in 50 years the current crop of greedy people will definitely die.

shailesh said...

Age old desire to plan child life by their parents !!! For once, people did not worry about their kids and enjoyed their own wealth, world would be better place.

Bursting China's real estate bubble...

...is not going to be easy and the Chinese government's attempts to control sky rocketing prices will not work unless there is a change in the local culture, a chemical industry executive confidently predicted at last week's Apic conference in Mumbai.

I thought the executive was referring to the Chinese love for speculating in real estate. But it turned out to be something more.

Chinese families, the executive explained, are supporting the boom as they are buying houses for their children, especially sons.

"It does not matter if the boy is still studying or does not even have a girlfriend; parents are putting aside money to buy an apartment. I have surveyed all the Chinese working in my office and found that most of them have invested in a house for their children," said the expat executive.

"You will see a lot of empty apartments in big cities; I live in a complex that has 1000 units and after 2 years only about 10% are occupied," he added.

shailesh said...

Property rates are zooming, but realty firms don’t seem to be raking it in

After the March 2010 quarter results, most listed developers were quoted in media reports claiming that they were satisfied with the annual sales growth over the past fiscal.

However, the numbers portray a mixed bag of results. If we compare the operating profit of FY09-10 versus FY08-09, of a few listed real-estate companies, this is the picture that emerges. DLF Ltd has reported a fall of 36% in operating profit (FY10 was at Rs1,109.61 crore; FY09 at Rs1,721.58 crore), Sobha Developers Ltd has reported a drop of 6% in operating profit (FY10: Rs254.5 crore; FY09: Rs269.7crore), Parsvnath Developers Ltd reported 5% annual growth (FY10: Rs233.31 crore ; FY09: Rs221.24 crore).

“One of the major reasons for de-growth is that developers are initiating new construction when the corresponding sales are not happening. Developers are failing to report incremental sales. They are just holding on to high prices without being bothered about sales,” said Aditya Bansal, vice president (finance), Liases Foras.

Anonymous said...

Anonymous 6:49

Well said. The dark madrasi and andhra people have attitude problem. These people have domestic servants and in hotels they treat the waiters like their domestics. It is their culture. However, ghuras are treated as masters.

This feudal culture will certainly disappear once people start getting education and realise that in no way they are inferior to anyone. In Europe you may find a CEO and lower level employee sitting together having lunch/dinner but in India this is considered as taboo.

Coming to real estate, the moneyed guys grab the best paying any price. I am too convinced that this is demand/supply phenomenon. I dont think that the investors are involved in this game very much.

Anonymous said...

Anon above:
As someone said earlier about Demand/Supply:

My dear, if this basic supply and demand theory were true, the rents would have have been very high. Anytime there is real demand, rents should go high as high as monthly mortgage. If rents don't increase, then it is speculative demand created by infestors.

Do not try to convince yourself by basic micro-econ theories. There is massive speculative demand created all over India by infestors and it is bound to crash the RE market.

Vijay said...

"I tend to disagree on Rupee value. In 1980 the rupee was 38.4 per dollar and it slid down to 44.5 in 2000 due to the retrograde trade policies of the old governments. Since 2000, the value has been fluctuating between 44 and 46 just like any major currencies. It is very unlikely that Rupee is going to slide as our economy is sound, in fact better than industrialized countries."


Dear Anony you are completely wrong on the exchange rates. The conversion in 1980 is 7.8 Rs per 1 US $. Please see the link below...

Looks like our IT companies should be thankful to MMS for giving competitive edge...

http://fx.sauder.ubc.ca/etc/USDpages.pdf

The other interesting point is when countries grow their exchange rates strengthen (e.g. Yen).. 20 years down the line we may see Rs 20 / US $

Thoughts ??

Anonymous said...

Vijay dear,
Majority of India's growth is based on Rupee/USD arbitrage. If Rupee strengthens, the economy will go to the toilet as all IT companies and exporters will be out of business. RBI will never let Rupee appreciate say around Rs.43-44 in current times.

India is still 50 years away from Rupee to come to even Rs.25 per USD.

And don't think that only India is growing, US will also grow too and maybe at a faster pace later after this depression.

Anonymous said...

I just checked Rupee is at 47.30 now.

The current Indian economy is based on borrowed money and majority is debt unlike all the failing countries like Greece, Spain etc. And on top of it there is a massive RE bubble.

I see Rupee going to Rs. 55-60 in a year or so. And the way Dow is going down, Euro is going down, Sensex will take a dive too. Foreign investors will fled India and there could be a drop of 6000-7000 points on Sensex. That means Rupee goes to RS. 60. And if RE bubble bursts, Rupee could take a further hit and if S&P downgrades India's debt, all growth goes to toilet for a long time. It will take India at least 10 years to come out of the bubble mess it has created for itself.

the only way out is if RBI increases interest rates by 400-500 basis points. Which it will not as it doesn't want the bubble to burst. It wants to maintain the bubble at somewhat okay inflation. But if Inflation is not controlled, there could be unrest.

Omkar said...

Dear deamers,
In case if your eyes are still not open.. see the biggest property deal in India's real estate history, was signed yesterday
http://content.magicbricks.com/biggest-deal-6-acres-for-rs-4k-cr

Any comments now ??

shailesh said...

Omkar: Just look at Burj Dubai.

Our eyes are awake. India has lot of land, there is no land shortage. In mumbai, there is artificial shortage created by poor infrastructure and politics. There is no reason people should have to pay New York price, living in 3rd world city called Mumbai. Construction is oldest industry. All is needed is few bold builders, coming up with large townships around mumbai and prices will drop like hawa mahal.

Mumbai Real Estate said...

Mumbai Real Estateis really exceeding faster, as a result house is beyond dreams of common man atleast in mumbai.

Project said...

Guys...guys...guys.....lets stick to facts.
Fact 1 RBI has instructed banks lend at rates above base rate, so loans are now costly for builders.Till date Banks have been financing builders and Individuals for the same property, providing discounted interest rate to builders(cost of discount was shifted to individuals like us).....remember builders tying up with banks for home loans.
Fact 2 Holding power of builders will now decreased thus small builders would be first to given in.
Fact 3 Bank will now play by rule thus buuilders would have to pay up their huge and costly loans with bank sooner than they planned.
Fact 4 Many RE / builders are now come up with IPO for financial stability(more accurately to pay bank loans and shift the risk to stockholders). YES Stocks / Sensex will get effected in near future.
Fact 5 Profits as per their declared Balance Sheet would never be interesting so those who purchased their share...GOD HELP.
Fact 6 Banks would now play safe thus no more pampering builders will make finance more difficult. RE would start dipping. Bubble burst.

Investers be cautious. Just stick with facts.

Mumbai property said...

Its true that the price of real estate in Mumbai is quite expensive, even everyone invest money on it.

Jerald said...

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Vishal said...

Hi, I booked my flat on sept 2009 at runwal's garden city-Phase 2 Bldg name Jasmine, balkum, thane and the possession date in agreement is dec 2011, but till no possession. Plz look in to the issue. Regards, Vishal

rajni sharma said...
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