Sunday, June 13, 2010

Pune : More registrations, less permissions

Pune mirror has an article which is bullish on Pune real estate. 21,000 registrations in 2010. It appears the the trend is strong and barring an unforeseen event of great magnitude, volumes will continue to be healthy. Once inventory vanishes I think prices will start rising. I was just checking with some builders and they are not negotiating. In the past they used to say get the checkbook and they will discount the price, now it appears they are not in a mood to bring their price down. Other buyers, end-users or sellers can post their experiences in this thread.

In the past I have always show my bullish stance for Pune vis-a-vis Mumbai and I think in terms of volume we will see more growth. The other number we need from banks is the NPA (non-performing assets) or loans in default. That could pressurize the market if the trend in that number is rising.


Flat sales show good healt- Link

Here is a win-win situation for the government and builders. After the recession-related slump in property deals, figures at the government registration office here show that, compared to last year, more people are purchasing flats in the city. In fact, the registration department has doubled its revenue as compared to the first quarter of 2009.

In Q1 of 2009, the registration office collected Rs 113.9 crore against registration of 13,033 flats in the city, whereas in 2010, revenue shot up to Rs 294.04 crore - more than double. March is the one of busiest months in the registration office.

This year, 8,900 flats were registered in March. Last year, in the same month, the number was 3,553, which translates into a 2.5 per cent increase. When we spoke to V D Dhansheety, joint district registration officer, he said, “In March, there are a lot of festivals.

On the auspicious day of festivals as well as towards the end of the financial year, people are more eager to buy flats. Therefore, in this month, more registrations happened. In mid-2008, the recession started. After that, the number of flats registered came down considerably.”

Dhansheety added that though banks reduced their home loan interest rates, no one came forward to invest in flats. “In 2009, due to improvement in the market, people started purchasing flats. The number is not a satisfactory one. But, in Q1 of 2010, there was an increase in registration of flats.”

50 comments:

Anonymous said...

Vik,

So now you believe news from Times Of India? Isn't Pune Mirror is published by TOI? The same news paper bashed several times in this forum.
May be Pune's prices are not as high as Mumbai, but you have to consider what Pune offers?
The industry Pune has is nothing compared to Mumbai. Only IT and Automobile are prominent. In that also only IT pays enough to buy flat above 35 lakhs plus. Although the auto industry salaries also increasing they need more labor jobs than the management jobs. So number of people who can afford is also low in auto.
I have seen many people from Mumbai buy the flats in Pune so that they can come and stay in Pune on weekends. Although I don't believe it some people say almost 40 % of the flats in Pune are bought from investors like these. As per me the actual number would somewhere around 20% of new construction. Pune's house prices will depend on whether these people sell in coming few years.

The flats which are around 35 lakhs are in the outskirts like Ambegaon, Waraje, Dhayari where the water and electricity and water is not guaranteed. If you in better areas 2BHK (less than 1000 carpet) would cost you 45 lakhs plus.

You go to Kothrud, Aundh no one asks less than 50 lakhs for atleast 10 year old building.

The flat I am staying in is atleast 65 lakhs + (1100 sqft + 1100 terrace yes it is a penthouse in kothrud)and I am just paying 13k/m as rent. Even in Aundh no one pays more than 15 k for 2 bhk.
So renting is much cheaper option right now as I cannot afford the price in Pune. Maybe people who have money and risk appetite can go ahead and buy.

shailesh said...

Earth Infra to invest Rs 630 cr in 2 Greater Noida projects

In the affordable housing project, titled 'Earth Towne', the Delhi-based company would develop 2,400 units at an investment of Rs 500 crore. The project, expected to be complete by June 2012, has been launched at Rs 1,950/sq feet.

This price seems realistic. What does everyone think !!!

Anonymous said...

This article is an eye opener to people who are talking about bubble. Now, I 've started believing BB and SS and wish i could have listen to them.

My dream of buying a flat in mumbai or pune are slowly evaporating.

Anonymous said...

rentals are low here due to the fact, people who can not afford to buy houses have to rent them and also many companies give less HRA to their employees hence it becomes impossible to fetch high rents.

However, it seems in India it has no direct relation with housing prices because the fact remains true that there is huge number of crowd, want to buy house but they can't because prices are too high and there is no availability.

Due to ever increasing population and rapid urbanization this is becoming more true every day. Availability is less and demand is more which is sustaining these higher prices.

Prices will not fall because there are huge number of buyer willing to buy flats for low prices but who will sell flat for loss ?

Prices will only fall when there are layouts or some major economic trouble or there is major improvement in transits system, which I don't see happening for next 10 years. So enjoy higher prices and inflation.

Mumbai is big slum, living and breathing here is mess, only lucky few who have their own property are happy reset are just working like donkeys to make their living.

Vik said...

Anon at 1:37

I don't believe the TOI at all when they write moronic articles about the certain areas or when they discuss property prices with realtors, builders and brokers. Those are all planted articles.

This one is also planted with the intention of forcing people from their seats however this article is written with some concrete data.

The price/rent ratio is highly skewed in Mumbai and Pune. I mumbai I can rent a 1.2 cr flat for 35,000 but the guy will never sell it to me for 80L.

I agree that a lot of flats are vacant, however if the builders keep raising prices the vacant owners have no interest to sell.

Vik said...

Another interesting point is that when the prices dipped in 09 and there were fewer registrations, the investors didn't sell. At the same time buyers were equally cautious. However once the economic bad news subsided the buyers ventured back into the market.

Buyers are affected by the economic sentiment more then the sellers since they feel that prices could fall further in a downturn. Most of them will never evaluate the price on the valuation basis.

They would end up paying 10-15% more since they would end up buying once the negative sentiment (and the best time for investment) has passed.

This in turn will spur other buyers to enter the market.

There are very few who will try to catch the falling knife and hope not to get hurt.

SabbalSeshu said...

The Mumbi builders association is planning to raise the prices from 10-20% from Sept '10 onwards. This is o cater for the increase in the cost of construction materials etc. The prices at Mira road are going to be from 3500- 5000 for super builtup whereas the malad-kandivili-borivili belt would be from 10,000-15000 depending on the amenities provided. I do not normally deal with other areas of Mumbai and therefore not able to come up with future prices.
Already investors are flocking the offices of the builders to get preferential booking slots and this may further raise the prices.

Those of you who really want a home, I advise you to start your research on affordable home in western suburbs and buy them at the earliest. The longer you wait, costier they will be.

Anonymous said...

Thanks for the advice Sabbal.

Put this high priced RE inventory in your arse. I'm happy renting and would never buy until the prices make financial sense i.e. rents are in the same range as EMI.
Otherwise, I'll save more by renting rather than risking very high priced flats.

You buy them and tell all your family and friends to listen to your advice. Once the bubble bursts, your family will beat and break you up into Sabbal and Seshu, 2 equal parts crying for help.

Anonymous said...

India's rating may decline as massive borrowing is still in place to fund projects.But if S&P or Moodys downgrade it, all growth goes to toilet and it would become another Greece.

Debt ratio

However, the report also said, “India's track record on sticking with medium-term fiscal plans is not good, although the Congress-led Government has at least voiced its commitment to debt reduction. If the debt ratios resume rising, it could impact the ratings negatively”.

Earlier, in March, Standard & Poor's had also revised India's outlook to ‘stable' from ‘negative' in expectation of an improvement in the fiscal position.

“The revision in outlook reflects our view that India's fiscal position could now begin to recover and that its economy will remain on a strong growth path,” S&P had said in its report.

Anonymous said...

Higher rates mean higher EMI which means slightly lower RE prices for people who take loans.

MUMBAI, India — India's headline inflation accelerated faster than expected to 10.2 percent in May over last year, as inflation spread from food and fuel to core manufacturing prices.

High food and fuel prices have plagued India for months, but now manufacturing prices are also rising fast, thanks to a robust industrial rebound and strong domestic demand. That is adding to pressure on the central bank to hike rates sooner rather than later in order to tamp down inflation.

Anonymous said...

Threat of Microfinance Defaults Rise in India:

“Jewels, clothes, food, the town hall,” said Rathore, 50, who makes towels from discarded clothes. She borrowed 30,000 rupees ($645) from moneylenders charging 60 percent interest and took additional loans from friends to pay for the wedding. Three months ago, she got a 10,000 rupee loan from urban lender Hindusthan Microfinance Pvt. to repay some of that debt.

Rathore is one of 25 million Indians who have taken so- called microfinance loans, often without adequate documentation or collateral, according to Micro-Credit Ratings International Ltd. As Hyderabad-based SKS Microfinance Pvt. plans to become the first such lender to go public in the country, an industry credited with helping alleviate poverty may come under pressure to tighten loan standards to avoid a pile-up of bad debts.

“Globally, microfinance is showing characteristics of the western financial markets before the collapse,” said Sanjay Sinha, managing director at Micro-Credit Ratings in New Delhi. “In the U.S., homeowners were given loans at 120 percent of the value of their properties. In rural India, people are being lent to at 150 percent of the value of their enterprises.”

Anonymous said...

India is World’s Largest Market for Microfinance:

Most microfinance loans in India range from 5,000 rupees to 20,000 rupees, according to an October 2009 report by Crisil Ratings, the local unit of Standard and Poor’s. The country, where more than 800 million people live on less than $1.50 a day, is the world’s largest microfinance market, according to a March report by CGAP and JPMorgan Chase & Co.

Anonymous said...

US puts India on trafficking watch list for 7th year

2010-06-14 20:40:00

The United States has placed India on its second worst category on human trafficking for the seventh consecutive year, saying the latter has done significant work on sex trafficking, but not enough to check labour trafficking.

'The government of India does not fully comply with the minimum standards for the elimination of trafficking,' said the US State Department in its 10th annual Trafficking in Persons Report released Monday.

Anonymous said...

If people are thing RE will not burst in India, they are mistaken. A double dip is coming this July.
And this time there would be no recovery for decades.

THE powerful Bank for International Settlements has judged that the European sovereign debt crisis is shaping up as a repeat of the US subprime mortgage debt meltdown.

The Swiss-based institution, which acts as the official banker to the world's central banks, said wild swings in markets over the past three months had been caused by a global loss of investor confidence.

"The swift reversal in market confidence evokes painful memories of (the northern) autumn 2008, when the collapse of Lehman Brothers brought money and capital markets to a virtual standstill," the bank said in its quarterly review of world financial markets, released yesterday.

Anonymous said...

Vik
I understand why you put your rants and ravings here
Probably you are a jealous failure who can't buy good things for your asshole and is lost in hallucinations
You have been fucking here since 3 years at least telling property prices are buble and will come down
but dear idiot moron junglee stupid monkey the have risen
so just shut up and get lost to your rented asshole and stop writing bullshit and misleading failures like you

Anonymous said...

Anon above:
Why the hell are you here on this blog. Your anger shows your frustration that you are worried prices will drop.

You should be enjoying a drink and celebrate your new found wealth through RE. Let others get education through this blog.

As regards to timing, no one knew that GOI will borrow so much money and provide stimulus. And never withdraw it under guidance from G-2summit. What I see is all G-20 nations have a RE bubble. Many in EU are going bankrupt. Asia is next.

When you borrow more than you can produce and repay, it becomes Greece, Hungary, UK, Italy, Portugal and Spain etc.

You are so angry now, but how would you react when prices really drop 50%.

Builders today are selling land to come up with 75,000 crore of payments to Govt. Would they be able to sell or salvage?

Anonymous said...

Fitch has upgraded India's ratings. These are the same people who always upgraded other economies like Greece and people still believe them. Don't know why. Maybe stock market keeps looking for good news to buy without using own brains to see if it is a paid upgrade or real.



Fitch also upgraded India’s growth forecast to 8.5 per cent in the year to March 2011 from earlier per cent this day from earlier 7 per cent, however, it forecast a decline in government debt to GDP ratio to 80 per cent by March 2011 from 83 per cent at the end of March 2010. The market opened on a firm note tracking gains in Asian stocks. The market breadth was also strong. Thereafter, stocks regained in strength in mid-afternoon trade and spurted in late trade.

Vik said...

Anon at 3:32

People like you only strengthen my resolve that the price of real estate is controlled by few key individuals in slumbay.

There is massive demand but there is total inability to pay anything beyond 5,000 per sq ft, specially when there is a loading factor of 35-50% in Mumbai.

For me it appears that people like you are paying an EMI of 1.2L and getting rent of 30,000, a total recipe for disaster. If

Even if you make 2L a month in salary/business you lose 10L a year and over 5 years will lose 50L. quite a financial genius I must say.

You are a complete financial failure since you have failed to calculate your net outgoings.

If you have bought in Mumbai cash down, then you are the lucky few and most readers of this blog are unable to do so. So be thankful to the almighty for having the house in the slum of your dreams

Anonymous said...

Expect cheaper homes by Diwali

http://www.mid-day.com/news/2010/jun/140610-real-estate-prices-25-percent-fall-diwali.htm


someone is playing a practical joke!!!

Anonymous said...

Anon 7:49,

Media is owned by businessmen who have investments in real estate. These guys occasionally plant false story's to confuse and misguide people like us. This is a con game. In this case, the bastard who has written this story, wants the potential buyers to wait until diwali when the market is at its peak. Then there are other types like sabalseshu who don't want us delay the buying decision. Bindas bhai wants us to invest in Pune anf go bankrupt.

We are sandwiched between corruption and black marketing. No matter what the GOI rants about development, the way it is happening, it is creating more hungry mouths and disgruntled population.

shayna said...

A major advt that govt in UK gained from the rise in house prices was the extra revenue earned by rebanding expensive houses, increase the number of houses in the higher brand and consequent rise in tax collection. Infact many of these rebanded houses are seeing their price come down to the original level before banding or now priced at a lower band, however since they have been tagged now they can't be rebanded down.

The same is started in Delhi and will spread to the rest of India before GOI allows prices to correct.This will help reduce state govt contributions to local municipalities.

http://economictimes.indiatimes.com/markets/real-estate/news-/Delhi-raises-property-circle-rates/articleshow/6049656.cms

Anonymous said...

Anon @6:11

Media will never plant stories that prices will ever go down. Maybe that storyhas truth to it.

But the biggest "if" with the story is interest rate going up and I don't Pranab Muk. is interested in raising rates and would never will be. RBI would have to follow them no matter how much they want to raise rates.

Min of Fin doesn't care about inflation. All they care about is big growth at the expense of middle class people.

So,the Diwali story will not happen. 25% price reduction not possible in 3 months. I think prices will go down 50% or more but over a 2 year period and not 3 months. It is a long painful decade ahead of us. Buyers be careful.

The current RE prices are that of year 2025. Even if you don't buy for 15 years, you'll be fine.

Anonymous said...

If prices continue like this, I don't intend to buy for 15 yrs!

As long as I know that in 15 yrs my savings will grow and provide me security when I retire and that prices will fall within the next 15 years, I am prepared to wait.

Kitne Sussuu's aaye aur gutter mein mil gaye, Kitne Sundaas Bhai aaye aur flush ho gaye...hum intezaar karenge...

Anonymous said...

My story:
I was about to get married and my parents and in-laws said they will buy a flat after marriage. I opposed to the idea of buying andmy Father in law even offered help towards downpayment. I make close to 1.5lacs per month and fiancee another 68K per month. Financially we don't have any issues.

My justification to them was: I could rent the place I planned to buy for 22K per month. This is a furnished flat in a gated community. The selling price is 1.4crores. If I keep renting, I'll pay around 2.5 lacs in a year as rent. If I buy, I'll pay around 10 lacs in EMI yearly. Now with a savings of 7.5 lacs per year, in 5 years I would have close to 45 lacs with compounded interest. Even if my flatbecomes 1.85 crores in 5 years, I still break even. The chances of it rising any further are slim and chances of it going down back to 60lacs are a lot.

My family supports me now and they are all with my decision. Moreover, my fiancee says we can move anywhere or even abroad if needed without getting tied to the flat.

My family also said they were initially pressuring due to the social stigma that we own a house now. But the reality is that we would still be working for the banks as they are the real owners till the loan is paid. And above all I didn't want to risk a price decline. I cannot see a decline of say 30-40lac rupees and all my hard earned money is gone. RE seems to me a very risky bet. It has become a casino and I'll stay away from it for quite a while.

Rahul Bajaj said...

@Anonymous 3:07

A Cock and bull story . No one here was born yesterday. Aren't you ashamed to take dowry from your father in law. What kind of person are you. No one here is going to admire your concocted 5th standard maths story and consider you as a financial genius. If you are here to spite people, you are in for a disappointment as most subscribers of this blog can instantly recognise a fake like you

Contribute something real and not the imaginary stories

Anonymous said...

I think i will go by BB, till date whatever he has said has come true. I intend going to Poona over this weekend and check out Kharadi.

Thanks BB

Unlucky said...

Anon 3.07
RE: My story

...."I was about to get married and my parents and in-laws said they will buy a flat after marriage. I opposed to the idea of buying andmy Father in law even offered help towards downpayment."

I am greatly moved by your parents gesture. Does your mom still wash your bum, I wonder.

Your parents have found a perfect father in law for you. Is his daughter as kind and generous. Does she wash and iron your clothes. Does she cook well. Does your mother in law massage you when you are tired.

Boy, I envy you. Some people get all the best in life. Good parents, Good in laws. Good job. Sound financial advisers. Lucky people.

My best wishes to you and please convey my regards to your in laws and dad/mum

cheers and keep smiling

Unlucky said...

@Anonymous 8:38

Avoid Pune for few day as it is raining cat and dogs. Kharadi is developing fast and will be an nice place to live after 3-4 years. Prices are reasonable compared to Mumbai. Before committing, research builders and the quality of constucction
All the best

Anonymous said...

Anon@3:07:

I'm not sure why other bloggers are talking nonsense like dowry etc. You saif your in-laws trying to help you and families always help each other and there is no dowry involved. Moreover, if you were taking the money, you would have bought the house and not rented.

What others think,I don't know but you seem to be making right decisions and in this high priced market it may be better to stay cautious. I myself am putting off buying a flat till next year hoping prices may correct. If they don't I'm still saving by renting.

With US and EU going down again, I'm afraid the world may go down in double dip recession and it may have an impact on salaries in India again. And if salaries in India rise too high, the work will be outsourced to other countries.

Anonymous said...

I have been reading this blog for more than 4 years now & was holing up my decision to buy a home almost 3 years till 2008 I could not take a decision as prices were very high , I am chartered Accountant & applied best of my financial knowledge & now where it was fitting in my mind to pay such abnormal price ,luckily my father forced me to buy a property in 2009 mid year when there was a slump & I bought a place in andheri west in a posh area @7900 just in 6 months rates are back to 13K.I lately realised that following Vik's advise was not correct since our Indian property market is monopoloistic since supply is limited & due to political nexus & Black Money.

I feel since the demand for housing is very high & which will not allow rates to fall drastically ,it might correct by 20 % in near future when Interest rates are hiked but in long run looking at the high profile projects coming up & development like metro rail is taking place prices would be northbound though it will not rise as fast as it rose in 2005- 2008.

Anonymous said...

Anon above:
Good luck to you. Don't you think the way prices have gone up in your case is unreal. Something that didn't go up more than 5-8% per year for the last 100 years, is going up like 40-50% up every year. Think? Is it real demand or speculative demand?

I'm happy waiting. I'll wait. I'm saving more than 50K rupees per month by renting and I'm not tied up to any place. Even if I don't buy, I'll retire happy with a huge savings account and what is good is Indian banks pay huge interest like 9-10% in savings/FDs etc. I went to US on a project and their interest rate on savings was 0.25% and CDs were 0.90%. I'm back to my country and enjoying the benefits.
But what I found in US is it was time to invest there. The RE prices where I was working as bodyshop, were down 60% from peak prices as per locals there. Even many Indians are under so much water at the the ones I spoke to on H-1B visas on the same project who bought thinking RE never goes down. One good thing I saw there was you could buy say a condo for $90K (approx 42 lac rupees) and rent it for $1500 (70K rupees per month). It is geting back to sanity in US.

This trip has made me realize that sitting in India I had no clue of world and how markets work. Now I can get a feel of RE slump as I saw in US. Many projects were left abandoned. Many Realtors were out of jobs trying to get a real job or collecting benefits from US Govt.

I'm in the camp of bear and will WAIT. People who want to buy, it is their choice. Looking at US unemployment rate, killing of 2 Indians last week, I'm scared of future. I hope things are not overdone to piss off others.

Anonymous said...

China Property Bubble to Burst ‘Quickly,’ Nomura Says.

June 16 (Bloomberg) — The “bubble” in China’s property market is going to burst very quickly, with prices set to fall as much as 20 percent in the next 12 to 18 months, according to Nomura Holdings Inc.

National real-estate prices may drop between 10 percent and 20 percent on average, compared with an increase of about 22 percent last year, Sun Mingchun, a Hong Kong-based economist at Nomura, said in a Bloomberg Television interview.

Anonymous said...

HI Vik,

can you post a article on north bangalore RE. The prices seem affordable and it is also not that far off from the city. the prices have more or less remainined stagnant for the last 3 years and am told you canm get a 10% discount on top of the existing price.

Anonymous said...

@Anonymous 7:25

Read your bit with interest. However, i feel that drawing a analogy between US is totally foolishness. IN US , 100% of population has roof on their head barring drug addicted homeless, where has in Indian cities 70% dont. In Mumbai 70% of population lives in slums, 20% in substandard housing and the rest good homes. The demand is huge and supply is very very limited. In these circumstances, the prices are bound to go northward.

The bubble is only imaginary. As people become prosperous, the demand is going to increase, so the prices

DhImAn said...

The bubble is only imaginary. As people become prosperous, the demand is going to increase, so the prices

Ah but it is only a fool or a blind man who does not see that the people are actually becoming less prosperous. The rich are getting richer, and the poor are getting poorer.

Meanwhile people are breeding like rabbits, adding to the already poor populace.

Also, the wealth of the rich is vaporous - they've invested in the stock market, or in real estate, or bond markets - all in India or abroad, and none of those look too stable right now. Worse, monetary inflation is at an all time high and accelerating. This can only have one effect - reduce the real value of "wealth".

So, no - not only is the bubble not imaginary, it is your perception of prosperity that is imaginary.

Prepare while you can, because this absolutely cannot end well.

Raj said...

@DhImAn

The whole scenario perplexes me. How can the real estate prices have risen so rapidly. To top this, all the apartments are sold out in the upcoming projects. If at all, someone wants a place, then he has to approach a reseller who quotes ridiculous rate. Everyone is demanding 40-50% black. Unlike the olden days when cash was paid as black, now they are asking cheques . The banks it seems are involved in money laundering. The very fact that no one is getting prosecuted for money laundering, suggests that the involvement of banks as well as government in this procedure.
I too think that there in no bubble. It is the corruption money that is being laundered.

shayna said...

Here a very good article on state of the RE market in 2 of the most advanced nations in the world. Bear in mind both these countries attract huge number of immigrants, far more than the number of people in India that manage to come into the so called Middle-Class(probable home buyers) from the lower middle class(living in Chawl n slums).

All this hogwash about Indian property growing for ever will end with EGG ON THE FACE of these investors.

My bro bourght a 4500sq-ft house in a Golf estate in Atlanta in 2009-feb. The house was built in 1994, he paid $40000 less than the first owner paid in 1994.

http://www.greaterfool.ca/
It’s fascinating how financial tastes can change. While hormonal young couples in Canada still lust after crown mouldings and bamboo floors, five years of a real estate recession are changing an entire American generation. People in their twenties, especially, are turning their backs on what’s now seen as the self-inflicted megalomaniacal wound of their parents. Even Obama’s absurd $8,000 bribe to make first-timers take the plunge (equivalent to almost 5% of the average US home price), didn’t work.

Anonymous said...

IN US , 100% of population has roof on their head barring drug addicted homeless, where has in Indian cities 70% dont. In Mumbai 70% of population lives in slums

If these people had money, they wouldn't stay in slums. Moreover, if they couldn't afford the previous prices how do you think they can now afford crazy prices. I make good money and still cannot afford a decent flat in Mumbai or Delhi NCR.

All this talk about demand and supply is nonsense. If the demand is real, rents should have gone up. Rents are still very low as compared to EMI, so demand is speculative. Anon @7:25 is right.

This is a massive bubble which will burst with UPA losing power. Makes me feel current UPA Govt's policies are same as what US had under Bush. And you see what is happening to what Bush did to USA.

Anonymous said...

All this talk in India about monsoon and inflation is utter foolishness subscribed by the politicians to keep rates low for a long time and to keep the stimulus in place.

I just don't understand why are they not looking at the long term future of the country.

I wonder what would happen if they included the RE prices in their inflation calculations for CPI. Inflation would have been 100%. Everthing is doctored to fool normal people and please the stock market.

Vik said...

Anon who bought home in Andheri and to another one who use asking me about North Bangalore :

Andheri(w) where you bought at 7900 was at 13,000 in mid 2008. You bought at a good discount to this price. I have always said that if you can afford you should buy it.Do not leverage loans you cannot afford to pay since the first 5 years of the loan payment goes towards interest and due to high interest rates (8-10)% minimum that is a lot of money.

If you have cash be my guest and pay 40000 rs in Worli.

As regards to North Bangalore I will be going there next month. Will post my findings. I am actually looking for a plot assuming it is still affordable. My goal is to find it in the stretch to Hebbal after the EMC building. I went there last year and I think that area holds a lot of promise. I won't be looking at close to Devanahalli since I think that area will take another 10 years to develop

Anonymous said...

Anonymous 1:45 PM

It goes without saying that demand is speculative. Now, these speculators have loads of black money and real estate is the safest parking place for such wealth. Market crash is unlikely to deter these people as their investment is 'extra cash in case of need ' . The builders may face the heat and slow down or stop construction activity. Crash or no crash, either way, common person is unlikely to get any benefit.

The only way to this solution is a crackdown on black money and confiscation of assets of persons who indulge in such practices.

In countries like USA/EU the black money factor is 0 because of govt control. Why cant our govt implement a rule to curb such activity

Anonymous said...

Even I sometimes tend to get a bit skeptical about RE rates falling because of the Black money factor, even if the rates fall then heck, the guy has still converted a lot of black money into atleast half white money.

On the other end, what I find, is that these investors are also equally greedy and love their capital, so I am hoping that at the very first crisis call, the big money will pull out causing all of this to crumble like a house of cards.

I just don't have a time line for this, but this is the trend that I have notices in most RE markets that I have studied, that the Big Money pulls out when the market is a its highest or at the first crisis call and the middle class and other herd mentality investors are left to soak the losses.

I could be completely wrong so please DYODD.

Slumdog said...

The disparity between have and have nots has been increasing since the Sonia govt came into power and corruption has reached the highest level. Until and unless the underground economy is controlled, we will see the disparities incrase. One family is living in 40cr apartment and another one in a shack half submerged in monsoon water contaminated with human excrement and chiddu takes the average and says that both the families are living in 20 cr apartments are their standard of living is in par with any european nations.

Don't expect the real estate to go down as it is controlled by powerful people that are part of political parties. Big companies are paying fat salaries, but large portion of this salary goes towards EMI towards exborbantly priced flats. In a way, these companies are helping the real estate market more than the person who earns that money through hard work.

shailesh said...

My 2 cents on RE bubble.

I live in US and have gone thru bubble and bust phase. What you are seeing in India is just bubble phase. Indian boom started almost 4 years after US boom started. I saw US bubble first hand. In 2005 and 2006, if anyone had said in US that there was bubble, no one believed it. Even US president and Fed gov did not think that there was bubble. All the WS analysts, folks with much more research and experience did not believe it. Everyone felt, they need to buy now or can never afford it. It is psychological at this stage. I was lucky, where I found good advice and did my own research to find out history. Bunch of us actually proved with historical numbers that we are in bubble, only problem was we did not know the cause of the bubble. As we all know it all came down in just few years after that. Today, no-one is looking housing as investment. Most folks are underwater and stuck. Many folks who have lost jobs, may have other job, but cant move as their houses are underwater.

Even in this environment, sellers are still listing at unreal prices at times. Its psychology that is difficult to adjust. Today I can buy same house for almost half the price as in 2006.

India is not different. The income for folks in corporate and government sector has increased, but that is very small percentage of population. Inflation is very high. This speculation will turn horrible for investors.

On Mumbai, anything beyond Rs 10K per sq ft is unreal in most of the city.

shailesh said...

Dubai's property bubble without answers

Back in 2005, I was about to sign papers with one big builder in Mumbai. I am glad that I did not. The promised building to be ready for possession in 2006, is still not done.

Anonymous said...

I know of some people who thought they were doing value buying when Dubai prices dipped sometime back. Given the miseries of Dubai and the fact that they will be unable to make payments plus the supply overhang...looks like Dubai market will be in limbo for decades to come if not forever.

Indian markets are also headed in that direction. Once this thing unravels, a lot of real estate companies will go bankrupt and at that point a lot of stories will come forth on what kind of frauds and double games were being played to siphon of money from overseas PE funds and partners while keeping the rates propped up...

Anonymous said...

There is no doubt that the RE is over priced in most of the Indian cities specially Delhi and Mumbai. The real estate hype was created by some vested interests in collusion with banks and government. Most investments in RE at these prices are doomed but it is hard to say when the market is going to hit the bottom. The ruling political party is propping up the boom currently but as the popular discontent reaches critical point, it may just let a free fall and come up with some new legislation s. This has happened before and certainly will recur.

Those who stretch their legs beyond the beds, are certainly going to find themselves in a boiling soup. At this time, it is better to be prudent and not succumb to the media hype about our country's great achievement. The very fact that the slums are increasing day by day, shows how hollow is our governments claim

Anonymous said...

There was an article on TV9 on a chandivili slum (western suburbs) of Mumbai which is on an eroding hillock. Some 60,000 people live on this hill and pay 3,000-4,000 as rent with 25000 deposit for this shaky piece of land which one day will give way and crash

There is only one conclusion here that Mumbai is overpopulated beyond limits

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