Tuesday, July 13, 2010

Property price surge across metros

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Property prices across the metros are soaring. In key markets, residential property prices are well past the 2007 peaks. Even land deal valuations have skyrocketed, report CNBC-TV18’s Vivek Law and Shubhro Sen.

Prices here have soared more than 40% since 2009. The national capital region is not far behind, with the price increase well over 30%. Bangalore too has seen a price rise of 10-15% in the first half of FY11.

That's not all, land prices have spooked analysts who have begun indicating that a property bubble is gradually building in cities like Mumbai and NCR. In what is being touted as the largest auction, Mumbai based Lodha Developers bagged a Rs 5700 crore deal recently. Several auctions by national textile corporation are being rescheduled as the company is re-considering an increase in reserve prices

Pranay Vakil, Chairman, Knight Frank India said, “People are buying land for the price of finished product, which surprises all of us and no amount of calculation can justify the price that some of them are paying.”

30 comments:

shailesh said...

I guess finally we have some cheer leader confessing that this is unreal.

shailesh said...

Developers start dropping Mumbai real-estate prices

Developers in Mumbai have finally started offering discounts on properties.

As the monsoon is approaching, there might be more discounts on the platter for customers. During the rains, developers usually find it difficult to push sales. Now they have started to offer discounts.

Pankaj Kapoor, founder, Liases Foras, believes that current trends are indicative of another asset bubble. "In the quarter ended March 2010, prices have gone up further by 15%-20% and we are estimating sales to be down further by 25%-30%. Despite the gradual decline in sales and market efficiency, the rise in property prices is indicating the creation of another asset bubble."

Mumbai is expected to report lesser volume of real-estate transactions over the next six months, according to industry experts. "We are going to see lower volumes of transactions in the next six months compared to the last six months, if the prices do not come down," said Pranay Vakil, chairman, Knight Frank (India) Pvt Ltd.

"More realty companies will offer discounts as sales are not taking place," said Sheetal Malpani, analyst, BRICS Securities Ltd. According to industry sources, developers are not publishing the discounts that they are offering.

shailesh said...

In an hour-long chat on rediff.com on Thursday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

digno asked, Hi, I am going to take home loan of Rs.5.6 lacs, my take home salary is 29k. Is it wise to take home loan & then invest in real estate in Mumbai [ Images ]?
Sailesh answers, hi, if you are buying a house to live in then it makes sense to take a home loan. But if its purely for investment purpose then I would not recommend buying a house on loan given the price of Real Estate in Mumbai. I personally expect that its a big bubble that can burst anytime.

Link

Desi Batman said...

Shailesh:
digno asked, Hi, I am going to take home loan of Rs.5.6 lacs, my take home salary is 29k. Is it wise to take home loan & then invest in real estate in Mumbai [ Images ]?

What is this guy going to buy for 5.6 lacs in Bombay? one corner of a bathroom?
I assume for 29K per month take home gross salary would be 40K per month i.e. 5 lacs per year. He is poor guy in Mumbai. May be he should stay in slums.

Desi Batman said...

Nice. Builders playing game NICE.

They know it is huge bubble. Therefore keep increasing the price and sell whatever they can. Then for others offer tiny discount to make it sound like big deal for a buyer.

Theory on real estate bubble in India is going on for quite few years. I read previous blogs and they were quite informative. I suppose where are those bloggers/commenters? did they buy house and gave up on sharing their intelligence.

Anonymous said...

2009 story-If builders sell they get their price they advertise..if we sell..we getbids at 20% lower

2010 story- Ifbuilders advertise a rate..only fools bite it..if we are seriousthey are ready to offer 20% discount
If we sellat 20% lower..builders undercut us even then..

Friends , Mumbaites and fellow buyers..Keep away ..40% inventory unsold across board in Mumbai..Its amarket which is keeping alive only cause RBI doesnt bite the bullet to increase rates to tame inflation..ANd some banks are hughelyoverexposed to properties..So dayis not farwhen we see one of them opening skeletons to fall and properites to getting dumped..

Rahul said...

Building industry has become like share bazar where builders are brokers. These guys use black money from investors who want to invest their black money and have realised that real estate is their best bet. So bubble or no bubble, the builders will be safe and therefore not worried. As for the investors, the game is speculation/gambling and are prepared to loose money.

In these circumstances, don't assume that the prices will go down. In fact prices may go northbound.

In a nutshell, 1% of the population is holding the rest 99% to ransom. All of you know who these 1% are but can't do anything.

Welcome to ManMohan's India

Desi Batman said...

Anon @ 8:41 AM
2009 story-If builders sell they get their price they advertise..if we sell..we getbids at 20% lower

2010 story- Ifbuilders advertise a rate..only fools bite it..if we are seriousthey are ready to offer 20% discount
If we sellat 20% lower..builders undercut us even then..


looks like it is now investors vs builders. For a buyer both are one and same.

Many years ago builders were not investors, they build buildings and sell to whoever is ready to pay. Investors were the ones that controlled the money and market, they were the ones to create hype and fake demands.

Now builders includes the role of investors. Lately many individual buyers have adopted role of investors.

Basically, everyone is looting everyone.

This will continue until only investors are left in market. That days are not far. Question will be who can rob a robber.

Desi Batman said...

Rahul:

That is wonderful news! Most of black money will be sucked out of market and will be tied to immovable, non-liquid money. What happens then?

also do you imply that all the buyers today have that kinda of money lying around? what kinda of work they do to earn this money?

Your insight will be helpful to shape many people's career.

Anonymous said...

Realtors looking for IPO

What a joke! Realtors are in deep shit, the market is at the top (22.5 PE or so)....Institutional Investors are trying to pump the suckers, I mean investors for the upcoming deals!!!

People in India deserve to be conned....what a fallout all this is going to result in..it will be a good joke!

BTW, I wonder where my noisome friends(I mean devils ;)), Sundaas Bhai and Sussuu Behan are nowadays?

50%Guarantee said...

World class city Mumbai

http://www.liveleak.com/view?i=93c_1275575759

Hotel Leela Kempinski is one of the customers of this market. After watching this, would you be willing to pay Rs 1100/ for a plate of chicken tikka, always recommended by the maitre d'hotel!!!!

The quality of post flats costing crores also has similaries of this meat market. Imagine spending crores for a flat and living in between human extrement, stray animals and fithy gujaratis!

I'd rather live in a modest apartment in Pune

Anonymous said...

Inflation - Duhai Hai Duhai..

The galloping inflation trends shows a lot of pain for Indian for quite some time to come. I would think that we would hit extreme inflation in 2011. People are already complaining about the cost of vegetables and essential foods. This form of indirect taxation helps the rich and drains the poor of any money they might have made. Manmohan believe in Keynesian economics which means a lot of pain to the poor and middle class.

According to the report last time inflation edged past 8%, interest rates were 350 bps higher!! If interest rates rising that high...people who have taken EMI's will die(or commit suicide)!! I wonder what the situation will look like at that time?

Anonymous said...

Typical desis. Sit on some website and complain all day, someone should do something for me.
I am 'bechara'.
I don't know how to make more money.
I don't vote nor know how to get things done in my Country.
I don't want to change, but can everyone else change to make my life easier.
You are a 'bechara', and get what you deserve.

samix said...

It is really annoying when people start bashing communities on this informative blog, the one's that seem to get most of the bashing are muslims/gujjus/marwaris,

Vik I would humbly request you to either pro-actively delete such comments or atleast disable anonymous posting, this will go a long way to discourage such things...

Adi said...

I agree with Samix. Religion/regional bashing should be kept away from forum. Anything that does not contribute to real estate news should be kept away or else its just a slippery slope.

Anonymous said...

58 lakhs profit in 4 months

1. flat sold at 9500 sq.ft - area 1360 sq.ft ( 1.29 cr)

2. Purchased : March end 2010

3. Builder Raheja

4. Location : behind d-mart - off link rd

5. Resold. July 9, 2010

6. Selling price: 1.87 cr

Unbelievable but true. 57lakhs in 4 months!!!!

Bubble is getting inflated at a very fast rate. Hope it bursts soon

Vik said...

ok guys. I'm doing some house cleaning.

Desi Batman said...

Anon @ 6:01 PM

You spoke like true desi who doesn't know what to talk and ofcourse when to open mouth.

Your post had no point. Please share your opinion on real estate not your feelings or anguish.

Desi Batman said...

I wonder with so many constructions, high rise buildings, what about infrastructure?

Water shortage - no problem order water tanker. Is that a solution in Mumbai, Delhi and other metro cities?

What about electricity?

What about health care?

What about hygine and sanitation?

Looks like India's growth story is only based on quantity and quality is absent.

http://www.time.com/time/magazine/article/0,9171,2002524,00.html

samix said...

Desi Batman you are correct this is exactly what I was discussing with my friend, If you look around Mumbai you will see so many projects like new flyovers/metros/monorail/skywalk coming up.

I wonder do we even have a contingency plan in place for these facilities if a disaster strikes like an earthquake or flood or something similar, do we have the wherewithal to quickly rebuild and repair the systems and kickstart life as normal ?

Thambi said...

samix anne,

why worry about unpredictable. Whatever destined to happen is bound to happen and no force on earth can change it. Our destiny is prewritten on our forehead by aabdavan (god - shiva, vishnu, brahma, alla, jesus etc )

Our main worry is the price. Unscrupulous and investors are making housing beyond the reach of common man. This can be curtailed by government but unlike other countries, our govt machinery is totally corrupt. Even the president is involved in land grabbing through her brother

What we can do his offer poojas, so that the situation corrects

Anonymous said...

hmmmmm interesting!! No sign of Sundaas Bhai or Sussuu behan!!

People run for your lives! The bubble is going to fall on our heads..

Anonymous said...

What bubble re babloo?

If you do not have money, does it mean everyone else also don't/should not have it to buy at todays prices...

Trend is your friend, your don't bet against it..

Anonymous said...

Thats right!

The trend says short the market!

Anonymous said...

My real estate agent says that the current prices will remain so until the end of monsoon, and come diwali, the prices likely to jump by at least 15% for premium properties in Mumbai. I regret not listening to him 4 years back and since then the prices have gone up by 120%. Kandivili flats were prices 5000-6000 in 2005-2006. The same are quoted today for 12000-14000 sq ft and few are in the market. I believe my real estate broker, but I dont have such money.

Indian rupee with the new symbol may crash, but can anyone here say that the prices will come down ?. May be in dollar terms, but not rupee. We local people are doomed.

If rupee crashes, there would be another flood of money into india and most of it will go into real estate. The prices will double in no time. Just imagine a flat with built up area in kandivili costing 4 crs. that is 40,000 per sq. ft. This is a nightmare scenario for most of us who dont own a home.

I am not being pessimistic. This scenario is possible. I am getting a feeling that sandas and sussu, whatever their nicks are, after all were realistic.

samix said...

Anon above I guess we all agree with what you have to say.

We have always maintained on this blog atleast, since I joined that the RE market is the best to make money right now, IF you have it.

If you have the cash then go make a killing, there are enough sheeple out there waiting for the bait.

What we normally do advise, atleast what I normally advise is that people who are living off monthly salaries and have no surplus should NOT enter this market for making money by taking out loans etc, that will make them indentured servants of the bank for the next 20 years.

For people who do have a surplus and who are investing to make money we say that pull when the top has been hit, ie short the market before you loss all your money.

As opposed to what people think this in not a Anti RE blog, this is a idea sharing about RE blog

Anonymous said...

this blog is crap,
ive been reading it since 2007 .. and prices hav gone up 3 times since then. blah
should change the name from bubble to boom.

Anonymous said...

China the mother of all bubbles

http://www.realestatebuzz.com.au/china-the-mother-of-all-bubbles/?source=patrick.net

Also read www.patrick.net for good insights into housing bubble in USA ad worldwide.

As Sherlock Holmes said "There is nothing new under the sun, its all been done before"

India China will follow on the path of what happened in USA post bubble( The bubble in USA is still not completely over)

sr said...

Guys, PLEASE...do not compare India/China to the USA. Median home prices have not even doubled in TWENTY years in the USA, and the median price to median income has always remained in single digits in the USA even in its so called bubble areas. In India and China, this multiple is in the HUNDREDs, and home prices have far outpaced inflation over the past 30 years. India and China have the MOST ABSURD real estate bubbled in the Universe, and when they collapse, there will be global depression for many decades.

rajni sharma said...

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