Tuesday, October 12, 2010

Real estate prices hit the fast track in New Delhi, Mumbai

Is real estate becoming an asset bubble?

DNA invited some leading real-estate players to help readers understand the trends in the industry in Mumbai.

Prakash Shah: Mid-town means areas like Lower Parel. I don't see a price correction happening in distant suburbs like Thane where the price is about Rs8,000. That is affordable middle-class housing. That’s a place where land availability is still possible. Enquires and business are going on. There is reasonable demand and supply. Not at the same levels as in 2008, buta reasonable demand-supply position is there. And Rs7,000-8,000 is an affordable rate in Mumbai. Maybe in other cities I understand Rs3,000-4,000 is an affordable rate, but Mumbai has a peculiar way of thinking. Compare the prices of Central suburbs, which are around Rs8,000 a sq ft, with those of Western suburbs like Borivli-Kandivli where prices are around Rs10,000-11,000 sq ft. These differences will remain.

Anand Narayanan: In Delhi, you can just keep expanding. Manesar or Gurgaon. The Delhi model is to give the first investor all flats, who then sells them to a second investor and then to the third. In Mumbai, because land is scarce, the builder (except for the small part he has sold to original investors) normally wants to sell to the real user. It also ensures that the market does not get too speculative, and prices don’t fall. The flats may sell very slowly, but the builder can afford to wait because he does not have a million square feet to sell, with the knowledge that he can develop another million square feet tomorrow. That is why, in Mumbai, when I go and buy a product in Hiranandani or any of the good developers. there is a lock-in period. If I put in money today I may not be able to sell for a period of time which is a reasonable period of time. It could be as high as one year to three years. Then there is a high exit cost.There is a transfer charge which is designed to stop investors from flipping it and which can go as high as 15% of your sale value. These exit costs could be in the region of Rs50-100 per sq ft.

Article Link

when we talk of the possibility of a bubble, we’re actually only talking of property in Mumbai and Delhi right now.

The real estate market in Delhi led the correction, and Mumbai fell in line next. Both bounced back after the introduction of stimulus packages and the government’s actions in restructuring debt. During the revival phase, a large amount of capital sitting on the fences immediately saw an opportunity. This was first seen in the equity markets, and then later in the real estate and gold commodity markets - all three classes bounced back convincingly.

There is, therefore, a concern that these two markets have demonstrated higher-than- expected enthusiasm, especially in the central parts in the case of Mumbai, and Gurgaon and Noida for Delhi. A lot of investors have plugged in considerable amounts of capital in these regions, and the values, on an average, have now gone 30% higher than the last peak. Some of the residential developments in central Mumbai in 2008 had peaked at `30,000/sq ft. Today, they stand at 38,000/sq ft.

The kind of volumes that we have witnessed in the first half of 2010 has come down dramatically but the liquidity situation in the market has not dropped, and neither has the appetite for investment. In fact, the same enthusiasm, which had been previously contracted by the central parts of Mumbai, is now spreading towards the other parts of the city.

53 comments:

shailesh said...

Speculators spur property rate spike


After a long slump, speculators are back in the country’s property market. That's bad news if you are looking for discounts or bargains while buying a home. The deep discounts of last year, when the downturn sent the demand for housing plummeting, are all but over. Developers now are in no hurry to sell, say industry insiders and experts.

Speculators — rich investors looking to re-sell homes at a profit — are said to be buying up in bulk. Home prices have risen by anything between 10 and 50 per cent in 2010 in the National Capital Region, Mumbai and Pune, industry officials say.

“We will be staying away from discounts,” said Abhisheck Lodha of Lodha Developers in Mumbai. Samir Jasuja, founder and CEO of PropEquity, was forthright. “Around 50 per cent properties are being bought over by investors and speculators,” he said.

However, some incentives may come to markets where end-users are slower to buy, said Rakesh Kaul, chief operating officer at developer Ansal API. A lot could depend on the initial public offers (IPOs) of realty firms currently hitting the stock market. If their attempts to raise cash fall short, 30 to 35 per cent discounts could well come your way, said Pankaj Kapoor, managing director at research firm Liases Foras.

samix said...

This was first seen in the equity markets, and then later in the real estate and gold commodity markets - all three classes bounced back convincingly.

The sentence is misleading with respect to gold, when the American recession started, as all asset classes were falling, gold was one that was rising.

samix said...

I think that the "Speculators spur property rate spike" article is actually a trap to make people just jump in by conditioning that that there is no option left now,

Subtle hint here,

"hurry up guys rich investors are buying up all the flats"
- you don't have a flat you ain't rich.

"We will keep away from discounts"
- We don't care, we are not cash strapped, we ain't gonna give you any discount

"Prices have gone up by 10 to 50%"
- Don't miss the get rich quick bus

shailesh said...

From article posted,

Prakash Shah: Mid-town means areas like Lower Parel. I don't see a price correction happening in distant suburbs like Thane where the price is about Rs8,000. That is affordable middle-class housing. That’s a place where land availability is still possible. Enquires and business are going on. There is reasonable demand and supply. Not at the same levels as in 2008, buta reasonable demand-supply position is there. And Rs7,000-8,000 is an affordable rate in Mumbai. Maybe in other cities I understand Rs3,000-4,000 is an affordable rate, but Mumbai has a peculiar way of thinking. Compare the prices of Central suburbs, which are around Rs8,000 a sq ft, with those of Western suburbs like Borivli-Kandivli where prices are around Rs10,000-11,000 sq ft. These differences will remain.

I can't imagine the prices being quoted here. So to live in distant Thane, in 1 BHK flat of 600 sq ft, at Rs. 8,000, the cost is Rs. 48 to 50 Lakh??? The income must be at least 12 lakh a year, i.e. 1 lakh per month. The person earning 1 lakh per month is called Middle Class !!! WTF !!! And we can still stay its not Bubble !!!

Anonymous said...

"And we can still stay its not Bubble "...
Till its burst, no one would say so.
For now, it is demand and supply. If people can "afford", who you and me are to object....I can do wishful thinking, " Me in USA for 10 years, and still cannot afford a flat in Mumbai." But if I think that no-one else should either, its no good to anyone, including myself!

Mumbai property said...

The price of real estate is become increasing day by day, the proverb is going to be true that, that land is gold.

Bachera Indian said...

One more blow to the common people by govt till now they were behind curtain now came out open-inly to loot


NEW DELHI: Property transactions in the national capital are all set to become a costly affair with the Delhi Cabinet on Tuesday deciding to enhance the current circle rates for sale and purchase of property by 100% with an aim to improve fiscal health of the state exchequer.

The new rates will be notified soon, chief minister Sheila Dikshit told reporters soon after presiding over the Cabinet meeting. This is for the first time that the circle rates have been increased after they were first introduced in the Capital.

The circle rate of properties is the system in which the government fixes the minimum or maximum rate of the land depending on the category of colonies it falls in. The chief minister said that a decision to increase the existing circle rates was taken in order to mitigate the black money circulation in property transaction in Delhi.

The circle rates were first introduced in Delhi in 2007, dividing the Capital into eight categories, and were notified under the provisions of the Delhi Stamp (Prevention of Undervaluation of Instruments) Rules, 2007 on July 18, 2007.
Ms Dikshit said the revision in circle rates will help in curbing the prevailing undervaluation of properties.

The neighbouring states of Uttar Pradesh and Haryana have been enhancing circle rates in respect of Noida and Gurgaon very frequently. “In view of prevailing actual market rates in Delhi and in other NCR towns, it was felt appropriate to reasonably rationalise existing circle rates. The new rates will come into force after issue of notification very soon,” a senior government official said.

Vik said...

Atleast somebody can afford a house in Mumbai

Mukesh ready to move into mansion in the sky
Reeba Zachariah, TNN, Oct 13, 2010, 01.23am IST

Article
Comments (225)



Tags:Reliance Industries|Reliance Anil Dhirubhai Group|Mukesh Ambani|Hirsch Bedner Associates|Antilia

Mukesh Ambani's 27-floor Antilia on Altamount Road took seven years to build.

MUMBAI: Antilia, the luxe 27-storey home of India's richest person Mukesh Ambani in south Mumbai, is ready for housewarming during the ongoing festive season. The building, which stands taller than most buildings in the vicinity and is visible from a distance in every direction, bears the name of a legendary island in the Atlantic Ocean.


Read more: Mukesh ready to move into mansion in the sky - The Times of India http://timesofindia.indiatimes.com/city/mumbai/Mukesh-ready-to-move-into-mansion-in-the-sky/articleshow/6738598.cms#ixzz12E83wY4F

Vik said...

I also read somewhere that the Maharashtra govt is going to levy a mining tax on construction as it involves excavating the earth to lay the foundation. Even though no metals are mined I think the builders have to dump the excavated earth somewhere and many could be selling it in the black market which could used as landfill. So expect this tax to be passed down to the consumer.

shailesh said...

Navi Mumbai airport to be ready by 2015

“The Navi Mumbai airport should have been in operation by 2011, but we will try to push it for at least a partial or a first phase opening by 2014-15,” Patel said on the sidelines of a function organised by the Gem and Jewellery Export Promotion Council in Mumbai.

Regarding the location of the Navi Mumbai airport, Patel said, “I have made it clear that the airport location cannot change. There is no other location that is suitable.”

Patel also said that if required, necessary changes could be made in the plan for parallel runways. “If some minor reduction of distance (for the runway is suggested) to accommodate the environmental concerns, I don’t think there is any reason why it cannot be done,” he said.

The international standard of separation between two parallel runways is 1,035 metres.

shailesh said...

What downturn, ask city builders


Another developer who is sponsoring a Navratri mandal in South Mumbai said, "There has been a rise of almost 35 per cent in the property market as compared to last year.

The market is good and we are seeing a major turnover in deals. We are also positive that the markets won't fall in the near future."

This year, real estate giant Sai Group is the main sponsor for Mumbai's biggest dandiya event the Kora-Kendra Dandiya in Borivli.

The event's organiser Pankaj Kotecha said, "Navratri mandals promise good branding since our revellers come from good backgrounds.

Desi Batman said...

Trying to understand the flow of money.

As usual I still keep wondering where do so many people get so much money to by such high priced RE? Lately I have started wondering where does this all money go? I mean buyers pay to sellers (builders) in croressss. Where do these croresss ultimately go? I can only think of one place- Government!!! builder buy high priced land from govnt as land is released by govnt. Land is naturally freely available for govnt.

WTF!!

Bachera Indian said...

No Desi batman,

It goes again in inflating the bubble and at some point builder will do IPO and cash out and money goes out of india or some other asset class, it never comes to real estate.

More important point to answer your question, which industry in world gives you return of 1000%, net profit margin of 70%, this is real estate, take Oboroi IPO recently, they made sales of 1000 crores and profit of 500 crores, this is insane?

Desi Batman said...

which industry in world gives you return of 1000%, net profit margin of 70%, this is real estate, take Oboroi IPO recently, they made sales of 1000 crores and profit of 500 crores, this is insane?

That didn't worked well for USA. Did it? Prices did go up but not to level in China and India.

RE Prices in USA are in pressure to decrease because of affordability. Affordability comes with earnings and jobs. India has lots of job inflowing from all over the world (read outsourcing). Today earnings per month of 40K to 1Lac is normal for many Indians in India. Hell, Govnt employee gets average of 40K.
Also there are lots of Indians abroad past 10 to 20 years, they are cash wealthy, they need to diversify their earnings, one the place is RE back home.
Well, that answers my question that where does money come from.

Now where does money goto? Where does black money go? yes, fueling RE bubble. How how long? until people are drawn down to lowest lifestyle possible with highest debt.

Wait for another 7 to 10 years and fun start BIG TIME.

Anonymous said...

Something big is going to happen to the world economy and it won't be good.

Anonymous said...

All real estate predictions except from sbalseshu and BB, have gone totally wrong. Our '50% guarantee' guy is nowhere to be seen. Sensex today touched 21,206 as opposed to the predictions of economic pundits prediction of 8000. Rupee is stable. There is an acute shortage of apartments in Mumbai in spite of the skyrocketing prices.
Malad/kandivili/borivili new construction price is from 14k to 15k for sq.ft but one can buy only from investors. The apartments are sold before the building foundation

This isn't a bubble. This is prosperity. I work for an airline. Every flight to Europe/ Far eastt is overbooked by Indians traveling abroad for fun. This include people carrying plastic mugs to wash their asses on the aeroplane. The flights leaving indian airports become so filthy in no time as there is no way of restricting/educating passengers of toilet use. Money is flowing everywhere.

I may be talking about 1% people. But this 5% has created havoc in the market. 5% of such creatures constitute nearly 10 1 million of Mumbai population. The rest 95% are destined to live in slums clike dharavi

Are you guy still in the opinion that Man Mohan Praji is doing good for the country ?

Anonymous said...

Jut to add to my above post.

If you happen to go to some clandestine foreign currency dealers either in bhendi bazaar or even suburbs like kalina, you observe that they are busy selling dollars. Even one can buy 50,000 US dollars in half an hour with a guarantee of genuineness. These guys are serious businessmen and dont cheat. I've seen people buying 10-15 k us dollars for going to places like shingapore, behankok for treatment/change of place for health. Only bhagwan know what health treatment these places offer.

My point is, everyone corrupt or carrying out illegal businesses are flush with money and the present govt policies help them to make more

Desi Batman said...

Anon above. I agree.

So now what is the solution for people like me or new generation which will enter this era with no inherited wealth (95% of the crowd)? How do we get into that 5% of successful people?

DhImAn said...

Question: If the US created out of thin air, about USD 1 trillion, how come the exchange rate between rupees and dollars is roughly the same at 45 INR/USD?

Shouldn't the INR have instantly become more valuable (because the USD devalued)?

Since exchange rate parity was maintained, this would mean that India must have devalued the INR by the same percentage value (give or take), i.e., it must have created a proportional amount of INR also.

Look up "competitive devaluation".

This is to answer the question about whence so many INRs come. There is only one source for INR - barring some counterfeiting, and that is the RBI and banks that loan every INR that RBI creates about a hundred times over.

The system is designed to reward borrowers over savers, cheats over the honest and so on.

This is why the establishment, who form the former groups (borrowers, liars, cheats) are so anti-gold, because gold forces an honesty that rewards savers, the honest and the truthful.

So Batman, the solution is simple - get gold and sit on it, doing nothing. The existing system is on a positive feedback loop, meaning that its demise is guaranteed. You don't have to do anything except short establishment fiat. The best way to be short something is to sell it - thus, sell your INR and USD and get something real.

Now lets see how you can get to the top 1% of all rich people. Here's some fun math.

Since there is about 20g of gold per person per lifetime, get 2000 grams - i.e., 2kg. This will cost you INR 40 Lakhs, which while not a trivial sum, is not unattainable either.

Now you have as much gold as 100 people-lifetimes. If we take all the gold in the world, and start giving out 2 kg per person, 1% of people will have it, and 99% won't because we will run out of the it.

So it's that simple - get 2kgs and relax. You'll already be in the top 1%.

Sadly, in a country with 100 crore people, 1% is 1 crore people, so you'll have one crore people to keep you company, along with 2 crore kgs of the shiny stuff.

Raj said...

@DhImAn

Hilarious!! Witty and True!!

xMumbaiker said...

How someone can say with straight face that Rs8000/Sq Ft super built-up is affordable in far flung suburban area. Cost for carpet area would be 270-300 USD depending upon loading. If this is affordable in mumbai then it begs to ask how will Mumbai remain competitive.

Now the Gurus who are in the business of selling RE forecasting that the price will not go down because all the flats are being purchased by end user. Where were these end users when the price went down in 2008-2009. I was looking to buy a home but the price didn't go down to my affordability level.
There is so much mis-information being spread by various parties with self interest because there is no way to verify the information due to lack of transparency and registration information.
There are lots of resale flats in unfinished and near finished buildings are available. I guess builders in Mumbai count then as end users.
I am not hopeful than the prices will comedown anytime soon. There has be some structural change such as western economy picking up steam causing unwinding of carry trade or continuing inflation in India that cannot be tames and FII moving to greener pasture.
Only time will tell. Until then I am sitting tight.

Anonymous said...

"Where were these end users when the price went down in 2008-2009"
Good question as DhiMan would say!
People have a tendency to buy RE/Stocks when it is on upswing. Since 2008-2009 was a downturn, general people like to hold onto the cash. But even then, if I think, 2008-2009 was not affordable to me, if todays average price in mumbai is 1.5 crors, even if we say 50%, 75lak is not affordable to me in 2008-2009. But who is me to afford?

neha said...

ya rite prices of real estate are increasing day by day........nice post.....

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Anonymous said...

This is what BB had said on July this year, I just can't believe this guy.

Where are you BB, this forum needs you

Blogger Bindas Bhai said...

Thanks Laaloo for your kind words but this is only my judgment, I could be really wrong.

Prices in Mumbai will further rise, now at a greater pace. Sellers (re-sale flats) will keep increasing the price even if they get the customer for the price they have quoted. Builders will launch lot of new projects during Diwali and will be see fairly good sales during pre-launch. Investors will be the main buyer and a lot of hype will be created in the media justifying RE as a good investment.

Suddenly we will find there are no good flats on the block. Greed and fear will start working. Welcome to the final lap which will work atleast for three to four qtrs. 95KCr debt of builders will swell along with unsold inventories in first qtr 2011.

Banks will start getting jittery including RBI, builders will put a brave front till June 2011 but will not be in a position to hold on further.

Prime properties will still have demand but me too properties will be thrashed in just two qtrs. From greed fear will set in but this time sellers will be scared.

All the best.

Bindas Bhai

4:00 AM

shailesh said...

This explains the recent boom after 2008-2008 decline,

Bubble Psychology

shailesh said...

Above picture is from this link,

August 13 2010: Bubble Psychology and Lessons from History

Meghana said...

Shailesh, So right now are in the "Bull Trap". If this is true, I should be partying ....

Anonymous said...

Guys I need your opinion on this:

1) Between 2007 and 2009 I invested about 13 Lakhs in the Stock market, which in Sep 2010 became 19 Lakhs

2) I cashed out 10.5 Lakhs in Sep-Oct 2010, left with 8.5-9 lakhs in the market.

3) I am expecting the market fall to precede (or coincide with) the bursting of the real estate bubble.

4) I will cash out the remaining investment as the crash happens.

5) Where do I park the 10.5 lakhs now such that the opportunity is ripe in the next 1 year or so to invest in real estate and/or the market?

samix said...

Anon above, if you had invested the same amount in gold then with an average price of $700 per ounce along 2007 - 2009 , you could now have liquidated your entire portfolio for 25.5 lak rupees.

Now, Do I need to even tell you where to plonk your 10 laks anymore ?

Disclaimer: DYODD

Desi Batman said...

Gold is one of oldest investment instrument, but today we have so many - Currencies, RE, Stocks, Bank CDs, ETF, CDS, etc etc...

It is all about confidence that particular investment will give you returns. Value of money is moved between these financial intruments because one loses the confidence and another one has to gain. Today many prefer move their value in Gold and RE rather than currency. Some might feel value in stocks than in Gold and RE. But saying that ONLY Gold has value and will retain it's value it is wrong. It is all about point of time in reference what holds more confidence. Ya arguments have been cannot create Gold, hence no manipulation of value. What if someone comes up with formula to create gold?

If you invent something that will change the betterment of lifestyle, it is much more precious than Gold and RE.

Lastly, to make money identify the bubble, take risk, earn highest returns. Today Gold is gaining confidence, I am going to buy ALOT as have no confidence in US dollars and INR. RE is way to much manipulated.

What is better physical gold or paper gold (ETF)? Any ticker symbol for dow jones/nasdaq?

samix said...

@Desi batman, ETF and other paper gold products are basically fraud.

In a recent hearing at the CFTC, the guy who handles one of these ETF's stated that they leverage the ETF's 1:100 ie they sell 1 ounce atleast hundred times, and hope that not all will take delivery at once.

Secondly, my idea of buying gold is a big thundering NO to the policies of the banks and their agents, their unbacked currencies, their economic policies, their funny money.

As such only trust gold that you can physically take possession of, for it's the same with ETF's as it is with bank runs, when the shit hits the fan, and all run to pull their gold out of the instruments, you know how many will get delivery.

And because you have hit the ETF note, let me also tell you that ETF's are the basic instruments using which the price of gold is suppressed, once people start to understand this price suppression via ETF/central bank swaps/leases of gold, the price of gold will go to the moon.

Another evident proof of this price suppression is the total media blackout... Do you know that day before yesterday gold hit a new high and rallied 23 dollars ? for the past months almost every alternate day gold is making a new high.

Imagine some stupid stock doing this, the entire lame stream media would be going ga ga over it.

for more information: http://gata.org

ticker: http://goldprice.org/spot-gold.html

samix said...

Batman you said

Gold is one of oldest investment instrument, but today we have so many - Currencies, RE, Stocks, Bank CDs, ETF, CDS, etc etc...


"Very few people see the fragility of wealth under the regime of irredeemable currency. Those who can are not tempted by the spectacular profit opportunities in stock, bond, and real estate speculation. They know full well that yielding to the temptation would be tantamount to sitting in a crowded auditorium just before the fire alarm was ready to sound. Their chance to reach the fire exit alive would be practically nil."
- Antal Fekete

Anonymous said...

Desi Batman,

You have raised a valid point. The argument raised by a vocal majority that gold is the only value retainer and the rest are just phony is specious at best.
We unfortunately are not living in a world where everything is left to natural forces. Gold historically has been a currency beyond corruption. But after the bretton woods agreement the world has managed to suppress the efficacy of gold. Now its more or less a commodity albeit a indestructible one. Equating it to a currency that can go only up is tantamount to lunacy.

Of course, gold being a precious metal will ALWAYS retain value with or without the presence of the State, unlike fiat currencies which tend to go worthless with a change in the system.(A frightening possibility however distant would be a maoist takeover).But for you to expect the stratospheric flight of gold will mean a few doomsday predictions.If gold is to go up humungously higher, the prominent path would be to trample the paper currencies. Trampling the paper currencies would mean the authority of the state and the system to crumble. But anyone in their right mind expect the govrnments to give up without a fight. Nada. The first thing they would do is to ban ETF's in gold and block the access to bank safe deposit vaults (just like the americans did a long time back to ban the physical possesson of gold). Those who manage to keep some gold at home would be just sitting ducks for the robbers and thieves who would certainly smell the gold somehow. The chaos the rise of gold unleashes would be hard to imagine. And for the same reason the public would only thank the govt(if there was one) to maintain order by confiscating anything that stands in the way of peace and order.

The stratospheric rise in gold prices would be chaos-inducing and hence it would be unwise to think of it as your saviour. Gold now exists because of the protection and support the state gives.So it should behave like any other commodity.(Most commodities have had this dizzying rise over the last one decade.Take rubber which has gone from 25/kg in 2000 to 175/kg at present.)

At this moment in time, a little bit amount of gold would keep you in good company. But the circumstances do not warrant enough to hoard on gold.(unless you are expecting the system to fall, which for me sounds far fetched)

Su-Al.

shailesh said...

I wonder how much longer the recovery will last...

FDI inflows down 60% in August


Reflecting fragile recovery in the world’s major economies, foreign direct investment into India dipped for the third consecutive month, by about 60 per cent to $1.33 billion, in August.

The FDI inflows in August 2009 were $3.26 billion.

Crisil Principal Economist D K Joshi said: “This is not a good news for the Indian economy. This reflects that global economic recovery is still fragile and some impact of that would be reflected in our FDI.”

shailesh said...

On other hand, FII keep growing strong. This is the hot money, that can go with push of a button...

RBI to intervene if FIIs inflows are lumpy: Subbarao

CHANDIGARH: Keeping a watch on the record USD 22 billion FII investments in the booming Indian stock markets this year, the RBI today said it will "intervene if the inflows are lumpy and volatile".

On October 13, FII investment crossed the magical USD 22 billion or Rs 1 lakh crore in stock markets. The total inflows last year was USD 17 billion.

According to reports, the RBI had intervened yesterday by buying dollars in the foreign exchange markets to arrest the rise in value of rupee.

Raj said...

Since the discussion in this board veers around economics, fiat currency etc., I was wondering if some of you have thoughts on wealth effect & high inflation in India.

Is it possible that home owners feeling flush with huge run up in home prices are consuming more of other goods and causing inflation?

Of course, they can't spend the money they don't have. Is there anyone in this board tracking income growth, savings rate?

Anonymous said...

Q
"Is it possible that home owners feeling flush with huge run up in home prices are consuming more of other goods and causing inflation?
"
A
Feeling flush with cash and having cash is different. Even if my actual house where I stay has appreciated, so are the other expenses in the locality. In general it is a good feeling if the house prices goes up, nothing else. At least for home-owners. For investors, yes..they would be flush with cash, but as is generally true, if you sell out and get cash, what would you do with cash?

Anonymous said...

Lot of Indians are flush with money. I'm not talking about fixed assets. It is cash. Many don't bat a eyelid when spending 10's of thousand on useless things which shows their financial power. Almost all such people are either traders or government employees. This sort of situation was non existent 5 years back.
I work for travel industry and have been witnessing the unique phenomenon. Travel industry is at its peak. Looks like hoarding is a thing of the past. In Singapore 90% of the jewelery sale customers are Indians. To cater for their demand, many French/Belgian designer shops have sprung up in the city. I've heard similar situation exists in HongKong.

One thing is perplexing. This isn't Rupee prosperity, rather it is dollar prosperity. Where is this money coming from. What about Indian govt.'s foreign currency control ?.

No wonder, the real estate prices are rising. This isn't bubble, this is affordability.

150 Mercedez Benz's were delivered to customers in Aurangabad in one day. Now all the luxury car manufacturers are diverting their attention to India and China.

My point is that this is no bubble. It is real and will stay unless there is a revolution

DhImAn said...

My point is that this is no bubble. It is real and will stay unless there is a revolution

Japan. USA. UK. Australia, Bulgaria, China, Denmark, Ireland, Poland, Romania, Spain.

But no. India is different. No bubble here.

Thambi said...

I tend to agree with anonymous anne, 3:32.

Unlike other countries, the cost of housing has been increasing only in metropolitan cities where the wealthy are concentrated and competing for better homes.The hoarding mentality is disappearing and people are investing in better living conditions. Nowhere in the world one can witness the disparity among classes like in India and it is growing. Most Indians blame this on destiny and accept the exploration. They all hope for better living conditions in their next incarnation or life if they happen to be human in it.
I don't see a point in lamenting. Make hay when the sun shines, as the saying goes. In my case I feel no more ashamed joining the corruption band wagon. In due course, I too hope to leave my miserable railway quarters and buy a home in Bandra.

The wiki Bubble explanation is not applicable to India

DhImAn said...

In my case I feel no more ashamed joining the corruption band wagon.

Remember, I told you that the first corruption is intellectual? Now that you've corrupted your own sense of right and wrong, i.e., corrupted your mind, you've opened the door for all other corruption.

In due course, I too hope to leave my miserable railway quarters and buy a home in Bandra.

Sure, your ill gotten gains will allow you a lifestyle beyond your capabilities.

They all hope for better living conditions in their next incarnation or life if they happen to be human in it.

Umm, no being human in your next birth for you, sorry. You just wiped out all the good karma that made you human in this life; so back to the beginning of the line for you again!

But seriously, corruption enables you to get something that isn't normally possible for your capability. Thus, a moron can become a doctor who operates on you, or a fool can become an engineer who builds the bridge your train goes on. Or a retard can become a teacher who educates your children.

Corruption has a cost, you see. It's just that you don't see that cost, but that doesn't mean you won't have to pay it some day, in some form or the other.

And not philosophically speaking, in case you misunderstood. No, I meant real economic cost, such as your child dying because some stupid doctor who got in via a payment seat fu**ed up. Or because corrupt cops let a drunk driver drive a truck that killed your wife and daughter.

Of course, we hope that something like this never happens to us - but both these incidents happened to two friends of mine; they paid the cost for someone else's corruption.

So, you can be assured that your corruption will also exact its cost. From whom, I don't know. But someone will bear that cost, and like the Indian sheep that we are, we will bear it in silence.

Until we can't bear it anymore. You better hope that you can buy your way out of that eventuality.

Laaloo Prasad yadav said...

HI,
What DhimAn says has point. Devaluing the currency (by printing more and more) is a method used by the Govts to pull the wealth from masses. And this will continue to happen as this is the way of new economics.

When they print more currency and circulate it in masses, masses will get an instant feeling of being rich and drives them to work more hard. Eventually inflation eats away their feeling and hey again start feeling poor. Then govt will print some more money to make them feel again rich. This goes in cycles and drives economy.

Who gets sucked is person sitting on cash (includes, bonds, other savings methods which give fixed percent incomes).
What left is, real estate and gold.
They are visible and usable commodities, and their value goes up as Govts print more and more money.
I do hope that real values would go down. But what can also happen is they just get stabilize for a long term ( say for 10 yeas), with out going down.

Coming to gold, its value is because of peoples mind set. And i don't think it will change so soon. At least our indian female would make sure that it has value.
So at this point i feel gold is one and only thing that would give real long term yield.

Anonymous said...

"...and like the Indian sheep that we are, we will bear it in silence.

Until we can't bear it anymore...."

Remind me when was the last time? Was it 1857? Was it 1942? Was it 1947? Was it 1965? Was it 1971?

We all read history books, Somnath temple was attacked 16 times, years after years, but I never read anywhere in history that people made some effort to counter the attacks...they just rebuilt the temple..

Bachera Indian said...

Again, no point in debating and fighting over here as we have hardly any control on the market even I would say whole mass classes get together then also builder lobby is so strong that we will eventually loose it. So better if we afford buy it or forget it. Bubble has to burst but the question is not if but when?
And I am a regular reader of this blog from 2008 onwards and I have seen prices quadruples minimum in Mumbai during this time in fact from March 10 onwards prices have risen 70%. There is one tower coming in Kandivali near shopper stop, the prices during march 10 was 7000psf now its 11500psf plus floor rise and the builder has only two flat. Now can you believe it even at 7000psf with 2500 sq.ft the cost comes to near 2 cr, in Kandivali of all the places!!!

Anonymous said...

Corruption has a cost, you see. It's just that you don't see that cost, but that doesn't mean you won't have to pay it some day, in some form or the other.

Very very true.

And the unfortunate part is that those of us who are not corrupt but unable to do anything about the system also pay the same price.

Only way out is to leave this country. Which millions have done. I also want my children to leave this country

Desi Batman said...

@DhImAn:
Your analysis on corruption is not complete. Corruption is not a exception as it used to be. Corruption was way to break into system when they were incompetent. For competent person to be part of the system it becoming more difficult. A student college admission today have donation seats, they have backward class quotas, back office dealing reserved seats, now think about this, what happens to the person who could have got admission if these execptions were not present? Now a eligible person has to be corrupt to get into this system.

Govnt officers dodn't pass papers even when everything required is furnished. Officers just wants his cut, what do you do? Survive or die? Die - read the RTI activists.

So to fight corruption one has to be corrupt, there is no other way. I know few eligible could-be doctors and engineers who never made it to college because of this corruption or their ethics. I wish they would have got admission, atleast in the pool of shits we would had better professionals even when their entry was through corruption.

Desi Batman said...

@ Bachera Indian:
I have seen prices quadruples minimum in Mumbai during this time in fact from March 10 onwards prices have risen 70%. There is one tower coming in Kandivali near shopper stop, the prices during march 10 was 7000psf now its 11500psf plus floor rise and the builder has only two flat. Now can you believe it even at 7000psf with 2500 sq.ft the cost comes to near 2 cr, in Kandivali of all the places!!!

There is ceiling for every absurdness. Because you have been following RE prices since long, you can answer better, what do you think will be the price of today's RE Rs. 11500 psf after 3 years?

With price increases you have to think about this, today only 5% can afford to buy, tomorrow it will be only 2% and then only 1%. Mind you the buyers are decreasing, so think before you respond.

Desi Batman said...

@ Thambi

Way to go!! you are late for the party. Soon you will realize that corruption money is not enough for survival, what is next? a robbery?

Do what it takes for you to do for survival. Jungle law exists. I have NEVER seen anyone beat corruption in India, I mean NEVER.

Bachera Indian said...

No Desi Batman, your thinking is quiet logical and you won’t believe when price was 5000 psf in Kandivali, I asked the same question to me and at that I found it was a bubble and not sustainable. Then it went to 6k, 7k now you see its 11k, I know 11k looks completely unimaginable but there it is, its there. Today Rustamjee is charging 12.5k just 5 minutes from that place, so, my question remained unanswered till now but it doesn’t mean that party has not stopped, I guess when price will reach to 15k we will be still debating on this. BTY, you must have seen that Dharavi slums each person got 25 lakhs or more, now do you think that’s possible but it is!

prakash said...

Who is prospering?? yah politicians , builders & bureaucrats are. They all have made syndicate after the election which was won by congress. This party is known for looting people under the pretext of economic boom.

SO COMMON MAN WATCH OUT AND BEWARE OF SUCH SO CALLED BOOM. REAL ESTATE PRICES WILL COORECT BY 30-40%. DO NOT GET CARRIED AWAY BY AD & OTHER MISLEADING ARTICLE.

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rajni sharma said...
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