Friday, March 11, 2011

Will Mumbai real estate prices correct, or will this bubble get bigger?

Article Link

Financers have also turned somewhat reluctant to fund realty projects after the arrest of DB Realty chief Shahid Balwa. Several foreign investors are also said to be shying away since the scandals surfaced, making it difficult for realty funds to raise money overseas. Besides, investors say, returns on investments have not been significant in India. Banks have also increased the rates for builders. "Builders will definitely try to keep prices up and avoid a crash," said the analyst of Elara Securities.

According to Liases Foras, a realty research firm, more than 88,000 flats remain unsold in the city. In fact, it has been reported that certain builders, who had earlier claimed that 90% of their flats have already been sold, are advertising these very same flats again. It has been reported that builders may offer a concession if payments are made in cash. This is prevalent especially in Kandivli, Borivli, Thane and Panvel areas.

Navi Mumbai, where the euphoria over the upcoming airport persists, has also not seen any correction yet. The per square feet rates of the Green Panvel project, one of the new, better-known projects, have shot up from Rs3,100 to Rs4,500 in three months, following the clearance of the airport project late 2010. "At the most, they will reduce some Rs200-Rs300 on that. It wouldn't make much of a difference anyway," an interested buyer wrote on the webpage of the India Real Estate Forum.

Pankaj Kapoor, managing director, Liases Foras said, "Price reductions should be more for affordability, and not just a minimal correction for the heck of it. Eighty per cent of the demand exists in the Rs20 lakh-Rs60 lakh space, and it is this demand which should be met."

142 comments:

shailesh said...

Mumbai's Home Prices May Decline 35% in Next Two Years, Liases Foras Says

Mumbai home prices may decline as much as 35 percent over the next two years as record prices and high interest rates deter buyers and developers slash prices to offload rising inventories, according to Liases Foras Real Estate Rating & Research Pvt.

Mumbai’s residential property market will stagnate over the next couple of years until prices decline to match affordability and income levels rise, Mumbai-based Pankaj Kapoor, founder of Liases Foras said.

“We will see two types of correction in the market, a price correction of about 25 percent in the next two quarters and a time correction where prices will remain flat over the next two years,” Kapoor said in an interview yesterday.

Anonymous said...

He said. She said, They said -- baba, why you giving us false hope. Most of this people are fake, so why you quote them. All these people made money saying something and fooling us.

Look at Mumbai population. It is increasing day by day. People need homes to stay. There is no land. If one doesn't want to live in shanty or chawl, then they either have to get out of Mumbai or pay the amount quoted by builders. Selective communities like Banias, Marwaris, Parsis, Cristians , Jains are taking up whatever available and the same people say things to fool us

Instead of quoting cheaters and fraudsters, please give us some real news

Thank you. Good Night

Anonymous said...

I agree with prices remaining flat.
100% they will remain flat
They may dip 20% in next 2 years.

A BUBBLE CAN BE DEFINED AS SOMETHING WHICH IS TOO GOOD TO BE TRUE.

Everyone feels so. that is why this is a BUBBLE and as we all know
WHAT GOES UP HAS TO COME DOWN (What goes up fast also has to come down fast)


Just be patient. Indians need to learn to be patient.
Sabar ka phal meeta hota hai.
JUST WAIT AND WATCH(How these builders give up :) )

Anonymous said...

There ia a massive bubble and prices will correct by 50% or more. They would have corrected by now if Govt. was not supporting the builders and banksters.

I'll wait till they fall or never buy.

Anonymous said...

http://timesofindia.indiatimes.com/city/chandigarh/Citys-property-costlier-than-metros/articleshow/7676091.cms


CHANDIGARH: UT Housing Board's upcoming two-bedroom self-financed housing scheme flats are fetching bids as high as Rs 89 lakh to Rs 1 crore. The real-estate prices in the city seem to have beaten the rates in the metropolitan cities such as Mumbai, Ahmedabad, Delhi, Gurgaon, Bangalore and Pune where a similar segment flat can be purchased for Rs 71 lakh to Rs 30 lakh.

Anonymous said...

Rs 1 crore bid for two-bedroom flat in Chandigarh


http://timesofindia.indiatimes.com/city/chandigarh/Rs-1-crore-bid-for-two-bedroom-flat-in-Chandigarh/articleshow/7651134.cms

Anonymous said...

http://www.economist.com/node/18250385

Bricks and slaughter

Property is widely seen as a safe asset. It is arguably the most dangerous of all

Anonymous said...

"I'll wait till they fall or never buy."

Well said... buying a house is not what we live for. I rather rent and wait. rent and wait. rent and wait.

When i can afford i shall buy
THAT WAY ILL BE HAPPY :)

THE FALL WILL COME!
HAVE FAITH IN TRUTH!

Mallu said...

People fed up of corruption: Maharashtra governor
http://www.indiatalkies.com/2011/03/people-fed-corruption-maharashtra-governor.html

WHAT A JOKE!!!

This guy was a minister in kerala before moving to the cent re and well known for corruption, nepotism and bigotry.

Now suddenly he has realised that people are fed up of it!!!!

His relatives have billions of investments in mumbai real estate
and has been using his position to help them

Anonymous said...

Mallu, good point, but 100% of our ministers and bureaucrats sail in the boat of corruption. If you get a chance, you will do the same thing.

This is our culture and no one can change it

Jai Hind

Anonymous said...

'people are fed up of corruption' really? Indian people are most corrupt, it is part of their life and blood.

RE prices will never get corrected in Mumbai because people have extremely high holding power. People are ready to live in shantis and low life for not to get into any loss. It is in our culture to not sell gold and property until extremes situation like live or die situation.

Anonymous said...

Long Term Slump Ahead

After 2009 recession, the residential market picked up but in a very short period builders hiked up the rates to record high. The commercial real estate market is still in depressed state. Well there was a hope that with a time lag demand will come back but oops… a time has come for another correction.

The sales caused in late 2009 & starting of 2010 was due to pent up demand & a correction in prices. The fact is that economy didn’t really pick up. The companies are not expanding, commercial real estate is still depressed and retail sector rents are down. As companies are not expanding jobs are not creating. The current salary hike is just a match up with inflation it’s not a real hike in income. If there are no new jobs there will be no demand. The urbanization rate has slowed down. The interest rate cycle has started. Costlier loans & inflation will keep buyers away from any misadventure at this time.Builders & speculators can hold the price but time based correction will consolidate the market. When it’s come to time, it takes its own sweet time. So, 2009 style sales are not going to pick after Sept 2011.

Interesting Indicators.
1. Oil is lingering around $100; at 140 we had seen global economy crash.
2. Interest rates at 10%. Last time it was around ~13%
3. Since housing prices has reached 2008 high, sales has came down.

Vulture.

Anonymous said...

Will black money hold the Prices??

Guyes, do not scare us we are seeing/hearing the black money since our child hood. Even in 2009 recession it couldn’t hold the market meltdown. The fact is that, the black money need a help of white money. Imagine a dacoits society if all people are dacoits they can’t survive. Because no one from such society will work or produce anything, they can only steal from each other & once the resources are over everyone will die. If the dacoit’s society wants to survive, a good producible society should exist.

Vulture.

Anonymous said...

Vulture,
You seem to make a lot of sense. This black money thing is just crap. All the stolen money will get evaporated by downfall in RE prices. I'm thinking I'll wait 5 more years till the correction is done to the RE by 60% at least.

Fools are selling to fools and NO value is added.

Anonymous said...

India's financial crisis is coming soon. It will take the country back by 10 years. Enough of nonsense by thieves and corporate folks. Similar would be the fate of Australia, Hong Kong and China.

Wait till QE2 stops in June.

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Anonymous said...

Recently met a gentleman who said I am rich because I am in USA for past 10+ years.

I was like you - really!! I can't afford two bedroom apartment in Mumbai after living 10 years in USA and people in Mumbai keep buying 2 or 3 units at a time. Buy comparison I am not even close to being rich by Indian standards.

Poor me.

Anonymous said...

Vulture:
"If the dacoit’s society wants to survive, a good producible society should exist."

No worries, outsourced jobs and unaccountable money are in abundance to perceive everything as producible. And these are to be here forever, so yes, black money needs support of white money and white money is flowing in steadily and heavily.

Anonymous said...

Money is money whether declared for tax purposes or not. In our case, the black or unaccounted money practically runs the economy. The declared money or white money is used for arm purchases, expenses of the government, salaries , infrastructure development , services etc etc. In the case of real estate, the valuation is done using white and black portion, the black being 70& value
currently.
This is how business is running in India. Few years back the white to black ratio was 2:1. ?Now it is the other way around due to corruption etc.

The govt doesn't want to crack down on black money as they are the beneficiaries of this system.

The high rise in real estate prices is due to the black money. There is no better way to hide ones money.

No matter what we hope for, the prices will not see a decline unless the black money menance is curbed

Easier to say than done. It is like mice like us discussing how to tie the bell to the cat.

To conclude, the poor will become poorer in India and the rich, richer. The 8% growth shown by the government is an average of extremities like the weather. like the average of 50c and 0c is 25c that is comfortable and ideal

Keep hoping for that is what keep us going

Anonymous said...

Hmm, there are bigger and serious issues than black money in India - What do call counterfeit money that is in Indian market.

Try talking to Banks, many cashiers in stores, businesses, you will know that how many times and how many anout of fake currency they come across. They all play passing the buck games - they many times simply pass it to each other knowingly instead of taking a hit.

So now - limitation of terming black money as unaccounted money seems far less issue. Which category does 'fake' money fall into - black money? No wonder India is booming and westerners need to learn this trick.

Anonymous said...

How Daku Bhola Singh stolen Bharat Ratna Medal??

All the citizens were wondering how Daku Bhola singh steal the medeal?
No need to explain, when the guardians are friend any one steal.


"I have known the DLF people for a long time and they are friends of mine. I had wanted to invest in real estate and one thing led to another. Right now, I can only be part of a small hotel. If I were taking favours from people I would be doing far bigger things. But I am doing this on my own. I can't expand immediately but I hope to expand a few years down the line," he added.

http://economictimes.indiatimes.com/markets/real-estate/news-/robert-vadra-ties-up-with-dlf-makes-low-key-entry-into-real-estate-business/articleshow/7697331.cms

Vulture.

Anonymous said...

Vulture mama,

Daku Bhola Singh is running the business and everyone in UPA govt have been getting their dues. This is a game of 'PAISA'

SAMETHING IS HAPPENING IN MAHARASHTRA, KARNATAKA, TAMILNADU, ANDHRA BUT STAGE PLAYERS ARE DIFFERENT

BOLO BHARAT MAHAN!!!

Bachera India said...

After spending two years reading this blog, finally I bought the two bed house in Malad just under one crore, now I am still getting the inquiries from broker if i want to sell with good return, so this is my honest suggestion to all people reading this blog, read for enjoyment and funny comments, the fact is that salary levels are rising much faster, now simple college going kids are getting salary of 4 to 5 lakhs, i,e at age 21 if they get this much of salary, what does it mean to the economy.

On the top, young generation will like to live septate, means more demand for housing, furnitures, consumer durables and this is what is propelling the economy. The same thing happens in US because there is no concept of joint family, housing demands keeps growing and so rest of the value chain as well and by that means more GDP, more growth more Income. We are at the fairly beginning of the this cycle, may be we will have some bumps but far and large this will keep assets price on the top beyond reach as well.

Even the drop of 10% or 20% is not going to make a earth shattering effect of real estate as there are lots of big HNI/PE funds etc are waiting on the sidelines as well as don't forget India is a one of the biggest saving nation in the world so demand for assets/investments will keep on growing one way opr other.

Anonymous said...

"Bachera India said...

After spending two years reading this blog, finally I bought the two bed house in Malad just under one crore, ...blah blah.... the fact is that salary levels are rising much faster, now simple college going kids are getting salary of 4 to 5 lakhs, i,e at age 21 if they get this much of salary, what does it mean to the economy."

===> So what is average salary at age of 35?
===> With average 10 Lacs of salary can one afford 1+ crores house with EMI of >10%?
===> You are conflicting your statement - one side you mentioned India is turning consuming nation and at same time a savings nation.. uhhh?
===> I agree as long as fake, black and NRI money are in play there will be no correction or minor correction.
===> Finally you bought a house - CONGRATULATIONS. I really mean it, hope you can afford it. Do you mind sharing your EMI, downpayment and black money component.

Bachera India said...

Well young kids are not going to buy once they get the job, they save for some time may be five year or so and when they have the savings, they go for a loan to buy the house. So you need to understand complete picture, just taking line from one para, i dont know what you are trying to prove.

The fact remains markets are always right and if you just shout here it just waste of your time

Anonymous said...

You're forgetting the bigger picture. And that is the problem of inflation. Things are more expensive than usa...food, fuel, energy, housing/land.

Anonymous said...

"Well young kids are not going to buy once they get the job, they save for some time may be five year or so and when they have the savings, they go for a loan to buy the house. So you need to understand complete picture, just taking line from one para, i dont know what you are trying to prove."

==> Earlier you mentioned this "On the top, young generation will like to live septate, means more demand for housing, furnitures, consumer durables and this is what is propelling the economy" . So now how much does average saving come to for next 5 years? 2 lacs 5 lacs 10 lacs 20 lacs???? Is that enough to buy 1+ crore house with EMi > 10%?

Mind you I have complete picture, may be you don't see it in today's hype. Many times things are not what they seem to be.

Anonymous said...

@Bechara,

Since you bought a house and you are happy why are you visiting this blog and persuading others to buy. Maybe others are not as smart as you are. Time will tell.

I would not have bought if I were you. Anyway, it is your money and your life. I'll wait till the prices to correct even if it takes 5-10 years. But I'll never throw my hard earned money away to crooked people. I would rather save it @10% in bank and double it in 8 years.

Anonymous said...

Bechara India, here is the bigger picture. In future we will see lot more regulation on tax evasion and black money. As digital age becomes more and more stabilized, the chances of old tricks to work is minimal or none. Look at 20 years ago and think of 20 years from now, smart business and politicians know that, they are getting away from black money as much as possible and dumping into RE and other non-liquid, non measurable assets. Buy in black and when time to sell, sell with white. that's how black to white works. Several years from now, when one tries to find black money stashed abroad, only fools will be lingering, smart asses must cashed out in white by then.

Enjoy your big picture.

Anonymous said...

ALL,
India is sitting on a big massive bubble. When it deflates, there would be a lot of carnage all over.

Be careful and don't be too optimistic. Indian metros have no business having RE prices more than Tokyo or NY city ywith people shitting on the streets right in front of the 2-3 crore flats.

Buy them when it makes financial sense to rent them, i.e. when the EMI is same as rent. If rent is 15K, EMI of no more than 20K makes sense but anything above it, do not touch even with a 50feet pole. All your hard earned money will evaporate in the coming years.

Greater said...

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shailesh said...

Wait - Russian Dancers are going to save Mumbai Real Estate...

Hit by slump, big builders treating brokers in style

With the housing sector going through a slump, and several top builders facing inquiries in various scams, real-estate firms are bending over backwards to woo the middle-men who deal with consumers on their behalf.

Another big developer is said to have organised for Russian dancers to add glam value to a regular broker meet at a hotel. Ackruti City in its grand bash is said to have offered brokers a commission of 2.5 per cent on business over Rs 20 crore.

Anonymous said...

Interesting chart in this article:

http://www.economist.com/node/18250439

Chart # 4 shows historical data on
hose price to rent ratio. Right
before the crash, in US, this number was 150. Today, it is hovering around 100. For spain, it barely touched 180 during the peak and today
it is about 140.

If you have to plot an Indian city
on this chart, where would it be. For my 3 BHK in Bangalore, that I am renting and not stupid enough to
buy, this number is 400!!!

Figure yours out if you want...

Anonymous said...

If you have to plot an Indian city
on this chart, where would it be. For my 3 BHK in Bangalore, that I am renting and not stupid enough to
buy, this number is 400!!!


400? how come, pls explain.

Anonymous said...

Price of apartment = 1 crore
Monthly rent = 25000
Ratio = 10000000/25000 = 400

In the US, close to 2006-2007 peak,
the numbers were

Price of 4 BR, 3000 sq feet
House in decent city = USD 400,000
Monthly Rent for same house = USD 2500.
Ratio = 160

Anonymous said...

Anon above.

Ratio of 400 in Bangalore is nothing to worry about.

If price stays at 1 crore for your 3 BHK, but rentals go up to 1 lakh a month, you can get a ratio of 100. The rate at which salaries are doubling every few years, very soon, people can afford a rent of 1 lakh per month. So, we will then hit global ratio of 100.

So, buy, don't rent. You will have your own place.

vasu

Anonymous said...

Anon @ 10:28 PM

I am not sure about anon @ 8:12 pm calculation. But my house ratio in Pune is still higher. I am renting 2 bhk pent house for 12600 pm. The flat area is 1100 and 2 pvt terraces area is 1100. Society is 12 years old. This is in Kothrud. Even if you do the conservative calculation of rs 4000/sqft (for new the rate is rs 6000/sqft) for area of 1650 (1100+0.5 terrace ) the price of flat is 66 lakhs. So the ratio becomes whoopping 524.

Anonymous said...

Vasu,

Please tell me which industry the salaries are doubling every year, I would like to join there.

Anonymous said...

Ratio of 400 in India is very good.

It has not gone below 300 in last 40 years.

Ratio near 300 in India is a screaming buy.

Waiting for ratio of 200 is foolhardy - house prices never fall so low.

400 would be considered average good price (=15000 rent, 60L price)

In Delhi, Ratio of 300 is usually available in unauthorised colonies (= 10,000 rent, 30L price). For authorised DDA flat, ratio is usually 500 (15000 rent, 90L price)

Anonymous said...

Anon @ 2:42 AM

You are still talking about current ratio. What about what was in the past? If you are saying that ratio is similar to the current then the yield you get on your investment is too low. Isn't it better to put money in FD with average 7 % interest rate? Yes you can argue about the appreciation in that case you can go with MF which can give you 12% return on the investment. And arguably MFs are less risky than the current RE scenario.

Anonymous said...

In 2005 in Delhi I bought a flat for 22lacs, 3bed, 2Ba ground floor DDA. It was renting for 10K in 2005. Now the price of same is 1.2Cr and rent is 16K.

Something has seriously gone wrong in the last 4-5 years. Either rents should go upto 50K per month or the price should come down by at least 60%.

Rents cannot go up as that means inflation and Govt. would raise rates to 20%. Only the prices have to correct and wait till they correct. If somehow due to insanity they don't correct, buyers still don't lose money by renting. Why buy a house when you are losing so much money in EMi per month. I don't think the flat will be worth 2Cr in even 10 years. We are at the peak of bubble.

Anonymous said...

6:06 anonymous, that's the problem...govt people own land/housing as investment and inflation protection. Govt ppl allowing drop in housing prices is like shooting their own foot.

Anonymous said...

Wow! Price to monthly rent ratios of more than 400 in India sounds absolutely crazy.

Remember that these ratios were very sane about a decade ago. At that point, the rents flattened and tracked inflation and the paying capacity of the renter. In other words, the rents tracked the market.

But, the prices went up because of speculative investments, specially with foreign and black (sometimes both) money. If you bought a flat in 2001 for 20 lakhs and it has gone up by a factor of 4, but the rent has only tracked inflation, you know that you are sitting on a massively inflated price.

The post above that says historical ratios in India have been in the range of 300 is complete bullshit.

The rents in India have to go up by 4X or the prices have to correct by 4X to get to healthy levels.

Just wait till we stay in the high interest rate regime for another year. This inflation control has to be maintained till general elections if the UPA wants to come back to power. Shit will hit the fan in the next 6 months to a year.

You want to find out the true value of your house. Don't listen to crap out there, just put it on the market and see if you can sell it!

Anonymous said...

There are very very few buyers with stolen money. Most people have jobs and have to take loans. The black money reasoning is nonsense. It has been there in play for the past 50 years. Then what happened in the last 8 years that the prices shot upto 400%. Utter speculation. All these finance MBAs have nothing better but to plan scams.

The day of reckoning is coming soon. Believe it or not. I'm out of the RE market for a good while till they come back to sanity. Not spending my hard earned money on speculative prices. Wait till the Oil hits high prices and inflation further goes uo due to QE3 coming out of USA after June.

P W Rane said...

@Anonymous above,

I beg to differ.95% of the buyers don't depend on loans and those who take loans, do so for income declaration purposes.( cash beyond their declared income.)
I'm an employee of an real estate company and have been house hunting for the last 2 years unsuccessful in getting one within my budget even in the remote outskirts of mumbai.

Black money isn't imaginary and I daily come across people loaded who dont know where to invest. These guys buy flats as they dont know where to put their money and only sell for profit or keep them empty or rent them.

Anonymous said...

Those who don't believe in black money read this
Hasan Ali's income multiplied in 6 yrs to Rs 54,268cr: CAG
http://timesofindia.indiatimes.com/india/Hasan-Alis-income-multiplied-in-6-yrs-to-Rs-54268cr-CAG/articleshow/7735895.cms

MMS paid 10cr each to MPs to secure votes. Isn't this black money

Muncipal clerk has to to be paid tminimum 2000 to get any document. In a day he deals with atleast 10 customers. So he earn 4-5 lakhs a month on top of his salary.

This is the way oureconomy function. so is real estate

Anonymous said...

To anon above, number has gone up in past 6 years but quality is still poor. This is called inflation not economic progress.

Anonymous said...

Fear of God
http://www.mumbaimirror.com/article/15/2011031820110318035015662b1467901/CP-has-the-might-idea.html

An article in mumbai mirror Fri 18/03/11 spoke of fear of God to be put in criminals for stopping their acts. If people really feared God would there be corruption and black money in the first place

Anonymous said...

Anon above
Mumbai Police Commissioner Arup Patnaik is not only delusional but foolish. Criminals, unlike olden days never use muscle or go into boxing match with police.

This only illustrates that our police have really a lot to catch up. By beating up few petty criminals is not going to solve our law and order problem

What we need a person like julius Rebeiro who could put the house in order or bring back Dawood Ibrahim and make him the police commissioner

Anonymous said...

Rane Ji,
Firstly you need to quit this Real Estate co. and find a real job as these are going to evaporate in the next few years.

Secondly, people you are seeing coming with black money are the same people coming again and again. 99% people do not have black money. I work in a job that pays 25K per month. I can see all my relatives even in Govt., they do not have the kind of black money that RE needs. Moreover, there could be buyers who sold high and got lots of black money and looking to further part it. But not many people have stolen money. There are very less people who are thieves and steal money from the motherland and invest it further to show people that they married their daughter off in a wedding that cost 350 crores. That is where thieves are using money for and they still don't know the meaning of life. Maybe they need a Geeta Path.

Majority of Indians are fair and loving people. They want to do good and being ambitious is not bad. They are succumbed to the thieves who are looting the country for their benefit. Be it politicians or banksters or builders.

As Geeta says, do your karma and they all will be punished either by family woes or early death. I have never seen a theif flourishing. They all die untimely death and see a lot of pain in life. It is their karma that bites them them in their arse in later life.

Anonymous said...

to anon above, nice integration of bhagavad gita. it always helps keep things in perspective that everything is maya.

Anil Paran said...

It is easy to philosophize and seek solace from it. Few can do it and they are the lucky ones. It is like producing dozen children and putting the responsibility on god.

The population of Mumbai is 21 million. Majority of people don't have money, I agree. What constitutes majority is a point to ponder. The minority who have black money,even if we consider 5%, would constitute 1 million and this segment is increasing, resulting in demand for new homes that building industry can not cater
In these circumstances, hoping for the prices to fall is utter foolishness. The current prices are there to stay and will rise proportional to the demand

B. Shah said...

Anil Paran,
Let me correct your basic assumption.

The population of Mumbai is anywhere between 25-30 million. This figure is from the latest census.
The population is increasing at 5% rate (conservative estimate). Some experts put it to 7%. If we take the median, Mumbai will have additional 25 million population in another 12 years, that means 2 million additional dwellings by 2021.(6 people for household)

Even a fool can tell that this is impossible to achieve, so the demand for new accomodation will keep on increasing, so the prices

Sensex can go to 27000 to 31000 by July 2012: Ajit Dayal, Quantum AMC -- This means new middle class that will grab anything under construction whatever the price (http://economictimes.indiatimes.com/opinion/interviews/sensex-can-go-to-27000-to-31000-by-july-2012-ajit-dayal-quantum-amc/articleshow/7742352.cms)

Mumbai is finished for all the poor. (those who earn 1 lakh or less/month ). It is high time for such people to explore outskirts of Mumbai, if they do not wish to live in zopadapattis.


Wake up to the reality and stop dreaming

B. Shah

Anonymous said...

Mr. Shah,
Maybe you are dreaming reading those articles. No place can ever have only rich people. Places have colonies for the rich. 90% people in any place would be workers and RE would be affordable to them in the coming future.

Mr. Paran,
As regards to having kids and leaving it to God to raise them is not what Gita says. One should do his Karma based on capacity and fulfill it. Geeta doesn't say that you take a mortagage of 1Cr. when your salary is only 50K per month. it is more about the injustice done by few on the masses. And people who are doing injustice will get punished. It is not solace, it what India believes in and we teach our kids. It is what we talk to God when we visit temple.

I'll never tell my kids to go out and steal money and become rich. Be it black money or looting the naiive people that few top people are doing. I'll tell them to follow the path of truth.

Anonymous said...

So what is there in Mumbai to attract so many people inflow? Many industries have moved out of Mumbai in recent years.

If you see growth rate, places like Banagalore, Chennai and many other cities had many fold growth rate compared to Mumbai.

So what is making Mumbai so much hot destination for RE?

Meghana said...

This is a great blog that I have been reading for 2 years now. I think we are now at the edge of a Real Estate breakdown. Once the breakdown begins, it will be swift and fast, and will not give much time for people to think or exit from Real Estate. The labour of so many people who post here regularly will bear fruits very soon. You have done a great job by asking us to be patient, which many of us have been, thanks to all of you.

Perhaps when real estate actually falls with a thud, the owners of this blog must arrange a small party/get-together to celebrate a job well done. I would be willing to help fund this party in my house after I buy a flat at 50% of current prices.

Anonymous said...

@Ms Meghana:
"I think we are now at the edge of a Real Estate breakdown."
-- no we are not there yet and probably never will. In USA Housing market collapsed because of sub-prime lending, job losses and no new job growth. USA always had needs for immigrants and now inflow of people is not that huge.

India has no needs for immigrants, thanks to potent beings in India. Black money component prevents sub prime lending risks. People ready to live low quality life in lieu of high priced RE.

So tell me again about RE break down.

Anonymous said...

@anon above

So tell me again about RE break down.

Looks like repeating the same stuff over two years did not work for you. So why again?

I suggest you use a brain tonic from Dabur India, that will raise your IQ levels a little bit.

Anonymous said...

@6.06

Ratio in South Delhi DDA flat 1988 Price 8L, rent 2000, Ratio approx 400. Salary was 4000

Same, 1993 Price 20L, rent 4000, Ratio approx 500. Salary was 8000.

Same, 1998 Price 25L, rent 8000, Ratio approx 250. Salary was 15000

Same 2003, Price 34L, rent 10,000 Ratio approx 350. Salary was 30,000=50,000 for most Delhi people

Same 2008, Price 1 Cr, rent 15000, Ratio 600 approx. Salary in Delhi varies from 50,000 to 1L per month.

In this period there have been 3 major bull runs, first from 1982 to 1988 (same flat costed 1.5L in 1984 but I have no idea of rent so cant tell the ratio)then plateau till 1992, then bull move from 1993-1996, then plateau till 2003 and then bull till 2008.

At the top of each bull run. ratio was around 500 plus. At the fag end of the plateau phase, ratio was 250-300 (difficult to estimate, because there are few transactions when price is so low - no sellers - also difficult to tell when price is so high, there are no buyers at such prices)

Even now, ratio is probably only 500, because there have been no transactions of 1Cr - maybe around 80L is actual market value

@22L DDA flat - what was the location - 22L in 2005 is a throw-away price

Transactions at ratio 250 and ratio 600 are all difficult to manage. Sensible thing is to buy at ratio of 300 and sell above 500.

From 2011 to 2014, what we have to do is look for creeping increase in inflation and rent. Minimum rent for 2BHK is now 11000 in good area. One can expect 20,000 soon. With people paying just 20% of salary as rent (vs 50% through 80s and 90s), there is good scope for rent increase - but not in NCR because of massive oversupply in Dwarka, Gurgaon and NOIDA.

The 2014 upmove is more likely to be linked to price rise in steel and labour and cement than rent increase, in NCR. For that, holding period of >15 years till 2025 is needed.

Anonymous said...

22L flat in 2005 was in the Mayur Vihar, Phase II area of East Delhi.

All this talk about prices sustaining is total BS. The current prices are that of year 2025. India will soon have its financial crisis. Do not compare India to USA as India will not be able to come out this nonsense easily for at least 10 years.

Readers should also understand QE2/3 and their implications on developing countries and all the scams created by Wall street. They should also read about carry trade and worry about inflation, oil prices.

Guaranteed fall in India RE prices is 60% or higher. Meghna, we'll join you when you buy your place after 50% drops. Just have patience and it might take years for it to go down as top brass is trying hard to keep it propped up.

For people who are convinced RE will not go down, please buy some more flats and stop visiting this blog.

Anonymous said...

Salary in Delhi varies from 50K-1lac:

This is not correct. Many business people steal in tax and make good money as their income is cash. Salaried employees do not make that much. Maybe IT folks. I work with a bank and our scales have not been revised by Govt. I still make 35K even at good bank position. ICICI bank wanted to hire me at a very good raise but I wanted to stay where I'm.

Moreover, there are many-2 low level workers. I would say only 5% people make that kind of money.

If people really make good money, they would not cry when onions are RS. 60 a kg. They will be happy to pay that price.

All this Keynsianism created by Dr. Singh is going to backfire with double the force in the form of inflation. All Govt. did was tripled the salaries, borrowed a lot money and spent it in India creating growth as per John Maynard Keynes. But the overextended and didn't control the RE bubble. It will end up worse than US here in India as USD is a reserve currency and they can print as much as they want. India cannot kill Rupee by printing a lot of rupees. Maybe that would happen eventually, another Zimbabwe. Or too much inflation means another Libya or Egypt.

Anonymous said...

Mother of all bubble- china and indian real estate.

Look at rupee strengthening against Dollie for
Last 6 years. India relying on it/ites will bust. Programmers r paid 60k usd. Ie. 30usd hourly rate. India will loose IT soon in competition and consolidation. USA will sell more goods to India until Indians run out of purchasing power. There come real estate collapse. Rent rent.. Let fools get in and fall out.

Anonymous said...

Anon above:
Salaries in India cannot rise higher as US salaries are going lower. If the salaries in India are even 50% the salaries in US, the outsourcing will stop and go to China, Brazil, Indonesia etc. India will lose edge. RE prices are already higher than NY City. The cost to rent and operate a business in India has gone 4 folds due to high operating costs.

What a shame. Ordinary people can see what is coming and people in power are looking at cooked numbers and data, and tryitng to convince that growth is organic.

Anonymous said...

Many people here are looking at only one sided argument that rich are the people that are earning more - WRONG!!

Rich are people who have high difference between earning and spending. India has 2 class - a cheap labor class who are ready to work and slog for peanuts and other class who make decent income. An average middle class has very decent savings and is able to afford many things. Also they are ready to shrink their spending to accommodate their needs and avoid losses on their investments like gold and RE.

Bachera India said...

TO think India will be free from black economy, free fro kangress madam raj even other also, free from bureaucratic process, free from corruption, free from all evils and so on...



THIS IS THE BIGGEST JOKE OF THE CENTURY AND WILL STAY FOR FEW MORE CENTURIES ALSO PERHAPS...........

So I have my complete picture, its better that you come down to earth and thinking like Indian who is a struggler to travel between Malad to Churchgate 8.32 local

Anonymous said...

@Meghana and others expecting 50% correction:
IT IS NOT COMING. EVER.
The flat which is selling (or more accurately quoting) for 1 Cr. can come to 80L in next year depending upon how desperate the sellers are. Even at 80L it may remain expensive on Price/Rent ratio but it will not fall below it.
Of all economic fundas and theories being discussed on this blog, the only one that makes sense anywhere in the world is demand/supply.
As supply rises, prices will fall but that is more like a decade long phenomenon not something coming in a year.
If you want to buy 50% cheaper on an inflation adjusted basis 10 years later, the 1 Cr. flat will only be more costly then in nominal terms.
For the non-biased readers of this blog, buy if and when you can. If you have the savings to make the down-payment, if you have a stable job to pay your EMIs and you expect your salary to go up with inflation and you know when you will married and have children and you have those expense covered and then if you find something in your budget, go buy. Else wait till you have to.

- V

shailesh said...

B. Shah: I don't think Mumbai is worth for living for Rich folks as well. It was proven scientifically that life expectancy in Mumbai is at least 10 to 15 years lesser compared to tier 2 cities. The quality of life sucks. I grew up near Juhu and when I go there now, I feel like I am in slums. There is no point living in Mumbai, even if it were to become cheap. In early decades, things were concentrated in Mumbai as not all facilities were available outside. Today you get everything in outskirts or tier 2 cities. Why live in such a dump, when you can get better and longer quality of life somewhere else.

Anonymous said...

Price bubble Asia's next crisis:

Disasters, speculation a dangerous mix
Published: 15/03/2011 at 12:00 AM
Newspaper section: Business

A commodity price bubble is growing and could lead to an Asian price crisis for the next 3-5 years, say economists at TMB Bank.

Two factors underpin the rise in commodities prices, said Dr Benjarong Suwankiri, a TMB vice-president. The first is the spate of natural disasters that have curbed supplies and pushed up prices since last year's third quarter.

The second is the imbalance of liquidity between developed and emerging countries. High liquidity in developed countries is out of sync with their sluggish economic recovery. As a result, funds have flowed into emerging economies and a lot of that money has gone into speculating on commodities.

"Increasing food prices will bring about economic issues followed by political uncertainties and unrest as in Egypt and Tunisia, considering the proportion of food per household consumption in those countries is higher than 36%," said Dr Benjarong.

Naris Sathapholdeja, another TMB vice-president, said prices of agricultural commodities such as sugar, rubber and palm were rising to peaks last seen during the food scare of 2008.

Compared with 2008, sugar prices have risen by 2.5 times and other unprocessed agricultural products by 1.5 times, food prices by 1.3 times and oil by 1.1 times.

Before the global crisis of 2008-09, he noted, most of the money invested in emerging markets from the developed world was channelled through banks. But now banks in developed countries face tighter regulations, and money is flowing through hedge funds.

As all market participants are rushing into emerging markets, inflation and price bubbles are likely to follow in the BRIC countries (Brazil, Russia, India and China).

Real Indian said...

To Anonymous above

My morning started nicely but you spoilt it. Now tell me, Is Dr Benjarong Suwankiri your chacha or mama. why do you quote thailand people here. What does he know about India

Bhai, post some genuine news realted to real estate. Early morning, i logged on internet and see your shit. Are you taking drugs or writing for the sake of spoiling others day.

Dont feel bad. This is brotherly advise

Jai Mukambika

Bindas Bhai said...

Anon 12:40Pm

Well said.. thanks

Anonymous said...

Why do people want to live in Mumbai when everything is so high?

Simple Reason : Girls and lots of lots of them. And a high level of anonymity.

Its common sense. Get all the hot and pretty girls out of mumbai to some other city and ull see everyone will want to stay in THAT city.

As long as bollywood and glamour is in mumbai, people wud want to stay in mumbai.

Anonymous said...

What a logic!! People are living in Mumbai for the sake of girls!!!! So, Indian men, for the sake of sex live in Zopadas and defecate along railway like so that they can court girls and produces more wrethed lives!!

The weirdest logic !! This guy must be consuming kokha a lot and must be having 24 hrs erection

Anonymous said...

Considering Haryana and Punjab have killed all their girls, now they will head straight to Mumbai!!!!

Situation in India is very simple - inflation or hyper inflation or super duper inflation - one of these is coming.

The rich are able to see it - and are wondering what to do with their money.

Only thing they see is real estate and gold - and they are buying both of these like crazy, regardless of price - because tomorrow their Rupee may be worth toilet paper.

The guy without money is happy - there is nothing he can do about anything.

The middle class is like the frightened hare - they see flat and RE prices rocketing up like crazy and wonder what to do - since they cant buy RE without a loan.

Chill out, middle class guy - pay rent, live in the best flat you can afford and be happy - dont try to ape the rich, he got money, you not got money - dont take a loan to do what he does.

He is worring about preserving money he already got.

You should not become a slave to the bank trying to ape him

Anonymous said...

In 5.7Cr you can buy castle in US but you will get only a 3BHK flat in Central Mumbai.


http://realestate.yahoo.com/promo/american-castles-for-sale.html

Anonymous said...

Home Prices in Mumbai Decline 20% From 2010 Peak, Jones Lang LaSalle Says
By Pooja Thakur - Mar 20, 2011 11:36 PM PT

Mumbai home prices have declined 20 percent from their 2010 peak as lower sales, higher land values and increased borrowing costs forced developers to reduce prices to woo buyers, according to Jones Lang LaSalle India.

Home prices, which increased 30 percent to 60 percent last year, have returned to 2008 levels, Sanjay Dutt, chief executive officer of business at the Indian unit of Chicago-based Jones Lang LaSalle Inc. (JLL), said in a report today. Dutt expects prices to remain at these levels until the three-month monsoon season ends in September.

Anonymous said...

Jones Lang LaSalle??????????
what about 'Ching Chung bosudi Inc. 's prediction. The CEO tiramuralichaliyandraraman says the real estate prices will decline by 70% by Dec 2011.
Now, can we belive phoren company Jones Lund La Salle or our local company Ching Chung Bosudi Inc.Very difficult question.

Pleasrepost your suggestion

Anonymous said...

Anon above,
You do not have to believe what Jones Lang LaSalle Says. Buy more RE if you are convinced prices would rise further. No one is stopping you. Why do you even visit this site.

I would wait to buy for another 3-5 years till the market corrects. Otherwise, I'm a happy renter.

Anonymous said...

One factor which is likely to be a major drag on emerging markets is the relative behavior of top corporate insiders during the past year, versus amateur investors. Bloomberg Businessweek reported on intense selling by the highest-ranking executives in India in this analysis ("India Insiders Sell Stocks at Fastest Pace Since Peak") from the fourth quarter of 2010. Just as foreign investors were pouring into Indian equities, top executives in India were unloading shares at their most rapid pace since the previous unsustainable equity peak in January 2008. Since insiders generally only sell if they anticipate a substantial percentage decline to follow, this increases the probability that we have begun a major bear market for emerging-market equities rather than merely a correction. All of the emerging markets listed in the previous paragraph have been in downtrends for four months, thereby increasing the likelihood of an extended slump to persist through 2012.

As emerging markets decline, their currencies are likely to similarly slump versus the U.S. dollar, just as they did during the last bear market and probably repeating their percentage pullbacks of 30%-35% in U.S. dollar terms. As the greenback rallies strongly, one of the best investment choices will be TLT, which is an exchange-traded fund of U.S. Treasuries averaging 28 years to maturity.

Anonymous said...

@Anon 12:21pm

Your analysis is very true. Rich have large amount & don't know what to do & throwing to RE.

But one thing to be understand that RE is illiquid investment. So going forward if they can't turn it in rent paying cash flow stream it will be cash eater dead investment. And can be exchangeable with only other rich person who also already in possession of such of such investment & can't be passed on to higher middle class or middle class unless some brave & greedy one stand up for the same.(if he can afford it then it is OK)

Anonymous said...

@Anon above,

If i have crores in black money, do I care that my investment into real estare fetches negative returns or no returns, I really don't care. It is better than some gangster or income tax grabbing my money plus prosecuting me. The real estate assets are safe. This is why people invest in real estate. not just for returns

Anonymous said...

@Anon above

Though I am not in a league of Crores so my understanding is limited. But I am trying to use simple logic.

I am partly agree if those money is used to purchas land Agri or Non Agri. But invested at this high price in built up building is going to be dead end.

If these people are not worried about negative return or return on investment that means what ever capital they are having is either luck by chance or may be very easy money through some illegitimate way.

So when their luck run out or door of getting illegitimate money closed they have to liquidate this at some point of time if no one want to barter it.

Also note that what ever has gone up has to come down.

So defiantly it's not a time to throw once hard earn money at RE for investing or self use.

Anonymous said...

@Many Anons,

My take is that do not buy. We work hard to earn money to build a family and future. Everything is now a casino with thieves calling the cards. Stolen money is being parked in RE and it will evaporate the way it was stolen. I would suggest all truthful people on salaries should save in FDs etc., rent till the prices correct to make financial sense in the investment and not pay any black component in any RE purchase. Let is be all white in downpayments and from loans.

My wild guess is that Indian banks have overextended themselves in giving out credit and I wouldn't be surprised if a few banks fail in the next year or so when the RE takes a hit. Indian Govt. doesn't even have resources to bail them out unlike USA. It will get really ugly. So, save your cash and be a happy renter. Do not become a slave to endless EMIs. We all desrve better than what we are going through. Even in developed countries, people have 70% of their income as disposable income after the mortgages.

Anonymous said...

Following this blog for two years.. never seen prices gone down yet at least in Mumbai.. Dreamers.. when would your imaginary decline in Mumbai property rates will start ? From generations they said, direction for Property rate in Mumbai is only one way, and it is UP. Let me know when our dream to get it down will realize.. I am loosing patience now :)

Anonymous said...

Anon above:
Did you know that UPA Govt. is under so many scams? Did you know the corruption level in India till recently? 2 years back all looked good and peopl eworshipped UPA. And if elections are held today, UPA will be ousted.

RE is not like stocks that there will be a sudden drop in prices. It is a gradual slow down. Many people will not sell even when prices fall thinking that their paper money prices will come back up soon after they fall. You'll have to wait another 3-5 years to see 50% declines. Right now watch the Sensex declines by another 20% in the next 6 months. RE is following and will be coupled with India's own financial crisis. Wait till people have to pay real petrol prices as Oil is going up and resulting hyper inlfation. If US does QE3, more pain for India ahead.

You should read about the World economy and get out of the Mumbai market thinking. It will give you a perspective on what could be coming to Mumbai prices in the next few years. The unsustainable RE prices will collapse not only in India but China, Canada, Australia and Hong Kong at the same time. It will be a new Asian crisis.

Anonymous said...

Prices would have corrected by now if UPA was not throwing in stimulus money or US was not doing QE1/2. All is ending soon.

Anonymous said...

Why slums are mushrooming in Mumbai?

Since last couple of years, slum construction is rising & property sales are going down.

Mumbai City Sales in Feb = 824
Mumbai Suburb Sales in Feb = 4,716

http://www.moneycontrol.com/news_html_files/news_attachment/2011/RealEstate_Prabhudas_170311.pdf

Mumbai Population in 2011 = 2,10,00,000

http://www.indiaonlinepages.com/population/mumbai-population.html

Slum Population in 2001 = 50% of total population.

http://www.indiaonlinepages.com/population/slum-population-in-india.html

I do agree with Mr. Shah, the slum population is rising in Mumbai, last year it went up by 29%.

http://epaper.hindustantimes.com/PUBLICATIONS/HT/HM/2010/10/17/ArticleHtmls/Mumbai%E2%80%99s-slum-population-up-by-29-pc-Census-17102010003008.shtml?Mode=1

Vulture.

Anonymous said...

Vulture, Thanks for the information. The statistics are mind boggling. There is no escape for us. One can live in a nice apartment but he is surrounded by slums. So, in reality virtually everyone lives in a slum, be it ambani or a bhangi rag picker.

I really solicit info, as to how one can escape this.

Anonymous said...

Slums are engine of lovely Mumbai - I really mean it. think of all luxuries one enjoys - maids, drivers, door step service for milk, groceries, garbage pickup, ironing clothes man, road side cheapo service - vada pav, udipi resturants, etc. Oh. not to forget six sigma certified - harvard loved - more proud indians business - 'Tiffin wala aka Dabba wallas'.

Name one location in Mumbai city without slums. Nada - NONE!!

I wish Mumbai without slums and we will see RE prices and prices for cheap service that we pay for!

Anonymous said...

Sensex is going to 15K in a month or so. The party is over for thieves in India. No more easy money from RE or stocks or bribes.

Anonymous said...

Anonymous 7.37 PM

Well said!! You painted the whole picture of Mumbai in few lines!!

Indians love slums. Otherwise why would a person with crores of money opt to live among slum dwellers

Anonymous said...

"Otherwise why would a person with crores of money opt to live among slum dwellers"

==> Theory of relativity.
#1 - If you had earnings of Rs.50,000 per month and you stay in slums where avg earnings is Rs. 5000 per month. You are RICH person.
#2 - If you had earnings of Rs.50,000 per month and you stay in place where avg earnings is Rs. 50,000 per month, you are not rich anymore, you are just an average person.
#3 - If you had earnings of Rs.50,000 per month and you stay in place where avg earnings is Rs. 2 lacs per month, you are not rich anymore, you are poor person.

Bottomline - If you want to feel rich stay in areas which have average earnings below your earnings. More the difference more richer you will feel.

I hope that explains situation for RICH guys buying crores of Rs RE and other stuff. Are they rich? - Yes they are!!

Anonymous said...

Prosperity and slums go hand in hand. Prosperity brings migrants in search of livelihood. Most end up in slums and these slums grow over time. If one wants to live in a city, he has no choice but to live among slum dwellers. Most people don't mind as they rarely interact outside their social classes. Slums are just a eyesore to them and may be health hazards

The government on the other hands looks at slums as vote banks and making no effort to control the migration or setting up illegal industries in slum land. Once a human being adjusts to slum living, he has rarely a desire to get out of it. There is no will by the government or people resulting in slumland is compounded by means of encroachment etc.
As Mr. Shah said, the only hope of securing accommodation is to look in slum land. This too is becoming expensive. The minimum cost of a zopda with illegal electricity and access to public tap in sion-koliwada area ranges from 20-40 lakhs. This may come as a shock to many readers of this blog, but these are hard facts.

No zopadapatti guys are expecting any decline in prices whereas people here are talking about lot of financial predictions that would bring down prices. Population is increasing, so are the prices

Survekar said...

Migrants in Goa

http://www.youtube.com/watch?v=wTzwXCz1P74

Anonymous said...

Some thing different:
A couple of years ago, ├╝ber-trader Paul Tudor Jones gave a talk to high school-aged young men at the Buckley School about the importance of failure. The entire thing is brilliant and worth a read. His story about being literally left at the altar as a 26-year-old "knucklehead" carries with it an extremely important message: Sometimes failure is merely chasing you off of the wrong road and onto the right one.
Complete speech @ scribd.com - link shown below.
http://www.scribd.com/doc/16588637/Paul-Tudor-Jones-Failure-Speech-June-2009

Anonymous said...

Is Economy Really Growing…..?

If economy is growing so strong, why unemployment rate is rising? Today, world is talking about US budget & unemployment but India is having much worst situation.
The unemployment rate is rising, inflation is rising. India’s budget deficit is reaching all time high.
Cautious analysts are evaluating the possibility of revolt like Libya/Egypt.

This is not only about Maharashtra, Mumabi is the financial capital of country so one can gauge the problems in other places.

http://maharashtratimes.indiatimes.com/articleshow/7767692.cms

Vulture.

Anonymous said...

I think India's financial crisis is not far away. I predicted a revolt and even a civil war in India almost a year ago and people on this blog laughed saying India is shining. Well, people should understand a very basic thing that there is no investment that gives 50% returns in the world. A 8-10% return is the best one should target. RE price rise is too good to be true. All the paper money is going to evaporate unlike Spain and Portugal.

Anonymous said...

Vulture-ji. You are contracdicting Bechara Indian's finding for string, growing economy India- a shining India!

I don't see any unemployment growing in Mumbai, nor do I see any financial issues.

All is well bhai. May be you need to look on brighter side.

Indians do not get loans for crores that easily and have to pay substantial downpayment (black or white) to get crores woth RE.

Anonymous said...

Anon above:
Unemployment would be caused by RE prices going down. It is not a matter of "If", but "When" the RE prices collapse, there would be massive layoffs in banking, construction, realtwhores and all the material used in construction etc. 40% of the GDP would be shaved off as once prices start to fall, there would be very less construction activity. Now, the way credit has been loose, if a few banks fail, it is invitation to unrest in India as the Govt. insures bank accounts in India for only Rs. 1 lac and money over it would be lost for depositors, which means more unrest, more money printing, and Rupee being trashed.

I think Govt. should try hard to keep the prices propped up high otherwise all hell will break lose on the country. But, Govt. will not be able to do much at this peak point and can only print rupees.

Anonymous said...

"the Govt. insures bank accounts in India for only Rs. 1 lac and money over it would be lost for depositors,"
==> reason for not to keep money in Bank (esp in India). Most of them would goto RE.

"It is not a matter of "If", but "When" the RE prices collapse,"
==> and why would that collapse? do people take high loans and less down payment? do people have less holding power? do people have less disposable income? is there shortage of black aka fake money? Can people not afford to buy RE - so why are they buying crores worth RE - ask any Banker, Broker whom you know well - they will tell you that people buy 40 to 60% down payment.

No question of 'if' and 'when'... Ask WHY?

Anonymous said...

Vik:
Congratulations!! This is comment number 100. Time to move on to another bogus link to some news story predicting the end of India's housing bubble. And then, your followers, the imbecile brigade, will chime in with their comments.

Anonymous said...

"And then, your followers, the imbecile brigade, will chime in with their comments."
==> and you are the one of these - 'followers, the imbecile brigade'.

What a moron - calling himself a moron.

Do you have anything better to say or put forward your thoughts?

Anonymous said...

Anon @7:13

Then why is inventory of RE rising?

Can people afford to buy the same house they liven in again if they have to?

Black money is there and could be causing high prices, but do you think it is going to stay like this forever?

Do you think US will do QE3 and money will come to BRIC countries and more of it?

Do you think inflation will not kill the growth and high Oil prices on top of it?

Why did the prices suddenly went 4 times in the past 5- 6 years? What suddenly changed and is that change sustainable?

Maybe the Govt. will get its act together and pass a law for people to account where the downpayment is coming from?

Maybe the Govt. will start recording all sales/prices electronically? This will take away the black component.

Maybe India always had black money issue and this time also it is something else going on like RBI printing a lot of money, more stimulus, low rates, many followers of Keynsianisn?

Anonymous said...

Then why is inventory of RE rising?
==> Because people are buying. Don't believe me? Ask Bechara Indian.

Can people afford to buy the same house they liven in again if they have to?
==> Yes, why? because many hv just bought with that money.

Black money is there and could be causing high prices, but do you think it is going to stay like this forever?
==> Yes. Look at India's past, current and culture. Everything has now very deep roots.

Do you think US will do QE3 and money will come to BRIC countries and more of it?
==> India didn't decline with severe financial crisis, it was just glitch here.

Do you think inflation will not kill the growth and high Oil prices on top of it?
==> It will not. With inflation comes growth - deflation is what one should be afraid of.

Why did the prices suddenly went 4 times in the past 5- 6 years? What suddenly changed and is that change sustainable?
==> Many global jobs, high paying jobs / work. Sustainable - Yes.

All your other questions - Please highlight "May Be" in bold caps. That answers all.

Anonymous said...

"Black money is there and could be causing high prices, but do you think it is going to stay like this forever?
==> Yes. Look at India's past, current and culture. Everything has now very deep roots."


"Why did the prices suddenly went 4 times in the past 5- 6 years? What suddenly changed and is that change sustainable?
==> Many global jobs, high paying jobs / work. Sustainable - Yes."

so anonymous above me is trying to say that in next 5-6 years, RE price will go up further 4 times. house costing 1 crore will cost 4 crore. house costing 2 crore will cost 8 crore.

Anonymous said...

Anon above:
Looks like you are so confident of the growth. Why don't you buy more flats for yourself. Why do you even visit this blog? The name says housing bubble blog. You should visit other optimistic blog that talk about optimism. This may not be the right place for your ideas.

Or are you trying to convince others to buy RE and are a paid pimp to the RE industry? Or you are already heavily invested and are scared to lose your wealth?

Anonymous said...

Looks like you are so confident of the growth. Why don't you buy more flats for yourself. Why do you even visit this blog? The name says housing bubble blog. You should visit other optimistic blog that talk about optimism. This may not be the right place for your ideas.

==> Seems you didn't like the truth that I said. Ouch! Your tone is in denial.
No I didn't buy any flat yet - planning to buy - Yes. Can afford - Yes as most (not all) the people can.



Or are you trying to convince others to buy RE and are a paid pimp to the RE industry? Or you are already heavily invested and are scared to lose your wealth?
==> Not conviencing to buy. Why should I? It is their decision. I just put forward my analysis. Yes, I am scared to lose my wealth - same as you. I am not RE pimp - why are you so judjemental - are you some baba or something?


BTW, in your last post there was no content - but had lots of denial and arrogance.

Anonymous said...

anon above:

I wrote what the person above me was trying to say. I don't agree it will go up 4 times in next 5-6 years.

I believe there's a housing bubble. If it goes up 4 times in next 5-6 years, it further validates there's a bubble (or inflation).

I don't see any evidence that prices will go up further.

Anonymous said...

i meant anon at 12:48

Anonymous said...

This is what India is built on:

Air India pilots bought fake licences; 57 others showed up for work drunk

All the economy and growth is fake. Wait till some accident happens. All high flying people will come down to earth and stop talking nonsense about the sustainability of prices. The RE prices are also fake unlike other fake pilot licenses or scams that are being uncovered. I'll stay out of the market for a few years now till it corrects, else I'm never buying.

Anonymous said...

This is what India is built on:
==> Mind you, great people were born in this country. I don't need to provide history lessons here.

"Wait till some accident happens. All high flying people will come down to earth and stop talking nonsense about the sustainability of prices."
==> UTTER BULLSHIT. Bombay was back to normal almost next day after shooting 26/11. No one cares in India. Everyone is just worried about themselves and their gains.

Anonymous said...

Anon above:

You are a buffoon full of yourself. First take a class in Econ101 and then talk your nonsense here.

Anonymous said...

The bogus wealth created by the RE bubble in India is just wrong...so wrong. Once the bubble deflates, India will be left much worse than USA.

Anonymous said...

"You are a buffoon full of yourself. First take a class in Econ101 and then talk your nonsense here."
==> Is that the best you got to tell me by name calling. What part of my note that you didn't understand? oohh... may be you don't want to comprehend.

Anonymous said...

"The bogus wealth created by the RE bubble in India is just wrong...so wrong. Once the bubble deflates, India will be left much worse than USA."
==> nope. India was and is already in bad shape. It is just that this bad shape is now new normal for everyone.

Anonymous said...

"so anonymous above me is trying to say that in next 5-6 years, RE price will go up further 4 times. house costing 1 crore will cost 4 crore. house costing 2 crore will cost 8 crore. "
==> let's increase your perspective. Money flows where it going to find more momentum. It is RE today and past it was silver, gold, currency, RE, labor, knowledge. So yes will this be 2 to 4 crores... but not neccessarily RE, it will be some other entity. Keep your eyes, ear and brain alert.

Anonymous said...

Anon with ==>s

It seems you have taken upon yourself to answer all the questions. Don't be so serious, just enjoy the blog. You can write some light comments too :-)

==> said...

"It seems you have taken upon yourself to answer all the questions. Don't be so serious, just enjoy the blog. You can write some light comments too :-)"
==> Well there are so many light comments already, people predicting that sky will fall and are dreaming of affordable RE for all. That has never happened and never will.

I am just trying to show other side of lovely India

Raj said...

Stock market was @ 22k once upon a time. I recollect that all paid news channels used to bit drum that it will go up to 25k by Diwali but that day never came. So bottom line is every thing can not simply go up. It has to
Come down on at the same speed. So hold guys and gal till u buy next property. Black money was also in play in stock market too. Btw black money can not buy snything without support of white money.

Raj said...

If every flat in Indian city is worth 1 crore and will go up @ 40% that will make India richest country in the world in few years. Guys support this cause by borrowing, stealing or begging to buy propeties please. God bless India!

Anonymous said...

I think the crazy prices in the city will lead to more development in the outskirts of mumbai - Kalyan, Mulund, Dombivali, Thane, Panvel , Navi Mumbai will become more and more developed in the future attracting projects in the 3000-7500 range where it is actually meaningful and affordable. I think prices will stagnate in mumbai city for a long period it might remain at these prevailing rates for next 3-5 yrs with less transactions, it will be a stale-mate. Dont think there can be a 50% correction of real estate prices unless we go to a nuclear-WAR with our neighbours.

Ashu said...

Prices for home are determined by the whim & fancy of cheater & fraudulent means. They create artificial shortage of homes by allotting some of the house in benami holders. names/investors and release them slowly to innocent end-users. they take measure such as paid news in media . As per the actual condition realty is the only asset which is getting doubled in every two years. There will some reasons for increase in prices such as airport/metro/extension of rail/ central park etc. We the common people in the street are getting fooled by these cheaters.In India there is tendency to take out all the eggs by opening hen stomach without caring for its life .

Anonymous said...

House price to Rent correction-
Folks, the ratio of 100 in economist is the indexed value of long term average and not the actual value so stop comparing your house price to rent with hundred. That makes no sense.

Anonymous said...

the real estate is hyped up. A 2 bedroom flat now costs 1 crore and above with a 10 thousand monthly maintenance. Only people with a 1 lakh + income will be able to afford these flats. now just imagine if recession hits the world, the higher class will loose their jobs first.
The future is grim and the prices are definitely going down!

Ali said...

yes prices will correct but it will be minor 10-15%, which is nothing as 400% in last 5-6 years.

Anonymous said...

yes it ur turn now still if dont understand it will all over,the same as u got freedom just boycot things which flasely manuplated, today 30% of people that is politicains & bussinesmen and 70% who pay tax and our loyal to country dont even have house to say or paying loans till generations

Anonymous said...

yes to fight with corruption is to boycot black money that pored in mumbai by politicain and underworld
so if there no sale aoutomatically the price will come down yes its ur india rulled by black money , so i request u to spread the message atleast we can make people aware of it

Anonymous said...

I am a mumbaikar from heart as I am born and brought up in this city. But I am frustrated as even after saving every pie I am not in a position to buy a property I am well paid MNC employee still I can not fream of buying a house I can only imagine what would happen to the real middle class I am frustrated to say the least I am planning to leave the city

Anonymous said...

Dear Friends,

Mumbai is THE MUMBAI only because of us.. BTW it is no longer THE LAND OF OPPORTUNITIES...u can get paid more in delhi, banglore, pune, surat, ahmedabad, hyderabad, and so on.. E1 dubai is cheaper than mumbai...E1 after a double income highly paid family i am not able to affod a two bhk in city...i would rather venture out to baglore, delhi.. they need educated poeple everywhere what is soo spl abt mumbai.. we made mumbai what it is today.. builders hike the price coz we morins are ready to pay...Y BUY A HOUSE WORTH 1.2 CRORE WHEN U CAN KEEP IT IN BANK AND EARN 12 LAKHS INTEREST PER ANUM I.E. 1 LAKH PER MONTH.. AND PAY 25 THOUSAND RENT ANYWHERE IN THE CITY... THINK ABOUT IT...ONLY WE CAN IMPROVE THE SITUATION.. DONT GIVE IN....WAIT WAIT AND WAIT... IF YOU WANT TO INVEST PLEASE DO IT SOMWHERE OUTSIDE MUMBAI..AHMEDABAD WILL BE A GR8 OPTION...LOT OF COMAPANIES COMING UP THERE.... PATIENCE IS THE MANTRA...

I want to tell all those people who own a house in navi mumbai ..they proudly say my house is worth a crore today i bought it only for two lAKHS... plese sell your house if u can i bet all my money u woudnt find a buyer...so quit boasting... it irritates us...

navi mumbai is supposed to be affordable housing place and now the rates are insane builders there need medical help.. they are quoting 65lakhs for a 2bhk in DAMMED ULWE.... that 1 hour from vashi...attrocious

Anonymous said...

All this 300%-500% increase in RE prices are due to NRIs. Most Indians (resident Indians), esp the salaried class, don't make that much income. It is the NRIs who just throw out huge amounts like 1Cr, 5Cr etc so easily, and hence the huge steep in prices. There are _many_ builders who start many projects exclusively targeting NRIs. Sice they are there to buy flats/villas at crores, we are simply squeezed out.

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Anonymous said...

Having read the blog from start to end i would say the real reason for hot RE is the global economic crisis. NRIS around the world feel insecure there and want to transfer their funds back home fuelling the prices firstly in big cities and then near their hometowns. they dont want to invest in fixed assets in countries which may oust them uncermoniously overnight.For them property is not how many Rs. it is how many dollars ? We are 50 to 53 times cheaper in real value. Rs 52 a stomach fill in mumbai and a dollar to get a stomach fill in US.This competition has made life miserable. RE will reverse when these dear NRIS feel secure again in the improved economies of the west and want to liquidate here to reinvest there for better living standards. Remember insecurity brought them here and greed for better life had taken them there. Now coming to the number of slums in mumbai. Slums havent increased in Mumbai the number of doors each slum had has increased. REASON Every slum door not the amount of space occupied has to be provided with a 350 sft flat under the Populist SRA Scheme for which the taxpayer pays or is penalized in time frames. Slums are hot property and are not run by slumlords as in good old days but are owned by builders riding BMWS who gift second hand honda cities to politicians. the value of your slum property increases just by adding doors to your slum and waiting for elction to come by. The best of economists shall not understand the realities of Mumbai where there are smart well heeled jacketed professional encroachers and squatters. Leave the Bmc alone which allows people to live on flowerbeds and lily ponds.

Anonymous said...

buy a slum . add a door double your asset value in the coming election season. Govt gives subsidies to the poor. a liitle help to middleclass investors shall not harm the economy . you can pay property taxes and registration fees honestly

Anonymous said...

Few things people say in favor of high real estate prices and why they would remain high:
1. Rapid Urbanistion.
2. easy loans availability.
3. rising salaries and employment prospects.

This could be true for any period in 2000's but this was not true everywhere in world in these years.

why US, Europe and other developed countries witnessed high real estate appreciation those years? There are none of these factors that applied because there is no popolation growth or urbanisation in thse yrs They had it in 1960 -80's max.
There is no actual income growth for these countries in these yrs.

all asset price bubbles are anchored in reality of good reasons but THEY ARE Bubbles!!

I live in bangalore and waiting for prices to come down for years. I got some tidbit of opportunity in 2009 but suddenly shot up in 2010. now its more than 2008. prices of decent 3bhk are quoted between 70lac -1 cr.
This is nonsense. If we have done well as Indian economy, we shoudl have more asset purchasing power. Instead whatever gains we get in salaries, RE is easting away.

I tell you that this is all due to faith of people that RE wil only go up and there is great desparation. People are falling over each other to book properties without even knowing when it would be delivered.

This is herd mentality and it woudl stop.
I am very decent earner here but I dont think that I want to purchse a pigeon hole for 60 lacs and I cant pay kings ransom for decent dwelling.
I can understand that Mumbai was always a problem for middle class. but Bangalore never was.

It is true that there is great money generation by businessmen in last 10 yrs and lot of it is black due to non tax complaince. they easily park this in RE. on top of it, RE industry also generates lot of black money which againgoes there.
Now, only of govt start insiting on quoting PAN numbers during registration, this problem of black money would solve to some extent.
This is not a brillint idea from me. anyone could figure out, but govt is not doing this. any guess?

why we do not have any real estate regulator who can take care of issues of builders, fairness of deals, owenrship title enforcement etc.
there are hardly open lands in bangalore which doesnt have lot of disputes.
we as a country shoudl be ashamed of what we have become. we are completely becoming degenrate society who allow vampires to rule us. in fact, we create them.

Anonymous said...

regulators in India ensure poor become poorer and the rich become richer by fair or unfair means

Rahul said...

Real estate prices are infalting far beyond the reach of common man, because of high expectations, artificially created for the value of property in future. People don't even know to evaluate the cost for property and on what basis they are charged, such huge price for the purchase.

Two beneficieries of this game are, Real estate developers (thats why n number of companies are getting populated like mushrooms in this business - HUGE profits in SHORT time) & BANKS (they cant keep thier money ideal without financing, as they too have high targets for loan disbursement every year. Sales pressure again on them too!!)

Poor victims are people who have fat salary packages, and doesnt even know whether the money they spend (even several lakhs to a crore) are worth buying it. Mainly for tax saving purpose, & for investment they are ready to spare huge amount of EMI's to be paid almost through out their life. Anytime, if recession hits and their fat salary job will be under problem, then they will feel the real heat on them and the stress on their economics. Guys! particularly salaried ppl, pls think twice or thrice and plan for your investments, so that your hard earned money need not get trapped into hands of real estate inflation!!

Anonymous said...

i am pretty sure that price is inflated in punjab.It will come down for sure .

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