Article Link
However, many middle class buyers feel cheated and harassed, especially due to the problem of delayed possession. Alok Goswami, who bought an apartment in Kumar Kruti, Kumar Urban Ltd’s (KUL) project in upmarket Kalyaninagar in March 2006, has not received possession even today, five years later.
According to Ravi Karandeekar, real estate expert, some builders take bookings and invest the money in another project, thereby causing delays. “For many builders this has become a business policy,” he said, not naming any specific builder.
As a real estate watcher, Karandeekar warns buyers against falling in the trap of taking over the apartment even before the entire project is completed (as in the case of Periwinkle). “This is called false possession. People get carried away due to the losses they are facing, but without completion and occupancy certificates, the dwelling has no legal standing, especially in the event of a mishap like fire,” he added.
Wanting to caution buyers, Karandeekar said, “In most real estate projects, buyers book apartments that are showcased at conceptual level only. Even plans are not passed and the bookings begin. Buyers must understand this.” He cautioned buyers against allowing themselves to get exploited because they are not aware of their rights.
Subscribe to:
Post Comments (Atom)
45 comments:
Thane loses its 1BHK too
Builders keen to sell 2BHK flats to affluent clientele in the Rs 80 lakh and above price range; no scope for the aam aadmi's dream house.
Only two builders were offering one bedroom-hall-kitchen (BHK) flats, of which only one was situated in the city proper, while the other was located at a distance of 10 km from the station. Most of the apartments on offer were two BHKs, costing no less that Rs 89 lakh each. A prominent builder was offering a two BHK apartment for a steep Rs 2.36 crore, in a soon-to-be launched project.
The rates in Thane are a whopping Rs 7,000 per sq ft. Considering that the smallest house built in Thane has a minimum area of 1,000 sq ft, almost all Thane lodgings will cost you a dear half a crore or more.
Heeru Rijhwani, a resident of Ulhasnagar, claimed that this is a move fuelled by the builders' greed to rake in more profits. However, he predicted that this would result in the speedy development of nearby areas. "The adjacent areas which have potential for development will get a boost because of this new trend, and builders will soon focus on them. They would provide a cost effective alternative for aspiring property owners. They can be like Delhi suburbs Noida and Gurgaon," he said.
Affordable homes at the cost of saltpans?
An expert panel formed by the Mumbai Transformation Support Unit (MTSU), a government think-tank on infrastructure projects for the city, has recommended unlocking certain No Development Zone (NDZ) areas and saltpan lands in order to accommodate more affordable housing projects. Citing dearth of available land for development, the panel—which included officials from the housing and urban development departments, BMC, MMRDA concluded that that releasing more land was vital boost affordable housing stock and bring down realty prices.
An empowered committee of the MTSU had appointed the panel to suggest reforms to overcome the acute shortage of affordable houses and arresting proliferation of slums. The committee is chaired by state chief secretary Ratnakar Gaikwad, and has nongovernment nominees like Deepak Parekh, Narinder Nayar, Noel Tata and Jamshyed Godrej, among others. Parekh had recently said that releasing restricted lands was the only means to control rising real estate rates.
There is enough land in Mumbai. They should give hefty sum to slum dwellers to vacate and acquire land to build prime and posh buildings.
Com'on we have primest location in center of Mumbai - 'Dharavi' - near to central, western, south and north Mumbai.
also there are many many slum areas in prime location - can't these builder use these lands? anyways these slum dwellers have illegally acquired land (encroachers).
Many slum dwellers were given free houses since 1995 - but they were smart - they rented out the slum and moved - many slum "property owners" live in nice neighborhoods and rent out the slums to migrant labor thronging from UP Bihar.
COmmodity bubble is bursting. Silver is down 30% in the last 3 days. Oil is back under $100. Looks like USD will strengthen further and Rupee is going to go down.
RE in India has to crash by 70%.
To all Indian RE Bear. Without comparing Indian RE international RE or economies give 5 good reason that RE will crash. Explain only Indian local economy and trend.
Any takers?
Price rise is a result of demand. Indians breed like cockroaches and then compete for the available place to live. Those who are lft behind in this rat race, construct a bubble in their mind and hope for a crash.
There is no initiative from the government to solve the problem. They dont even want to improve the sanitary facilities.
Now do your maths ans see where the problem is
Commodity bubble is bursting. Silver is down 30% in the last 3 days. Oil is back under $100. Looks like USD will strengthen further and Rupee is going to go down.
What fundamentals have changed for commodity prices to go down. Has the interest rates gone above actual inflation or Govt's have taken a oath not to print more currency. Silver is down because Comex has increased margin requirements 4 times in 8 days. Interestingly as the silver price is going down, the physical metal inventory in Comex is going down as well.
"What fundamentals have changed for commodity prices to go down."
Excerpt from an article on moneycontrol:
The gold-silver ratio has dipped to as low as 30, which from an average perspective shows that silver was over valued. The trend since about 1980s always required about 65 ounces of silver to but an ounce of gold, whereas in this current rally in silver, we saw the gold-silver ratio to drop into 30, implying that it required only 30 ounces to buy an ounce of gold.
Also, what fundamentals have changed for RE to crash?
India is all set to become the most populous nation on the earth by 2025 - this is a stronger possibility, almost a certainty and our population will continue to grow in the lifetime of people posting on this blog.
Commodities will fly as long as interest rates are down. Will they remain down till 2025 or our lifetime?
The gold-silver ratio has dipped to as low as 30, which from an average perspective shows that silver was over valued. The trend since about 1980s always required about 65 ounces of silver to but an ounce of gold, whereas in this current rally in silver, we saw the gold-silver ratio to drop into 30, implying that it required only 30 ounces to buy an ounce of gold.
While the historical Gold: Silver may be 1: 65, Silver is available only 16 times more than Gold in Earth. However, most of the silver is consumed for industrial purposes where as the Gold mined in History is available on the Earth somewhere. Silver - Zinc battery for electric cars and Solar Photo Voltaic cell panel use silver and their demand can explode in future. And add it to any buying of silver from central banks to diversify their foreign reserves. Based on this silver is most like to outperform gold but with very high volatility that we are seeing now.
House prices started to fall in the US after the Federal reserve raised rates (around 2006 I think). Interest rates have started tightening here in India as well. For sure, the real estate market will be affected. Remains to be seen, how much. Hopefully our banks have been prudent in their lending and lent to credit worthy borrowers.
But interest rates can go up a lot. In the early 1980s USA had base rates as high as 15%. Such high rates here can easily push even credit worthy borrowers into default.
==> Many are still comparing past to present and still comparing USA to India.
If you want to compare USA to India - compare everything (laws, regulations, culture, etc ) and not just what you feel like to make your point.
Wanna continue comparing apples to oranges?
@pol pot'
Unlike US, 95% of Indian home owners dont have mortgages. Most new buyers buy paying outright case. Most who have morgages also have suffiecient cash to meet contigencies.
So, do not compare USA with India. Nothing is going to change if the banks hike up the interests.
Black money is the driving factor in real estate and will continue to be. Don't work yourself with rosy dreams by comparing US to India, for these two contries are totally different.
HoChiMin
HoChiMin: What are you doing on this board? Just go and buy 2 bhk flat in Thane for 80 Lakh. You are missing opportunity of life time. It will be 90 Lakh in a week, so don't wait.
HoChiMin: One more reason to buy !!!
What's new in real estate investments?
"There is a sense of achievement that is celebrated when one purchases real estate on such auspicious days like Akshaya Tritiya. Any property bought on this day signifies the sense of achievement, of 'having arrived' at a particular stage in one's life. This segment can best achieve the heady feeling of success when they pick up a 'second home' or a 'weekend home' on the auspicious day," he adds.
"If you want to buy a second home within urban limits, the price factor can be a problem. Or, in most cases, possession is expected after two and a half years. This is where a 'second home' or a 'weekend home' wins - ready possession options, at prices that are easier on the wallet," he adds.
Ho Chi Minh,
Read up on the Hong Kong real estate bubble in the 1990s. Even there, loan to value ratios were quite low. That however did not stop prices from declining steeply. I am not saying prices will fall steeply here. But dont expect double digit gains if you are a home owner.
Said,
The point was not about comparing US to India. The point was about the effect of rising interest rates on asset prices. Basic finance -> When the cost of money increases, the cost of assets fall. It does not matter whether people own it outright or have leveraged themselves to buy it. There are enough and more examples all over the world for this.
To all Indian RE Bear. Without comparing Indian RE international RE or economies give 5 good reason that RE will crash. Explain only Indian local economy and trend.
1 -[On your black money argument] Black money doesn't need shelter only in Real Estate. It might have done so in past 5-6 years because RE was going up. If RE is stagnant, there are many other assets where black money can be deployed and get returns too!! There are enough loop holes to exploit in the system.
(BlackMoney demand reduced)
2 - Speculators have to find a genuine buyer at the end of the chain to dump the asset. With prices going up, genuine buyers' number is reduced and more supply comes into the market. (The question is not demand but affordability).
(Speculators demand reduced)
3 - We are in Interest rate tightening cycle in India. With inflation showing no signs of slowing down, the home loan rates are going to go up much higher and add to it the woes of teaser rates resetting to market rates.
(Genuine buyers demand reduced)
4 - Smart People who want to buy RE for investment legally now can see that Gold and Silver are much likely to beat RE in terms of investment. (Please do not argue on the tax saved on home loan. I have already provided a calculation in the previous thread)
(Investors demand reduced)
5 - Indian IT sector is showing signs of stabilization (evident from recent quater results) which was the primary driver for RE increase in Bangalore, Hyderabad etc and driver for consumption boom leading to stock market boom and subsequently increase of Mumbai RE starting 2003 to 2007.
($ earning people's demand reduced)
Also, the argument about 95% of Indians not holding mortgages does not hold water. If that were the case, when credit disappeared during the 2008 recession, why did home prices fall so much? Like it or not, real estate market is heavily dependent on credit. And when credit becomes expensive (i.e. high rates) or simply unavailable (2008), the market will slowdown or fall.
To add to black money argument, looks like people
do not understand basic economics. The real estate decline in 2008 in India, where was black money? The answer lies in the overall money supply in the market. Money supply
was reduced in year 2008 as evident from following charts(Look for India chart):
http://www.businessinsider.com/6-charts-which-prove-that-central-banks-all-over-the-globe-are-recklessly-printing-money-2011-2
Overall it's the overall money supply coupled with interest rates which govern currency flows, part of which becomes black money. So if black money or white money supply shrinks, so do asset prices.
Bear above:
Exactly. Doesn't matter black or white, people should understand where this money came from? It didn't exist 5-6 years back. Either GOI is printing, or taking too much loans, or too much FDI or a combination of all of these.
RE has to correct by 70%. Otherwise I'll never buy. I'm better off saving my money @10% in banks. I don't want to catch a falling knife. Those who are bulls may catch it but mine is hard earned money and not stolen money like many other Indians have.
To add to black money argument, looks like people
do not understand basic economics. The real estate decline in 2008 in India, where was black money? The answer lies in the overall money supply in the market. Money supply
was reduced in year 2008 as evident from following charts(Look for India chart):
==> Black money has been in existance since decades, now it is at exponential growth rate. In 2008 black money didn't decrease, it was on sideline - waiting for better and secured investment.
Want to see the fun - Ask yourself - What if all the RE transactions are tracked, taxed and accounted. Basically if every individuals all earnings are audited, all business earnings and expenses are audited. And there are HUGE penalities with strong law enforcement what will happen?
Overall it's the overall money supply coupled with interest rates which govern currency flows, part of which becomes black money. So if black money or white money supply shrinks, so do asset prices.
==> Wrong. Only price of currency will decline. but value of assets will decline with only more supply and less demand. Therefore if market has more money and less RE available for buying - Assets will still shine.
We need to understand that most of the Indians are not pressed to sell their RE at loss. They will hold on RE until they have extremely extreme needs. They will go hungry once a day, stay a shoddy life, will not move to another state / location for better opportunity, will beg relative and friends for money even when they are living in 2 crores worth apt.
What is that will make any Indian sell their RE for less than what he bought for?
For above:
Indians will sell when the sentiment goes down that RE is going down. You'll see investors becoming sellers. Inventory will pile up. People will be ready to take a loss to get out of the RE.
Your thinking that people will wait is all in your mind.
When it happens it will be a self fulfilling prophecy.
Said:
You are living in your own world. RE is a mere investment and when it loses its lustre, it will start off selling with people who already have a lot of equity. SUppose someone could make 1 crore profit, would be willing to take 80 lacs if he can sell. Then people wil start cutting down on profits and eventually more and more RE will come to the market.
Do not forget that majority of sales are through cheap credit and once loans are hard to get, RE has no wheere but to collapse. Tt is all about the easy money from banks to both consumers and builders.
It will happen so quickly that people like you won't even have time to save even one house from not going down in value. India is no different than the west but more screwed up and prices can fall even 80%.
Agree with anon above. Sentiment can shift rather quickly. (both ways though:)
Secondly, the black money argument is a little weak. If the builders were actually rolling about in black money, why then are so many builders pushing themselves to the brink by borrowing at exorbitant rates (25-30% !!). Something has to give soon. Either prices have to correct, or cheap and plentiful credit has to return so that buyers can return.
Note that flat or low growth in prices is also a correction, since in real terms you are actually losing due to inflation.
Thirdly, anyone who says India is different,etc should read "This time is different" by Rogoff and Reinhardt. One of the best books on financial history. It chronicles 800 years of booms and busts.
@Said
>>==> Wrong. Only price of currency will decline. but value of assets will decline with only more supply and less demand. Therefore if market has more money and less RE available for buying - Assets will still shine.
<<
Wrong, if money supply decreases, currency becomes more precious compared to assets. Even though demand - speculative or end user -- may exist, but there is less money supply in the economy, people can not buy since in aggregate they have less money. Banks can also not lend because money supply is short, and this is interesting phenomenon. It happened in 1994 and it happened in 2008-2009. Both the times RE crashed.
The fundamental problem I see on this blog is that people are not willing to accept that those who bought real estate 5-10 years back, irrespective of the fact that they got lucky, have seen their money grow 500% in less than 10 years. Whether it can be repeated in RE? Probably not. But will prices go down 70%? Probably not.
The next bubble could very well be in Silver, Oil, Gold, Tea, Coffee or Rubber (which incidentally has been the best performing in last 10 years). The chances of any smart engineer, doctor, lawyer catching any of these bubbles and making money are miniscule.
So please acknowledge the 'success' or luck of those who made money in RE and keep looking for your 'lucky' bubble.
@Pawan
>> The chances of any smart engineer, doctor, lawyer catching any of these bubbles and making money are miniscule.
<<
Believe it or not, one month back almost every indian tom dick and harry in my aquaintance was asking me how to invest in silver through ETF and these included people of every profession in India. I was certain that now these people are going to lose money, and it happened. Why can't it happen in RE ?
Bear above:
If bloggers here think RE will not go down, why are they even here. Let them go and buy more. And we'll have fun when they get a good spanking of falling prices in months to come. I think that all the commodity bubbles etc. were created after the RE bubble and RE has to go down by 60-70%.
QE2 in USA is ending next month in June. That will be a deciding phase for future of Commodities, RE and stocks. All the free money that the world Govts. have been printing is coming to an end.
If the economies start correcting too fast, USA will come up with QE3 and other countries will start their printing presses again. So, there would be more pain ahead for Bears as World Govts. are trying to keep the RE bubble intact. But that will not happen forever. Next bubbles to burst are Canada and Australia. China and India will follow. Brazil's would wait another year or so.
If you think black money is cause of RE bubble then you are wrong. People had black money in India since beginning, but then why RE did not appreciated at this rate for so many decade? This bubble is started building slowly since easy availability of home loans. Previsously only bank employees used to get loan easily every body else has to wait for months and months to get load sanctioned. HDFC has changed this world 10-12 years back and most of the private and nationalized banks have followed it. I got my load sanctioned within 7 days in HDFC, so I could buy house, so did many. This has created demand in RE and black money followed the demand. Hence more demand. People may have tons of money, but it is fools world to believe that 95% people r buying properties outright. People with money believe in using someone elses money to make more money. When this flow is tight demand will certainly go down. Correction is bound to happen.
@Above:
When easy money came in from banksters, RE prices started to move up and anyone who was selling made more black money. This became a cycle and anyone who is selling at the peak is making 40% more black money and pumping back into the system. All this will evaporate will falling RE prices.
Now can anyone explain me why prices have gone north so rapidly instead of getting into same old argument of black money??
Has India's population doubled in last 5 years- answer NO. Has India's employment doubled in 5 years - answer NO. Has Mumbai's population is doubled in last 5 years - answer is NO. So fundamentals have not changed in last 5 years then why property prices are gone up so rapidly....
Potential reason is zero interest money and unprecedented supply is driving all commodity prices...and RE is also one of commodity...When US RE market was hot every one from world has invested in US RE to push it further north. Remember mortagage back securities ?? Now it is payback time. Fed is printing hot money, which is driving commodities and RE too.
Mumbaikar,
I myself am in the bear category, but the reason for high prices may be expectations of higher future income. The price for any asset (stocks, bonds, real estate) is simply the net present value (NPV) of all future income from that asset discounted appropriately.
For houses the income is the rent that you receive or expect to receive if you were to rent it out.
Price/rent ratios of 25-40 in India simply mean that expectations of growth in future rents are high. This is what I think will change over the next few years.
Interest rates are rising (i.e. the discount factor in NPV calculation will increase). Furthermore, growth is moderating, this implies slower growth in personal income as well, which further implies lower growth in rental income. This seems to suggest slower (or negative?) growth in home prices.
Hi,
having been reading this blog for over 3 years now.
No sign of a burst.
Now dont want to wait
Want to invest in Mira road.
How to go about this (Through broker/direct builder) what is rate . how are terms and conditions for investor flats
If some of you can help me on this
Anon above:
Good luck buying. You really want to own now. It is a dream. Go for it if you cannot wait anymore.
If I were you, I would not throw my hard earned money away. Many people in West got trapped in this mess and can never buy a house now for next 10-15 years as they can't get rid of the house they bought at peak. Most bubble places prices are down 50-60% in West.
If you cannot wait, choice is yours. Go for it. I'll wait even if I've to wait 4 more years but I'll never throw my money to a bubble. I'm a happy renter.
@Mira road property seeker
The rates vary from 4500~7000 depending upon location and amenities. It is prudent to avoid semi constructed/planned construction building as there is no guarantee that you will get posession as promised. Lot of people have burnt their fingers by booking with small time builders or thriugh crooked agents. Another thing to look for is the religious aspect of the locality.
Good Luck
@Anon above,
Last part of your comment is interesting and sensible. A cousin of mine moved to a flat in Jogeshwari 2 years back and guess what, during certain festivals goats are slaughtered on the terrace and their caracas thrown out of compound. People are scared to complain, that includes building secretary. Some people have moved out but moving out is easier said than done.
Locality should be the first consideration when buying a place
Anonymous @ 11:36 AM 4:26 PM and 7:03 AM.
Thanks
I would like to know the nitty grity of how to deal I mean.
How is an investment in real estate done.
If i don't want to pay the full amount. I don't want to transfer the house in my name
just hold it for a few months and move out
what is the procedure the legal documentation.
Regarding the comments of Bogus and crook agents. Most are out to fleece you. Have been going out to see buildings and they talk about appreciation in value as that they are gods and know whats coming tomorrow. Also one of the bogus agent tells me that mira bhyander area has BMC water. LOL
Please if you experts can enlighten me
Anonymous said @ 11:36 AM
Brother, I too am a renter. have been on rent since 2008. When the boom started. I too believe that the bubble has to burst. But why not earn some amount from the RE instead of keeping it parked in an FD.
Yield on rent is not good in India, and housing societies have additional fees when apartment is rented. So that reduces yield further.
This may not be true in all housing societies.
Maharashtra Govt. is planning to give additional FSI of .33 at premium in Mumbai suburban area. I hope that will bring down prices by some factor but again , that is not guaranteed as we are dealing with greedy builders, babus and politicians.
But certainly it will reduced TDR rate and more congestion in suburban area.
Anonymus @ 8:27 AM
1. Only property registration of sell deed holds the highest legal value.
2. All other commitments made on the stamp paper holds good, but if denied it takes lot of money and effort to fight the legal battle.
Two of my friends have given money to one of the builder in Pune. The costruction is moving at snails pace, virtually stopped. They are neither able to sell it nor able to get back the money.
If you have muscle power to take on the builder or ready for the above then go ahead.
What fundamentals have changed for commodity prices to go down. Has the interest rates gone above actual inflation
Post a Comment