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India has reported weaker-than-expected growth numbers for the first three months of the year.
The country's economy grew by 7.8% in the first quarter compared with the same period last year, the latest government figures showed.
India's economy has posted robust growth since the global financial crisis.
However, the Reserve Bank of India's monetary tightening policies have seen a loss of momentum.
Analysts say that as the central bank continues its fight against rising prices, the pace of growth is likely to be slow for some time.
"I think this loss of growth momentum will continue for industry for a quarter or two because we are not yet done with interest rate hikes," said Shubhada Rao of YES Bank.
However, analysts warned that though a slowdown in growth had been broadly expected, continued loss of momentum would have an adverse effect on the economy.
"It is significant because it is the first quarter of sub-8% growth since the crisis," said Sonal Verma of Nomura.
"The last four quarters we have been growing above 8%, so this is really a slow starting point for the next financial year," she added.
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117 comments:
How does increasing interest rates help controlling inflation in a nation where there is parallel economy of black and fake money.
More interest rates are hiked, there will be more demand for black money to evade taxes. No wonder we see rise in corruption and more under table dealings.
Black money has to be brought to control, there should be transparency and accountability of dealings. RE transactions should be transparent. Simple question - if govt is so concerned about black money then why are they not investigating the published and real RE transactions to RE registered deed? Looks like they are turning blind eye to all black market deals.
WTH.
--------
I have been following this blog on and off for a while. We need to address the black money issue repeated ad nauseum to explain why prices are high, why prices will go up, why prices will never go down.
here is the news:
BLACK MONEY WAS ALWAYS THERE WAY BEFORE THE ROCKET SHOT REAL ESTATE BUBBLE
Here is a much more interesting discussion, how much of black money is created by raise in real estate prices vs how much the raise in real estate prices is created by black money.
From my anecdotal info 90% of money people have today in black money( cash or asset valuation) was created in the bubble last 5 years.
It is a bubble, forget about Mumbai, a lot of small shit hole towns in Andhra pradesh a 1500 - 2000sq ft independent house costs 300k+ usd.
@Said
>>> How does increasing interest rates help controlling inflation in a nation where there is parallel economy of black and fake money.
<<<<
Monetary policy tightening through any measures - raising
Interest rates, reserve ratios, etc. - is bound to effect money supply, and asset prices are a function of money supply, doesn't matter black or white. If money supply in system is more compared to assets, then assets become costly. If money supply is less compared to assets supply, assets become cheaper.
=>Said:
Finally, you are making sense. The people in power are in bed with the black money marketers. That is very reason they do not want to disclose accounts of people who steal and send money on overseas accounts.
The point you make about transparent transaction is very valid. It will also help the GOI get more in taxes on the sale price.
My hopes are now on Team Anna Hazare and Baba's Swabhiman party.
What if GOI raises interest rates and on the other hand is printing money as if there is no tomorrow and buying back stocks on Dalal street to keep it propped up plus dropping it aggressively by helicopter to liquidate the system.
As =>Said said, changing monetary policy may affect the higher level of stuff slightly like more interest rates for borrowed money etc., but GOI will keep throwing printed money from the back door.
Monetary policy tightening through any measures - raising
Interest rates, reserve ratios, etc. - is bound to effect money supply, and asset prices are a function of money supply, doesn't matter black or white. If money supply in system is more compared to assets, then assets become costly. If money supply is less compared to assets supply, assets become cheaper.
==> Agreed.
Let's say, keeping all Monetary policy / money supply conditions same (black and white) - only change is that all RE transaction are supposed to be ONLY in White and transparent transactions. Any black market dealing has heavy penalty and imprisonment.
What do you think will happen to RE prices? what will happen to inflation?
Black money will collapse with real estate crash.
Anon above:
You are very right. Once the RE bubble bursts, most of the black money component will evaporate. Like US lost trillions of dollars in RE bust.
But the black money component is used by the builders to pay bribes to keep business alive.
Construction industry employs a lot of people in India. Stopping black money would severely curb new projects, which would mean massive unemployment to the construction workers, who would then vote out the govt.
In short high black money is allowed by GOI like a bailout to laborers(keeping in mind that it trickles down to the labor classes even though in exploitative rate). Its basically suburban NREGA of the govt.
If there has to be transparency, construction workers should be cartelized & organized as contractors who get paid salary like employees and dont deal with cash - but that will kill many jobs too. So black money becomes pivotal in kick starting new work and more jobs for the laborers. This will go on as long as India (and China) have surplus construction laborer pool (landless farm workers, laid of factory contractors, sick industry workers who migrate to construction, new babies born in the 80s and 90s in poor districts, farmers displaced by drought floods or famine)
In China this trend is slowing as less people migrate to cities for work. If India has to achieve this, lower smaller cities need to be revamped to better status. If tier 2/3 cities Lucknow, Ludhiana, Patna, Jodhpur, Cuttack, Ranchi, Raipur, Aurangabad , Coimbatore, Trivandrum, Cochin, Surat, Nagpur, Vishakapatnam, Hubli, Mangalore, Goa, Kharagpur, Kanpur, Bhopal, Gwalior, etc are overnight converted to have same best in class facilities like the top 8 cities, you will see a large labor pool moving away from Mumbai, NCR, Bangalore, Chennai, etc.
So its actually how govt micro manages smaller cities to prosper while larger cities are in doldrums with high real estate that will dictate how the bubble deflates.
Unfortunately Roads, Water, Education, cultural up-liftment and Electricity (and internet) are key for smaller cities to leapfrog.
I partly blame the British who neglected smaller towns which had potential - the Brits never setup more institutions there for fear of more revolt once those people got enlightened.
McManmohan wants to have labor reform which is pro biz but the Union bosses across all parties wont let that happen -
This problem is present in all nations of the world (surprisingly except communist china and vietnam)
As long as India has a pool of buyers and pool of labor class, prices will be high and black economy will thrive.
Black money is to be cash money (physical currency) some years back. This is no more true. Builders ask for cheques payable to different accounts, some of them opened by fake ids etc and closed once their need is over. This increased level of sophistication makes the builders almost immune from govt. audit as tracing all the accounts is a herculean task. Moreover the govt officers are asked by their Superiors not to too inquisitive and are these goons paid handsomely by the builders.
Black money servers the interests of politicians, law enforcement, judiciary and govt administrative officers. When this benefits the rulers and their stooges, why would they put a stop to it.
The well educated bloggers here try to apply economic models of western countries to India, and in full hope that India is going in the direction of USA., Ireland and Greece. Nothing is far from truth. No one cares for general population as long as their needs are satisfied. Money is power in our beloved country and people with black money are the rulers.
So with this discussion on black money coming back to my original question - How does increasing interest rates help controlling inflation in a nation where there is parallel economy of black and fake money.
Black money rules. White money is just for masking or just for formalities to show some transaction so that business is legitimate.
Income tax department has no way or has no system in place to tie loose ends together, they heavily depend on your bank statements and form 16. Other than that one can do whatever it wishes. There are no audits to check to and from money flows.
‘Number of hungry people in India rose by 65 mn between 1990-2005’
http://www.thehindu.com/health/policy-and-issues/article2065723.ece
Is there any reason I should believe this news? India RE, growth and all those stories doesn't add up to this news.
Why the Real Estate stocks on BSE are near 52 week low???
Are these companies going bankrupt or is it pure manipulation??
In India there is not much leverage as compared to US companies, then why are these stocs trading at these valuations??
Why RE stocks are trading low:
The reason is simple that the investors know the truth about RE bubble and the amount these companies owe. The investors shorted all the RE stocks and they will stay low for a long time as the bubble will burst and RE will pick back again around 2025. Some of these companies will go bankrupt also when RE prices start falling. They will also take down a few Indian banks and the overall economy will tank for 8-10 years.
Believe it or not. It is coming.
Analysts Expect China’s Property Prices to Fall at Least 10% this Year
30 May 2011
May 30, A growing number of analysts are expecting China’s red-hot property prices to fall this year, as the government’s property curbs and prudent monetary policy begin to take effect.
“Given China’s massive efforts, from monetary tools to administrative constraints, to curb the property market, a lot of speculative buying has been phased out,” Professor Nie Meisheng, president of the China Real Estate Chamber of Commerce, said during a forum organized by Peking University’s Guanghua Real Estate Association on Sunday.
“I think there will be a 7% decrease in housing transactions and another 10% in transaction values this year, so it’s fair to predict a 10% drop at least in home prices as far as I’m concerned,” Nie was quoted as saying by the Beijing News.
So much bad economic news from US, looks like there will be QE3.
May 31, 2011, 1:17 a.m. EDT
China developers to write down asset values
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Falling land prices may prompt Chinese property developers to write down the value of their assets, forcing a sober reassessment for those with vast land holdings, according to a survey released Monday by Credit Suisse.
Most at risk are those mainland Chinese and Hong Kong developers who added aggressively to their land banks in 2009 and 2010, the prices of which could come under pressure amid Beijing’s ongoing credit tightening, the investment bank said.
The findings were part of a poll of both listed and unlisted companies conducted by an independent research company and commissioned by Credit Suisse.
Samsung plans more tablets despite ongoing legal battles with Apple, and Computex, Asia’s answer to Las Vegas’s Consumer Electronics Show, starts this week, with Acer and Intel expected to make a splash.
Among concerns are the potential impact on smaller developers, many of which don’t have the financial resources to weather leaner times.
“The potential exodus of small developers could be overwhelming, and result in a surge in land supply that may bring down land prices further,” said Credit Suisse’s Hong Kong-based analysts.
Prices for land sold at auction were down 20% so far this year, the report cited one industry expert as saying. Other data indicated price declines of up to 50% for the year to date, although the figures were affected by slumping transaction volumes in cities such as Beijing, possibly overstating the true rate of declines, the report said.
Per capita income jumps to Rs 54,835
http://www.samachar.com/Per-capita-income-jumps-to-Rs-54835-lf5sMtjhdeh.html
And average cost of RE is in crores.
septic ghost, good post.
RE will become reasonable when there is good governance, good infrastructure and better laws - and better implementation of laws.
Unfortunately, given Indian's basic nature, I dont see that happening.
Dont blame British - they made "small cities" like Bangalore, Poona, Quilon, Bhopal, Kasauli, Shimla and many others with excellent infrastructure for their time.
We spoilt it after independence and built shanty towns all around.
Even Delhi, Bombay, Calcutta and Madras were small once - Look at the British parts and look at the parts we made after independence.
Basically British had a very low opinion of Indian people and the were right.
Mughals (and Afghans before them) also had a very low opinion of Hindus and they were also right.
We need to see our own problems and improve ourselves.
Unfortunately I dont see that happening either.
Among the educated clas also, widespread denial of the problem exists (as will be exposed in the responses to this post).
http://timesofindia.indiatimes.com/business/india-business/IOC-may-hike-petrol-prices-soon/articleshow/8661258.cms
why cry when petrol prices hike and rejoice when RE prices hike... ooh, you can stock on RE but not on petrol!
Next diesel, lpg.
...and what happened to good old onion prices... are they back to affordable level?
=>Said: Just curious, you are based in California or India?
Stocks are rising again. I'm so happy I was born in India. I've been pressured from peers and family to do what they want or what is appropriate. Like getting into IIT, I joined Brilliant Tutorials. Worked hard and got a JEE rank of 664. Joined a public sector after my B.Tech. Family pressured me for IAS. I joined IES and got Railways and still preparing for IAS. I cannot handle the bribery portion in my job and I'm tired of all the nonsense. My neighbourhood kids and other people who never worked hard and used to chase girls when I was busy with IIT coaching are better off. They have multiple properties, drive expensive cars and here I'm a class I officer and cannot afford a house. Forget about marriage.
I made up my mind 6 months back to end this nonsense in life and I applied to a premier school in US. I've admission and 50% assistantship. Would be joining this fall and will never return to this insanity.
For all those who think house prices go up forever, see http://online.wsj.com/article/SB10001424052702303657404576357170425058088.html . (Search for the article on google if you do not have a paid subscription on wsj).
I am not saying this will happen here in India, but be aware. We use the black money, lots of savings, NRI money, etc to justify the "this time is different in India" argument.
It has happened in many countries around the world. We are not special in any way.
Bindas Bhai,
It's June 2011. Are we all set for the RE fall or do you think it will take some more time?
It pays to be a beggar in India's financial capital
http://www.kerala.com/news/newsDetails.php?ndId=2236
As long as people have socialist mind set and give free handouts India will shine, RE will shine.
W T F**K !!
A reasonable solution would be Government offices to move to smaller cities. No reason all administrations needs to happen from mumbai, too much concentration of power. Move those offices to pune or nagpur. Free up the lucrative land in mumbai, and spread the risk out.
Realty poor-show hints at slide
Unitech sales drop 45%, DLF’s 20%.
Mumbai’s Sky-High Property Prices Set to Fall, Say Experts
According to industry experts, home registrations are down 30-35 percent in Mumbai compared with the previous year, which shows that investors and homebuyers have moved to the sidelines.
The recent slowdown in activity in the residential space is hurting both property developers and home sellers.
“I have a 2-bedroom apartment in central Mumbai, it’s a very nice building with a garden and a gym. I put it on the market 3 months ago and haven’t received a single inquiry,” Rajesh Jogani, a Mumbai-based real estate investor, told CNBC.
The bad news for investors is that transaction volumes are unlikely to recover in the coming months, according to Shobhit Agarwal, Managing Director, Capital Markets at Jones Lang LaSalle because of the lack of affordable housing and rising lending rates.
“This year, sales during the festival season won’t pick up,” he added. The festival season, which takes place from mid-September to the end of November, has historically seen a surge in property purchases especially on the residential front.
In addition to poor demand, industry experts believe there is also an oversupply in the market. Over 65,000 new residential units were launched across India during the first three months of the year.
Agarwal says it is just a matter of time before property developers begin to slash their prices, particularly as new projects are not getting the same sort of response seen in 2010.
Jogani of Indiareit agrees and adds, “Property developers are taking debt at rates of 18 to 24 percent per annum, which will put further stress on their books and lead them to reduce prices.”
Another post on China's underground black money economy (very similar to India's)
http://blogs.ft.com/beyond-brics/2011/06/01/guest-post-credit-bubbles-underground-in-china/
"Chinese media reports suggest that there is now an enormous pool of underground loans, possibly totalling in the trillions of renminbi, although the government has not released an exact figure. In any event, the government may have a hard time tracking such loans, which often transpire through a handshake between two individuals."
So black economy runs local economy and when it comes to global economy, put forward good things from black economy with incorrect white economy figures. What a mess. Is this how Indian and Chinese economy are working?
How are these MNCs tackling black money component in these countries? Audit and regulation I believe are strong in western countries.
The reason people around the world buy properties in western countries is rule of law. Any investment you made is fully protected, no matter what. These protection do not exist in 3rd world countries and arab countries. There has been news about many Indians buying properties in US due to low price in US.
To ==>
Chinese accounting has been questioned time to time. - Their closed media doesn't verify any numbers. since the Beijing Olympics ended, China has hoarded Tonnes of finished Iron Ore and that has been added to its growth number even thought the iron isnt used.
This hoarding has increased Iron-steel costs around the world.
The same is being done in rare earths. Gold and Silver hoarding is more for investing, where as this hoarding is meaningless.
China keeps doing this again and again and will jeopardize the world by selling US debt one day.
However that day can only be after China surpass the US in Military might.
China is nowhere close to being stronger than the US military wise. It will take them another 20 years, so till then the dollar shold be safe...
gOlDfInGeR
@gOlDfInGeR
This is a serious housing blog. No one is interested in who is stronger. you should find some comic blog to post your stuff.
I guess that you are watching too mush wrestling
As per one analyst US wants weaker dollar. Past two days stock mkt is going down, QE2 is ending, low job generation in the US, Moody is threating to downgrade USA.
What is this means to Indian realty market?
1. Less demand from IT folks.They wont get hike or promotions.
2. Common people cant buy gold and property so they will keep their money in FDs for better returns.
3. Investor stay away from buying because common people is not around.
4. NRIs will remit less. NRI will not buy any new property because of high prices after currency conversion.
5.
6.
??? anyone
SO weaker dollar could crash realty bubble in India?
Shahank,
If there is no QE3, USD will get stronger. With Indian RE already deflating slowly, foeign investors pulling money out of India, Sensex may drop by 10% in the next month or so. I think Rupee will take a hit and it would be close to 48-49/USD in the next 40-50 days.
As regards to investments by NRIs in India, most middle east NRIs are already in a weak position to buy and save their own jobs after Dubai crisis. NRIs in US are going through a tough crisis in US as well as US Govt. spending is declining, consumer spending is low, unemployment rate is officially at 9.1% and in reality is more than 20%. US RE market is in a double dip and many NRIs had heavily speculated even in US are losing money big time in US. I don't see much coming from NRIs.
The main source of money is within India, money conversions from routes like Mauritius, excessive printing by Pranab Muk and failed monetary policies of RBI. Banks in India will get cautious now and the party seems to be getting over in India as well. A slow 10 year decline period is coming.
A lot in India would depend on Baba Ramdev's agitation and QE3 in US.
anon at 1.01 pm
WTF buddy.
You need to take some class in global macroeconomics and the effect of foreign currencies on the Indian Real Estate Market. Watch out the Chinese are going to give India an ass whipping once they surpass US in military strength and currency strength.
gOlDfInGeR
Hey Goldy above:
When the China RE bubble bursts, it will take down major economies like Australia and South Asia.
So you right that in this globalized world, counries are interdependent.
This summer we'll definitely see a 10% drop in China RE, Aussie bubble to burst and Canada running around for help. Israel and other EU countries cannot hold on for long now. Indians will also start coming out of the denial and will stat accepting the bubble in India shining.
The only thing shining in India is the SUN and it is too damn hot.
The only thing shining in India is the SUN and it is too damn hot.
The only thing shining in India is the SUN and it is too damn hot.
but the high levels of pollution block UV-B rays, so I'd say the sun is stronger in the USA.
Yes, at this time of the year the sun is shining very bright in the USA. As you can see the market is tanking like crazy over in the USA and pretty soon it should take everything else down with it.
If Rupee becomes stronger than dollar then there is no chance Indian realty bubble will bust.
There are lot of people sitting abroad with hoards of cash. They will pump their money , creating new demand and eventually inflating the prices again.
Also higher rupee means higher margin for IT companies resulting into higher salaries for IT folks that will cause renewed demand for housing.
Unless rupee exchange rate becomes less than 40rs/1 dollar I think chances of realty bust are slim.
@shashank
If Rupee goes up (38INR per USD) then Indian market usually booms
so local people have more rupees and purchasing power
If Rupee goes bust (48+ INR to USD) then the NRIs have more rupees and have more purchasing power.
The exchange rate wont affect prices. The real culprit is the mismatch between real demand being over shadowed by black money and "investors"
This has happened in China and India on a large leveraged scale.
Keep reading how governments will keep bailing out these cheater investors and black money parking buyers by keeping rates high as long as possible
here
and here here
@gOlDfInGeR
Take it easy!!!
you may be right. Currently, I heard that they are working on increasing the size of their dik. once they achieve that, they will flood the world with their descendants.
My advice to you that you avoid visiting chinese restaurants with your wife.
Good Luck buddy
If Rupee goes up (38INR per USD) then Indian market usually booms
so local people have more rupees and purchasing power
==> This is good for imports. Therefore it hurts export baised economies like India and China. Especially IT companies will be crying blood if Rupee becomes 35.
If Rupee goes bust (48+ INR to USD) then the NRIs have more rupees and have more purchasing power.
==> True, but this will fuel IT hikes and export values go up. Boom time for India as India is export based economy.
My bet is US is trying to devalue dollar so that their exports boom, and they can try to bring back some jobs that are lost to cheap-O labor countries.
==> This is good for imports. Therefore it hurts export baised economies like India and China. Especially IT companies will be crying blood if Rupee becomes 35.
The Asian low cost export based business model is flawed and does not promote growth. It just builds asset bubbles and inflation. If rupee goes to 35, along with increase in standard of living, IT companies will be forced to innovate to build innovative products than providing low cost services soley based on exchange rate arbitrage like today.
My bet is US is trying to devalue dollar so that their exports boom, and they can try to bring back some jobs that are lost to cheap-O labor countries.
US is mainly devaluing their dollar to pay back debt with depreciated dollars. One report says that even if the Americans are taxed 100% of their income, they would'nt be able to pay back their debt. So the easy way out is devaluing the currency in the pretext of helping exports. If weak currency is the best stimulus for export, Zimbabwe should have been one of the world's largest exporter, shouldn't they?
@GSM: Very correct. We are in banana republic now.
I'm more afraid of the situtaion getting worse in India due to Ramdev's arrest. If people come on streets, the President may have to dissolve the Govt. and enforce Emergency.
Which means Stocks tank by 60%, RE by 80% and Rupee could be 60/USD in a few weeks.
I'm more afraid of the situtaion getting worse in India due to Ramdev's arrest. If people come on streets, the President may have to dissolve the Govt. and enforce Emergency.
==> You are joking, right? Indians are in no mood to go on streets and fight. Most of the Indians are happy these days with Globalization world. Everyone is atleast lalkhpati if not crorepati. Corruption is grounded into common man's daily routine why blame only govt.
Which means Stocks tank by 60%, RE by 80% and Rupee could be 60/USD in a few weeks.
==> Nope, not going to happen, we have powerful people holding strings - there will be bailouts and handouts - we have seen this happening in USA
US is mainly devaluing their dollar to pay back debt with depreciated dollars. One report says that even if the Americans are taxed 100% of their income, they would'nt be able to pay back their debt. So the easy way out is devaluing the currency in the pretext of helping exports. If weak currency is the best stimulus for export, Zimbabwe should have been one of the world's largest exporter, shouldn't they?
==> Currently America is no mood to repay the debt, they are actually arguing how much debt ceiling can they increase. For them debt is money.
Let's not confuse inflation vs Weak currency. Weak currency is boon for exports, but not inflation eats away the profits made on these exports.
==> Currently America is no mood to repay the debt, they are actually arguing how much debt ceiling can they increase. For them debt is money.
That's probably the reason why Fed is buying 70% of treasuries. For all bloggers here who think QE3 is not going to happen and Fed will stop printing money, lets see.
Let's not confuse inflation vs Weak currency. Weak currency is boon for exports, but not inflation eats away the profits made on these exports.
In a globlized world you have to import raw materials to export finished goods. And weak currency will increase raw materials cost besides wage cost. If exporters shows good profit it may mostly becoz they can pay their debt with depreciated currency and the value of their assets(like land) increase wrt to currency.
GSM:
QE3 is not happening. FRB will make a case only if there is a 2008like recession. Not happening at least in the next 4-6 months.
=> Said:
You talk foolish again. Indians are very nationalistic and will fight for corruption. They will get to streets. And looks like UPA Govt. time is over. Pimps like you cannot think anything beyong money.
Baba Ramdev and Anna Hazare have succeeded in sending panic signals to BLACK MONEYWALE circles and this has resulted in setting motion to park the black money in safe investments, real estate being one of the safest. There is a rush to buy or book flats and currently black to white ratio is shot up as much as 70:30. Prices have also gone up by 5% and there are signs that they are moving north.
As soon as the monsoon ends, you may see a construction boom but most of us may not afford the spiraling prices
concerned
You talk foolish again. Indians are very nationalistic and will fight for corruption. They will get to streets. And looks like UPA Govt. time is over. Pimps like you cannot think anything beyong money.
==> and when was last that Indians fought for what is right? You are in denial... a common man in India is corrupt, it's just that they don't look themselves in mirror and instead look at other people.
Everybody is crazy about money, Indians especially, they talk all big talks but when it comes to action, they watch everything from sidewalk.
Want proof? Why is RE in upward move? Sellers and buyers both profit from black money and you know - both are Indians. They are fueling this nonsense.
For you, keep ranting.
There is a rush to buy or book flats and currently black to white ratio is shot up as much as 70:30. Prices have also gone up by 5% and there are signs that they are moving north.
==> Let's say all black money is absorbed into RE, what happens next? RE will shoot up, but who will pay that high price tag when there minimal supply of black money and white money becomes precious? Black money has to pay it's due when time comes.
I hope that black money supply get choked into some RE or some other non liquid units. That will put an end to lots of issues in India.
=> Said:
RE prices going up is a worldwide issue due to major macroeconomic factors. LEarn something before you start ranting here about Indians being greedy. Everyone in the world is greedy. There is a RE bubble in all of World. India is no different. And Indians too are greedy like other parts of the world. And greed is fine.
But you saying that Indians will sit idle on this Black Money issue is utter non-sense. People like you may be stealing but majority Indians are still honest. They don't even get a chance to steal.
Everyone in the world is greedy. There is a RE bubble in all of World. India is no different. And Indians too are greedy like other parts of the world. And greed is fine.
==> I never said only Indians are greedy. I said Indians love black money, do you know number one country that has black money? I don't think you want to guess... so you keep ranting, fine with me.
But you saying that Indians will sit idle on this Black Money issue is utter non-sense. People like you may be stealing but majority Indians are still honest. They don't even get a chance to steal.
==> What makes you say that Indians will revolt. Corruption and black money has been in play for many decades, I didn't see any revolt - did you? let me know where has it happened? looks like you just came out of college, grow up and feel the real world.
Immature people like you will always attack other personally just like accussing me of stealing... so, mr jassos who knows what others are -- what are you going to do.. goto ma and pa! HA!
Finally what is said contradicts what you say - you say Indians will revolt and you also say Greed is fine, Really?
=> Said:
This time it is different. Wait and watch for yourself. No matter how you try to protect your ill gotten wealth, it will become a pain for you.
@==
Money is money. It doesn't vanish either black or white. Black money is the one which is earned by crooked means and no taxes are paid to the government. It is a parallel economy and those who have no means to generate the black, are pushed down the economic ladder. Why we can not afford real estate because we have no black money
This time it is different. Wait and watch for yourself. No matter how you try to protect your ill gotten wealth, it will become a pain for you.
==> I hope too that this time it will be different, but seems not - India's population 1.2 billion, people at the ramdev baba rally 60k. do your math.
Money is money. It doesn't vanish either black or white.
==> Agreed.
It is a parallel economy and those who have no means to generate the black, are pushed down the economic ladder.
==> why? money is money, why now different between black and white?
Why we can not afford real estate because we have no black money
==> Why? money is money you said, you have white money then use your white to buy RE, anybody stopping you? many builders, sellers will figure out the way to convert your white money to black money - no worries there.
=> Said:
You are an arrogant person. You'll believe when you see it happen. You've always seen greenery and believe too much in the bubbles. You will see for yourself when the shit hits the fan.
And now you'll say it will never happen. People like you always stay in denial till they are whipped by reality.
I thought everyone in India was now crore pati and were shopping and eating in Malls....
Mumbai: A city of spooky malls
“There is demand for just three malls, and we have 35,” says Shah, adding that this has resulted in a huge oversupply of retail space and the satellite city just does not have the potential to absorb the volume. “The moment there was oversupply, brands and companies began arm-twisting mall managements to lower rates. It was just not feasible to be in the business,” he says.
Malls like Palm Beach Galleria, City Centre and Raghuleela, which witnessed near-stampedes on weekends during their heyday a couple of years ago, are now battling for survival. “The slide began during the slowdown in 2008, when some premium brands downed shutters in Navi Mumbai after revenues did not match their projections. While some big stores and international brands shut shop when the abysmal footfalls left them deeply in the red, others migrated to the newer, swankier Inorbit Mall that emerged as the hot destination for Navi Mumbaikars when it opened in late 2008,” says Vashi-based consultant Hiren Thakkar.
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According to industry estimates, 700 malls have been planned in the Mumbai Metropolitan Region, of which about 170 are already operational and barely a dozen are considered runaway commercial successes.
Seeing the once-operational malls facing rough weather, even upcoming malls in Navi Mumbai are having second thoughts. Ripplez, a mall in Sector 8 of Airoli, that was expected to change the way the residents of the node shop, is not even 50% occupied six months after completion. While two other ambitious projects, the Wedding City and Gold City theme malls, have been put on the back-burner, a handful of other malls are ready in nodes like Kharghar, Seawoods and Nerul, but there’s no news yet about their formal inauguration.
@Shailesh:
Correctly said. When current RE priced is used to generate revenue it will Fail. As rightly mentioned in the article you put out. Commercial properties MUST make money, that's the sole purpose. If it cannot make money or cannot even break even they are FAILED business.
Same goes for residential business aka RE residential investment. People are only hoping on capital appreciation, taken that away residential RE investment performs poor or infact returns are in negative. But many RE owners math is poor I guess, all they know if they bought for 1 crore and will sell it for 2 crore next year and forgot everything in between for EMI, maintainance, brokerage fee, etc..
do you what owners (not investors and builders) that want to sell RE are upto? media is simply putting builder's attention for RE.
And now you'll say it will never happen. People like you always stay in denial till they are whipped by reality.
==> I mentioned the facts that you see around everyday. Where as you mentioned your feeling. I appreciate your feelings. Keep it up baby.
Re:malls
One can see the writing on the wall. As maintenance being the last priority, these malls will start crumbling in a few years time resembling to those tabelas or cowsheds that you come across in Jogeshwari and Goregaon.
Malls survive when people have the purchasing power and this would be when our per capita income reaches tp $ 5000 from the present $1000. The fact is, vast majority of mumbaikers visit the malls just to admire them and spend time in the air-conditioned comfort.
The fact is, vast majority of mumbaikers visit the malls just to admire them and spend time in the air-conditioned comfort.
Well most go to malls for cleaner toilets, I have done it myself too.
On top of that the food courts in the malls charge such exorbitant amounts for the most basic of stuff, and sadly enough the quantity, quality and taste is horrible, not worth my 10 paisa.
@Anonymous 3:54,
I second your observations
Malls survive when people have the purchasing power and this would be when our per capita income reaches tp $ 5000 from the present $1000. The fact is, vast majority of mumbaikers visit the malls just to admire them and spend time in the air-conditioned comfort.
==> people staying in check-naka (near Mulund) tell me that they are frequent visitor. I was like 'WHAT'! what do these people living in check naka buy from mall? if they are so rich why the hell they are staying in shit-hole.... BUT then they tell me that they visit to enjoy free air condition air, they also proudly tell that they take their guest out to mall away from shitty smell heat in their neighborhood.
lol that is sooo true, the only affordable joint in any mall is McDonald's, I remember that when McD was introduced in India it used to be the most costliest of places to go to and other local joints were where the people would go to, how times have changed with now McD becoming the affordable choice of outgoers.
People who have invested in malls need fast ROI so they charge excessively to shopkeeper. Shopkeeper on top of that needs fastest return on his investment. He needs to keep prices high and top of that expenses for maintainance. Prices of running mall is high due to all these factors, and these guys competing with street side vendor who investment is far less.
And worst part in India is everybody tries to jump on same wagon at same time, be it any field, how the hell on earth you can build so many malls in such short timespan in Mumbai region? Are people getting rich so faster in India?
I heard that malls are started charging for parking? so now people visit malls less unless they want to buy something. It will reduced spontaneous buying.
This has been an exceptionally good blog - I have been reading for years.
Nowadays, it is becoming easier to do all shopping from Big Bazaar or lifestyle. Easy to drive, get parking, shop, see movie, eat, come back home.
We do it almost every alternate weekend. Buy all subji and provisions as well.
Too hot to go to local fellow - carry heavy weight because car parking not available. Not fun.
Slowly, life in India is definitely changing
Big Bazaar , Croma, Lifestyle, Spencers are the only shops which make sense to visit in a mall. The rest are just for show. buying fake gucci from mall is more expensive then buying from road stall outside the mall. So visit the mall for the taking kids to play area etc then buy from road
http://economictimes.indiatimes.com/personal-finance/tax-savers/tax-news/no-filing-of-tax-return-for-salary-and-interest-income-up-to-rs-5-lakh/articleshow/8747354.cms
Income tax exemption up to 5 lakh rupees (~11,000 dollars).
==>said, do you have any comments for this?
Income tax exemption up to 5 lakh rupees (~11,000 dollars).
==>said, do you have any comments for this?
I will repost my post:
http://www.blogger.com/comment.g?blogID=19740856&postID=1402604334658658021
Taxpayers with income below Rs. 5 lakh need not file returns:
http://www.thehindu.com/news/national/article2045422.ece
What does it mean?
1. If your earning is below 5 lakhs, you are below poverty line.
2. Let's create more black money!! How? it's age old practise: Business will happily add more heads (family) members like old mom, old dad, some near by relative, and also sons, daughters to their employees list. Pay them 4.99 lakhs per annum, money remains within house and also get deduction as business expenses to lower profit and therefore pay less tax.
Think 30% of total is tax free. Employ 10 people in such way and save 15 lakhs in taxes every year for just doing nothing.
Enjoy. RE prices coming down, my foot.
Anon at 1.10 pm
So if there are 6 people in a family with total income of Rs 29 lahks per year they will eat sh*t and live like crap and pool all their money to buy a 1BHK flat for 1 crore. This will definitely vault RE prices higher and higher. You are a joker..
So if there are 6 people in a family with total income of Rs 29 lahks per year they will eat sh*t and live like crap and pool all their money to buy a 1BHK flat for 1 crore. This will definitely vault RE prices higher and higher. You are a joker..
==> what you mentioned about eating shit and living like crap to buy 1 Crore RE is somewhat true.
what's your point - except using abusing words that I am joker.
looks like more and more people are in denial and not aware of real world out there. Or it is same asshole anonymously just sitting there to abuse.
@ anon above
Guys wake up. It says you don't have to file income tax return that doesn't mean you dont have pay income tax. For most of salaried people (only honest income tax payers) TDS will be there, but don't have to go through agony of filing tax returns form.
Reasons could be
1) these are honest people and dont have other income sources so it is waste of time for Govt. to go through files of these people
2) Less files will make IT department more efficient to catch big fish
It may be more expensive for Govt to pay back or charge change to these people, so it decided to let it go.
Btw small businesses pay only 1400-2000 not sure exact amount irrespective of income, so no point in chasing them either. Only people affected will be Income tax return filers like CA companies will be affected, less files less income.
@Mumbaikar
How would govt know individual's real earnings (salaried + other) unless they file tax returns. TDS is just an estimate and not actual returns as there are other deductions that one may file to get credits, also there other earnings that one may have.
Only way to track down black money is to accountability to track flow of money, unfortunately that is lost with these gimmicks.
Try these gimmicks with IRS in USA, they have solid way of tracking earnings. Payroll and labor laws have to be followed small or big companies.
=>Said..
You are a buffoon.
You are a buffoon.
==> that's it?
BANGALORE: Early signs of a potential slowdown in the US, marked by high unemployment and weakening consumer demand, is causing anxiety among India .s top tech firms deriving more than half of their business from the world's biggest market for software outsourcing.
Concerns of worsening macro-economic factors including falling housing prices can delay new technology investments by American firms, force outsourcing customers to renegotiate lower billing rates for software projects and could eventually affect the growth forecast for India's $70 billion IT sector if a recession takes shape, experts and company officials say. In an ET poll among five of the top 10 biggest Indian tech firms conducted over past week, two CEOs raised concerns while the remaining three said they remained cautious about a potential double dip.
"There are concerns of Greece defaulting. Some estimate this to be 50%. No one will be able to predict the repercussion if this happens. Last time, when Lehman failed, it triggered the economic recession," said S 'Kris' Gopalakrishnan, CEO of Infosys, India's second biggest software exporter.
Over past two years, companies across sectors in the US improved profitability by cutting down costs and trimming their payroll. Now, as demand created by the 'government stimulus' tapers off and unemployment climbs back to 9.1%-levels, concerns of another recession loom large.
How much more can they print. We have seen QE1, QE2 not working, With QE works USA is exporting massive inflation to countries like China and India. QE3 on tap now, but markets will cash out when QE3 hits, which means double dip- recession for sure. Like it or not. First it was Bear Sterns/Lehman, now it will just be whole countries begining to default begining with PIIGS, then slowly to PRICKS, etc etc..
The only way this will end is if USA stops massive military and government spending and raise interest rates, which will strengthen the US$ but will trigger another economic slowdown. So like it or not we are going to be screwed in the next coming years. Better stay invested in gold and mining companies.
RE, especially in India, China, Canada, Australia is a big gamble. If you have convertible monies, buy RE in USA. Even now, good properties in good cities are available for reasonable price. Buy and rent it out and in next 10 years you will get solid returns on your investments
Cheers!
gOlDfInGeR
From TOI
"No income tax returns is required for salaried persons whose annual annual taxable income including salary and interest is up to Rs 5 lakh.
However, he said this would not cover income from other sources like house property , capital gains and gains from profession and business.
Under the scheme, the salaried person wants exemption from filing IT return, has to disclose about the incomes like dividend and interest to his employer for tax deduction. In the scenario, the Form 16 issued to salaried employees will be treated as income tax return. At present, it is obligatory for all salaried persons to file income tax return under the Income Tax Act, 1961.
US and other countries have social security number or ITIN, which is mandatory to open bank and trading accounts. It is must to get loan, credit card, insuarance policies etc. US has spent Billions of dollors on e-governance and moving to paper less system and fuel IT boom in country.
Unfortunately country which is back office of US IT industry is still believes in paper files. Files don't move from one table to other table without greasing palms of officers.
When required these files go missing i.e. Adarsh Housing Society scam, files are missing slowly slowly.
Mumbaikar 3:53
I have lived in both US for many years and have worked in both Government and Private sector. Comparing US and India is like apple to orange, that's why I laugh when people justify Mumbai prices comparing it to Manhattan prices. India is definitely on its way to stardom, but I think we have started to take credit too soon. Right now, India is darling since global financial bust did not impact India. The reason for that is not prudent planning, it was precisely the lack of it.
We have to go through at least a generation (another 20 years) before current Babu's retire and new generation (which grew up with Computers, Internet and TV) takes over. I am bullish on India, but that is not due to RE builders.
This definitely seems better managed development. I wish folks in Mumbai would expand the boundries of mumbai and make it possible to get affordable homes in 15 to 25 lakh range. That's when the real demand will kick in.
Noida's new landlords
This real estate boom has been almost single-handedly driven by the so-called ‘affordable housing’ market. This has been possible because of the coming together of some innovative policy changes in 2008 and some very aggressive entrepreneurs who have taken advantage of these changes to build houses and companies.
Post the global downturn, land prices in Noida crashed from as high as Rs. 6,000 per square feet to below Rs. 3,000 per square feet. Many of the big developers, who had many projects across the country, suffered an acute cash crunch and put a halt to almost all construction activities. But the demand for housing, especially affordable housing, did not halt and the Noida Development Authority, prompted by some builders, decided to get into the act with some innovative policy changes.
==
The policy change that meant builders had to make an upfront payment of only 10 percent has to stand the test of benefiting the end consumer. To be fair, it passes that test. Average property prices have fallen from Rs. 4,650 per square feet in 2008 to Rs. 2,750 per square feet in 2010. Also, the bulk of the estimated 1.5 lakh new apartments being constructed in the Noida-Greater Noida region are priced at less than Rs. 35 lakh with an average area of 1,400 to 1,600 square feet. At four people per household, that implies fresh housing for an estimated 6 lakh people. With Noida’s existing population at 7 lakh, it is almost like creating a separate Noida.
The government too would have gained 6 percent of all the land value as stamp duty from the rise in sales. The rupee value of sales jumped from approximately Rs. 7,500 crore in 2008 to Rs. 41,000 crore in 2010.
According to one ballpark estimate, the total lease rent earned by the Noida and Greater Noida authorities for all the new flats announced since 2008 would be about Rs. 1,100 crore.
Ramdev effect: Trader converts Rs. 24 lakh into 100-rupee notes
Read more at: http://www.ndtv.com/article/india/ramdev-effect-trader-converts-rs-24-lakh-into-100-rupee-notes-110697?cp
I read in other RE forums, 90% of the time people are talking of RE investing and not really staying in that place. So where are the real buyers?
Should wait for couple of years to see how this will end, when real buyers are in short supply.
==> said... = Bindas Bhai
A Swiss window to black money the UPA won't look into
http://www.thehindu.com/news/national/article2074736.ece
...and I wonder if all RE transactions are in white? why can't this be simply tracked by GOI? Do all shops charge correct sales tax and all day to day transaction are in white? Do all businesses report profit that they actually make?
I don't think these are any secrets or tax loopholes, it is just that govt isn't truthful and has no means or standards of measuring and tracking. Whole accountability from top to bottom is a sham.
all processes are ambiguous. In Mumbai, seat belt is must for drivers and passengers, BUT small kids and infants can sit in front seat without any safety protection! You cannot talk on mobile with or without handset, but can drive in any lane in any manner you want.
Real estate prices soar in Delhi, NCR
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/real-estate-prices-soar-in-delhi-ncr/articleshow/8775888.cms
So where were we..... RE tanking?
my prediction:
next 3 months-20% increase
last 3 months of year: 35% increase
first 3 months of 2012:60% increase
in next 5 years: 1000 % increase
ALL HOUSES WILL BE WORTH 10 TIMES VALUE OF TODAY.
average apartment/house will be worth 10 crore.
even the kamvari will have crores of rupees
déjà vu
ALL HOUSES WILL BE WORTH 10 TIMES VALUE OF TODAY.
==> they already are 10 times today compared past 10 years.
average apartment/house will be worth 10 crore.
==> check out south mumbai or prime delhi. we have past 10 crores sometime back.
even the kamvari will have crores of rupees
==> they are staying in slums which is built illegally on public land, which they will legally own in few years (if they have not already owned it). Yes, land is expensive and is in crores.
Update from Pune -
Wakad Pune prices are down to 3300, Baner prices are around 3800 and Aundh is at 4500.
In 2006 Gold was 10000 rs per tola
today its 20000.
In 2006 Wakad RE prices were 2300-2700
By that rate - the price of RE has fallen 30-40%
Everywhere else in suburbs like Navi Mumbai, Gurgaon NOIDA, Bangalore outskirts, Hyderabad, etc - you will see the same Prices will stagnate.
As I said RE wont fall, but wont spike either.
average prices will increase to 100 crore by 2020.
Anon above:
When avg. prices go up as you say to 100 crore, onions will cost 1 lakh per kg and potatoes will cost the same.
I can see the beginning of end to all this nonsense created by GOI and corporations.
There will be no QE3 in US and funny money will stop coming to India. Moreover, UPA may fall anytime now which will take away major froth from the markets.
There will be QE3, not just that, you will see QE(n) , The US has no option but to print, and print it will, they may just not call it QE, but may use some other euphemism.
In fact Baner is at 5000-5500. Can you point me some links where I can get the apt for 3800. Kothrud is 6000+
Value can be 1000 crore per house but what is point if you cannot buy quality of living
Looks like next labor rates will be seen on rise to afford this crores worth living.
Is your servant at home complaining?
All the above predictions will be true if GOI allows every one to print money at home with your own photographs instead of Gandhi ;)
Nobody has to work just seat relax in u r 10-100 cr house and print money.
I feel prices will never come down it will only go up. Just go to any property sites to see ads and you will zapped.
I came recently across such an ad.
Area 325 sq ft carpet , super duper built up area 500 sq ft.
Asking rate 12000 Rs.
WTF 52% loading. Tomorrow people may add area for road, play ground , bus station , railway station and air port to sq. Ft depending upon where they stay.
Good luck to all buyers for investing in Hawa mahal.
Smaller builders do have good deals (provided they haven't leveraged to hilt)
But then buying at low rate also comes with the risk of completion and poor quality.
I read this blog since 2006 and then I got a fully built up (ready possession) 2200 sq ft place in Baner when the market went down in mid 2009 for good rate.
Since then people keep quoting that prices are 5000-5500 which is about twice what I paid, but no one is really buying - so Im pretty sure you can bargain. However you cant reduce the price below the cost of land, which is running at 2500 - 3000 Rs/sqft in Pune Suburbs.
Mumbai on the other hand is a different story - perhaps due to the large amount of Prime land wasted in the Sanjay Gandhi national park, JNPT, Trombay and other government owned places - Agreed that its the lung of Mumbai but that land has could have been judiciously used to spread out businesses, transport, housing etc.
I dont want to comment on anything in Mumbai, but I feel that if the government builds 6-7 - 8 lane freeway style roads connecting Navi Mumbai to each eastern suburb in Mumbai - RE in Navi mumbai will become more better option to commute live in crowded expensive metro
@anon above
If QE3 ....QEn come India will become richer than US in short span of time. Any way currently properties in Mumbai r cost 1 cr which is like 250 k in USD. GOI will print more money it will help to push prices further ,same time $ will keep tanking due to QEs. After 5 years from now 1 INR = 1$ and every body in India will be richer than average American, Indian house holds will have American maids on I1 (equivalent to H1 visa) and probably American bahus too. Bahus will be eagerly waiting to get marry. If this happens ....
@anon above, would'nt that be great, then we can all have some blonde wives, power to the bernanke printing pess
China bubble ..now will be India's turn
WSJ.com - The Great Property Bubble of China May Be Popping http://on.wsj.com/jbbJot
For all you dreamers of future QEs in USA making all Indians Richer, having American maids, Blonde wives, Arab slaves, Paki drivers, please stop having super duper wet dreams..
We are going into hyperinflation, which means, that you will all have to sell your real estate, gold, etc to buy onions, condoms, etc...Make sure that you have enough KY Jelly on hand to give the Chinese, when they come to visit you....
We are going into hyperinflation, which means, that you will all have to sell your real estate, gold, etc to buy onions, condoms, etc..
==> you are funny. what is so expensive that many cannot afford? RE worth crores? pyaing EMIs Rs 50k per month? BMW? iPhones? LCD TVs? SUVs? Foreign Trips? Resorts visit every other weekend? Gucci?
It is difficult to find low wage workers, why?
Food is much more cheaper than these items. If inflation was concern people would be buying onions only and not spending on these items.
The point was that despite all the QE stuff, unemplpoyment, etc etc, USA was the only country among the developed nations to grow their GDP to levels slightly above the 2008 level. So additional QE will not necessarily mean that USA is going to the dogs and that the Rupee is going to be King...
@==> Also US consumes 800billion$ worth of oil each year (of which it imports about 50%). But it has 50years worth of oil reserves (and US canada have humongous natural gas reserves) in Alaska, Gulf of Mexico, California and Texas. (the Govt lies that world has reached peak oil). Also the shale deposits in PA NY are much more than all of Canada's present output which is about 1/20th of US consumption
If US stops importing and drills its own oil for 20 years and cuts down usage by 50% by stopping using SUVs and trucks to ride to work it can pay back every penny it owes. But will US do it? Probably not - they are milking the oil out of other nations so that later on US oil can be sold at a premium
The US also has 50% spare agricultural land and the US govt has banned agriculture on this land so that food prices remain high. If US farms on all the acre it owns, wheat & corn prices would plummet to 10% of todays prices.
Oil reserves + Powerful Military -> US $ will remain world reserve currency.
If you observe - mankind's entire modern lifestyle this past 120-150 years is build on the back of cheap energy (coal and oil). And the people who consume most/more are more powerful than those who produce.
PS for those wanting blonde wife-
And I have dated 3 white women (2 blonde 1 brunette) - All that comes with dating white chicks is lot of drama and lot of expenses ;)
Coming back to RE - only a catastrophic war or revolution in India (riots/emergency/food shortage/multiple earthquakes) will bring down RE.
RE will at the most stagnate - but wont ever fall more than 10-20% peak Rupee value.
Same cant be said about Rupee - Value of Rupee is solely controlled by Govt policy and market fundamentals of demand and supply
way to go ghost.. White chikcs will suck you dry both your wallet and your **** Now going back to Energy, Exxon hit the Natural Gas jackpot in the Gulf of Mexico. New trend is for electric cars, CNG vehicles and LNG export, yes USA is going to be exporting shitloads of Natural Gas begining the next two years mostly to China and Japan...
M3M Merlin - M3M Group coming up its new residential project M3M Merlin. M3M Merlin Gurgaon offers 3-4 Bhk luxury Flats in Gurgaon. M3M Merlin is strategically located in Sector 67, Golf Course Extension Gurgaon.
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