Thursday, May 19, 2011

Realtors grapple with huge unsold stock; rising prices & costlier loans hit buying plans

7,100 seems to the sweet spot for Malad. Anything above is just not affordable in any tier-1/tier-2 city.

Economic times reports

Dentist couple Sushma and Vikrant Mohanty had been looking to buy an apartment in Delhi-NCR for almost a year. But after several rounds of unsuccessful discussions with builders and umpteen visits to property sites, they decided to wait till prices came down.

The 2009 real estate slump had created lots of buying opportunities, but prices have climbed since then to what some believe are unsustainable levels.

Last week, as home loan rates shot up after RBI hiked interest rates, the couple saw their dreams come crashing down. They have now dropped all plans of owning a house.

"This is like a double whammy. Now I don't know when we will be able to buy a house. We are already paying heavy rent in Delhi," says Mohanty.

Across the city from where they live, RK Arora, managing director of Noida-based real estate company Supertech , is a worried man. He has seen a 10-15% drop in sales in the past few months. His company launched six projects in the past one year and prices have already risen 15-20%. He fears a further drop in demand. "Rising interest rates have already impacted demand," he said.

Builders like Arora and prospective home buyers like the Mohantys are caught in a bind. Rising interest rates and soaring prices are forcing more and people to put off purchasing plans, affecting builders who desperately need money to pay off costly loans and start new projects. The unsold stock in major cities has been going up, forcing banks and equity investors to call for a price cut.

"It's not interest rates that have spoilt the party, it's home prices," says Renu Sud Karnad, managing director of HDFC Ltd , one of India's biggest housing finance companies.

"There has to be some rationalisation of prices-by at least 10-15%-in the next few months," she added. Unsold residential units in projects that are completed or are nearing completion within the next 6-12 months in Mumbai and Delhi-NCR are as high as 25% and 16%, respectively, of the total number of units.

In other top cities, including Bangalore, Chennai and Kolkata , the numbers range between 12% and 19%, consultant Jones Lang La-Salle found in its real estate intelligence service for the first quarter of 2011 (see chart on Page 1).

"A price correction is imminent. How long can developers hold back... I think prices will correct by a maximum 15%," says B Niyogi, chief general manager, real estate and housing, State Bank of India , India's largest lender. Real estate research firm Liases Foras says approximately 471.9 million sq ft of residential stock, one-fifth the size of Chandigarh, is lying un-sold in the country's top six markets.

For real estate firms, with bad memories of the 2008-09 slump, these numbers are scary. But they also illustrate what could go wrong in a highly price-sensitive industry hugely susceptible to the vagaries of consumer sentiment, interest rates and commodity price changes.

"Cost pressures are building up for developers. They will have to cut prices to retain volumes, failing which it will impact profitability and cash flow in the coming quarters and affect margins as well," says Aashiesh Agarwaal, real estate analyst at Mumbai-based Edelweiss Se-curities.

Companies such as Gurgaonbased Unitech, one of the country's top builders, are feeling the pinch too. "Today, selling efforts need to be put in unlike earlier when all projects were selling on their own," says R Nagaraju, vice-president, corporate planning and strategy, Unitech.

In the past one year, the industry managed to bounce back from the 2009 slump, though the recovery has been uneven. In 2010-11, the industry took full advantage of the positive sentiment, economic growth and softer rates to sell more. Prices rose, not just because of demand but also construction costs. Rising steel and cement prices fuelled a 60% jump in construction costs. Price of land is not coming down either.

"It is becoming almost unmanageable," says Snehal Mantri, director-marketing at Bangalore-based Mantri Developers. Companies coped with the scenario by increasing prices and hoping that consumers would be able to pay. For some time they did, but the party may be coming to an end now.

At the end of trading on May 18, 2011, the BSE realty index was at 2,120.45, down 47.5% from its 52-week high of 4,034.35 on October 7, 2010, and down 84.7% from its highest-ever level of 13,848.09 on January 8, 2008. Defaults, not unheard of in the real estate industry, are likely to re-turn. Bank lending is already down after a recent RBI directive and scams involving real estate companies. Private equity, the alternative to loans and IPO, is playing coy too. They want builders to cut prices and get rid off the inventory.

"All private equity funds are working on the basis that there would be a 15% correction. No one wants to lose money," says V Hari Krishna, director-investments, Kotak Realty Fund , a sector-specific private equity firm.

According to PropEquity, a real estate consultancy firm, in the last one year, prices of new and existing housing projects in some parts of the country have risen 10-40%. In the first quarter of 2011, Mumbai has seen a 17% drop in home sales, Bangalore 14% and Hyderabad 15%.

Some builders think they can manage by focusing on small cities. Jaxay Shah, a real estate developer in Ahmedabad and vicepresident of Credai, insists that Mumbai and Delhi should not be considered as the barometer. These cities contribute hardly 4% of the national mar-ket. Sales in tier-2 and tier-3 cities are steady, though there is some panic due to hike in interest rates, which have climbed to around 11% from 8.25% a year ago.

An executive at a large home loan lender gives the example of smaller cities where local developers understand the market demand and know how much people are willing to pay. So they price their projects according to the paying capacity. Markets like Lucknow, Indore, Ghaziabad, Faridabad and others are doing well because the ticket sizes are low.

"The actual ticket size of a property is what matters. Rs 20-40 lakh is really the segment that will attract mid-income Indians," adds Karnad of HDFC. All this is happening at a time luxury projects are languishing. "Developers have not been able to interpret the activity in the mar-ket," points out Shveta Jain at Cushman & Wakefield .

Mumbai-based Omkar Realtors and Developers recently launched apartments at Rs 7,100 a sq ft in Malad, a Mumbai suburb, where other builders are still selling at Rs 8,500-13,000 a sq ft. Within 20 days, Omkar was able to sell a tenth of its total inventory of 1,000 apartments. Similar price cuts have worked in projects in Chembur and Dadar as well.

"Genuine demand still exists in the market. If one decides to stick to high prices, demand may remain elusive," said Babulal Verma, manag-ing director of Omkar Realtors & Developers. Across the country, many builders and lenders will hope that he is right. But there is another fear-the bottom could be a long way off. As Jaxay Shah of Ahmedabad says, "When buyers don't buy, they don't buy at any price, because of the sentiment." The industry will hope that he doesn't turn out to be right.

150 comments:

Anonymous said...

Why Indian bubble would be worse than America's?

As the loans in India are full recourse and the banks will make people bankrupt to go after their money whereas in US most loans are non-recourse. It will get really ugly when the prices fall in India.

It has started to happen in Australia and Canada. These countries are also full recourse and will get really ugly out there.

Anonymous said...

Congress == inflation + corruption = massive rise in real estate prices.

Inflation is inflation, everything inflates including real estate.

Apart from gold, real estate is the only hard/real asset which will protect you in times of inflation.

Contrary to popular belief, stocks dont protect you against inflation - stocks are hurt by inflation but do well with low inflation - which usually means loose monetary policy and low interest rates.

@ anon above - Most property siezed by banks have court dispute which drags on for years. Property doesnt come on the market to disrupt prices.

While I agree with 10-15% price reduction for new launches mentioned in article, resale prices are likely to remain static/5% declines for 2011 and 2012.

This is a bad time to enter the property and stock market - FD is the best option for now (for 2011/2012), until better entry price becomes available.

Stay away from property for now

Pawan said...

resale prices are likely to remain static/5% declines for 2011 and 2012.

The equation for end-user is pretty simple - if prices fall 20% buy. If not, then with the extra 25% you would pay for buying at current prices, you can live on rent for next 5-7 years.

Anonymous said...

Builders are worried that the sales are falling off the cliff, but they are sill increasing the prices. So what if the price corrects by 15%. The price increased more than 25% in last year. Even with 15% correction, prices will be up by 6% up yoy. WTF

shailesh said...

Real estate headed for a significant correction

At long last, India's overpriced real estate market could come back to earth with a thud. Developers trying to sell costly property cannot find buyers, who in turn find themselves squeezed out of the market by rising mortgage costs and inflated property prices.

Inventory, jargon for built-up homes that haven't been sold, is piling up. Fittingly, a full 25% of total units remain unsold in Mumbai , where real estate rates are the least realistic; Chennai and Pune follow with 19% units unsold, 16% of units can't be sold in Delhi and its surroundings, followed by Bangalore and Kolkata.

Developers who find themselves unable to sell built units cannot pay back loans and find it hard to raise capital for new projects. Sensible economics suggests that if they can't sell at high prices, they should cut rates and find buyers. But most builders would rather hold on, hoping for gullible buyers to buy dream homes at prices dreamt up by the sellers.

Anecdotal evidence suggests that many builders are selling land holdings to finance loans, rather than cut prices. This too is good, because it will bring more land back into the market, creating further pressure for property prices to fall. For many years, India has not seen a property crash, so many people still believe in the phrase 'safe as houses.' But globally, property has been prone to long cycles of price appreciation and decline.

==> said...

Are only builders increasing the prices, what about private party sellers? What about investors?

Builders and investors have already made their money. Even if RE prices decrease they will not be at loss.

The last person to hold the bag will suffer at end of musical chair game - most of the time it will be average guy with debt.

Again, what are the percentage of people that have loan defaulted or are in risk of default? Anyone with numbers?

Anonymous said...

.....Again, what are the percentage of people that have loan defaulted or are in risk of default? Anyone with numbers?

HARDLY ANY SO FAR . This is for Mumbai. I am not qualified to comment onother places. Most buyers have enough equoty to meet the eventuality. Otherwise, people don't venture in the real estate market. Unlike westerners, we Indians are always cautious and don't bank on jobs to meet the debts. (Iam an employee of SBI(Market research)

The banks know this, builders know this and private lenders are aware of this, and therefore not unduly concerned about market crash.

This is the main reason why the bubble is getting bigger. When it bursts, the only people that may suffer are the builders relying on third party loans.

==> said...

Thanks Anon above. With what you mentioned, why would RE market crash if all is well?

India has got all - black money, white money, very less per capita debt, lots and lots of jobs, growing educated population/consumers, lastly corruption and sab chalta hai attitude. All these are missing in developed countries. Yes, India is different.

There are many on this blog who feel that Indians are buried with debt and cannot afford RE. But your comment "Most buyers have enough equoty to meet the eventuality. Otherwise, people don't venture in the real estate market. Unlike westerners, we Indians are always cautious and don't bank on jobs to meet the debts." makes it very clear.

Regarding those who have 2008-2009 India RE market decline... well people kept plans on hold to get 'better deal', that didn't mean Indians were not able to afford or sell their RE for less.

Now, I am waiting for some mouthing off from other bloggers.

polt said...

Hope that Indian banks have been conservative and lent to creditworthy homeowners.
In the USA, a lot of initial defaults were due to sub-prime borrowers. But with a long recession and job losses, even initially credit worthy borrowers started to default.

@SBI employee above -
The problem is that if land/home values start to drop, banks will ask for increased collateral from borrowers. This additional cash call may cause problems esp for heavily leveraged builders.

I know many on this list are waiting for steep falls in home prices. But that will cause more problems. RE construction will stop, in turn hurting banking, cement, steel, etc industries. Much better if we have a gentle fall or simply a stagnation in prices so that they eventually are in line with long term averages.

preetiedul said...

Real estate prices in Mumbai are ridiculous ! How do people with even above average salaries feel like spending their hard earned cash on something so inflated in value. I do hope companies create jobs in other cities to which people can migrate instead of pouring into Mumbai. When the desperation to live in Mumbai dies, so will this madness.

Anonymous said...

Prices are falling now. Do not listen to "=>Said". He is a paid person from builder lobby who spends all his time here convincing people to buy and why RE will not go down. People like him are building stories as to why India is different.

I would say that India is no different in this GLobalized world and all this mess happened due to easy money policies of the GOI. They did exactly what they were told by G-20 summit members and all the G-20 member countries now have a bubble. Australia is deflating now and Canada is also following.

India's would be the biggest fall as the markets are so screwed up and massive speculation has happened. All the speculators and buyers will become sellers in no time and the market will be burdened with excessive inventory. NPA will start rising in this process and prices will come down by 60-70% in a few years. Buyers beware unless you have stolen money and want to part it somewhere. Stolen money will also evaporate the way it was earned.

Mumbaikar said...

@ Sbi employee
Do u know how many builders r depend upon third party money? My gut filling is almost all. Nobody puts their own money to build building , if that was case why builder will be selling % of units when it is under construction? Won't he make more in this market if he sells once all the units are completed after 2 - 3 years?

Mumbaikar said...

India is different than rest of the world is utter bs. If that was the case why GOI printed money following rest of the world? Why stock market tanked alongwith other markets in world? Why inflation is so high in India? Why people have been laid of in India?

India was different before 1990. We were happy in our own world. But globalization has changed everything . We r part of the same world and will go into same direction. If RE bubbles are forming all over world and bust eventually , so will in India.

Anonymous said...

Banks value the fkats according their own criteria and currently is approximately 50-55 % of the actual mrket value. If you want to buy a 1 Cr flat, banks may grant 45-50 lakks mortgage. If the borrower defaults any time, the bank will auction the flat, recover the money lent and make a handsome profit. Therefore, there are no defaults. If worse comes the worse, people sell the flat , pay the bank.

Getting a mortgage is very easy provided one is employed as banks consider this as safe investment, Only one has to bribe the bank staff to move the papers.

preaws

skeptic's ghost said...

Crash in RE prices will follow with crash in Rupee value as Government will have to dole out cash handoouts to sick industries & construction sector that will be hurt by the fall -
This would mean that NRIs would rush in to buy houses and would avoid a steep fall. As someone earlier said as long as the Govt artificially keeps Rupee value low by printing more money, prices in Rupees wont fall.

People who are saving for buying when prices fall - should have saved in diverse ways - Gold, stocks, MF, Forex and cheaper location RE - then alone they can buy if and when bubble deflates by liquidating the diverse funds.

The Govt will keep bailing out the RE sector in one way or the other as majority of the builders are in nexus with the MLAs & corporators (dont know about MPs)

Also - expect deep correction in Gold and commodities if chinese RE bubble pops before Indias

FYI I read this blog since 2006
Bought a house middle of 2008 for a decent deal in pune, Prices are still neither skyrocketed nor crashed since

skeptic's ghost said...

Correction: I bought middle of 09 for 2800 rs psqft in Baner Pune - now going at 4000-5000

Land prices in Baner have been steady 2000 Rs psqft so I dont see then falling below that since even remote areas in Pune have at least 1200-1800 rs per sq ft land

Anonymous said...

@Above Skeptic:

Fall will come. Don't panic. Once it comes, it will go back to 2003 values. In fact it will overcorrect. Wait and watch for a few more years.

Mumbaikar said...

Fall is imminent. So many factors. GOI can not keep printing money endlessly. It will only help, rich and riches of India. Common man doesn't really have resources and time to benefit from it. But certainly it hurt him a lot.

Builder can not be in dream world forever. They will visit earth once forever.

Person who have saved for life, value money more than his own life. I doubt this same person will easily throw his money to dream world builder.

Who else in the world believes in the "Value for money" concept than Indian?

Mumbaikar said...

One of my relative has bought property 4 years back under construction. Since then prices have doubled in last 3 years and now tripled in last one year. But possesion is so far away and builder keep postponding it by 6 months whenever u ask.

If he tries ask genuine questions, builder says if you are not happy with whatever is going on I will return your money with interest, you give me back u r unit.

Person keeps quite as his property is now worth 1.2 crore and appreciating every month by 10 lakhs whenever he meets builder. Builders get away from his promises due to high value of property and customer keeps mum due to the same.

Welcome to dream world, where people counting money in the thin air.

Anonymous said...

I met some people last week who are thinking of putting their investments on the market and get them sold before the market collapses. One of them mentioned that he will not lose money as the hike has been around 2-300% in the past 3-4 years. But if he waits he may keep losing money on it every month. He feels that it may go down the way it went up.

My advise to him was to sell before there are more sellers. I think many people are still optimistic and would be a good time to sell before it is too late.

Anonymous said...

This is same as what is happening in India. And more inflation in India than China. Look at the China story:

CHINA is capable of strong growth for another 30 years, but the re-mergence of a major asset bubble looms as the biggest short-term danger to its economy.

"It could bubble up in the next couple of years, given that there is a lot of money around.

"If you look at the past 30 years, all the major crises in the world have been related to asset bubbles, particularly housing.

==> said...

Mr. Mumbaikar,

One of my relative has bought property 4 years back under construction. Since then prices have doubled in last 3 years and now tripled in last one year. But possesion is so far away and builder keep postponding it by 6 months whenever u ask.

==> If your relative has holding capacity since 4 years on on hawa mahal, think what will be his earnings and holding capacity when his house really converts to brick and mortar.

Sellers have very very high holding capacity and repay debts (if any).

also profits are 400% by now, then even with 50% correction prices, profits will stand at 200%.

Dream on

Anonymous said...

@above:

So you are saying people should keep buying as prices will not correct. Well, everyone should buy.

I'll stay out of this rat race and wait for the whole thing to correct. It has to correct by 60% or more. And when that happens, people like you would be ashamed of all your bad ideas.

For example: Look at the SBI profits. They are down 99% and are putting more for NPAs. If people have holding capacity, why are there NPAs? I think you are a pimp who sits with thieves and do not know the real buyers who have loans from banks. Get real and stop preaching false stories here.

Anonymous said...

All,

Since when has any bubble NOT popped? Anyone who hasn’t looked at the history of bubbles and is not perdiciting a collapse is a moron. Of course the India,Chinese or Australian/Canadian/Israeli government etc. can try to stop a collaspe, but then they would be no different than the Soviet Union, leading to a slow sever debt ridden decline.

Bottomline is all what is happening is not real. Be careful with your money.

Anonymous said...

I came across this article for India RE status:

A drop in sales has led to an increase of inventory across India. In six major cities - New Delhi, Mumbai and surrounding areas, Hyderabad, Bangalore, Chennai and Pune - 471 million sq ft of property space, or more than 406,000 housing units, remains unsold, according to Liases Foras.

The debacle of India's once-thriving property sector, the country's second-largest employer after agriculture and a major contributor to GDP growth, worries developers.

"The current real estate ecosystem is highly unsustainable," says Pankaj Kapoor, the founder and managing director of Liases Foras. "The housing bubble could spell doom for real estate developers."



Negligible sales amid tightened bank lending and growing debt have compounded their trouble.

The global financial services group Credit Suisse says outstanding bank loans to property companies shot up by 33 per cent in the past two years to more than 1 trillion rupees.

The Bombay Stock Exchange realty index, a measure of 15 realty stocks, fell by about 30 per cent this year amid a 17 per cent rise in the overall index, reflecting a lack of investor confidence in the property market.

But even that source of capital remains doubtful. During the property boom, which began two years ago, the market attracted a large number of private-equity investors. Since March 2006, private-equity funds poured investments worth $10.2bn into the industrythrough projects and companies such as DLF and Unitech. Of that amount, $8.2bn was invested during the boom years. The Japanese investment bank Nomura Holdings estimates that in the next two or three years, as the property sector declines, private-equity investors will withdraw $5bn worth of investments.

Some estimates say a middle-class Indian earning an annual salary of 125,000 rupees would have to wait 369 years without spending on anything else to afford a 75-sq-metre apartment worth $1m in the high-priced neighbourhoods of south Mumbai.

At least 23 million urban families from India's middle and lower middle-income groups - whose earnings range between 60,000 rupees and 130,000 rupees - live in slums and low-income neighbourhoods. Many of them strongly aspire to live in homes of between 250 and 600 sq ft in the suburbs, according to Monitor India, a research company in Mumbai.

Credit Suisse expects property prices in major cities, including Mumbai, to slump by 30 per cent in the next six months.

Mr Kapoor estimates prices will fall by 35 per cent, but he says the decline could take two years. Those who invested in property during the sector's boom - equity companies and retail investors - will continue to exert pressure on developers to offer the returns promised in good times, compelling them to keep prices high, he says.

Anonymous said...

MUMBAI, May 19 (Reuters) - Private equity investors are poised to exit roughly $5 billion worth of Indian real estate investments in the next two or three years, a Nomura report said, adding pressure to a sector struggling with access to capital and falling property prices.

During the boom years of 2006-2008, India attracted an influx of private equity in property, a big chunk of it structured as debt, and in some cases developers will be forced to buy back the investment from the PE firms, the report said.

"This will increase pressure on developers to generate cash flows through affordable pricing and better execution," Nomura analyst Aatash Shah wrote.

Commercial property prices in India have fallen this year as supply exceeds demand. Residential prices have been steadier in some cities while falling 10-20 percent in others, said Surajit Pal, sector analyst at Elara Capital.

Prices in India's key markets are expected to decline after rising last year as inventories pile up and rising interest rates deter buyers.

"We are going through a tough time, for sure. As a fund, we are cautious in making investment decisions," said Ramesh T. Jogani, chief executive at Indiareit, a property fund, backed by 3i Group.

Anonymous said...

TOI' brother economictimes.com has published few articles on realty. Surprisingly articles sounds bearish like 'how realty has become risky investmnet', 'realty is heading for correction' or like 'FIIs are going to withdrow 5B from realty stock market'

I was wondering what made Times group to publish such stories at this time?
Could there be an order from RBI, PM' office or some influencial billionaire bear sitting abroad?
Or is it just to 'show' the world that they do balanced journalism?

Stock market or commodity market ,manipulation works more than market sentiments.
If my first guess is right then I see realty market to plumment in near future by the manipulators and it will also take down Stock market along with it.


Such news creates confusion among new and old investers. Could it be a big design by high level people to crash the realty market in India?

Until picture is not clear, it would be prudent to stay away from any form of investment in Stock, Realty and Gold( if you dont know 75% of gold's demand come from two third world counties - India and China. Rest of the world is not interested in stocking physical gold)

Anonymous said...

If you're fretting over the increasing property rates in your city, how about buying a house in a place where the average prices are 60% cheaper than those in Mumbai? And no, we're not talking about a tin shack in the boondocks. Actually, we aren't talking of India at all. It's in the heart of a country, where water, sanitation and transport facilities are better than in any Indian city.



Yes, Dubai is back on the radar of Indian buyers after a sharp drop in realty prices in the past couple of years. However, before you rush to buy land, you need to know the purchase process and the charges you will incur to own a house in Dubai.

Anonymous said...

“As the loans in India are full recourse and the banks will make people bankrupt to go after their money whereas in US most loans are non-recourse. It will get really ugly when the prices fall in India.”

Whoa, hold your horses bro. Indians (unlike Americans or Australians) hold significant savings in GOLD, whose values in Rupees has skyrocketed in tandem with housing prices over the past decade (Indians, for reasons best known to them, seem to want to invest only in Gold and real estate).

If house prices fall and/or mortgage rates increase, Indians will simply sell as much of their gold as they have to in order to make their payments. This is why I wrote in a previous post that the housing market will never fall (in Rupee terms) unless there is a meaningful appreciation in the value of the Rupee.

If the Rupee rises sharply with respect to Gold and the Dollar, three things will happen: (i) Interest rates would have risen sharply along with the ascent of the Rupee, (ii) NRIs (especially US NRIs) will be simultaneously priced out of the Indian property market and (iii) Indians will not be able to fall back on their gold savings to make their mortgage payments. That would set up an opening salvo to a deep crash in the property market.

Of course, the GOI could always do a Bernanke and aggressively print money and bail out the developers like they did in 2008-09 and thus keep housing prices (measured in Rupees) high or at least stable. Since everyone thinks this latter scenario is more likely, it may be a better idea to hold any savings in a strong currency in anticipation of any real estate crash.

In fact, measured in Gold or Swiss Francs, it is arguable that the Indian real estate market has already crashed long ago.

Anonymous said...

Anon at 6.27 pm

No matter how much gold one has it will not pay off any mortgage. I kg of gold is about 25 lakhs rupees. Now tell me how many Indians have 1 crore flat with atleast 50 lakh mortgage and 1 kg of gold in their possession. M99 percent of Indians will not sell gold, no matter what. THey may starve to death or give a bedroom/living room to rent, while their own family living in the kitchen to make ends met

Anonymous said...

Anon at 6.27 pm

No matter how much gold one has it will not pay off any mortgage. I kg of gold is about 25 lakhs rupees. Now tell me how many Indians have 1 crore flat with atleast 50 lakh mortgage and 1 kg of gold in their possession. M99 percent of Indians will not sell gold, no matter what. THey may starve to death or give a bedroom/living room to rent, while their own family living in the kitchen to make ends met

Anonymous said...

@ Above:

Indians never sell Gold. They just collect and pass it on to generations. Moreover, Gold is also in a bubble. It is prices at least 3-4 times more than what it should be.

Few days back George Soros dumped all his Gold holdings. USD will get stronger eventually and Gold will go back to $500 per ounce which means 1/3rd of prices today. It happened in 1989, when Gold was $925 an ounce and it fell to $300 in 4 months time.

All this hype about Indain RE will remain high is total BS. It has to fall by 60-70%. Get ready for a selloff in RE soon.

PE investors are going to take out $5 billion in 6-8 months. This will make builders go bankrupt very soon and they will be forced to sell RE at lower prices to get money. No more price fixing in RE.

Fools are buying and bigger fools are holding their RE thinking it never falls. Sure, buy and hold till you are called bigger fools.

Jayant said...

http://www.business-standard.com/india/news/rising-npas-areconcern-pranab/436399/


Rising NPAs are a concern: Pranab
BS Reporter / Mumbai May 22, 2011, 0:17 IST


~ “There is one area though, where I am a little bit concerned. It is the issue of asset quality. During 2010-11, non-performing assets (both gross and net) increased against the level in the previous year,” Mukherjee said while addressing bankers at the annual general meeting of the Indian Banks’ Association (IBA).

~ State Bank of India (SBI) — the nation’s largest PSU lender, reported significant rise in delinquencies for the previous financial year.


~ Punjab National Bank and Union Bank of India also reported higher gross NPA ratios during the period.

GSM said...

USD will get stronger eventually and Gold will go back to $500 per ounce which means 1/3rd of prices today. It happened in 1989, when Gold was $925 an ounce and it fell to $300 in 4 months time.

Would you pls explain how will USD get stronger except in short run.

And regarding Gold, it went from $35 to $850 in 1980 and yes dropped back to $300. If you take the same anology, Gold in 2001 was $350 when the bull run started so it should go to $8500 before crashing back.

Anonymous said...

Most Indians selling flat/plot get around 50L in cash (black). Those who do not want to re-enter the RE market buy 2 Kg of gold = two small biscuits which they put away in their locker.

It is then taken out when black money is needed again.

Now dont tell me you all dont have a biscuit or two - what the hell have you been doing till now?

Anonymous said...

anon at 11.01 pm/

My dog ate my bicuts...

Anonymous said...

anon at 11.01 pm

My dog ate my biscuits...

Anonymous said...

Pretty soon "Helicoptor Ben" will roll the USA Printing Presses again and GOI will start printing too. So gold will go up to $2000per oz. in this round of inflation. After that US$ will be steady to moderately strong and INR will depreciate by 20%. Indian RE will not go down in INR terms. GOI will justify high cost of real estate by depreciating INR to attract more FII. Gold will remain high, since the Chinese govt wants to buy atleast 1 trillion US$ in gold so that they can officially claim reserve currency status. If you look at money supply charts, gold should be much higher, and money supply will not shrink in the future.

Any intelligent thoughts..

Anonymous said...

Anon above:

What if inflation pressures in US get stronger and USA starts tightening. Just a thought as inflation is high in US now. Moreover, there will be no QE3.

So, no more printing of USD. People who are thinking Gold will go to $2k and higher is because they are thinking USD is trash.

USD will come back up as soon as rate increases are even announced. USD is the reserve currency and would stay that way for the next 10-20 years. Euro cannot replace USD as EU is in their own massive printing effort.

Rupee will definitely go down to 60/USD due to massive GOI printing.

RE has to go down by 70%. Keep dreaming if you don't believe and keep buying. Your money and your arse.

Anonymous said...

"Would you pls explain how will USD get stronger except in short run. "


There will be no QE3 and US Govt. is working to reign in their debt. As the Australian, Canadian and Chinese bubbles are deflating, people will move back to USD. These bubbles deflating means money going back to US and massive printing in the countries where bubbles is bursting. The currencies in the bubble countries will depreciate by 30-40% against USD. In effect, USD appreciates.

Believe it or not, it is coming. Similarly, Rupee is goung to be 60/USD as the RE market weakens and GOI prints more.

One myth people have is GOI will be able to keep the RE market propped up. GOI will try their best, but would fail to keep it high as fundamentals will rule and market will slowly deflate to 50-60% lower values. All the stolen and black money component will evaporate.

Anonymous said...

Inflation is US is less than 2% and not anywhere close to what it is in China and India. US Feds have increased money supply but have controlled inflation. However US GOVT cannot make it through without QE3 as their spending is about $100 billion per day. Only way there is going to be any tightening is to withdraw from Afghanistan and Iraq asap.

ALso Chinese are not stupid, they want to be No. 1, however they cannot claim reserve currency status because all their money is backed by US$. So they will keep buying all the gold they can and once they have equal or more amount of gold US has then they will come out and claim reserve currency standards. That is why I say gold will go up.


RE in India will not go up, however any correction will be small and will be in the 15 - 20% range in terms of INR which will be healthy, however correction will be coupled by depreciation of INR. So in terms of foriegn currency the RE correction will be massive (40-50%) This was experienced back in 2008 when $ went from 40 to 50 Rs and RE corrected more than 20%

Anonymous said...

There is a very simple funds in investing championed by the legendary Warren Buffet - stay within your circle of competence.

Though people keep talking of demand/supply and global money supply, it is very hard to get these numbers right.

For RE and Stocks, there are still numbers like price-to-rent and price-to-earnings. And these numbers tell you that stocks though not cheap by historical standards are still way cheaper than stocks.

I don't care if Gold or RE or commodities go up or down as long as I can pick up good stocks at reasonable valuations and make money.

Anonymous said...

-- typos in previous post; reposting --

There is a very simple funda in investing championed by the legendary Warren Buffet - stay within your circle of competence.

Though people keep talking of demand/supply and global money supply, it is very hard to get these numbers right.

For RE and Stocks, there are still numbers like price-to-rent and price-to-earnings. And these numbers tell you that stocks though not cheap by historical standards are still way cheaper than RE.

I don't care if Gold or RE or commodities go up or down as long as I can pick up good stocks at reasonable valuations and make money.

==> said...

@Anon above,

Your explanation makes sense. Many will still argue that RE will tank heavily in India, which I doubt given all the factors.

Also with depreciation of INR, exports will boom especially IT related stuff as 42% of revenue is generated from that area. But at same time oil to imported good people enjoy will become expesive.

Waiting and watching how this will be played out in next 6 months.

Anonymous said...

It is a wishful thinking that there wont be QE3.
Question is how and what should we do in the event QE3 is implemented.
What could happen to Indian stock market and realty in paticular.

Anonymous said...

There will be no QE3 period.
Go figure. The party for emerging markets is over.

Anonymous said...

The market is expecting QE3, so stocks will go higher. Inflation will be higher in India. Gold and Silver will both go higher. Best bet against this is keep buying gold....Buy 24K gold bars. from reliable mints..

Anonymous said...

I am more interested to know the impact of QE3 on the Indian reality sector and stock market.

Buying gold is rulled out. I don't want to get murdered for storing gold in the valut in the house.

After many many years we did not buy even a one gram of Gold this Akshay Trutiya.

Higher gold prices have made women folk in my house to loose the appetite for gold.

Despite all QE3 or trillion doller debt hungama in the USA, noone is talking about austerity measure.

Anonymous said...

Gold is the only investment that you can have where you dont get penalized for capital gains tax. YOu dont have to tell anyone you purchased gold and you can store it in your bank locker. If not, you can buy gold Exchange Traded Funds. Indian stock market SENEX id going to 23,000 by JUly 2012 after that there is a huge crash.....worldwide....because America will be broke and all dollars will be flowing back to America.....

skeptics ghost said...

There is no runaway Inflation in the US. At least in Food and Fuel - because US consumes mostly in excess to what it needs - when gas prices went from 2.5 to 3.75 a gallon, people will drive that 30 - 40% but wont cut on commute. Buy less to in malls, shop less, and spend less on luxury items but wont starve on essentials. like when branded milk and cereal gets expensive from 2$ to 4$ people buy store brand (kirana) milk and cereal which still costs about 2.5$.

In short US exports its inflation to China and OPEC nations because when consumption drops, these people who rely on American and Europeans to spend, get nervous and create more bubbles.

As long as US-Europe remains the powerful consumer, the world will keep begging America/Europe to buy no matter what.

So Ben Bernanke has no trouble rolling the country in more debt as the US can get away not paying it as it is the sole superpower on the planet.
This means that investors who want to make a quick buck , borrow from Bernanke (who borrows it from India and China and OPEC) for 0%, and exit with a handsome profit by pumping up prices in these nations.

George Soros, Goldman Sachs, Warren Buffet, and the cronies in the 10 big giant banks and IBs Merill, Morgan Stanley, Credit Suisse, Nomura, Barclays, RBS, Deutsche Bank, etc have been playing the same game since the Soviet Union collapsed in 1991.

Again - in India RE is still a premium because not all neighborhoods are the same.
Prices wont correct for more that 10-15% unless there is civil war or nationwide riots like Egypt etc


Back

skeptic's ghost said...

Some person who is trying to sell Dubai property - WTF?

You can even buy a house in Phoenix AZ, Las Vegas, NV for 100,000$ 44lakh - that too with just 20% down (9 lakh) - great neighborhood, 3 car garage, 2 miles from freeway and better weather and water than Dubai - that does not justify why someone should or shouldnt buy in India.

In India there are 2 type of people buying - those who need house to raise family and those who are looking to invest into another place either for their kids, or for their retirement.
All other speculators, realtors, instiutional buyers and touts are just rolling in greed.

I dont think buying in Dubai makes sense - first of all Dubai's sovereignty and safety is not at all guaranteed, some revolt there like Bahrain Egypt, will render Dubai useless. Dubai also has no oil or industries like Singapore or Hong Kong, to bail it out from decline and decay. There is nothing stopping from Dubai becoming a Yemen or Somalia

Dubai also has no freedom of speech and expression pretty much like the entire Middle Earth - which means its just a prison made out of gold.

Be careful about Dubai - its like a person from Mexico investing in a lottery ticket in Vegas

Anonymous said...

To all the anons above:

QE3 is not happening. If the market is already pricing it, they will come down. There is no way with so much inflation in US, QE3 is happening.

Also, what if India's debt it downgraded. Look at India's debt to GDP ratio. Even the salaries of GOI employees is paid by borrowed money. If India's debt is downgraded, there is another Egypt/Greece in India. Masses are really unhappy with inflation.

RE has to go down by 50% or more. There is no way out. If you think otherwise, buy more and face the music later.

Anonymous said...

Sensex would be below 18K today. Foreigners have realised the fake India growth story and are pulling money out. Don't believe it. See it for yourself today when the market opens and closes.

shailesh said...

April property sales in Mumbai down 30%

Mumbai: Property sales registrations in Mumbai are down a sharp 30% year on year in April, hitting a new 23-month low. According to data compiled by Prabhudas Lilladher, registrations in April numbered 4,917, which was lower by 16% compared with the registrations in March 2011.

The Mumbai real estate market had got off to a weak start, with registrations falling 22% year-on-year in February, with 4,716 properties registered. In March, while the number of property sales registered was 5,852, it was nonetheless 30% lower year-on-year. In January 5,085 sale registrations were made.

“The transactions volume has been coming down both because of high asset prices and high interest rates,” said Anuj Puri, country head, Jones Lang La Salle.

Anonymous said...

In India the economy boomed and businesses grew all these years because the flow of cash was steady and growing. But the cash that flowed all these years wasn’t earned cash, it was borrowed cash.

Businesses sprung up and flourished because of the cash flow that resulted from people borrowing cash and spending the cash that they borrowed. But now people can’t borrow anymore, which means they can’t spend anymore, which means those businesses that grew up and flourished SOLELY BECAUSE of this spending of borrowed money are going to go away because they really shouldn’t have been in business in the first place.

Borrowing and spending what is borrowed creates one type of economy, earning and spending what is earned creates another type of economy. In my view what we are witnessing is the end of a borrow-and-spend economy and the re-emergence of a earn-and-spend economy. It’s not going to be a lot of fun getting from one type of economy to another but that’s the direction of where we are going.

Anonymous said...

People who bought RE in India are in a boat with a slow leak. You know soon they would all be Titanic.

Anonymous said...

"Sensex would be below 18K today. Foreigners have realised the fake India growth story and are pulling money out. Don't believe it. See it for yourself today when the market opens and closes."

Oh Man! You are so right! :)
Nice to see ur predictions are right

Molina Timothy said...

Rising Property Prices in Effect Economic. Properties Detail you provide is Very important for all. Real Estate Sector in India is really Attractive Investment Ground.

Anonymous said...

If Rupee depreciates to 60 - if there is massive inflation - why on earth would RE correct?

These are causes for RE to APPRECIATE - not depreciate.

If the value of Rupee goes down - value of all goods - including RE - will go up.

As for QE3, I agree that it will not see the light of day.

Dollar has to appreciate. Rupee has to depreciate disproportionately - not only to balance appreciating dollar but also because of high inflation, high rates and general economic weakness.

Best play to gain from Rupee depreciation is through gold ETF.

Second best - and best asset for long term - is real estate.

2008 Rupee depreciated, but RE depreciated because of liquidity crisis for builders. Now with the experience of hindsight, builders are unlikely to overleverage for land bank and get caught out.

So some RE in portfolio is a must in high inflation Rupee depreciation times. But not at current levels - mid 2012 should give a better entry price for RE.

shailesh said...

Urbanisation and cheap credit fuel growth

Prime urban housing in China has doubled in price in three years. In India, tycoon Mukesh Ambani recently moved his family into a $1bn Mumbai home, complete with three helipads.

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/6973e458-8498-11e0-afcb-00144feabdc0.html#ixzz1NBaAXGKs

Rapid urbanisation, abetted by cheap credit, lies behind the boom. Global interest rates are at record lows, over half the world’s 7bn population now lives in cities, and the UN forecasts that another 1.4bn people will join them in the next two decades.

There is huge unsatisfied demand for homes in the developing world. But as real assets, “land and housing are very prone to speculation”, says Paul Romer, a Stanford University economist.

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/6973e458-8498-11e0-afcb-00144feabdc0.html#ixzz1NBaEXLDq

House prices are bubbling the most where there is a limited supply of choice properties, as with Rio de Janeiro’s beachfront apartments, Mr Ambani’s 27-storey Mumbai home or refurbished colonial mansions in Colombia’s Cartagena.

But it is not only wealthy buyers who are pursuing the conspicuous consumption that accompanies every financial bubble. In Brazil, where a near-doubling of private sector credit since 2007 has prompted a consumption boom, house prices in some police-pacified Rio slums have doubled in three years.

Cheap money has accelerated the process. If the script plays out like other booms, eventually the bubble will burst.

shailesh said...

Costly housing, transport halt Navi Mumbai's growth

The paper says the main objective behind creating Navi Mumbai was to absorb Mumbai's immigrants and also to decongest the state capital. "But public transport, whether the railways or buses, and housing facilities have not kept pace with demand," the town planner said.

The paper says: "Extremely lengthy land acquisition procedure and a time-consuming legal framework, and a lack of initiative to involve local village populations—which has lead to disputes and agitations regarding compensation—have caused delays, cost overruns and social strife."

shailesh said...

Costly housing, transport halt Navi Mumbai's growth

The paper says the main objective behind creating Navi Mumbai was to absorb Mumbai's immigrants and also to decongest the state capital. "But public transport, whether the railways or buses, and housing facilities have not kept pace with demand," the town planner said.

The paper says: "Extremely lengthy land acquisition procedure and a time-consuming legal framework, and a lack of initiative to involve local village populations—which has lead to disputes and agitations regarding compensation—have caused delays, cost overruns and social strife."

shailesh said...

Nice Article. Good recognition to Tata's. Now the key is when do others join.

A House For Mr. Biswas: Tata Housing's Low Cost Township

Key sentence:

(Banerjee also admits that they were afraid a bubble could be building up in some markets.

Anonymous said...

I was in Mumbai last week. I drove through new and old development areas. Here is my perspective:

It is real estate bubble:
1. Rental yield and price-to-income ratios.
2. Reports of about 100,000 unsold flats coming online by 2012.
3. All advertizing posters are of real estate.
4. Everyone keeps talking about real estate.
5. Flats bought in morning are getting sold in the evening for higher price.
6. Sales have gone down significantly.

It is not a bubble:
1. You can see lights are ON in the evening in both old and new development areas i.e. no ghost town.
2. People are earning more. I met a friend of mine who is working with TESCO and is making Rs. 25 lacs. His wife is making Rs. 5 lacs. He said that it is normal to make Rs. 30 lacs for a couple in their 30s. The average price of flat in Bangalore in his area is Rs. 50 lacs. He can easily afford this. However, he is renting because rent is Rs. 10,000 per month.
3. I think there will around 1.5 million households with an income of Rs. 30 lacs in India and the couple is in their 30s.
4. For making downpayment, parents are helping.

Anonymous said...

Anon above:

In the US, many couples made a lot of money in boom years. When RE corrected, 25% of the jobs vanished. People haven't seen raises for almost 5-6 years now.

Look at it this way: People are getting paid high due to the bubble created by Keynsianism and not the other way. Once it corrects, it will definitely have an impact on salaries as there would be more people willing to work for low, thereby putting pressure on nonsense salaries. It would further bring down RE prices and as NPAs pile up, inventory will also pile up and this will be the last nail in the coffin.

Anonymous said...

anon at 9.27

what is your point

Anonymous said...

8 years ago IAS officals including president of India would get salary of 30K rupees per month. After 6th commission whole dynamics changed.

At the same time Manager in IT MNC or top 5 Indian IT companies used to get salary of 9 lakhs where as billing rate in 2001/03 was 100 dollars/hour for Java developer and 150 dollars/hr for SAP professional.

Actually 6th commission recommended higher salary to Govr babus to counter theirs move to join IT companies for high salary jobs.

Today billing rate in the USA have gone down almost 30% where as Indian Salaries are gone up 200 to 400 %.

It only means money flow from USA to India supposed to be reduced by 30% and that should be reflected in the IT salaries. But we dont exactly oppost.. 300% pay rise.

Isn't it ironic?

Anonymous said...

@anon above at 7:54 PM:

These are good points you make. Also remember that as the salaries in India go up, it will become less cost effective for US companies to outsource to India, specially, now that they have a huge pool of unemployed workers, willing to work for less.

In such a situation, the only way India can keep its exports competitive is by devaluing its currency. So, 60 INR = 1 USD is not a far fetched thing.

Devaluation will do the following:

1) Raise commodity prices bought from the international market, mainly Oil. This will increase domestic inflation, resulting in more interest rate hikes by RBI.

2) Make it useless for FDI/Real estate investments to flow to India, since higher interest rates cannot counter a continuously devaluing currency. NRIs who bought RE a few years ago, solely for investment purpose will see their gains vanish in dollar terms as the Indian currency falls.

3) Over the next three years, there will be NO change in monetary policy as Congress is jittery about its performance in the assembly elections (they somehow scraped through in Kerala, lost TN and WB win was Mamata's win). So, they cannot afford to have uncontrolled inflation.
Expect higher interest rates: will be better to park your money in FDs than real estate.

The only way out of this mess for India is to hold steady with its exchange rate, and let the private sector figure out how to keep the business healthy, based on market forces, i.e, no currency pegging. That will result in another round of layoffs in IT companies, and/or significant salary cuts. Otherwise, all these jobs will now migrate to Vietnam and Philippines.

Whether India pegs its currency to help exports or not, I don't see green times for real estate. Guys, the party is over. Go home.

And Mumbaiwalas, just move out from that overflowing tank of sewage, which is a sorry excuse of a city. In Maharashtra itself, there are so many good and cost effective options for you.

Mumbaikar said...

In Mumbai it is very easy to control the Prices of RE provided Govt. has will for it. CIDCO is seating on tons of land in New Mumbai, if they start developing the houses for low income or mid income group automatically it will reduced demand for pvt builders, and prices will come down. Instead of building the houses CIDCO believes in selling land to private companies and let them ruin the property market. I am very sure that similar Govt. bodies are following same route all over India.

==> said...

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.

==> said...

Not jobs, Indians fear rising food prices

http://www.samachar.com/Not-jobs-Indians-fear-rising-food-prices-lfysMcaecie.html

Indians will stave to death, will borrow, steal but will not compromise on selling RE prices, gold for loss.

Enjoy, still thinking RE prices in India will drop significantly?

==> said...

Here is more than decade long loop hole coming to limelight.

http://www.samachar.com/Infosys-gets-subpoena-from-US-court-on-B1-visas-lfytMVefbgi.html

I hope USA brings justice to H1 holders, USA Permanent residents and USA residents.

Enjoy Infosys, you are in fix now.

skeptic's ghost said...

===> is right - Indians continue to breed like cockroaches and starve themselves and kids - all for what? To show off their property and gold assets. Thats first reason why prices wont fall.

Another reason builders wont reduce prices is that if one area price goes down, there will be booking cancellations en masse leaving project unfinished.

Third reason why price in Rupees wont fall is that Govt will keep printing money to stop bubble bust.
China and India both are scared shit from the frustrations of housing bubble meltdowns from Japan in 1990, USA in 2007, Iceland/Ireland/Spain in 2008, Australia in 2011.

They will do all it takes to make monetary policy conducive to keeping asset prices intact in Rupees. This high inflation is actually the reason for that.

Independent house construction prices also wont fall even if cement, brick, prices fall - for the same reason.


I dont fully blame the builders either - they have paid premiums in bribes to babus and MLAs/Corporators for clearance.

In short we are all to blame for the bubble. Many people here also own homes (some with mortgages) None of them want to see the value of their property reduced to dust.

Again I maintain my 2 points -

1) Since Indian city neighborhoods are not alike - prices in good neighborhoods wont fall - especially in IT ITES and manufacturing hub proximity locations.
2) As long as there is political stability prices wont correct - it will take a civil war or uprising to seriously dent the buildup.

when I say prices wont fall - I also mean that they wont appreciate either. - It will remain in limbo until the next big boom)

Anonymous said...

I also hope the Indian newspapers stop writing stupid articles eugolising the founders including NRN. Infosys has long abused the B-1 visa from the early 90's so there is nothing new there. Same goes to whole IT industry which used the cheap Indian labor force as their main arbitrage

==> said...


skeptic's ghost said...

===> is right - Indians continue to breed like cockroaches and starve themselves and kids - all for what? To show off their property and gold assets. Thats first reason why prices wont fall.


==> skeptic's ghost, be careful what you write and be prepared for wrath of proud Indians that are in denial. They will call you RE pimp or paid blogger or something more to make this blog more interesting.

==> said...

I also hope the Indian newspapers stop writing stupid articles eugolising the founders including NRN. Infosys has long abused the B-1 visa from the early 90's so there is nothing new there. Same goes to whole IT industry which used the cheap Indian labor force as their main arbitrage

==>Problem is - In global world, global rules are missing. Laws and regulation have not been updated with change in trade and economies. Smart corporations know that and they make use of these loop holes whenever and wherever they can whether it is labor laws, trade laws or immigration laws.

There is long list that laws in India are missing or not enforced. Many gaps makes India interesting destination in global world. Everyone likes free rides.

Anonymous said...

@anon 10:23 PM

"That will result in another round of layoffs in IT companies, and/or significant salary cuts. Otherwise, all these jobs will now migrate to Vietnam and Philippines"


This will not happen if Rupee depreciates to the value that you have mentioned. Even if Rupee depreciates in the 50 - 55 range per dollar, IT companies will make huge profit. It will make IT folks/manager's salary increase of another 100% in near future albeit oursourcing does not get hit.
At the momenet sentiment is not against Oursourcing so going work to Vietnam or similar countries not going to happen.
Question is if there is no QE3, there is 60 rupee per dollar What should ordinary person do?

Also what if the currency rate remains stagnant? If the rate remains stangant then surely Indians will be richer in next 6-8 years after their FD returns double the investment. Person with 1 crore investiment will ger 2 crore that is 250000 dollars will become 500000 dollars. WOW


It would be interesting to see next few weeks/months.

Anonymous said...

Anon above:

There will definitely be no QE3.

--What if the Rupee depreciates to 60/USD and there is not much IT work to be outsourced. You can hire normal Americans at 70% salary Indians demand for sloppy work.

--What if India cannot pay its debt and is downgraded?

--What if NPAs rise and one of the major banks in India fails?

--What if the world commodity bubble bursts?

--What if inflation rises extensively due to easy monetary policy and
there is a revolt in India?

--What if RE bubble finally bursts?

--Also, don't just think about India's growth. US also should grow at some point. Maybe there is runaway inflation in US and people there feel double rich the way people in India feel right now.


I don't want paid pimp "=>Said" to even attempt to reply to above.

Anonymous said...

A lot of day dreamers and newbies are dreaming that their investments are going to double in the next 6 or even 8 years, all you guys keep dreaming. RE may or may not fall, but it will not rise in India. WHen dollar becomes 60 Rs all FIIs will exit the realty investments in India and automatically there will be a price drop. Whatever you have remaining after you pay the 15% interest on your mortgage, you can put it in FD and you may get 10-11%per annum on this. So best case you may be even on your net worth in the next 6-8 years unless you sell all your RE now and move in with your mom/pop/inlaws, etc and invest all your money in gold silver. This is the only way your networth will double. Silver will hit $100 per ounce by the end of the decade and gold will be $5000. And please this is my opinion and dont call me a PM pimp.....Just my thougts.

Anonymous said...

please take a walk along western or central railway tracks in Mumbai in the day time and you can see all the freshly minted gold that Indians have lying on the tracks.

Anonymous said...

anon above

"Silver will hit $100 per ounce by the end of the decade and gold will be $5000"

You have to understand that we Indians are consumer of Gold and Silver and not investor or traders. Even if they buy Gold at the current price they will not sell it even gold touches 8000 per ounce. How many Indians do you see around you selling gold? They bought ounce gold for few thousand rupees not very long and despite price has touched 22000 they are not selling it. In India gold is not bought for resale Period. Gold is not considerd as an instrument that will give monetory returns like bank account interest rates.

More than India it was China that have inflated the Gold price. China bought gold from IMF only after India bought half of IMF' gold reserver one and half years ago(2009). Gold was 1000per ounce then. Indian Govt must have found out China's plan to inflate Gold prices. And no developed country bought Gold at that time.

We see and read all ghost town in China and think that it is a property bubble. If you look at other angle China has purposely created artificial demand for iron core, steel etc and jack up the rates. I am sure China must be playing with such commodities's prices. And now they are doing the same with Gold and Silver.

Funds like Soros are not dumb to dispose off all of the Gold.

==> said...

I don't want paid pimp "=>Said" to even attempt to reply to above.
==> are you scared of me, you dumb F#%K? ha ha

There will definitely be no QE3.
==> why not? I hope not too.

What if the Rupee depreciates to 60/USD and there is not much IT work to be outsourced. You can hire normal Americans at 70% salary Indians demand for sloppy work.
==> What if

What if India cannot pay its debt and is downgraded?
==> What if

What if NPAs rise and one of the major banks in India fails?
==> What if

What if the world commodity bubble bursts?
==> What if

What if inflation rises extensively due to easy monetary policy and
there is a revolt in India?

==> What if

What if RE bubble finally bursts?
==> What if

==> do you have anything else to say other than WHAT IF and foul words?

Anonymous said...

anon at 5.57

Even if China is playing the gold game, it is in Chinas best interest to suck up all the gold it can and get rid of the US$. Once they have 4-5000 tonnes in their hand they can claim reserve currency status. As you see currencies will have to be backed up by something tangible. All countries who boast good global currencies have sufficient gold in their reserves.

India may buy a few hundred tonnes, and there is not a whole lot of gold to go around, so price will be inflated until China gets to where it wants to be in gold. China has large gold deposits, so their strategy is to partly mine and partly buy in the open market. What else can they do with all the USDs that they have other than buy up natural resources, that they can they in turn supply to the world. You can see from the Chinese investments in Australia, Africa, South America and most recently Canada.

As far as Indians go, yes they buy gold for financial security to be used in times of uncertainity but then they become too emotoionally attached to it and dont sell when the price goes up. TO me this means one thing only, that the Chinese and others will drive up prices.

Soros did not sell physical gold, he sold ETFs. Soros has made mistakes in the past, but he sold his ETF and is investing in gold miners. The Big Gorilla John Paulson and a lot of other billionaires who hold significantly larger portion than Soros is still holding for some more time. US constitution says that gold is the only legal tender, so US will not sell their 8000 ton gold reserves.

QE3 or not, Gold will run higher because of too much money that is being printed out by central banks all over the world.

Anonymous said...

=> Said::

You are the biggest immature motherfucker on this blog. I don't understand if you know it all, why do you even come here. Go and buy RE. Why are you wasting your time here. Why are you trying to convince people to buy? You appear to be a bharva of the RE lobby.

No matter what losers like you try, unsustainable cannot sustain.

==> said...

You are the biggest immature motherfucker on this blog. I don't understand if you know it all, why do you even come here. Go and buy RE. Why are you wasting your time here. Why are you trying to convince people to buy? You appear to be a bharva of the RE lobby.

No matter what losers like you try, unsustainable cannot sustain.


==> There you go again. What is with you guys? Why do you have to show your filthy language wherever you go, may be you can't resist showing your culture anywhere you are.

I NEVER mentioned or advocated anyone to buy RE. It is personal decision what one should do with their finance - buy RE or not, buy gold or not.

So chill and save your words to be used at your home, ghar ki baat hai... hai na?

Anonymous said...

Anon above

"so US will not sell their 8000 ton gold reserves"

US is already talking about selling 25% of Gold. What they are saying now is that they will not sell it in one go. They dont want to crash the Gold market.

Another developed nation sold they half of their Gold in 2000-2001.

What I think is Gold can't make Chinese yuan or any currency reserve currency status alone.

In the market driven economy, prices of products are determined by demand and supply. Do you want to say that India will pay/receive chinese yuan to USA when India buy/sell produts if Chinese currency becomes reserved currency? The answer is NO. In that system the value of the transaction will be based on demand and Supply. Just like in realty,propert prices are not backed by gold but consumption demand. So countiries with higher consumption will decide reserved currency status.

Anonymous said...

I've shorted all my RE stocks in India and all the ETF.

I've also put my RE investments for sale in India. It is better to get out now before it is too late.

I can send e-mail to buyers if interested. I want all the money in white. I'll pay taxes to GOI on my earnings and not steal anything as I also have kids and wish well for their future. If I steal now, my kids will face the wrath of someone who gets hurt. Done with India stocks and Indian RE.

Anonymous said...

I'm not going to do any more bond buying and no more QE3.

Ben Bernanke

Anonymous said...

So far, the big sell-off has not even begun. But it could start any day. Maybe Friday’s numbers reflected the new trend. Maybe not.

But just so we get to say ‘I told you so’ here is what we expect:

1) Stocks will be weak…maybe a big sell-off in the summer months. Investors will begin to realize that the economy is not as healthy as they thought. And the effects of QE2 will wear off.

2) The Great Correction, combined with the feds’ battle against it, will continue. Economic reports will be mixed and confusing as a result. But no clear, real recovery will begin.

3) The Fed will announce new measures - QE3. These could come anytime, but will most likely follow a new crisis. For example, a default by Greece…or a sharp break in the stock market.
Analysts say the punky figures are not confined to the US. The entire world is slowing down. Emerging markets are being forced to try to control inflation. Europe is worried about what happens when Greece defaults - which is coming soon. And the US is suffering from the worst housing slump in its history.

Anonymous said...

Is Goldman Sachs Doomed?

Posted by Stephen Gandel Friday, May 20, 2011 at 12:23 pm

Farewell to the Goldman we once knew (Brendan McDermid/Reuters)

These are the last days of Goldman Sachs.

On Friday, the Wall Street Journal reported that Goldman is preparing to be hit with subpoenas soon from U.S. prosecutors looking into the firm’s mortgage operations. How big was the news? Not very. Dealbook, the New York Times blog about all things Wall Street, didn’t even cover it. And that might be a bigger problem for Goldman than the subpoenas.

A year ago, news that Goldman was under investigation would have been huge, shocking news. These days, it seems, the notion that Goldman broke the law, possibly cheating clients, is almost taken as a given. At its core, a Wall Street firm is an advisory business. It tells companies when to raise money and when to make transactions. It tells clients what investment are good and what ones should be avoided. If Goldman has lost its ability to be trusted, it’s going to be very tough for the firm to continue. What about trading, where Goldman has always been known to make the bulk of its money? Well, Dodd-Frank may mean that much of that business is going away as well.

In fact, there are already signs that Goldman is in decline. The firm, once a persistent leader on Wall Street, now is all of a sudden an also-ran. Goldman’s shares are one of the worse performing among financial firms this year. Their only rival in that category - ward of the state insurance firm AIG. Goldman also seemed to at least initially stumble this year in the investment banking business, dropping as low as fourth at one point in the ranking of top advisers to companies doing mergers & acquisitions. It recently climbed back to the No. 1, according to research firm Dealogic, but the fact that it had to stage a come back was unusual. What’s more, Goldman’s profits were down in the first quarter of 2011. Worse, it was the fourth quarter in a row that profits fell. And those profits may not rebound anytime soon. Earlier this week, the New York Times reported that Goldman is considering culling its ranks of partners.

==> said...

In that system the value of the transaction will be based on demand and Supply. Just like in realty,propert prices are not backed by gold but consumption demand. So countiries with higher consumption will decide reserved currency status.

==> Well said!! USA holding reserved currency status is majorly because of confidence (to consume) and productivity (to innovate and produce)

Anonymous said...

anon @ 4:20 AM

Wait until morning you will get your biscuit back. You will have to wash it though.

Mumbaikar said...

It not because US is consuming nation it currency has reserved status. Japan is also big consuming nation, but their currency doesn't have reserve status

. To back reserve currency status you need ample resources and military power. Japan doesn,t have both. Also resources are not only criteria besides military power, but utilization of resources, industrial base also matters. Though US is consuming nation they r also producers of goods. Today US produces 20% of goods in the world. Plus they have gold reserve. All these factors give US currency reserve status.
Last but not least it's perception of world abt country also matters.

shailesh said...

30% of Mumbaikars's flat cost goes into bribes

“The underworld’s demands have steadily gone down over the years but officials have developed a voracious appetite for bribes,” a Chembur-based developer said (see box for details). Now, BMC officials seek at least Rs1,500 per sqft,” he said. “It can be Rs2,000 per sqft depending on concessions [violations].”

The other major heads that involve unofficial payments are local corporators, shakha pramukhs of political parties and gangsters, he said. These account for at least 15% of the cost. “One-third of the cost goes into bribing various people. And the percentage goes up in projects that blatantly violate rules.”

And what about the consumer? “If we do not have to pay bribes, the flat prices would come down by 30%,” the developer said. Not to mention the builder’s own profit. It fluctuates from 30% to 100%, depending on the cost of land acquisition. And this has to be coughed up by the hapless buyer.

The bulk of the bribe money goes to officials in the BMC’s building & proposals department and officials who are in charge of TDR (transfer of development right) at the Maharashtra Housing and Area Development Authority (MHADA).

Anonymous said...

shailesh Bhai,

I'd rather say it is about 50%. 30% visible or direct, and the 20% indirect that is added in material costs.
To summarise, 20% of the cost is actual, 30% profit made by the builder/investor and the rest 50% bribe.
The parallel or black economy has been becoming dominant day by day and we people have recognised it as the norm.

The end result is 'either be corrupt/cheat/dishonest or perish. ' In other words survival of the fittest.

==> said...

The end result is 'either be corrupt/cheat/dishonest or perish. ' In other words survival of the fittest.

==> You have summarized it well. I have been telling same but many say 'aisha hi hai, sab chalta hai'.

Do you know tricks to cheat and earn more money, I will be thankful. I need to survive in this crazy jungle (nowhere to go). Rents are going up, costs are going up and RE is just out my reach.

Anonymous said...

@==

You aren't alone in the sinking boat, I am there too. Corruption and rich-poor gap has been increasing at a exponential rate.

I read in the newspaper about Porche car entry into India. The car is priced 22 cr and people tell me Porche company can look a comfortable balance sheet for the next 5-6 decades at least.

Now, we all know that 50% of the Mumbai population shits in the open for lack of toilets as govt. does not have funds for infrastructure. Just imagine hundreds of Porches plying around Mumbai on the shitty roads. What a contrast.


The country isn't developing. It is going to dogs. My due apologies to Bharat Mata

Anonymous said...

anon above:

The country has been hijacked by rich and connected. 80% people are suffering. 19.5% are doing just fine. 0.5% are doing very well.

I think there would be a revolt in India in the next few years. Mases are really unhappy. MMS has screwed it all up. Gone are the good old days. Just 6-7 years back people were happy. Now India is at the mercy of West. Let's see what the next 3-4 months have instore.

Re crisis is coming soon. That would fix some of it.

Anonymous said...

Global Colonizers Stage Retreat to Corporate Banking
Financial Times
Competitive Dynamics - Retail Banking
Is the era of the global consumer bank over? HSBC has become the latest group to signal a retreat from some of its furthest-flung retail-banking operations, and Citigroup is pulling out of retail markets where it is overstretched, such as Spain, Greece, and Belgium, and refocusing on just 100 cities around the world. Barclays, too, is on the retreat, announcing that retail-banking operations in Russia and Indonesia should close. Increasingly, the heads of so-called universal banks - those that combine high-street banking with corporate and investment banking - are deliberately shifting their focus away from foreign adventures in retail branches and on to corporate business instead. Some of the reasons are obvious. Many banks have come out of crisis mode and are now in a cost-cutting phase - often under the direction of new management. Branch networks are costly to maintain in terms of both property and staffing. And increasingly the global colonizers are realizing they cannot compete with local operators who know the quirks of the domestic banking scene far better.

Anonymous said...

@above:

“Many banks have come out of the crisis mode and now are in a cost-cutting phase - often at the direction of new management.

From this I get:

1. The rewards used to go to bank managers who could float the most loans. Now the rewards will go to bank managers who can collect from those loans. Which means…

2. Less loans will be made and more loans will be collected from. Which translates to less money being put into the economy by banks and more money being withdrawn from the economy by banks. These two combined will continue to shrink the float of money in circulation.

Anonymous said...

From the USA:

No QE3, dollar improves, oil improves, inflation up, interest up, pensioners happier, gov unhappy with higher rates, more unemployment, debtors happier holding usf, stocks priced at real worth, banks less profitable, fewer loans, housing flutters, banks get nervous and unload housing in a short period. Gov employees choked into line.

Anonymous said...

@Anon

Nice one on Porche Cars

Soon you will find Paan chewing bania on Porche ordering urine laced paani puri,with subtle surrounding of dozen people shitting around the paani puri stall.

This is what we call 'India Shining' - of course MNS terminology

Johnny Gaddar said...
This comment has been removed by the author.
Anonymous said...

Mr. Porche will be saddened when the day comes when one of his cars have to go over Indian shit that is lying on the street. Porche is made to drive on immaculate roads, not roads that have be crapped on, pissed on and spitted on, and of course not roads that have bumps and potholes. Any A**hole driving this should have one hell of a ride..

==> said...

EGoM to consider hike in prices of diesel, kerosene, LPG soon

http://www.thehindu.com/business/Industry/article2051023.ece

Growth in diesel, kerosene, LPG sector. Time to celebrate. Yoo hoo...

MumbaiMama said...

I have a question to all the bloggers here.

The past decade saw an increase in salary, in some places 10 times. Lot of exotic malls have come amd foreign cat have been introduced in the market. Lot od exotic gadgets like LED Tvs, iphones, Bluray players, cable internet etc etc etc.

The question is ' Is there an improvement in the living standard.

Your views please

suesse

==> said...

The question is ' Is there an improvement in the living standard.

==> definitely big bold YES.

why? All this is indication of financial freedom, increase in personal productivity which results in growth in societies, individual freedom to think and act responsibly.

For example: Today girl can work, earn and has identity of herself rather than identified by father's or husband's name.

Anonymous said...

=>Said: You are Ulti Khopri. You'll only get it in your head when you see the RE bust.

skeptic's ghost said...

Living standards have increased for the middle class and India does have upward mobility for many.

However India also has a vast pool of deprived population who are fast multiplying but contributing little to the growth.

Unfortunately the way the Indian statehood has been setup (based on Western Ideals which not all of us follow), the most productive in India have to bear the baggage of the most unproductive. The same is done in every field of life in India - example Good government officers are decimated by the corrupt, good engineers are asked to shield the bad, striking labor force jeopardizes production, incompetent politicians steal from the national coffers, and so on.

To make things worse, the Indian (probably Asian) culture of prioritizing marriage and kids before anything else makes it a rat race for everyone as you have to compete for resources in a fast increasing pool of people.

Coming back to RE - the reality is that the real RE owners (at least in housing) have to compete with investors. Investors rely on cheap capital which is funded either by government's borrowed money or by huge surpluses.

This bad mix of Socialistic expectations of (real) buyers and Capitalistic expectations of investors spells doom as real demand and supply gets skewed.

Things wont clear out - as long as India and China maintain trade surpluses. Only a catastrophic war or calamity will collapse RE.

Anonymous said...

@skeptic's ghost

Excellent points. Really appreciate your views. Very thought provoking too

Thank you
.

Anonymous said...

Great points Skeptics ghost, You have connected the social and capitalist nature of today's India very clearly. Hope to see more of your insights into this

Anonymous said...

In the long run, we are all dead. We will leave all RE and all material possessions here for someone else to destroy. There is no meaning in this rat race except to copulate and populate and consume. People should move out of the city once they hit 50 and live in the serenity of some mountains. Dont worrry about all this RE crap..

gOlDfInGeR

Anonymous said...

A Porsche Boxster in India costs 47 Lakhs (ex showroom). Since nearly every house in Mumbai, Delhi and Chennai is now worth at least 1 Crore, all houseowners in these cities could sell off their house, buy a brand new Porsche and have over 50 lakhs to spare which they can use to move into a rented house. Sounds like a great deal to me.

Do Indians really have this type of purchasing power? If yes, why don’t we see a heck of a lot more Porsches on the road than we are seeing today?

Anonymous said...

Lot of Indians can afford Porche cars but are scared to buy. A Porche will certainly invite extortion calls from gangsters and their associates (in our case Police), request for donation from political parties like shiv sena, jealousy and wrath of relatives and neighbors. Why would anyone spend so much and invite trouble.

In a western country people normally buy this sort of cars if their net-worth is 10 times the cost of cars. In India this has to be 100 times for a person to venture into this sort of luxury. In other words, a porche owner in India is worth minimum 65 crores.

Real estate asset is different. People place it in Gold category and consider it as a safe investment.

Anonymous said...

@Goldfinger

Your comment 'People should move out of the city once they hit 50 and live in the serenity of some mountains'

Easier said than done. Why would anyone spend time in India rural places where there is no basic amenities and security. Who would want to rub shoulders with superstitious, communal, illustrate and unhygienic people. Iyt looks fine when you go for a holiday and live in a 5 star village resort. Bur settling down will bring other problems that you normally dont face in a city

Anonymous said...

"The past decade saw an increase in salary, in some places 10 times. Lot of exotic malls have come amd foreign cat have been introduced in the market. Lot od exotic gadgets like LED Tvs, iphones, Bluray players, cable internet etc etc etc.

The question is ' Is there an improvement in the living standard."

If you measure standard of living in terms of electronic gadgets, then yes for improvement.

But what about other essential things in life such as fruit not ripened by calcium carbide, affordable living space for most people, affordable and quality education, etc.

5 and 10 years ago, these electronic gadgets were not available anywhere ever, except for fast internet and good cell phones in japan. technology can help efficiency, allow entertainment, etc but cannot do much for basic things in life.

Anonymous said...

Anon at 3.59.

So dont you think this is a business opportunity, convert many many serene locations into areas where seniors can retire and live a peaceful life. Of course its easier said than done.

In the old days it used to be Bangalore, Ooty, Shimla, Nainital, etc. Not sure where one will go now. Looks like there is no place to hide.

I for one will want some peace from constant honking, noise, constant pollution, sweat, dirt and filth. Seniors have no life in Mumbai, and many of them just give up their ghost and are put to rest after 60. Living in a peaceful atmosphere can double your retirement years...Cheers

gOlDfInGeR

Anonymous said...

skeptic ghost.

I remain skeptic about technology. While it may claim to improve lives, yet it has a great social effect. It creates children who become socially retarted. i.e. they dont develop social skills. THey are always obsessed and their brains are sucked into the new technology, i.e. video games, facebook, instant message, net-ploring, etc etc. Though technology may connect all of us and we may have new openings to express our views, we do not use this to develop our logical, analytical, social and other skills, which people had. In the pre-industrial age, a person had all the skills to survive and live a good life. If he had to go out and live in the wild, he would go and do it all with his own hands. Todays people find it had to even venture beyond city limits, so if you take the technology away they are then totally screwed.

Anonymous said...

Started getting lots of realestate from desi companies, this happened during 2008 and it is happening now. This indicates another slum in RE price, another opportunity for investment.

Anonymous said...

@ Anonymous 2.27,

I guess that you are Smoking pot and hallucinating about desi real estate while living in videsh. Don't waste your videshi money on desi real estate even if you see a slump. I guarantee you that you will be a net looser at the end of the day if you do so.

Anonymous said...

I think NRIs are biggest fools investing in India. Reasons:

--They cannot easily convert their money back to USD. How will the convert the black component other than lying or hawala or buying gold.

--They will have to pay heavy taxes on capital gains.

--They risk the property being occupid by someone and lose it if no one local from family is incharge.

--They cannot take advantage of the currency arbitrage. Someone at my work bought a flat in Delhi and paid USD 200K. He paid major portions in advance and then some installments. If he got a rate of 43/USD and Rupee falls to say 60/USD in a year or two, this person striaght away lost like 30% of his money. Now even if the RE goes up by 30%, he is really not making any money plus he will have to pay all taxes, maintenance and cap gain after he sells it.

--If someone buys it to retire there, I would say retire in some green part of USA. RE prices are very cheap there and you can get a lot more with lot of facilities for your money.

--Indian RE is only good for people with stolen money like bribes, stealing by not paying taxes, actually stealing money, unaccounted cash money, inheritance without paying due taxes etc., for people who want to park their loot.

For normal hard working people, I would say stay away for at least 2-3 more years till the prices come down. Do not waste your hard earned money in downpayments and then get those teaser loans. They will take your house back when you default and all your downpayment would also go vanish.

Now why would you default:
--If you lose your job.
--When RE prices go down, there will be massive layoffs for years.
--When RE prices go down, you maynot want to pay loan on a property that is worth less than your loan amount. This is exactly what has been happening in USA. People call it strategic default and is happening in 30% of the houses in USA.
--You could have some disease or other illness that may prevent you from paying mortgage, likeliness is only 0.5%.

Anonymous said...

Why the Realty stocks are near all time low??

Indian stock market is the biggest manipulation and you think india shining?

What a lie!!!!

People believe that and Economic times likes to publish it...a 3rd world country indeed!!

Anonymous said...

Most of the NRI's re jealous....because they now think leaving India was not a good decision, given the appreciation of house values.

all these IZT guys thought there is gold in California, b ut found out of job and see their cousins getting rich with the souses in Nida

They are bitter..NRI's are angry and bitter...do not trust them!!!

Anonymous said...

Anon at 7.28

Your style of writing and spelling tells us that you will be dirt poor just as soon as the RE shit hits the fan in India.

Proud NRI and happy I moved to California, even though I may not have a lot of money. Atleast I dont get to see or smell the sh*t coming out of people's a*s each day.

Anonymous said...

Anon above:

I think NRIs are not angry or bitter abut India RE prices rising. In fact they have contributed a lot to India's growth and RE success. But many do feel after seeing a first hand bubble burst in the US that it would not fare well even in India. It is the same story that most NRIs have seen in US about convincing people why RE will not fall in US and how the country is growing. Then, in 2008 a steep fall came and even though US Govt. printed a lot of money they coudn't stop the fall. Though they were able to control it to deflate it slowly rather than bursting.

It will be the same story all over the world. India is no different. COuntries like Israel, Australia, Canada, China, Singapore, Korea etc. and many others are all in line for a bubble burst. There has been nothing diffferent that happened in India that didn't happen in other countries.

RBI is soon going to prick the bubble by raising more interst rates, Pr Muk is thinking of withdrawing all the stimulus.

If GOI doesn't do this, India's debt will keep growing and it may default like Greece. To prevent this and to control inflation, GOI has to take action. Moreover, there would be no QE3 from US unless there is a full blown crisis like 2008. So, no more inflows of money to India. The party is getting over.

RE prices will correct and the bubble will not burst. It will be a long correction. The next 6-8 months looks like a 30% correction and then around 10-15% for 4-5 years. It could overcorrect and the total correction could easily be 60-70%.

Believe it or not. NRIs have seen it happen and worry for India and Indians. People in US are civilized and are not on th estreets whereas in India, there could be a civil war as masses would not be able to handle this downturn.

Anonymous said...

Anon 7:38 PM
Atleast I dont get to see or smell the sh*t coming out of people's a*s each day.

In India people wash their a*s after sh*tting unlike US which should be more smelly. Sucking up to white people is so ingrained in your genes that you no longer find their unwashed a*ses smelly.

Mumbaikar said...

@Anon above

Accept the fact that India is no different than rest of the world. It was 15 years back not any more. If someone is putting the facts that doesn't make him slave of white skin.

Why did GOI had followed footsteps of US in 2008 when Indian economy was so strong? Why did it print money ? Think logically...all this economy ugenda of India shining is bs.

Only 10% people are enjoying India Shining mantra and rest is hype in media. People still believes in reservation to get jobs, then reservation is getting promotion that make Indian system week. This needs to stop somewhere. Then reservation in assembly seats, parliment seats etc. This all country is all aboout reservation. But no one wants to follow reservation when it comes to breeding....then it becomes god's gift.

India will truly shine when 80% of people will say from heart India is shining. I don't see difference in India 20 years back and now, instead of importing/smuggling stuff from rest of the world, people are buying it on Indian street by paying hefty import duty. I will be happy if 50% of that stuff has label of "Made In India".

NRI forever said...

To Start with I am an NRI based in Dubai (That makes me bit of Expert in Property Bubbles )
My monthly salary is about 10,000 USD ( INR – 4.5 Lac a month ) but still cannot buy a decent house in Delhi for my parents
My father made a house some 20 years back in “Rohini “ – a colony at extreme end of Delhi then . With a total cost was only 2 lac
Now the apparent property value of that house stands at close to 70 – 75 lacs ( Crazy as it gets )
Total area of the Plot on which that 3 story house stands is ONLY 32 Sq Mtrs ( No Typo error here )
Firstly 32 Sq mtrs is little smaller than my current kitchen area and I wonder who the hell had this great Idea of planning such small plots instead of a large flat

Now talking about current prices - It’s all part of ‘A” plan
The property in India by and large will never follow Demand Supply Rules specially in cities like Delhi / Mumbai / Bangluru ( and suburbs )
On an average close to 5000 migrant workers from lesser develop states ( I am not a racist ) come over to these cities everyday
If you do the numbers it’s over 18 lacs people added every year + the population growth from existing population
These Migrants push the demand at unauthorized colonies / areas and further pushing demand to new / far away suburbs
Do not get me wrong – They are not the problem !

Property in Delhi for sure has no value for money right now – You may sell a 1400 Sq Feet ugly , Shithole , flat with “desi Toilet” , no elevator , no gym , no pool , no security ( if you eliminate the “security guard “ at your apartment gate working @ Rs 3000 month ) , With the same money you can get a lavish fully equipped apartment with Pool , Gym , Garden , Fitted Kitchen , Central AC etc in Dubai/Australia/Brasil !
I am not selling it but focusing on Value for Money

It’s depressing for NRI’s like me who wish you give a better home to their parents but are unable to do so as

Black Money is MUST – Actual Demand (Selling Price) of property Rs 1,00,00,000 – ON PAPER – Rs 30,000,000
Bank will fund only 80 % of 30,000,000
Commercialization of residential areas
Sell by Floor in Delhi
No Control by Govt

In a nutshell it’s all governed by a powerful lobby that sits with builders / Politicians / Govt Officers
There is and There will never be any respite !
The Salaried Class has suffered and will continue to do so for the times to come ( pay TAX for nothing )
For a property which is actually worth 10 Lacs ( compared to anywhere else in world ) you will end up paying 50 lacs and slog yourself for 20 years to repay loan
Only way you may make some comfort is to buy under construction projects but hey there is a catch too – How would you pay the installments and the rent together !

Good Luck – I am happy to be out of this !

Anonymous said...

Can someone tell me where is the money going to come from for all the debt piled up by the builders and the home buyers?

Dreams turning into nightmares??

Anonymous said...

@NRI forever

Can you tell me which sector you work in. I am also planning to move to Dubai and any heads up will be welcome.

Thanks,
Kanu

Anonymous said...

NRI forever

Do you all pay any income tax, property tax or insurance in Dubai? Does your employer give you free housing and car? How much rent do you pay for a 1400 sq ft house/apartment in Dubai.

Anonymous said...

In Dubai 5% of the Indian expatriates are doing well, 45% hand to mouth category, and the rest 50% just survive. There is lot of racism too. For eg, businesses managed by western expatriates like banks, oil companies, trading establishments prefer certain section of Indian expatriates, Govt. Depts prefer to have Indians who have something in common with the management etc etc. Needless to say that religion plays a great role. I hold a masters degree in chemical engineering and report to a Goan guy who has no formal qualifications other than rubbing shoulders with the American/British. He is an international staff whereas I fall in asian expatriate category. Not that i am complaining. This is the order of the day here. I am paid well,at lest 5 times I could earn in india plus all the perks like accommodation etc etc
If any of you want to come here, be prepared to compromise your pride, perception . Other than life is good. At the end of the day, that is all it matters

Anonymous said...

anon in Dubai

I have MSCHE plus MBA but in good old USA having to pay tax, insurance, home mortgage, car, childrens education in private school/college, and for trips to India. End of the day there is no savings...So Dubai may be a better option. Are you all hiring...

Anonymous said...

This story is so predictable that it pains me to read it.

Housing inventory in Beijing’s Tongzhou totals 20,000 units
11:15, May 26, 2011

Tongzhou District of Beijing, where housing prices were once close to that of Beijing’s CBD area, has come to be an “outcast” of Beijing’s housing market because of the adoption of the housing purchase restriction policies. It will take seven years to consume the 20,000 units of housing inventory in Tongzhou that are worth more than 10 billion yuan. The sharp decline in housing demand has caused real estate developers to adopt new pricing methods to postpone housing sales.

Anonymous said...

Guys, here's a good one

Want a house? Build a shanty!

http://www.mid-day.com/news/2011/may/300511-Medha-Patkar-struggle-house.htm

Better hurry before the shanties are occupied by our gujju marwari banias

Good luck in your venture

shailesh said...

The biggest issue with Indian (especially Mumbai) real-estate, I have is money made by all people except folks involved getting a house to you. This are folks like Politicians, Babus, Mafia/Gangs & Builders.

The worst off are Land owners and Construction workers. Most land construction workers are paid pittance. The cost of construction (including labor and material) is at most Rs 1000 per sq ft. The asking rate for such a flat can be Rs 10,000 per sq ft. Assuming even if the land costs Rs 3000 (I believe that is TDR price), that's over Rs 6,000 per sq ft given to all middle men. This is ridiculous. I can understand some overhead for things like permission and builder's project management skills, but it seems most of the money is pretty much going to politicians, babus and mafia, which really does not add much value to housing process.

Jayant said...

http://www.thehindubusinessline.com/industry-and-economy/banking/article2026797.ece

May 17, 2011

HIGHER NPA PROVISIONING

~ The sharp increase in SBI's non-performing asset (NPA) provisioning to Rs 3,263 crore this quarter, from Rs 2,186 crore was the result of the bank trying to improve its provision coverage ratio, in line with RBI norms. Additionally, asset quality also slipped as is evident from the gross NPA ratio going up from 3.05 per cent in March 2010 to 3.31 per cent in the March 2011 quarter . To provide for additional slippages, coupled with improvement in provision coverage, led to higher loan-loss provisioning this quarter and for the year.

~ SBI was also hit by one time provisions (Rs 500 crore) recently mandated by RBI for teaser rate loans also taken this March quarter. To comply with 70 per cent provision coverage as of September 2010, SBI had to create a Rs 3,430 crore of counter cyclical buffer. Of this, it has set aside Rs 2,330 crore this year. Provisions for incremental NPAs would be on prudential norms given by the RBI in the recent monetary policy. Other banks did not see a similar rise in provisions

Anonymous said...

The bubble predicted by some bloggers has becoming elusive. The prices in Mumbai are increasing unabated. In Mumbai western suburbs, no real estate agent entertains you ubless you start talking in crores. 'lakh' seems to have disappeared from their vocabulary just like 25 paisa from market
Interestingly, people are buying. There isn't much inventory in the market so this is a sellers market. Prices quoted and negotiated yesterday are no more valid today.
Now, I am left to wonder where all this money has suddenly appeared. What will happen to us who don't own a home yet.

The future looks very bleak in Mumbai. I've given up the bubble concept and just planning to move from this god forsaken slum Mumbai

==> said...

Now, I am left to wonder where all this money has suddenly appeared.

==> India has seen solid job and business growth. Salaries have increased 10 folds in 10 years. Economy growth is increase in trade in goods and services. Not only this growth has increase locally but has increased globally.


What will happen to us who don't own a home yet.

==> Nothing will happen, you will live the way and survive you do today. May be you should ask for increase in your earnings for goods/services you provide to be in sync with all the growth.


The future looks very bleak in Mumbai. I've given up the bubble concept and just planning to move from this god forsaken slum Mumbai

==> Where you will move to? This RE shit is happening all over world. You can run but can't hide.

Real Estate India said...

Properties detail you provide is very important. Real estate sector in India is really attractive investment ground.

==> said...

Real Estate India said...

Properties detail you provide is very important. Real estate sector in India is really attractive investment ground.


==> You bitch. At least have decency to tune your sales pitch for RE as house/home/shelter instead of investment. All you think is money and screw everyone.

Anonymous said...

Vik:

New article please.

Pawan said...

There is a reason why prices are going up/holding steady even though there is no sales.
A recent survey said that 70-75% buying in new projects is being done by investors as opposed to end users. It is very very important for the builder lobby to not let the prices dip because if that happens, all these investors will run away. As long as these speculators (calling themselves investors) can keep trading the units amongst themselves at ever increasing prices, they don't need the end users. The end users will do really well to keep away from this nonsense.

Anonymous said...

Pavan,

Very well said. Agree 100%

==> said...

It is very very important for the builder lobby to not let the prices dip because if that happens, all these investors will run away. As long as these speculators (calling themselves investors) can keep trading the units amongst themselves at ever increasing prices, they don't need the end users.

==> Also end users are buying high priced RE, How? They are selling current RE they own, add 25 to 50L and then buy bigger tag RE. This is also driving RE prices up. This way only affordable option is lower end units like chawls, and slums. Once these lower ends appreciates in price, which it does, move to next level.

Question to ask is - who and how does one afford lower end shithole.

Mumbaikar said...

@=>
your logic defies gravity the way current prices of RE. If end user has that much money then he is no more end user he is investor. Just go and check with u r friends how many of them have 25 to 50 lakhs to pay on top of existing prices and buy bigger RE.

At current rate if I have 50 lakhs I will rather put my money in FD and earn interest. ROI is not even 2-3 % if I rent apartment worth 1 crore and pay hefty maintaince tag.

Even big bankers need retail investor in stock market to offload equities at higher prices, bankers won't make money by selling equities to each other. Similarly investor on RE need retail buyer to offload their holdings. So wait and enjoy firework. Delhi ab dure nahi hai!


Only way to get higher ROI by appreciating prices, which is not going to happen any more.

Anonymous said...

If RE was so overpriced, can anyone tell me if the Stocks that make up the Realty Index are being shorted. If so, has anyone seen the short interest increasing during the last 6-months. Any input is appreciated.

polt said...

@Pawan,
What you are describing is a sort of a reverse Ponzi scheme. Investors buying assets (house) simply in the hope of selling it to someone else for a higher price. They dont even rent it out for a cash flow, because a used house might sell for less.

Supply and demand cannot stay out of line forever. One thing we can all be sure of is that fundamentals will always assert themselves. All Ponzi schemes come to an end. If the houses are overvalued, then the last ones in the chain will be screwed.

Of course it could be simply the case that a small correction 10-15% could bring back genuine buyers.

Rahul said...

Projects in Raj Nagar Extension

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The project Ivory Tower coming up at Raj Nagar Extension, Ghaziabad on NH-58.The said project is in the same location as of Impressions compelled the group to launch another project In the form of tower, under phase 2 in the same locality of Raj Nagar Extension, Ghaziabad.

Keywords-> Flat in Ghaziabad, Project in Ghaziabad, Raj Nagar Ghaziabad, SG Impressions 58, SG Impressions Raj Nagar Extension

http://sgimpressions58.com/lp/ivory.html
http://sgimpressions58.com/lp/indigo.html

SG ESTATES LTD
105-106, Deepshikha Tower, Rajendera Place, New Delhi-110008
Telephone: 011-42323230 (Hunting Lines)
Fax: 011-42323244
Email: -info@sgestates.in
Call@ 9999008503
http://sgimpressions58.com
http://www.sgestates.in/

Rahul said...

Projects in Raj Nagar Extension

Indigo Tower SG Impressions 58 phases -2 Raj Nagar Extension Ghaziabad, offers budget homes with facilities that fulfill the aspirations and demands of today's home seekers.
The project Ivory Tower coming up at Raj Nagar Extension, Ghaziabad on NH-58.The said project is in the same location as of Impressions compelled the group to launch another project In the form of tower, under phase 2 in the same locality of Raj Nagar Extension, Ghaziabad.

Keywords-> Flat in Ghaziabad, Project in Ghaziabad, Raj Nagar Ghaziabad, SG Impressions 58, SG Impressions Raj Nagar Extension

http://sgimpressions58.com/lp/ivory.html
http://sgimpressions58.com/lp/indigo.html

SG ESTATES LTD
105-106, Deepshikha Tower, Rajendera Place, New Delhi-110008
Telephone: 011-42323230 (Hunting Lines)
Fax: 011-42323244
Email: -info@sgestates.in
Call@ 9999008503
http://sgimpressions58.com
http://www.sgestates.in/