Wednesday, August 22, 2012

Chidambaram wants builders to lower prices

With the Finance minister officially calling the top in housing prices is there any investor willing to stick in their neck out and buy at the peak

Economic times reports 

 FM wants builders to lower prices of unsold houses 

MUMBAI: P Chidambaram, the newly-appointed finance minister, has asked chiefs of government-owned banks to put pressure on real estate developers to lower property prices in order to get the economy moving. In a meeting held last Saturday with bank chiefs, the finance minister told bankers to impress upon builders the need to complete projects according to schedule and lower the prices of apartments that are ready for possession but not getting sold. 

"Builders are sitting on huge inventories (unsold apartments) which they are neither able to sell at the prevailing prices nor are they allowing others to buy by lowering the prices," a banker present at the meeting quoted Chidambaram as saying.

Full article here


209 comments:

1 – 200 of 209   Newer›   Newest»
SKG said...

The questions are -
1- why the banks with a bag of NPA would put the pressure on builders?
2- wouldn't it violate the expectations of the angel investors who are expecting fat returns on the stupidity of masses?
3-even if they do it there is going to be a lower limit to it, does that lower limit coincides with the budgets of a common man?
4-why would a common man (who has purchased a pigeon hole solely for making money)for 1 cr would like to sell it for 80L just for an example?
5- where will it end?

- SKG

Anonymous said...

Some of the questions about where it will end will be rendered moot after the economic depression hits some time within the next two months. Unoffical reports indicate a tsunami of job losses is about to hit.

Anonymous said...

All this is gimmicks and lip service to show to the frustrated middle class that government is "doing something" about home prices.

The real money lenders to the builders are the PE firms who have charged 20-25% coupon rates to these builders. Coupled with increase in input costs, no way RE prices are coming down in this scenario.

If and when push comes to shove, builders will stop building (they've already made tons of money in the boom) and abandon existing projects.

The retail buyer going for under-construction with their hard earned money is really playing russian roulette in this scenario.

Anonymous said...

I think this is lip service too and will not yield anything in the short term. Somebody said economic depression, I think something like that could serve as a catalyst....it's going to be a grand "ah-whoom effect" sooner or later. My guess is sooner, but when we least expect it to. I also anticipate a crisis which will shake the world to the core happening somewhere down the road. Gold is also topping out, so that this is not a safe refuge...I wonder what is?? Any Ideas??
Grand Ah-whooms

Anonymous said...

@SKG - "why would a common man (who has purchased a pigeon hole solely for making money)for 1 cr would like to sell it for 80L just for an example?"

That one is easy to answer. Because he thinks it will go down further and wants to cut his losses at 80L.

@Anon - "If and when push comes to shove, builders will ... abandon existing projects."
Agree. This is what has happened in Ireland/Spain. Might happen here too.

Anonymous said...

Gold is also topping out, so that this is not a safe refuge...I wonder what is?? Any Ideas??

Guns and bullets (lots of bullets)

The ultimate hedge!

Rustomji said...

I saw the rise and fall of the US real estate bubble and was stupid enough to buy RE in the middle of it. I was lucky to sell without making a loss before the housing crash got ugly.

I am seeing a strange similarity between the current attitude of banks+government, and what we saw in the US, a few months before the crash began. The government was in denial for a long time that there was a problem in real estate, specially, because constructions jobs were crucial to the economy. Then, the CDOs (read as NPAs for Indian banks) got burnt, and all hell broke loose.

Mr. Chidambaram has publicly admitted that there is a problem, which can only be solved by lowering prices. This means two things:

1. The losses made by banks due to Real estate NPAs will have a much worse political impact on Congress than money lost in real estate by Congress cronies if the home prices come down. They most have done the calculations. So, they want to drive the prices down.

2. Big investors from Congress/BJP in real estate must have exited real estate by now, because if they have booked their profits, the only thing on their list now if to protect their political interest, i.e, re-election.

So, brace for the crash, or get out as fast as you can. In any bubble, when the government admits openly that there is a "pricing problem", they are only admitting to the tip of the iceberg. This is to proclaim "I told you so!" in six months, after the crash hit the market.


GSM said...

Agree. This is what has happened in Ireland/Spain. Might happen here too.

And that is a good thing. Once the dust settles the speculators would have exited and only end user demand will drive project completion, so will be affordable to all. Of course during panic phase, some pigs get slaughtered.

Anonymous said...

@GSM - "Of course during panic phase, some pigs get slaughtered."

Most (if not all) speckers will lose money. The average speckers modus operandi is this -
Invest at early stage of building - Sell at late stage to end-user - Reinvest profits in early stage of another building - Repeat.


Very few of these are actually what would be called smart money. Mostly dumb money. People in India who profited from RE have ploughed back their undeclared profits into it. They will probably lose it during a correction.

Anonymous said...

"Some of the questions about where it will end will be rendered moot after the economic depression hits some time within the next two months. Unoffical reports indicate a tsunami of job losses is about to hit"


YOu are simply dreaming.

REBear said...

http://www.moneylife.in/article/facing-high-real-estate-loans-china-india-both-pressure-banks/27972.html

Anonymous said...

Take rest buddy

polt said...

A common refrain from the bulls here was that RE prices in third world countries will never correct.
Vietnam looks set to prove that wrong. See

http://www.nytimes.com/2012/08/23/business/global/23iht-vietnam23.html?_r=1&pagewanted=all

aam aadmi said...

@polt
But there's no corruption and black money in Vietnam. /sarc

We were discussing at lunch today, what would it take for prices in an area to come crashing down.

The answer is...just one panicky speculator who is neck deep in debt. This time is different but some things never change. LOL

Anonymous said...

Few months back investors and real estate bulls were denying the fact that there is a slow down in real estate and prices would continue to rise.....
Now these folks at least have realized that there is no way real estate would rise further.....
Next when the bubble hits they would say it wont fall below 10-15% and so on.....
The Investors and poor retail buyers who bought at high prices are in for a jolt now.
Enjoy the slide.

aam aadmi said...

Greece is selling it's islands
There's lot of RE there...for RE bulls.

http://www.zerohedge.com/news/greece-ready-start-selling-its-islands

Anonymous said...

BUT GUISE BLACK MONEY! THE IT GUYS! THE CORRUPT POLITICIAN!

back to gold

Bidyut Malakar said...

Chidu says there approx 5 lakh unsold inventory in Mumbai region. Hope after the crash some sanity will be restored and people will be able to buy affordable flats/houses.

If there had been a bill which would have prohibited the speculation by investors, then we would nt have seen these long bull run in RE.

Anonymous said...

So far we're only worrying about unsold inventory. When prices correct, a lot of mortgages will be under water.

Those who took out 15/20 year loans in the last 5 years have no incentive to pay back loan amount with negative equity.

Infact, any rational person would stop paying at that tipping point.

Anonymous said...

If Chiddu was worried about high RE prices in 2005 I might have believed him.

It's almost criminal of him to share this "gyan" after countless innocents have been roped into this ponzi scheme.

India needs another revolution!

Anonymous said...

WoW !!! We Live in a Funny country. Law applies to people who bought before 2010, and after that it is 1% VAT... Ha Ha Ha...

Pay 5% VAT for flats bought from 2006-10

Several Mumbai-based developers said they would soon send VAT collection notices to such flat purchasers.

The new burden on a customer who bought a flat at Rs 50 lakh works out to a minimum of Rs 2.5 lakh.

The Maharashtra government subsequently reduced VAT on sale of flats to 1% from April 1, 2010. The government, however, is now levying 5% on the flats bought between 2006 and 2010, putting thousands of buyers into a fresh financial spot.

MCHI-CREDAI said each flat buyer in Maharashtra will have to pay up to 5% additional taxes for flat purchased by them along with interest at 15% per annum and penal interest at 25% that the state government is levying. Flat buyers are already reeling under the pressure of 3.09% service tax which has been implemented by the central government.

Anonymous said...

@Anon - "Those who took out 15/20 year loans in the last 5 years have no incentive to pay back loan amount with negative equity."

That might not happen here. The RBI has always been strict about downpayment guidelines. Hopefully we have not had zero down mortgages like in US/Canada.

But I remember reading that some people take personal loans to pay the downpayment amount. So effectively its a zero down loan.

Anonymous said...

Based on the comment ^^ uptop -

I think its just not worth becoming a home owner. Everybody is out to slaughter the goose that lays golden eggs. Stay on rental. I am seeing that investors who have bought flats are so desperate that everything is loaded in the renters favor nowadays.

samix said...

So now one day the government of India can decide to tax me retroactively for breathing for the past decades!

Desi Babu said...

So now one day the government of India can decide to tax me retroactively for breathing for the past decades!

Yes, but you can claim carbon credits for breathing polluted air and trapping it in your body.

samix said...

LOL! Carbon Deduction in my tax statement....

SKG said...

LOL! Non smokers will demand credits for second hand smoke too.
Another credit could be for shitty fumes which we smell on the streets-:)
-SKG

samix said...

Sorry SKJ, keeping in spirit with the Asian games "Indian standard of cleanliness" we should accept the "Indian Standard of Streets" as normal...So sorry no credits for that!

Anonymous said...

"Sorry SKJ, keeping in spirit with the Asian games "Indian standard of cleanliness" we should accept the "Indian Standard of Streets" as normal...So sorry no credits for that!"

I believe those were the Commonwealth Games (not Asian Games).

REBear said...

I think you all should be worried about saving your life if real estate crashes. Bears should pray that RE doesn't fall much quickly otherwise this is what has happened inner Empire State building in NEw York City is going to happen everywhere in India :

http://online.wsj.com/article/SB10000872396390444270404577609130688482626.html

aam aadmi said...

@REBear
Do you stay in US ? I think you are just getting paranoid. Ever heard of anyone going cuckoo in India and spraying other people with bullets ? Doesn't happen here. First it's not easy to get guns. Second it's not so easy to kill so many people with knives.

Here I'd be more worried about stepping into an open manhole or getting crushed in Monsoon by some municipality built wall. Even in US people have simply lost perspective, some 30k-40k people die each year from road accidents in US and people worry about gun violence.

Someone please tell them that they are more likely to die by the hands of some idiot driver than some crazed lunatic.

polt said...
This comment has been removed by the author.
polt said...

http://www.greaterfool.ca/

The bubble now bursting in Canada. Who knew, they too had a black market in homes similar to ours. Speculators would buy at early stage, but not register with govt (i.e avoid stamp duty). And at a late stage of construction flip the property to an end user. But now many are stuck with unsellable properties and are offering big discounts to offload.

But wait we are different. Our speculators are different and will sit quitely as they see their investment decline in value before their eyes :) . Its different here goddamit.

aam aadmi said...

I know this is off topic but just to clear the air.

Here's another report...the incident looks more like a targeted murder which went wrong rather than a crazed lunatic going trigger happy and spraying innocents.

A great lesson in how media distorts our view

http://indiatoday.intoday.in/story/empire-state-building-shooting-police-shooter-former-colleague/1/214634.html

SKG said...

>>>
Someone please tell them that they are more likely to die by the hands of some idiot driver than some crazed lunatic.
>>>>

I tend to agree with the statement.why dont we see the obvious? This looks like something to do with human nature /psycology.

-SKG

aam aadmi said...

http://www.guardian.co.uk/world/2012/aug/15/spanish-robin-hood-sanchez-gordillo

Last week, and not for the first time, Juan Manuel Sánchez Gordillo found himself in the Spanish headlines. Dubbed "Robin Hood" by El Pais, Sánchez Gordillo, the mayor of a small town in rural Andalusia, led farm labourers into supermarkets to expropriate basic living supplies: they filled trolleys with pasta, sugar, chickpeas and milk, left without paying, and distributed the loot to local food banks. His reasoning was blunt: "The crisis has a face and a name. There are many families who can't afford to eat."

You can't make this stuff up. It's happening smack in the center of western world.

Anonymous said...

India lends $1 billion to 3 Euro Nations, IMF
Gayatri Nayak, ET Bureau Aug 17, 2012, 05.12AM IST

Shrinking foreign exchange reserves coupled with rising local demand for foreign currency has not deterred India's central bank from lending to the International Monetary Fund (IMF) and the troubled European troika of Ireland, Portugal and Greece.

India has lent an aggregate of over $1 billion through the International Monetary Fund (IMF) under various arrangements. Under the fund's Financial Transaction Plan, India — which is designated as a creditor nation by the IMF since it no longer borrows from it — has lent $221 million to the three countries between October 2011 and March 2012.

Anonymous said...

As soon as Greece is thrown out of Euro, there would be a panic all across the World. I think that would trigger the RE bubble burst in mamy countries as it would take 6-8 months for the ill effects to ease. Massive recessions are coming.

RIght now Obama wants them to delay it till US elections. Lets see if it gets delayed.

KSM said...

The Household savings as a percentage is GDP is crashed to 7.8%. This is really a sorry state of affairs. But still the idiots who are running the show is not accepting this mistake and asking for further rate cut. Nobody is depositing money in the bank. Even Indians investment in equities are on the decline.

Many Indians who are investing in Real Estate and Gold. I do not know much about Gold ( even though I am sceptical about gold as an investment), but I am certain that people who invest in Real Estate will face the shock of their life soon. If Japan could not stop their real estate slide. Even mighty US could not stop their RE slide. who are we?

coming back to the point, I know many people who invested their hard earned money in real estatethinking that they can sell the real estate as their retirement fund. very interesting indeed.on one hand Chidambaram asking people to invest in money market instruments. On other hand he is pressuring RBI to cut interest rates. what a farce? We pride ourselves as a country to save and we boast exactly this is the reason that our banking sector is doing good. Now that is gone. What will happen next?

DON'T WE NEED TO RAISE INTEREST RATES NOW MR.CHIDAMBARAM?

Anonymous said...

Chiddu will not raise rates. As usual like in the past he'll make a chodu of public. Inflation is good as it is growth and they keep on printing and borrow. Wait till Moodys downgrades the country to junk status.

GOI is worried about RE prices not to fall. If they fall, there will be riots in the country. They will try to contain them where they are now but will not want them to fall. So interest rates will not go up till next elections. They can go down if recession hits due to Greece falling out of Euro but rates will not go up. Inflation would be a killer though.

Anonymous said...

Thank god the blog is dead. Everybody is tired of typing the same old comments. This is like the school kids who memorise their answers the previous night and write them in the next days exam, irrespective of which question was asked. The same is the story of the blog

Realty Edge India said...

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Realty Edge India said...
This comment has been removed by the author.
Anonymous said...

Commercial RE rents down 15% to 50%
Wonder how the builders will pay back the loans ?

http://www.business-standard.com/india/news/commercial-realty-demand-dips-30-rentals-down-15/484572/

REBear said...

If open ended QE, one with no limits on printing and with no committed end time, is approved by FED imagine what kind of inflation we are going to see before the existing as well as upcoming bubbles across the world start bursting :

http://www.reuters.com/article/2012/08/26/us-usa-fed-stimulus-idUSBRE87P03820120826

Anonymous said...

Job offers are pouring in. There is no slowdown in India. Soon salaries will start rising

http://economictimes.indiatimes.com/news/news-by-industry/jobs/job-offers-from-microsoft-hul-ril-goldman-sachs-and-others-pour-in-as-recession-fails-to-affect-iits/articleshow/15852707.cms

aam aadmi said...

@above
What nonsense. How many jobs are those in total? Microsoft and Goldman Sachs are at the very top of the pyramid. What matters is how many jobs are being created at the bottom and middle.
Even my company is hiring but those are premium jobs not accessible to everyone. To counter your point Motorola just fired an entire division in my adjacent building.

Even in US there is a shortage of highly skilled IT labor in Silicon Valley, (some ten people in my company just made a switch) but the vast majority of people in US are unemployed. (unemployment figures are biased and unreal, real rate is at around 17-20%).

Do you have a link for new factories being set up ? coz that's what matters. Not everyone can be a top grade programmer.

Anonymous said...

An example of prices coming down in mumbai..

27,47,500 ( Not Negotiable )
1 Bedroom | 615 Sq.Ft | Rs. 4,467/Sq.Ft | New Property





Description : ZERO BROKERAGE with a Discount of Rs.20000/-. Welcome to S.M.R Properties,we are one of the finest Real Estate Agents in Kharghar, Navi Mumbai. We offer properties in an UNBELIEVABLE PRICE.The Actual Price of these Property is Rs 4700 per sq.ft but S.M.R Properties is offering a huge discount to its customer. The Discount Price of these Property is Rs 4500 per sq.ft.Plus an additional Discount of Rs 20000/- (From S.M.R Properties).Save up to Rs.1,40,000 and more.Area available: 590 sq.ft, 615 sq.ft, 630 sq.ft, 640 sq.ft.This Offer ends on 8th August 2012

Anonymous said...

I havent seen more potent example of crash then the price graph with 30% drop.. is this real?

http://www.makaan.com/mumbai-south-west-property/vile-parle-west-property/2bhk-apartment-for-sale-in-vile-parle-west-1947266-3-0.php

Anonymous said...

To anon above.. are we there? these are some posh areas in mumbai..



http://pricetrends.makaan.com/property-price-trends-for-buying-property-in-mumbai-south-west/?sc=S288&pf=1&pt=3&tm=3

Anonymous said...


In a one apartment complex (occupancy started in 2010) that I visited in Bangalore, the builder is quoting 1cr+ for a new 3bhk home. But many investors in the same complex are selling 3bhk homes for 80L. These homes were/are currently rented out,

I know this is anecdotal, but it seems that investors are getting realistic about pricing (esp for used homes even if the house was used for less than a year).

Anonymous said...

@Anon - "these are some posh areas in mumbai.."

I think we misuse the phrase 'posh area'. It usually means high end homes + greenery/parks + high end restaurants/salons etc.

In Mumbai, only the home is high end. Everything around is hardly posh.

BLR Guy said...

In a one apartment complex (occupancy started in 2010) that I visited in Bangalore, the builder is quoting 1cr+ for a new 3bhk home. But many investors in the same complex are selling 3bhk homes for 80L. These homes were/are currently rented out.

Bangalore has a HUGE number of "investor" properties that are simply locked up. Some of them don't even have wardrobes and toilet fittings to enable renting. Investors don't have the money/time to do these up. These apartments are just four walls with doors and windows. Many of these properties have now started coming on the market as investors are getting realistic about returns and the future of the Indian economy.

Expect to see some serious price adjustments in Bangalore in the coming months!

Anonymous said...

Commercial real estate dips 30% in Bangalore. Can some of these be re-tooled into residential spaces? If so we are looking at a collapse.
http://www.business-standard.com/india/news/commercial-realty-demand-dips-30-rentals-down-15/484572/

Anonymous said...

Government & Banks are not encouraging savings in cash or investing into liquid instruments. If am opting for FD, they are taxing highest bracket leaving me returns much below inflation. Even indexing i.e. adjustment with inflation is not allowed.

Where as for home buying, the buyer is getting tax benefit on interest contrary to the TDS for FD investor. Even if property is fliped after 3 yrs, there are many ways that one can get capital gain exemption. An ordinary person is rushing to acquire property as soon as he accumulate upfront money.

This skewed regulations is creating demand for RE leading to price rise. If the price raise could have been speculative as like equity, housing bubble must have been crashed by now. It has not happened so far.

Anonymous said...

@BLR Guy - "Investors don't have the money/time to do these up. "

True. More likely they dont have the money. The average investor would do this
For a 60L apartment before construction, put up 20L. When construction starts/half complete, sell to end user for 70L. So essentially a 10L profit on a 20L investment.
Now with end users staying away, these investors have to fork up the remaining cash. Cash which they dont really have or have to borrow at eye watering rates. Bulls on this blog think that most people in India are loaded with cash. But that is simply not true.

These investors will now try to sell quickly and this is why we will see (already seeing) some correction in prices.

Anonymous said...

// Now with end users staying away, these investors have to fork up the remaining cash

The scenario you mentioned happened in USA. No chance this will ever happen in India. People in India are flush with cash and will always look for oppurtunities to buy

Anonymous said...

@Anon - " People in India are flush with cash "

Really? Why then are auto and home sales almost as bad as in 2008 ?

Anonymous said...

Even we are plush with cash but we are not buying.

Only a fool would buy. Either them or either the one with black money.

Almost 50% are those who have had investments in swiss banks and now that there is pressure on them to disclose, the money is coming here.

But once the money stops, the game will stop.

Once the music stops, everyone will lose their CHAIR :) (no pun intented)

REBear said...

@Anon at 12:34 AM

The scenario you mentioned happened in USA. No chance this will ever happen in India. People in India are flush with cash and will always look for oppurtunities to buy

Oh yes, I forgot we are different. Indians in general are wealthy and are flush with cash and thats the reason Real Estate in India is highly priced, correct ? Alas, even with so much of wealth the rentals here are so low as compared to developed world. Do you find a 3 bhk apartment for as low as 400$ in posh localities of US or Singapore ?

If landlords are so rich why do they care to rent such a precious real estate for less than 400$ ? If tenants are so rich, why are the rentals so low ? And every one in India is either a tenant or a Landlord, so it appears both are not rich so you are 100% wrong.

samix said...

I am an Indian and an NRI and I am not flush with cash.

Anonymous said...

This thing about NRIs having money is nonsense. They do make good money but it is spent in the quality of life. A person making $100K in US which is a good salary as per US accounts, the take home is $60K after taxes etc. Then health insurance, car insurance, home insurance, car payments etc. take away quite a bit. Eating out, vacations etc alongwith a sizeable mortgage takes away almost all of it.

India is a Kleptocracy and democracy only on papers. Land of thieves. Indians are up for a major shock and surprise of their life soon.

aam aadmi said...

Indians are flush with cash

I haven't heard of a more absurd statement. We are one of the poorest countries on the planet in almost every aspect.

Anonymous said...

This thing about NRIs having money is nonsense. They do make good money but it is spent in the quality of life.

True. And it's not as if they have a choice, like they have in India. In the US for example, they usually have not choice but to stay in a place that is fully air conditioned, has abundant electricity/water, etc. If they have to travel, they almost always HAVE to buy a car. And when they buy they HAVE to pay atrocious amounts on insurance, and maintain as per the local safety inspection laws. Many families choose to stay in smaller accomodations than legally allowed (i.e 1 b/r insted of 1 b/r), in order to be able to save some money.

Anonymous said...

Those who proclaim that there is a housing bubble in India must also state what alternative investment vehicles there are for the average Indian. Deposits are a fool's game with real interest rates permanently below the rate of inflation. Stocks are a rigged game. In the US, Bernie Madoff got 150 years in pison. In India, Ramalingam is scot-free, out in "bail" with a get-out-of-jail-free card handed by the supposedly "independent" and impartial Supreme Court for running pretty much a similar operation as Madoff. This is for a man who admitted fraud and liability. He is still out of prison. I can only imagine what the situation is for someone who vehemently denies all charges. Listed company executives in India now know for an absolute fact that they can get away with anything, including the most brazen misreporting of financial information. Satyam has set a powerful precedent that no one can TOUCH you if you are moneyed and have the right connections in India.

So what else does an average bloke do? Invest in overseas currencies, stocks or bonds? Can't do. Need permission from RBI goons.

So the sole remaining option which is "safe" (again, by Indian standards) is to buy something you can touch and feel and which you have some semblance of control over without counterparty risk. That asset is of course, real estate.

Anonymous said...

We are one of the poorest countries on the planet in almost every aspect.

On the flip side, India (along with China) has added the most millionares (in dollar terms) in the last 10+ years. And these are official stats. Unofficially we all know how many govt. officials making 10,000 rupees per month have crores stashed in property and cash.

In a country of 1,200,000,000 all it takes is a small fraction to be flush with money to skew the averages.

Example, if you club 1 Ambani residence with entire population of Dharavi and took an "average" reading of income/affordability you would get a very skewed result.

As far as RE is concerened no builder in any major city is targeting the true middle class earner. They are mostly targeting the top 0.1% earners which could also number in tens of thousands and maybe even lakhs for a major metro area like Mumbai.

Anonymous said...

BTW. developed world home ownership is nearly at saturation point. US has 60% home ownership

India is probably 20-30% at best.

It is important to differentiate "home" which implies a modern shelter with adequate space, toilets etc. vs. simply having roof over one's head.

Which is why it is doubtful that RE prices will crash since there will be genuine demand in cities as far as the eye can see.

Unlike the Western societies, Indians are not prone to letting economic factors get in the way of postponing marriage / having kids etc. Witness our 1.2 billion inspite of dire economic conditions for majority. So supply of greater fools is limitless...

Anonymous said...


So the sole remaining option which is "safe" (again, by Indian standards) is to buy something you can touch and feel and which you have some semblance of control over without counterparty risk. That asset is of course, real estate.


Very good point and something that bears out in experience as well.

One additional point to note that even within RE - built up property is safer/safest. Hence the builder monopoly.

BTW. most RE "investors" are actually retirees in their late 50s/60s who are putting their pensions payments into EMIs for 2nd / 3rd homes. They've seen the value of their liquid savings evaporate with inflation and are trying to salvage something for future generation.

Anonymous said...

"Investors" flocking to book flats in Pune:

http://www.flickr.com/photos/ravikaran/7720967656/

This was a few weeks ago! Another proof of the sheer volume of greater fools that exist. This builder sold entire project without even lifting a single finger. Construction site is in the middle of nowhere and is will be a barren landscape for next 5-10 years atleast!

What slowdown?

Credit: http://ravikarandeekarsblog.blogspot.com/

Anonymous said...

Anon above:

Jab Gaand phategi then all these buyers will become sellers and put a pressure on RE prices. The inventory of unsold homes will rise so high that there would be no buyers and builders would have to stop building.

India has a supply of houses till the year 2030 and the currennt prices are also of year 2030. So buy now and stay at these prices and see declines or wait and buy at dip in the next few years at 50% of the price.

Anonymous said...

^^^ RBI policies tore you a new one if you were on fixed income or saving in rupees these past few years.

polt said...

@Anon - " is to buy something you can touch and feel and which you have some semblance of control over without counterparty risk "

Somewhat agree. Firstly, we did not have this mad rush for owning multiple homes before credit became cheap and easy to get. Imagine people calling and pestering you to take a loan in the 1980s! (I know most folks did not have a phone then, but the point about easy credit still stands).
Secondly, folks in many Western countries prefer RE over stocks. (Canada/AU/France come to mind). These countries have liberal currency regimes, but still people prefer RE.
In RE, counterparty risk is replaced by liquidity risk. One, you can be stuck for a long time with unsellable property (Ask bombay builders :). Two, you cant sell a part of it.

I still say this is a credit induced bubble, and like other credit induced bubbles this too will end.

polt said...

Continuing ...

People bought RE because the net return (capital gain + rental yield - maintenance - tax) was much better than other avenues (FD/stocks/bonds).
Now that capital gains are slowing down (possibly zero or negative in some cases), people will start taking a hard look at rental yields and prices will adjust accordingly.

The home price bubble in India is simply due to a land price bubble. Construction costs have largely tracked inflation.
The same thing has happened in AU. See http://www.macrobusiness.com.au/2012/08/the-land-bubble/ for analysis and some insightful comments from readers too.

We are not different.

Anonymous said...

India is a Kleptocracy and democracy only on papers. Land of thieves.

India is like a Saudi Arabia except you get to show up once in a while and pick your favorite prince. Bottomline, your only choice is to vote for the royal family.

Those who try to go against the elite are swiftly made aware of their real place in society.

SKG said...

Gentlemen,

I think in the current mad rush we should have a discussion on the pros and cons of the following, (because root cause is only one, everybody wants to generate income) -

- FD Pros, & Cons
- Stocks, Pros & Cons
- RE, Pros & Cons
- Gold, Pros & Cons
- Other commodities for generation of income, Pros & Cons.

I know some of them have been discussed partially in past, but lets create an exhausive list so that we can refer to it later and see how it turned out to be over the time.

-SKG

skeptic's ghost said...

I usually dont like this blog, as it almost is an RE advertisement collection, however Ravi Karandeekar the RE blogger has some alarming news about bubble rates in smaller cities in Maharashtra like Kolhapur, Nashik, Aurangabad going up as high as 40 lakh, and plots as high as 60 lakh -

Poorly written but very candid piece on the situation in semi-urban India

http://ravikarandeekarsblog.blogspot.com/2012/08/Flats-in-Kolhapur.html

aam aadmi said...

@skeptic
Thanks for the link. The madness continues unabated. If you talk to ordinary folks, everyone is bullish about something or the other, usually it's the field they are in.
You talk to an IT guy and they will say that IT will keep going up, to anyone in banking and they will say that RE will keep booming. If the IT guy has a mortgage then they will be bullish on both.

I had a chat with someone in auto sector and they simply shrugged off the recent decline in car sales. So everything should keep going up as long as everyone is alive, if only the real world worked like this.

PropTiger.Com said...
This comment has been removed by the author.
polt said...

During the previous recession in India (96-2002), RE prices fell 50% in Mumbai.

This time, if we have a prolonged slowdown, then prices will fall all over India.
Inventory continues to pile up. Some investors are capitulating and lowering their prices. If investors are lowering prices, then the builder too will have to do the same.

Anonymous said...

For anyone who thinks housing is expensive in India, be happy you aren't in northern Iraq where they have the mother of all bubbles.

No Water, No Electricity, No Roads, but houses worth 3.5 Million Dollars. Sounds familiar? See here:

http://www.youtube.com/watch?v=pnGBLZCq35w

Anonymous said...

For those who suggest that high housing prices will cause social unrest, remember this: THERE IS NO SOCIETY IN HUMAN HISTORY WHERE PEOPLE HAVE REVOLTED FOR HIGH HOUSING PRICES. In fact, if anything, the reverse is true, people have revolted when house prices aren't high enough:

http://www.planetpropertyblog.co.uk/2011/10/27/chinese-homeowners-riot-over-falling-prices/

Most people around the world are wealthy (especially in India) and have plenty of money to burn. I'm yet actually to meet anyone who meets "a dollar a day" as the UN idiots keep blabbing over day after day after day. Have you ever met anyone making "a dollar a day" in India? It seems to me that Indians are just doing just A-Ok, flush with cash and ready to spend it on malls, shopping, luxury vacations, luxury cars and RE.

Anonymous said...

@4:53PM even the low cost housing seems so much better than the 1cr pigeonholes called apartments in India

Pawan said...

@Anon 4:58
Have you ever met anyone making "a dollar a day" in India?
You would see them only if you didn't have your eyes shut stupid.
If a security guard earns 5000 pm and has a wife and two kids, then per person it comes to less than dollar a day.

Anonymous said...

@Pawan - "You would see them only if you didn't have your eyes shut stupid. "

Aptly put. I cant believe the number of clowns who come to this blog claiming that 'most Indians' are rolling about in wealth.

Anonymous said...

// -- Most people around the world are wealthy (especially in India) and have plenty of money to burn. -- //

Post of the century.

aam aadmi said...

Have you ever met anyone making "a dollar a day" in India?

Yes.

The guy who picks up garbage from my house, the lady who brooms our apartment complex, the milkman (yes they still exist) who delivers half a liter of milk in the morning. The corner guy who irons my clothes, the guard who mans the gate in our office and the lady who cleans my office desk everyday.
The world is full of people who live on a dollar a day. You see them everyday and they influence your lives everyday.

Get out of your ivory tower.

Anonymous said...

The guy who said most people are rich is right because the poor in India are treated worse than animals - they aren't counted as human
Sad but true

Anonymous said...

^^ Sadly I have to agree with you. All those espousing virtues online let them put their money where their mouth is.

Last I heard "educated" middle class Indians erupted in protests when certain progressive schools tried to enforce some semblance of equality by admitting poor kids in.

Anonymous said...

Problem with most people is when they're growing up as children they are brainwashed to "aspire"/"look up to" the rich and offered dire examples of the poor as "losers" or folks who aren't successful simply because of inherent character flaws or even worse.

A handful of generations of this indoctrination and you'd need to be a rare thinker to see the exploitative systems that have been put up which need to be pro-actively undone to have a semblance of a "free" society.

Anonymous said...

To conclude, it's not the poor that have to change. The flaw is in the thinking of the rich and educated that needs to change.

Throughout history, it's the rich and educated who have justified various atrocities, from owning slaves to forcing caste system, by blaming the poor victims.

In hindsight, we wonder how this could have happened and how on earth could well educated and otherwise well meaning and moral people justify such actions. It's societal level brainwashing.

Right now our society is worshipping folks like Steve Jobs and others. Perhaps 100 years from now, folks will wonder how did this man command the adulation of so many while at the same time enriching himself and building his corporate "empire" by exploiting Chinese slave workers...

PropTiger.Com said...
This comment has been removed by the author.
aam aadmi said...

Tax proposals to make capital gains tax free.

http://www.firstpost.com/business/shomes-tax-nirvana-make-india-a-mauritius-like-haven-441359.html

Here we (middle and poor class) are, paying taxes directly (through income) and indirectly (through inflation), and they want to make capital gains tax free.

aam aadmi said...

http://www.thehindu.com/business/Economy/article3859110.ece

Hang tight folks

quote from the article

As the Finance Ministry has told the Petroleum Ministry that it has no funds left to subsidise fuels, the prices of petrol, diesel and LPG are likely to be increased next week, after the monsoon session of Parliament concludes.

Emphasis...it has no funds left

Anonymous said...

Not sure if people here follow the commodities market. But iron-ore prices have crashed this year - http://www.businessinsider.com/chart-of-the-day-iron-ore-is-getting-destroyed-2012-8

The China asset bubble is bursting. Iron ore and copper are piling up at Chinese ports. Steel also in abundant supply, prices falling. expect steel mills to shut down.

Our high flying steel and mining robber barons will soon be at the govt doorsteps asking for help.

China is hit by a bad problem of oversupply - from toys to cars to homes. See http://www.ft.com/intl/cms/s/2/8e2a74e4-eac0-11e1-984b-00144feab49a.html

jay said...

More things there is no one to buy ipl team any more.

Sahara real estate acquisitions might come into the market. oops we thought everyone in india is rich and hold on to the properties till every dump in small cities sells for 1 million dollars.

Anonymous said...

Urban India is, and always will be, a rich country. Every house in urban India is worth at least a quarter million dollars (and even that will get you only probably a flat or a wreck if it is an independent house).

Anonymous said...

could any of you guys name 1 or 2 names, friends or relatives, who bought properties for crores and sold for a huge loss?????? you must know many?????? these properties, sold for crores happend to be sold to the elite. It does not matter to them if the market crashes 100%, it is all house moneys for them. They will keep making millions next year, year after next and and year after next. You, the 99.9% dont matter.

IF I made 50 crores illegally, and then decide to buy few flats, does it really matter to me if the flats are worth 20 crores 5 years down the road???? If i sold my land that was worth 5 lakhs 10 years ago, but i sold for 1 crore, then bought a flat for 1 crore, do i really care if the real estate market crashed???

Anonymous said...

Imagine the Indian RE as the dot com bubble, and imagine you sold your stocks at the top, ie lets say you sold a dot com( pets.com, breakaway, athome,broadcast.com, etc etc) stock for 100 dollars, then you flip the 100 dollars to a CSCO, MSFT or a IBM( blue chips). Market crashes, dot come stocks go bust, and your csco, msft and IBM also goes down 50%, but you still come way ahead. This is the INdian stock market. ALL the money is going into the blue chip stocks, ie the real estate. IT will go down, but these guys will still come way ahead.

Anonymous said...

@Anon - " but i sold for 1 crore, then bought a flat for 1 crore, do i really care if the real estate market crashed?"

1. You will certainly care if bought the flat as an investment.
2. Event if you do not care, what about the guy who bought land from you at 1 crore?
All transactions have two parties.

Anonymous said...

All transactions have two parties

What he's saying is the elite have already made their money. The chumps are off whom the money has been made. If you don't have multiple crores stashed in an offshore account, you're a chump.

Here's how the game is played.

The land was/is sold at exorbitant prices (under the table cash dealings) On paper prices are minimized to avoid scrutiny, taxes, stamp duty etc.

The politicians/businessmen route the (black) money from land deals to offshore tax havens like Mauritius and Gulf countries. Wealthy NRI lobby operates hand-in-glove in these countries to obfuscate the origin of the funds.

Then that same money re-enters the Indian economy in the form of PE (white) earning 25-30% interest rate.

This game has been going on for at least last 5 years (perhaps more)

The real victims are the innocent bystanders (chumps) who have to take on enormous debt when they buy flats.

Whoever bought flat in last 5-10 years helped put money in politicians coffers allowing them to dispose off their rural land banks at inflated prices.

You also made 25-30% interest payments possible for PE players (basically a back channel for black-to-white conversion)

Not to mention you paid inflated cement/steel/copper prices allowing said company execs. to enrich themselves with record bonuses and paychecks.

Ofcourse, you paid for builder profits.

And bank execs made a fortune as well.

Not to mention, marketing campaigns, brochures promising utopia etc.

Now, please tell me why shouldn't Indian RE be more expensive than US.

Infact when you consider the amount of hungry mouths a simple and selfish act of purchasing a flat can accomplish we should all encourage this noble cause.

Anonymous said...

fore Fraustated readers who cant do much are taking out their anger here.

I guess one thing we can certainly do is that educate our friends and circle to take out corrupt politicians and in particularly Italiano pizza gang asap. Imagine with no sales prices are going 20% to 30%, what will happen is QE3 comes and some growth will come, then we had it.

Bachera Indian

Pawan said...

No much detail but Mish shedlock writes about India property bubble.

http://globaleconomicanalysis.blogspot.in/2012/09/property-always-good-investment-says.html

skeptic's ghost said...

The only solace for people waiting for prices to come down is to save in US$/CHF/GBP and hope that the Indian rupee crashes to 80/90 per $ - that would mean a Rs 1 crore property in 2012-13 is equal to ~ Rs 40 lakh property in Rupee's peak value of 38 in 2007 winter.

The hedge funds meanwhile will try the same ploy - pump dollars when rupee is cheap, pull out when rupee strengthens and have a windfall of profit even if the enterprise you invested actually flopped.

As I said a million times - only a black swan of catastrophic proportion will actually cause a fall - in the past it was war, disease, natural calamities. I have no clue what the catastrophic black swan event will be for this bubble - Drought, Food riots, severe fuel shortage or some sort, another war? - Keep guessing

Till then Uncle Bernanke, Uncle Mario, BOE, BOJ, RBI, People's Bank, etc will keep printing

Anonymous said...

That blogger cited @11:11 says this at the end:
"I do not follow India closely..."

Should've started off with this statement and saved me some time.

I agree with above post that property prices are not crashing unless there is major catastrophe.

In other words, property prices will be sticky on the downside (as we're already seeing)

Sensex will collapse long before, petrol will skyrocket, food will become scarce and yes in such a scenario property will tumble BUT who will be brave/stupid enough to run after real estate in such a scenario anyway...

Anonymous said...

In India, folks will buy 2-3 flats just for their (male) kids. Gold for their (female) kids.

Gold is subject to international fluctuation. Property in your home town in good neighbourhood may indeed be best long term investment for the average/clueless investor.

GSM said...

The only solace for people waiting for prices to come down is to save in US$/CHF/GBP and hope that the Indian rupee crashes to 80/90 per $ - that would mean a Rs 1 crore property in 2012-13 is equal to ~ Rs 40 lakh property in Rupee's peak value of 38 in 2007 winter.

Till then Uncle Bernanke, Uncle Mario, BOE, BOJ, RBI, People's Bank, etc will keep printing


Aren't you not contradicting yourself?

Anonymous said...

As long as good paying jobs are there property will not come down in any meaningful manner. If you see mass layoffs in IT till then, same old story...

Anonymous said...

7. Sonia Gandhi


The only female in our top 10 list is Sonia Gandhi. This Italian born lady is one of the most recognized faces of the largest democracy in the world. She was voted as amongst the most women in the world and has a personal wealth of more than $19 billion.


Read more: http://www.gizmocrazed.com/2012/02/top-10-richest-politicians/#ixzz25f1xOnZg

http://www.gizmocrazed.com/2012/02/top-10-richest-politicians/

Anonymous said...

Received an SMS a couple of days back:

"Wanted FEMALE with excellent CONVINCING SKILLS for 2 day property show at bangalore this weekend. Only for 2 days"

LOL & Wow, look at the stratergy & the desperation. Clear signs of strain.

Anonymous said...

LOL & Wow, look at the stratergy & the desperation. Clear signs of strain.

This has been the case since forever. Nothing new.

90%+ buyers of property in India are male. And 90%+ human males think with their dicks instead of their brains so it all adds up.

Anonymous said...

90%+ buyers of property in India are male. And 90%+ human males think with their dicks instead of their brains so it all adds up.

Then learn to profit from it. Herds go one way, the creatures that feed on them lurk in the bushes and wait for the right moment to strike. Be the creature that is higher up on the food chain.

Anonymous said...

time for new thread

Anonymous said...

time for new thread and same old ranting.

RE in India will NEVER EVER fall. Only inflation will eat away so called hikes, unfortunately many don't realize this and thinking that their Rs.100 holds same old purchasing power.

Anonymous said...

// -- RE in India will NEVER EVER fall. Only inflation will eat away so called hikes. -- //

That's still a fall. Who in their sane mind save in INR?

Mehta said...

rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...rehash...That's been the nature of this blog and comments. Maybe the owner needs to focus on enhancements such as property locator, Do's and Dont's while buying property, factors one should look into for avoiding fraud, regulatory and other hurdles..

Anonymous said...

Developed economies easing again. Money will find it's way to emerging markets.

20-30% rise in 2013 is baked in.

Anonymous said...

This will be a real game changer
http://timesofindia.indiatimes.com/entertainment/bollywood/news-interviews/Balaji-group-enters-into-real-estate-business/articleshow/16307863.cms

Anonymous said...

So the world didn't end this time too? Meh.

Pawan said...

This will be a real game changer.
http://timesofindia.indiatimes.com/entertainment/bollywood/news-interviews/Balaji-group-enters-into-real-estate-business/articleshow/16307863.cms


Shahrukh khan's entry into Dubai real estate resulted in a huge burst almost immediately. So may be this is a contrarion warning signal to all.

As a note, Balaji group more business sense than Shahrukh.

Anonymous said...

http://timesofindia.indiatimes.com/business/india-business/Gold-costlier-but-no-dip-in-demand/articleshow/16317172.cms

If this is happening with Gold why will the house prices fall. There will always be buyers for RE

Anonymous said...

Majority of the real estate in India, is owned by the Cricket players, Movie stars,Politicians and Businessman with deep pockets. All the above 4 groups will keep making big moneys in the future. So a real estate crash is just not going to happen. You guys just make sure to keep supporting them and cry about it later.

Anonymous said...

@Anon - "If this is happening with Gold why will the house prices fall. There will always be buyers for RE"

The larger picture is different.
http://timesofindia.indiatimes.com/business/india-business/Gold-demand-falls-for-2nd-straight-quarter/articleshow/15525525.cms

Same story in RE. Sales are down to 2008 levels.

Anonymous said...

RE in India is controlled on the supply side.

It is not a "free" market where demand will dictate prices.

There is huge social pressure to owning RE (and gold) People will sell gold before they lose their RE since gold can be sold discreetly. But everyone will know if you lose your home.

A lot more things have to crash before a RE crash can happen. It's going to be a long wait...

Anonymous said...

The depravity may be genetic:

http://www.businessweek.com/articles/2012-09-06/indias-poor-starve-as-politicians-steal-their-food

The scam was simple, says Javeed Ahmad, the CBI officer leading its investigation: Often using dummy firms, local officials paid the national government the subsidized prices for the food—as little as one-tenth of the market rate—then sold it to private companies at market prices and pocketed the difference.

While the middle class chases the rich dreams peddled by the elite the invisible poor are being simply brushed aside.

If our bureacracy is so depraved as to scam people out of their meager food rations, we have NO chance of aspiring to good education, healthcare and infrastructure.

There must be a fundamental shift...

REBear said...

@Anonymous at 11:09 AM

There must be a fundamental shift...

It has not happened in the history. Be it 2500 years ago during the time of Chanakya when Alexander invaded, or 1000 years ago when invaded by Mughals or the 200 years ago when invaded by British, the characteristics of Indians have remained same.

Anonymous said...

"Right now our society is worshipping folks like Steve Jobs and others. Perhaps 100 years from now, folks will wonder how did this man command the adulation of so many while at the same time enriching himself and building his corporate "empire" by exploiting Chinese slave workers..."

This is a pretty serious accusation. Can you provide any evidence that the Chinese workers who produce Apple products are "slaves"? Are they forcibly required to work at Apple factories or do they do so voluntarily? Are they free to seek any other employment if they want to? And if they don't, do they not do so because of coercion by Apple or because they cannot find better working conditions or benefits elsewhere? Again, do you have any evidence that Apple is requiring the Chinese employees to forcibly work only at Apple?

Let me spell this out for you: If the Chinese workers work voluntarily for Apple because they could not find better benefits or working conditions elsewhere, that is not slavery. Sure, it is a sad commentary on globalization that the best jobs that these workers are able to get requiring toiling in not so desirable conditions, but with due respect, that is not "slavery".

Don't get me wrong, modern day slavery still exists (although it is widely overblown by left-wing outfits like CNN) and it is a serious issue to be tackled. But let's not cheapen the impact of the word by using it willy-nilly to support Michael Moore's view of the world.

Kapish?

Anonymous said...

"There is huge social pressure to owning RE (and gold) People will sell gold before they lose their RE since gold can be sold discreetly. But everyone will know if you lose your home."

Excellent point. Real estate will take a looooooonng time to crash in these circumstances.

I think we may also have to wake up to the reality that it may never ever crash in nominal terms. This is what I've been saying for a long time on this board.

If we login to this board 5 years from now (i.e. in 2017), my gut feeling tells me that the talk will still be exactly the same (that an RE bubble burst is imminent), but meanwhile RE would have gone up another 270%. Of course, the INR may also have declined by 500% during that same period.

SKG said...

Anon above, you might be right.
In a nut shell that means things will only get worse over the time and there is no hope what so ever that it can be improved.

I know that is very negative way of looking at it but at this point of time there is nothing else which makes sense.
-SKG

Anonymous said...

can someone post something on infra sector?

Everyone know they need infra investment, but where is the money going to come from?

Govt. makes 5 yr plans but where is the capital? Stock proces are all down to all time lows/

aam aadmi said...

Let me spell this out for you: If the Chinese workers work voluntarily for Apple because they could not find better benefits or working conditions elsewhere, that is not slavery. Sure, it is a sad commentary on globalization that the best jobs that these workers are able to get requiring toiling in not so desirable conditions, but with due respect, that is not "slavery".

Yes it is, it's called wage slavery. Traditional slavery is very labor intensive, you need guards, 24x7 surveillance and what not because slaves don't like being slaves. However if you create conditions such that people work voluntarily for slave wages you get the best of both worlds. And how do you do that ? You destroy the traditional economy, so that people cannot live off the land and are forced to compete for livelihood.

This technique was first invented in the 17th and 18th century, by now it has been honed to perfection.

Pawan said...

http://www.moneycontrol.com/news/business/car-sales-fall-19august-first10-months_755678.html#toptag

I thought Indians were rich and flush with money.

Anonymous said...

http://www.business-standard.com/india/news/car-sales-drop-19-siam-seeks-govt-help/186001/on

From the article 'now entering a desperate situation', '.
Remains to be seen if Diwali sales will be good.

Looks like the auto industry is in the same boat as the RE. Both are looking for 'The stimulus package', but this time the govt finances too are in dire straits.

Anonymous said...

Indians tend to do 'adjustments'. Why not buy Tata Nano - the 'cheapest' car on the lot. Similarly why not stay in dingy 10 x 10 foot flat... if still that is expensive, why not live as joint family (got to applaud Indian culture then) in 1BHK.

If there's a will there is always a way.

Anonymous said...

//but this time the govt finances too are in dire straits. //

nope, govt finances are never in dire straits. Look at the scams, new emerging one in Maharashtra - irrigation scam... there is no limit to money flowing. Govt gets money from tax payers, fake money and black money. There is no end... they can produce money from thin air... govt are true magicians !!

point to ponder - how can a country like India that has poorest people, less productive labor, less number of tax paying people have largest and more number of scams in the world (see the amount involved in scams) ... where is the money come in from ?

Anonymous said...

What I found striking is how relatively inexpensive housing is in other developing countries (even those which are currently in the midst of a bubble). Look at these houses located in Pattaya, a popular tourist attraction in Thailand within easy driving distance of Bangkok:

http://www.pattayacityproperty.com/buy_house.php

These houses look large and well built and they are selling for between 40,000-60,000USD. i.e. around 25-35 lakhs. In India, for 20 lakhs you cannot buy a flat even in the exurbs of the exurbs of the metros.

Anonymous said...

http://economictimes.indiatimes.com/news/news-by-industry/jobs/it-firms-go-slow-on-hiring-offer-same-pay-as-last-year/articleshow/16349137.cms

Wages are stagnating at the entry level. The article also papers over the fact that many IT firms have deferred joining dates for last years graduates.

Anonymous said...

^ Doesn't matter. RE will continue to rise.

Anonymous said...

IF 77% of the overpriced real estate has been sold to the top 1 %, why do you think a real estate correction going to happen if non elite guys get laid off, or they dont get the same salary or TTM sales plummets or INFY does not have the same growth ?????? even if GDP slows to 1%, you will not see any major correction happening. you might see some new builders going belly up, you might see some real estate agents getting screwd, but price is not going to come down.

Just look at that Haryana minister who got caught up with the 23 year old girl( who suicided). The no name minister's net worth is well over 25 million dollars.How did he accumulate that much wealth???? nobody knows, but he has the 25 million. India has 1000's of guys like that, in every state. His son, his brother, his friends, his wife, wife's family all got money stashed away too.

Anonymous said...

@Anon - "IF 77% of the overpriced real estate has been sold to the top 1 %, why do you think a real estate correction going to happen if non elite guys get laid off, or they dont get the same salary or TTM sales plummets or INFY does not have the same growth"

Were you born after 2008? That recession and the consequent job losses led to a fall of 40% in RE prices. The jobs came back (along with banking credit) and RE recovered.

Anonymous said...

This is a pretty serious accusation. Can you provide any evidence that the Chinese workers who produce Apple products are "slaves"?

No he cannot because corporations rule the modern world and Apple is the biggest of them all.

But you've provided plenty of evidence regarding your naivete.

Anonymous said...

IF 77% of the overpriced real estate has been sold to the top 1 %, why do you think a real estate correction going to happen if non elite guys get laid off, or they dont get the same salary or TTM sales plummets or INFY does not have the same growth ?????? even if GDP slows to 1%, you will not see any major correction happening. you might see some new builders going belly up, you might see some real estate agents getting screwd, but price is not going to come down.

Just look at that Haryana minister who got caught up with the 23 year old girl( who suicided). The no name minister's net worth is well over 25 million dollars.How did he accumulate that much wealth???? nobody knows, but he has the 25 million. India has 1000's of guys like that, in every state. His son, his brother, his friends, his wife, wife's family all got money stashed away too.


If you look at it that way, the growing gap between rich and poor and the epidemic of corruption then one could argue that most of us are temporary asset owners and will eventually be ripped off.

It this continues to run it's course, the end game will be that a handful of assholes in each state/district would've become so powerful that they would control all material aspects of our lives.

i.e. Feudalism all over again.

REBear said...

News from SFO: Apple expected to unveil iPhone 5, new line of iPod touch 's and iPod nano,

News from New Delhi : Raul Vinci (aka Rahul Gandhi) is soon expected to become minister,

So this is what we have even after the most talked about and hyped "demographic dividend". BTW, how many builders have lowered prices since Chidambaram urged banks to force them do so ? Instead the banks have taken the burden on themselves and cut the home loan rates.

aam aadmi said...

@REBear
"Bread and Circuses" is the correct term. Read "Rainbows End" by Vernor Vinge if you have time. It predicts the same future where people are so immersed in virtual reality that they don't have time for the real world.

Anonymous said...

"No he cannot because corporations rule the modern world and Apple is the biggest of them all."

Left-wing balderdash! Yes, corporations have a high degree of economic power. If you don't want them to have that, the solution is simple. Stop buying their products. Don't buy iPhone5. The choice is yours. Apple is not forcing you to buy iPhones or iPods by forcing a gun onto your head.

If Chinese workers work VOLUNTARILY at Apple, that means that they could not get better benefits or wages with any other employer in China (otherwise they would be working for that other employer). In other words, Apple has provided them the best working conditions, benefits and salary that their skills warrant. For this, they should be grateful to Apple. If they don't like Apple, they are free to seek employment elsewhere and work for some other employer.

In any event, even if corporations "rule the world", I would rather be ruled by Apple, IBM, SONY, Glaxo or Microsoft rather than the likes of Laloo, Sonia, PC, Raja or Karunanidhi.

Pawan said...

Fire sale:
http://www.firstpost.com/business/gmr-gvk-dlf-who-will-survive-india-incs-great-infra-firesale-454118.html?utm_source=MC_TOP_WIDGE

Anonymous said...

// In any event, even if corporations "rule the world", I would rather be ruled by Apple, IBM, SONY, Glaxo or Microsoft rather than the likes of Laloo, Sonia, PC, Raja or Karunanidhi. //

you completed missed the point. It is double edged sword. These likes of corporations work directly or indirectly with likes of politcians to amend laws / regulations to their benefits. No? Read your own post again slowly and carefully.

polt said...

@Pawan - "http://www.firstpost.com/business/gmr-gvk-dlf-who-will-survive-india-incs-great-infra-firesale-454118.html?utm_source=MC_TOP_WIDGE"

The smart money saw this coming and fled a long time ago. These companies shares are down 80-90% from their peak values.

They might seem attractively valued now, but going from 100 to 20 is a 80% fall, from 20 to 10 is a 50% fall :)

polt said...

Some economists are saying infra and power sector will cause the Indian sub-prime crisis and bring down our banks.

Cash is king nowadays. I think same holds true for individuals true. A year or two from now will bring once-in-a-lifetime buying opportunities across all asset classes.

Anonymous said...

@Polt - We are in inflating economy. Cash is never a king in inflation world. Rather cash is stolen in inflation.

Are you implying that deflation period will start... if so, then people rather be scared (and very scared) of what is heading their way.

Anonymous said...

^^^ Indian elites have already shifted their gains to dollars and euros.

Do they care if rupee further loses it's value? Infact, I think they prefer it since more wage slaves can be exploited.

Wage arbitrage is the Indian business model and it complements the Western mega-corporation model of environment and legal-arbitration.

aam aadmi said...

Even Deccan Chronicle is in debt, no pay for Deccan Chargers players.

aam aadmi said...

Fed launches QE3
http://www.marketwatch.com/story/fed-to-launch-qe3-of-40-billion-mbs-each-month-2012-09-13

Enjoy, celebrate, distribute sweets coz soon you'll need a wheelbarrow full of cash to do the same.

Anonymous said...

// Enjoy, celebrate, distribute sweets coz soon you'll need a wheelbarrow full of cash to do the same. //

What does that mean for lower , middle (so called) and upper class ? I am sure each one gets different treatment/effect for same medicine!

I strongly believe RE in India WILL NEVER decrease, only inflation will kill away savers, poor class and rest everyone will make merry.

Anonymous said...

Writing is on the wall, get real assets.

Only fools slog away their lives for bits of paper and even worse, bits of electronic IOUs

It's always a scary scenario when you can't trust the government to do right by it's citizens. But it's good to be scared sooner and survive than be foolhardy and end up dead later.

Anonymous said...

Bernanke has turned on his printing press. Signal to rest of central banks to start doing same.

Meanwhile Israel is preparing to mount air strikes on Iran with implicit backing of Uncle Sam.

Good luck to all...

polt said...

@Anon - "Are you implying that deflation period will start... if so, then people rather be scared (and very scared) of what is heading their way."

Demand is falling everywhere, and interest rates are still high here in India. Not sure if we will deflate, but I think 9%pa in liquid funds is probably better than flat stock markets and RE.

That said, I still continue my SIPs. Only the spare cash is not going into equities as it did before.

Anonymous said...

Indians are so full of cash that they're whining now that the government is removing subsidies from LPG.

Anonymous said...

Indians flush with cash :) are now depending on credit cards to fight inflation .

http://economictimes.indiatimes.com/personal-finance/credit-cards/news/consumers-avail-credit-facility-on-their-credit-cards-again/articleshow/16391246.cms

REBear said...

Open Ended QE3, hyperinflation, buy Gold, buy Silver, buy Super-prime real estate(if one exists in India), don't save any cash. And also think on saving yourself from upcoming cataclysm in the form of social unrest.

SKG said...

forget about everything now comes the booster shot by Dr. MMS-

http://www.rediff.com/business/slide-show/slide-show-1-govt-clears-fdi-in-multi-brand-retail/20120914.htm

India Shining again! (Shortlived again!)

-SKG

Anonymous said...

@SKG - that was expected to GOI. FDI was and is last resort to keep India shining. Also west were pushy to get this moving.. may be this was game all the time.

Now with FDI coming... let's talk about local, small businesses. We know what happened with Walmart coming to West. Mom and Pop store diminished. Only way to keep head up is efficiency and innovations. Let's see how India get's itself out of this mess... a country with low productivity and innovations (globally).

Anonymous said...

What will this new move do? Will it displace the black money in the hands of merchants with properly reported white money? Or on the other hand, will the massive investments in urban commercial real estate for big box stores further energize the RE sector?

Anonymous said...

Desperate act?

Anonymous said...

////

Now with FDI coming... let's talk about local, small businesses.

///

You know what will happen. Somehow, magically all the small vendors will get jobs at Walmart and Ikea. Five years from now we will become superpower.

All iz well.

Anonymous said...

http://www.dailymail.co.uk/news/article-2203559/Why-cheaper-buy-rent-Difference-132-month-bed-house.html

Why-cheaper-to rent than buy

Pawan said...

http://www.zerohedge.com/news/bofa-sees-fed-assets-surpassing-5-trillion-2015-leading-3350-gold-and-190-crude

Anonymous said...

http://timesofindia.indiatimes.com/city/hyderabad/Income-tax-officer-booked-for-demanding-Rs-65-lakh-in-bribe-kin-held/articleshow/16423378.cms

One IT office gets 65 lakhs bribe in one case. With this kind of income will RE really come down?

Anonymous said...

The govt has stepped on the gas on reforms. Uncle sam has started the printing press. Rates in US will be down till 2015. Now all this money will flow into the emerging markets like India. No way RE in India will come down for a generation. Guys if you have money, buy a house now insead of living like a loser for the rest of your life

Anonymous said...

The Fed, RBI and other related criminals can control nominal prices but they cannot control real prices.

Markets must be viewed with cool heads, patience and rationality not with emotion and greed. Doing things in a hurry is always a sure fire way to regret later.

We know housing is in a bubble because rental yields are incredibly low (<2.5% after expenses) and the spread between rental yields and FD interest is very high (>800 basis points). Any capital appreciation now is solely on the ponzi assertion that "property prices can only go up".

Patience and careful introspection now will bring forth rich dividends later.

Anonymous said...

Patience and careful introspection now will bring forth rich dividends later.

Magnitude of corruption is breath-taking.

There is way too much easy much money sloshing around. For every 2G or coal scam that gets published and gains national attention, there are tens of thousands of smaller scams going completely unnoticed.

Country (and honest salaried man who pays taxes) is being raped.

Anonymous said...

"There is way too much easy much money sloshing around. For every 2G or coal scam that gets published and gains national attention, there are tens of thousands of smaller scams going completely unnoticed."

My friend, there is far more corruption in Bangladesh, Zimbabwe or Burma compared to India. Yet, RE prices are much lower (in real, not nominal terms) in those countries. What is important is not how much corruption there is, but how productive an economy is. Productive economies will have higher real RE prices. Look at China for example, China is corrupt but also highly productive.

Corruption alone cannot result in high RE prices. In fact, the more the corruption in a country, the lower the RE prices should be in real terms.

Anonymous said...

Just to follow up on my previous post, there is NO ASSET CLASS IN RECORDED HISTORY that can "only go up" year after year in real terms. Eventually, markets always correct and when the correction come, the pendulum typically swings back (again, in real terms) much, much harder than people expect.

10:51pm

Anonymous said...

Sensex is at 14 month high. Rupee is at 6mnth high. Moeny is going to flow in india. The losers on this forum will keep thinking in terms of real vs nominal prices and keep renting till they get priced out forever.

Anonymous said...


Worlds largest Democracy ( aka Banana Republic! )

http://economictimes.indiatimes.com/news/news-by-industry/et-cetera/7730-high-net-worth-indians-collectively-own-925-billion-report/articleshow/16435556.cms

Anonymous said...

@Anon - "Sensex is at 14 month high. Rupee is at 6mnth high."

Nice try there with the cherry picking of data. Here's another one

Sensex is now down 15% from its all time high reached 4 years back in Jan 2008. The rupee is now down 50% from its all time of 38 reached in Oct 2007.

See how that works :)

Anonymous said...

http://economictimes.indiatimes.com/news/news-by-industry/et-cetera/7730-high-net-worth-indians-collectively-own-925-billion-report/articleshow/16435556.cms


I have no problems with sociopaths hoarding wealth under mattress or Swiss accounts (@0% rates)

Trouble arises when this wealth try to manipulate markets and necessities like food, shelter, energy etc.

We have more than enough human productive power (aka wealth) in the 21st century to wipe out major diseases, ensure respectable quality of life for ALL 7 BILLION.

Eventually it will get fairly distributed either voluntarily (like Buffet/Gates are doing) or through force (like it's about to happen in Europe)

Anonymous said...

sensex just tracks dow/daq, and now dow/daq all at 4 year high. This earnings quarter not that great and it is the election year, so dont expect any correction now. But come next year or 2014, expect shit to hit fan. Not much earnings growth across the board. AAPL is the heavy weight in the indexes, so this is a fuzzy run up. Low volume, retail out, take AAPL out of the equation, you got a no growth run up in the last 6 weeks.

Any ways, market correction is not going to bring the real estate sector in India down. People worship, Cricket players, Bollywood douches and Politicians and now you will get to enjoy the good ol hosing done by these guys. They own 90% of the real estate, so just bend over and enjoy the hosing.

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Anonymous said...

http://timesofindia.indiatimes.com/city/bangalore/Private-equity-play-hots-up-Bangalore-realty-market/articleshow/16460708.cms

No slowdown in Bangalore

Anonymous said...

There is no way a slowdown is happening.
ET carried a story today that Indian CEOs and making more money that American CEOs.
That will silence the people who keep saying that Indian RE being more expensive that American RE does not make sense.

Anonymous said...

Read the full paper:

http://economictimes.indiatimes.com/news/international-business/us-meltdowns-history-lessons-for-the-euro/articleshow/16462820.cms

Anonymous said...

// There is no way a slowdown is happening. //
First - define what is growth and what is slow down.

// ET carried a story today that Indian CEOs and making more money that American CEOs.
That will silence the people who keep saying that Indian RE being more expensive that American RE does not make sense.//

so now CEOs salaries are bench mark for RE? They are handful (<1%) people making huge huge amounts. Can you please talk about a 'real' buyers - a common man's earnings which make 99% of real buyers.

Anonymous said...

Can you please talk about a 'real' buyers - a common man's earnings which make 99% of real buyers.

Indian RE developers have learnt the lesson from the housing bubble collapse in Western world.

In West, 99% home values were destroyed. Yet during same period, ultra luxury properties in NY and London continued to record significant gains.

Even if GDP goes negative there will be quite a few who will be taking in crores of income while almost everyone else scrambles to survive.

Anonymous said...

// In West, 99% home values were destroyed. Yet during same period, ultra luxury properties in NY and London continued to record significant gains.

Even if GDP goes negative there will be quite a few who will be taking in crores of income while almost everyone else scrambles to survive. //

West survived so far because in a way they outsourced their inflation to India and other countries. What is plan for India? Inflation will take it's toll. Let the inflation hit USA and you will know the real plight of ultra rich in West.

NY and London are running on credit money... looted from a commoner. They are financial hub of the world... means they control the money flow. Let helicopter Ben stop the credit expansion and we can debate on ultra rich in NY and London.

Let's talk about India... Bombay - a Land of bollywood, cricketers and politicians.

SKG said...
This comment has been removed by the author.
SKG said...

I think the next wave of boom in RE is coming ...

http://www.cnn.com/2012/09/17/world/asia/india-open-toilets-udas/index.html?iid=article_sidebar

since people are NOT able to buy homes they would prefer to buy toilets instead of it.after all toilet is also built on land so it is RE.-:)
we can imagine 5 and 10 storied toilets selling for 1000 to 10000 rs per sqft.based on the amenities inside it like paper/water/western/indian style/lifts/swimming pool areas/child play areas while you do potty.-:)

-SKG

Anonymous said...

^^^ now someone from blog will come up with theory that CEOs earning equal wages of west will buy all these toilets and a common man was and will be still on railways tracks with water bottles.

SKG said...

^^^ Before that govt of India will introduce 99.99% FDI in toilet construction.all the parties will get their cuts and builder politician and CEOs will be equally happy, shareholders and investors will get dividends.

and everybody lived happily ever after.

The End.

-SKG

Anonymous said...

"NY and London are running on credit money... looted from a commoner"

What do you suppose Mumbai and Delhi are running on?

Anonymous said...

http://timesofindia.indiatimes.com/india/Free-medicine-scheme-gets-Rs-1300-crore-boost/articleshow/16468589.cms

Do you guys really think this 1300 crores will go to free medicines. There are hundreds of sucn schemes. In India RE is not sustained by commoners.Rich Indians buy multiple properties as investments and to hide black money. How many rich people do this in USA

Anonymous said...

http://harshasagar.com/2012/08/16/fraud-practices-by-builders-in-bangalore/

Anonymous said...

// What do you suppose Mumbai and Delhi are running on? //

Fresh air... LOL. anyways, the point I was trying to make is all these high flying RE prices in cities are running on inflation a.k.a. money looted from someone else.

suggestion - if you can' beat them.. join them.

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Shubhkamna Group is coming with a brand new residential project Shubhkamna Epic at Noida Extension. Shubhkamna Epic, Noida is one of the beautiful places, where your dream of having comfortable and affordable home comes true.

Agra Real Estate said...

I am agree with P Chidambaram,Finance Minister of India as the cost of realestate in Mumbai is beyond the limit of middle class family.I have very happy that it is first time when any minister has taken interest to reduce the cost of realestate which is touching sky.It is a little hope for middle class family in Mumbai to buy their own flat.

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katti kane said...

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vimal chauhan said...
This comment has been removed by the author.
Vicky Leo said...
This comment has been removed by the author.
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