Wednesday, January 16, 2013

Builders blink, first price cuts are here

Article Link

After stubbornly holding on to high prices for four years in the face of sluggish sales, a crippling liquidity crunch and rising cost of capital, Mumbai’s real estate industry has just blinked.

At least three of Mumbai top builders have either cut prices by as much as Rs 2250 to Rs 5,000 or introduced flexible pricing within a single project, or launched innovative schemes where buyers stump up large sums to book properties even before the project enters construction stage.

All this means only one thing - the longdue correction in real estate prices is here. And while many builders may not be announcing price cuts up front yet, it is no secret that they all are now willing to negotiate with buyers.



--
A survey conducted by Knight Frank, areal estate consultancy firm, in June last year had revealed that Mumbai real estate market had an unsold inventory of 80,000 units worth approximately Rs 1,050 billion.

The report had also stated that the global economic crisis of 2008 affected the market adversely as prices dipped in some micro-markets at the premium end of the market and rebounded, scaling to their 2007 highs in the subsequent two years.

But in 2012, the Mumbai market stagnated as buyers largely kept away expecting a drop in prices in the near future. The buyers’ patience has paid. The Mumbai market is now opening for good bargains.

Lalit Kumar Jain, president of Confederation of Real Estate Developers Association of India, said the liquidity crunch is forcing builders to reduce prices and clear inventory. He expects more builders to follow Naman, RNA and Lodha’s example.

185 comments:

Anonymous said...

More Land Supply...

Industry policy to free more land for housing

According to the state government officials, there were 124 special economic zones across the state. The new industrial policy allows the corporate firms to unlock their 40% of land which is over 35,000 acres in Mumbai. And, at remaining 60% of land the industry will be developed.

“These lands, acquired under SEZs, were locked for the last several years. Land is a crucial factor for the development of any state. Because of land scarcity, many entrepreneurs were reluctant to start industries. Now, the SEZ land will be used for the construction of houses, and the remaining land for industries. The new industrial policy is good but it should be implemented properly. Otherwise, it will just remain another good policy on paper,” said Pankaj Kapoor, managing director of Liases Foras, a real estate research firm.

Anonymous said...

Ho - Hum...not much of a difference. I am going back to sleep, will wake up and check in after 6 months....

polt said...

Early days.

I would think that reductions would be highest in Mumbai/NCR where the price/rent ratio and price/income ratio are the highest in the country.

I read recently that 85% of cars in India are bought with some amount of bank financing. My guess would that for buying homes this number is much higher (95%+).
Many people on this blog think that Indians are loaded with cash and can buy assets outright. That is clearly not the case.

People who own and live in the house will probably not care about price falls. Speculators will care.

In every country in the world where RE bust took place, sales fell first and then prices. It is now the same here. We are not different . Laws of economics apply here too. (Inspite of what the bulls here may say). What remains to be seen is whether this will be a soft slow landing or a crash.

GSM said...

I read recently that 85% of cars in India are bought with some amount of bank financing. My guess would that for buying homes this number is much higher (95%+).

I would say in both cases, it really does not make sense to buy with cash. In case of a car, as the value depreciates over 5 years and you can pay with depreciated currency then. In case of home loan it gets even better. The differential between FD and home loan is 1-1.5 % only. Not to forget the Income tax benefits that you get with home loan. In my case, I could have put down 65% of the construction cost, but chose to load myself with home loan and keep liquid cash. But I agree speculators are very different case.

polt said...

@GSM - "I would say in both cases, it really does not make sense to buy with cash. "

My point that for most people that is not really an option to pay cash outright. Inflation is at 8%, but car loans are 11.5%+. Home loans are around 9-10%+. Atleast for homes, people take loans simply because they dont have the entire money.

In fact, many people borrow to make the down-payment as well. They take a personal loan at 18-20% for this amount.

Real Estate India said...
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Unknown said...
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Anonymous said...

"I read recently that 85% of cars in India are bought with some amount of bank financing. My guess would that for buying homes this number is much higher (95%+). "

So you are saying that 95% of residential RE in India is bought with mortgages?

Do you have any idea how absurd you sound?

polt said...

> Do you have any idea how absurd you sound?

These were my assumptions
1. Homes are far more costlier than cars and hence people would need to borrow.
2. Prices have increased faster than interest rates, hence leverage becomes attractive
3. Tax exemption on interest also helps.


In the US (a far richer country with surprisingly affordable homes relative to the situation in India), 70% of homes are bought with a mortgage.

If you have data to prove otherwise, lets see it. Also spare us the 'Most Indians are sitting on pots of cash' nonsense that gets spewed here repeatedly.

polt said...

http://www.bloomberg.com/news/2011-03-29/cash-paying-vultures-feast-on-u-s-housing-as-mortgages-dry-up.html

In the US, cash purchases were only 15% in 2008 (i.e 85% were with a mortgage). They have increased recently as investment firms have started buying homes due to attractive valuations.

polt said...

http://www.bankrate.com/finance/auto/more-new-car-buyers-use-cash.aspx

Similar numbers for car buyers in USA. About 90% buy with some form of a loan (direct loan, home equity loan, credit union ...).

Anonymous said...

Most people take out mortgagages and loans for cars/RE. That is why RBI interest rates matter. I think Polt is right. The numbers are very high for loans. NPAs are also rising.

Cool Head said...

In my society (built 7 years ago) ALL 60 flats except TWO have been purchased ONLY with a bank loan. So banking credit does matter, otherwise why would there be so much pressure on RBI to reduce interest rates?

Anonymous said...

All this discussion on Mortgages in India is interesting. I think we have 2 distinct India.

New India (Young and Rich): Primarily living near IT hubs, where by most people buying homes/flats have above average salaried income. This group also has enjoyed trips to on-site assignment adding to liquidity. This group also has access to large bank loans as most income is in White and getting bank loan for large amount is possible. Due to demand supply situation (it takes few years for homes to build, hence supply is limited and this group has increased very fast in last 10 years), the prices around IT hubs have increased significantly. In essence the money is there so prices rise faster. This group is dependent on interest rate, but I think not to the extent everyone thinks. Most in this group probably pay 30% or higher in downpayment.

Old India: This are areas not near high paying jobs. Here there are lot of Investors, primarily business owners or high income babus. They looked at the price rises of earlier group and got enticed by huge returns. Many of them are flippers. They take advantage of booking home at pre-launch stage, paying significant amount by cash during the construction phase. Many take personal loan in secondary market (not bank loan). The whole aim for this group is to exit once the houses are in ready possession. Lot of them have bet large amount of money. This group has most to loose from housing price collapse. But many in this group feel Housing is like Gold, which never reduce in prices. Hence they hold on to it even though yields are significantly lower.

Hence I feel, though RE generally is sensitive to Bank Rate, in India, the rates are already high (10%+), hence few percent increase will not cause the housing market to crash. What will lead to crash is significant drop in demand or large increase in supply. The supply side is constrained by laws and builders in big metros. Hence IMO the price drop will happen when demand will drop significantly.

GSM said...

@Anon Above

The speculators and buyers are investing in a ponzi scheme which can blow up easily. Let me explain. If I see the payment schedule agreement with the builders, it is either time linked or construction linked. No need to explain about Time linked. In construction linked, 90% of the amount is to be paid at the finish of Structure. Well, it only cost 30% for that. The rest 60% is going into a new launch. There is no incentive for the builder to finish the rest which is why it drags on.

For the end user, it is a double whammy. You have to pay interest as well as rent. For a loan of 40L, after 5 years at todays interest rate of 10.5%, you still owe 36L to the bank. About 20L is paid as interest.

For a flipper, to wait till possession takes about 2 years in best case and he had paid 90% already with in 1 year. For the same 40L, he has atleast paid 6L Interest. So, to just break even, he needs to sell it for 46L. But what about the end user who buys for 46L, does he have to sell at 66L after 5 years just to break even?

Isn't this a ponzi scheme with the buyer, builder as well as speculator that has to blow up on day? Well, the only thing that makes it attractive is the Govt incentives and inflation.

Anonymous said...

ok.

Anonymous said...

@GSM - "For a flipper, to wait till possession takes about 2 years in best case"

In the heady days of the bubble (both here and in USA/Canada/AU), flippers would not even wait till possession. They would book a house, the construction would start and the house would be flipped in just a few months for a juicy profit. And then take your gains, find somewhere else to invest.

Now those days of easy gains are gone. I had posted earlier about how some investors are now selling homes below the builders rate in Bangalore. May be they are happy with their gains, or may be they see the slowdown and want to exit, or both.

Anonymous said...

Forgot to add - the under-construction house would be flipped even without registering it, thus saving a few percent on stamp duty. T

Anonymous said...

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/banking-system-shows-signs-of-instability-on-rising-npas-rbi/articleshow/18099115.cms

NPAs increasing. However, almost all of this increase has come from corporate loans. But if this continues, companies (that have currently only slowed down hiring), will eventually be forced to reduce staff as well.

aam aadmi said...

Banking is under stress, otherwise the govt would not have infused liquid money into public sector banks.

http://www.reuters.com/article/2013/01/19/statebank-capital-idUSL4N0AO07H20130119

Right now the govt is doing some balancing with diesel prices and all but how long they can do this tightrope walk is anybody's guess.

Rustomji said...

I am surprised at the way some owner based sales are in free fall in north Bangalore. A 2 BHK apartment that I have been tracking in Sanjay Nagar fell from close to 2C last year to 1C. That is a 50% drop!

If you are in the market, look at "owner" properties, they are much more motivated. The brokers markup the prices by 10-20% and waste everyone's time.

Rustomji said...

Sorry, that was a 3 BHK not 2 BHK above.

Anonymous said...

details abt the flat?? need to be more specific.

SKG said...

FinMin favours real estate, broking firms to set up banks-

http://www.moneycontrol.com/news/business/finmin-favours-real-estate-broking-firms-to-setbanks_810463.html#toptag

This is new way to continue the ponzi scheme.Imagine builders opening their own banks and providing their own loans to home buyers..new way of modern slavery...
-SKG

Anonymous said...

@FinMin favours real estate, broking firms to set up banks-

People are not touching the shares of these companies, because of fears of diversion of shareholder capital by promoters. Wonder how many will deposit their cash with them?

I for one will not deposit any cash a bank owned and operated by a real estate company. Take a loan maybe. But deposit savings - no.

Company Swot Analysis said...

If the economic system grows, real estate gets better, faster. Indian Housing Sector

real estate ponte vedra said...

The new industrial policy is good but it should be implemented properly.I would think that reductions would be highest in Mumbai/NCR where the price/rent ratio and price/income ratio are the highest in the country.

Cool Head said...

Vik,
Can you remove all the spam comments and links above? Thanks

Unknown said...

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Pawan said...

Rats jumping the ship:

HDIL promoter sells stake; stock down 15%.

http://www.business-standard.com/india/news/hdil-plungespromoter-stake-sale/203721/on

Buy a plot in Satara said...
This comment has been removed by a blog administrator.
Pawan said...

HDIL down another 19% today!!

REBear said...

@Pawan

There sounds something fishy about HDIL stake sale. Quoting from the news article :

http://www.moneycontrol.com/news/business/hdil-shares-extend-slump-after-exec-sells-partial-stake_812489.html

"Controlling stakeholders, including Wadhawan, own 37.36 percent of the outstanding shares, of which 96.24 percent is pledged."

If shares have fallen 40%, there will be margin calls by the lending institutions for sure. And since almost 96% is pledged, where will promoters get more shares to pledge from ? Or Mr Chidambaram is going to ask banks to not issue margin calls !

Unknown said...
This comment has been removed by a blog administrator.
Anonymous said...

http://www.business-standard.com/india/news/banks-post-100-jump-in-net-npa-in-h1-npasourcecom/203886/on

Mostly commercial borrowers. Individual NPAs are probably at normal levels.

Anonymous said...

More noise in the media now about the correction now taking place. Buyers should very careful about buying now. You could end up with an overpriced house.

http://economictimes.indiatimes.com/markets/real-estate/realty-trends/correction-in-the-housing-market-may-be-round-the-corner/articleshow/18215120.cms

"Delhi-NCR market has already crashed and markets like Bangalore and Chennai haven't seen much price appreciation,"

Anonymous said...

Please read this
http://www.mid-day.com/news/2013/jan/280113-eat-veggies-but-not-in-the-raw-say-docs.htm

You may buy a 5crore apartment but will have to eat out of the gutter

Anonymous said...

The first of many to come or an isolated case ?

http://economictimes.indiatimes.com/markets/real-estate/news/bangalore-based-century-realtys-debenture-default-triggers-panic-in-sector/articleshow/18231618.cms

Anonymous said...

^^a hole in the sky for 5cr! man you guys are being duped like chickens!

Unknown said...
This comment has been removed by a blog administrator.
Mangoman said...

The tug of war between government and RBI ended today as RBI governor D.Subbarao conceded by lowering the Repo rate by 0.25 even CPI is over 10% and WPI is over 7%. Whether it is pressure, threat, coax, cajol or whatever from Chidambaram, governer obliged with the rate cut and this is not at all good for the common man. Subbarao ditched the common man for real estate mafia.

. Normally with every review RBI used to talk about inflation only. Now they understood this is not only about inflation. The mismanagement started affecting CAD and Rupee value also. One need not to be economist to understand all this basic things. Interestingly they seems to read my blog and wrote something about the fall in the savings rate in India. RBI included all these things in their review. But instead of raising the interest rates they reduced.

Now let us see what would happen next:

1. As I have been maintaining, the 0.25% is not going to save the ass of corporate mafia. The real estate mafia has to pay for the sins. I do not think any body would go and buy apartments or flats only for 0.25% or 0.50% rate cut. People should have real money or jobs. With new jobs are hard to come by I am not sure.

2. A well known Bangalore builders defaulted in corporate debentures. Hopefully a start is made. I love to see at least 50 medium builders to bankrupt to start with. These idiots are thinking they have land bank which is valued more than the loan amount. .They value all these land banks at CMP at which rate nobody buys :) so I don't believe their price. Let us see how the creditors get back their money.

3. Chidambaram has placed all his cards on the table and forced RBI also to put their best foot forward. Since they cannot do anything more to pep up, I think they will run out of steam.

Anonymous said...

@Mangoman

// A well known Bangalore builders defaulted in corporate debentures//

Could you give us their name?

Cool Head said...

The news came out today in ET. The Bangalore based Century Real Estate has defaulted on interest payments to debenture holders. It seems HNIs had purchased this with a minimum of 1 crore investment each. The debetures are "secured" against land, but what if nobody buys the land if it is to be liquidated for proceeds to be given to banks/creditors?
http://economictimes.indiatimes.com/markets/real-estate/news/bangalore-based-century-reals-debenture-default-triggers-panic-in-sector/articleshow/18231618.cms

Unknown said...
This comment has been removed by a blog administrator.
Cool Head said...

Looks like Vik is no longer interested in maintaining this blog. All the real estate spammers ahve taken over....

Anonymous said...

Another developers default in noida for 3000 cr
Developers default in paying Rs 3,000 crore dues
Purusharth Aradhak, TNN Jan 9, 2013, 02.42AM IST
NOIDA: Following a lacuna in the group housing scheme introduced during the BSP regime in Uttar Pradesh, the three authorities in Gautam Budh Nagar are likely to make some amendments in their upcoming board meeting. During the BSP regime, group housing plots were allotted after payment of just 10% of the total amount, thereby ensuring that Noida remains an affordable housing destination. Noida Authority, however, has recently identified around 50 defaulter developers who have stopped making payments to it.
"Almost all developers in the city are violating the agreement and not paying the instalments. There are also big names of the real estate world in the defaulter list. We are going to produce a fresh proposal to strengthen the norms against the defaulter developers bringing the Authority losses to the tune of Rs 3,000 crore," said GP Singh, finance controller of Noida Authority.

Anonymous said...

Looks like Vik got his own house now and not interested in maintainin this blog..

Looks like the spammers are paying him to have their posts seen.

Im just kiddin :P but yeah! please delete the spam comments

Mangoman said...

Before rate cut SBI chief was telling to all and sundry about his plans to pass it on the benefits to Aam Aadmi of India. In reality his Aam Aadmi's are none other than real estate sharks. Simple logic of 'you save my ass and in return I will save your ass' concept. The interesting news is that after RBI cut 0.25 % in Repo, SBI cuts 0.05% in base rate.So according to this genius banker, RBI has to cut repo rate by 5% to as low as 2.75, so that we will get 1% reduction in his bank's lending rate. Really I feel proud that I live in the era of SBI chief Pratib Chaudhuri.

Buy & Hold Blog said...

I visit this blog on and off to get perspective on the Indian RE market. My view is that folks are chasing performance by buying RE now. There are so many speculators and flippers. Also, there is a mentality that Indian market is different, Indians are different, Indians are savers etc. that adds to the frenzy of buying and selling. When people are buying more than they can afford at 10-11% interest rates for 20-25 years, there is obviously something wrong with this picture.

Anonymous said...

Slightly old news
http://www.dayandnightnews.com/2012/02/punjab-real-estate-business-in-slump-mode/

Given the above, the following would be expected -
http://www.business-standard.com/india/news/slump-in-realty-sector-jolts-punjab-revenue-earnings/499854/

It would have been interesting if the article also provided details of how many transactions took place ? Then we could if the average sale price went up or down.

The situation is probably similar across India

Anonymous said...

Prices will not fall by much in nominal terms. Rents (and inflation) will increase.

Bought a 2BHK for 38 lacs in a tier 2 city. 60% construction completed. Complete possession in 1.5 years.

Pawan said...

Congrats Anon above. One needs the security of a roof over one's head in life. Whether prices will rise or fall, no one can say. Enjoy your purchase.

Anonymous said...

Agree with Pawan above. If are buying a house to stay, and you get a reasonably (wrt to your income and savings), then you should go ahead without really worrying about ups and downs.
I cant speak for Mumbai/Delhi, but in Bangalore one can get a house that one needs for a fairly reasonable price. A house that one 'desires' is a different story altogther

aam aadmi said...

I concur. If you really need a house buy it, don't think about when the housing bubble will burst, as a side effect if everyone bought houses on a need basis the prices would be much lower.

In other news
http://www.firstpost.com/economy/indias-savings-rate-to-plunge-to-10-year-low-this-fiscal-611845.html

Our lone star the Domestic Savings rate is set to plunge to 27 percent of GDP, no doubt a function of the negative real interest rates. If it goes as low as 10-15 percent we'd get sucked into a debt bubble like western countries.

Anonymous said...

Woah..looks like this Housing bubble blog is starting to have a "neutral" view on housing and so are bears ;-). In a few months we may see the blog as renamed as "RE investment tips" :-D

polt said...

Woah..looks like this Housing bubble blog is starting to have a "neutral" view on housing and so are bears ;-).

1. IMHO, Land is where the real bubble was and is present. Once that ends (and it will), prices will revert to mean.
2. Delhi, Mumbai and several other tier II cities still have a bubble. Sales are down everywhere. This is almost always a precursor to price reductions.
3. Do we have a shortage of homes - Yes. Do we have a shortage of Rs50L+ homes - No. The real shortage is in the Rs 15L+ homes categories. But absurd land prices (caused by land-banks), and rent-seeking (corrupt bureaucrats and politicos) has made it almost impossible to build such homes.

Strange that taxes on homes are higher than taxes on undeveloped urban land. We should be incentivizing construction rather than hoarding of land.

polt said...

New-york city metro area with a per-capita income of about $40K has average land prices of around $300/sqft.

Delhi with a per-capita of about Rs1.8L ($4K) has average prices of around 8-10K/sqft ($200). Delhi is not land-locked either.

Pawan said...

@Polt
Delhi vs New York

Please note the the difference between living in NY and suburbs is only travel time. You get water, power, sanitation, parks, rule of law - everything that NY has in suburbs.

Can we say the same about Delhi suburbs? NO.
I have never seen anyone - not a single person - wearing a helmet in Ghaziabad while riding a two wheeler for an example.

polt said...

@Pawan,
I dont have data for suburbs, but my guess would be that the land bubble would seem greater if you do a similar comparison for NY suburbs with Delhi suburbs.

Anonymous said...

If you live in NY or CAL, you end up paying about 60% taxes while in Delhi, majority do not pay didley.

Anonymous said...

"If you live in NY or CAL, you end up paying about 60% taxes while in Delhi, majority do not pay didley."


At a per-capita income of 1.8L, even if you did pay taxes ,it would not be large enough to justify prices.

Anonymous said...

Delhi is not land-locked either.

Ah, here you made a mistake. Delhi or any major Indian city is more land locked than Japan.

Land can be locked naturally or through man made rules & regulations. In India, it's unwritten law that no land development can happen without the blessing of our masters...

Anonymous said...

But absurd land prices (caused by land-banks), and rent-seeking (corrupt bureaucrats and politicos) has made it almost impossible to build such homes.

At basic construction cost of 1000-1200 rupees per sq ft. government will have to give land for free to make it worthwhile for a developer to build 15L homes.

Anonymous said...

"At basic construction cost of 1000-1200 rupees per sq ft. government will have to give land for free to make it worthwhile for a developer to build 15L homes."

Poor people crammed into 300sqft homes will be more than willing to move into 750sqft homes. (7.5L construction cost taking your cost estimates). Besides, who's to say we cant use prefabricated materials and bring down the cost by 30-40% and also reduce construction time. Recently someone built a 9 storey building in 24 hours using prefab stuff. This may have been a demo, but why cant this be put in to practice on a large scale?

Anonymous said...

@Anon - In India, it's unwritten law that no land development can happen without the blessing of our masters...

True. That is rent-seeking.

aam aadmi said...

The winds of change

http://in.reuters.com/article/2013/02/06/gold-india-imports-idINDEE91505M20130206

The RBI said it would consider imposing value and quantity restrictions on gold imports by banks, which account for 60 percent of India's imports of the yellow metal, under extreme conditions, as the world's biggest consumer of gold battles a record high current account deficit.

aam aadmi said...

I would say that it's like watching a repeat telecast of the East Asian crisis of 90's and South American crisis of 80's.

Anonymous said...

>I would say that it's like watching a repeat telecast of the East Asian crisis of 90's and South American crisis of 80's.

One difference is that the East Asians had pegged their currencies to the dollar. Ours has fallen from as high as 39/$ to 55/$. This has helped cushion the blow somewhat.

GSM said...

Would like thoughts on how the coming election would affect RE prices. Does the supply increase becoz of politicians liquidating their assets and put a downward pressure OR the black money would provide additional stimulus to hold the prices?

aam aadmi said...

@GSM
Why do you ask this question ? I don't see anything special about this particular election. Have the previous elections caused any upheaval in the market ?

IMO it's just 540 LS seats, a fraction of the prize money (from state legislatures to panchayats) that the Indian democracy gives to the winners.

GSM said...

IMO it's just 540 LS seats, a fraction of the prize money (from state legislatures to panchayats) that the Indian democracy gives to the winners.

Perhaps the main differnce is the panchayats scam are a few tens of lakhs, state MLA's a few tens of crores wheres in case of Central ministers is in the tune of lakhs of crores. Aleast isn't a few tens of thousand crores of that be poured back in to the economy?

aam aadmi said...

Yea but the numbers make up for loss of value. You add five zeroes (number of village panchayats in India) to 10 lakh and you have 10,000 crores, for local legislatures you add 3 zeroes to 10 crore (number of state legislature seats) and multiply by some factor then you again get a number in the ballpark of 10k crore, add up corruption from all petty sources and the number quickly dwarfs the notional loss from a scam like 2G.

I think people underestimate the sheer size of this country.

aam aadmi said...

I think the media is trying to hype the coming election like the so called 'fiscal cliff' in US. Part of the reason being that there is a so called 'messiah' on the horizon.

Yes it will likely result in a govt change but overall the status of Indian finance will barely budge because the factors affecting the economy are much bigger than what the union govt or a messiah can handle.

Anonymous said...

Delhi vs New York debate

There are 2 main issue which are keeping Delhi (or any metro) prices high in India.

1. Conversion of Agri land to Residential:
India put in very complex rules for this process on fear of food security. This food security fear is unwarranted. With increased housing density, the amount of land needed for residential development is much small and would have no impact in food security. This would be issue, if everyone was building homes on acres of land, which is not the case in urban expanding India. They should basically change the law and allow this conversion without Babu permission at least for areas surrounding cities and if used for high density residences. By High density, I don't mean slums, but multi-story building.

2. Lack or very slow development of Infrastructure in extended suburbs.
This is where one has to depend on Government, which is corrupt and does not do any futuristic planning. This is where again government should allow Private Participation with incentives. For e.g. Commercial / Residential exploitation of new area can pay for building of Road, Water, Sewer, electricity lines etc... If not Private, one can look at Co-operative type model.

If these 2 things are done, India will quickly become country with 400 cities and not just 6 mega city.

polt said...

>There are 2 main issue which are keeping Delhi (or any metro) prices high in India.

A third reason - Credit provided to buy and hold land (essentially speculation in a non-income producing asset), and a cultural preference for real estate.

Anonymous said...

http://www.business-standard.com/article/economy-policy/real-estate-prices-in-ncr-may-dip-further-113020700953_1.html

5% last year. More expected this year. And yet the builders keep on about how prices will continue to rise in double digits :)

Gentlemen, this is what a slow steady correction looks like. No crash, no blazing headlines, just a slow almost gentle melt of prices. Before you know it, in 5-6 years you may have lost 20% in nominal terms and 40% in real terms.

Anonymous said...

One prominent reason for price rise is cartelisation and cornering the supply.

Ramakrishna said...

You are right above are the good locations to invest money. Thank you for your suggestions.

Parth said...

To give you some idea about land prices near Bardoli, Surat --> the prices have corrected almost 50%, the going land rate has crashed from INR 36 lakh per bigha to INR 18 lakh per bigha with no takers at these prices as well.. and the best part is nobody is even surprised at this correction, everyone now seems to be wise that the price had run up from INR 30k to INR 3600 k (120x in 10 years period) is consolidating at these levels..

aam aadmi said...

I just went around the Bellandur Lake area in Bangalore with my friend in search of properties (I am not buying, he is). We saw three to four properties where price has appreciated by 4-5% over the last year, same story the year before. So the myth of properties going up by 20% every year is busted. It may happen in some places but not everywhere.

The properties are in partially completed stage and prices are in the range of 3400 to 4400 psft. There is a water shortage with borewell depths plunging to 850ft (it's close to the lake, so you can imagine how dire the situation is)
As usual the dealer gave BS about how the Cauvery water is going to arrive within a year or two but everybody knows the truth, anyways I felt that the properties are overvalued but not as much as the 1 bedroom hell holes of Mumbai, at least there are some open spaces to look around. Overall I think that if you really need to buy a house, it's not a bad option but over the long term I don't see these things going anywhere, these places are unsustainable given the acute water shortage facing them.

Mangoman said...

Mr. P. Chidambaram is going to present budget this year and I see the following announcements

1. Diesel prices will be raised by 20 Rs per Litre and the all the money collected will be given to the struggling car makers who are living in below poverty line.

2. Tax concession for housing loan will be increased to enable more sales in housing market so that the poorest of the poor such as housing brokers and the builders to eat at least square meal per day.

3. Interest rates such as Repo rate will be reduced by 5% and the CRR will be abolished in order to bring out the money deposited wastely in banks by the super rich people of India. The poor corporates who are dying without money will be benefitted.

4. Steps will be taken to increase the real estate prices to another 50% so that the common lazy man of India will work hard to earn more money to realise his dream of having own house. This decision is taken in the best interests of common man so that he works hard.

5. A task force will be set up to find the other natural resources unsold in the country so that the next budget deficit can be funded.

polt said...

>I felt that the properties are overvalued but not as much as the 1 bedroom hell holes of Mumbai.

Put Delhi too in the overpriced list. Compared to these two cities, Bangalore is so much more affordable. The weather is a bonus too.

Recently, I saw a TV interview where they said builders in Bombay have reduced prices from 29K/sqft to 24K. This was laughable. Forget the average India, at 24K/sqft even well employed IT engineers or bankers cannot buy.

Anonymous said...

India will quickly become country with 400 cities and not just 6 mega city.

Sorry but this bubble is easily pricked.

Met a big 5 consultant over the weekend who shared an anecdote about an Australian infrastructure firm who spent 5 years in India trying to bid for government contracts to build world class infrastructure. Apart from a couple of minor contracts, they didn't win anything. After years of frustration, they decided to pull out of the country.

Reason: They refused to bribe or pay middlemen.

Instead contracts were awarded to poorly equipped local contractors or Chinese companies (who bribe aggressively)

Result: Poorly planned and executed roads that are constantly clogged with traffic jams in some of the busiest areas of the Delhi-Gurgaon region.

I'm 100% positive this is occuring all over India.

Mindless growth is worse than no growth. Reminds me of cancer.

Duplexes in Bhopal said...

Thank you for sharing it...

Cool Head said...

Another spam comment above "Duplexes in Bhopal"- Vik, please clean up all the spam links in the comments.

Cool Head said...

One question to all the wise people here "If the US, which has a $14 Trillion economy, prints the world's reserve currency, has printed gadzillions via QE, has the world's leading technology was not able to stem falling housing prices or prevent the pricking of their housing bubble, why will we in India be able to prevent the local bubble from bursting?" Only rational arguments please...

Shapia Software Solutions said...
This comment has been removed by the author.
Anonymous said...

Cool Head-

- India is an agricultural country that is urbanizing rapidly. Immigration to cities is pushing up demand.
- In India, zoned land (i.e. land on which construction is allowed by the local authority) is scarce and expensive. This scarcity is artificial.
- In India, infrastructural development (roads, schools, water, hospitals) is scarce. Hence the pockets that have easy access to these command premium.

As these points are not going to improve in near future (availability of cheap zoned land, availability of infrastructural development, etc.). Hence there will not be a crash, but, stagnation.

Stagnation is a result of mismatch between developers/politicans/rent-seeker's greed and the economy's ability to sustain that greed.

Anonymous said...

>Immigration to cities is pushing up demand.

Firstly, these immigrants are years or decades away from being able to afford a home.
Secondly, should this not lead to a fall in demand in smaller towns and villages? Land and home prices have been shooting up everywhere.

Anonymous said...


Firstly, these immigrants are years or decades away from being able to afford a home.
Secondly, should this not lead to a fall in demand in smaller towns and villages? Land and home prices have been shooting up everywhere.


True that there is a permanent class of citizens who will never own any worthwhile asset. I estimate this to be ~50-60% of the population. But there is also a rapidly expanding class of farmers who have become exceedingly wealthy due to the growth and expansion of cities.

These folks in turn want to move to urban areas for "better opportunities" for their future generation i.e. good schools, hospitals, entertainment zones the works.

As an anecdote, a friend sold his bungalow plot on city outskirts to an illiterate farmer who owns 35 acres in his native village and is a dollar millionaire.

In 1990, his land holdings wouldn't have mattered much but in 20 years his net worth (and those of his fellow villagers) has climbed by a factor of 100x This type of broadly distributed wealth effect is simply impossible in the Western world.

Buy property in Bangalore said...

As land rates (government value) are set to be revised from April 1, 2013 and metro rail work is progressing at a brisk pace, there is a spurt in property registrations in Hyderabad, especially in areas where the metro corridors are passing through like L B Nagar, Uppal and Miyapur.

http://www.realtycompass.com/blog/?p=52

Mangoman said...

India has achieved another rare distinction as an arm under PMEAC finds that the high growth India is witnessing is actually achieved without the corresponding growth in the number of new jobs. This is very new and actually not achieved anywhere else in the world. This is a new record. Chidambaram, Manmohan Singh etc can be proud.

For the sceptics we suggest still we have huge openings in real estate broking business as it seems that is the only business thriving in the country with the active support of Government, RBI, Public Sector banks and Corporates.

1. After completing high schools students straight away join to street corner real estate agent to finish training
2. Every year 20% appreciation will be there and so the mango people to buy assets, so it is permanent job
3. The margin is huge and can make easy money and unaccounted too

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aam aadmi said...

As these points are not going to improve in near future (availability of cheap zoned land, availability of infrastructural development, etc.). Hence there will not be a crash, but, stagnation.

Not impossible but unlikely, of course it all depends on your timelines, you can say that it stagnated for a year and then crashed.

The reason being that most of the value attached to properties is perceptual and not intrinsic, the reason a 2BHK in Bangalore costs 50L is not because the land adjacent to it gives you a return of 5L a year, it's so because everyone expects Bangalore to turn into Mumbai in 10 years time. Which may very well not be the case, it's called speculation.

After 20 years of economic growth everyone expects that one can just do a linear extrapolation of the same trend for the next 20. Real life never works that way.

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Pawan said...

As these points are not going to improve in near future (availability of cheap zoned land, availability of infrastructural development, etc.). Hence there will not be a crash, but, stagnation.

This is pure bullshit which people who never move their ass off the couch propagate. Let me give an example:

In Gurgaon, close to my office, a 200 sq yd land plot has an asking price of 2 crores. No power backup, no security and lots of hassles in construction because one has to deal with the local authority.

In Greater Noida, which is same distance from Connaught place - the centre of Delhi, as Gurgaon is, you can get the same sized plot for 1/3rd of the price.

The difference is that Greater Noida will take probably another 10-20 year to become livable but what the heck? You are saving 1.4 Cr by buying there. You can live on rent where ever you want for next 10-20 years and construct your house once you retire if you have land.

Now the bullshit part of the argument. Why would a company like JP associates agree to build a world class Yamuna/Taj expressway? Because they were allowed to develop the real estate aroud the expressway. I expect more such projects. Which means first infra would be built and then plots/flats would be sold to lure in prospective buyers. Each new project will try to outdo the others. There will be sufficient competition which will help the buyer in the end.

Anonymous said...

After 20 years of economic growth everyone expects that one can just do a linear extrapolation of the same trend for the next 20. Real life never works that way.

Detroit was #1 city in USA for 5+ generations. Once upon a time it was known as "Paris of the West"

Stagnation/collapse can happen to any city but we have a long way to go. Right now, there is simply no competition. If you complain about lack of infrastructure or services in Mumbai or Bangalore, you can imagine what incentive is there to improve tier 2 or 3 cities.

Pawan said...

Stagnation/collapse can happen to any city.

That is why it is probably best not to buy anywhere during your working life - at least at insane valuations. Those who worked at Detroit may not want to live their retired life there.

Anonymous said...

@Pawan,

Amen to that! Have resisted this temptation for about 7 years now. Am ready to go without a house for another 7 :) How's that? With that kind of patience, I expect the Builders to "blink" first. Builders are so badly leveraged that they have to give way sooner or later. Meanwhile I build my capital and become wealthier...

Pawan said...

I expect the Builders to "blink" first

I won't really pin my hopes on this. Builders have sufficient clout with banksters and politicians and if an individual builder is in trouble then some other builder will buy his assets at very low price. Those deals will not be available to us.

However, I know lots of people - individuals as well as big bulk buying investors - who have bought property putting down the minimum 10-20% and are hoping to exit before the builder asks for more money. These people, specially the individual ones, are very nervous. Any down-tick will put the cat amongst these pigeons. That is when the fun will start. And I get a strong feeling that the time is not too far. Prices have stagnated everywhere. Volumes are gone. The next move should be down.

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Anonymous said...

@Pawan - If investors do lower prices, then builder will have no option but to match the price. He will remain stuck with inventory otherwise. What works on the way up is equally true on the way down .

We seem to be headed for stormy weather. Inflation is high (CPI is at 11%!), growth has almost halved from 9% to 5% and probably still falling. Interest rates are high and very little chance of falling given high inflation, high current acccount deficit and weak rupee. The auto sector is projecting negative growth this year. NPA's at public sector banks are high and increasing. Hiring is slow.


aam aadmi said...

@Anon
My friend is from a small town in Maharashtra (Parbhani) where the rent for a 2BHK is around 3.5k. The asking rate for apartments is at 3500k/sqft.
If that isn't a bubble I don't know what is.

He told me that you won't even find people to rent your house, they just buy them and keep them in the hope that it will go up.

Anonymous said...

@pawan,

I am reading a lot of books on value investing. And one of the primary advice that is doled out in these books is that if you want value you have to wait. Business cycles being such...once you reach bubble proportions and people like banks, politicians are not getting a good yield (say they buy a house for 1.5 crore and the best they get is 1.55 crore or maybe the holding time is so large that the annualized yield is less than what a bank FD would give you), the decline will start from that point onwards. And then the perception that will build up will be so bad that people will have revulsion for Housing sector. That might be the time I will walk in with my little kitty and buy something with zero debt...When will that be? Whenever..does not matter, I will wait till it happens. I have infinite patience, if I do not buy a house before I die, that's good I will try to blow up all my savings on my bucket list of places to visit or leave it to someone for something useful. But, I will not hand over my money to these Builders, Politicians or Bankers nexus...

Anonymous said...

I wish you all well and have been watching this blog over several years.

My only advice is

"DONT BUY. HAVE PATIENCE"

Common sense prevails here hence no one buys.
Greed prevails outside hence everyone buys.

Remember this ad for tiger conservation
"When the buying stops, the killing will stop too"

Same applies here
"Dont buy and dont let others buy"

Indians are easily scared and follow the herd mentality so when prices fall expect a freefall.

Anonymous said...

Meanwhile I build my capital and become wealthier...

If you need a house, there is no better time to buy. Unless you're a travelling salesman, most of us like to be planted and belong somewhere. Living at the mercy of landlords has it's own costs beyond what you pay for rent.

If you're looking at RE for investment then it's a different story altogether.

Anonymous said...

But, I will not hand over my money to these Builders, Politicians or Bankers nexus...

If one pays taxes, that's probably the most direct handout to the politicians and their cronies.

Anonymous said...

@ anon above,

I have done a discounted cash flow analysis for my probable income, expenses, savings and what I can retire. I have also analyzed scenarios of what capital gains I can expect if I do regular investments. I am not a salesman, but I do hope to make it to the US soon. Even if I don't the ire of landlords who bug me for a thousand or two increase every year is little compared to the one time loss I would incur by buying a house at these levels.

Lastly, taxes are extorted from me by pointing a gun at me, so I have no choice. On the other hand if I buy a house, I am handing over my money to them of my own volition. Which I am not gonna do..

Unknown said...

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aam aadmi said...

If one pays taxes, that's probably the most direct handout to the politicians and their cronies

There's a catch here, yes you are indirectly financing corruption but a lot of money is used to run the country as well, however inefficient it may be. It's like a binary argument, either the country has to be like Germany or Uganda.
If the govt runs out of money (which it will inevitably) there won't be any money to finance the CRPF in the jungles of central India as well. I am not saying it's a good or bad thing but that's just the way it is.

Anonymous said...

There's a catch here, yes you are indirectly financing corruption but a lot of money is used to run the country as well, however inefficient it may be.

There is a catch but not the obvious one you've cited. GOI uses the revenue as collateral to finance even more debt. So as a taxpayer one is on the hook for way more than what is being paid yearly.

Think about yearly taxes as making a minimum payment on your credit card statement. If actual debt were to be cleared, the tax bill would sink most households.

Here is the US view:
http://www.usdebtclock.org/

Anonymous said...

A friend who works for one of India's premier construction companies informs me that they are actually losing money on many of their construction contracts since price of raw materials like sand and labor has gone up dramatically over last couple of years.

That adds another wrinkle to this bubble. If prices were to fall where the developers can't stand to make any profits, they will stop paying their contractors who in turn will stop work OR some may take quality shortcuts instead which is even more scary...

aam aadmi said...

@Anon
Yes it is, I wasn't implying that the govt is some kind of messiah or that we can maintain this with our taxes forever. It's a wretched system and we are stuck in it. It sucks but that's the way it is. Also as I mentioned the ultimate result is a govt going bankrupt (without any reset), it's almost a mathematical certainty.

The debt will grow till there is growth and when growth stops, the system will be unable to pay the debt and will promptly collapse.

Pawan said...

price of raw materials like sand and labor has gone up dramatically over last couple of years.

At least for labor prices, a couple years of no salary hikes and 20% inflation would fix it. Not all inflation is bad.

Anonymous said...

I am fairly certain that the housing bubble has burst. I keep getting calls from these developers if I am interested in 'investing' in housing, although I never showed any interest or filled any forms for apartments. I remember the same things happened to me during the early stage when the US housing bubble burst and was never covered in popular media (they went silent till it was too late).

My suggestion, if you want to buy house/apartment, never try to catch a falling knife. It will just cut your arm.

Cool Head said...

Yes, I am getting SMS, emails (even from banks like ICICI and HDFC) beseeching me to buy houses at "discounted prices". This has started about 6 months back. Secondly now builders have actuall started advertising the prices in their ads. They never used to do so earlier

Anonymous said...

how? when?

Anonymous said...

RE will not crash. There are politicians and govt babus with lot of black money. Just yesterday the Mayor of Sangli spent hundreds of crores on his sons wedding. If a mayor can do this just imagine what the ministers and top beaurocrats can do

REBear said...

Summary of boom/bust cycles across the world :

http://www.guardian.co.uk/money/2013/feb/10/boom-bust-property-markets-round-world

Unknown said...
This comment has been removed by a blog administrator.
Cool Head said...

Hi Vik,
Please remove all the property agents spam links!

Amit Agarwal said...

This was imminent as castles cannot be build in air. Actual consumer demands are consistently coming down and the yield on property investment for residential flats have come down to almost 2.5% annually.

Fundamentally the real estate prices should correct at least 20 - 40% in majority of Tier I and Tier II cities.

Pawan said...

We were having this casual discussion today in office which lead to some back of the envelope calculations. Delhi has an area of 1500 sq km. It comes to about 15 billion sq ft. At a rate of 200 USD psft, total cost of Delhi comes to 3 trillion USD (TUSD). (Okay not all land is sale-able but then there are areas with FAR of more than 1). US has GDP 14TUSD, national wealth 45-50TUSD with approx half in real-estate. California has GDP of 2TUSD so proportionately a real-estate valuation of about 3 TUSD - same as Delhi.

I am waiting for the day when Rashtrapati Bhavan is valued more than entire state of California!

(PS - double check the calculations. The numbers are so big I might have missed a zero or two )

Anonymous said...

The calculation above is correct.
Around 3.25 trillion dollars to be exact.

Im selling delhi.
Who wants to buy? :)

i will give you a free car, will waive your registration and stamp duty fees too :)

Offer only till Sunday. Prices increase from monday.. lmao

aam aadmi said...

I'll buy...on credit. Do you take post dated cheques ? They cash in 2020.

Anonymous said...

(Okay not all land is sale-able but then there are areas with FAR of more than 1).

there are so many factors to account for which make such comparisons completely useless.

for one, majority of land in any Indian city is NOT sale-able at any price. Getting clean title is next to impossible. there is a good reason why, unlike US, there is no title insurance business in India.

So actual land available for development is only a tiny fraction. unless you have local tieup and blessings from the right political deities you can't simply start a development project in any indian city.

A close friend who wanted to develop his ancestral property had to run around for 5+ years before he got all the necessary clearances. And this was his own ancestral land. God only knows what would've happened if he had tried to purchase similar property from a third party and then develop it.

Anonymous said...

A prime and possibly extreme example to my point above:

Often dubbed “Asia’s largest slum,” Dharavi is in fact a heart-shaped agglomeration of primarily informal settlements, literally located in the heart of Mumbai, India’s commercial capital. Dharavi — due to Mumbai’s rapid northward expansion — now finds itself strategically located between the city’s two main suburban railway lines and a stone’s throw away from the Bandra-Kurla Complex, the new financial and commercial center.

These geographic advantages and Mumbai’s relative shortage of developable land combine to make Dharavi a prime piece of real estate potentially worth billions of dollars.


In US, they've evicted the old/poor/black people and redeveloped a long time ago. In India, this is next to impossible.

Anonymous said...

Slumdog Millionaires Indeed! :)

They wont even have to answer any questions to be millionaires.

aam aadmi said...

http://www.bloomberg.com/news/2013-02-19/china-housing-slaves-helping-property-rebound-mortgages.html

Sherry Sheng, a 29-year-old Shanghai policewoman, bought herself a 4,000 yuan ($642) black fur jacket, splurging for the last time before she starts paying off the mortgage on her first home.

Sheng is part of a generation of middle class that Chinese media has dubbed “fang nu,” or housing slaves, a reference to the lifetime of work needed to pay off their debts. They’re taking on mortgages even as the government maintains property curbs to damp prices that have almost tripled since China embarked in 1998 on a drive to increase private home ownership.


Pawan said...

@anon
for one, majority of land in any Indian city is NOT sale-able at any price.

Have a sense of humour man!
You really think Japan was going to trade its presidential palace for California?

Anonymous said...

>You really think Japan was going to trade its presidential palace for California?

Or that Californians would sell their land for a piece of the Palace :)

There are some interesting papers on the net about the Japanese bubble. Even there holding empty land was a cultural phenomenon and seen as a stable investment. Land was also passed on across generations. Pre 1989 (when the bubble burst), the talk there used to be about shortage of land, population pressure etc. The bust of 1989 changed all that. Land prices fell 90% in the heart of Tokyo ! and real estate began to reviled as an investment. So much so that today renting is more expensive than buying, but people still prefer to rent.

Anonymous said...

Tokyo and California demographics are completely opposite as well. Lots of really old folks (80+) who have multiple properties that they can pass on to their next generation.

Japan has virtually no immigrants but Cali is getting reclaimed by Mexico. People with money (aka white folks) are actually escaping from Cali.

Anonymous said...

Keep dreaming morons with your stupid theories. Do you know how many jobs does RE create and contribute to the economy and what do you contribute by typing bits and bytes?

Anonymous said...

>Keep dreaming morons with your stupid theories. Do you know how many jobs does RE create and contribute to the economy and what do you contribute by typing bits and bytes?

RE can be a double edged sword. Check out what the hunger for real estate did to banks in USA, Spain, Japan, Ireland.

Anonymous said...

^^ The banks may be in deep doo-doo but the bankers are doing exceedingly well, last I checked...

Anonymous said...

http://www.financialexpress.com/news/real-estate-tips-housing-price-more-than-what-meets-the-eye/1078360/0

Anonymous said...


"Keep dreaming morons with your stupid theories. Do you know how many jobs does RE create and contribute to the economy and what do you contribute by typing bits and bytes?"

Check out the link below:
http://www.firstpost.com/business/how-robert-vadra-made-a-killing-in-the-rajasthan-sun-634110.html

Bikaner used to produce high quality woolen yarn.
Both from imported wool fiber as well as the wool sheared from Indian sheep.

Today because of this crazy rise in prices, most mills owners have shut their businesses and moved on dealing in "Real Estate".

The shepherds, fearing a slowdown in demand have drastically downsized their livestock holding (some say by up to 60%)

This has directly (negatively) impacted the Hand Made Woolen Carpet production, of which India is the largest exporter in the world.

Do you have any idea about the number of weavers that could be soon out of work??? That number is close to 200,000.

Unfortunately these poor weavers are neither RE owners nor do they have any hopes of becoming RE pimps.

This is a story that is being repeated across the country.

I know friends who are giving up high paying, high level jobs in various sectors just to be able to join the RE bandwagon.
These are people who have the potential of being future corporate leaders.

All sorts of Productive business activity is giving way to RE

What are we going to become, a country of "property dealers"?

aam aadmi said...

@above
Reminds me of the story in Iceland where fishermen folk quit their well paying but hard to do job and started flipping houses on bank loans.

Michael Lewis talked about it in his book about the 2008 financial crash. He said that if women were in charge they would have never let the men engage in such stupid behavior.

Anonymous said...

Today because of this crazy rise in prices, most mills owners have shut their businesses and moved on dealing in "Real Estate".

History repeating in some sense. Mumbai textile mills have mostly made way for apartments.

Anonymous said...

cry me a river.

the biggest corporate names engage in bodyshopping and criminal violations of law (sending workers on business visas being the most well known)

now, the biggest corporate names are fully engaged in Real Estate.

the small scale craftsmen are the only ones whose loss should be mourned. rest are all moochers.

not one indian corporate product that is known worldwide as best in class.

aam aadmi said...

The urban middle class are scoundrels, I was kinda hoping that others wouldn't turn into us.

GSM said...

Do you have any idea about the number of weavers that could be soon out of work??? That number is close to 200,000.

Atleast in Bangalore, landless laborers from North Karnataka doing ok because of RE. One of the laborers told me 3 from his family came to Banglore 8 years back and today earn close 30k together with which they support 3 people back home. They were able to pay back 2L medical emergency loan and buy land worth 3L.

By the way coming back to weavers and shepherds, I always said we cannot compete with pay in Egypt, Bangladesh or Vietnam. Let them take our pie. Govt should help these people with hi tech manufacturing skills which pay better. See what Hero Moto Corp unions are demanding (1L per month)

Pawan said...

Govt should help these people with hi tech manufacturing skills which pay better. See what Hero Moto Corp unions are demanding (1L per month)

If it was possible, why would Detroit be bankrupt?

Anonymous said...

Unlikely that manufacturing jobs will provide the employment numbers that India needs. In all probability robotics will replace all repetitive work. The transportation industry employment will be virtually wiped out by driverless cars. Google driverless car cleared the driving test and has driven for almost 2Lakh km without incident. Las Vegas is considering allowing it for cabs and (not surprisingly) the cabbies there are protesting.

All this will happen within the next 15-20 years. Some economists say that low wage manufacturing countries (China, India, Bangladesh, etc) will be hit the most. The West already has lost most of its manufacturing base to low wage countries, and the industries that remain there already use high levels of automation. So they may not feel the same level of pain.

IMHO, The workers in Maruti are digging their own grave by asking for 1L/month + interest free home loans + ...

A robot will work for free 24 hours a day.

Anonymous said...

A robot will work for free 24 hours a day.

and never join a union or go on strike.

Anonymous said...

^^ Ah, the rise of the machines!

Rejoice for all of mankind will be free to pursue causes of higher intellect, while robots drive us around and pick our garbage.

Wait a minute, wasn't that the promise of computers and automation?

Then how come we're struggling to keep our head above the water even while both spouses slave away daily.

Anonymous said...

BTW, that Google car or delivery truck is one fatal crash away from extinction. At this time it's simply nerds with plenty of money acting out their wet dream.

Automation works well in a closed ecosystem where every parameter can be controlled and the entire system can be stopped when an exception/error occurs.

And God forbid if a Chinese hacker "breaks in" to your GCar! Get ready for the WTFLOL time of your life...

Anonymous said...

BTW, that Google car or delivery truck is one fatal crash away from extinction. At this time it's simply nerds with plenty of money acting out their wet dream.

At this time, driverless cars are legal in California, but the law requires the presence of a human behind the wheel (even if the computer is doing all the driving). As I said, it is simply a question of time. Eventually it will drive itself.
If you can trust a computer on a flight, why not on the ground.

Anonymous said...

Please stick to the topic of RE.

Dont fantasize.

Imagine a robot taking the shit out of a man who is doin his thing on railway tracks and washin his ass lol.

Thats india. That is how we would love our robots to be. As slaves who will do anything. Who will take our shit and keep quiet. :)

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