tag:blogger.com,1999:blog-19740856.post8315047355825960734..comments2024-03-28T00:59:01.483-07:00Comments on India's housing bubble: Realty prices show major declineUnknownnoreply@blogger.comBlogger14125tag:blogger.com,1999:blog-19740856.post-37623871733509545642009-03-16T10:33:00.000-07:002009-03-16T10:33:00.000-07:00David is right.The major reason why builder lobby ...David is right.The major reason why builder lobby is able to delude itself that things will be hunky dory come tommorow is not because they are not smart enough to smell the earth just simply that even the worst of their lot made such money during boom they think ( may be true in some cases also), that they can ride it over anticipating the turnaround.Unfortunately for them the economic realities of the world right now is such that even a miracle cannot end this downturn atleast for 2 years at any rate.This no doubt will lead to bankruptcy of considerable number of real estate biggies and builders alike.No body I guess will shed too many tears for their well deserved fate.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-56760290987008768702009-03-16T09:27:00.000-07:002009-03-16T09:27:00.000-07:00David N, that was excellent. Could not agree more....David N, that was excellent. Could not agree more.<BR/><BR/>The builders were like Chdambaram parotting : We will have over 8 % growth through 2008. Obviously wrong.Venkathttps://www.blogger.com/profile/05480442651035336961noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-33858009986345196162009-03-15T12:22:00.000-07:002009-03-15T12:22:00.000-07:00Indian Real Estate Market had seen lack of buying ...Indian Real Estate Market had seen lack of buying interest from last quarter to 2007. Throught 2008, Indian Builders hung on to high price. They have been too sluggish to react to the market.<BR/><BR/>Builders are like middle aged women. It takes a woman courageous effort, to come to terms with the harsh reality of aging. You can continue to live in a make believe world for months or even couple of years?but natural aging just can't be stopped.<BR/><BR/>Those who read the signals and adjust their lifestyle, carry on with minimal impact, on their lives. Those who refuse to read signals and adjust lifestyle, end up in medical care. <BR/><BR/>90% of women are smart enough to admirably adjust and are prepared well in advance. (Salutes to women on Women's Day!!). However, more than 90% of the builders react sluggishly to realities of the market which could affect, if not personal but definitely their financial health.<BR/><BR/>In a booming market, builders were quick to react by resetting prices upward, every week. The possibility of making larger profits drove them to be extra alert! When market trend shows negativity, it is rightly expected that the same builders would be quick to act, to cut losses. After all, cutting losses is MORE IMPORTANT than making quicker profit. (In boom, whether one reacts quickly or not, there is profit, always. Its only the quantity of profit that varies. But in a sliding market, money gets burned. And that could be deadly)<BR/><BR/>And this is exactly where builders have gone, dreadfully wrong. Even now, many are in a "make believe world". Comforting themselves, with grandiose vision of early boom! Unfortunately, they are unaware that they are shooting themselves in the leg. And soon, the self inflicted injuries may aggravate.<BR/><BR/>Cutting losses by aggressive pricing in anticipation of worsening market, should have been the mantra 9 to 12 months ago. But the opportunity was lost due to the blind belief that boom is perpetual and negative trend, a flash in the pan. Builders offered small cuts from August 08 onwards which had absolutely no impact. <BR/><BR/>There were opportunities as late as September 08 to offer aggressive pricing and convert leads to Sales. But once the negative trend firmed into solid slide, NOTHING could work. Its only in December 08, after a whole year and a half of negativity, that few builders started to react with larger cuts. But the horses had bolted in September 08 itself. And builders who reacted late, know that the stable is empty. <BR/><BR/>For the smarter builders, the market has indeed given an opportunity to prepare itself for the future. Those who have learned the lesson that procrastination will cause misery, may be quick to act during a slide, after the next boom! <BR/><BR/>David at www.exclventures.comAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-35865802370030439662009-03-14T20:48:00.000-07:002009-03-14T20:48:00.000-07:00Prize guarantee is another dubious scheme to fool ...Prize guarantee is another dubious scheme to fool buyers, builders who were forced to reduce prices after initial sales have other means to lure late buyers other than reducing prices upfront. Some for e.g. said that they would give 1 bedroom 'free', that is 3 BHK for price of 2 BHK. Note that per sq.ft. price is same but 3rd bedroom is free. Others have resorted to major free upgrades- from vitrified tiles to master bedroom with wooden floors, expesive gadgets like shower enclosures etc. when exisiting buyers ask for same, they are simply told to cough up the differnce amount.Price protection is nothing but duping gullible buyers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-71665633310215241782009-03-14T15:05:00.000-07:002009-03-14T15:05:00.000-07:00Frustrated Builders Look Out for Schemes to Attrac...Frustrated Builders Look Out for Schemes to Attract Buyers<BR/><BR/>“With real estate prices continuing to fall, builders have been forced to come up with innovative schemes in order to woo buyers. Price guarantee scheme is one such sop being offered by the builders. This scheme — being offered by the members of Confederation of Real Estate Developers’ Association of India (CREDAI), Karnataka — is unique as it benefits the buyers and not sellers. As per the scheme, the buyer would get back the difference amount if the builder sells the apartment at a lower price than the amount received from the former.”<BR/><BR/>http://www.indianpropertyreview.com/2009/03/<BR/>frustrated-builders-look-out-for-schemes-<BR/>to-attract-buyers/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-19060655969288834742009-03-14T14:58:00.000-07:002009-03-14T14:58:00.000-07:00City builders in a fix as parties seek ‘donations’...City builders in a fix as parties seek ‘donations’<BR/><BR/>“A person who calls himself Tiwari and who claims to represent a Congress party functionary has been calling us, asking for Rs 5 crore from each builder. Many will probably bargain and beat this down to Rs 50 lakh as no one is in a position to cough up such large sums at present. Neither are they in a position to turn down the request," said a developer who is connected with the Maharashtra Chamber of Housing Industry.”<BR/><BR/>http://timesofindia.indiatimes.com/Cities/<BR/>City-builders-in-a-fix-as-parties-seek-donations/<BR/>articleshow/4262698.cmsAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-38188269630298010572009-03-14T14:39:00.000-07:002009-03-14T14:39:00.000-07:00How short will be the short? RE can go ahead &...How short will be the short? RE can go ahead & start the party, we will also join the party but <BR/>we will buy in auction. <BR/><BR/>Why govt. is investigating the books of RE, are they searching for party expenses?<BR/><BR/>When Malabar Hill prices has slashed down, do you think Mulund prices will go up?<BR/>Location factor is a major contributor to RE prices, but the prices stays in equilibrium with other neighboring localities. Other wise after 2-3 years Mulund will quote more price than South B’bay.<BR/>Based on the project condition different builders are holding the prices & reacting, only the question is how long? <BR/>If the holding is for 4 years Builder’s will incur interest at 16% per annum & buyers will gain at 10% per annum. Now you understand longer the holding deeper will be the correction.<BR/><BR/>So guys let it fall then only pick up, minimum 50% price cut is guarantee. <BR/><BR/><BR/>Vulture.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-62495652207598922162009-03-14T08:52:00.000-07:002009-03-14T08:52:00.000-07:00K P SinghRealty baron K P Singh, the 7th richest I...K P Singh<BR/><BR/>Realty baron K P Singh, the 7th richest Indian, who was among the top ten in the world last year is now ranked at 96.<BR/><BR/>The realty sector has been badlly hit by the economic slowdown. His wealth has fallen to $5 billion.<BR/>Image: K.P. Singh, chairman of real estate firm DLF Ltd. strikes a gong during the listing ceremony of DLF<BR/><BR/><I>When does he gets off the forbes list?</I>shaileshhttps://www.blogger.com/profile/14407031960831830463noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-89383109025026176512009-03-14T07:29:00.000-07:002009-03-14T07:29:00.000-07:00RBI verifying solvency of 10 realty firms Anindita...RBI verifying solvency of 10 realty firms <BR/><BR/>Anindita Dey / Mumbai March 14, 2009, 0:25 IST <BR/> <BR/><BR/><BR/>Internal assessment follows banks’ worries over systemic risks.<BR/><BR/>The Reserve Bank of India (RBI) is examining the books of ten real estate companies to verify their solvency and assess the systemic risks arising from possible defaults by these companies on various loans and public deposits. <BR/><BR/>Sources close to the development said the exercise followed concerns expressed by bankers over possible large-scale defaults in loans and deposits, which may have implications for the entire system.<BR/><BR/>The companies identified for assessment are DLF, Indiabulls Real Estate, Unitech, HDIL, Mahindra Lifespace, Peninsular Land, Ansal Properties, Phoenix Mills, Anantraj Industries and Akruti Citi Ltd.<BR/><BR/>The exercise is currently an internal assessment based on available information in the public domain. RBI has also sourced data on loans, cash deposits and other fixed deposits held by these companies from all banks and mutual funds. Most of these companies have also borrowed through non banking financial companies (NBFCs) that they have floated, and the central bank is verifying the books of these related NBFCs independently. <BR/><BR/>The exercise, said these sources, aims at a comprehensive analysis of the data relating to these companies for determining the correct debt-equity ratio, solvency, state of liquidity to avert defaults, cash flows and profit margin in the current operations. <BR/><BR/>After the review, the companies or their NBFC arms may be advised to check exposure in line with cash flows, and banks may also be asked to cut exposure. <BR/><BR/>Sources said these real estate companies had raised long-term loans from banks and had placed commercial paper amounting to thousand of crores to raise short-term financing from the mutual funds. <BR/><BR/>The mutual funds, in turn, got a major part of the subscription to their schemes from the banks who held public deposits. This means a default on even a single commercial paper will impact the mutual funds, the banks and ultimately public deposits. <BR/><BR/>Large-scale borrowing has distorted the normal debt equity ratio for most of the companies and made them highly leveraged. RBI is of the view that the debt is being camouflaged in cases where the ratio meets standard norms. <BR/>xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx<BR/> Would a crash in the RE market add to the feel good factor for the common man, a possible positive development for the congress govt.<BR/>They could go to town saying we are not going to prop up insolvent RE firms even if it means a crash in RE prices and devaluation of assets. <BR/>Once back in power things could be rapidly restored to status quo.shaynahttps://www.blogger.com/profile/14563567686138983615noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-26324016799468215492009-03-13T08:39:00.000-07:002009-03-13T08:39:00.000-07:00Isjey, those were great links. But I have seen man...Isjey, those were great links. <BR/><BR/>But I have seen many busts in Indian stock (1994, 2001, 2008) and real estate markets (1994-2001, 2008). Usually in a mature economy the pains last. In a developing economy, they are more easily got over. Unless you buy on the top of the spike, there are gains in flat prices regardless of where in the cycle you buy<BR/><BR/>RE Hawk, I agree. I have tried to negotiate for pricing. In the area you want to buy, they offer 2% discount, then show disinterest and dont call back. The one who pesters you with calls is the one you dont want because of poor location.Venkathttps://www.blogger.com/profile/05480442651035336961noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-5897176511795008932009-03-12T20:53:00.000-07:002009-03-12T20:53:00.000-07:00There is a major disconnect between headline grabb...There is a major disconnect between headline grabbing price declines quoted and ground realities.for e.g. in bangalore except for DLF who cut their prices by 30% and sobha who cut by pahtetic 8% no major builder has announced major cuts and perhaps are still in ostrich like attitude that things will 'blow over' and that the party will continue again after this short break!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19740856.post-71735838146732040922009-03-12T20:29:00.000-07:002009-03-12T20:29:00.000-07:00Guys,Here is some piece of history. On how countri...Guys,<BR/><BR/>Here is some piece of history. On how countries fared when faced with just two bubbles Stock market and Real estate.<BR/><BR/>http://select.nytimes.com/gst/abstract.html?res=FB0712FA3E540C768EDDAB0994DD404482 <BR/><BR/>http://www.smh.com.au/news/national/slump-hits-home/2006/02/06/1139074171442.html?page=fullpage# <BR/><BR/>This time around we have had many bubbles popping<BR/>1. Stock Market<BR/>2. Real Estate<BR/>3. Commodities<BR/>4. Salaries<BR/><BR/>to name a few. The effect is going to be devastating to put it mildly.<BR/><BR/>Great blog Vik. <BR/><BR/>Regards,<BR/>JeyJeyhttps://www.blogger.com/profile/08882605986432997864noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-73949447738094117322009-03-12T19:17:00.000-07:002009-03-12T19:17:00.000-07:00I've intentionally put the real estate agent's nam...I've intentionally put the real estate agent's name in a bigger font. Its not some analyst who is taking. This is a guy whose bread and butter depends on the business. If he makes such strong statments we have a winnerVikhttps://www.blogger.com/profile/14772111799029574023noreply@blogger.comtag:blogger.com,1999:blog-19740856.post-8767581165414039842009-03-12T19:12:00.000-07:002009-03-12T19:12:00.000-07:00The bold letters should have bigger fonts ...The bold letters should have bigger fonts ...Venkatesh Babu K Rhttps://www.blogger.com/profile/16593327144762902106noreply@blogger.com