NASSCOM Chief sees US Visa limits as 'business killer'

I know this topic does not pertain to Indian housing however the sheer mornic arguments made by Som Mittal makes me wonder whether he is cocooned 20000 ft below the Indian Ocean and expects US Congressmen and Senators believe asnine press releases.

What Som Mittal doesn't say is that Indian offshore providers want to ship in cheap Indian engineers while billing the end customer market rates. The onsite wage arbitrage was exploited by Infosys/TCS/Wipro who shipped thousands of engineers on H-1B and L1-B visa to the US until Mr Grassley and Mr Durbin stepped in and put a brake to these unfair trade practices.

I'm not sure how Mr Som Mittal can explain a shortage of US trained IT workers when there is unemployment leves at 10%+ with underemployment at 15% levels. How can American competitiveness improve by issuing Visa when local work-force is unemployed ?

These press releases show that Nascomm is nothing more then shill for Indian IT companies and does not care about work-force whether Indian or American. They will exploit Indian engineers by paying them below market wages and thereby drive American workers out of their choses professions. The only ones to benefit are the owners and top management of these companies and the politcians in India who they suck up to, to get free land, tax-exempt SEZ's and other benefits.

WASHINGTON: The head of an Indian trade group fears proposals in US Congress to limit visas for foreign high-tech workers would be a "business killer" for India's burgeoning information technology industry and would not reduce US unemployment.

Som Mittal, president of India's National Association of Software and Service Cos (NASSCOM), was concerned that pending legislation would sharply restrict the hiring of foreign workers by domestic and overseas companies operating in the US, harming rather than helping the US economy.

Two senators, Democrat Richard J Durbin and Republican Charles E Grassley have proposed legislation that would prevent any large company from hiring more foreign high-tech workers if more than half its work force already consists of visa-holding foreigners.

"It's a business killer for us," Mittal said, adding that such a move could harm US competitiveness and was not needed anyway because there are not enough Americans to fill the high-tech jobs.

The Grassley-Durbin visa reform bill was first introduced in 2007. Congress is preoccupied with health care and climate change legislation, but Mittal said he fears that elements of the visa bill could be incorporated in immigration legislation that Congress is expected to take up next year.

US technology giants argue that they need more, not fewer, foreign workers to tackle highly technical jobs.

"Sixty percent of all technology PhDs are foreign nationals," Mittal said. "[The visa requirement] could be detrimental to the US economy. You do want to retain the best and brightest."

The industry also needs the ability to make rapid changes to its work force in response to demand or new product development, he told a newspaper.

Launching a new product in the United States requires the temporary infusion of technicians from the country where the product was developed, he said.

It's no different, he said, when a company such as General Electric is building power systems in India - the company will need to temporarily assign a substantial number of US technicians to India.

The Indian information technology sector - with export revenues of $47 billion - includes the software, design and back-office outsourcing industries. It is critical to US technology and financial services companies, Mittal said.

Mantri developers interview with NDTV

Sushil Mantri of Mantri developers speaks to NDTV and makes some good points about the Indian housing market. I like the spin he puts on the market to entice the buyer back into the market. He believes that 80L is unaffordable however 40L is affordable. He also thinks that Mumbai is highly speculator driven market.

Morons of the world unite.

Here we go again. Its start of the hype season for the builders and they are sparing no effort. Here is an article on rediff.com on such outlandish super luxury apts. There is no mention on who the buyers are, what is their profession, are they using banks to finance loans or how much black money is used to finance these homes. All the hype is meant to persuade the middle class buyer so they can jump back into the market and take loans to buy apts in far flung suburbs. Who the hell cares if there are 1000 people in Mumbai who buy apts priced over 10 crores. Most readers of rediff hardly make a fraction of that. What are these moronic idiots trying to present to the reader ? There could be 10,000 people in a city of 20 million who can afford these apts, what about the 19.999 million people who living in Slumbai ? If you agree with me just post a comment in this section. I will then point this to rediff and let them know that we are not stupid.

Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation (HDFC)

Developers committed a number of mistakes. The first was that they increased prices too much, too soon. Since sales volumes were strong, all developers across the country felt prices should be increased, even though many of the projects were on legacy land parcels. Developers kept raising prices to a point that went out of reach of even the upper class. The second, and more damaging, mistake was that they committed to buy land at exorbitant prices. Developers rushed to buy land as if there is no tomorrow and land is in short supply. Without tying up the necessary funds, developers bought land at unbelievable prices at auctions across the country. There was intense competition to buy land. The government was also increasing prices at each auction. Commercial plots of land in Bandra-Kurla Complex went as high as Rs30,000-35,000 per sq ft. If you add on three years of interest (as buildings take that long for construction), it is just too high. The third mistake was that developers refused to sell stocks that they held as they thought prices will only go up.

All three factors were due to greed—aimed to make quick money and more money. All these could have been avoided if we had a real estate regulator, for which I have been asking the government for a while. We have a regulator for the petroleum ministry and for civil aviation. But we are reluctant to have a regulator for real estate. Agreed that it is a state subject, but the industry needs to be regulated—in good times, you will notice that developers made a lot of money, but their balance sheets were still heavily leveraged. When RBI prohibited banks and housing finance companies (HFCs) from lending against land, developers went overseas to borrow money. Most of the deals were structured as cumulative convertible preference shares (CCPF) and generally carried very high rates of interest. These were convertible into equity in 2-3 years, and developers intended to repay the face value before conversion. Since these structures were categorised as equity, they came under the automatic approval route. Developers utilised these borrowings to purchase land. So, real leverage on developers’ balance sheet was very high.

Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation (HDFC)

HDFC Rate cutter offer

In the mortgage business the more you know the better it gets. Ignorance is definitely not bliss.

HDFC has comeup with a scheme called "Rate cutter" for the existing Loan customers . In this ,if you repay 0.5% of the outstanding principal, your interest will come down to 9.5 irrespective of your present rate. If you repay 1.5% , then it comes down to 9%.

There is a huge win for everyone since the differential payout could be in the 30k-50k range but the interest savings are in the lakhs. I have no idea why they don't publicize this but some friends have benefitted from this and are very happy. Hope more folks benefit. Also check with your local bank to see if they are able to match this offer. Enjoy and spread this news. This Diwali is definitely going to good for the HDFC loan borrowers. Kudos to Deepak Parekh for this.

Slow demand crimps India property rebound: PE fund

Finally people are getting the fact that the Indian bubble has popped. The unwinding in high priced locations will be slow just like air leaking out of a balloon. and this is the Economic times reporting. Good job guys to report the ground reality. Full article here

Sourav Goswami, managing director of Walton Street India Real Estate Advisors, sees the most potential in middle-income and affordable housing in top-tier cities and expects land that was initially earmarked for high-end development will be shifted to lower-cost housing as strapped investors sell at a loss.

"There are deals in the marketplace now where funds are offering to sell down some of their land positions at 50, 60 cents on the dollar. And once they do that, the next fund that's buying in at a much lower basis has the ability to sort of re-engineer, sort of reposition the product," he said.

Chicago-based Walton Street manages $3 billion globally. It has invested $200 million in India, including a position in a high-profile township project in Kolkata.


Also Read
→ Step carefully while buying a property
→ Rakindo, Appaswamy strike Rs 100-crore deal
→ Mafatlal puts city property on the block
→ HDIL to pay tax on Rs 350 cr more, says didn't evade tax


Once-soaring property prices in India tumbled by as much as 50 percent during the global financial meltdown as an asset price bubble collapsed, and while prices have crawled back by roughly 20 percent, Goswami said they have a long recovery ahead.

"I really think that even the 20 percent recovery from the lows may have gotten ahead of itself a little bit, and I think maybe you'll just see it stall here for a little bit before it starts to pick up again," he said in an interview.

Much of the bubble was driven by high-end, high-margin projects, and Goswami said the pool of buyers for such offerings has shrunk in the wake of the global financial crisis.

"To really sell into the marketplace you need to make sure that you're building something that the local population can afford," or a monthly mortgage of about 40 percent of a buyer's income, he told Reuters TV.

Action hots up in premium realty market

Another meaningless article from Economic Times. In a city of 20 million residents, these morons trumpet the realty purchases of few unnamed HNI and NRI's when in other articles they have quote studies which put the number of slum dwellers at 54%. Absolutely retarded reporting by the most moronic newspaper in India.

MUMBAI: With the revival in the residential portion of the real estate sector gaining ground, developers in Mumbai are focusing on the premium
category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations too find takers.

Developers point out that big-ticket deals are in the range of Rs 5 crore to about Rs 35 crore, with the price on a per sq ft basis starting from Rs 25,000 to almost Rs 1 lakh.

Among the properties that attract huge interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi too are witnessing interest from potential buyers.

Prices in both South and central Mumbai did not drop during the slowdown. Read more here

Can you wait till after Diwali 2010 to buy your house?

Last month, a friend of mine called up asking for my help in looking for a 1 BHK flat in Pune area. He is thinking of closing the deal by Diwali. I suggested him to wait for one more year, more specifically till Diwali 2o10.

In my opinion real estate market in Pune is a game of "who blinks first". Builders who are sitting on ready possession homes are still quoting the astronomical prices from last year (30L to 50L). Builders who are quoting around 25L for a 2 BHK are promising castles in the air (i.e. new projects launched now and will complete god knows when). Real estate nerds (and investors) like us think these projects and builders are sub prime and will crash anytime soon.

For a genuine home buyer who wants to buy a flat and stay in it, this is a dilemma.

This is not a purely financial decision. Buying a flat which is going to be your home is a great emotional high. It means security and stability, freedom from increasing rents, not having to search for a new flat to rent every 2-3 years.

On the other hand, no one likes to buy a flat for 35L and see its value drop to 25L in 2 years, even though they planned to stay in it for the rest of their lives!

So here is a question for the person who actually needs to buy a flat and settle down:

Does it make sense to wait for one more year and see where the real estate market goes in Diwali 2010, or is it better to go for a deal today if you can afford it?

I-T dept raids HDIL premises

The Income Tax (I-T) department has raided 12 Housing Development and Infrastructure (HDIL) premises, reports CNBC-TV18 quoting sources. The raided premises include residences of two HDIL directors. Sources said the department has recovered unaccounted cash of Rs 1.54 crore so far.

HDIL has been claiming excess expenses and undermining profits, it has been alleged. Over 100 I-T department officials were involved in the raids today, sources said. HDIL is publicly listed and trading at 308 at close of business 9/10/2009. Lets see what 9/11 brings to HDIL. I'm not sure what the fuss is all about with builders and black money. Everybody knows that there is no way one can buy in Mumbai without paying 40% black. What is the fuss all about ? and why single out HDIL ? Why not others like Raheja's and Akruti and countless other big and small builders ?

More details here

Hitler parody on the Real Estate downfall

Rich in India aim for fixed returns, shy risk: Deutsche Bank

I love the dicotomy in reporting by Economic Times and the Times of India property times, both papers belonging to the same company, Bennett and Coleman. Deutsche Bank says that rich folks with minimum assets of 4crs and above have very little appetite for real estate, on the contrary the Times of India says that property sales are picking up in the upper segment. Now the question is are there two sets of rich folks in Mumbai, or are we suckers like they say in Mumbai "Alibag se ayaa hain".

MUMBAI: Deutsche Bank sees little appetite for riskier assets among India's rich despite a more than 60 percent rebound in the domestic stock

Ajay Bagga, head of the German bank's Indian wealth management arm, said its assets under advisement had risen by more than a quarter in 2009 but clients were seeking safe-haven investments. "Most of the money is still very short-term, very fixed return, very preservation oriented. Very little money is looking at taking risk," Bagga told Reuters in an interview.

Deutsche has a 55-member wealth management team spread over five large cities in India and services individuals with at least $1 million in bankable wealth. Bagga said while some clients had started to invest in stocks, demand for real estate and private equity investments remained low.

"Clients have lost that bull market frenzy of chasing returns. It is back to sober asset allocation," he said. The world credit crisis has wiped away trillions of dollars of wealth globally, cutting profits of wealth managers who charge higher fees on riskier asset classes such as stocks as compared with short-term investments such as money market funds.

In India, the number of wealthy fell by nearly a third to 84,000 in 2008, the fastest drop in the world after Hong Kong, as a 52 percent slump in domestic shares hurt the net worth of individuals. By comparison, the world's rich lost a fifth of their wealth in 2008 and their number fell 15 percent as the financial crisis wiped out two years of growth, according to a Merrill Lynch/Capgemini report. Their wealth dropped below 2005 levels to $32.8 trillion.

New real estate bill worries builders

NDTV.com reports. Will this regulator be as toothless as SEBI.  One more department for the builders to grease. All the regulator needs to do is crack down on the black money component. Everything else will fall into place. Who will bell the cat ? Not anytime soon is my guess

The government is all set to tighten the noose around the realty industry. Under the provisions of the new real estate bill, developers may have to face stringent reporting norms.

Besides recommending a regulator for the real estate sector, the new bill also mandates the auditing of account books every quarter. NDTV has learnt that the audit of real estate companies will be conducted by auditors approved by the regulator.

As a result, the realty sector is clearly worried saying that quarterly audit amounts to overregulation.

But what does the government hope to achieve through a real estate regulator and quarterly audits. It is believed that by doing this the government is looking to keep a track on sale of properties besides having clarity on developer’s land bank. The government is also looking to overvaluation of land in accounts.

For the realty sector which is used to work in an unorganised fashion, the real estate regulator is expected to bring in proper regulation.

The bill soon coming up for clearance at the Cabinet also gives the regulator power to cancel the license of a property developer on violation of their guidelines – a step welcomed by many experts who feel that it is high time the government steps in.

It remains to be seen how far the law could be implemented, if at all it gets Cabinet approval as land is a state subject and would need active participation from the states.

WSJ - Better to Buy or Rent?

The full article is here.

The San Jose CPA is advising to base the rent vs buy decision on a simple formula of dividing the home price with the annual rent and then checking if the result is less than15

Indian housing has to deal with 2 other negative factors as opposed to the US. Mortgage rates are two times US rates and there is 40% black money angle to properties in Mumbai. Both these factors affect the affordability of housing for the salaried employee. Add to that the US has a tax credit of $8,000, if the house is bought before Dec 1st, 2009. 

On the NRI H-1b perspective immigration backlogs prevent anyone taking a house purchase risk as any layoff can kill the home ownership dream in a second.

All this goes to say that the US government does far greater things to facilitate an easier lifestyle for its citizens and permanent residents. Motivated people all over the world work equally hard but the US and western countries provide its citizens an affordable high quality of life which only citizens of developing countries can dream of.

>>

With housing prices down significantly in many parts of the country and interest rates low, it may be an affordable time for twentysomethings to buy that first home.

In some instances, the price of owning can be comparable to renting in the long run. But a lot of uncertainty still remains about the housing market and the economy -- making the decision to buy more complicated.

Nicole Stivers, a 24-year-old who works in public relations in Contra Costa County, Calif., purchased her first home with her fiancé in February. They were able to capitalize on what she calls a "perfect storm" -- job stability, a desire to settle down, a surge in home foreclosures and the $8,000 tax credit for first-time buyers.

Still, the move was not without its concerns. "Would we be able to afford this if we both lost our jobs? Do we have enough for a down payment? Do I have enough for moving? It's really nerve-racking when you're first doing it," says Ms. Stivers.

Here are some questions to consider when deciding if buying or renting is the right choice for you:

How long do you plan to stay in your home? "There are high transaction costs associated with buying and selling" a house, says Dean Baker, co-director at the Center for Economic and Policy Research, so home buyers should plan to stay put for at least four to five years.

The reasoning? The costs for buying and then selling a home -- which can include a real-estate agent's fee, a transfer fee, closing costs, and inspector and surveyor fees -- could add up to about 10% of the sale price, or roughly 1½ years worth of rent. "If you average that over 10 years, it is not that big a deal," says Mr. Baker. "But if you average it over, say two years, you're paying an awful lot of money to own a house for a short period of time."

Can you handle the monthly expense? While a monthly mortgage payment may be comparable in some cases to a monthly rent, there are other expenses to consider.

To get a feel for the financial burden you'll be taking on -- and to see if you can handle it -- "practice" making payments. Each month, set aside projected mortgage and property-tax payments, maintenance costs, utilities and any other home-related expenses into a separate savings account, says Gary Smola, a certified financial planner with financial-educational firm Financial Finesse.

What's the price-to-rent ratio? Home prices have come down significantly in some areas of the country, but "nobody knows what tomorrow's going to bring in the housing market," says Daniel Morris, a certified public accountant in San Jose, Calif.

To determine whether it makes more financial sense to buy or rent in your area, compare home sales prices with the cost of renting a similar place.

Divide the price of the home by the total cost of rent for one year. If the result is more than 20, "I'd be very concerned that the price [of the home] might fall more," says Mr. Baker, and you should consider waiting to buy. If it's 15 or below, he says, "you're probably reasonably safe" with prices holding steady or growing.

What is your job and relationship status? Twentysomethings are still getting a grasp on their futures and a constantly changing lifestyle might require the flexibility of renting.

But "if your career stability is strong, you are comfortable doing what you're doing … and you are committed in some form to your lifestyle," Mr. Morris says, buying a home becomes a more attractive option.

How to become bankrupt once a loan is approved

As everyone knows the availablity of home loans in India has propelled the market to new highs in 2007, sometimes upto 300% in 3 years. Most homes are unaffordable to the average Indian who is somehow supposed to magically generate money out of think air. Indian loan rates are double that of the US so the average interest payment on a loan is more twice of an average US loan. Someone suggested in one of the comments on how one can double money in 3 years by buying a property. Lets analyse this myth and see if the investor doubles this money or just goes bankrupt.

Property value total including registration : 1,00,00,000 (1cr)

downpayment : 15L

loan amount: : 85L

interest rate: : 10%

loan period : 20 years

EMI : 82026.84

payment towards interest 1st year : 8.4L

toal payment towards interest after 2nd year : 16.7L

total payment towards interest after 3rd yar : 24.8L

total principal paid in 3 years : 3.5 L

Total equity in house : 15 + 3.5L = 18.5L

Loan early termination fee 1% of oustanding principal : 1% of 80L = 80k

After 3 years the property has to sell for atleast (1.25 +80k ) = ~1.26 crore to break

Lets tabulate the gains based on the projected returns.

increase = -20% gain = -46%

increase = -10% gain = -36%

increase = 0% gain = -24%

increase = 26% gain = 0%

increase = 50% gain = +129%

increase = 100% gain = +400%

All we can say is that leverage is a high risk, high reward game. If you have the guts to lose 50% of capital or 46L in 3 years, you can make anything from 129% to 400% in that same period.

All the best to the risk takers. You deserve the reward as it is commensurate to the risk.

 The above example is more relevant for an leveraged investor.  Let us now think from the point of view of the renter. If the annual rent is 3.6L,  over 3 years the renter pays approx 11L for 3 years. It makes sense for the renter to buy an apt for a price where EMI is closer to rent, rather then further way. Its more common sense then any complex math

Lets do the same calculations for a 60L apt with a rent of 20k

price 60L

downpayment 15L

loan                   45L

tenure               20 years

interest rate    10%

EMI                   43400

total interest over 3 years : 13.1L

total principal paid             : 2.4L

total equity                          : 17.4L

total rent paid  over 3 years  : 7L

here a 3 year rent payment leaves only 5L as a difference over 3 years over the interest paid. 

Macro Markets and Micro Markets poll

Lets take a poll of where bloggers would like to buy (apt/plot/independent house) and at what price. Also lets list the reasons for the selection. It could be close to work-place, relatives or snob value for all you know. Also list whether you are NRI or not and if salaried or businessman. If you have multiple choices lets list them as well. Agents like BB please stay off commenting on the thread. Let me start

1a. Mumbai apt  Vile-Parle(East)     8k(current price 12k)  - NRI - salaried - work/relatives

1b. Pune       apt  Kalyani Nagar        4k (current price 5k)   -  NRI - salaried - work/snob value

Tim Giethner cannot sell his house

if the US treasury secretary cannot price his house accurately to reflect the market, how can we expect any other seller to be realistic in this market.

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Most property project delays in Ghaziabad, Gurgaon: Study

Ghaziabad and Gurgaon, the satellite towns in the National Capital Region (NCR), led in terms of the highest proportion of property projects delayed in the country, which were scheduled for completion in 2008 and onwards, a new study has found.

Both these suburbs have 71 per cent of projects delayed, as against the total number of projects scheduled for completion in 2008 and onwards, a study by real estate research firm PropEquity said.

In Bangalore, 309 of the 575 projects were delayed and the average delay in these projects was nine months. In Pune, 305 of 665 projects were delayed, with an average of eight months. Mumbai came third, with 233 of 501 projects, with an average delay of nine months, the study said.

“A lot of developers were diverting funds meant for a project to other projects, hence cash flow was an issue. Their order book was more than what they could actually execute. Many smaller developers jumped into the property sector and they could not complete the projects, resulting in delays,” said Samir Jasuja, founder and chief executive of PropEquity.

Thane, Mumbai and Gurgaon ranked first, second and third, respectively, in terms of percentage price drop in apartments in the country, as economic downturn and dwindling incomes of home buyers impacted property sales and led to a drop in prices. Between May of 2008 and 2009, Thane (a far eastern suburb of Mumbai), Mumbai and Gurgaon witnessed a drop of 22 per cent, 20 per cent and 19 per cent, respectively.

Most property project delays in Ghaziabad, Gurgaon: Study

Reality Expo-2009 gets good response

Deccan Herald reports. Does anyone think the Times of India article on saturday will be any different ?

The exhibition, that has stalls of around 30 developers and housing finance institutions, is expected to have more than 7,000 footfalls.

The rush to own homes in Bangalore was evident at the registration counter, as Karnataka Ownership Apartments Promoters Association (KOAPA) kicked off Reality-2009, its two-day real estate exhibition, on Saturday August 15th, 2009

The exhibition, that has stalls of around 30 developers and housing finance institutions, is expected to have more than 7,000 footfalls.

It will continue at the Grand Ashok on Sunday, between 10 am and 8 pm. The registration fee is Rs 50.

The exhibition features a huge project map of Bangalore City with the various properties of the participating builders marked on it. All the top-of-the-line industry players — including Total Environment, Golden Gate, Sobha Developers, Vaswani Estates, Mantri Developers, Gopalan Enterprises, Puravankara Projects, Brigade Group, Ranka Group, Vakil Housing Development Corporation and Kristal Group — have put up stalls at the venue.

Upcoming high-end projects, including Mantri’s Espana and Purvankara’s Venezia, had many enquiries on the first day. The stall put up by Total Environment — highlighting the use of natural materials like wire-cut bricks and exposed form-finish concrete — also got the visitors coming in. Some of the visitors found the prices steep, but were content with the choices on offer.

“The exhibition helps in keeping a tab on the actual property prices in Bangalore. The different finance options under one roof, also help the decision-making easier,” said Deepan, a chartered accountant.



Finance options

The developers are also offering financing options in association with many banks. That apart, LIC Housing Finance, ICICI Home Loans and HSBC have put up stalls at the expo. “We are offering a flat rate of Rs 5,000 as processing fee, and not the normal rate of one per cent of the loan amount taken. If the documents are pucca, we are also offering spot loan approvals,” said Sridhar, Area Manager, LIC Housing Finance, that also sponsors Reality 2009.

“The event offers a great opportunity for the buyers to avail competitive prices and special offers by builders and financial organisations,” said Mr Balakrishna Hegde, President, KOAPA. The expo was inaugurated Mr S K Mitter, Director and Chief Executive, LIC Housing Finance Ltd.

Change of plans

I just came across this article on DNA India and I am really appalled by the justified two timing by the real estate developers and builders. Is this even legal?

"Residentials hot, commercial space not.

With developers forced to return to the drawing board to make projects financially viable, the landscape is, indeed, changing."

Many commercial property areas are supposed to be only commercial. Its a way to ensure that there is uniform distribution of activities and that there is equitable growth withing the city's numerous sub sections. Also these builders claim incentives like cheap electricity and water from the civic authorities for commercial projects.

India has none or non existent zoning rules, you can mix educational, shopping, recreation, residential, commercial and industrial units in any city block without any awareness of consequences. Does this mean that zoning only for demarcating and industrial land. Why should a builder that owns a piece of land intended for commercial use - that can generate thousands of jobs and provide nearby residents place to shop, be allowed to switch to residential plans. Such haphazard plans not only lead to uneven development, it gives rise to unnecessary skewing of prices.

The same article also quotes

"Inventory days in the two cities have fallen back to early 2008 levels or better. However, the overhang in Bangalore, Chennai, Gurgaon and Hyderabad remains significant with at least 15 months of inventory in the pipeline," Goldman analysts Vishnu Gopal and Aditya Soman wrote.

Well, if GSachs is right, then I don't see how the over supply is going to be filled at current rates. In cities like Pune, there have been lot of shady dealings where builders have given huge discounts but have prolonged delivery of the house. This very similar to the years 1997-2000 where rates were decreasing but not collapsing.

On a Lighter note with the swine flu scare, I am hoping the rush of people to the city will at least pause :) and open some window of opportunity. :) FYI I genuinely think Pune will bottom post Diwali - at least in suburbs.

Six reasons why real estate is a good investment

Times of India, Bangalore trumpetting the cause of the builders. The article is right next to an advertisement from Credai - Karnataka (The builders lobby) which is touting a property mela on the 15th and 16th of August at the Lalit Ashok Hotel. Can someone from Bangalore visit and give us a real report of the ground situation. I'm tired of these soft marketing articles from the Times of India. They are as one-sided as a the coin from Sholay.

This is a good time for investors to buy property as part of a portfolio, says Kavita Sriram
Leading a life of luxury on borrowed money may not always be the right thing to do. How prudent would it be to make an exception on home loans? Should you buy your dream house or invest in some piece of land? Is it time to invest in real estate?

Stability
Real estate is less volatile than stocks. While real estate may be less liquid, and you may have to wait indefinitely before a buyer agrees to purchase your property for the price you seek, the prices are not as volatile as the stock markets. The transition towards a correction or boom takes place gradually, giving ample time for investors to read the transition and safeguard their positions.

Price correction
The economic slowdown had an impact on this sector. The rates have come down over the past few months. Wouldn't it make a lot more sense to invest in real estate when a price correction is taking place rather than in a heated market?
People with a large disposable income can explore investing in real estate for diversification of their assets. Lowering home loan interest rates and lower property prices makes it an opportunity hard to resist.

Good in recession
Some investments are considered safe in times of recession like precious metals and foreign currencies. In this list of investments that are popular during times of financial uncertainty, real estate can be included. Focus on achieving positive monthly cash flows rather than immediate appreciation. Cash flow refers to the amount of cash coming in relative to the amount going out.

Hedge against inflation
Real estate and gold are considered a hedge against forces of inflation. Inflation has led to the rupee value depreciating and property prices travelling upwards. Property investments are typically held over a long term.

Tax benefits
Home loan borrowers are eligible for tax deductions on their interest and principal repayments subject to a certain limit. Further, you can use the rental income from the property to make a portion of the EMI repayments.

Good returns in long term
Investments in property has always proved to be stable and yielded good returns over the long term. With lesser risk and probability of higher returns, this is a much favoured investment option.
Stimulus packages announced by the government are expected to show good results and bolster the economy. Cement, a key construction material, has indicated a growth of 12 percent in May. This is enough indicator of vigorous economic activity.
Borrow as little as possible and consider investing in property.