UPA or NDA.... currently there is less easy money (BPO and IT money) inflow in to the country. Manufacturing imports are also hitting low these days and continue to be less for few more years (1 to 3 years).
But due to UPA these real estate suckers will gain strength and can sustain the high prices for longer. Remember ... its just longer.. not forever. Coz there is less money in circulation in india man.
But stock market will gain strength. reason is simple.. stable govt.
TATAs 'griha lakshmi' kind of projects have future in india..
Easy money will not be a problem. UPA has another five years and they are planning reduce interest rate, CRR and everything to again fuel the real esate market.I feel like developers will hold on to their prices or may increase also. I am not sure about buyers and transactions.We have to wait and see. Again Its not a stock market to go up 1000 points every day; we can wait and see. There is a budget in June and there will lot of IPO for PSU. So liquidity will be injected and even exchange rate may go to 46 level soon. My 2 cents..
as the proverbial sardar's 12 o clock rings in, the entire banana republic of india went berserk. With at best grey fundamentals, restless & mushrooming unemployed young, outsourcing model increaingly in doubt, global money drying up, 10%+ deficit staring sardar in the face, and a neighborhood that can blow up in smoke at the slightest pretext, chances are the summer of discontent will last a long time. Astute ones will unload whartever investments they have. I am doing the same.
Hmmm.... This is a nice twist to the RE tale. Like a soap opera, where some long lost son or daughter suddenly resurfaces....
My 2 cents: This will pass over. The IT mess is not yet over, RE mess is far from over. I'll prefer to wait and watch. Anyways rentals will not increase immediately.
RE wont go up unless the job situation improves. Even in Mumbai with the stock markets doing well, inverstors will put their money in the market rather than RE. RE still has atleast another year to recover, when the job market is likely to start improving.
I think me, Vulture, Shailesh and others are still here...it's childish to say that if the market booms we will disappear. Things go up and things go down, especially things which go up irrationally and in a flash for something like UPA victory, will be short lived things. I do not expect this rally to go beyond a couple of weeks. Mark my words, we will breach 10,000 on the sensex again in the near future.
Let us also take a journey down time and see what are the reasons the RE market went up last time and whether UPA was responsible for them?
1. RE had been in a bear phase for a prolonged period, right until 2003-04. Prices started seriously rising in 2005. UPA had been in government for about 2 years at that time.
2. There was a worldwide liquidity tsunami due to Greenspan printing money to revive the US markets and this had a spillover effect on all asset classes and global economy in general. Everthing in 2005 was rising the stock markets, gold, commodities, RE...
3. Almost everyone had high paying jobs due to the Outsourcing boom or because of boom in Gulf, US, Europe etc..so people had plenty of money to throw around and therefore we had raging inflation.
4. PE and other funds were investing heavily in the overseas markets and thus RE players had access to huge funds.
5. Due to the stock markets running up DLF, Unitech and others had bloated valuations and therefore easy access to capital. Which led to them speculating to drive up growth..
6. Banks were flush with funds and very low NPA's and therefore keen to loan out to expand their asset base.
Switch to 2009. Even if the banks are forced to reduce their interest rates, there will be few takers for loans against RE. Secondly, banks themselves are forecasting rising NPA's and therefore are not very keen to expand their asset base any further to contain risks..
Globally there is massive contraction which is in no means over. There is a temporary stay in declines to massive injections by central banks. This has caused a temporary blip which people are calling a rally..the worst is still to come.
Stock market rally in India is without a base. Like I said before stock markets move up or down based on technicals, fundamentals or economics...UPA govt. being re-elected is maybe a good start but in no way is there any justification for this rally. There is an old saying - The higher it goes the more badly will it fall. This drive up is irrational and driven up by speculators/market players. I agree with Isjey, Jayaram and others..this is an extremely temporary blip. I will try to cash out on most of my stock positions soon too...
Unemployment is rising and this is a global phenomenon. Protectionism in the US and Europe will mean a very painful period for IT. All of which will translate to a lot of uncertainty and people being tight fisted. If one has money to speculate, the best place might be the stock market, its liquid and one can exit very fast.
FII's and PE's will come to India in the longer run for the time being they will stay away and focus on low risk and "known" markets.
Lastly, UPA will try to reduce interest rates and galvanise the markets. But, this move will have two major driving forces - 1. The strengthening of Dollar in the coming weeks. 2. Rising inflation. As someone had pointed out sometime back, do not look at WPI for inflation indicator look at the CPI.
In sum, I think UPA will have to be very cautious. The markets will be euphoric for a short time during which a lot of greater fools/pigs will be slaughtered. RE is in a death spiral and will continue downwards..short term blips not withstanding.
UPA is good for the economy and long term growth but they will not be able to do anything for RE in India, like Helicopter Ben could not do a "soft landing" for the US RE market with all the interest rate reductions.
I would seriously welcome objective critic of the analysis above.
I am sure Vulture, Shailesh, Vik and others will add their insights to this topic for all of us to gain.
Unitech faces revolt from Grande buyers Ravi Teja Sharma NEW DELHI
A NUMBER of HNI buyers at Unitech Grande in Noida, dubbed as India’s most luxurious residential project, have formed the Unitech Grande Buyers’ Association and are seeking refund of the crores they paid to book apartments in the project. The association, which has the support of 80 of the 300 buyers (that includes around 50 NRIs), claims that Unitech had raised close to Rs 500 crore from the 300 buyers. Many buyers had paid over 50% of the total cost of the apartment to the developer. A few had made full payments because they were offered discounts. With a huge debt to pay, Unitech recently announced it is redesigning the project which will now comprise high-rise apartments, bungalows, villas and developed plots. It has already started selling residential plots at Rs 51,000 per sq yard. One of the buyers Raj Kumar Jain, who is in the exports business explained that most of the HNIs like him had bought the apartments considering the certain unique style, character and format which has been changed now. The association members say changing the project at this stage amounts to misrepresentation of facts and cheating as they paid for the project in 2007 on the basis of the original masterplan. Unitech had launched the project in Noida in July 2007 on a 347-acre plot that it had won in May 2006 for Rs 1,582 crore by outbidding DLF. The original plan was to build 5,300 flats targeting high net worth individuals and NRIs for the ultra luxurious project. It was to include a Greg Norman Signature golf course, a state-of-theart habitat centre a 200-bed hospital and had a prestigious list of international experts working with Unitech. Another member of the association Chamkesh Sadh is clear that they do not want to fight. “We have been trying to meet Unitech chairman Dr Ramesh Chandra but haven’t got any response,” he says. Some of the members of the association met the general manager sales and marketing at Unitech but did not get any clarity of the future course of action. “But we want our money back with penalty. We will take all necessary steps to safeguard our interest,” says Jain, who has paid over 50% (Rs 1.5 crore) of the price of his 27th floor three-side open apartment at Unitech Grande. A Unitech spokesperson, in an email response said: “We are formulating the policy for existing customers of Unitech Grande. Our team is in constant touch with them and is taking their inputs. We shall address their concerns in the new policy as the interest of our customers is utmost to us. At the same time, we would like to clarify that in the new format that we have designed for Grande, the overall positioning of the project remains same. Only the product mix has changed without tampering with overall ambience & environment that we had offered initially.” But buyers say their attempts to get any clarification from Unitech have been in vain. “I have gone to Unitech’s office twice in the last 6 months. They said the project was being restarted but did not mention any change in format. As yet no options have been given to us,” says entrepreneur and angel investor Mohit Goyal, who has paid around 50% of his apartments cost of Rs 3 crore at Unitech Grande. “Due to the unsatisfactory response from Unitech, we had to come together to form this association,” he adds. NO PREMIUM A number of HNI buyers at Unitech Grande in Noida have formed the Unitech Grande Buyers Association Unitech had launched the project in July ’07 on a 347acres The original plan was to build 5,300 flats targeting high net worth individuals and NRIs for the ultra luxurious project With a huge debt to pay, Unitech recently announced it is re-designing the project
When the Stock market went down the prices of real estate didnt crash that much so why the vice versa may follow.Prices of Real estate which were sold in Jan 2008are still the same now. Why the hell didnt they crash with stock market?? So People who are bullish on Real estate now can sit with their asses shut.
India can never spend much on infrastructure with such a bad fiscal deficit. Not like the 2004-2006 phases. Now when Oil prices go up watch the India fiscal deficit zoom more than real estate prices
UPA getting more votes and retaining their power does not impact RE prices directly. That is to say RE prices are influenced by many other factors then party in power at central government. RE is local to great extent. I would evaluate any city in mainly following ways.
Cities like Mumbai and Banglore were already expensive, hence will not get bulk of new Employments. The second tier cities will probably get if any gains in employments.
Infrastructure development is improving compared to 90's. That will result in better connectivity with distant suburbs. More people will start thinking them as viable alternative, to older suburbs.
In case of Mumbai always Supply was considered as main constraints. During boom time Govt passed all redevelopment policies, increased FSIs etc... that will add significant supply.
I don't see any single reason (at least in case of Mumbai) on why the home prices should move up? In fact stock prices going up is like double whammy. People who lost their shirt during last burst, will feel so bad that they did not catch current run up. And will become even more risk averse.
RE busts take long time to stabilize. This one started just 2 years ago. It will take at least 5 years to get back to flat.
Realty slump hits MMRDA againAnother attempt of Mumbai Metropolitan Regional Development Authority (MMRDA) to try and earn maximum funds from the Bandra Kurla Complex (BKC) seems to have gone for a toss.
The authority had offered over 100 players in the G block of BKC an extra floor space index (FSI) of four. However, apart from nine players who wish to reconstruct in the block, no one has come forward to take benefit from it.
Confirming the development MMRDA spokesperson Dilip Kawathkar said that it will be the metropolitan authority which will decide the further course of action on whether to extend the scheme or not.
In order to earn more and more funds from the existing land users in BKC, the authority had come up with a plan to offer them additional FSI in October 2008. According to the plan, the existing building owners were to submit a proposal to the authority for granting of permission to reconstruct and avail the additional FSI.
Well, I see the UPA Govt. equivalent to a second Bush term in US. They will try the same old things like lowering interest rates, massive stimulus and helping rich to make more money.
This will all come down like a pack of cards and there would be re-elections in India by 2010.
All the enthusiasm will get over as a lot of pain is coming for Indian market. --Major job losses. --Salaries will be slashed substantially. --Very less buyers for RE. --RE prices tumbling by 50-60%. --Stock market going back to 6000 level. --A lot of unemployment and increased crime.
Grow up and talk something new. Jerks like you who have been predicting since second half of 06 will just run away in sometime from this blog.
Just two days back you wrote that NDA will come to power.
Guys like you, shailesh and vultures are big failures in life. Pls. keep your Gyan to yourself and understand the upcoming reality.
Kindly do not mislead the forum with your bullshit about sensex coming to 10k now.
You guys will vanish from this forum shortly, just grow up and admit that since 2006 we have been predicting about the crash and we have failed miserably, SORRY.
Accept your mistakes with dignity as we all make mistakes.
Sanya: No one is stopping you from buying. In fact, I believe someone on this board offered to sell his home for the price he bought + Interest he has paid in last 2 years.
Our opinion does not change market. Our opinion are based on market. I pointed 3 main points Unemployment, Infrastructure and Supply. All seem to point to decreasing housing prices. What points do you have to offer? Validate your argument by reason, not just whims.
RE does not crash like stocks. It deflates. That is happening now, it will do so till employment picks up.
Consider this: a report from PropEquity, a firm that maintains data on real estate, said that in the first quarter of the current financial year, the Mumbai market saw an average correction of 42.84 per cent compared to the corresponding quarter last year.
According to another report by Centrum Broking on Maharashtra Chamber of Housing Industry's exhibition, prominent developers such as Kalpataru, Lodha, Rustomjee and Acme Group were quoting prices 20 per cent lower than their card rate six months ago. Godrej Properties had dropped the quoted price of its Mahalaxmi project (Planet Godrej) by 34 per cent.
Prices in other major metros too have seen a significant correction in the past six months, according to the PropEquity report. These include Gurgaon (24 per cent correction), Chennai (13 per cent) and Hyderabad (10 per cent) for the same time period.
I am regular follower of this blog and I am aggressively looking to buy home in bandra area in mumbai.
I have few facts to share with you. I am in no way related to real state companies or agents and I am individual looking to buy flat for myself.
I must tell you that flat rates have fallen 30% in this area and if you are dealing with real state agents they will try to get you in trap.
Many many foreigners are leaving country hence rent is coming down very fast becasue only foreigners can pay rs.1 lakhs + rents and now they are leaving India because many companies are running in huge amount of losses and they just can't afford to pay such extra ordinary prices.
There are many many flats available and new supply is just being added every day.
Rents also have fallen by 40% in mount marry and pali hill area and 20% fall is invatable.
Few months back when i use to contact real state brokers to show me flat they use to say no flats are available but now every agent have 2-3 flats to show me.
I will be further getting into negotiation but I must tell you I am getting flat for atleast 30% lower price from top.
Today sensex went up by 20% and everybody is taking it as start of new bull market which is clearly not the case.
After todays 20% run did you noticed one thing, there was no volume in trading, market traded only for less then 30 seconds and it hit circuit. Nobody got chance to buy and sell, it was driven totally on pure speculation.
Rise of this market will actually be defined tomorrow or day after tomorrow when we will see profit booking, lets see where it stays then.
This market rise was purely driven by FII investors and there are many many mutual funds in India (DII) which are still sitting on pile of cash and they will only invest when there is atleast 25% fall in market which will drag us down again to 10000 levels in sensex and 3000 levels in nifty.
This is bear market rally and there has to be one fall again for it to start new bull market, because I talked to few people and they do regret not buying at 8000 sensex level but they feel market prices are too high and they are still in shock of 2008 bear market which destroyed there portfolio by 80%.
Todays rally was totally driven buy traders and speculators and there are hardly any geniun investors in the market yet, it will take some time for them to come back into market hence don't get any bullish on the market, world economy is still in bad shape and these analysts which you see on t.v. (cnbc tv18 etc.,) are just here to speculate.
btw, just ignore my suggestion and think, will you buy shares on 14500 sensex levels when you seen them falling from sensex 21000 to 8000 in just 1 year and suffered 95% loss in case of real state stocks?
I bet, you won't, not atleast now because average indian retail investors wealth is destroyed and mutual funds also will not see any more investment soon. People are still scarred and this rally was totally driven by FII's who need emerging markets to invest because they know developed markets are still in crappy ressesion and nothing is going to improve before 2010 hence they are just bulling developing markets like India which are very easy to manipulates with small amount of money (imagine they call bull run indian market with 2 billion dollar investment, which is penuts for markets like united states, nasdaq).
I can tell you, if you want to buy flat hold for at least 6 months more and you will get atleast 10% more fall in the prices.
Haven't you seen rise in advertisments for flats under 10 lakhs in newspaper? why? because developers know there is no money in the market but they can stil make money buy selling in bulk in low prices instead of selling few flats in exteremely high prices.
as vluture said 50% price fall is gurnateed, market has already fallen by 30%, wait more for 10% fall and don't buy. Real state market is NOT like stock exchange, it takes time to rise and it will take time to find bottom, this is not the end. This rise and done nothing for local people they are still in mess they are still in loss they still have no money this rally was driven by FII's and not people here who can book profits and buy real state.
@Sanya: I do not understand the reason for your euphoria on RE. Just because UPA will form a stable government does not mean RE will go up. Also, when stock market fell 50% the RE didnt fall by the same amount, no reason why it should gain from the one day rise of the market. Fundamentals of the economy hasn't changed and we will soon see today's gain getting nullified. You can see expert reviews saying the market gain has no fundamental basis.
Having an opinion is all this forum is about, but it should be substantiated with sound arguments instead of hyperboles.
Indian stock market went crazy.. Almost 20% up in one day. That is stupid, what has changed?? Anyway, same emotional reason can make this market run another 20%. Lets be realistic UPA government is not going to spent money on infrastructure. UPA government will spend your tax money to grab votes.. Builders should try to raise capital by secondary offering as equity price has gone up quite substantially. I think balanced sheet will get better. I think market fundamental will remain same for this year. However, 3-5 years time frame you will definitely make at least 50-70% in good projects.
Clear mandate will make sure that market does not crash as expected before and business will turn around in next six months or so.
I was a bit amused and bemused by your reaction :)
Firstly, growing up implies consistency and being consistent means we all have the same message viz. - This is a RE bubble and its going to burst.
Only stand up comedians require a new story everytime they talk..at least no one can blame us for being inconsistenct in that sense.
I never wrote that NDA "will" come to power. I might write that it would be good if NDA comes to power..but never have I made that kind of prediction. Pls. substantiate such claims.
People like me, Shailesh and Vulture are patient people who can wait long term for good deals and are able to look at criticism and data dispassionately. We are happionaires :) So, though we are not millionaires, we are successful!
Everyone is entitled to an opinion and I think and can furnish objective reasons why sensex should go below 10K. If you think that the stock market will go to 20K in the short term, pls. tell us why and maybe we will benefit/learn from your insights.
I do not understand why you have abused me and some other people in this forum. Two reasons could be - 1. You have invested in RE and are scared about losing it and not getting buyers or are already stuck with a loss .. 2. You are trying to provoke/intimidate people with the intention to curb opinions not agreeable to you..
I do not get intimidated or provoked easily and will be around with my opinion's for quite some time and so should all the others, regardless of which way the RE market goes...
Bharat, Shailesh, Vulture et. al. I was away buying some foreclosures in the US and now I'm back to the forum. I got some good deals at 60-75% in Washington DC area. I myself have been an advocate of reality and waited 4-5 years to buy in the US till it has corrected. US is still not done going down in a lot of areas and major pain is ahead for them. I think by 2012 we'll see a bottom in US. In India it will be a slow process as people need to get out of denial mode and may take years. In fact I'm afraid of civil unrest in India.
This 20% runup in stocks is total BS. People have nothing better to do and are just waiting to gamble, be it stocks or housing. The country is now like a casino.
II have been following this forum but now i feel that this forum will slowly die for not looking at the realities.
I just fail to understand why you guys are not realising the fact that certain industries have already started reviving. Auto, FMCG, Durables, Steel, Cement etc. Infact the other day in BS they mentioned that 5000 diamond units which were shut has already started.
I see stock market for short term stablising @ 13500 to 14500. Just matter of one year it will be close to 18k.. Lot of money sitting on the sidelines will slowly start pouring into India.
Some of you guys just are failing to look at new realities or conveniently ignoring the facts.
Let us wait for a couple of days and then we will get some direction.
Aren’t they the same people who failed to revive the market in last 1.5 years? Are these the same people who caused market crash in 2008? There are two things going on, 1. Stock Market euphoria 2. Real estate stagnation.
If you know how to make money in stocks then act accordingly, don’t get confused between RE & stock.
Manic Monday | UP And away?
“Association of Mutual Funds in India (Amfi), a trade body representing fund houses, declared Monday a non-transaction day. This means investors who placed orders to buy or sell units of mutual funds on Monday could not do so and the net asset value (NAV) of each unit of a scheme still reflects Friday’s closing price of shares”.
Mumbai: At a time when transactions of premium apartments in south Mumbai have become a rarity, a flat in the landmark Il Palazzo building on Little Gibbs Road, Malabar Hill, sold for around Rs 14 crore last week. Property market sources said although this is just a one-off sale, it is probably the highest price fetched by an apartment this year. The market for high-end flats in south Mumbai has virtually stagnated for over a year now. Builders who used to quote Rs 70,000-Rs 80,000 a sq ft for such flats—when the market was booming two years ago—have slashed their prices by almost half but are still struggling to find buyers. People familiar with the deal said the threebedroom flat was bought by textile magnate Alok Shah of Garden Silk Mills at Rs 56,000 a sq ft. The apartment located on the eighth floor of the 21-storey building has a carpet area of 2,500 sq ft and belonged to a widow. Il Palazzo is considered one of the best residential buildings in south Mumbai and has traditionally commanded a high premium as its apartments are much sought after. Built in 1972, Palazzo is placed on the highest point of south Mumbai, surrounded by the sea on three sides and commanding a breathtaking view of the island city. It has 84 flats in all, including 14 duplex apartments, a basement car park, storerooms, four automatic elevators, CCTVs placed at strategic points and intercom facility in each flat. The lobby area is lined with granite, marble, mirrors and decorative lamp shades as well as sofa sets for visitors. In late 2007, the building came to national prominence when actor and former BJP MP Vinod Khanna bid an astonishing Rs 1.20 lakh a sq ft (Rs 30 crore) for a flat on the 13th floor, belonging to Citibank. Subsequently, the deal fell through and Khanna withdrew his bid. However, last week’s transaction at Il Palazzo is no comparison to the last big sale that happened in 2007 when a flat measuring 3,475 sq ft (super built-up) in the NCPA Apartments at Nariman Point was bought by a London-based NRI at Rs 97,842 a sq ft. The price of a plush building is determined not only by its location or view but also by the status of residents. If the neighbours are big corporates and industrialists, the society commands excellent value. Interestingly, these premium flats are not to be found in the new skyscrapers that have come up lately, but in buildings constructed over two to three decades ago, mainly located in south Mumbai. Meanwhile, realty market sources said that with Monday’s stock market rally and the euphoria created by it, a section of builders may find it tempting to hold on to their prices or even increase them. “There is a fear that builders are trying to take advantage of the good sentiments by increasing prices. The psychology of the developers has suddenly changed,’’ said a source. Ashutosh Limaye, associate director of Jones Lang Lasalle Meghraj, a global property consultancy firm, said, “The sentiments are in favour of a stable government and if the sensex continues to rise over a period of time, there is a chance that the property market will rise.’’ Pranay Vakil, chairman of Knight Frank India said, “It seems prices will not go down any more because sentiments are strong. There are also expectations that the new government will offer sops to the housing industry.’’ According to him, developers may stop selling for some time and watch for a while before taking a decision to hike prices.
Article like this have already started appearing in news paper. Now pls. read what the so called consultant have to say about RE. These are the same guys who were predicting a fall.
Guys use your brains and believe in yourself and then take a decision.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying AttentionPosted May 15, 2009 09:31am EDT by Aaron Task in Investing, Recession, Banking, Autos, Housing Related: ^DJI, ^GSPC, DDR, XLF, GM, RWR The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.
"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."
Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."
This outlook is based on the following main points:
* With the unemployment rate rising into double digits - and that's not counting the millions of "underemployed" Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity. * Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt. * More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.
As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the ‘greater fool' theory."
"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for financials and automakers alike. "The bailout money is in the sewer and gone."
15 May 2009 The Worst Is Yet to ComeOne of the favorite retail analysts in the Cafe is Howard Davidowitz, and he is probably in the top ten overall. The accomplished shoppers in our crowd (predominantly the ladies for some reason, who have a canny sense of price and demand and store quality, whereas yours truly becomes overwhelmed by a numbing dread upon entering most retail establishments of the non-Home Depot or non-electronics persuasion) all tend to shake their heads in agreement when David speaks to the ups and downs of specific store chains and trends. I can think of no higher recommendation, for these are for the most part the front line consumers and they take their duties seriously.
Last night in speaking with a youngish acquaintance just completing law school (another one, alas) who was looking for advice on long term investments we observed that now is the time to remain liquid because 'the worst is yet to come.'
In 1999 I began an intense study of market bubbles and crashes as mentioned before. This included buying contemporary magazines and newspapers and reading them to see what was going through people's minds.
Today reminds me of the briefly sunny period in 1930-1 when most economists and public officials agreed that the Depression was already over and the economy was back on track. President Hoover dismissed a delegation of businessmen who came to Washington with ideas on stabilizing the economy with "Too late gentlemen, the slump is over."
There are few things from my childhood that I remember more vividly than grandmother's comments regarding this false recovery. "If we knew what was coming, we would have killed ourselves." This from as strong a person as I have ever encountered, with a faith that would break rocks. The Great Depression left an indelible mark, or more accurately scar, on her entire family, and my father's as well.
And I never heard the name "Franklin Roosevelt" from her lips without it being preceded by "God bless" followed by "he saved my family." Not all of her children unfortunately. She said she cried so much and so often that she was never able to cry again. And she did not, even at the end.
Of course it was the second half of the great stock decline after the 1929 Crash that did the most damage, because this is when the carnage moved from financial assets and the banks into the real economy, with unemployment rising to 25% into the trough of the Depression in 1930.
Roosevelt came into office and began spending and innovating with programs to attempt to mitigate the impact of the economic collapse on America's families. Other countries, such as Italy, German and Japan, made their own political choices. We need to bear in mind that America itself came perilously close to a genuine brand fascism, and not the cartoon caricature presidential overreach cited by the corporate elites of the day. Hitler and Mussolini were the solutions proposed by the industrialists, they were their men, and they bankrolled them heavily.
And so here we are. What comes next is anyone's guess. But by now you should be accepting and internalizing the general themes, including the devaluation of the dollar down to levels that are probably still not believable, an activist central government nationalizing key industries, civil unrest and agitation, and a confusing cacophony of hysterical mumbo jumbo coming from media whores and corrupt officials.
The crisis is not over. We have just finished the beginning, the easy part, the initial collapse of the bubble. The worst is yet to come.
Watch the video of this commentary from Howard Davidowitz linked below if you get an opportunity. His delivery is priceless New York style.
On saturday 17th May, NDTV had a panel of politicians commenting on the CONGRESS win and their future course of action.
I can't remember the name of the communist party rep, his only comment was on the relatively limited damage felt by India due to the global credit crunch, which he attributed to this election as the ruling party was trying to suppress the effects of the global cedit crunch for its own gains - now achieved.
He was quite categoric on the challenges facing the UPA from this global credit crunch.
Another statement which caught my eyes were that of KAMAL NATH in todays papers, he has mentioned social housing as a means of creating employment. So the emphasis is more on keeping the lower sections of the society employed and sheltered rather than pampering to the yuppie crowd of MALL SHOPPERS, LIMOUSINE BUYERS, 4 BEDROOM PENTHOUSE OWNERS and KINGFISHER PAX.
In short lower house prices will drag the prices down. There is more grief to come on the employment front.
Well regards the stock market..........read this article on the western market.
US 'sham' bank bail-outs enrich speculators, says buy-out chief Mark Patterson
The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.
“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.
Under the convoluted deal agreed earlier this year, MatlinPatterson has come to own 80pc of the shares while the US government has ended up with under 10pc. Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.
MatlinPatterson said private equity and hedge funds were deluding themselves in hoping to go back to business as usual after the trauma of the last 18 months.
“This is not a normal recession and there will be no V-shaped recovery. The crisis has destroyed leveraged companies. We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance,” he said.
“Alfa hedge funds have been making their money by gambling with excessive leverage, so the knife that cuts off leverage is going to cut off their heads as well,” he said.
Like many bears, Mr Patterson expects the great crunch to end in deliberate inflation, deemed a lesser evil than outright depression.
“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.
Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!
At present there is no way to confirm that this was what Mr. Patterson said, and readers will need to consider this in whether they take the article seriously. However, there are a couple of points with regards to the article that might need highlighting. The first is that it is difficult to imagine any reasonable motive for why the reporter might have invented the quotes. After all, the article is based upon a conference where many people would have heard Mr. Patterson's discussion - and inventing things from such an event would therefore be an odd thing to do.
The second point to consider is that, if he said such things, Mr. Patterson would have risked any further involvement in bailouts and may have damaged the position of his company in any future bailout activity (Ratner calling his company's jewellery 'crap' comes to mind as a similar example). As such, retraction of the comments might be seen as an exercise in damage limitation, if the comments were indeed accurately recorded.
Neither of these points demonstrate that the article has accurately represented Mr. Patterson, but they are points that might be considered in making a judgement about the veracity of the article. I will, of course, field any comments on this from Mr. Patterson, and an explanation of why the original article is wrong, and why he has chosen to ask the article to be removed from the Telegraph.
In the meantime, I am guessing that many US taxpayers might find the alleged comments made by Mr. Patterson to be a matter of some concern. No doubt, many of these taxpayers might want to establish whether the comments were made and, if they were made, may find that their perspective on the various bailouts has shifted.
From the point of view of this blog, there is nothing new in the quoted comments and, if they are accurate, just serve to confirm an existing view. Of particular note is the comment suggesting that the banks are insolvent, a point made many times on this blog.
As a final comment, all credit to Zero Hedge for hanging on to the original article, and their efforts to establish the truth of what was, and was not, said. If such comments were made, they represent an 'insider' view that should be heard.
Another statement which caught my eyes were that of KAMAL NATH in todays papers, he has mentioned social housing as a means of creating employment. So the emphasis is more on keeping the lower sections of the society employed and sheltered rather than pampering to the yuppie crowd of MALL SHOPPERS, LIMOUSINE BUYERS, 4 BEDROOM PENTHOUSE OWNERS and KINGFISHER PAX.
This is a typical bear interpretation but a bull will look as a opportunity for growth and thus having a positive impact on RE.
Mass housing scheme is already existing it is only that this Govt will give these guys tax incentive so that all the black money can be brought from abroad. Friend’s things are not simple as this. Money laundering will become a serious offence very shortly and world bodies are looking to make this transparent. Now most of the politician and crooks who have the money abroad will route this money thru mass housing scheme.
I personally feel builders are going to get complete tax exemption on the name of mass housing. Trust the builder’s passing on to the consumers.
Some builders in Mumbai have already started to say that currently they have decided to wait and watch and then sell. I was told by a broker this morning that K Raheja Universal which had brought their Mahalaxmi project to 18k has suddenly increased the price to 25k.
Since last one year no new projects have been launched in Mumbai. QIP's for real estate is happening at lightening speed. Infact I heard Sameer Aurora saying on CNBC that he did DLF deal in four hours.
Sentiments are changing slowly but surely. Fund managers will be punished by their bosses if they ignore India.
I am not saying that property prices will shoot up again but be rest assured that movement has started and the momentum will only gain.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
I think the housing market may still have some downside. Especially because in the US the part A and option ARM resets are due to hit this year. Buying houses will be on the decline because of Banks afraid of loaning money and also because of rising unemployment. Besides as far as the Banks go, the stress tests were a sham and they still need to provision for Commercial Real Estate bust and credit card defaults. On the east coast, especially the Tri-State area, one can already see a lot of strip malls putting up signs for rentals and outright sale. DC was bloated and ripe for picking..I suspect India will face a similar fate very shortly. Last time around, I remember people saying that there will be no crash in Mumbai and things will improve in 6 months etc..but the crash when it happened was very sudden. In about 3-4 months Lok Housing was going bankrupt, Hiranandani prices crashed and all over Mumbai RE become pariah.
On the BB phenomenon. A lot of his statements are the conspiracy kinds..black money, politicians, smugglers etc. And almost all of his projections are of the nature - "I personally feel", in my experience. I see a complete lack of objective analysis. If the RE market was about to boom and BB was a RE player, he would be out doing research, buying properties and getting ready to make the big bucks. Its ironical that we find him on this forum writing 5-6 posts of the "I personally feel" subjective variety. With no analysis, no data and no objectivity.
Anyway, I hope his pump and dump style does not find victims on this board and spoils someone's savings or retirement plans.
The stock market closed almost flat today. Vulture is right about the volumes being low and therefore this seems to be a fake rally. Also as Vulture has pointed out, remember it was during this UPA govt.'s tenure that stock market was falling from 21k to 18 K to 12k and then to 8K. If they could not arrest it then and were worried about their dollar reserves then, why would they be able to pump up the markets to 20k now?
Like I said before all signs are that this rally will die before long and I will be exiting soon at an opportune time.
Like one mentioned " there will be social unrest in India" are extreme predictions. I still feel house prices are very much over priced; but anything can happen in India. I am in India for the last 2 months and I can see people still like to buy house/land and think that RE is the best investment.
Majority of the RE investors in India are not going to think like us in this forum.
Don’t hit Vulture below the belt I am sure he will give us today’s volume which was historic. Let him give the figures if I give perhaps likes of Bharat and co. may not agree. With today’s volume and still the market is flat speaks about the strength of yesterday historic rally
Bharat wants you to give data and proof, I really don’t know what data he has provided besides repeating what Vulture has already said. None of these guys have posted any positive news and analysed.
Now like the retired person he too is getting personal, I am increasing getting a feeling he is the same frustrated guy who was getting back at you.
Bharat cant we have this forum going on without getting personal.
Its supremely ironical that you have made personal judgement on quite a few people including Bharat, Sanya etc. While asking people to refrain from passing personal comments.
Hello all- I think that the politicians are trying hard all over the world to keep housing propped up. And they have put the world economy on steroids (stimulus). This huge dose of steroid would give birth to massive inflation.
The only way house prices can stay high and stock market at double the price is that anything worth today at Rs. 100 is worth Rs. 200 in the coming future. Or a house worth 20 lacs in actual value would be worth 40 lacs in inflated value terms. Which means record breaking massive inflation.
If inflation happens and salaries don't keep up with it or job losses continue/are there etc. there will be immediate change in Govt. and may even cause social unrest as majority of Indians are still struggling.
Rich default on luxury homes like subprime victimsThe above article is relevant for Indian Luxury Home Buyers also. In the light of good chunk of thumb twiddling IT "Managers" coming back to India, the lending institutions will be greeted will be more defaults resulting in voluminous NPAs. This is one of the reasons why Banks are not reducing the interest rates in the same breathe as they were increased. The banks are trying to recover their dues as much as possible before the RE crash.
I know for sure you are very intelligent and would need your help in analysing the news which are currently appearing.
I speak with my experience and conviction but your view is very analytical. This forum has learned a lot from your comments including me. These are some of the news I read today and would like your views.
There are lot of other news like Baltic dry Index at seven months high, Market trade record volumes etc.
BB Said; This is a typical bear interpretation but a bull will look as a opportunity for growth and thus having a positive impact on RE.
Mass housing scheme is already existing it is only that this Govt will give these guys tax incentive so that all the black money can be brought from abroad. Friend’s things are not simple as this. Money laundering will become a serious offence very shortly and world bodies are looking to make this transparent. Now most of the politician and crooks who have the money abroad will route this money thru mass housing scheme.
I personally feel builders are going to get complete tax exemption on the name of mass housing. Trust the builder’s passing on to the consumers.The govt especially Chidambaram has mentioned in the past of inviting BLACK MONEY but only into non essential sectors which generate employment and revenue i.e TOURISM, ENTERTAINMENT etc.
The last thing you do is to attract investment from bhais!!! into social housing. You can imagine the quality of build, poor Ganpat getting thrashed by the crooked builders henchmen for complaining.
where the electorate has given the LEFT FRONT a kick in the touch, if the UPA had to follow BB suggestion the LEFT will be back within no time championing the cause of hapless poor homebuyers left at the mercy of unscrupulous BHAIs!!!
BB you keep quoting Chembur in your posts as a attractive RE investment. For your info i am a hard core born n bourght up Chemburkar, The charm of chembur is in its laid back green colonies and good network of schools along with a predominantly educated middle-class. The character of chembur has undergone huge changes and most of it is for the worse rather than the better.
The Catholic convents of OLPS and St Anthonys have deteriorated alongwith SWAMIs. Good leafy colonies like Maitri Park are giving way to multiple towers being constructed by HN. Look at the state of Union Park all those idealic bungalows turned into multiple storied towers with bedrooms in adjoining buildings within a handshake, a la DOMBIVILI. Union Park has no place for parking cars.
I have invested in property and have a vested interest in prices rising to keep my investment growing however i am realistic about what to expect. Right now i live in London, i brought the present house i live in 2000, since then every year i've been baffled by the increase in house prices, here now my house is valued at 2004 prices and expected to come down further. All around where i live new housing estate are vacant without any buyers.
The same is likely to happen in INDIA especially MUMBAI when places like SINDHI COLONY, SUBHASH NAGAR, SHELL COLONY in Chembur are turned into huge social housing sites. And expect large corporates to enter this sector, they ain't stupid to let go the LOW HANGING FRUIT.
me also from chembur, i bought in 2002 for 20 lacs a small 2 bhk, now the same if for 80 lacs, i want to upgrade to bigger flat i am not able to , as i am not finding buyers willing to pay this market rate for my home. definitely the price has to come down , in many of my friends buildings 10-20 flats are still free, even though buildings are 5 yrs old. builders are too greedy, they are not ready to let go for even few lakhs lesser. even though stock market is up, the other things are still negative, i feel price must fall atleast 20% from here to attract new transactions.
@shayna you said 'The Catholic convents of OLPS and St Anthonys have deteriorated alongwith SWAMIs' could you elaborate, i went to swamis and loved it, one day would want my kids to go there, i would be so disappointed if things have changed so much for the worse there :-(
You, the entire Chembur area has become crowded with buildings in place of earlier bungalows and a rise in hutments too. The infrastructure is more or less the same but now creaking under the extra load. Most old buildings are more than 25 years old, so look really jaded. Who will pay 70-80L for an old flat in a building which may need extensive repairs in near future. Just have a look at the old "star" buildings in Chembur like those near Diamond Garden and Ambedkar Chowk. Also I recently visited the area and now some parts really look seedier than they used to about 25 years ago. I myself used to stay in Sion and many friends used to stay in Chembur, now large tracts of the area has turned unliveable (or have our standards of liveability changed over the years, I wonder). However, flats in the garbage dumping ground near Anik Depot called Bhakti Park (see it to believe it!) are still having asking prices in the several millions. Do you people feel that these prices are sustainable? Something's gotta give! Step outside the area and you have the large festering slums of Antop Hill and Sewri. Travelling there recently really gave me an unsecure feeling, which I never used to have in the old Bombay, even at odd hours.
I am surprised that you dont know the nexus between Goodas, politician and builders.
Can you pls. let the forum know the price you brought, area and the current price.
It will be very helpful when numbers talk in this forum.
Bindas BhaiThe house i quoted in my posts is the one i am living in here in London. Brought for £86000 in 2000 and being re-mortgaged this month for £145000. It was quoting £195000 in Sept 2007 when i last re-mortgaged it.
I released £14000 of equity from this house in 2005 and purchased an acre of land in COIMBATORE for Rs13Lakhs. In 2007 a SEZ (RAKINDO)was announced adjoining my land and then was valued at Rs80Lakhs, I Do not know the current valuation however the SEZ was being promoted by Dyanidhi Maran and hence am hopefull.
Having said that all of these are figures thrown about. End of the day it boils down to how much an individual is ready to pay for the Apt or Land. With the current situation of tight credit valuations have to come down.
Looking at the excess of Apts Hiranandani is selling whole floors in the Maitri Park regeneration project in Chembur. The reason being he is not hopefull of attracting adequate buyers for 4 apts on each floor.
Talking of Builders, Goonda, Politician nexus. There has been a DISINTERMEDIATION in this industry where the GOONDA had turned into a builder cum politician. CONGRESS realises this and will try to correct it by tendering these social housing projects to the CORPORATES.
MUMBAI or for that matter INDIA's housing prices cannot sustain in a vaccum, globally there are massive reduction in valuations of Tangibile and Intangible assetts. I am a aircraft engineer by profession, here in Heathrow the valuations of slots are taking big hits. BMI has the largest number of Slots after BA, Lufthansa had decided to buy BMI last year but now are renegotiating the price simply because there ain't enough business pax flying LHR. A fact that can be gauged from Virgins decision to stop flying to MUMBAI.
First and foremost let me tell you that Bhai in our community is called with respect. Motilal Oswal CMD is called MotiBahi by us. Trust this clarifies the usage of Bhai.
I am sorry, i thought that you have brought property in Chembur and hence I asked you the price. I am not a qualified person to comment on your market.
Regarding Chembur post by Vishaal looks realistic. If you look at the CAGR it is around 9.5%.If you remove inflation from this the net return will be around 3 to 4%, correct me if I am wrong. Now if you say that getting 3 to 4% for a developing country like India and for a city like Mumbai is high then I tend to disagree with you.
Priyank: Pls. can you tell me where you brought for 20L 2BHK which area in Chembur? I will then comment on it. Your post is nothing but bullshit. People like you are misleading this group.
Shayna: Since you are from chembur, can you pls. check and let the forum know 2000 price of Chembur in comparison to the prevailing price. Pls. compare prices of old building during 2000 and also for 2009. New building prices vary a lot from builder to builder.
The prices have corrected by about 10% in II tier city like Pune, However, despite the absence of any buyers,and many empty flats, builders are holding onto these assets and the prices primarily because
1) Black money generated by the huge margins in the previous projects is with builder.
2) Knowledge about the fact that all the black money generated in the economy, easily gets transferred to white money/ invested in assets by buying property.
3) Another fact, demand will always stay for all the layers of offerings in property- the great indian population not withstanding the eco situation.
Unless, the builder is heavily leveraged, or listed and majorly white ( aka DLF, Unitech etc) the prices would not come down much.
:Builders are holding onto ready property and prices.One can go and c 4 himself the truth across property in India.
As the property dips, buyers enter the market genuine or investors.
Agree with Bhai - survey and buy
Govt. can provide these options:
1. Greater Tax benefits for customers.
2. Greater Incentives for budget flats. Cheaper homeloans + Tax benefits +FSI etc.
3. Infrastructure status for townships. corporatisation etc.
Personally i think, interest rates are going to be decreased marginally with large benefits to budget housing schemes
Govt. cannot stop the decline of home prices. They can only delay it. The fall is inevitable and is going to be a long one that would go for 3-4 years. It is good if the prices can stay high, but the fundamentals don't support them. They have no where but to go down slowly over years.
Ultimately by 2012-13 we'll start seeing properties worth buying.
Technically yes, Fundamentally not. Media is flooded with both side of news; technical indicators are showing bottoming signs whereas fundamentally the issues are still there. To digest both the news one has to acknowledge the change in market. Lot of things of the past will never come back, new trends & changes will shape the market, align your investment accordingly.
As per last year’s survey of 50 economists, market will bottom in June-2009. My own opinion is that economic turn around will happen in Sept-2009.
RE is going through a major change from Luxury to affordable housing. --What about the pending Luxury projects? Open question. --The PE funds which withdraw money from RE, definitely knew about bottoming signs but they understood the trend.
Economic Recovery or Economy Resetting At Lower Activity Levels? The GDP has shrunk from 9 to 6%. Corporate are cutting cost to reach to previous profit level. Unemployment will reach to peak after couple of months which is another threat for double hump recession. As corporate are cutting costs, it’s turning from loss to profit, which is causing euphoria for stock markets looking forward.
RE market Drivers --The declined household income will take time to reach previous level. --As employment will improve only after unemployment peak, there is lot of time to go. --One can’t rule out the possibility of decline in prices even after 2/3 years. [In Japan the prices fell after 5 years.] -- Even in boom time there are examples where prices fall (comparative scale) as the builders changed the development direction. Means an area which was the most prestigious 5years before is no longer a lush place, demand is created for other areas without roads & electricity.
In short, you have same money in pocket what you had 3 months before. UPA govt. didn’t fill yours & my pocket [may be Bhai’s pocket]. I don’t see any reason, neither for rush nor price rise. Now builders will start spreading news about sold out or price rise but don’t forget, even V shape recovery will take 2/3 years to reach 2007 level. One can’t fill the holes in one night.
Now since the scenario is changing and likely to look up in future. For actual use should the people wait further or negotiate hard say minimum 30% from the peak for Mumbai and close the deal.
All Brokers who are in the avatar of advise to buyers -
In bangalore the price of Flats have come down to 2005 prices (37 Lakhs for 1800 SqFT) In the peak they were quoted 55 Lakhs... You can calculate the correction...
I know buyers who booked in 2004/05 are going to the court as he has not completed the amenities and asking for more money... This is the same case with all the builders (Dont tell me about good builders.. The word "Good", Professional should not be associated with builders)...
IF Bhindaas Bhai and his supporters still want to buy i am ready to sell my flat - They need to pay my cost + Interest portion of my EMI... Why cant you benefit from the Sensex rise and associated real estate benefit... Are you game? Answer me or Shut your mouth?
So why should one buy - There are enough houses where people can stay in rent - In bangalore its in high 1000's... No need to buy..
The important point is 9 % growth did not come because of Cong Govt... Its because of cheap money!!... Not the case any more... I am happy with the music cong govt will now face - Lets watch Revenues are not easy to come by... But they would like to spend in NREG / Loan waiver... They cant increase tax exemption in this scenario... Or they will reduce income tax and increase service tax... The large employment generator was IT industry... Because of IT other industries grew... With stagnation in IT where is the hope? Lets wait... House is major decision... People can wait for 5 - 10 years... Few crooked builders will go belly up... Who Cares?
Also the behavioural change is getting reversed because of cut in salaries and bonuses... Just take a walk to the malls.. You will understand...
US Scenario - Citibank closed my savings account as i had ZERO balance.. They are shit scared..
Vik - Can you post my offer to any time Bhindas or his colleagues advice for buying houses!!!
I am ready to buy if you can offer me at 04 prices anywhere in Mumbai. Pls. give me more details about Bangalore property I will let you know. I can assure you that if you want to sell at 04 levels + interest on your EMI paid there will be lot of buyers in this forum itself.
We all know Bangalore, Hyd(IT depended cities) has seen a deep correction but has never come to 04levels.Even if it comes I have nothing to do i am purely talking about Mumbai properties. I repeat properties which have multiplied 3 times since 2000 levels would have seen only marginal correction. You will not see anymore fall from here neither will see any significant jump atleast for four months.
BTW pls. read all my post carefully, I have never spoken about any cities other then proper Mumbai not even the peripheries.
Bindaas Man, What in the world are you trying to prove here? Are you a pimp trying to influence people to buy? If you are not a pimp, go and buy some more RE and leave this blog. If you are a pimp, go and fuck yourself.
I live in NJ and the normal rentals are in $1200-$1500 range - this is one of the costliest places in USA !
In 2006-2007, I was shocked to hear that Lehman was willing to pay $4000+ rentals in Mumbai for their executives.
It is clear that influx of US dollars had begun the distortion of RE in India, stoked by black money followed by speculators and masses with access to easy money, and thus got created the mega RE bubble.
Now the reverse movement had happened - US$ went out first, speculators vanished and masses are unwilling to get in and unable to exit.
So the factors that created the bubbles are gone for a long time. The prices have been falling and they are still not affordable to the common man.
Now there is a glut of oversupply of inventory that would severe pressure on the price.
So my estimation on when RE would improve:
1) No excess inventory of buildings
2) Job market esp in IT should stabilize
3) Investors returning to the market
4) Masses begin to feel that RE prices have bottomed out
Till these things happen - nothing is going to change the downfall of RE prices.
Elections, government policies etc., have very marginal to zero effect on this free fall.
Unsold inventory! That says it all-it is the key. I see hundreds of towers coming up all over Mumbai/Thane/Navi Mumbai. I see so many of the finished buildings totally empty, devoid of occupants. This will place a downward pressure on the prices. The end user of this boom, the highly paid IT/BFIS/BPO guy is now either in defensive mode or already laid off. He is not now going to buy these flats at the current rates. All one has to do is to wait and watch the game between the builders and the banks-who will blink first? The end user is already finished and the supply of foolish speculators is also over. In such circumstances, the time is really ripe for a collosal free fall.
72 comments:
I think there won’t be any major impact on realty as of now but yes at least in Mumbai people will slowly start shopping.
Sentiments will improve further by Diwali and hence we can expect good sales by then.
The above assumption is based on no further Global bad news.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
Pls. don’t time the market.
Minimum 50% increase for Mumbai in Three years.
Bindas Bhai
UPA or NDA.... currently there is less easy money (BPO and IT money) inflow in to the country. Manufacturing imports are also hitting low these days and continue to be less for few more years (1 to 3 years).
But due to UPA these real estate suckers will gain strength and can sustain the high prices for longer.
Remember ... its just longer.. not forever. Coz there is less money in circulation in india man.
But stock market will gain strength. reason is simple.. stable govt.
TATAs 'griha lakshmi' kind of projects have future in india..
Kulkarni,
LBS belt is a good buy. Pls. seal the deal is the project is nearing completion.
Try if you can close the deal 4750, it will be a good buy.
All the best.
Bindas Bhai
Easy money will not be a problem. UPA has another five years and they are planning reduce interest rate, CRR and everything to again fuel the real esate market.I feel like developers will hold on to their prices or may increase also. I am not sure about buyers and transactions.We have to wait and see. Again Its not a stock market to go up 1000 points every day; we can wait and see. There is a budget in June and there will lot of IPO for PSU. So liquidity will be injected and even exchange rate may go to 46 level soon. My 2 cents..
-- Kannan
Bharat, Vulture and all the other bears, WHERE R U ALL ?
We are waiting for your comments.
Kindly let us know what we should do now?
Sanya
Interest rates may be reduced. But the margin money requirement is going to suck. Minimum 25%. This time bankers will also be very careful.
jayaram
as the proverbial sardar's 12 o clock rings in, the entire banana republic of india went berserk. With at best grey fundamentals, restless & mushrooming unemployed young, outsourcing model increaingly in doubt, global money drying up, 10%+ deficit staring sardar in the face, and a neighborhood that can blow up in smoke at the slightest pretext, chances are the summer of discontent will last a long time.
Astute ones will unload whartever
investments they have.
I am doing the same.
Hmmm.... This is a nice twist to the RE tale. Like a soap opera, where some long lost son or daughter suddenly resurfaces....
My 2 cents: This will pass over. The IT mess is not yet over, RE mess is far from over. I'll prefer to wait and watch. Anyways rentals will not increase immediately.
Regards,
lsjey
RE wont go up unless the job situation improves. Even in Mumbai with the stock markets doing well, inverstors will put their money in the market rather than RE.
RE still has atleast another year to recover, when the job market is likely to start improving.
Dear Sanya and Others,
Don't worry, Be Happy :)
I think me, Vulture, Shailesh and others are still here...it's childish to say that if the market booms we will disappear. Things go up and things go down, especially things which go up irrationally and in a flash for something like UPA victory, will be short lived things. I do not expect this rally to go beyond a couple of weeks. Mark my words, we will breach 10,000 on the sensex again in the near future.
Let us also take a journey down time and see what are the reasons the RE market went up last time and whether UPA was responsible for them?
1. RE had been in a bear phase for a prolonged period, right until 2003-04. Prices started seriously rising in 2005. UPA had been in government for about 2 years at that time.
2. There was a worldwide liquidity tsunami due to Greenspan printing money to revive the US markets and this had a spillover effect on all asset classes and global economy in general. Everthing in 2005 was rising the stock markets, gold, commodities, RE...
3. Almost everyone had high paying jobs due to the Outsourcing boom or because of boom in Gulf, US, Europe etc..so people had plenty of money to throw around and therefore we had raging inflation.
4. PE and other funds were investing heavily in the overseas markets and thus RE players had access to huge funds.
5. Due to the stock markets running up DLF, Unitech and others had bloated valuations and therefore easy access to capital. Which led to them speculating to drive up growth..
6. Banks were flush with funds and very low NPA's and therefore keen to loan out to expand their asset base.
Switch to 2009. Even if the banks are forced to reduce their interest rates, there will be few takers for loans against RE. Secondly, banks themselves are forecasting rising NPA's and therefore are not very keen to expand their asset base any further to contain risks..
Globally there is massive contraction which is in no means over. There is a temporary stay in declines to massive injections by central banks. This has caused a temporary blip which people are calling a rally..the worst is still to come.
Stock market rally in India is without a base. Like I said before stock markets move up or down based on technicals, fundamentals or economics...UPA govt. being re-elected is maybe a good start but in no way is there any justification for this rally. There is an old saying - The higher it goes the more badly will it fall. This drive up is irrational and driven up by speculators/market players. I agree with Isjey, Jayaram and others..this is an extremely temporary blip. I will try to cash out on most of my stock positions soon too...
Unemployment is rising and this is a global phenomenon. Protectionism in the US and Europe will mean a very painful period for IT. All of which will translate to a lot of uncertainty and people being tight fisted. If one has money to speculate, the best place might be the stock market, its liquid and one can exit very fast.
FII's and PE's will come to India in the longer run for the time being they will stay away and focus on low risk and "known" markets.
Lastly, UPA will try to reduce interest rates and galvanise the markets. But, this move will have two major driving forces -
1. The strengthening of Dollar in the coming weeks.
2. Rising inflation. As someone had pointed out sometime back, do not look at WPI for inflation indicator look at the CPI.
In sum, I think UPA will have to be very cautious. The markets will be euphoric for a short time during which a lot of greater fools/pigs will be slaughtered. RE is in a death spiral and will continue downwards..short term blips not withstanding.
UPA is good for the economy and long term growth but they will not be able to do anything for RE in India, like Helicopter Ben could not do a "soft landing" for the US RE market with all the interest rate reductions.
I would seriously welcome objective critic of the analysis above.
I am sure Vulture, Shailesh, Vik and others will add their insights to this topic for all of us to gain.
Regards,
Bharat
Unitech faces revolt from Grande buyers
Ravi Teja Sharma NEW DELHI
A NUMBER of HNI buyers at Unitech Grande in Noida, dubbed as India’s most luxurious residential project, have formed the Unitech Grande Buyers’ Association and are seeking refund of the crores they paid to book apartments in the project. The association, which has the support of 80 of the 300 buyers (that includes around 50 NRIs), claims that Unitech had raised close to Rs 500 crore from the 300 buyers. Many buyers had paid over 50% of the total cost of the apartment to the developer. A few had made full payments because they were offered discounts.
With a huge debt to pay, Unitech recently announced it is redesigning the project which will now comprise high-rise apartments, bungalows, villas and developed plots. It has already started selling residential plots at Rs 51,000 per sq yard. One of the buyers Raj Kumar Jain, who is in the exports business explained that most of the HNIs like him had bought the apartments considering the certain unique style, character and format which has been changed now. The association members say changing the project at this stage amounts to misrepresentation of facts and cheating as they paid for the project in 2007 on the basis of the original masterplan.
Unitech had launched the project in Noida in July 2007 on a 347-acre plot that it had won in May 2006 for Rs 1,582 crore by outbidding DLF. The original plan was to build 5,300 flats targeting high net worth individuals and NRIs for the ultra luxurious project. It was to include a Greg Norman Signature golf course, a state-of-theart habitat centre a 200-bed hospital and had a prestigious list of international experts working with Unitech.
Another member of the association Chamkesh Sadh is clear that they do not want to fight. “We have been trying to meet Unitech chairman Dr Ramesh Chandra but haven’t got any response,” he says. Some of the members of the association met the general manager sales and marketing at Unitech but did not get any clarity of the future course of action. “But we want our money back with penalty. We will take all necessary steps to safeguard our interest,” says Jain, who has paid over 50% (Rs 1.5 crore) of the price of his 27th floor three-side open apartment at Unitech Grande.
A Unitech spokesperson, in an email response said: “We are formulating the policy for existing customers of Unitech Grande. Our team is in constant touch with them and is taking their inputs. We shall address their concerns in the new policy as the interest of our customers is utmost to us. At the same time, we would like to clarify that in the new format that we have designed for Grande, the overall positioning of the project remains same. Only the product mix has changed without tampering with overall ambience & environment that we had offered initially.”
But buyers say their attempts to get any clarification from Unitech have been in vain. “I have gone to Unitech’s office twice in the last 6 months. They said the project was being restarted but did not mention any change in format. As yet no options have been given to us,” says entrepreneur and angel investor Mohit Goyal, who has paid around 50% of his apartments cost of Rs 3 crore at Unitech Grande. “Due to the unsatisfactory response from Unitech, we had to come together to form this association,” he adds.
NO PREMIUM
A number of HNI buyers at Unitech Grande in Noida have formed the Unitech Grande Buyers Association
Unitech had launched the project in July ’07 on a 347acres
The original plan was to build 5,300 flats targeting high net worth individuals and NRIs for the ultra luxurious project
With a huge debt to pay, Unitech recently announced it is re-designing the project
Jayaram
When the Stock market went down the prices of real estate didnt crash that much so why the vice versa may follow.Prices of Real estate which were sold in Jan 2008are still the same now. Why the hell didnt they crash with stock market?? So People who are bullish on Real estate now can sit with their asses shut.
India can never spend much on infrastructure with such a bad fiscal deficit. Not like the 2004-2006 phases. Now when Oil prices go up watch the India fiscal deficit zoom more than real estate prices
UPA getting more votes and retaining their power does not impact RE prices directly. That is to say RE prices are influenced by many other factors then party in power at central government. RE is local to great extent. I would evaluate any city in mainly following ways.
1. Employment
2. Infrastructure
3. Supply constraints
Cities like Mumbai and Banglore were already expensive, hence will not get bulk of new Employments. The second tier cities will probably get if any gains in employments.
Infrastructure development is improving compared to 90's. That will result in better connectivity with distant suburbs. More people will start thinking them as viable alternative, to older suburbs.
In case of Mumbai always Supply was considered as main constraints. During boom time Govt passed all redevelopment policies, increased FSIs etc... that will add significant supply.
I don't see any single reason (at least in case of Mumbai) on why the home prices should move up? In fact stock prices going up is like double whammy. People who lost their shirt during last burst, will feel so bad that they did not catch current run up. And will become even more risk averse.
RE busts take long time to stabilize. This one started just 2 years ago. It will take at least 5 years to get back to flat.
my 2 cents.
Well, Confirmation of my above note,
Realty slump hits MMRDA againAnother attempt of Mumbai Metropolitan Regional Development Authority (MMRDA) to try and earn maximum funds from the Bandra Kurla Complex (BKC) seems to have gone for a toss.
The authority had offered over 100 players in the G block of BKC an extra floor space index (FSI) of four. However, apart from nine players who wish to reconstruct in the block, no one has come forward to take benefit from it.
Confirming the development MMRDA spokesperson Dilip Kawathkar said that it will be the metropolitan authority which will decide the further course of action on whether to extend the scheme or not.
In order to earn more and more funds from the existing land users in BKC, the authority had come up with a plan to offer them additional FSI in October 2008. According to the plan, the existing building owners were to submit a proposal to the authority for granting of permission to reconstruct and avail the additional FSI.
Well, I see the UPA Govt. equivalent to a second Bush term in US. They will try the same old things like lowering interest rates, massive stimulus and helping rich to make more money.
This will all come down like a pack of cards and there would be re-elections in India by 2010.
All the enthusiasm will get over as a lot of pain is coming for Indian market.
--Major job losses.
--Salaries will be slashed substantially.
--Very less buyers for RE.
--RE prices tumbling by 50-60%.
--Stock market going back to 6000 level.
--A lot of unemployment and increased crime.
-HB
Dear Bharat,
Grow up and talk something new. Jerks like you who have been predicting since second half of 06 will just run away in sometime from this blog.
Just two days back you wrote that NDA will come to power.
Guys like you, shailesh and vultures are big failures in life. Pls. keep your Gyan to yourself and understand the upcoming reality.
Kindly do not mislead the forum with your bullshit about sensex coming to 10k now.
You guys will vanish from this forum shortly, just grow up and admit that since 2006 we have been predicting about the crash and we have failed miserably, SORRY.
Accept your mistakes with dignity as we all make mistakes.
For god sake do not mislead this forum anymore.
Regards,
Sanya
Sanya: No one is stopping you from buying. In fact, I believe someone on this board offered to sell his home for the price he bought + Interest he has paid in last 2 years.
Our opinion does not change market. Our opinion are based on market. I pointed 3 main points Unemployment, Infrastructure and Supply. All seem to point to decreasing housing prices. What points do you have to offer? Validate your argument by reason, not just whims.
RE does not crash like stocks. It deflates. That is happening now, it will do so till employment picks up.
One more article for Sanya
Time not ripe for home buying
Consider this: a report from PropEquity, a firm that maintains data on real estate, said that in the first quarter of the current financial year, the Mumbai market saw an average correction of 42.84 per cent compared to the corresponding quarter last year.
According to another report by Centrum Broking on Maharashtra Chamber of Housing Industry's exhibition, prominent developers such as Kalpataru, Lodha, Rustomjee and Acme Group were quoting prices 20 per cent lower than their card rate six months ago. Godrej Properties had dropped the quoted price of its Mahalaxmi project (Planet Godrej) by 34 per cent.
Prices in other major metros too have seen a significant correction in the past six months, according to the PropEquity report. These include Gurgaon (24 per cent correction), Chennai (13 per cent) and Hyderabad (10 per cent) for the same time period.
Sir,
I am regular follower of this blog and I am aggressively looking to buy home in bandra area in mumbai.
I have few facts to share with you. I am in no way related to real state companies or agents and I am individual looking to buy flat for myself.
I must tell you that flat rates have fallen 30% in this area and if you are dealing with real state agents they will try to get you in trap.
Many many foreigners are leaving country hence rent is coming down very fast becasue only foreigners can pay rs.1 lakhs + rents and now they are leaving India because many companies are running in huge amount of losses and they just can't afford to pay such extra ordinary prices.
There are many many flats available and new supply is just being added every day.
Rents also have fallen by 40% in mount marry and pali hill area and 20% fall is invatable.
Few months back when i use to contact real state brokers to show me flat they use to say no flats are available but now every agent have 2-3 flats to show me.
I will be further getting into negotiation but I must tell you I am getting flat for atleast 30% lower price from top.
Today sensex went up by 20% and everybody is taking it as start of new bull market which is clearly not the case.
After todays 20% run did you noticed one thing, there was no volume in trading, market traded only for less then 30 seconds and it hit circuit. Nobody got chance to buy and sell, it was driven totally on pure speculation.
Rise of this market will actually be defined tomorrow or day after tomorrow when we will see profit booking, lets see where it stays then.
This market rise was purely driven by FII investors and there are many many mutual funds in India (DII) which are still sitting on pile of cash and they will only invest when there is atleast 25% fall in market which will drag us down again to 10000 levels in sensex and 3000 levels in nifty.
This is bear market rally and there has to be one fall again for it to start new bull market, because I talked to few people and they do regret not buying at 8000 sensex level but they feel market prices are too high and they are still in shock of 2008 bear market which destroyed there portfolio by 80%.
Todays rally was totally driven buy traders and speculators and there are hardly any geniun investors in the market yet, it will take some time for them to come back into market hence don't get any bullish on the market, world economy is still in bad shape and these analysts which you see on t.v. (cnbc tv18 etc.,) are just here to speculate.
btw, just ignore my suggestion and think, will you buy shares on 14500 sensex levels when you seen them falling from sensex 21000 to 8000 in just 1 year and suffered 95% loss in case of real state stocks?
I bet, you won't, not atleast now because average indian retail investors wealth is destroyed and mutual funds also will not see any more investment soon. People are still scarred and this rally was totally driven by FII's who need emerging markets to invest because they know developed markets are still in crappy ressesion and nothing is going to improve before 2010 hence they are just bulling developing markets like India which are very easy to manipulates with small amount of money (imagine they call bull run indian market with 2 billion dollar investment, which is penuts for markets like united states, nasdaq).
I can tell you, if you want to buy flat hold for at least 6 months more and you will get atleast 10% more fall in the prices.
Haven't you seen rise in advertisments for flats under 10 lakhs in newspaper? why? because developers know there is no money in the market but they can stil make money buy selling in bulk in low prices instead of selling few flats in exteremely high prices.
as vluture said 50% price fall is gurnateed, market has already fallen by 30%, wait more for 10% fall and don't buy. Real state market is NOT like stock exchange, it takes time to rise and it will take time to find bottom, this is not the end. This rise and done nothing for local people they are still in mess they are still in loss they still have no money this rally was driven by FII's and not people here who can book profits and buy real state.
Jay
@Sanya: I do not understand the reason for your euphoria on RE. Just because UPA will form a stable government does not mean RE will go up. Also, when stock market fell 50% the RE didnt fall by the same amount, no reason why it should gain from the one day rise of the market. Fundamentals of the economy hasn't changed and we will soon see today's gain getting nullified. You can see expert reviews saying the market gain has no fundamental basis.
Having an opinion is all this forum is about, but it should be substantiated with sound arguments instead of hyperboles.
Vishal
excellent post Jay
Indian stock market went crazy.. Almost 20% up in one day. That is stupid, what has changed?? Anyway, same emotional reason can make this market run another 20%. Lets be realistic UPA government is not going to spent money on infrastructure. UPA government will spend your tax money to grab votes.. Builders should try to raise capital by secondary offering as equity price has gone up quite substantially. I think balanced sheet will get better. I think market fundamental will remain same for this year. However, 3-5 years time frame you will definitely make at least 50-70% in good projects.
Clear mandate will make sure that market does not crash as expected before and business will turn around in next six months or so.
Dear Sanya,
I was a bit amused and bemused by your reaction :)
Firstly, growing up implies consistency and being consistent means we all have the same message viz. - This is a RE bubble and its going to burst.
Only stand up comedians require a new story everytime they talk..at least no one can blame us for being inconsistenct in that sense.
I never wrote that NDA "will" come to power. I might write that it would be good if NDA comes to power..but never have I made that kind of prediction. Pls. substantiate such claims.
People like me, Shailesh and Vulture are patient people who can wait long term for good deals and are able to look at criticism and data dispassionately. We are happionaires :) So, though we are not millionaires, we are successful!
Everyone is entitled to an opinion and I think and can furnish objective reasons why sensex should go below 10K. If you think that the stock market will go to 20K in the short term, pls. tell us why and maybe we will benefit/learn from your insights.
I do not understand why you have abused me and some other people in this forum. Two reasons could be -
1. You have invested in RE and are scared about losing it and not getting buyers or are already stuck with a loss ..
2. You are trying to provoke/intimidate people with the intention to curb opinions not agreeable to you..
I do not get intimidated or provoked easily and will be around with my opinion's for quite some time and so should all the others, regardless of which way the RE market goes...
Regards.
Grow up Sanya. Your anger (that RE prices are going down) shows in your tone. Accept the reality.
Please buy some more flats and become rich. And also buy a lot of stocks to get richer. And then pray to God.
--HB
Bharat, Shailesh, Vulture et. al.
I was away buying some foreclosures in the US and now I'm back to the forum. I got some good deals at 60-75% in Washington DC area. I myself have been an advocate of reality and waited 4-5 years to buy in the US till it has corrected. US is still not done going down in a lot of areas and major pain is ahead for them. I think by 2012 we'll see a bottom in US. In India it will be a slow process as people need to get out of denial mode and may take years.
In fact I'm afraid of civil unrest in India.
This 20% runup in stocks is total BS. People have nothing better to do and are just waiting to gamble, be it stocks or housing. The country is now like a casino.
--HB
II have been following this forum but now i feel that this forum will slowly die for not looking at the realities.
I just fail to understand why you guys are not realising the fact that certain industries have already started reviving. Auto, FMCG, Durables, Steel, Cement etc. Infact the other day in BS they mentioned that 5000 diamond units which were shut has already started.
I see stock market for short term stablising @ 13500 to 14500. Just matter of one year it will be close to 18k.. Lot of money sitting on the sidelines will slowly start pouring into India.
Some of you guys just are failing to look at new realities or conveniently ignoring the facts.
Let us wait for a couple of days and then we will get some direction.
Anhinav
What’s changed in the govt.?
Aren’t they the same people who failed to revive the market in last 1.5 years?
Are these the same people who caused market crash in 2008?
There are two things going on,
1. Stock Market euphoria
2. Real estate stagnation.
http://bseindia.com/mktlive/
market_summ/categorywise_turnover.asp
Volume Stat in (crore)
18/5/2009: FII = 12.27, DII = -8.41, Clients = -17.72, NRI = -0.14, Proprietary = -9.97
9/5/2009: FII = 8109.73, DII = 646.84, Clients = -5000.96, NRI = -6.34, Proprietary = -236.70
If you know how to make money in stocks then act accordingly, don’t get confused between RE & stock.
Manic Monday | UP And away?
“Association of Mutual Funds in India (Amfi), a trade body representing fund houses, declared Monday a non-transaction day. This means investors who placed orders to buy or sell units of mutual funds on Monday could not do so and the net asset value (NAV) of each unit of a scheme still reflects Friday’s closing price of shares”.
http://www.livemint.com/2009/05/
19001608/Manic-Monday--UP-And-away.html
Thanks Jay, nice analysis.
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
thanks vulture for the execellent comment,bindas bhai should learn a thing or two from you
Flat in Malabar Hill bldg sells for Rs 14cr
Nauzer Bharucha | TNN
Mumbai: At a time when transactions of premium apartments in south Mumbai have become a rarity, a flat in the landmark Il Palazzo building on Little Gibbs Road, Malabar Hill, sold for around Rs 14 crore last week. Property market sources said although this is just a one-off sale, it is probably the highest price fetched by an apartment this year.
The market for high-end flats in south Mumbai has virtually stagnated for over a year now. Builders who used to quote Rs 70,000-Rs 80,000 a sq ft for such flats—when the market was booming two years ago—have slashed their prices by almost half but are still struggling to find buyers.
People familiar with the deal said the threebedroom flat was bought by textile magnate Alok Shah of Garden Silk Mills at Rs 56,000 a sq ft. The apartment located on the eighth floor of the 21-storey building has a carpet area of 2,500 sq ft and belonged to a widow.
Il Palazzo is considered one of the best residential buildings in south Mumbai and has traditionally commanded a high premium as its apartments are much sought after.
Built in 1972, Palazzo is placed on the highest point of south Mumbai, surrounded by the sea on three sides and commanding a breathtaking view of the island city. It has 84 flats in all, including 14 duplex apartments, a basement car park, storerooms, four automatic elevators, CCTVs placed at strategic points and intercom facility in each flat. The lobby area is lined with granite, marble, mirrors and decorative lamp shades as well as sofa sets for visitors.
In late 2007, the building came to national prominence when actor and former BJP MP Vinod Khanna bid an astonishing Rs 1.20 lakh a sq ft (Rs 30 crore) for a flat on the 13th floor, belonging to Citibank. Subsequently, the deal fell through and Khanna withdrew his bid.
However, last week’s transaction at Il Palazzo is no comparison to the last big sale that happened in 2007 when a flat measuring 3,475 sq ft (super built-up) in the NCPA Apartments at Nariman Point was bought by a London-based NRI at Rs 97,842 a sq ft.
The price of a plush building is determined not only by its location or view but also by the status of residents. If the neighbours are big corporates and industrialists, the society commands excellent value.
Interestingly, these premium flats are not to be found in the new skyscrapers that have come up lately, but in buildings constructed over two to three decades ago, mainly located in south Mumbai.
Meanwhile, realty market sources said that with Monday’s stock market rally and the euphoria created by it, a section of builders may find it tempting to hold on to their prices or even increase them.
“There is a fear that builders are trying to take advantage of the good sentiments by increasing prices. The psychology of the developers has suddenly changed,’’ said a source.
Ashutosh Limaye, associate director of Jones Lang Lasalle Meghraj, a global property consultancy firm, said, “The sentiments are in favour of a stable government and if the sensex continues to rise over a period of time, there is a chance that the property market will rise.’’
Pranay Vakil, chairman of Knight Frank India said, “It seems prices will not go down any more because sentiments are strong. There are also expectations that the new government will offer sops to the housing industry.’’
According to him, developers may stop selling for some time and watch for a while before taking a decision to hike prices.
Article like this have already started appearing in news paper. Now pls. read what the so called consultant have to say about RE. These are the same guys who were predicting a fall.
Guys use your brains and believe in yourself and then take a decision.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
Pls. don’t time the market.
Minimum 50% increase for Mumbai in Three years.
Bindas Bhai
Anonymous said...
What’s changed in the govt.?
Aren’t they the same people who failed to revive the market in last 1.5 years?
Are these the same people who caused market crash in 2008?
No logic in the above statement. After 1.5 years we all know that the markets change.
Just to give you an eg. please read the link below.
Survey shows jobs recovery in March quarter
BS Reporter / New Delhi May 19, 2009, 0:24 IST
http://www.business-standard.com/india/news/survey-shows-jobs-recovery-in-march-quarter/358553/
Wait and watch by June we will get the direction.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
Pls. don’t time the market.
Minimum 50% increase for Mumbai in Three years.
Bindas Bhai
Should govt. give rise to employees for votes (6th pay commission)
OR favor RE companies for fund contributions?
Considering the contracted GDP (6%) & widening deficit (11%), govt. is
left with very few solutions.
http://www.rediff.com/money/2009/
feb/20bcrisis-india-fiscal-deficit-to-be-highest.htm
World economy is not going to rally to support Indian RE.
The job market is not improving. [The dept., which never placed a single candidate in 20 years, has provided improved labor market statistics.]
Housing bubbles around the world
“As the price-rent ratio grows, the market value moves away from its
fundamental value”.
http://www.newsneconomics.com/2009/
05/housing-bubbles-around-world-looks.html
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
@Bindas Bhai
go (Dick Cheney) and buy more flats....!!!
Vulture said
Volume Stat in (crore)
18/5/2009: FII = 12.27, DII = -8.41, Clients = -17.72, NRI = -0.14, Proprietary = -9.97
9/5/2009: FII = 8109.73, DII = 646.84, Clients = -5000.96, NRI = -6.34, Proprietary = -236.70
Pls. dont leave at this kindly update the forum about today’s volume. i.e. 19.05.09
Frustration is showing up :-)
Guys you all have still time go and buy now after required due diligence and trust me you guys will not repent.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
Pls. don’t time the market.
Minimum 50% increase for Mumbai in Three years.
Bindas Bhai
So much for the Bulls and Greenshoots callers!!!
"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying AttentionPosted May 15, 2009 09:31am EDT by Aaron Task in Investing, Recession, Banking, Autos, Housing
Related: ^DJI, ^GSPC, DDR, XLF, GM, RWR
The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.
"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."
Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."
This outlook is based on the following main points:
* With the unemployment rate rising into double digits - and that's not counting the millions of "underemployed" Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.
* Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.
* More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.
As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the ‘greater fool' theory."
"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for financials and automakers alike. "The bailout money is in the sewer and gone."
Jayaram
Some more stuff.
15 May 2009
The Worst Is Yet to ComeOne of the favorite retail analysts in the Cafe is Howard Davidowitz, and he is probably in the top ten overall. The accomplished shoppers in our crowd (predominantly the ladies for some reason, who have a canny sense of price and demand and store quality, whereas yours truly becomes overwhelmed by a numbing dread upon entering most retail establishments of the non-Home Depot or non-electronics persuasion) all tend to shake their heads in agreement when David speaks to the ups and downs of specific store chains and trends. I can think of no higher recommendation, for these are for the most part the front line consumers and they take their duties seriously.
Last night in speaking with a youngish acquaintance just completing law school (another one, alas) who was looking for advice on long term investments we observed that now is the time to remain liquid because 'the worst is yet to come.'
In 1999 I began an intense study of market bubbles and crashes as mentioned before. This included buying contemporary magazines and newspapers and reading them to see what was going through people's minds.
Today reminds me of the briefly sunny period in 1930-1 when most economists and public officials agreed that the Depression was already over and the economy was back on track. President Hoover dismissed a delegation of businessmen who came to Washington with ideas on stabilizing the economy with "Too late gentlemen, the slump is over."
There are few things from my childhood that I remember more vividly than grandmother's comments regarding this false recovery. "If we knew what was coming, we would have killed ourselves." This from as strong a person as I have ever encountered, with a faith that would break rocks. The Great Depression left an indelible mark, or more accurately scar, on her entire family, and my father's as well.
And I never heard the name "Franklin Roosevelt" from her lips without it being preceded by "God bless" followed by "he saved my family." Not all of her children unfortunately. She said she cried so much and so often that she was never able to cry again. And she did not, even at the end.
Of course it was the second half of the great stock decline after the 1929 Crash that did the most damage, because this is when the carnage moved from financial assets and the banks into the real economy, with unemployment rising to 25% into the trough of the Depression in 1930.
Roosevelt came into office and began spending and innovating with programs to attempt to mitigate the impact of the economic collapse on America's families. Other countries, such as Italy, German and Japan, made their own political choices. We need to bear in mind that America itself came perilously close to a genuine brand fascism, and not the cartoon caricature presidential overreach cited by the corporate elites of the day. Hitler and Mussolini were the solutions proposed by the industrialists, they were their men, and they bankrolled them heavily.
And so here we are. What comes next is anyone's guess. But by now you should be accepting and internalizing the general themes, including the devaluation of the dollar down to levels that are probably still not believable, an activist central government nationalizing key industries, civil unrest and agitation, and a confusing cacophony of hysterical mumbo jumbo coming from media whores and corrupt officials.
The crisis is not over. We have just finished the beginning, the easy part, the initial collapse of the bubble. The worst is yet to come.
Watch the video of this commentary from Howard Davidowitz linked below if you get an opportunity. His delivery is priceless New York style.
Jayaram
Bindaas Bhai
Are you related to some Dons? Your name scares me
On saturday 17th May, NDTV had a panel of politicians commenting on the CONGRESS win and their future course of action.
I can't remember the name of the communist party rep, his only comment was on the relatively limited damage felt by India due to the global credit crunch, which he attributed to this election as the ruling party was trying to suppress the effects of the global cedit crunch for its own gains - now achieved.
He was quite categoric on the challenges facing the UPA from this global credit crunch.
Another statement which caught my eyes were that of KAMAL NATH in todays papers, he has mentioned social housing as a means of creating employment. So the emphasis is more on keeping the lower sections of the society employed and sheltered rather than pampering to the yuppie crowd of MALL SHOPPERS, LIMOUSINE BUYERS, 4 BEDROOM PENTHOUSE OWNERS and KINGFISHER PAX.
In short lower house prices will drag the prices down. There is more grief to come on the employment front.
Well regards the stock market..........read this article on the western market.
US 'sham' bank bail-outs enrich speculators, says buy-out chief Mark Patterson
The US Treasury’s effort to stabilise the banking system through the TARP programme is a hopelessly ill-conceived policy that enriches speculators at public expense, according to the buy-out firm supposed to be pioneering the joint public-private bank rescues.
“The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
The comments are likely to infuriate Tim Geithner, the US Treasury Secretary, because MatlinPatterson took advantage of the TARP’s matching funds to buy Flagstar Bancorp in Michigan. His confession appears to validate concerns that the bail-out strategy is geared towards Wall Street.
Under the convoluted deal agreed earlier this year, MatlinPatterson has come to own 80pc of the shares while the US government has ended up with under 10pc.
Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
“It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.
MatlinPatterson said private equity and hedge funds were deluding themselves in hoping to go back to business as usual after the trauma of the last 18 months.
“This is not a normal recession and there will be no V-shaped recovery. The crisis has destroyed leveraged companies. We’re going to see a catastrophic increase in the number of LBO’s (leveraged buyouts) going into default because they’re knee-deep in debt and no solution exists since they can’t refinance,” he said.
“Alfa hedge funds have been making their money by gambling with excessive leverage, so the knife that cuts off leverage is going to cut off their heads as well,” he said.
Like many bears, Mr Patterson expects the great crunch to end in deliberate inflation, deemed a lesser evil than outright depression.
“The US government has thrown 29pc of GDP at this crisis compared to 8pc in the early 1930s. The Fed’s balance sheet has risen from $900bn to $2.7 trillion to bail out the system. America has to do it because the only way out is to debase the currency, but that is going to lead to some very high inflation three years down the road,” he said.
Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!
At present there is no way to confirm that this was what Mr. Patterson said, and readers will need to consider this in whether they take the article seriously. However, there are a couple of points with regards to the article that might need highlighting. The first is that it is difficult to imagine any reasonable motive for why the reporter might have invented the quotes. After all, the article is based upon a conference where many people would have heard Mr. Patterson's discussion - and inventing things from such an event would therefore be an odd thing to do.
The second point to consider is that, if he said such things, Mr. Patterson would have risked any further involvement in bailouts and may have damaged the position of his company in any future bailout activity (Ratner calling his company's jewellery 'crap' comes to mind as a similar example). As such, retraction of the comments might be seen as an exercise in damage limitation, if the comments were indeed accurately recorded.
Neither of these points demonstrate that the article has accurately represented Mr. Patterson, but they are points that might be considered in making a judgement about the veracity of the article. I will, of course, field any comments on this from Mr. Patterson, and an explanation of why the original article is wrong, and why he has chosen to ask the article to be removed from the Telegraph.
In the meantime, I am guessing that many US taxpayers might find the alleged comments made by Mr. Patterson to be a matter of some concern. No doubt, many of these taxpayers might want to establish whether the comments were made and, if they were made, may find that their perspective on the various bailouts has shifted.
From the point of view of this blog, there is nothing new in the quoted comments and, if they are accurate, just serve to confirm an existing view. Of particular note is the comment suggesting that the banks are insolvent, a point made many times on this blog.
As a final comment, all credit to Zero Hedge for hanging on to the original article, and their efforts to establish the truth of what was, and was not, said. If such comments were made, they represent an 'insider' view that should be heard.
Shayna Said:
Another statement which caught my eyes were that of KAMAL NATH in todays papers, he has mentioned social housing as a means of creating employment. So the emphasis is more on keeping the lower sections of the society employed and sheltered rather than pampering to the yuppie crowd of MALL SHOPPERS, LIMOUSINE BUYERS, 4 BEDROOM PENTHOUSE OWNERS and KINGFISHER PAX.
This is a typical bear interpretation but a bull will look as a opportunity for growth and thus having a positive impact on RE.
Mass housing scheme is already existing it is only that this Govt will give these guys tax incentive so that all the black money can be brought from abroad. Friend’s things are not simple as this. Money laundering will become a serious offence very shortly and world bodies are looking to make this transparent. Now most of the politician and crooks who have the money abroad will route this money thru mass housing scheme.
I personally feel builders are going to get complete tax exemption on the name of mass housing. Trust the builder’s passing on to the consumers.
Some builders in Mumbai have already started to say that currently they have decided to wait and watch and then sell. I was told by a broker this morning that K Raheja Universal which had brought their Mahalaxmi project to 18k has suddenly increased the price to 25k.
Since last one year no new projects have been launched in Mumbai. QIP's for real estate is happening at lightening speed. Infact I heard Sameer Aurora saying on CNBC that he did DLF deal in four hours.
Sentiments are changing slowly but surely. Fund managers will be punished by their bosses if they ignore India.
I am not saying that property prices will shoot up again but be rest assured that movement has started and the momentum will only gain.
I still maintain buy at least 1BHK if you have requirement of 2BHK.
Pls. don’t time the market.
Minimum 50% increase for Mumbai in Three years.
Bindas Bhai
Hey HB,
I think the housing market may still have some downside. Especially because in the US the part A and option ARM resets are due to hit this year. Buying houses will be on the decline because of Banks afraid of loaning money and also because of rising unemployment. Besides as far as the Banks go, the stress tests were a sham and they still need to provision for Commercial Real Estate bust and credit card defaults. On the east coast, especially the Tri-State area, one can already see a lot of strip malls putting up signs for rentals and outright sale. DC was bloated and ripe for picking..I suspect India will face a similar fate very shortly. Last time around, I remember people saying that there will be no crash in Mumbai and things will improve in 6 months etc..but the crash when it happened was very sudden. In about 3-4 months Lok Housing was going bankrupt, Hiranandani prices crashed and all over Mumbai RE become pariah.
On the BB phenomenon. A lot of his statements are the conspiracy kinds..black money, politicians, smugglers etc. And almost all of his projections are of the nature -
"I personally feel", in my experience. I see a complete lack of objective analysis. If the RE market was about to boom and BB was a RE player, he would be out doing research, buying properties and getting ready to make the big bucks. Its ironical that we find him on this forum writing 5-6 posts of the "I personally feel" subjective variety. With no analysis, no data and no objectivity.
Anyway, I hope his pump and dump style does not find victims on this board and spoils someone's savings or retirement plans.
The stock market closed almost flat today. Vulture is right about the volumes being low and therefore this seems to be a fake rally. Also as Vulture has pointed out, remember it was during this UPA govt.'s tenure that stock market was falling from 21k to 18 K to 12k and then to 8K. If they could not arrest it then and were worried about their dollar reserves then, why would they be able to pump up the markets to 20k now?
Like I said before all signs are that this rally will die before long and I will be exiting soon at an opportune time.
Folks from US are on the extreme pessimistic side...
http://indiaeconomywatch.blogspot.com/2009/05/is-indian-economy-heading-for-its.html
Like one mentioned " there will be social unrest in India" are extreme predictions.
I still feel house prices are very much over priced; but anything can happen in India. I am in India for the last 2 months and I can see people still like to buy house/land and think that RE is the best investment.
Majority of the RE investors in India are not going to think like us in this forum.
--Kannan
Dear Bindas Bhai,
Don’t hit Vulture below the belt I am sure he will give us today’s volume which was historic. Let him give the figures if I give perhaps likes of Bharat and co. may not agree. With today’s volume and still the market is flat speaks about the strength of yesterday historic rally
Bharat wants you to give data and proof, I really don’t know what data he has provided besides repeating what Vulture has already said. None of these guys have posted any positive news and analysed.
Now like the retired person he too is getting personal, I am increasing getting a feeling he is the same frustrated guy who was getting back at you.
Bharat cant we have this forum going on without getting personal.
Sanya this goes to you as well.
Abhinav
@Abhinav,
You are quite a joker.
Its supremely ironical that you have made personal judgement on quite a few people including Bharat, Sanya etc.
While asking people to refrain from passing personal comments.
Hello all-
I think that the politicians are trying hard all over the world to keep housing propped up. And they have put the world economy on steroids (stimulus). This huge dose of steroid would give birth to massive inflation.
The only way house prices can stay high and stock market at double the price is that anything worth today at Rs. 100 is worth Rs. 200 in the coming future. Or a house worth 20 lacs in actual value would be worth 40 lacs in inflated value terms. Which means record breaking massive inflation.
If inflation happens and salaries don't keep up with it or job losses continue/are there etc. there will be immediate change in Govt. and may even cause social unrest as majority of Indians are still struggling.
--HB
Rich default on luxury homes like subprime victimsThe above article is relevant for Indian Luxury Home Buyers also. In the light of good chunk of thumb twiddling IT "Managers" coming back to India, the lending institutions will be greeted will be more defaults resulting in voluminous NPAs. This is one of the reasons why Banks are not reducing the interest rates in the same breathe as they were increased. The banks are trying to recover their dues as much as possible before the RE crash.
Vulture,
I know for sure you are very intelligent and would need your help in analysing the news which are currently appearing.
I speak with my experience and conviction but your view is very analytical. This forum has learned a lot from your comments including me. These are some of the news I read today and would like your views.
There are lot of other news like Baltic dry Index at seven months high, Market trade record volumes etc.
Kindly let us have your comments.
Power ministry switches on divestment plan
Arun Kumar / New Delhi May 20, 2009, 0:14 IST
http://www.business-standard.com/india/news/power-ministry-switchesdivestment-plan/358660/
LIC plans to invest Rs 50,000 cr in equity
Anirudh Laskar / Mumbai May 20, 2009, 0:16 IST
http://www.business-standard.com/india/news/lic-plans-to-invest-rs-50000-cr-in-equity/358659/
Hyundai to resume third shift
Surajeet Das Gupta / New Delhi May 20, 2009, 0:22 IST
http://www.business-standard.com/india/news/hyundai-to-resume-third-shift/358664/
Indiabulls Real Estate raises $550 mn through QIP
BS Reporter / Mumbai May 20, 2009, 0:19 IST
http://www.business-standard.com/india/news/indiabulls-real-estate-raises-550-mn-through-qip/358653/
Bindas Bhai
Daily Updates on Computer Industry
relevant link to the current discussion -
http://www.equitymaster.com/ht/detail.asp?date=5/17/2009&story=1
BB Said;
This is a typical bear interpretation but a bull will look as a opportunity for growth and thus having a positive impact on RE.
Mass housing scheme is already existing it is only that this Govt will give these guys tax incentive so that all the black money can be brought from abroad. Friend’s things are not simple as this. Money laundering will become a serious offence very shortly and world bodies are looking to make this transparent. Now most of the politician and crooks who have the money abroad will route this money thru mass housing scheme.
I personally feel builders are going to get complete tax exemption on the name of mass housing. Trust the builder’s passing on to the consumers.The govt especially Chidambaram has mentioned in the past of inviting BLACK MONEY but only into non essential sectors which generate employment and revenue i.e TOURISM, ENTERTAINMENT etc.
The last thing you do is to attract investment from bhais!!! into social housing. You can imagine the quality of build, poor Ganpat getting thrashed by the crooked builders henchmen for complaining.
where the electorate has given the LEFT FRONT a kick in the touch, if the UPA had to follow BB suggestion the LEFT will be back within no time championing the cause of hapless poor homebuyers left at the mercy of unscrupulous BHAIs!!!
BB you keep quoting Chembur in your posts as a attractive RE investment. For your info i am a hard core born n bourght up Chemburkar, The charm of chembur is in its laid back green colonies and good network of schools along with a predominantly educated middle-class. The character of chembur has undergone huge changes and most of it is for the worse rather than the better.
The Catholic convents of OLPS and St Anthonys have deteriorated alongwith SWAMIs. Good leafy colonies like Maitri Park are giving way to multiple towers being constructed by HN. Look at the state of Union Park all those idealic bungalows turned into multiple storied towers with bedrooms in adjoining buildings within a handshake, a la DOMBIVILI. Union Park has no place for parking cars.
I have invested in property and have a vested interest in prices rising to keep my investment growing however i am realistic about what to expect. Right now i live in London, i brought the present house i live in 2000, since then every year i've been baffled by the increase in house prices, here now my house is valued at 2004 prices and expected to come down further. All around where i live new housing estate are vacant without any buyers.
The same is likely to happen in INDIA especially MUMBAI when places like SINDHI COLONY, SUBHASH NAGAR, SHELL COLONY in Chembur are turned into huge social housing sites. And expect large corporates to enter this sector, they ain't stupid to let go the LOW HANGING FRUIT.
Shayna,
I am surprised that you dont know the nexus between Goodas, politician and builders.
Can you pls. let the forum know the price you brought, area and the current price.
It will be very helpful when numbers talk in this forum.
Bindas Bhai
More the raise more the PAIN
I am also from Chembur. In 2000 I brought a flat in Atur Park for 30L for 750 carpet today the brokers are quoting around 70 to 80L
I feel the prices has to come down atleast by 25%
Vishal
me also from chembur, i bought in 2002 for 20 lacs a small 2 bhk, now the same if for 80 lacs, i want to upgrade to bigger flat i am not able to , as i am not finding buyers willing to pay this market rate for my home.
definitely the price has to come down , in many of my friends buildings 10-20 flats are still free, even though buildings are 5 yrs old. builders are too greedy, they are not ready to let go for even few lakhs lesser.
even though stock market is up, the other things are still negative, i feel price must fall atleast 20% from here to attract new transactions.
@shayna you said 'The Catholic convents of OLPS and St Anthonys have deteriorated alongwith SWAMIs'
could you elaborate, i went to swamis and loved it, one day would want my kids to go there,
i would be so disappointed if things have changed so much for the worse there :-(
You, the entire Chembur area has become crowded with buildings in place of earlier bungalows and a rise in hutments too. The infrastructure is more or less the same but now creaking under the extra load. Most old buildings are more than 25 years old, so look really jaded. Who will pay 70-80L for an old flat in a building which may need extensive repairs in near future. Just have a look at the old "star" buildings in Chembur like those near Diamond Garden and Ambedkar Chowk. Also I recently visited the area and now some parts really look seedier than they used to about 25 years ago.
I myself used to stay in Sion and many friends used to stay in Chembur, now large tracts of the area has turned unliveable (or have our standards of liveability changed over the years, I wonder).
However, flats in the garbage dumping ground near Anik Depot called Bhakti Park (see it to believe it!) are still having asking prices in the several millions. Do you people feel that these prices are sustainable? Something's gotta give! Step outside the area and you have the large festering slums of Antop Hill and Sewri. Travelling there recently really gave me an unsecure feeling, which I never used to have in the old Bombay, even at odd hours.
Sorry the first word in my earlier post should be Yes, not You!
Shayna,
I am surprised that you dont know the nexus between Goodas, politician and builders.
Can you pls. let the forum know the price you brought, area and the current price.
It will be very helpful when numbers talk in this forum.
Bindas BhaiThe house i quoted in my posts is the one i am living in here in London. Brought for £86000 in 2000 and being re-mortgaged this month for £145000. It was quoting £195000 in Sept 2007 when i last re-mortgaged it.
I released £14000 of equity from this house in 2005 and purchased an acre of land in COIMBATORE for Rs13Lakhs. In 2007 a SEZ (RAKINDO)was announced adjoining my land and then was valued at Rs80Lakhs, I Do not know the current valuation however the SEZ was being promoted by Dyanidhi Maran and hence am hopefull.
Having said that all of these are figures thrown about. End of the day it boils down to how much an individual is ready to pay for the Apt or Land. With the current situation of tight credit valuations have to come down.
Looking at the excess of Apts Hiranandani is selling whole floors in the Maitri Park regeneration project in Chembur. The reason being he is not hopefull of attracting adequate buyers for 4 apts on each floor.
Talking of Builders, Goonda, Politician nexus. There has been a DISINTERMEDIATION in this industry where the GOONDA had turned into a builder cum politician. CONGRESS realises this and will try to correct it by tendering these social housing projects to the CORPORATES.
MUMBAI or for that matter INDIA's housing prices cannot sustain in a vaccum, globally there are massive reduction in valuations of Tangibile and Intangible assetts. I am a aircraft engineer by profession, here in Heathrow the valuations of slots are taking big hits. BMI has the largest number of Slots after BA, Lufthansa had decided to buy BMI last year but now are renegotiating the price simply because there ain't enough business pax flying LHR. A fact that can be gauged from Virgins decision to stop flying to MUMBAI.
Dear Shayna,
First and foremost let me tell you that Bhai in our community is called with respect. Motilal Oswal CMD is called MotiBahi by us. Trust this clarifies the usage of Bhai.
I am sorry, i thought that you have brought property in Chembur and hence I asked you the price. I am not a qualified person to comment on your market.
Regarding Chembur post by Vishaal looks realistic. If you look at the CAGR it is around 9.5%.If you remove inflation from this the net return will be around 3 to 4%, correct me if I am wrong. Now if you say that getting 3 to 4% for a developing country like India and for a city like Mumbai is high then I tend to disagree with you.
Priyank: Pls. can you tell me where you brought for 20L 2BHK which area in Chembur? I will then comment on it. Your post is nothing but bullshit. People like you are misleading this group.
Shayna: Since you are from chembur, can you pls. check and let the forum know 2000 price of Chembur in comparison to the prevailing price. Pls. compare prices of old building during 2000 and also for 2009. New building prices vary a lot from builder to builder.
Bindas Bhai
Shayna,
Let me also add HN coming to Chembur will only prop up the prices of Chembur.
Bindas Bhai
Hi,
Coming back to original topic,
The prices have corrected by about 10% in II tier city like Pune,
However, despite the absence of any buyers,and many empty flats, builders are holding onto these assets and the prices primarily because
1) Black money generated by the huge margins in the previous projects is with builder.
2) Knowledge about the fact that all the black money generated in the economy, easily gets transferred to white money/ invested in assets by buying property.
3) Another fact, demand will always stay for all the layers of offerings in property- the great indian population not withstanding the eco situation.
Unless, the builder is heavily leveraged, or listed and majorly white ( aka DLF, Unitech etc) the prices would not come down much.
:Builders are holding onto ready property and prices.One can go and c 4 himself the truth across property in India.
As the property dips, buyers enter the market genuine or investors.
Agree with Bhai - survey and buy
Govt. can provide these options:
1. Greater Tax benefits for customers.
2. Greater Incentives for budget flats. Cheaper homeloans + Tax benefits +FSI etc.
3. Infrastructure status for townships. corporatisation etc.
Personally i think, interest rates are going to be decreased marginally with large benefits to budget housing schemes
sansei.
Options
Hunt and buy if genuine requirement
Wait and watch for policy direction if investor
Sansei.
Govt. cannot stop the decline of home prices. They can only delay it. The fall is inevitable and is going to be a long one that would go for 3-4 years. It is good if the prices can stay high, but the fundamentals don't support them. They have no where but to go down slowly over years.
Ultimately by 2012-13 we'll start seeing properties worth buying.
Hi,
the word bhai in mumbai does not mean(respect)but a term used for a criminal boss(don)
Has the market reached to bottom of recession?
Technically yes, Fundamentally not.
Media is flooded with both side of news; technical indicators are showing bottoming signs whereas fundamentally the issues are still there. To digest both the news one has to acknowledge the change in market. Lot of things of the past will never come back, new trends & changes will shape the market, align your investment accordingly.
As per last year’s survey of 50 economists, market will bottom in June-2009.
My own opinion is that economic turn around will happen in Sept-2009.
RE is going through a major change from Luxury to affordable housing.
--What about the pending Luxury projects? Open question.
--The PE funds which withdraw money from RE, definitely knew about bottoming signs but they understood the trend.
Economic Recovery or Economy Resetting At Lower Activity Levels?
The GDP has shrunk from 9 to 6%.
Corporate are cutting cost to reach to previous profit level.
Unemployment will reach to peak after couple of months which is another threat for double hump recession.
As corporate are cutting costs, it’s turning from loss to profit, which is causing euphoria for stock markets looking forward.
RE market Drivers
--The declined household income will take time to reach previous level.
--As employment will improve only after unemployment peak, there is lot of time to go.
--One can’t rule out the possibility of decline in prices even after 2/3 years. [In Japan the prices fell after 5 years.]
-- Even in boom time there are examples where prices fall (comparative scale) as the builders changed the development direction. Means an area which was the most prestigious 5years before is no longer a lush place, demand is created for other areas without roads & electricity.
In short, you have same money in pocket what you had 3 months before. UPA govt. didn’t fill yours & my pocket [may be Bhai’s pocket]. I don’t see any reason, neither for rush nor price rise. Now builders will start spreading news about sold out or price rise but don’t forget, even V shape recovery will take 2/3 years to reach 2007 level. One can’t fill the holes in one night.
Vulture.
Vulture & Vik,
Now since the scenario is changing and likely to look up in future. For actual use should the people wait further or negotiate hard say minimum 30% from the peak for Mumbai and close the deal.
Pls advise.
Bindas Bhai
All Brokers who are in the avatar of advise to buyers -
In bangalore the price of Flats have come down to 2005 prices (37 Lakhs for 1800 SqFT) In the peak they were quoted 55 Lakhs... You can calculate the correction...
I know buyers who booked in 2004/05 are going to the court as he has not completed the amenities and asking for more money... This is the same case with all the builders (Dont tell me about good builders.. The word "Good", Professional should not be associated with builders)...
IF Bhindaas Bhai and his supporters still want to buy i am ready to sell my flat - They need to pay my cost + Interest portion of my EMI... Why cant you benefit from the Sensex rise and associated real estate benefit... Are you game? Answer me or Shut your mouth?
So why should one buy -
There are enough houses where people can stay in rent - In bangalore its in high 1000's... No need to buy..
The important point is 9 % growth did not come because of Cong Govt... Its because of cheap money!!... Not the case any more... I am happy with the music cong govt will now face - Lets watch Revenues are not easy to come by... But they would like to spend in NREG / Loan waiver... They cant increase tax exemption in this scenario... Or they will reduce income tax and increase service tax... The large employment generator was IT industry... Because of IT other industries grew... With stagnation in IT where is the hope? Lets wait... House is major decision... People can wait for 5 - 10 years... Few crooked builders will go belly up... Who Cares?
Also the behavioural change is getting reversed because of cut in salaries and bonuses... Just take a walk to the malls.. You will understand...
US Scenario - Citibank closed my savings account as i had ZERO balance.. They are shit scared..
Vik - Can you post my offer to any time Bhindas or his colleagues advice for buying houses!!!
Anon: 9:49
I am ready to buy if you can offer me at 04 prices anywhere in Mumbai. Pls. give me more details about Bangalore property I will let you know. I can assure you that if you want to sell at 04 levels + interest on your EMI paid there will be lot of buyers in this forum itself.
We all know Bangalore, Hyd(IT depended cities) has seen a deep correction but has never come to 04levels.Even if it comes I have nothing to do i am purely talking about Mumbai properties. I repeat properties which have multiplied 3 times since 2000 levels would have seen only marginal correction. You will not see anymore fall from here neither will see any significant jump atleast for four months.
BTW pls. read all my post carefully, I have never spoken about any cities other then proper Mumbai not even the peripheries.
Bindas Bhai
Bindaas Man,
What in the world are you trying to prove here? Are you a pimp trying to influence people to buy?
If you are not a pimp, go and buy some more RE and leave this blog.
If you are a pimp, go and fuck yourself.
Bindaas bhai @10:20PM.
You ask people to buy at current rate and in your last post you ask for an offer at 04 price.
Aren't you contradicting yourself?
When you ask for offer at 04 price, do you mean current prices dropped to 04 level?
Please provide some more clarification behind asking for an offer of 04 price.
When you yourself ask for 04 price and encourage others to buy at current price doesn't go well bhai.
Rentals Rs 100,000 per month??
I live in NJ and the normal rentals are in $1200-$1500 range - this is one of the costliest places in USA !
In 2006-2007, I was shocked to hear that Lehman was willing to pay $4000+ rentals in Mumbai for their executives.
It is clear that influx of US dollars had begun the distortion of RE in India, stoked by black money followed by speculators and masses with access to easy money, and thus got created the mega RE bubble.
Now the reverse movement had happened - US$ went out first, speculators vanished and masses are unwilling to get in and unable to exit.
So the factors that created the bubbles are gone for a long time. The prices have been falling and they are still not affordable to the common man.
Now there is a glut of oversupply of inventory that would severe pressure on the price.
So my estimation on when RE would improve:
1) No excess inventory of buildings
2) Job market esp in IT should stabilize
3) Investors returning to the market
4) Masses begin to feel that RE prices have bottomed out
Till these things happen - nothing is going to change the downfall of RE prices.
Elections, government policies etc., have very marginal to zero effect on this free fall.
Unsold inventory! That says it all-it is the key. I see hundreds of towers coming up all over Mumbai/Thane/Navi Mumbai. I see so many of the finished buildings totally empty, devoid of occupants. This will place a downward pressure on the prices. The end user of this boom, the highly paid IT/BFIS/BPO guy is now either in defensive mode or already laid off. He is not now going to buy these flats at the current rates. All one has to do is to wait and watch the game between the builders and the banks-who will blink first? The end user is already finished and the supply of foolish speculators is also over. In such circumstances, the time is really ripe for a collosal free fall.
Same true story here.
Lots & Lots of unsold flats in PUNE
IT/BPO/NRI/MUMBAI Investor
stuck with these high value flats.
Only way to go is down
PS: any one stuck and ready to sell reasonable rate around Kalyaninagar talk to me.
I don't find any link or content?
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