It seems like RBI will be forced to give some relief in terms of CRR cut or rate cuts in the coming meeting on 24th Jan. The low inflation numbers might be used as a justification. This might lead to an uptick in RE prices pretty soon. Sensex is already going up in anticipation.
Economic Times is publishing some spin - some parts of this article are true http://economictimes.indiatimes.com/markets/real-estate/realty-trends/why-residential-property-prices-never-fell-in-cities/articleshow/11485683.cms
Noone predicted Lehman bro or Bear stearns or AIG would be affected with the scale like what we saw then.
Similarly nobody is sure what lies in the year 2012 but all the pointers are negative.
If I had any excess property in India, I would sell it immediately and lock the money in the secured monetory instruments like Bank FD.
There is no new rich class evolving in India. IT folks are not making that much money to buy crore price tag property. The next buyers are definitely NRI (I am assuming black money holders have already bought flats). I will not surprise next Realty marketing will be centered on NRIs. If they fall prey to thoese advertisements then forget price correction in Indian Realty.
I will continue to live in the land of opportunity than in the land of opportunistics.
Let me go out on a limb here and just for the fun of it make two predictions for 2012 for india. 1. Sensex will end 2012 at around 12000 2. Home prices will be flat or drop by around 10%.
I am a staunch believer in RE correction (which is not showing that much). Anybody's take on the following piece? http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Why-residential-property-prices-never-fell-in-cities/articleshow/11485683.cms
I always wonders where is such high money at high velocity is flowing just for buying RE in India... I literally mean from where... it seems like never ending flow of money... worst is - it is getting bigger flow everytime!
US Real Estate bubble went from 1998 to 2006, correction is still going on. The bubble in India is no different, the question is when will the correction start and how long will it last. When renting gives negative cash flow, and mumbai prices are at par with Manhattan, then a correction is inevitable. It's not different this time, it never is.
Builders are holding on there prices because they are counting on lower Rupee against a Dollar.
NRIs are going to decide future up/down of the realty prices in India. In just months Rupee has lost 18% againt US Dollar. It means today NRI would pay approx 8 lakhs instead of 10 lakhs otherwise he would have paid 8 months ago. If rupee depreciate 10% more i.e. 63 rupees againt US$ then the same property would cost him only 6 lakhs. So NRI will get 1 crore property for just 63 lakhs.
'Duniya zukati hai zukane wala chahiye' That is what Builder believes in..
If NRIs got into this trap then realty price correction is near impossible in big metro areas in India.Whether NRIs will buy the property or not is a billion rupees question. To me, future of the realty is in hands of RBI's foreign exchage department.
Anon above: NRIs are fraction of buyers. Moreover, if rupee keeps falling, why would NRI invest in a sinking asset and catch a falling knife. NRIs would keep their Dollars and not buy. Even now they are not buying. It is the inside people sending money outside and then bringing it back through Mauritius etc. and buying up RE. NRIs are shit scared as many would be reruting to Inida soon due to job losses etc.
"NRIs are shit scared as many would be reruting to Inida soon due to job losses etc."
Sorry, if there are job losses in West there will be even bigger job losses in India. In 09, India dodged the bullet and majority of layoffs in 09 were in Western economies.
There is no more slack as productivity in West has peaked. Politically also it's no longer acceptable to fire locally and hire abroad.
So NRIs are better off being unemployed in West than being unemployed in India.
NRIs are not better off staying abroad with layoffs. They are returning to India in huge numbers. Estimate is around 100K per year nowonwards for the next 5 years. They are not coming out of their will but for survival and visa issues. They will come and lower thr salaries in India and will increase the supply of workers with skills and experience abroad. Btw, party in India is really getting over.
NRIs are not better off staying abroad with layoffs. They are returning to India in huge numbers. Estimate is around 100K per year nowonwards for the next 5 years. They are not coming out of their will but for survival and visa issues. They will come and lower thr salaries in India and will increase the supply of workers with skills and experience abroad. Btw, party in India is really getting over.
I have a question. Do investor registers flat with government? Do they pay the stamp duty and register flat against their name? I asked this question to one of my friend in RE; he said no they do not. Don't you think this is loss of revenue for GOI? Investors are involved in every project. Every builder declares at some point of time that project is sold out. GOI can just check how many flats are actually registered from the project. Either builder or investors can be exposed in a second this way. But then I realize that the name of the country I live in is 'India'; so I can't help it. :P I need to get adjusted to it. If such simple things are not being implemented then how are you guys expecting a crash? Real supply figures will never come out; one need to trust developers for whatever shi* figures they are claiming. And off course they will never say supply is exceeding demand. :) I read about NHB somewhere. Do they understand the f***ing shi* thing I wrote above? Or my point is baseless?
@ Anonymous above - great point - ask your local corporate or MLA about this - make it an issue in local newspaper
People need to act - many here are scared of being shot for being whistle blowers - that's the main reason why due process is not followed in India - all it takes is a little bit of courage - file and RTI petition and ask question to MLC/Corporator . If you know a lawyer file a public interest litigation .
china has tried to deflate its bubble via strict rules on hoarding of property by investors Maybe something like this can also be passed
Also vote for candidate who promises redressal - at least that is a moral Victory
Time to invest in real estate will come when rent will be more than EMI for a given property as it was in 2001-02(nothing can remain overpriced or underpriced forever). It is law of economics which applies to every country on the planet.
Rupee strengthened today, so the NRI buyer who bought around 54 has already suffered a loss of around 6%! Who is to say which way the rupee will travel ? Are NRIs morons to listen to builders' claims that they are getting a discount due to forex rates. Tomorrow if the rate changes, they might be looking at 5-10% losses instead.
Did you join the Anna movement? Supported it? Argued with one of your skeptic colleague or friend about the usefulness of Lokpal? If yes, you did your bit. If not, you deserve it.
So let's see list of RE buyers here... 1. Local buyers - already pushed out because of affordability - cut off 40 lacs 2. Black money buyers - Already bought - cut off 1 crore. 3. NRIs - Already bought and will buy more - for what? - cut off 1.5 crore 4. Anyone else - who and what is cut off - 2 crores ?
The Mumbai real estate space has been standing on a soft patch for a while now. In the quarter gone by, the city's registration numbers reached a 31 month low. Complicating matters further is the just announced development control regulations which will further squeeze out new launches.
But the story doesn't end with Mumbai; now even Bangalore and NCR have started witnessing dipping sales figures.
According to a recent report published by Edelweiss Capital, buyers in Bengaluru are delaying purchase decisions on back of global uncertainties and high interest rates. As for the NCR region, volumes have declined as new launches have slowed down and sellers (in secondary sales market) are unwilling to sell their booked properties till milestone payments are due.
I was right in guessing when I commented earlier that builder's next target is going to be NRI folks.
There is no new class of people emerging anytime soon who could buy inflated realty properties. If NRIs fall prey to these gimmicks then we will have to forget price correction in Indian realty.
RI or NRI they love to think ,sleep and dream properties only.
I remeber I bought my flat just because I could find a 'good' girl to get married. Girl's parent wont even talk to you if you dont have your own accomodation. They expect you own 2bkh flat, Gold, bank deposits, car and what not.
I sold that flat in 2007(repenting) and now waiting for realty crash so than I could buy one.
Many here including myself were expecting Rupee to go to 60, instead it has done a somersault to 50. Goes to show how volatile and unpredictable the situation is and how worthless predictions are :)
@Aam admi - "Goes to show how volatile and unpredictable the situation is and how worthless predictions are :)"
I see tons of ads on Indian sites about how "I made 400$ in my first week" etc by trading currency.
I hope folks understand how hard it is to make money in currency trading. In all likelihood they will lose and with margin trading they will lose more.
Regarding ShashankRao's comment on flats being a pre-req for marriage, such expectations are present in China. Did not know that Indian brides also expect the same.
There are just too many men and fewer and fewer women. Did you all not notice how warped our nations sex ratio is? The trend has reversed and educated girls do make demands .... especially the ugly ones. BElieve it or not....but they also remain unmarried.
37 comments:
It seems like RBI will be forced to give some relief in terms of CRR cut or rate cuts in the coming meeting on 24th Jan. The low inflation numbers might be used as a justification. This might lead to an uptick in RE prices pretty soon. Sensex is already going up in anticipation.
@Pawan - "This might lead to an uptick in RE prices pretty soon. "
True. But even ZIRP has not helped elsewhere. I would say events in Europe will have a greater bearing (esp with regards to liquidity and sentiment).
http://www.dnaindia.com/india/report_realty-to-brave-recession-prices-may-remain-stable-this-year_1636159
u have posted very nice Article it has very good information that’s nice I like it
Economic Times is publishing some spin - some parts of this article are true http://economictimes.indiatimes.com/markets/real-estate/realty-trends/why-residential-property-prices-never-fell-in-cities/articleshow/11485683.cms
Link
Noone predicted Lehman bro or Bear stearns or AIG would be affected with the scale like what we saw then.
Similarly nobody is sure what lies in the year 2012 but all the pointers are negative.
If I had any excess property in India, I would sell it immediately and lock the money in the secured monetory instruments like Bank FD.
There is no new rich class evolving in India. IT folks are not making that much money to buy crore price tag property.
The next buyers are definitely NRI (I am assuming black money holders have already bought flats). I will not surprise next Realty marketing will be centered on NRIs. If they fall prey to thoese advertisements then forget price correction in Indian Realty.
I will continue to live in the land of opportunity than in the land of opportunistics.
Let me go out on a limb here and just for the fun of it make two predictions for 2012 for india.
1. Sensex will end 2012 at around 12000
2. Home prices will be flat or drop by around 10%.
I am a staunch believer in RE correction (which is not showing that much). Anybody's take on the following piece?
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Why-residential-property-prices-never-fell-in-cities/articleshow/11485683.cms
I always wonders where is such high money at high velocity is flowing just for buying RE in India... I literally mean from where... it seems like never ending flow of money... worst is - it is getting bigger flow everytime!
US Real Estate bubble went from 1998 to 2006, correction is still going on. The bubble in India is no different, the question is when will the correction start and how long will it last.
When renting gives negative cash flow, and mumbai prices are at par with Manhattan, then a correction is inevitable.
It's not different this time, it never is.
@Polt:
A third/fourth one for 2012:
--Rupee will be in 62-65 range per USD.
--Eary layoffs happening in all sectors of economy primarily in housing, banking, loan industry and manufacturing. IT will slow down.
Builders are holding on there prices because they are counting on lower Rupee against a Dollar.
NRIs are going to decide future up/down of the realty prices in India. In just months Rupee has lost 18% againt US Dollar. It means today NRI would pay approx 8 lakhs instead of 10 lakhs otherwise he would have paid 8 months ago. If rupee depreciate 10% more i.e. 63 rupees againt US$ then the same property would cost him only 6 lakhs. So NRI will get 1 crore property for just 63 lakhs.
'Duniya zukati hai zukane wala chahiye'
That is what Builder believes in..
If NRIs got into this trap then realty price correction is near impossible in big metro areas in India.Whether NRIs will buy the property or not is a billion rupees question. To me, future of the realty is in hands of RBI's foreign exchage department.
Anon above:
NRIs are fraction of buyers. Moreover, if rupee keeps falling, why would NRI invest in a sinking asset and catch a falling knife. NRIs would keep their Dollars and not buy. Even now they are not buying. It is the inside people sending money outside and then bringing it back through Mauritius etc. and buying up RE. NRIs are shit scared as many would be reruting to Inida soon due to job losses etc.
"NRIs are shit scared as many would be reruting to Inida soon due to job losses etc."
Sorry, if there are job losses in West there will be even bigger job losses in India. In 09, India dodged the bullet and majority of layoffs in 09 were in Western economies.
There is no more slack as productivity in West has peaked. Politically also it's no longer acceptable to fire locally and hire abroad.
So NRIs are better off being unemployed in West than being unemployed in India.
India should also have US style election debates when we are copying too much of the west, why not debates also.
Anon about NRI layoffs:
NRIs are not better off staying abroad with layoffs. They are returning to India in huge numbers. Estimate is around 100K per year nowonwards for the next 5 years. They are not coming out of their will but for survival and visa issues. They will come and lower thr salaries in India and will increase the supply of workers with skills and experience abroad. Btw, party in India is really getting over.
Anon about NRI layoffs:
NRIs are not better off staying abroad with layoffs. They are returning to India in huge numbers. Estimate is around 100K per year nowonwards for the next 5 years. They are not coming out of their will but for survival and visa issues. They will come and lower thr salaries in India and will increase the supply of workers with skills and experience abroad. Btw, party in India is really getting over.
in 2009 India didn'd dodge the bullet, but printed more money and lowered rates by half. It worked that time but cannot work anymore due to inflation.
I have a question.
Do investor registers flat with government? Do they pay the stamp duty and register flat against their name?
I asked this question to one of my friend in RE; he said no they do not.
Don't you think this is loss of revenue for GOI?
Investors are involved in every project. Every builder declares at some point of time that project is sold out. GOI can just check how many flats are actually registered from the project. Either builder or investors can be exposed in a second this way. But then I realize that the name of the country I live in is 'India'; so I can't help it. :P I need to get adjusted to it. If such simple things are not being implemented then how are you guys expecting a crash? Real supply figures will never come out; one need to trust developers for whatever shi* figures they are claiming. And off course they will never say supply is exceeding demand. :) I read about NHB somewhere. Do they understand the f***ing shi* thing I wrote above? Or my point is baseless?
@ Anonymous above - great point - ask your local corporate or MLA about this - make it an issue in local newspaper
People need to act - many here are scared of being shot for being whistle blowers - that's the main reason why due process is not followed in India - all it takes is a little bit of courage - file and RTI petition and ask question to MLC/Corporator . If you know a lawyer file a public interest litigation .
china has tried to deflate its bubble via strict rules on hoarding of property by investors
Maybe something like this can also be passed
Also vote for candidate who promises redressal - at least that is a moral Victory
Time to invest in real estate will come when rent will be more than EMI for a given property as it was in 2001-02(nothing can remain overpriced or underpriced forever). It is law of economics which applies to every country on the planet.
Rupee strengthened today, so the NRI buyer who bought around 54 has already suffered a loss of around 6%! Who is to say which way the rupee will travel ? Are NRIs morons to listen to builders' claims that they are getting a discount due to forex rates. Tomorrow if the rate changes, they might be looking at 5-10% losses instead.
Did you join the Anna movement? Supported it? Argued with one of your skeptic colleague or friend about the usefulness of Lokpal? If yes, you did your bit. If not, you deserve it.
So let's see list of RE buyers here...
1. Local buyers - already pushed out because of affordability - cut off 40 lacs
2. Black money buyers - Already bought - cut off 1 crore.
3. NRIs - Already bought and will buy more - for what? - cut off 1.5 crore
4. Anyone else - who and what is cut off - 2 crores ?
Realty on shaky ground despite interest rate pause
The Mumbai real estate space has been standing on a soft patch for a while now. In the quarter gone by, the city's registration numbers reached a 31 month low. Complicating matters further is the just announced development control regulations which will further squeeze out new launches.
But the story doesn't end with Mumbai; now even Bangalore and NCR have started witnessing dipping sales figures.
According to a recent report published by Edelweiss Capital, buyers in Bengaluru are delaying purchase decisions on back of global uncertainties and high interest rates. As for the NCR region, volumes have declined as new launches have slowed down and sellers (in secondary sales market) are unwilling to sell their booked properties till milestone payments are due.
I was right in guessing when I commented earlier that builder's next target is going to be NRI folks.
There is no new class of people emerging anytime soon who could buy inflated realty properties. If NRIs fall prey to these gimmicks then we will have to forget price correction in Indian realty.
http://timesofindia.indiatimes.com/business/india-business/Rupee-drop-makes-realty-attractive-for-NRIs/articleshow/11532454.cms
...and what will NRI do after buying property in India ?
anon above..
RI or NRI they love to think ,sleep and dream properties only.
I remeber I bought my flat just because I could find a 'good' girl to get married.
Girl's parent wont even talk to you if you dont have your own accomodation. They expect you own 2bkh flat, Gold, bank deposits, car and what not.
I sold that flat in 2007(repenting) and now waiting for realty crash so than I could buy one.
"Girl's parent wont even talk to you if you dont have your own accomodation. They expect you own 2bkh flat, Gold, bank deposits, car and what not."
So sell your daughter to the highest bidder? Parents or pimps?
Mera Bharat Mahan...
ShashankRao - so to get a girl one needs flat, may be this is the way India is Shinning!
so NRI and RI buy real estate for a girl? that's all to this NRI buying ..no more reasons ?
honest confession
Many here including myself were expecting Rupee to go to 60, instead it has done a somersault to 50. Goes to show how volatile and unpredictable the situation is and how worthless predictions are :)
@Aam admi - "Goes to show how volatile and unpredictable the situation is and how worthless predictions are :)"
I see tons of ads on Indian sites about how "I made 400$ in my first week" etc by trading currency.
I hope folks understand how hard it is to make money in currency trading. In all likelihood they will lose and with margin trading they will lose more.
Regarding ShashankRao's comment on flats being a pre-req for marriage, such expectations are present in China. Did not know that Indian brides also expect the same.
@Anon above
flats being a pre-req for marriage
All I have to say is that India is not one monolithic entity, a lot of variety exists. It may be true for some not for all.
Girls make independent decisions as well, I am not sure if all girls would be dumb enough to let go of a good guy just because he doesn't have a flat.
RE: "All I have to say is that India is not one monolithic entity"
Sure, but what is the overwhelming (i.e. 51% :-) cultural trend.
For example, it's fair to say that Indians prefer male child even though I'm aware of several exceptions to this general rule.
There are just too many men and fewer and fewer women. Did you all not notice how warped our nations sex ratio is? The trend has reversed and educated girls do make demands .... especially the ugly ones. BElieve it or not....but they also remain unmarried.
Very informative post. Thanks.!!
Thank you for the info. It sounds pretty user friendly. I guess I’ll pick one up for fun. thank u
Flats in Chennai
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