23% of flats in Navi Mumbai lying vacant
The newest destination for property investors in the Mumbai Metropolitan Region is the Navi Mumbai-Panvel-Raigad zone. Experts have concluded this based on Census 2011 findings , according to which 23% of houses here are lying vacant. They say that while investors are buying most vacant homes expecting rate appreciations ; genuine buyers are deferring purchase in the hope of a correction in prices. But some experts feel that low occupancy of houses does not necessarily imply a flourishing investor presence.
Now a days Times of India too has been reporting on the sorry state of Mumbai real estate. The ads by the builders are down significantly from the huge booklets to just a few pages.
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240 comments:
1 – 200 of 240 Newer› Newest»We have talked about the bubble enough. Now it is time to post some information about whether it is bursting or not.The second thing which we should try to figure out is how much time would it take to burst.5 yrs, 10 yrs, 20 yrs? because as long as it doesn't burst all the hypothesis's will be kept holding wrong.
- SKG
How about posting some houses that was bought for half the price or sold for a huge loss. I am sure with the impending bubble bursting, people are selling houses for a big loss. I am talking about your friend, or relative or anybody that bought a house and sold it for a huge loss. Go.
http://www.business-standard.com/india/news/mumbai-home-prices-set-for-steady-rise-says-report/481797/
At 20% pa, prices will double in 3.5 years. Are incomes rising at the same pace ?
^^ The article above mentions that people are buying because the hopes of price declines are fading. I would like to know who are these people buying 1CR+ houses and can they afford them. People who can afford would already have bought. Even with both husband and wife working in IT, it is difficult to buy these houses
Systemic collapse triggered by domino effect
http://www.ndtv.com/article/cheat-sheet/massive-power-failure-in-northern-india-since-2-30-am-top-10-developments-248943
There has been a massive power breakdown in northern India; it's the worst northern grid failure since 2001. The power failure has majorly hit metro services in Delhi along with the water and electricity supply across seven states in north India.
This is how things start collapsing...one monsoon is weak...hydro is low, coal quality degrades over the years and suddenly the grid trips due to overload. These will become more frequent as years progress.
no bubble...only fools who missed out crying bubble...leave mumbai n go to your village...lest u cant even afford there
imagine song "roja janeman" by a r rahman and substitute "mumbai real estate" for "roja"..hahahaha
@mango man:
// -- This is how things start collapsing...one monsoon is weak...hydro is low, coal quality degrades over the years and suddenly the grid trips due to overload. -- //
No worries. We'll buy water from tanks and electricity from Pakistan. All iz well.
BRB, gotta invest in RE and gold.
Non IT salaries in Mumbai are ridiculous. IT salaries are high due to Bangalore, Hyderabad paying well. Mumbai RE is bound to collapse, with wealth with few and common man barely managing his daily life for survival.
They should publish statistics between haves and have nots.
If it has not burst yet; simply means there is no bubble, we can keep wishing for prices to go down; but its not happening...from 2009 to 2012; in short span of 3 years, property prices have grown average 100%; in some case even more. If it drops 20% now; does it really make a big difference?
Indian propertu market is not like USA peoperty market where people got 100% finance from loan. Credit check is strong in India than USA. So those who had money and good track recotd or 2 salaries only they have brought houses.
2nd in USA they have products like Credit Default Swap. CDS is derivative product on CDO. CDO is Where they package all loan and sell it as CDO product.
All the home loans have the gaurantee from government sponsered companies.
India has lot of black money. So when some one buys house he has already paid 50% of the home price.
India's population is huge. They need lot of housese. So any small correction will be boom for them.
I don't think it will collapse for next 15 years.
@Anon
If it drops 20% now; does it really make a big difference.
Let it drop 20% first and then see.
there will be no drop. I feel there is no bubble, rather all non RE products are under priced. These products have to catch up to RE prices, it can be services or products. If there is lots of cash in market how can RE increase and not other products.
I see that prices are rising for non RE products but still they are not on par with RE increased price. It will take 2 years to catch on, automatically most of RE prices will make sense.
yea genius, and salaries are going to increase fourfold. Also I have a bridge to sell to you.
@Anon
there will be no drop. I feel there is no bubble, rather all non RE products are under priced. These products have to catch up to RE prices, it can be services or products. If there is lots of cash in market how can RE increase and not other products.
I see that prices are rising for non RE products but still they are not on par with RE increased price. It will take 2 years to catch on, automatically most of RE prices will make sense.
So you agree that RE has gotten ahead of other things in terms of pricing; it is at least 2 years ahead per you..is not it?
Property prices in Mumbai set to increase 20%
http://www.rediff.com/business/slide-show/slide-show-1-property-prices-in-mumbai-set-to-increase/20120730.htm
Flats vacant are deliberately kept vacant in anticipation of higher prices.
Now, can we call this as bubble ?
I just stumbled across this blog. I totally agree that this is bubble but also I don't believe its going burst any time soon.
Who is buying,
1. mostly small business owners(Grocerywala, jwellers, even paanwala) in Mumbai who hardly pays any tax and average income is 1cr per annum.
2. Non IT but high income jobs like Marketing, finance and advertisement CA etc, we bought 1.5 cr flat in bandra because me and my spouse work in adv. field and combined income of 75 lacs. I believe it is common among my colleagues.
3. Government employees and small politicians with ton of added income.
So guys it’s not going to come down soon or perhaps never.
@Anon:
"we bought 1.5 cr flat in bandra because me and my spouse work in adv. field and combined income of 75 lacs"
Buddy, if you make 750,000 (or half of it) in advertising, with your writing skills, not just your Real Estate, but your Salary is a bubble as well.
For the bulls who think that India is somehow different from the rest of the world and that RE only goes up here.
See the two links below detailing the crash in Mumbai prices by almost 50% from 1996-1999.
http://re-it.blogspot.in/2008/12/peep-into-1996-real-estate-bust-in.html
www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdf
We have forgotten our history in just a few years and are now doomed to repeat it. This time the bust may be bigger because of increased leverage.
In the long run, house prices will go up at inflation plus maybe 1%. The 1% itself will be more than lost to repairs, renovation, taxes, etc.
BTW, if someone is really interested in urban RE, please read Homer Hoyts 'One hundred years of land values in Chicago'. You will easily see parallels with our own cities and our speculative behaviour. We rush to buy houses near 'upcoming highway/airport', in the 1800s people lined up to buy near 'railroads/canals' :)
@anon 8:17 AM
>> 75 lakhs per annum ?
making 6 lakhs (USD 11000 or $5500 per person )per month!! great!
As somebody pointed out, it is happening because of flattening of the world economy. In this globally connected world, till salaries find an equilibrium among different countries and economies , salaries will keep on raising for Indians! Till tehn enJoy the world.
// -- 1. mostly small business owners(Grocerywala, jwellers, even paanwala) in Mumbai who hardly pays any tax and average income is 1cr per annum. -- //
Average income for small businesses in India is 1 Crore ($180k)? Congrats, you've become a first world country.
Yeh sub kya ho raha hai. did indians just break the record for suffering the largest power outage in a non-disaster event?
"I just stumbled across this blog. I totally agree that this is bubble but also I don't believe its going burst any time soon.
Who is buying,
1. mostly small business owners(Grocerywala, jwellers, even paanwala) in Mumbai who hardly pays any tax and average income is 1cr per annum.
2. Non IT but high income jobs like Marketing, finance and advertisement CA etc, we bought 1.5 cr flat in bandra because me and my spouse work in adv. field and combined income of 75 lacs. I believe it is common among my colleagues.
3. Government employees and small politicians with ton of added income.
So guys it’s not going to come down soon or perhaps never.
"
LOL this guy is a broker. 10th pass buffalo.
Cant u see.. he is tryin to tell us we are fools by acting as some ad professional
India is full of losers like these.. :)
As for the prices, if they come even 10% then there will be a freefall cuz no one wud buy expecting the prices to go down further. its commonsense.
So that is why they are trying to hold prices as much as they can.
A stupid move i shud say. the more they hold the more they wud suffer.
Majority of Mumbai people don't pay taxes. Even cricket players and bollywood whores who go to us/england get under the table moneys. They get atleast 50,000 dollars per city. If they hit chicago,ny, dallas and la they make over 250k tax free moneys. Lehmans, spain, greece or any hedge fund going bust has no impact on desi real estate. Indian stock market is cheap, what happens when markets turns bullish in the next two years???? All them mumbai flats will be sold. Infosys ceo or cfo just has to sell 200,000 adr shares to absorb those flats. During the dot com bubble days, Indian wealth was estimated at 250 billion dollars in a 100 mile radius, talking silicon valley. Less than 1% of the population can control the real estate market. If this was any other country, real estate market would have collapsed with the lehman fiasco.
Btw, 1990's Indian bubble way different than today. Indians have billions in cash today vs 1990's. Indians put down 30 to 50 % down payment in hard cash. Indian banks way stronger than US banks. Whitey, Blacks and hispanics bought houses with no down payment, and the bubble grew in some states. That is not the case in India.
You can easily walk away from your $400k home, if you have no down payment. When you have million people buying home at the same time, and majority of them have no equity in the house, you could see the housing market crash, when they just walk away from the house. They got no dog in fight. India is different.
Salman khan paid 21 crore for a 1000 sq feet place.1000's Salman khan's in Mumbai. So how much money does he really have????? What about SRK???? Anybody question Salman khan????
In Ajmer, Rajasthan, which saw a massive real estate boom since 2007-2008, prices have come down by at least 30% and still people are not buying. A very good friend is a real estate agent there, and made tons of money from the boom (he runs a small general store in a middle-class locality and now owns 2 cars).
This friend told me no one is buying real estate in Ajmer and if there is a sale happening at all, it is happening way below the peak prices! He hasn't completed a single deal in the last 4 months when he used to complete 10+ deals in the good ol' days!
This is ridiculous, the haves present themselves with inflated salaries matching their ego (not reality). Have nots venting their frustration at not able to buy one.
There should be an equilibrium which is certainly going to burst the ego and bring market crashing. Let us not live in a fools paradise. The current market is (UN)real, this is fact.
The Northern and Eastern grids trip again
http://www.thehindu.com/news/national/article3707135.ece
Services in the national capital came to a grinding halt as power supply snapped around 1.30 p.m. The load fell to 40 MW and all of Delhi's generation station stopped working, because of the cascading effect of the fault in the grid.
While it's not an apocalypse as some emotional people would like to think, it highlights a very important problem i.e. maintaining critical infra in the face of depleting resources and slowing growth. I have argued many times about tipping points existing in the system which will show themselves given enough time. This is one of them.
Interestingly power failures in
the US are also rising at an alarming rate and they don't even build big transformers there any more. I recollect seeing a graph to that effect.
The future is upon us. Buy RE where there is ample power supply.
No power in half of India now. Thats affecting 2 times the combined population of US+Canada. Amazing!!!
For those Libertarians amongst you tracking the housing bubble, here's a small Desi tribute to Milton Friedman on his 100th birthday today.
The Milton Fountain.
Peace!
Desi Babu
@Anon above
Yup, I just called folks in Kolkata, no power there. Delhi, Gurgaon, entire North + East combined is out. Metros, Trains, Hospitals, water treatment plants, Traffic lights everything is out.
As I and many others have been saying, a lot of folks are going to be angry as hell, RE will be the least of our worries going forward.
Off topic, but do you guys know why we have such a severe power shortage???
Because our vast reserves hold substandard coal and the company that won our gas reserves would not sell the gas to the country at the original agreed price.
Instead they are holding out till the nation capitulates and agree to pay them the demanded price. Till then they will just keep on pretending that there is no gas.
'The IT industry with its super rich employees will save RE :))'. One by one, the bubble arguments are bursting.
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/bangalore-property-sales-down-by-40-per-cent-in-q1/articleshow/15291673.cms
"For those Libertarians amongst you tracking the housing bubble, here's a small Desi tribute to Milton Friedman on his 100th birthday today."
Milton Friedman was no libertarian. He was a statist who almost single-handedly devised the payroll income tax withholding system.
This is of course the system where salaried schmucks get to pay the bulk of the taxes while the businessman/merchant class are able to hide their income and shield their wealth from the taxman indefinitely.
"One by one, the bubble arguments are bursting. "
Looks like everything is bursting, except the bubble itself.
Question: Over half the nation has lost power. This would be a major disaster in any other country (let alone one with as horrendous roads, railways, hospitals and infrastructure as India), so why is the stock market UP today???!!!!
Anyone??!!!
With such massive power cuts, there will be renewed demand for apartments with back up power.
Hence, RE prices are set to go even higher.
And I say this only in half jest.
there will be renewed demand for apartments with back up power
Totally agree. The power backup systems will run on subsidised diesel while the poor farmer will rot in hell.
Bharat mata ki .... Jai.
"Question: Over half the nation has lost power. This would be a major disaster in any other country (let alone one with as horrendous roads, railways, hospitals and infrastructure as India), so why is the stock market UP today???!!!!
Anyone??!!!"
Well if you want a really bearish POV, they say that the stock markets rallied before the great depression too.
A more current reason could be that the world markets are in the throes of an orgasm in anticipation of another QE by Saint Bernanke.
http://www.zerohedge.com/news/670-million-people-india-without-power-electric-grid-fails
Read the above. Especially the comments.
Imagine if the grids continue to fail. And then recall that there was rioting in Gurgaon just a few days back due to power cuts that lasted a few hours.
Well the picture ain't pretty if you ask me.
Whats that in the sky?
Is it a plane? Is it superman, for God's sake? No... it looks like a large black bird!
With such massive power cuts, there will be renewed demand for apartments with back up power.
LOL. You think it's the same as a local power cut. No one cares if there is no power at home. Problems start when there is no power in the city, no traffic lights, no water supply, no supermarkets, no refrigeration, no milk, no vegetables. No cops to take your calls.
You have no idea how a system works. Things will start tipping over like dominoes.
Or are you going to run the whole city on backup power ?
@Anon - "Looks like everything is bursting, except the bubble itself."
A real estate crash is not like a stock market crash. You certainly wont see screaming headlines.
It usually plays out slowly, painfully. You will see about a 0.5-0.75% fall every month. This may not seem like much, but compounded it adds up to 10-12% pa. And this will go on for a 2-3 years or more.
Folks, I have a sincere question to those who fret about RE bubble and get easy aroused whenever a bull comments. Though all the bears are happy when the real picture of bubble is visible to everyone, like the Northern grid failure bringing the nation to its knees. This obviously means assets in this country are highly overpriced rather than discounting for the bleak future of the country, the quality of life.
The question is suppose the real estate prices collapse today by say 50%, would you guys be here posting the same comments or will be busy scouting for deals ? Even with the fall in RE prices, the future would still be bleak and the quality of life would be same if not worse.
Because we have bigger bubbles than RE in our country, like Snapdeal in talks to raise 100m USD from General Atlantic, but no one cares about it.
http://timesofindia.indiatimes.com/tech/news/internet/Snapdeal-may-sell-100m-stake-to-General-Atlantic/articleshow/15292692.cms
media, once again -
http://profit.ndtv.com/News/Article/why-property-prices-in-mumbai-are-likely-to-fall-308633?pfrom=home-otherstories
-SKG
Even with the fall in RE prices, the future would still be bleak and the quality of life would be same if not worse.
Indians are the most deluded people on this planet. A couple of days ago majority were still believing they would be a superpower by 2020.
Now they just got bitch slapped with half the country without any power.
Unless ordinary people wake up and drag their inept leaders out on the street you can rest assured the downward spiral will continue.
The end game will be for the rich to milk this country dry and abandon it. Their money is already parked abroad, they just need to make the transition official.
http://www.moneycontrol.com/news/real-estate/mumbai-residential-real-estate-a-mexican-standoff_737712.html
Forget real estate, forget being a nerd and working for some white man's company, just buy some agricultural land and plant some crops. You will end up making 10 times the money. Farm land is just getting depleted, so it is time to be a farmer. Supply and demand folks, and now it is time to go the other way. Go to the market and see the vegetable prices, it is getting higher by the day. These guys who live in the 10 crore shit holes need to eat something. Go organic, and charge triple the prices.
Invest in Dr. Reddy stock. India is getting fat and lazy. People in their 20's now getting high blood pressure + diabetic. All these nerds who work in the IT field, cant handle the pressure and they are out of shape. They need medicine.
IT employees are not rich. It just happens, IT employees pay taxes, unlike 90% of the other population. IT guys who work 8-12 hours a day, cannot afford 1-2 crore houses. Top level IT guys have money, but 90% of the other guys who work under them live month to month. Majority of the IT guys send 10-20% of the pay to their parents, who can hardly survive.
// IT employees are not rich
What are you talking about? An IT couple with offshore trips easily makes 2 lakhs per month after taxes.There is enough disposable income with these guys.I havent seen many poor IT people
Majority of IT guys in US have either locked their money in costly real estate over there. Very few have sold at peak and stayed in rental, some have wisely not invested there and in fact bought house/apartment here in India. They are the lucky ones, rest are all stuck in the pursuit of getting rich which proves to be a mirage.
Forget real estate, forget being a nerd and working for some white man's company, just buy some agricultural land and plant some crops. You will end up making 10 times the money. Farm land is just getting depleted, so it is time to be a farmer.
That is Jim Rogers view and most likely he is correct. However do not ever buy farm land in India, instead buy it in US if you can. You might end up paying a hefty premium for farm land in India and worse it may be illegally occupied by a goon or taken away by the State in case there is hyperinflation.
REBear
The question is suppose the real estate prices collapse today by say 50%, would you guys be here posting the same comments or will be busy scouting for deals ?
That depends. RE crash of 50% would cause a stock market crash of 90% so I will buy stocks instead. They will recover faster. If Gold/Stocks do not fall and only RE falls 50% then I will buy a house.
Buying farmland in India is impossible for the majority of the Indians, because of rules that forbid anyone and everyone from buying farmland except those who are already farmers or have a 7/12 exctract of a farm land in their family.
I can see two reasons for this,
1) To cordone off a large section of Indians fertile land corner it for the politicains and elite, who can get a 7/12 exctract for anything
2) Caste aparthid, historically only the upper classes, the top three ones were allowed to hold land in India and the Shudras were denied any land holding. This is just an extention of the same system under various guise of protecting the farmers.
Considerations about buying land aside. Farming is a back breaking work esp for an amateur and not just in India, outside as well, the average age of a farmer in US is now 60, only those who love doing it can do it. Here it's corruption and a feudal system while outside it's competition with the likes of Walmart and Monsanto which will ruin you.
If you were to take Jim Rogers advice at face value and get into farming the way you get into stocks you would be in serious trouble.
RE falls 50% then I will buy a house.
If that is a public view, then the public must not crib about lack of infrastructure, quality of life, corruption & red tapism. Because these problems do not get solved by fall in RE prices.
@REBear
If that is a public view, then the public must not crib about lack of infrastructure, quality of life, corruption & red tapism. Because these problems do not get solved by fall in RE prices.
I don't understand your line of reasoning. We crib out lack of infra because we pay taxes for it. Had my income been tax free, I would not crib about it because I would have no right to. But I do have the right to demand services from the govt. for the money I pay to them just as I demand good service from private players like my phone and DTH company.
As far as RE prices are concerned, I am not even bothered. They will move according to people's earning + some speculative component. Infra however is unrelated to everything else other than govt's will. You may build the private island colonies of Gurgaon or any other city in India but without govt. roads, water, power and rule of law you can't really lead a good life.
@Pawan
I don't understand your line of reasoning. We crib out lack of infra because we pay taxes for it. Had my income been tax free, I would not crib about it because I would have no right to
Nop thats not the right perspective. The demand for good infrastructure, public health and sanitation IS the right of public (citizens of country which do not care for this right are by definition citizens of third world country). And it's the duty of the Government to provide it. Obviously providing services needs capital and Government raises it through taxes, bonds, etc. Government can not just wash away hands from its duty by just not collecting enough revenues. Of course I agree in India taxes are that of first world country while quality of life is grade three or worse.
My only line of reasoning was that its sheer hypocrisy to take a stand that the country's law and order, infrastructure, quality of service is and will always be hellish and at the same time think of buying real estate when the prices go down.
To me, real estate without being accompanied by decent infrastructure, safety, quality of service has zero(0) value. For instance, today I found this link related to mosquito menace in Noida :
http://noida.newzstreet.com/news.php?slug=noida-authority-to-introduce-new-drug-to-curb-mosquito-menace&news_id=10606
Noida authority is using Propoxur to kill mosquitoes, From wikipedia (http://en.wikipedia.org/wiki/Propoxur) ,
"Several US states have petitioned the Environmental Protection Agency (EPA) to use propoxur against bedbug infestations, but the EPA has been reluctant to approve indoor use because of its potential toxicity to children after chronic exposure."
To me such a real estate has no value either for investment or for living - correction or no correction.
Anon @1:49 PM "Unless ordinary people wake up and drag their inept leaders out on the street you can rest assured the downward spiral will continue."
Even if people wake up there is nothing much they can do, except maybe protest on the streets and get lathi charged by the same leaders they elected earlier.
This is because, unlike the developed nations, we do not have 'right to recall' procedures in place. In most developed countries the citizens can peacefully de-throne/recall their elected leaders if they are dissatisfied with their conduct or performance.
If an IT person makes 10 lakhs per year they pay 3 lakhs tax. His tax free day may start on Apr 1 . It is fools day because fools start working for them self on this day . ( every dog has its day )
For a five years he would have made 50 laks and paid 15 laks as tax which is an year plus salary.
In other words, he works for the Govt ( for his poor neighbors to get free TV )
In other words, he gives 15 laks to his elected leader to make his living better
But does he bother to go to vote to select his choice of leader whom he will give his one year of work?
Is he ready to take one day off and travel to his home town for election.
He does not! In-fact he is not even aware he will be working for one whole year and has given his wealth to JJ/Karunanthi/Mayawathi/Lallu.
"I am ready to work one year for free but not ready to give up my one day holiday fun."
Till they get educated nothing will change
This is because, unlike the developed nations, we do not have 'right to recall' procedures in place. In most developed countries the citizens can peacefully de-throne/recall their elected leaders if they are dissatisfied with their conduct or performance.
We can give excuses all day long. I'm sure there were to right to recall laws when the common man was under the British boot.
Our ancestors could've blamed such technicalities and sat on their hands.
More recently, witness the Arab spring. If folks can rise up in a place like Middle East (where there has been no hint of democracy or people power) then a country of 1.2 billion has really no excuse to be suffering under a few thousand corrupt leaders.
We all need to become a little less selfish and think a little more long term.
As someone put it earlier, you can buy all the Indian real estate when the market crashes. But if one is going to be surrounded by hunger, disease and desperation, the future is doomed.
For instance, if we all came together and empowered key lawmakers / officials to confiscate all the illegal overseas bank accounts, we could wipe out our entire deficit overnight.
Start with prosecuting the big fish. That will build public faith in the system and people will be willing to work within the system rather than try to bypass it.
Otherwise, we do not have a united country / society and we keep disintegrating until there is no concept of India anymore.
"He does not! In-fact he is not even aware he will be working for one whole year and has given his wealth to JJ/Karunanthi/Mayawathi/Lallu."
Even if he does that what difference will it make? Every candidate eventually turns out to be corrupt.
Say you hire a servant at home, and while hiring you sign a legally enforcable contract that you cannot kick him out at least for 5 years. What will happen? Within days you will be the servant and he will be the master . Would the situation be any different if you hired Nyarelal instead of Pyarelal?
// -- But does he bother to go to vote to select his choice of leader whom he will give his one year of work? -- //
You don't understand the system, do you? Your vote never counts. We don't have alternative vote system.
// -- if we all came together and empowered key lawmakers / officials to confiscate all the illegal overseas bank accounts, we could wipe out our entire deficit overnight. -- //
And this bullshit continues to be used.
Bah - I told you the Bailouts will keep coming - inflation or not
SBI cuts car and home loan rates by 50 basis pts -
http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/state-bank-of-india-cuts-car-home-loan-interest-rates-by-50-bps/articleshow/15320620.cms
Expect more stimulus to keep the construction/manufacturing industries running
The best way to fight corruption in India is to use Indian mentality. If sonmeone is caught in corruption and he if provides evidence of a higher authority involved in corruption then the small-fish will get a lighter sentence. Work your way up the corruption-ladder to see where the buck stops.
time to rejoice! bubble or no-bubble RE prices are going up and up. means there are people that are ready to shell out money.
Good part is that cost of other things are increasing too but at not that rate what RE prices are increasing.
India is super country, you can do whatever you want to if you have will, ways and strategies.
If sonmeone is caught in corruption and he if provides evidence of a higher authority involved in corruption then the small-fish will get a lighter sentence. Work your way up the corruption-ladder to see where the buck stops.
I think this is standard everywhere not just in india. it's called plea-bargaining in US.
In India, the rich pay some poor bloke to take the hit.
for example, Salman runs over some hapless homeless blokes and his driver takes the blame.
Some rich industrialist rakes in billions from illegalities and some low level manager/director gets thrown in jail.
Happens all the time, all over the world. We need fully independent and impartial prosecuting agency that is only accountable to the people and not the government.
When will the Indian Army remember it's oath to defend the Indian constitution and not the politicians in power. It's only a matter of time before we undergo a coup. I'd give this country 10-15 years max.
@Anon 7:02 AM
Will not work for long, unless you have a Jury system in place. Look it up on the internet. Half of our problems are because we think we as Indians are different, so our solutions need to be unique and tailor made for our conditions. Not always true. Sometimes we just have to research a bit on how the other countries solved them while we were busy missing the steep learning curve during the industrial revolution, and then just copy their solutions.
@ Anon 5:29 PM
India is a highly racist and fascist society. With Jury system, we will have muslims favouring muslims. Hindus' will favour Hindus. And it will depend on which community has a larger weight in the Jury.
India needs an autocracy and thats the only way Indians will response to law.
^^^ If you watch closely we are already there.
Home prices will now go up as many people will start buying
http://timesofindia.indiatimes.com/business/india-business/Home-loans-may-become-cheaper/articleshow/15335294.cms
More truth emerged: Growth forecast now down to 6%.
http://www.moneycontrol.com/news/economy/poor-monsoon-to-pull-down-economic-growth-to-6_739905.html#toptag
^Pawan - Indians are known to put blame on nature, god, luck and neighbor.
Show me single report that shows ownership of issues.
All is Well brother.
Home prices will now go up as many people will start buying
That's one possibility. On the other hand this may be also be a sign of distress in the system. It all depends upon the market sentiment - once people lose money and the sentiment turns bearish, no amount of money printing can save it.
>>>
When will the Indian Army remember it's oath to defend the Indian constitution and not the politicians in power. It's only a matter of time before we undergo a coup. I'd give this country 10-15 years max.
>>>>
Based on the way the things are, as discussed in this blog,I really dont see that happening in next 25 yrs.
But what scares me is that we will be old (assuming average age on the blog 30 yrs today) by that time and most of us might not be able to handle it.
-SKG
@REBEar
"once people lose money and the sentiment turns bearish, no amount of money printing can save it."
-Didn't people loose money during 2008 downturn? Did it change anything? India is fools paradise. Nothing changes here (to good) that easily.
@Pawan
"More truth emerged: Growth forecast now down to 6%."
- Shouldn't matter as all these numbers anyway are most likely rigged.
Get on to "lateral thinking" and see how you can tread through this muddy water without much damage to you and your family. That's the only possiblity. Hoping for something else is foolishness.
-VJ
-VJ
too much theory, too little practical
allthis talk against corruption and builders robbing in broad daylight. yet, when time comes each one will quietly become party to this game.
sala, ek baar traffic havaldar ne pakda to phir sab kuch bhool ke sidha sau ka note dega ki nahi tu?
if ur not part of the solution, you are the problem.
North Korea's Olympic athletes are thrilling their countrymen with surprising success in winning medals and they are attributing their success to their Dear Leader Kim Jong Un.
But others, including former North Korean athletes who have defected, suggest the success of the country's small contingent of athletes at the games may be the result of a policy of training them from a very young age at specialized schools, backed up by rewards like cars and refrigerators for winners and the threat of labor camps for losers.
Poor ROI on Olympics for India. Maybe we should take all these goofballs staright to Labor camps. Many of them are just there for the fun of it and not to really compete and win. Huge drain to the economy..
Hell we could have some 16-year old girls loan some of their gold medals to these foolish athletes.
Read this story. A class four employee earning 10000 has property worth 1 crore. And people on this blog feel Indians are poor and cannot buy RE. As long as there is corruption and black money RE will not go down
http://timesofindia.indiatimes.com/india/Odisha-govts-class-IV-staffer-a-crorepati/articleshow/15344705.cms
Read this and weep
"Phelps has accomplished as much in his Olympic career as all the athletes in India’s history combined – men and women. Not bad for one guy vs. one billion plus"
INDIAN companies making money, in crores, so expect them to expand into 3rd and 4th tier cities( Infy willing to pay 1.5 to 2 crorers for 1 acre of land). Slowdown is not a correction, so if it dips, elite will keep buying. Insiders not selling, but buying in the stock market, so dont expect any market correction from here. Same flats that go for 1 crore probably go for 20 lakhs in any other country, but we are not talking any other country. Cement, metals, water, laborer income etc etc none of them going down in the near future, so dont expect house prices to tank. Only major catastrophe that wipes out 200 to 300 million people will tank the housing market.
@Anon
Only major catastrophe that wipes out 200 to 300 million people will tank the housing market.
No one wants a catastrophe. Best scenario would be for RE to deflate slowly over next 5 years. A sudden shock like 2008 would be very bad.
Cement, metals, water, laborer income etc etc none of them going down in the near future.
That depends on demand and supply. If people stop buying and constructing homes, each of the things you mention will go down.
Btw a very very good indicator of economy and spending power of people is automobiles sales. For July 2012, the car sales number has been the worst after October 2011.
Maybe we should take all these goofballs staright to Labor camps. Many of them are just there for the fun of it and not to really compete and win. Huge drain to the economy..
Our cricketers should be thankful we don't have a lot of cricket playing countries...
And even in countries where cricket is played it's a tier 2 or 3 sport.
Only major catastrophe that wipes out 200 to 300 million people will tank the housing market.
NRIs will swoop in like vultures on a carcass in this scenario.
These guys are probably conducting havans abroad for the swift demise of "shitty" Indians.
@VJ
Didn't people loose money during 2008 downturn? Did it change anything? India is fools paradise. Nothing changes here (to good) that easily.
You have a good point where we need to be careful identifying a full bubble burst vs temporary blip in the market. It just not applies to India or for that matter real estate, but to any country and any asset class. Example, DJIA crashed from 14000 to 6000 in 2008 and is now back to 13000. People lost money but its still back. The housing market on the other hand has not been able to recover and QE1, QE2 have not been able to save it.
From the wikipedia : http://en.wikipedia.org/wiki/Economic_bubble
"bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst."
So if bubbles can only be identified in retrospect, 2008 was definitely not a RE burst. All of us believe there is a bubble in Indian RE based on various ratios(Price/Income, Price/Rent) but until it bursts "conclusively" we can only argue about its existence.
@VJ
In continuation with my previous email,
http://www.business-standard.com/india/news/state-bankindia-cuts-home-loan-growth-target/482231/
So even after cutting home loan rates, SBI has lowered the home loan growth target, is a clear sign of a distress in the system. Hence the other view that lowering of interest rates would aggravate the bubble although possible seems less likely.
@REBear
"bubbles are often conclusively identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst."
We can probably generalize this stetement afa Indians are concerned. As I mentioned, Indians are very gullible. You get Dhoni present them a piece of packed shit as the best smelling soap and they would stand in q to buy it:)
The point is Indians don't read much. They don't think. They don't analyze (This applies to many so called "Techies", the IT crowd). But they have enough money to indulge in the greed game. So nothing might look like a bubble for them till it goes burst and they land in a disastrous situation.
"DJIA crashed from 14000 to 6000 in 2008 and is now back to 13000. People lost money but its still back. The housing market on the other hand has not been able to recover and QE1, QE2 have not been able to save it.
"
- QE money is flowing into 3rd world countries as the money lending rules were tightned in US. Since India is importing inflation from US, it can't be argued that since the same phenomenon is failing in US, it would have the same effect in India...
Having said all this, I still can't comprehend the RE prices in India but it's just that I have lost hopes of any correction and have started seeing this problem differently
-VJ
"India is a highly racist and fascist society. With Jury system, we will have muslims favouring muslims. Hindus' will favour Hindus. And it will depend on which community has a larger weight in the Jury. "
That is also applicable in the case of the existing Judge/bench system. Judges also can be, and in many cases in fact are racists, casteists, and communal.
In the Jury system, there would be no scope for corruption in the form of money or favors. And trials would be time bound and conclusive.
@VJ
Having said all this, I still can't comprehend the RE prices in India but it's just that I have lost hopes of any correction and have started seeing this problem differently
Trust me, when an overwhelming majority of the individuals start thinking like you and purchase real estate, that is the time it will crash. Thats the hallmark !
If I can suggest something to you and other fellows posting on this forum, I would advice all those who have enough brains and are well educated to simply use this brain to move out of this country - you all deserve it. Don't fall prey to either (a) criminals and politicians of this country, or, (b) numskulls who on one hand fret about potato prices and on the other hand happily purchase overpriced Indian real estate. Your money is most likely going to land into hands of (a) or (b).
"In the Jury system, there would be no scope for corruption in the form of money or favors. "
Hahahahaha!!! Look at this naive man!!! LOL!!!!
Heard of a compensation of 20 crore per acre. But it happens in India
http://www.mid-day.com/news/2012/aug/060812-mumbai-Farmers-demand-Rs-20-crore-per-acre.htm
Well..i have been contemplating a burst as well...lets be practical...For the mass in India, there are just couple of investment vehicles...Gold & RE, & these are real assets ( No counter-party risk, like equity, derivatives etc .. !! With so much of money being printed all around the world...all prices are going to go up , & that is what has happened..with average savings of 30-40%, i dont see it coming down...there may be stagflation..time will tell...Indians are no dumb people ( but slaves )...look at HDFC bank...worlds most valued bank :) ..
"Well..i have been contemplating a burst as well...lets be practical...For the mass in India, there are just couple of investment vehicles...Gold & RE, & these are real assets"
Not only that, but most importantly, the INR is not freely convertible and Indians cannot purchase other competing assets overseas.
The only other choices are: stocks, which is a casino that no one trusts or INR, which again is widely distrusted...needs no further explanation as to why.
In such an environment, all the money generated from 6%-9% growth has to go somewhere, and that somewhere is RE.
@Anon
In such an environment, all the money generated from 6%-9% growth has to go somewhere, and that somewhere is RE.
Fully agree. But what if GDP does not grow at 6%-9%?
http://economictimes.indiatimes.com/news/economy/indicators/crisil-cuts-indias-real-gdp-growth-forecast-for-2012-13-to-5-5-from-6-5/articleshow/15386926.cms
if this happens regularly, then what about the vacant , will the cost of the salary increases? after such a period
Dear "Palace homes"
I have tried translating your comments in Hindi and they still make no sense at all.
Kindly enlighten us on what your query may be.
Regards,
"Humble Home"
http://economictimes.indiatimes.com/markets/real-estate/news/south-delhi-property-prices-drop-20-on-weak-sales/articleshow/15395381.cms
The article talks about ultra high-end homes, but this will almost certainly have caused a cascading effect in the lower priced homes.
If you were expecting 1cr for your house, and the 2.2cr house nearby is reduced to 1.8cr, then you too must reprice lower if you wish to sell.
It is the investors that held up markets in Mumbai/NCR over the last few years. Now that they are leaving, expect a slow painful downward grind in home prices.
Waiting for the bulls now to come up with some novel explanation for why this will not happen.
@Anon
Waiting for the bulls now to come up with some novel explanation for why this will not happen.
I am no bull but Mr. P Chidambaram is back as finance minister and he has already stared arm-twisting SPI and RBI for lowering interest rates. He will do everything in his power to let his friends and masters exit before the 2014 elections (18 months to go) and everyone else after that time will be hung out to dry.
Btw to put the 25% fall in perspective: if someone bought in 2009 and saw prices go up 100% in 2 years then a 25% fall has eroded 50% of his profit.
@Pawan
Another thing to note is that our RE markets are just as volatile as our equity markets.
A 20% fall in six months! Enough to wipe out someone's down payment. By comparison, the US RE market has fallen about 35% over 5years.
The Euro crisis has been put on hold (summer holidays in EU) + Olympics. Once bankers/politicians are back we are in for interesting times.
Is South Delhi in India, or is this news fake ?
http://economictimes.indiatimes.com/markets/real-estate/news/south-delhi-property-prices-drop-20-on-weak-sales/articleshow/15395381.cms
Is this possible? Chennai RE prices decline by 8%. This is Chennai, God's own country where RE prices can never, never, never EVER fall and prices can only go up.
Is this even possible? Someone tell me this article is a hoax, please:
http://www.thehindu.com/todays-paper/tp-features/tp-propertyplus/article3694675.ece
Got emu???
http://www.firstpost.com/business/emu-and-the-never-ending-story-of-south-indian-ponzi-schemes-410614.html
RE is similar to this ponzi. making india so much more expensive than singapore, us, europe. jab footega...
Prices falling? Here??
But we have black money, population, builder-politico-officer mafia, gold , nri money, IT dollar salaries, elites who can keep prices up ... and my personal favourite - 'demand/supply laws do not apply here' :)
I think whats really damning is the fact that South Delhi prices are falling. If the super rich are not buying, unlikely that us commoners will step in.
Most likely our story will play out like other countries. A 10% fall will draw some buyers. But most others will smell blood or be just plain afraid of the economy and wait. Prices will then fall further. Repeat this process for a while until fair valuation is reached.
But we have black money, population, builder-politico-officer mafia, gold , nri money, IT dollar salaries, elites who can keep prices up ... and my personal favourite - 'demand/supply laws do not apply here' :)
This is perhaps a joker country I would say. Today Economic Times article mentions prices falling, and when you read TOI's Saturday's coverage of property market it will have all bullish stories.
Bubble watchers should be smart enough to gather some real intelligence by putting some boots on the ground.
Stop being desperate and shouting "WMD in Iraq" like it's 2003...
http://profit.ndtv.com/News/Article/state-owned-oil-retailers-register-biggest-ever-losses-in-india-s-corporate-history-309116
The title says it all.
http://profit.ndtv.com/News/Article/state-owned-oil-retailers-register-biggest-ever-losses-in-india-s-corporate-history-309116
The title says it all.
More importantly, if government has not compensated for the losses(22000 cr in one quarter alone), then how are they surviving and getting the working capital ? Clearly from the banks, and people say PSU banks in India are safest. If this continues, those holding big sums of money in banks will suffer - trouble is brewing up in the banking sector.
Clearly from the banks, and people say PSU banks in India are safest.
On the face of it yes, they are safe, for the common man who does not understand currency printing and devaluation, for him the PSU bank is the safest, because the PSU bank in the face of a default, will call up RBI and RBI will choose to print rather than default on the bank accounts of the people.
The politicians know this, the business elite know this, thus the PSU banks are milked.
@REBear,@aam aadmi
I hope these are the signs of possible corrections. But I think it's too early to celebrate. Let me ask you couple of questions (as I really don't the answers and understand these points)
1.How GDP of a nation is arrived at? Who comes up with these nos?GOI? and how GDP is growth is calculated? and what's the baseline to calcualte GDP growth?
2.Why would GOI not continue to print money and bail out all it's builder friends?
The reason I am asking these qs is, it might help us to understand which direction this whole ponzi scheme is headed.
Thanks
VJ
@VJ
1. No idea about GDP calculations, my best guess is that it's done based on tax declarations and sales/octroi/other tax estimates.
2. Well yes I guess a bailout for builders is in the works. But why should that matter any more than bailing out anyone else. Oil PSU's for example. IMO It has already begun to an extent...Chidambaram is now going to force interest rates lower to bail out his corporate buddies.
The reason I am asking these qs is, it might help us to understand which direction this whole ponzi scheme is headed
Ponzi schemes head in only one direction.
"2.Why would GOI not continue to print money and bail out all it's builder friends?"
Let's hope builders do get bailed out. If builders go bankrupt, then the supply of new housing will slow down to a trickle and this make RE prices go up even higher.
Read this ultra bearish interview where someone finally has the guts to say the obvious. There are people who are saying China growth rates will come down to 3%. India will be no different if that happened. From 9% we are already down to 5%. Another 2% down is not so far off.
http://www.moneycontrol.com/news/economy/gdp-growth-to-berange5-55-icrier_743272.html#toptag
"From 9% we are already down to 5%. Another 2% down is not so far off."
Why exactly is 5% growth or even 3% growth a disaster? Seriously. Why?
5% growth means that there is 5% MORE economic activity this year than last year. This means that (assuming productivity is more or less constant), 5% MORE of the population will get jobs to generate that additional growth activity, that there is 5% MORE goods and services being produced and that the national wealth is increasing by 5% MORE.
At the very least, this year will be better than last year (which had approximately 5% less GDP than this one) right? And things weren't falling out of the sky last year.
I don't understand this. Why must the country have 9% growth for everything to be hunky dory? Countries like Japan, the US and European countries would *KILL* for 5% growth or even 3% growth. So why is it such a big disaster in India? Anyone?
@Anon - "Why exactly is 5% growth or even 3% growth a disaster? Seriously. Why? "
1. Because tons of companies and individuals have borrowed and invested assuming high growth rates (and implicitly high earnings growth) that will allow them to pay off the loans. Many of these will now default and can bring our banking system to its knees.
2. Lower GDP growth => lower job growth, possibly layoffs => more unemployed => increased crime/riots/forced migration/general unrest.
Even worse is stagflation - low growth, high inflation. Which is what we seem to be heading towards.
Imagine your salary hikes stop but inflation continues. That is stagflation in laymans terms.
Anon above,
At a 9% growth projection, demand will be estimated to be high and production capacity will be boosted. And then there are leveraged speculators who will bet on the asset price increase because of increasing incomes and thus demand. All these will be done with borrowing from banks. Well, if the 9% turn out to be 5%, these guys default on their borrowings and leads to a domino effect. See the list of companies in distress today. Deccan Chronicle is the latest addition to the list after Kingfisher.
Oh come on, Deccan Chronicle and Kingfisher are companies on the fringes of the Indian company. Their difficulties portend nothing about the state of the general economy overall.
Besides, if things are that bad, how come the stock market is so resilient?
">Oh come on, Deccan Chronicle and Kingfisher are companies on the fringes of the Indian company. "
One indicative number is the NPAs on the bank balance sheets. These have grown significantly over the last two years.
"Besides, if things are that bad, how come the stock market is so resilient?"
Time frame please. It has fallen from 21K five years back to 17K today. In real terms thats almost a 50% fall. Hardly 'resilient'.
Thanks for sharing this informatoin.....
real estate property always tend to rise...and people always buy with an appreciation motive.... so hence it will pay fr sure....
Natalia
Website: http://www.groffr.com
"Why exactly is 5% growth or even 3% growth a disaster? Seriously. Why? "
Lets take a village with 100 people and their total GDP is 100g Gold.
Every year They add people 3 people to their population.
Assuming GDP is not growing
---------------------------
Same 100g has to be shared with 103 people.Means people become poor
Assuming GDP is growing 3%
---------------------------
Villagers are able to trade with near by village and made 3grams gold in a year.
103g gold is shared with 103 people. again 1g/person. mmm there wont be any change in their lifestyle
Assuming GDP is growing 6%
---------------------------
Villagers are able to trade with near by village and made 6grams gold in a year.
106g gold is shared with 103 people.
1.03g/person. Now they are on the path getting rich and their lifestyle will improve.
Incase of Gold it is simple,but with fiat currency it is little complicated but fundamental remains same.
Assuming GDP is growing 6% with Debt
----------------------------------
Villagers are able to trade with near by village and made 6grams gold in a year.
Based on their consistency in Growth,
Village council got the confident to borrow 60g (60% of GDP ) of gold for their infrastructure project. And promised the creditors that they will make money and pay back 3g of gold every year
With the borrowed 60g of gold Consil started many projects and that increased Job prospects for that villagers
Assuming GDP Growth is declining 1%
----------------------------------
Now if the Village is not able to make money, and if the decline is consistent
How will creditors react?
How will the Village Counsel fund the projects?
what will happen to the people who are dependent on those projects?
Lo...here's your bailout
http://www.firstpost.com/investing/irda-is-about-to-give-lic-govt-a-free-ticket-to-imprudence-413986.html
IRDA set to raise the 10% investing limit for buying equity in any single company by an insurer. Most likely this will be used by LIC to bailout companies like IOC, ONGC, BPCL etc.
Enjoy while it lasts.
"Why exactly is 5% growth or even 3% growth a disaster? Seriously. Why? "
We grew at 2-3% from independence (may be even before that) till 1990. Do I need to tell you how things were at that time? Go read India Unbound.
"Do I need to tell you how things were at that time? Go read India Unbound."
Actually I remember that time. I was alive during that period. I'll tell you how things were:
1. Roads were clean and clear. There was no traffic. You could drive from destination A to destination B in any of the metros without stopping or even slowing except at the traffic lights.
2. When you opened the tap......water would actually come out flowing , 24/7.
3. There weren't people sh*tting in the streets or living by canals of raw sewage.
4. Power cuts were there but nowhere near as frequent and chronic as they are right now.
5. You could actually travel through the city without wearing gas masks. You could lie down in your terrace, look at the night sky and see all the stars in the night sky including all the major constellations. Try doing that today in any Indian city.
If that is what 3% growth looks like, please give me 3% growth anytime over 9% growth "Incredible India".
@Anon - "please give me 3% growth anytime over 9% growth"
You want to go back to a dirigist 'mai-baap' economy. You want to work for public sector where merit doesnt really count. You wish to wait 4 years for a phone. You do not want world class medical care. Really?
What about the countless folks who have been lifted out of poverty into lower middle class, from lower middle to middle class? .
Has urban growth been mismanaged - yes. But the solution is not to grow slower and condemn millions to poverty. Perhaps growing tier-2 cities might help. In any case, slower growth will not help. It will only push the rural poor further into our metros.
@aad admi "Most likely this will be used by LIC to bailout companies like IOC, ONGC, BPCL etc."
Thats the cost LIC has to pay for being a 'govt of india enterprise'. It enjoys a lower cost of capital compared to other insurance firms, primarily because people (rightly?) assume that it is backed by the govt. So in return it has to scratch the governments back by periodic equity purchases of overvalued public sector firms.
The cost of all this is usually borne by the poor sods who fall for the 'Jab LIC hai to kahi aur ...'.
^^^ Natural lifecycle and balance dictates that you cannot grow. And any sane person will admit that human growth has been anything but sustainable.
The closest thing in nature that resembles this is termed a cancer.
The human cancer has been growing and is now 7 billion strong. Will it end up killing the host planet?
Humans are already causing species extinction in record numbers. Sad fact that my generation will see the Indian tiger go extinct on our watch but there are hundreds of not so well-known plants and animals unable to cope with our "growth"
What about the countless folks who have been lifted out of poverty into lower middle class, from lower middle to middle class?
Seriously dude, next time you're in India go actually talk to some of these folks. Unequivocally they have claimed that they are worse off with high food inflation, zero savings and suffering the worse in health and lower quality of life from environmental degradation.
This is my anecdotal observation talking to lower middle-class folks like fruit vendors, rickshaw/taxi wallas, municipal workers (garbage collectors, postman) etc.
The benefits of the growth have only gone to upper sections of the society. If you had assets in 1990 and went into a coma and woke up in 2010 your networth would've gone up 10-25x times.
And then bubble watchers wonder who is buying these flats for crores?
Get a clue.
// -- The benefits of the growth have only gone to upper sections of the society. If you had assets in 1990 and went into a coma and woke up in 2010 your networth would've gone up 10-25x times. -- //
THIS! FINALLY!
The human cancer has been growing and is now 7 billion strong. Will it end up killing the host planet?
I'll bet my life that Mother Earth will terminate us before long.
Humans are the next dinosaurs. Atleast the dinosaurs seem to not have caused their own extinction.
I think it was Gandhi who said that there is enough provided on this planet to satisfy man's needs but not enough to satisfy man's greed.
Problem is not that we have 7 billion or even 10 billion humans.
Problem is we have one too many greedy humans. Ergo the 23% vacant homes in Mumbai alongside vast stretches of humanity in absolute squalor.
@Anon - "Seriously dude, next time you're in India go actually talk to some of these folks."
I live in India :)
Inequality may have increased, but that does not change the fact that millions at the bottom have been pushed up due to rising incomes.
Besides instead of relying on your insightful anecdotes from the rickhshaw puller, check out the NSSO surveys. The number of people who say they go hungry (hunger ratio) has declined significantly over the last 10-15 years. Perhaps they missed your vegetable seller and postman in the survey:)
Inflation in India was always high. If anything it actually declined during the high growth period of 2000-2007 See http://capitalmind.in/2011/08/the-history-of-inflation-in-india/
Savings rate has been growing in India. Look for long term trends.
Anyone arguing for low growth in poor country such as ours needs a cranial examination. Pronto.
http://www.firstpost.com/business/dont-stunt-real-estate-growth-dlf-to-rbi-415324.html
hilarious
@Analog
I am bearish on Indian RE, but I agree with KP singh. The fact of the matter is RE does provides employment for millions.
Secondly we do have a housing shortage, but not at current prices.
He is right in saying that policies must promote more supply. That will bring down prices.
On another note, I highly recommend Hugh Hendrys excellent letter. http://www.zerohedge.com/news/hugh-hendry-back-full-eclectica-letter
Its a long read, but the first part about China reflects very closely what happened here.
Dollars flow in -> RBI increases rupee supply to prevent the rupee from strengthening -> Real interest rates become negative -> people put their money in into gold and RE -> RE bubble (people buying just for capital gains).
Now the dollars are flowing out -> weak rupee -> high interest rates and high inflation.
Demand for property falls by 40% in six states
1) Zensar lays off up to 250 people
2) Tieto has laid off approx 2000 people globally.
3) Synechron laid off people few months back.
4) 40 persons laid off by AVAYA India.
5) Symphony services too laid off people.
6) Many IT Companies laying off experienced people and hiring freshers.
If that is what 3% growth looks like, please give me 3% growth anytime over 9% growth "Incredible India".
The result of sustained 3% growth is that people headed to cities not being able to find any gainful employment in the villages. Result - congested suffocating cities. And you conveniently forgot the quadrupled population since 1947.
You want to go back to 3% with 125 Crore people? God forbid if we go there, the rich will flee the country and there will be a civil war amongst those who remain stuck back here.
This country has gone to dogs.
http://www.firstpost.com/india/government-a-property-dealer-of-farm-land-vk-singh-415500.html
GM closes. Now Motorola. Things are looking very bad indeed.
http://economictimes.indiatimes.com/tech/hardware/motorola-mobility-to-shrink-operations-in-india-cut-4000-jobs-under-google/articleshow/15472181.cms
He is right in saying that policies must promote more supply. That will bring down prices.
More supply will not come with more increase in prices/ profits else why would anyone invest. The only way they can is with excess supply due to a large bubble burst. After that yes it only gets better compared to inflation. As I have always said bubbles solve a problem in a relatively quick time, only thing is that you should not be the last man holding the bag, but hey doesn't the bubble burst only when the last bear has thrown the caution and jumped in?
That is my post above. Just hit enter too soon
// GM closes. Now Motorola
This is the standard case in such situaltions. These companies cut jobs worldwide but increase/retain headcount in India. Read the article in TOI about HP CEO saying there will be no layoffs in India. Indian IT will always be strong. Pay hikes in Indian IT are the biggest in world
^^^
ha ha ha
@G - "More supply will not come with more increase in prices/ profits else why would anyone invest"
I meant supply of land. In Japan, till their RE crash in 1989, people used to think of land as an asset (as opposed to simply a factor of production) and hence buy and hold it.
Even there folks used to talk about a land shortage, but the fact was that even in Tokyo there was plenty of empty land held by people. And during the crash, all these plots came on to the market. Land prices fell by up to 80%.
I suspect the same is true even here. Take a flight from Bombay and you will see plenty of empty land inside the city. In India, the bubble has been more in land prices than in home prices. In Bangalore, some places have seen an 9-10 fold hike in price of land in just about 10 years !!
But this might continue for a while. RE bubbles can last generations. An entire generation can grow up thinking RE prices only go up, then next generation thinks otherwise.
^^ @polt: you are absolutely right. These bubbles often extend an entire generation. If you look at the lost decade for Japan, you will find out that people in the 25-35yrs age group surviving so badly whereas their previous generation were much better off. Come what may, some day these prices would find their own place. Long chasing emus.
Guys the one thing you are forgeting in comparisons with USA/Japan is the social pressure in India. In US I can flip burgers in Mcdonalds and nobody will care. I can rent all my life and nobody will care. Marriages dont have more than 100 guests. You cant do these things in India due to societical pressures. If you dont buy a house your spouse/children are not happy. Finding a son in law/daughter in law is difficult. It is due to this that there will always be buyers.
@Anon
Finding a son in law/daughter in law is difficult.
Exactly. Because arranged marriage is fixed by people of last generation.
All my colleagues and friends, including me, who did what they call love marriages, did not have a house at the time of marriage. Some of us, including me, don't have one even today. Attitudes change with time.
As long as the bubble is on, people will present 1000 BS arguments in favour of it and bears like me will keep producing counter arguments. That will not change anything however. Ultimately the economic reality will prevail and set the aberrations right, if any.
// All my colleagues and friends, including me, who did what they call love marriages
Great. Just becuase you did a love marriage means everybody does a love marriage. Seems like you are living in your own bubble.
Number of comments more than 150, new thread starts, RE increases by another 40%, comments reach 150, .... and so on..
^^^ Agreed...
I think the blog as well as the responses are quite pointless.
Now these guys are talking of a generation before the bubble bursts.
Tomorrow they will be say it will be a millennium before it happens.
I used to believe there is a bubble but not so much anymore.
@Anon - "RE increases by another 40%"
Either you are trolling or you are a dimwit.
The bubble is bursting even as we speak.
http://economictimes.indiatimes.com/markets/real-estate/news/south-delhi-property-prices-drop-20-on-weak-sales/articleshow/15395381.cms
http://www.thehindu.com/todays-paper/tp-features/tp-propertyplus/article3694675.ece
^^ oh really??
http://economictimes.indiatimes.com/markets/real-estate/news/housing-prices-rise-in-16-cities-by-upto-10-5-during-apr-jun/articleshow/15480394.cms
// Now these guys are talking of a generation before the bubble bursts.
Tomorrow they will be say it will be a millennium before it happens. //
hmm... no one knows when one is going to die. But one is sure that death is for sure.
Same goes with each and every bubble. Only difference is human 'quality' life span is limited to only 30 years or 40 years at the most. Many have seen lots of change in this life span... let's not talk about generations... you and I have no clue.
Look at the residex data here - http://www.nhb.org.in/Residex/Data&Graphs.php
Bangalore down 50% over five years
Hyderbad down 60% over five years. Same with Jaipur and Kochi. The others will follow.
To the general economic malaise, add the following
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/bangalore-property-sales-down-by-40-per-cent-in-q1/articleshow/15291673.cms
http://articles.economictimes.indiatimes.com/2012-06-16/news/32269300_1_pressures-on-many-micro-markets-mmr-and-hyderabad-delhi-ncr
Always look at sales volumes first. The bottom is falling out in the most cities as we speak. Prices follow sales, always. (like they did in South Delhi). Unless you are one of the nutters who think economic laws dont apply here.
And Finally - http://en.wikipedia.org/wiki/File:Stages_of_a_bubble.png
"Return to normal" stage ??
It will not be a smooth ride down. Lots of false bottoms along the way.
"Anyone arguing for low growth in poor country such as ours needs a cranial examination. Pronto."
Anyone who argues for growth at the expense of environmental degradation and greater inequality should get a Nobel Prize!
Or in other words, we'll see how pro-growth you are when a nuclear power station comes up in your backyard or your home is demolished to make way for the newest factory.
God forbid if we go there, the rich will flee the country and there will be a civil war amongst those who remain stuck back here.
This is the situation in China. Routine riots and violent protests as peasants realize that they've made the biggest sacrifices and benefits have gone to select few.
And India is headed on that trajectory. A civil war/military rule in the future is a real possibility.
I suspect the same is true even here. Take a flight from Bombay and you will see plenty of empty land inside the city
In India it doesn't mean shit if you "own" title to the land. Without Pawar's direct or indirect backing you won't be able to develop a square inch in Mumbai.
Please continue comparing to Tokyo, NY etc.
double digits hike in IT are back again
http://timesofindia.indiatimes.com/tech/news/software-services/IBM-India-gives-double-digit-salary-hikes/articleshow/15476237.cms
^ COMING SOON: "HIGH HIKES IN REAL ESTATE" IN THEATRES NEAR YOU.
A bit old but still relevant for those comparing Indian real estate to Japan and US:
http://www.tehelka.com/story_main49.asp?filename=Ne280511Coverstory.asp
If we were Japan, the societal pressure on these bastards would've been such that they'd have committed harakiri by now.
In India, they are hailed as demi-gods. Indians getting what they deserve.
There will come a time in India where instead of slum dwellers, we will vacate the privileged who have reaped the benefits of illegalities and are living in zones designated for the economically backward sections of society.
No justice, no peace.
@Anon - "Without Pawar's direct or indirect backing you won't be able to develop a square inch in Mumbai. "
Conspiracy theories abound here. This one is nothing new.
>>Or in other words, we'll see how pro-growth you are when a nuclear power station comes up in your backyard or your home is demolished to make way for the newest factory.
I might hate losing my home, but it does not change the fact that it should be done.
Or you prefer that we continue burning coal and also continue to consign millions of farmers to every decreasing landholdings and penury instead of moving to an industrial economy.
Growth does not cause degradation. Regulations (or lack of) and mispricing of pollutants do.
Inequality is highest in the US, but the poor there are significantly better off than the poor here.
AU has a small subprime scandal of its own.
http://www.macrobusiness.com.au/2012/08/australias-sub-prime-mortgage-scandal-grows/
I wonder if we have "liar loans" here too. Presumably many buyers here in India are self-employed and can furnish dodgy income statements.
Retail investors deserting mutual funds.
http://articles.economictimes.indiatimes.com/2012-04-27/news/31424546_1_retail-investors-equity-funds-mutual-funds
Generally, the average retail investor loses money by buying at the top and selling at the bottom. On that basis, perhaps we are close to bottoming out now :)
http://www.thehindu.com/opinion/open-page/article3755007.ece
It's OT but I thought I'd post it here for a change amidst all this negative talk. It's about life in NE actually Mizoram, the state with the highest literacy in India.
An excerpt
Mizoram celebrates Christmas not just on December 25 but the whole month. The December market in the second largest city Lunglei in Mizoram wore a festive look to the hilt. People were buying all sorts of things — dress, Chinese gadgets, utensils, tools and whatnot. The whole city seemed to be in the market. It was amid this ordered clutter that the driver was referring to the announcement made over the public address system in Mizo language.
“Sir, they are announcing that someone had purchased a T-shirt, paid for it, but absent-mindedly left it at the shop itself. They are calling that person to come and collect it!”
They don't have a 9% growth rate but life seems fine there. I wonder which one would you choose if given an exclusive choice.
Sometimes I feel that we have the wrong priorities.
Good point.
Like they say, the problem with being part of a rat race is that even if you win, you're still a rat!
Majority of Indians are unfortunately in this category.
I have the misfortune of occasionally transiting through Bombay. You will literally feel like you're going through a rat colony.
@Anon above
Yup, I hope to quit this rat race someday and live in places which are still untouched by the 9% growth rate.
@aam aadmi
I hope to quit this rat race someday.
I was in Sikkim 2 months back with my wife and we noticed how happy and content people were. Even those doing menial jobs. And we wondered why can't we be like that? I am still searching for the answers.
DLFs Rs 702 crore investment has not even doubled in seven years. It’s gone up around 75 percent. A debt fund giving you 9-10 percent per annum would have doubled your money in the same time.
Link: http://www.firstpost.com/business/why-dlfs-worli-realty-deal-looks-like-a-distress-sale-417224.html
@Pawan
I was in Sikkim 2 months back with my wife and we noticed how happy and content people were. Even those doing menial jobs. And we wondered why can't we be like that? I am still searching for the answers.
The answer lies in dignity, it's not about being poor or rich which IMO are inadequate and rather poor definitions of what riches are as they require you to possess imaginary bits and bytes on some faraway server in a bank.
I have a colleague who comes from a farming background, by all conventional standards his family is dirt poor. Even he says so.
I personally asked him what was the difference between his family and any urban poor, what he told me opened my eyes. His reply was simple, they didn't have to beg anyone for anything, even on days when they didn't have money, they could always eke out some food from their land and some water from their pond and they lived happy content lives. It's another matter that the village is poisoned by things like caste, religion and superstition. But other than that people are actually quite content. They don't need fancy stuff to eke out a living.
I feel that the distinction between rural poor(who possess land) and urban poor is very important.
Our future?
http://crudeoilpeak.info/nigeria-fuel-shortage
http://www.firstpost.com/business/mumbai-realty-is-dead-its-time-to-move-on-414024.html
Does Mr Pawar have anything to do with this too?
To all the morons posting links about slowdown, if you have the money buy a house and move on. Dont waste time on this site consoling yourself that someday you will buy a house
^^^ buy a house? how? are you giving away free money to make RE affordable?
"To all the morons posting links about slowdown, if you have the money buy a house and move on. Dont waste time on this site consoling yourself that someday you will buy a house"
And what are you doing on this site? Surely you are not wasting time here worrying about 'morons posting links', or pimping RE.
You must be doing something profoundly game changing here. Pray educate us.
it's not about being poor or rich which IMO are inadequate and rather poor definitions of what riches are as they require you to possess imaginary bits and bytes on some faraway server in a bank.
I suppose if you put it like this then vacant flats in Bombay would be a *little* better than bits and bytes on a server :-)
@Above
Yes indeed, it is better than bits and bytes but unlike a farming land flats don't provide you with food and water. They sure provide you with a shelter though.
But if shelter is all that is required why bother buying such expensive shelters, much cheaper and better alternatives are available
Unitech qtly profits down 53%.
http://www.business-standard.com/india/news/unitech-q1-net-dips-53/483344/
Not surprising considering that sales are down everywhere. But prices still seeing modest increases in some places. This reminds me of the bugs bunny cartoons when he runs off a cliff and continues climbing through air, only to realize that there is nothing below.
http://blogs.rediff.com/thebravepedestrian/2012/05/06/india-indian-metros-mumbai-delhi-property-bubble-asset-bubble-burst-economic-failure-contamination-real-estate-banking-sector/
@Pawan -
In the US, it was mortgage debt owned by individuals that almost brought down the banking system.
Here it is corporate debt (esp power sector, RE and textile) that will hurt. Banks are merely rolling over the loans in the hope that they will be eventually repaid.
I read somewhere that in India that when a bank rolls over a loan due to non-payment by a firm, 40% of the time the loan eventually ends up in default.
But no bank here is assigning such high default rates to the bad loans in their current balance sheet. They simply extend the loan and pretend that things will turn out fine.
The way out is bank-bankruptcies, or more likely high inflation to erode the all debt away over the next few years. Folks like us with cash in LIC/FD/PostOffice/savings acnt/PF/PPF will be hosed.
thanks for the article pawan
http://blogs.rediff.com/thebravepedestrian/2012/05/06/india-indian-metros-mumbai-delhi-property-bubble-asset-bubble-burst-economic-failure-contamination-real-estate-banking-sector/
Great Now you guys are relying on Pedesstrian blogs to make your point. Guys just buy a house and move on. Otherwise once the economy improves you will be priced out forever
@Anon - "you will be priced out forever"
Ha! The 'priced out forever' argument is the last resort of the RE pimp.
The way out is bank-bankruptcies, or more likely high inflation to erode the all debt away over the next few years.
Trying to solve debt problem with inflation doesn't work simply because there should always be someone else who should be ready to take on more debt. Filling a small hole with a bigger one is absolute stupidity.
http://www.zerohedge.com/news/housing-recovery-lessons-japan-one-chart
First line from the article above:
"When real estate prices made a vertiginous ascent in the 1980s Japan the bullish refrain was that there wasn’t enough land."
From one of the comments:
"What is not mentioned in the article is that land in Downtown Tokyo was selling for $1 BILLION AN ACRE at the peak of the market.
All the land in Tokyo was "worth" more than all the land in the US at that time."
The above is for the reading pleasure of those who keep saying that Indian RE is different.
As if the Gods showered their holy piss on the entire country to make the land here special and precious.
http://www.amazon.com/Are-Missing-Real-Estate-Boom/dp/0385514344
I think i just found the bible of RE Bulls.
- SKG
RE Bears need to take a cue from teh recent anti-Assamese sentiment and start trashing some IT workers and NRIs and force them to go back to their towns/villages.
Otherwise, the pool of greater fools has a near unending supply in most major cities.
Every IT hub sees influx of tens of thousands of new hires every year.
>>>>
RE Bears need to take a cue from teh recent anti-Assamese sentiment and start trashing some IT workers and NRIs and force them to go back to their towns/villages.
>>>>
Early and tell tell sign of civil war.We have discussed this possibility on this blog and based on the events unfold i tend to agree more and more with the possibility.
BTW there is a new revelation in mid day today -
http://www.mid-day.com/news/2012/aug/170812-mumbai-One-third-of-urban-India-may-be-homeless-by-2020.htm
Could this be paid news by RE Pimps?
- SKG
^ Even if it wasn't paid news, how in the world do they except Indians, the average ones, to buy houses at 50 Lacs - 1 Crore?
Early and tell tell sign of civil war.
We have civil war going on since 1947.
Tamils want independence from "India", Kashmiri's too, NE folks are not too keen to be part of a country where they are treated as foreigners anyway.
What's left, do Gujjus want to be associated with bhaiyas from UP, Bihar? Marathis certainly don't!
This NE situation just makes me mad and one more reason why it's not worth living in India at any price.
Indians are least educated. Literate yes, educated no. Few Indians know what critical thinking means let alone practice it.
Even in this day and age some conjured up SMS message can transform the usually meek Indian into a raging hulk.
Fool me once, shame on you. Fool me twice shame on me. Indians collectively are being fooled by their vote bank "netas" for so long you'd think "stupid" was in our genes.
Comments on this article which shows that Indians are apparently still spending big:
http://www.cnbc.com/id/48655542
So finally our FM is worried about fall in Housing Demand :
http://www.dnaindia.com/india/report_govt-asks-bankers-to-form-committee-to-advise-it-on-housing_1729725
Has anyone forecast a hiring slowdown/freeze or even layoffs in IT/financial service jobs.
IMO that is a precondition to RE bubble bursting.
"So finally our FM is worried about fall in Housing Demand :"
Interesting that our political class is more interested in keeping house prices from falling than ensuring that housing is affordable for the common man.
But what else can you expect from these vile scumbags?
@7:16AM
Quote from that article:
// --
For example, I have lent money to my friend, there’s no paperwork involved and I’m earning about 15-18 percent interest on it.
-- //
LOL, he's proud of being a small-time loanshark? What a scumbag.
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