The global real estate
fund of Morgan Stanley, which was in talks with the Wadhwa Group to
invest about Rs 900-1,000 crore ($186 Million) in an office development
project in Mumbai, has now shelved its investment plans as the rupee’s
plunge has made the hedging cost for the entire deal too huge, The
Economic Times reported today.
The investment by Morgan Stanley Real Estate Investing (MSREI) was
proposed to be deployed in jointly developing 1.6 million square feet
office space in Mumbai’s financial hub Bandra Kurla Complex.
Mumbai-based Wadhwa Group had already begun construction of the project,
ONE BKC, which would consist of two office towers and is due to be
completed by 2014.
Are foreign investors shying from Indian realty?
Are foreign investors shying from Indian realty?
MSREI has invested about $850 million in Indian real estate, mainly in
residential projects, including $100 million to $125 million in a
housing project by Mumbai-based Sheth Developers, Reuters reported in
December 2011, and the ONE BKC project would have been its first
investment in commercial real estate.
“Returns that were arrived at in earlier negotiations between Morgan
Stanley and Wadhwa were shrinking even before concluding the deal,” one
of the people familiar with the deal told ET as the rupee has slipped 46
percent in the last two years, wiping out returns of several PE funds.
The pull out comes even as Wadhwa has been marketing ONE BKC as offering
office spaces designed to suit occupiers of all sizes. The company has
been using this as its USP by offering office spaces of as small as
1,000 square feet as it targets professionals like chartered
accountants and law firms.
“This deal is already very costly and there is high vacancy in BKC. Not
just the Wadhwa Group but even Godrej Properties has a huge office
complex there where absorption rates are very low. Add to the economic
gloom and a horrible hiring outlook… Post Lehman Brothers, commercial
real estate has been going South and BKC is largely a finance and
banking sector, which is under maximum pressure right now,” said Pankaj
Kapoor, MD at real estate research firm Liases Foras.
Data from property consultant CBRE shows Mumbai’s BKC is the eleventh
most expensive office market in the world. Clearly when there is a
slowdown and corporates are looking to cut costs, MNCs wouldn’t want to
shell out more as rent, which is why several corporates move out of
expensive offices in BKC to relocate at low-cost locations such as
Andheri East, Goregaon and even Parel.
In Mumbai, Johnson & Johnson took up 150,000 sq ft in Andheri East
moving from more expensive Worli while Franklin Templeton India moved
out of Wockhardt Towers in BKC and shifted to Indiabulls in Lower Parel,
where rentals are as low as Rs 125 a sq foot, and Volkswagen moved out
from Maker Maxcity where it was paying Rs 500 a square foot to
Andheri-Kurla road where rental is Rs 130 a square foot a month.
Knight Frank data also showed that bulk of office space transactions
during the fourth quarter of financial year 2013, took place in the
suburban business districts of Andheri and Goregaon.
“Andheri East and Goregaon East accounted for a massive 92% of the
transactions in Mumbai,” the report said.
A report by a Cushman & Wakefield says office relocations and
consolidation of space have more than doubled in the first half of 2013
against last year and companies have managed to reduce their rents by
25-30 percent.
In fact, property consulting firm Knight Frank points out that while the
rental value ranges between Rs 200 and Rs 350 in BKC, it is any where
between Rs 125 and Rs 190 a square feet in Central Mumbai (Lower Parel,
Dadar, Prabhadevi) and between Rs 50-Rs 100 in Andheri, Josgehwari,
Gorgaon and Malad.
Moreover, sluggish leasing in business districts and new supply led to
vacancy levels rising in office spaces. Mumbai saw a 10 percent decline
in office demand in the first half of the year due to subdued economic
conditions at domestic as well as international levels, the Cushman
report said.
Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
http://www.firstpost.com/business/realtors-bank-on-freebies-festival-sales-but-rule-out-price-cuts-1141771.html Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
via
Foreigners dumping realty? Morgan Stanley pulls out of major Mumbai project
Sep 27, 2013
The global real estate fund of Morgan Stanley, which was
in talks with the Wadhwa Group to invest about Rs 900-1,000 crore ($186
Million) in an office development project in Mumbai, has now shelved its
investment plans as the rupee's plunge has made the hedging cost for
the entire deal too huge, The Economic Times reported today.
The investment by Morgan Stanley Real Estate Investing (MSREI) was proposed to be deployed in jointly developing 1.6 million square feet office space in Mumbai's financial hub Bandra Kurla Complex.
Mumbai-based Wadhwa Group had already begun construction of the project, ONE BKC, which would consist of two office towers and is due to be completed by 2014.
"Returns that were arrived at in earlier negotiations between Morgan Stanley and Wadhwa were shrinking even before concluding the deal," one of the people familiar with the deal told ET as the rupee has slipped 46 percent in the last two years, wiping out returns of several PE funds.
The investment by Morgan Stanley Real Estate Investing (MSREI) was proposed to be deployed in jointly developing 1.6 million square feet office space in Mumbai's financial hub Bandra Kurla Complex.
Mumbai-based Wadhwa Group had already begun construction of the project, ONE BKC, which would consist of two office towers and is due to be completed by 2014.
]
Are foreign investors shying from Indian realty?
MSREI has invested about $850 million in Indian real estate, mainly in
residential projects, including $100 million to $125 million in a
housing project by Mumbai-based Sheth Developers, Reuters reported in
December 2011, and the ONE BKC project would have been its first
investment in commercial real estate."Returns that were arrived at in earlier negotiations between Morgan Stanley and Wadhwa were shrinking even before concluding the deal," one of the people familiar with the deal told ET as the rupee has slipped 46 percent in the last two years, wiping out returns of several PE funds.
via
Why real estate is a landmine of troubles for NRI investors
Sep 30, 2013
By Om Ahuja
The global capital and currency markets have been volatile for last the few months, also triggering serious turbulence in the rupee. Current account deficit and the fact that foreign institutional investors are selling heavily in the Indian bond market have been the key triggers for the rupee's repeated depreciation. Factors such as negative export and industrial growth have triggered even more uncertainty, specifically in the currency trend pattern.
Will The Rupee Depreciate Further?
The Central Government has passed the Food Security Bill, which effectively increases subsidy for the nation. The fact that the Lok Shabha elections will be held in in 2014 may be cause for more of such populist measures - nevertheless, the country's overall financial status does not look very exciting right now. We may continue to see volatility over the mid term. Moves such as importing of fuel would further hurt the economy.
NRIs And Real Estate
When it comes to Indian real estate, NRIs take centre-stage when the rupee depreciates. The foreign exchange that they tend to funnel into the sector increases significantly when the rupee slides. In times of rupee volatility, banks institutions and developers tend to announce various schemes aimed at attracting NRIs. At the same time, NRIs are also attracted to the higher interest rates on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) deposits, as the standalone rupee returns look quite lucrative to them.
The global capital and currency markets have been volatile for last the few months, also triggering serious turbulence in the rupee. Current account deficit and the fact that foreign institutional investors are selling heavily in the Indian bond market have been the key triggers for the rupee's repeated depreciation. Factors such as negative export and industrial growth have triggered even more uncertainty, specifically in the currency trend pattern.
Will The Rupee Depreciate Further?
The Central Government has passed the Food Security Bill, which effectively increases subsidy for the nation. The fact that the Lok Shabha elections will be held in in 2014 may be cause for more of such populist measures - nevertheless, the country's overall financial status does not look very exciting right now. We may continue to see volatility over the mid term. Moves such as importing of fuel would further hurt the economy.
NRIs And Real Estate
When it comes to Indian real estate, NRIs take centre-stage when the rupee depreciates. The foreign exchange that they tend to funnel into the sector increases significantly when the rupee slides. In times of rupee volatility, banks institutions and developers tend to announce various schemes aimed at attracting NRIs. At the same time, NRIs are also attracted to the higher interest rates on NRE (Non-Resident External) and FCNR (Foreign Currency Non-Resident) deposits, as the standalone rupee returns look quite lucrative to them.
]
Continue here -
Om Ahuja is CEO - Residential Services, Jones Lang LaSalle India
via
Realtors bank on freebies, festival sales but rule out price cuts
Sep 30, 2013
Realty developers are hopeful of clearing a large portion
of their inventory pile-up during this festive season by luring in
buyers with freebies and
discounts, even as they sit tight on declared prices, said industry experts.
"Higher interests and the overall slowdown has led to a significant build-up of unsold units with developers in most of the major realty markets over the past few quarters, adversely affecting cash flow and impacting new project launches," said KPMG India partner Neeraj Bansal.
Further, RBI's stringent directives like banning the 80:20 scheme is expected to make things more difficult for developers, he said.
However, industry watchers are not expecting any price correction during the period.
"We don't expect any price correction now. Most projects have maintained the price levels or in some cases gone up marginally. But since they have already been factored in the slowdown, they will cautiously plan their sales," PwC India associate director Bhairav Dalal said.
Developers are likely to attract buyers through several discount schemes/gifts with most common being gold coins, cash-back on monthly rentals, customisation, free parking and club facility, zero brokerage, upfront cash discounts among others.
According to realty portal Magicbricks, developers in metros like Mumbai, Delhi-NCR, Bangalore, Kolkata, Pune, Chennai and Hyderabad have already announced various freebies.
"Offering such innovative schemes is most likely to result in higher enquiries and footfalls, which coupled with festive offerings, may help generate decent sales," Bansal said.
courtesy - PTI
discounts, even as they sit tight on declared prices, said industry experts.
"Higher interests and the overall slowdown has led to a significant build-up of unsold units with developers in most of the major realty markets over the past few quarters, adversely affecting cash flow and impacting new project launches," said KPMG India partner Neeraj Bansal.
Further, RBI's stringent directives like banning the 80:20 scheme is expected to make things more difficult for developers, he said.
]
Reuters
The September-December period witnesses maximum launches and publicity of real estate projects.However, industry watchers are not expecting any price correction during the period.
"We don't expect any price correction now. Most projects have maintained the price levels or in some cases gone up marginally. But since they have already been factored in the slowdown, they will cautiously plan their sales," PwC India associate director Bhairav Dalal said.
Developers are likely to attract buyers through several discount schemes/gifts with most common being gold coins, cash-back on monthly rentals, customisation, free parking and club facility, zero brokerage, upfront cash discounts among others.
According to realty portal Magicbricks, developers in metros like Mumbai, Delhi-NCR, Bangalore, Kolkata, Pune, Chennai and Hyderabad have already announced various freebies.
"Offering such innovative schemes is most likely to result in higher enquiries and footfalls, which coupled with festive offerings, may help generate decent sales," Bansal said.
courtesy - PTI
Foreigners dumping realty? Morgan Stanley pulls out of major Mumbai project
Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
The global real estate
fund of Morgan Stanley, which was in talks with the Wadhwa Group to
invest about Rs 900-1,000 crore ($186 Million) in an office development
project in Mumbai, has now shelved its investment plans as the rupee’s
plunge has made the hedging cost for the entire deal too huge, The
Economic Times reported today.
The investment by Morgan Stanley Real Estate Investing (MSREI) was
proposed to be deployed in jointly developing 1.6 million square feet
office space in Mumbai’s financial hub Bandra Kurla Complex.
Mumbai-based Wadhwa Group had already begun construction of the project,
ONE BKC, which would consist of two office towers and is due to be
completed by 2014.
Are foreign investors shying from Indian realty?
Are foreign investors shying from Indian realty?
MSREI has invested about $850 million in Indian real estate, mainly in
residential projects, including $100 million to $125 million in a
housing project by Mumbai-based Sheth Developers, Reuters reported in
December 2011, and the ONE BKC project would have been its first
investment in commercial real estate.
“Returns that were arrived at in earlier negotiations between Morgan
Stanley and Wadhwa were shrinking even before concluding the deal,” one
of the people familiar with the deal told ET as the rupee has slipped 46
percent in the last two years, wiping out returns of several PE funds.
The pull out comes even as Wadhwa has been marketing ONE BKC as offering
office spaces designed to suit occupiers of all sizes. The company has
been using this as its USP by offering office spaces of as small as
1,000 square feet as it targets professionals like chartered
accountants and law firms.
“This deal is already very costly and there is high vacancy in BKC. Not
just the Wadhwa Group but even Godrej Properties has a huge office
complex there where absorption rates are very low. Add to the economic
gloom and a horrible hiring outlook… Post Lehman Brothers, commercial
real estate has been going South and BKC is largely a finance and
banking sector, which is under maximum pressure right now,” said Pankaj
Kapoor, MD at real estate research firm Liases Foras.
Data from property consultant CBRE shows Mumbai’s BKC is the eleventh
most expensive office market in the world. Clearly when there is a
slowdown and corporates are looking to cut costs, MNCs wouldn’t want to
shell out more as rent, which is why several corporates move out of
expensive offices in BKC to relocate at low-cost locations such as
Andheri East, Goregaon and even Parel.
In Mumbai, Johnson & Johnson took up 150,000 sq ft in Andheri East
moving from more expensive Worli while Franklin Templeton India moved
out of Wockhardt Towers in BKC and shifted to Indiabulls in Lower Parel,
where rentals are as low as Rs 125 a sq foot, and Volkswagen moved out
from Maker Maxcity where it was paying Rs 500 a square foot to
Andheri-Kurla road where rental is Rs 130 a square foot a month.
Knight Frank data also showed that bulk of office space transactions
during the fourth quarter of financial year 2013, took place in the
suburban business districts of Andheri and Goregaon.
“Andheri East and Goregaon East accounted for a massive 92% of the
transactions in Mumbai,” the report said.
A report by a Cushman & Wakefield says office relocations and
consolidation of space have more than doubled in the first half of 2013
against last year and companies have managed to reduce their rents by
25-30 percent.
In fact, property consulting firm Knight Frank points out that while the
rental value ranges between Rs 200 and Rs 350 in BKC, it is any where
between Rs 125 and Rs 190 a square feet in Central Mumbai (Lower Parel,
Dadar, Prabhadevi) and between Rs 50-Rs 100 in Andheri, Josgehwari,
Gorgaon and Malad.
Moreover, sluggish leasing in business districts and new supply led to
vacancy levels rising in office spaces. Mumbai saw a 10 percent decline
in office demand in the first half of the year due to subdued economic
conditions at domestic as well as international levels, the Cushman
report said.
Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
Read more at: http://www.firstpost.com/business/foreigners-dumping-realty-morgan-stanley-pulls-out-of-rs-1000-cr-mumbai-investment-1137019.html?utm_source=ref_article
933 comments:
1 – 200 of 933 Newer› Newest»What has Diwali got to do with a house purchase?This is just wishful thinking by developers.The run for exit has started and not even Diwali or Christmas can stop it.
We are at the end of credit expansion cycle across the globe. Which means deleveraging, means higher rates, means lower growth and speculative bubbles bursting. Whichever large creditor you look at is contracting its balance sheet...this will probably lead to global depression/recession and lack of availability of funds to pump up assets. This is all obvious, so Indian, Chinese, Indonesian etc...real estate markets should witness large correction, where is the doubt in all this? Its just a matter of time.
@Above
Yes it's already begun, I can see people deferring purchases, vacations, choosing domestic travel over international and small things like choosing Alto over an i10 etc etc.
These things add up over time. Purchasing power has come down significantly.
Thank This Is good Informative detail
www.AGRANTEBEETHOVEN.IN
http://www.propnix.com/
http://www.business-standard.com/article/finance/buyers-default-on-second-home-loans-113100100166_1.html
Looks like some defaults have started...
@Anon - "http://www.business-standard.com/article/finance/buyers-default-on-second-home-loans-113100100166_1.html"
The pain has only just started. As the first poster already said, Diwali will make squat difference to our economy and RE.
Small firms are defaulting in large numbers. I read recently about a spike in two-wheeler loan defaults, suggesting that lower income people are also defaulting.
Now the above link shows the pain is spreading to middle and upper classes. Expect stress even in first (not second) housing loans soon, distress sales of homes and even cars. All those Honda city and iphone EMIs are going to pinch more now.
The leverage cycle is over. Now comes develeraging.
3 months back , I spoke to my friend who wanted to invest(?) in apartment and his assumption was that price will reach Mumbai level in 10 years
I spoke to him today, he is saying lot of inventory on houses and he is getting so many calls. Price is not appreciating.
Soon it will be talk of town and once the public sentiment turns against Reality prices will have to go down drastically
For once common people are realizing that supply has far outstripped demand. With fewer jobs to compete and extremely high inflation food, transport and school are more important than showing off anything.
In such scenario the real estate prices will revert to their true means (w.r.t gold/land price).
I can easily see transactions going back to 2010 levels.
http://www.99acres.com/commercial-property-in-tamil-nadu-ffid?search_type=QS&search_location=NRI&lstAcn=NR_C&lstAcnId=-1&src=L5&budget_min=28&class=O,B,A&property_type=6,82,7,9,10,83,11,12,13,14,15,17,18,19,21,81&area_min=1000&area_unit=1
Out of curiosity I searched for high value properties in TN.
2 engineering colleges around 150 Cr
1 Retail mall for 650 Cr
20+ acres land for just 800 Cr ( some morons wild imagination)
Looks like PE funds are not even ready to invest in rental property with known yield.
hearing more and more common people lamenting the fact that the housing prices in Mumbai are artificially inflated.
These are your common people who would swear by ever increasing house prices. Good sign.
Bear activity has been very low on the forum for few days.Has mating season for bears started or house prices have tanked?
"Bear activity has been very low on the forum for few days.Has mating season for bears started or house prices have tanked?"
Where is the fun when all the bulls have disappeared? Prices are now falling (directly or indirectly through discounts and freebies).
Even mainstream media dishes up a daily dose of grim news in RE. http://www.business-standard.com/article/companies/brick-by-brick-indian-realty-story-crumbles-113100300014_1.html
The only question that now remains is how much will prices fall.
@Kitu, The realty bulls have been shafting everybody in sight for about 10 years now. The bears have been in hibernation all this while...so when spring thaws, the Bears are going first feast and then the mating will come. Have patience, the sight of a bear feast is awesome!
Having a lavish villa in Delhi NCR is like a dream for most of the people living in Delhi NCR or other cities/states in India and willing to move to Greater Noida. After the Development of Noida, Greater Noida is the place where the Residential and Commercial Real Estate Development is on the boom and as a result, you can see that many new projects in Greater Noida.
Bear activity has been very low on the forum for few days.Has mating season for bears started or house prices have tanked?
Honestly, the last week has been the period of lowest activity for me. Really enjoying the Hudson river waterfront in Jersey City that you completely forget all problems of India - housing bubble, corruption, red tape. It's not that US is not in a bubble, infact the bubble in US is enormous - 1 bed room 600 sq ft flat near water front rents upto 2500 USD when so many people are still being laid off. Got a call from a friend in Cisco who said that he got a pink slip, another friend whose company recently fired 50% of the workforce. Still you have one way train fare 2.50 USD per person, whereas you can easily travel in Delhi Metro from one end to the other for just 20/- !
But when you see young women travelling in trains late night without fear, quality of houses, entertainment options for kids, quality of parks, discipline in people even after Govt shutdown, professionalism, and the variety of choices for consumers in almost anything which is almost nil in India, you find it stupid seeing your friends fighting on Facebook for Congress vs BJP, AAP vs BJP. India will never change, no matter which party wins. I now understand it well that I hate high prices in India for not high prices, but extremely poor quality.
Re: Above
Take a bow man! YOu have echoed the sentiments of so many people. I hate the high prices due to the extremely extremely poor quality in India. US will all its troubles is a superpower not because of nothing. the professionalism, the parks, the outdoors will more than mitigate all your mental troubles. just take a drive outside to remove your stresses.. try doing the same in any place in Bangalore. you will feel glad that you stayed at home.
The crash is coming. Even with rupee at historic lows NRIs refuse to buy at current prices it makes no sense especially with v poor rental yields when u take into account all the costs u get no more than 2%-3% put in an FD instead. Might as well buy in Dubai or USA were long term rental returns are higher.
Hello,
Complete attractive blog. I like always.
World Trade Center Signature Tower is high concept of real estate commercial project. There are better opportunity for investors.
Bears are out of hibernation...
http://www.firstpost.com/economy/good-news-for-home-buyers-this-diwali-expect-a-15-drop-in-prices-1152361.html
http://www.firstpost.com/economy/no-jobs-for-young-india-economy-worse-than-2008-global-crisis-1152641.html
I hate the high prices due to the extremely extremely poor quality in India.
I totally agree. What is more preposterous is that for a 1Crore+ house, if you look at the ad in 99acres/magicbricks, it will be a poorly taken photograph (sometimes upside down) of the toilet in the apartment.Based on that one photograph of the toilet, am I supposed to buy that piece of crap? (no pun intended)
Brokers and Investors in India have gotten used to easy money. They don't know the age old phrase: Easy Come, Easy Go!
http://www.bangaloremirror.com/bangalore/others/Price-of-coriander-leaves-shoots-up-from-Rs-5-to-Rs-50/articleshow/23535921.cms
is coriander 50/bunch in bangalore now? my eyes popped out!! :)
http://www.nytimes.com/2013/09/11/business/global/a-housing-slump-in-india.html?pagewanted=all&_r=1&
wow... your blog is cool
Sullivan County NY properties
Buy property in Catskill Mountains NY
We all praised RGR for raising Repo rates even though eventually he reduced short term rates in the form of MSF rate reduction last month. He got the benefit of doubt last week. We thought that by signalling Repo rate as primary tool, there may be more repo rate hikes in the offing.
The hawkish tone in the last policy print is commendable. But now things are not that clear especially with the last night MSF rate reduction, he has made reduced the short term rates up to 1.25% which is huge. The lazy Indian bankers will hail this and they will get confident that they can milk RBI further. This is not correct as far as fixing the economy is concerned. Still we want to give benefit to doubt to RGR as he is our only last hope to fix the mess created by RBI under Indian government pressure.
Is he going to raise the Repo rates now? If he wants to that, why not he do that now?He played along with Chidambaram in extending consumer loans at concession rates which a RBI governor should never do. He would have instructed RBI Deputy Governor to go and talk against the idiotic move as he cannot do that :). He may justify that in Indian system that is all we can do. But still??
But he also should know that a lot is expected out of him and he should not wilt under any pressure and he should not walk in the same trap / route in which Subbarao walked/trapped.
Now the onus is on RGR to prove himself as time is running out. The conspiracy theories such as 'RGR is brought into RBI only to buy time and save the corrupt congress govt' will gain momentum unless he acts otherwise to save the sinking ship.
www.mangoman2012.blogspot.in
http://capitalmind.in/2013/10/currency-notes-in-circulation-shows-lowest-growth-in-6-years/
Black money
@anon 2:11, ReBear,
The example of quality is in the NYTimes link posted by anon 2:11. Quoting form the article:
The Orbit Grand stalled with 10 stories completed out of 26, although the firm is seeking regulatory approval to extend the building up to 36 stories.
So they must have laid the foundations for a building that can take the load of 26 stories. How can it be extended to 36 floors at this point? Anything goes in India.
nice blog..thanx for sharing nice information.
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Thanks for nice blog,its really informative...and really informative and helpful to my research point of view... I have also avail information about the best new projectIreo Grand Arch
//So they must have laid the foundations for a building that can take the load of 26 stories. How can it be extended to 36 floors at this point? Anything goes in India.//
That is the usual trick.
One of my college booked apartment at top floor which was 15th in pre-launch offer.
usable area Sqft calculation is based on 15 floors.
After a year, company increased total no of floors to 23 and increased the price too.
That increase in price always consoles poor souls
By the way he took delivery of his apartment after 5 years.
Why are the ugliest houses in India built in Bangalore? Don't kannadis have any aesthetic sense?
Bear news as usual
http://economictimes.indiatimes.com/markets/real-estate/realty-trends/buying-your-first-house-heres-a-checklist-of-9-sales-pitches-that-you-should-be-wary-of/articleshow/23574374.cms
If India is going to hell in a hand-basket, can someone please explain to me why then the stock market (SENSEX) is partying like it's 2007(and not 2013)? Every day, the SENSEX goes up. It's as if this whole "crisis" thing never happened.
What gives?
Anony@1.27 pm,
Ever since money printing presses were revved up in the western world,stock markets have diverged from the real economy.Stock market is no longer a reflection of the real economy.It is now the parking for cheap money.With interest rates close to zero,investors have no choice but to go into risky assets like stock market.Once the flow of free money stops and interest rates go up,we will see stocks coming back to realistic levels.We saw a glimpse of this when every one thought Fed was going to taper.
"With interest rates close to zero,investors have no choice but to go into risky assets like stock market."
I'm afraid I don't find this answer convincing. Nominal interest rates are nowhere close to zero in India. I would argue that even real interest rates are CURRENTLY higher than zero in India. So what gives? And if you're suggesting that it's all FII money that's in the stock market then what's causing the CAD crisis? Shouldn't INR be surging with all that foreign money pouring into the country?
The strength of Indian stocks is something that frankly baffles me. Also, can someone explain to me how RE can be weak in an environment with a strong stock market? Wherever stocks have surged worldwide, they have been eventually accompanied by a strong RE market as stocks are a leading indicator. US stocks boomed since April 2009 but US RE eventually caught up 2 years later. Since 2010/11, US RE surged and is now close to pre-Lehman levels.
I'm afraid the booming Indian stock market does not bode well for RE bears in this group. I fully expect INR priced RE to go up in the coming years.
"Once the flow of free money stops and interest rates go up,we will see stocks coming back to realistic levels."
Here's the thing. What if the flow of free money stops...like...NEVER. Once you get an economy addicted to zero % interest rates, it's very hard to kill the addiction. That is why Japan was hooked on 0% interest rates for like TWO DECADES. See what happened earlier this year when the Fed was forced to not taper. They knew what would happen if they did. Now with Yellen at the Fed, the Fed will not taper in the next 3 years. And even if they do, interest rates will never ever, EVER be allowed to go above 0% in our lifetimes unless the US is forced to raise interest rates by market forces (i.e. a systemic crisis of some sort).
Quite frankly I can't see how Indian RE stays down for much longer in this environment.
Anon above:
Your theory is BS.
If India doesn't stop printing or increase interest rates, it will default. It will get downgraded by all rating agencies. Then the rupee collapse, RE and stocks too.
Japan has been addicted to 0% rates but their Stock market is down almost 60% from 2 decades ago and RE is also down by 70%.
If India tries the easy money policy, it will become zero one day. Inflation will cause riots in country and India would stand no world sympathy. Another Greece in the making.
Indian stocks much cheaper compared to the US market. Majority of the ADR's hitting 52 week high in the last few weeks. Money has to go somewhere, so why not stock market.
US- revenues not rising much, but company EPS is up, due to less employees and stock buybacks( decreased float). Fed printing 85 billion a month and it is not going to slow down in the next two years.
Stock market only helps the top 5-10%, not a true indication of the economy.
All these armchair wannabe economists have hijacked this blog with useless discussions on stocks and revenues. It is quite clear that there are many jobless finance guys now with nothing better to do.
Guys, if you can read, this is a blog on the so called "bubble" in real estate in India. For your information, there is NO bubble. This diwali, we will liquidate all inventory, buyers are queuing up to buy. Stop wasting time with your useless discussions and go buy a property.
Bhikhu Lal Chamanbhai
Chamanbhai:
If there is no bubble,what are you doing on a bubble discussion forum?Please go ahead and buy all the properties you want.Do not worry there wont be any ques so you can buy as many as you want.
any info on recent property exhibition in Navi Mumbai?
-- I got to know that response was very subdued and didn't attract serious buyers.
-- Signs of weakness in Vashi / Kopar Khairane property prices as 20% cut from peak price is clearly visible in investor held properties.
@ Anon above
Yes. I visited the property exhibition on the very first day and didn't see much crowd.
However the sad news is, property prices (of course quoted) have gone up since last exhibition in April
My friends too are indicating that investors are willing to take a cut for genuine buyers.
Dear Bhikhul al Chaihe man bhaiya
This diwali, we will liquidate all inventory, buyers are queuing up to buy. Stop wasting time with your useless discussions and go buy a property.
Which inventory are u liquidating RE or others even better for you will be all RE and invest in further RE
Have a Happy Diwali
Nobel Prize Winner Schiller says India, China have frothy Real Estate Markets
An Builder & Financer in Surat defaulted & Made fraud for Rs.400 cr.
http://www.divyabhaskar.co.in/article/DGUJ-SUR-400-crores-fraud-in-surat-4405721-PHO.html
also one project loan scam in surat for 500 cr.
More default have to come.
Sandesh news paper
૪૦૦ કરોડના કૌભાંડીનું કમિશન ૧૫ ટકા
Oct 09, 2013 02:31 Surat > Surat City
સુરત તા. ૮
સીએ ફર્મ સાથે સંકળાયેલા 'ગૌરવે' જે બેંકોમાંથી ફાઇનાન્સ કરાવ્યું તે બેંકોનું ગૌરવ ગીરવે મૂકી દીધું છે. પ્રોજેક્ટ અને ટેક્સ્ટાઇલ મશીનરીની ખરી કિંમત કરતાં તેની વેલ્યૂ ૩થી ૪ ગણી બતાવીને લોન પાસ કરાવવામાં આવી હતી. જે બેંકોના ખાતા એનપીએ થઇ ચૂક્યા છે તે વસૂલી કરવા પણ નીકળે તો ૪૦૦ કરોડની લોનમાંથી માંડ ૨૦-૩૦ ટકા રિકવરી પણ નહીં નીકળતી હોવાનું જાણવા મળ્યું છે. બેંકોનું કરોડોનું કરી નાંખનાર 'ગૌરવ' અને તેના પાર્ટનરની ફરતે સરકારી ગાળિયો ફીટ કરવામાં આવી રહ્યો છે. બેંક અધિકારીઓ અને વેલ્યુઅરના મેળાપીપણાંમાં કરોડોના કૌભાંડમાં લોન લેનારાઓ પર પણ તવાઇ આવે તેવી શક્યતા નકારી શકાય તેમ નથી.
કૌભાંડી ગૌરવનો પાર્ટનર પણ કમિશનની ગોઠવણ કરવામાં માહેર : લોન કૌભાંડમાં ટેક્સટાઇલ જૂથોએ પણ હાથ કાળા કર્યા છે
બેંકોને ૨૦ ટકા પણ રિકવરી મળી શકે તેવા સંજોગો નથીઃ અધિકારીઓ અને વેલ્યુઅર પણ સંડોવાયેલા હોવાની શંકા
બેંકના અધિકારી અને સીએ ફર્મ સાથે સંકળાયેલા ગૌરવ નામના યુવાને સાથે મળીને કરેલા ૪૦૦ કરોડના કૌભાંડના પર્દાફાશ થયા બાદ સમગ્ર શહેરમાં ચકચાર મચી ગઇ છે. ખાસ કરીને ટેક્સટાઇલની પેઢીઓ તેમજ એક્સપોર્ટર્સમાં આ કૌભાંડ આજે દિવસભર ચર્ચામાં રહ્યુ હતું આ કૌભાંડમાં સીબીઆઇ અત્યંત ગુપ્ત રાહે તપાસ કરી રહી છે. આખું કૌભાંડ ઉધના દરવાજા નજીક મોટી કોર્પોરેટ સ્તરની ઓફિસમાંથી સરળતાથી પાર પાડવામાં આવ્યું છે. પ્રોજેક્ટ ફાઇનાન્સના ઓથો હેઠળ ગૌરવે બેંકોને મોટા નુકસાનના ખાડામાં ઉતારી દીધી છે. ખુદ બેંકોના અધિકારીઓએ પણ કૌભાંડમાં ગૌરવ સાથે એકસૂર પુરાવીને ગજવા ગરમ કરી લીધા હોવાનું આધારભૂત સૂત્રોએ જણાવ્યું હતું. ગૌરવ અને તેના પાર્ટનરે પોતાની કરતૂતને પાર પાડવા ઇન્કમટેક્સના અધિકારીઓનું પણ નામ વટાવી ખાધું છે. પ્રોજેક્ટ પાસ કરવામાં ગૌરવ અને તેનો પાર્ટનર ૧૦૦ રૃપિયામાં ૧૦થી ૧૫ રૃપિયાનું કમિશન મેળવી લે છે. વળી, પ્રોજેક્ટ લાવનારને પણ તેઓ કમિશનની લાલચ આપે છે. આખા કૌભાંડની મોડસ ઓપરેન્ડીની વાત કરીએ તો પ્રોજેક્ટ અંગેના કાગળિયામાં ગોલમાલ કરીને મજબૂત બનાવવામાં આવ્યા હતા. ધારો કે, કોઇ પ્રોજેક્ટ (બિલ્ડિંગ-જમીન)ની કિંમત પાંચ કરોડ હોય તો તેની કિંમત ૧૫થી ૨૦ કરોડનાં કાગળિયાં તૈયાર કરવામાં આવ્યાં. ઊંચી કિંમત દર્શાવીને ગૌરવ અને પાર્ટનરોએ બેંકોમાંથી કરોડોની લોન મંજૂર કરાવી લીધી. આ આખું કૌભાંડ બેંકના અધિકારીઓની સંડોવણી વગર તો સંભવ જ નથી. લોનના ખાતા એનપીએ થયા બાદ વસૂલી માટે નીકળેલી બેંકોને લોનની ૨૦-૩૦ ટકા જેટલી રિકવરી પણ મળે તેમ નથી. આ જ રીતે મોટા ટેક્સ્ટાઇલ પ્રોજેક્ટ માટેની મશીનરીની કિંમત પણ તેની ખરી કિંમત કરતાં ઊંચી બતાવીને કૌભાંડ આચરવામાં આવ્યું છે. ગૌરવની સાથે આ કૌભાંડમાં શહેરના મોટાં ટેક્સ્ટાઇલ જૂથો પણ સંડોવાયેલા હોવાનું માનવામાં આવી રહ્યું છે. ઊંડાણપૂર્વકની તપાસ થાય તો કૌભાંડમાં સામેલ તમામના ચહેરા પરથી નકાબ ઉઠી જાય તેમ છે. કૌભાંડ આચરનાર ગૌરવની સાથે બેંકના નાણા સાથે રમત રમનાર અધિકારીઓની જવાબદારી ફિક્સ થવી જોઇએ તેવી માગ ઉઠી છે. આગામી દિવસોમાં આ કૌભાંડીઓના હસ્તક લોન લેનારાઓ પર પણ સીબીઆઇના અધિકારીઓ ત્રાટકે તેવી પૂરેપૂરી શક્યતા છે એટલું જ નહીં પણ આ બાબતે ફોજદારી થવાની પણ પૂરે પૂરી શક્યતા છે.
http://www.firstpost.com/business/hirco-in-deep-trouble-co-defaults-on-2-major-township-projects-1180143.html
Wonder what happens to the investors here? Does default means years and years of litigation trying to get your property/money back?
Stocks are booming. RE is booming. INR is booming.
There is no bubble.
It's all over. Go home people.
Money has to go somewhere, so why not stock market.
Brilliant. sounds like the
cheerleaders of US stocks in 2007..
Imaginary money has to evaporate somewhere, so why not the stock market!
Wake up and smell the stench. India's growth "miracle" is finally being exposed for the scam it was. Full scale loot of the country's natural resources and what do we have to show for it? A few billionaires on the Forbes list while 84+ crore have to be fed by govt. else we risk a violent revolution!
Well done...
No one has answered the question yet: If the Indian economy is really in such poor shape, why is the stock market booming and close to record highs?
@anon above
For the same reason that US equity indices are all time high despite shutdown and high levels of unemployment. It's all liquidity driven.
Someone above rightly said that stock markets aren't the true indicator of the economy. In RE bubble context, things are pretty bad because builders andinvestors have leveraged position and even a small price drop will hurt their returns badly. And if they don't reduce the prices their business is roast. Wait for the fun ;)
Honestly builders are waiting for a miracle and nothing short of it.
They know sales are down and a price cut will hurt as pointed above yet they are 'HOPING' that the real estate market revives.
Now the fact is miracles do happen.
Just that they happen with good people and have a 1 in a million chance.
Now the bad real estate mafia and All of them expecting a miracle is a MIRACLE in itself. :)
Hence as again pointed out 'WATCH THE FUN'
"They know sales are down and a price cut will hurt as pointed above yet they are 'HOPING' that the real estate market revives."
Real estate market WILL revive and indeed is in fact reviving already. Just like the stock market and the INR have already recovered and are indeed zooming up higher and higher day after day after day.
In 2009, all the doomsday clowns said the world was coming to an end and that we were all going to hell in a hand-basket. Everyone thought that stocks/ RE will be stagnant for years to come. In fact, post-2009, global asset prices (stocks, bonds, RE) enjoyed the biggest bull run since 1998-2000.
Markets have a way of putting egg on the face of pretty much everybody.
Please exercise more prudence and humility before making such lurid statements.
There is a lot we we do not know and markets are simply by their nature unpredictable.
Anon above,
It has been all about massive printing of money by central banks all over the world. US would have to taper and end printing by next June. And Rajan at RBI is not in favor of printing.
All this Stock and Rupe thing is temporary. If you feel you are optimistic, go and buy more RE for yourself.
Anony@ 6:40pm,
What is the market? A bunch of sellers low on confidence and an equal number of willing buyers high on confidence.What happens when the balance tilts to more number of people with low confidence?We have more sellers than buyers and you do not need to be a genius to know what follows that.At the moment there are not enough reasons to be high on confidence wherever in the world you are.If you can not understand this simple logic,go ahead ,load up with stocks and property and start your indefinite wait for appreciation.
"Please exercise more prudence and humility before making such lurid statements. "
I stated the facts. Too bad you cannot understand. I understand that.
My friend, keep buying all the property that you can. There are plenty of properties around just waiting for buyers like you.
Sell them and make all your money. I'll be happy for you.
If you however lose money dont come crying here. Remember times change and nothing you can do about it.
"Please exercise more prudence and humility before making such lurid statements. "
"Real estate market WILL revive and indeed is in fact reviving already. Just like the stock market and the INR have already recovered and are indeed zooming up higher and higher day after day after day. "
Do they go hand in hand?
This shows the quality of RE bulls :P
http://www.thehindu.com/news/cities/bangalore/realtor-shoots-himself-dead-at-his-office/article5261978.ece
Looks like greed & extortion is catching up with the greedy realtors. They are getting paid back in the same coin. Police are mostly suspecting his eyeball-deep debt as the reason for suicide, but also have a doubt on some anti-social element who was involved with this realtor & has threatened him recently. Either way it is the same: Greedy and foolish speculation had led to debt. The dark, murky nature of the current realty scenario in India has led him to the contact of anti-social elements (he had a choice to stay clear of this blood-money business, but greed drove him not to chose it).
There was one more realtor death reported a few days back, though I don't remember exactly if it was due to debt.
Some one on this forum had predicted (or atleast guessed) mass realtor suicides. It's just beginning now.
Aside from this, another joke is that several weeks back some big shot realty guy (mostly raheja or the dlf guy) had requested newpapers not to publish news about building collapses in cities - there was atleast one every week in Bangalore alone - mostly under construction buidings caving in & killing workers, but also constructed old & new buildings collapsing. Such is the quality, but the realtors don't want us to know about this.
- Sara
The end of outsourcing to code coolies in Bangalore is coming. As soon as next month. To a theater near you.
http://profit.ndtv.com/news/corporates/article-wipro-to-hire-aggressively-in-us-to-reduce-dependence-on-h1-b-visas-370265?pfrom=home-topstories
Have met a couple of friends in Silicon Valley. Salaries have stagnated, its unreasonable for 10 year experienced guy to expect total salary more than 150K in any company (FB, Google, Yahoo). Houses in Sunnyvale and Santa Clara are in the range of $1 million. Its difficult for most to even make down payment so nobody can buy house. The only few lucky ones who have bought million dollar condos are :
1. Who joined Facebook more than 4 years ago. These people have made 2 million dollars through stocks,
2. Who joined Google in 2009 when the stock was at 300$. Today Google stock is 1000$ so even if someone got 1000 stocks he made 700K$ in profit,
3. One couple working in Yahoo also bought a condo , through profits made from surging Yahoo share prices.
Overall only the lucky ones who made money through stocks or made a bounty through a successful startup are able to buy a house. And the hope for megabucks through stocks or acquisition is what is driving several Indians to stay in the valley. No one likes here to be just for the salary - the salary here is bare enough to cover the expenses plus minimal saving. 35% of your take home salary goes to rent, if you have a kid and need to send him to preschool it costs over 1000$/month. Nothing much to save if only one person in the family is working.
Bottom line, the equation is no different from metro cities in India.
@REBear above: You make a very good point -- the situation in silicon valley is no different from the situation in the metros in India. I would like to add the following to your points:
1. It seems that people who owned land where jobs came later, became rich at the expense of the people who worked hard later to make the city rich. People working 12-15 hour days in Bangalore struggle to make payments on their tiny 1C flat, while the people who got rich are the wealthy landowners and real estate company owners.
2. Now, the people who actually add value to a local economy can strike back. This is the age of social networking and of bright start-up ideas. Read on.
3. Virtual City: Make a virtual community of talented people: engineers, doctors, professors, lawyers. Membership will be by invitation only. Next, let such people plan an entire "mini-economy" in cyberspace. A "virtual" city with schools, colleges, software parks, hospitals, airports etc. Next, invite all the right people in
cyberspace to become "citizens" of this "virtual city". Give every one a share in this city, even before a single physical brick is laid.
4. Let the virtual citizens elect their "government". Get world-class business people to quantify the economic impact of this "virtual city". It could be in billions or trillions of USD.
5. Let the virtual government negotiate with an actual government to get subsidized land for this city. Countries will line up for a major economic center
like this coming to them. Let the country provide citizenship or permanent residency to all the "virtual" citizens.
6. This is a great way to benefit the end users without middlement in the picture. Those who can
make something like this possible will make out like bandits -- more than Google, Apple and Microsoft combined.
Good Luck!
"engineers, doctors, professors, lawyers"
Talented or Greedy money minded people?
Have you ever seen these people help the poor and needy?
So just replace these people with "good people who actually help" and your city will be the best in the world.
The world needs good selfless people. Not doctors and lawyers and engineers.
Have you ever seen these people help the poor and needy?
Atleast the salaries class are paying taxes and not relying on Govt handouts and not a part of the problem.
Have you ever seen these people help the poor and needy?
Atleast the salaries class are paying taxes and not relying on Govt handouts and not a part of the problem.
Rustomjee kem cho. Don't bother, there's no such thing like perfect society. Look for 70-80% perfect not 100%. If you just migrate to the US and live in a upper middle class HOA, u will find what u looking for. good prices also, cheaper than corrupt mumbai or stinky garabege pile bengaluru.
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hedge funds have bought up houses in TX, NV, Fl and Ca to rent. Either you pay more for the houses or you rent from them. Empty houses not for sale.
Goog, FB, Twitter( ipo coming), yhoo workers have all cashed in, congrats to them and the fed for printing 85 billion per month. San Fran housing price is out of control.
RBI increases interest rates, Stock Markets Sky rocket, Bears in this blog are finding a place to hide.. Yes, It is different this time and India is different
Anon above,
Bears are not hiding. They are just shocked that the people in power in power cannot see it coming. They are shocked that instead of fixing it, they are putting more fuel to make it bigger so that it bursts even with a more bigger noise.
Don't be too optimistic about stock prices or any phoney news about RE. US Fed has to taper, if not now in 3 months time. As soon as it tapers, Rupee will go down to 75, RE down by 50%, jobless rates will soar and RBI cannot do anything other than printing more toilet paper.
Have you looked at the inflation in India? Only the people at top are benefiting, most of the country is finding it even to afford food. I'm worried about a full scale riot scene in India in the next 6 months.
US Fed has to taper, if not now in 3 months time
I doubt Fed will taper anytime soon as per my observations. Though inflation in US has started climbing up, especially in bigger cities. Recently visited New York, San Francisco, and Chicago. Real estate prices are insanely high in each of these locations. Those who say US has no inflation are wrong - I collected lot of data about how expensive are these big cities. Toll rates, parking rates in the big cities have gone up by 2.5 times in the past 6 years, taxi fares are up more than twice both in SFO and NYC. I hardly see anything for a dollar in the super markets as used to be the case 6 years ago.
The only exceptions are smaller cities like where you can get 1 bhk for as low as $50K, and a decent 3 bhk between $150K-$250K with a backyard, garage, basement. For living, these cities ROCK and are far ahead of any big Indian city. And I predict that lot of foreign as well as domestic buyers would grab these houses as money printing continues. And there is no way Fed can stop printing before inflation gets insane in these smaller cities like Salt Lake city, Des Moines. The moment they stop printing, job growth stalls, M&A activity reduces, Real Estate purchases slow down.
Effectively, I see these guys have to keep their exports competitive so they won't allow dollar to appreciate significantly. And they don't have much tolerance for deflation anytime soon. I have changed therefore changed my view of 1 USD = 100 INR after closely observing the prices and wage data in the US.
I think INR is far more reasonable at 65/- unless India creates inflation.
RE-Bears are slowing turning to RE-Bulls in this blog... But what about the opportunity cost you caused people believing you?
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Dear REBear: You say US has inflation. Agreed.In fact a lot. Now IF the Fed believes there is
inflation, they would stop printing and increase interest rates. They don't want to believe in inflation.
But the time is coming, things could be very expensive in US in 2014 and consumers stop spending. The banks and corporates sitting on massive pile of printed dollars would see that wealth depleting.
Fed has no choice but to stop printing soon. They can wait to increase the interest rates but printing would have to stop. Moreover, the long term yield will also go up to increase mortgage rates which will help in cooling the new RE bubble in US. I also see Rupee as I said earlier at 75 by June next year (Fed should have been done with tapering by then).
RE-Bears are slowing turning to RE-Bulls in this blog...
No way - Indian RE is overvalued and continues to be, no matter Fed taper or no taper. The only thing I mentioned is US too has a bubble, rupee is close to fair valuation at this time, unless India prints lot more money and creates more inflation than expected. It doesn't mean RE valuations in India are justified.
Now IF the Fed believes there is
inflation, they would stop printing and increase interest rates. They don't want to believe in inflation.
I think unless smaller cities in US where you can get a house for under 100K USD start seeing housing price inflation, FED will not taper. They will only taper when inflation becomes unbearable.
Taper or no taper, now is the turn of US to see inflation in everything. And money would start flowing to US. Already lot of my Indian friends in US have started buying houses in US, infact multiple houses. This alone is enough to deflate Indian RE, because NRI buying is reducing ! So Taper or no taper, Indian RE would deflate.
Thx. I love free stuff.
Very soon housing in india will be free too because of the unrest in some cities due to unaffordability.
Close to chernobyl :) but this one will be 'made in india'
India is not fit to be in this globalized world.
Fed will not taper until Obama is out of the office. Look at the top hedge fund guys, all heavy Obama donors, silicon valley = heavy Obama donors, ipos lining up for the next 12 months, means the market is going up. This market will see small correction, but it is pointing up for the next 3 years. After that, Sh** will hit fan.
Last couple of years, bread prices have gone up 50%, milk prices have gone up 50%, Mcdonald's drive through combo number 1 has gone up from 4.99 to 7 dollars. Middle class and the lower class going to get shafted in the US, just like India.
Indians in the US doing great compared to other races, but I have seen Indian's 18-25 year old's working at Mcdonald's, Target, Walmart recently, which did not happen 5 years ago.
Saw a Indian lady hustling for money in front of a Indian grocery store.
I was just browsing at some properties in Delhi area. I'm shocked to see the prices. The houses (houses and not apartments) used to be like 70-80lac range in SouthEx1-2, Maharani Bagh etc. I'm shocked to see quoted prices between 50crores to 120crores. Are these people nuts who are both buying and selling?
Too good to be true. Indians can steal but ethically cannot make this kind of money. Not everyone and not many of of us.
I predict a fall of more than 70% in Delhi area. Cannot be possible the prices are more than anywhere else in the World. 50 crore is like 10 million USD. Who has that kind of money? Land of fools run by fools and inhabited by fools. I'm glad I left this foolish place.
^^^^
Apparently NRIs and IT guys have the kind of money to support RE at these prices.
That is what the bulls claim.
What do you and I know.
50-120 crores?
Are you drunk dude?
Even if the prices were 5-12 crores, i wud ask the seller.
Have you lost it dude?
This is crazy. But the craziest part is people still fall for these traps.
Look at property times (saturday) mumbai. Everyone is giving discounts. Properties everywhere.
Its a good time to sell your newspapers :) you can make an extra buck or two.
Hahahaha :)
Indian property has been at a stand off phase for nearly a year now.This is the phase with few buyers in the market but the bulls still not seeing the light.I only know that this can not continue for 3 or 4 years.A small shock is all we need to make this market capitulate. The rising interest rate scenario could be one such event.
50-120 crores?
Are you drunk dude?
Actually these figures are somewhat right, not for flats but houses in Delhi's posh area. Flats in posh areas are like 15-20 crores and houses can go upto 100 crores.
Go to Delhi and see for yourself where the bubble has reached. Houses mean independent houses with own land.
Most people shop for flats only and hence are not aware of house prices in Delhi. A RE agent recently told me of a propperty for sale in New Friends Colony area of Delhi for 140 crores. So, I believe these numbers.
A RE agent recently told me of a propperty for sale in New Friends Colony area of Delhi for 140 crores.
Quoted house prices in New Friends Colony and Maharanibagh area are above 50 cr, and this bubble has already burst as per various news reports quoted earlier on this blog. Note that these areas have very high mosquito menace and heavily polluted. Look at Palo Alto house prices on Trulia or Zillow, which are lesser than most of these houses. And those who don't know just go to Palo Alto downtown for once and I bet you will think where were you born !
> Look at Palo Alto house prices on Trulia or Zillow, which are lesser than most of these houses.
Totally agree. Palo Alto is one of the most desirable places in one of the wealthiest areas in the world (Silicon Valley) and prices there are far more reasonable than Delhi. The last time around in 1997, prices fell 40% in many Indian cities.
This time around the high priced ones will be crushed. I read recently that properties in Delhi that were listed for about 100cr last year are now being quoted for 65cr.
This time around the high priced ones will be crushed. I read recently that properties in Delhi that were listed for about 100cr last year are now being quoted for 65cr.
Brilliant, so next year if the prices are quoted for 32 Cr Or the succeeding year to 16 Cr you can afford to buy? Dream on...
Contact here to buy commercial property in gurgaon commercial project in gurgaon is one of the best commercial real estate projects Gurgaon.
Brilliant, so next year if the prices are quoted for 32 Cr Or the succeeding year to 16 Cr you can afford to buy? Dream on..
Well, that would mean a 50% YOY drop in high valued RE. I'm thinking that would be at least 30-40% YOY on low value RE as well. I'll buy when prices fall a total of 70% from current prices. If a flat is 2 crores, I'll buy at 60 lacs and if Rupee drops to 75/1USD, then I'll consider 70 lacs. Otherwise I'm a happy renter and would never need to buy a flat. Makes more financial sense to rent than own.
>Brilliant, so next year if the prices are quoted for 32 Cr Or the succeeding year to 16 Cr you can afford to buy? Dream on...
I am not sure what your point is. I said high priced houses will correct the most. Not that they will become affordable for me.
// Otherwise I'm a happy renter and would never need to buy a flat.
The only problem with this is that you will have no respect in society. People look down upon those who don't have their own house
The only problem with this is that you will have no respect in society. People look down upon those who don't have their own house
Why should I care what others think? As long as my wife and my family are with my decision, fuck the society. Would the society pay my bills when the prices fall 50%?
What respect are you talking about? Indians still live in this false premise that you show that you have more to gain respect. Where would that respect go when the house gets foreclosed?
Low level thinking.
http://bangalore.citizenmatters.in/blogs/eye-shot/blog_posts/confident-group-bangalore-antlia-scam-irregularities
"As long as my wife and my family are with my decision, **** the society. "
The problem is that wives and families are generally not on board with a decision not to buy. There is generally TREMENDOUS social pressure from peers and family to buy RE.
^^^
Social pressure has to be the worst ever reason to buy anything at all, forget a big ticket expense like RE.
>The problem is that wives and families are generally not on board with a decision not to buy. There is generally TREMENDOUS social pressure from peers and family to buy RE.
Is this really true? My father rented throughout his career and close to retirement bought a house with almost 90% downpayment.
I am now in my mid 30s, rent and never has any of my friends or family ever said anything disparaging about renting.
Seriously, given the current difference between rents and EMIs, I'd rather pay the rent and use the rest for traveling or saving for future.
// Why should I care what others think
I am confident you dont live in India. This is easy to say living in US but not in India.
Price correction not happening, prices in Pune have gone up or remained same.
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Commercial Property Investing
iPhone 5c and 5s selling like hot cakes in India:
http://economictimes.indiatimes.com/tech/hardware/apple-iphone-5c-and-5s-sell-like-hot-cakes-in-india/articleshow/25140568.cms
Where are the idiots on this board who were squealing that Indians wouldn't buy houses or cars because they were too broke? Indians are wealthy my friend, wealthy beyond imagination.
@anon above
Decision to buy a house and to buy an iPhone shouldn't be likened. One is long term mortgage decision and buying is induced citing long term gains. While the other comes with an expiry. Also, under current scenario, the buying of apples phones are fuelled by false notions of prosperity because of house ownership value.
If you look closely, now a days even a rickshaw driver is carrying a Samsung smart phone but that doesn't mean that he is eager to buy a house.
Only 6000 iPhones S models are sold in india. One thousand per metro.
See the pic in the news. The guys in the line are 20-28 age groups. They spend this to impress others.
With hyper inflation all paper currency is transferred to buy 100c houses. Poor(it folks) can't buy small apartments.
The Indian wholesale price index (WPI) rose by 6.46% in September.
This was largely due to the fact that food prices have increased beyond control.
Since the start of this year onions have increased by 322%, for example.
Food prices have increased by an annual rate of 18.4% so far according to data released by the Indian government on Monday this week.
Hey guys, how is the garbage problem in India's silicon city "Garbage-galore"? Have the cases of Dengue and rat-plague gone down? Someone was asking me if they should invest in RE in Garbage-galore, and I asked them to invest in Rahul Gandhi instead. Bad advise?
@Anon above
Someone was asking me if they should invest in RE in Garbage-galore
Show him this article instead :
http://mashable.com/2013/11/04/bought-apartment-rent-airbnb/
Returned back to India, and extremely disappointed after seeing the smog in Delhi. Glad I paid money to Trader Joe's and Whole Foods for high quality food stuff rather than paying a builder
for a crappy Apt in India.
@ 4:00 AM above,
That was sound advise. I'm from garbage-galore, and the city is going to the dogs.
I don't have first hand info about "Dengue", but can swear that there is a sharp increase in respiratory illnesses among my friends, family & neighbors this year - even the high-immunity folks who have never been very ill so far have succumbed badly this year, and I can definitely say that smoke (garbage-burning, what else?) and bad smells are on the increase.
I stay in thippasandra, which almost overlaps Indiranagar (one of the most posh localities in the city). I hold my nose every day as I walk towards the bus stop. Earlier, only en route to busstop was bad, and the other roads were pretty 'ok' - they were wider (because of fewer parked vehicles than on the main road). But now even they are rotten - _every_ road had a broken drain one after the other, and black sewerage water almost covered the road. You have to walk on tip toes, very carefully, or go back home. I haven't checked those streets (i.e all streets except the main road & a few feet on either side of the main road) in the last few weeks (too ill to go out much, except to workplace), but I bet they are still as bad or worse. The main road would have gone much worse, but they have deployed a lot,lot more poukarmikas now - may be because of the festivals, and they may be pulled out soon (but I feel very sorry for those poukarmikas - they are driven by a manager who acts like a slave driver. And they are not given even gloves to protect themselves from the stinking and probably dangerous unsegregated garbage which they are forced to carry with their bare hands).
Just on the other side of my bus stop lies Indiranagar's creme-dela-creme part - the Defense Colony. It is now plagued by raving stray dogs. It used to be really good some years back, but now smoke from burning garbage will assault you at every other intersection. It still looks better than other areas, but is definitely NOT the defense-colony I knew in the recent past.
Even the "clean and green" (according to brokers) and expensive (according to dwellers) areas of old blore have met the same fate.
Just to give a perspective, see this:
http://www.commonfloor.com/news/hutchins-road-losing-its-beauty-44810
..and the above is the narrative of Hutchins road folks. But actually, you will rate even Hutchins road as much better if you see the (current state of) many other areas in the once beautiful old-blore.
The rise in vegetable prices is quite shocking and people think it's a short term phenomenon, there may be something underneath.
It's not just about anger, people have less to spend now and that impacts everything.
@Anon - "But actually, you will rate even Hutchins road as much better if you see the (current state of) many other areas in the once beautiful old-blore."
As a long time Bangalorean (30+years), I fully agree. I would gladly move to Mysore if I could get a job there (even with a 30% pay cut).
And the stress of living here is getting to the people. One sees more rudeness, me-first attitude, and an increasing disregard for civic sense. Not to mention, the fast vanishing footpaths. Any civilized country would emphasize pedestrians above vehicles. But here we do the opposite !
@Anons above
I'm from garbage-galore, and the city is going to the dogs.
I have a first hand experience on this. Used to live in a locality where there was filthy smell when it used to rain and it was nothing but Hydrogen sulphide emanating from nearby landfills. Had to leave the place as soon as the problem was beyond tolerance and the people over there still don't understand why we left !!! We live in a third world country where people have embraced these living standard, and that's the reason how our society is able to sustain on low incomes. The only hard choice for you and me would be to leave this country - there is no guarantee if the locality where you live will not have such problems in future, because people would humbly embrace such living conditions without ever complaining.
Interestingly, I have sensed the other flavour too. Met lot of Indian families in US living in first world conditions, but still they are not happy, and would always prefer to relocate to India if paid very high salary ! You would ask WHY. The trouble they have is even earning over 100K USD in salary they are still middle class and can't afford maids. There wives always complain that they have to wash the utensils as dishwashers are useless if cooking Indian food. They need to clean the house and eventually the wives think that they are nothing but servants and that reminds them about India where they can get cheap full time maids. Of course the reason that maids are cheaper here is because of lower standard of living, but that is okay for them. That is an unfortunate hard choice for many families, particularly the wives.
Indians are taught from childhood to be tolerant and humble to filthy situations. The 1000 rupee to keep the neighborhood can increase the wealth and make them proud amount their circles.
Indian wome- cant even imagine their laziness and selfishness. Indian husbands are working slaves both inside and outside.
Oh just looking at someone's Facebook status reminded me of an iPhone 5S sales comment by someone in this forum saying Indians are rich as iPhone is sold out. He is wrong, the reason for strong sales is the service contract offer by Reliance Infocom, much like AT&T and Verizon in US. iPhone 2G sales were very low when it was launched at 600$ price tag in US, and they boomed as soon as it was offered for 200$ price tag with 2 year contract. Same thing is happening here now !
@REbear, I dont get the concept of "having servent maids to work" - I have never seen a single servent maid who does a decent job. We never employed a maid, and most working women in my circle manage to do atleast the basic/necessary household stuff regularly themselves. Probably your friends' wives are actually missing their family, but are afraid as usual to voice it, and hence are saying things like they very badly need a maid etc.
My friend owns a new apartment very close to a Tech Park in Bangalore. He had to shift out to a place closer to his kids' school. An NRI returnee hired his apartment - he had come here with a plan to relocate here permanently. But now, in a few months of his arrival, he has changed his plan and wants to return back to US! And this change of plan while staying in a relatively nicer, developed area. Wonder what he would have done if he had stayed anywhere else.
Probably your friends' wives are actually missing their family, but are afraid as usual to voice it,
I can vouch that is not the case. These are at least 6 different families not related to each other, and including my very close relatives. The common thing between them is each family has a little kid and the problem with house wives is taking care of kid all alone while the husband is at work, and cooking twice a day , washing utensils by hand, cleaning kitchen, house, bathrooms. Tell them that quality of maids in India is pathetic, they are unreliable, take more than 4 leaves a month without notice. And they reply that at least maids come and do some job more than 20 days in a month ! And then "oh we miss Bangalore too much. One of my friend in Bangalore has a full time maid, a chauffeur for the kid who takes kid where ever he wants".
The Indian share markets are hitting new highs. Investors are laughing all the way to bank. The advance decline ratio of the shares are heavily in the favor of advances. Except the first sentence all the other sentences are dark comedy. We are witnessing a strange rally wherein nobody is making money.
Even the FII's who are controlling the markets also not making any money in this rally although I feel they are trying their level best to control their losses. As I said, the below article says about the FII's plight in Indian Stock market. http://www.firstpost.com/investing/hotel-california-sensex-remarkable-belief-of-fiis-in-india-1206073.html
Now we are seeing some articles in main stream media about the disconnect between the food production and food prices. If this is indeed true ( which is very true if you see through common sense), then this is shame on economist PM, Harvard educated FM etc. All these cheats are fooling us just to make money for themselves. Drinking own citizens blood in order to stay in power is unbearable.
Whoever talks about supply side issues are cheaters and the inflation in India is purely because of excessive money printing and there are plenty of evidences for this farce. RBI has become a laughing stock. A large portion of people are robbed in the name of inflation and very few of people are benefited.
The end game is near as the inflation is uncontrollable now. We are in stagflation.
The much hyped October festival sales bombed everywhere. Car sales figures slapped at the face of corporates and rulers.
Out of targeted 2000 crores of consumer loans in a large PSB, so far only 6 crore has been disbursed. I have never seen people buy fridge and washing machine by borrowing from PSB. Desperate attempt of cheaters are bombing at their face.
HSBC services PMI is -ve.
IIP data is -ve.
What else? Still these guys are not serious and shamelessly celebrating the cooked up CAD figures. Our Government is not bothered about rewarding the savers and they are not bothered about the smuggled gold into the country as they donot want the gold import figures officially affecting their CAD. I see no evidence that people stopped buying jewels suddenly to save the ass of the corrupt government.
Only hope is RBI and Rajan. But will be act before we reach the point of no return?
http://www.business-standard.com/article/economy-policy/chidambaram-wants-you-to-spend-because-he-cannot-113110600623_1.html
Fully knowing that the economy is thoroughly screwed our FM wants us to spend while he tightens the purse. What a farce?Lawless country. Who will save common man? I will not be surprised if our FM tell us to buy apartments to save the brokers and the corporate mafia tomorrow. He simply ask us to borrow and spend for broker's sake.
Rates are hardening not because of government is willing, but the economical situation forcing them to do that. Now Rupee started downtrend and also the festival sales bombed we are ready to face the next set of bad news. Last heard SBI and HDFC base rate touched 10%. Things are in right direction.
www.mangoman2012.blogspot.in
Who said Dishwasher is useless for indian cooking?
Dishwahser needs detergent + drying agent. Our people usually add detergent but not the drying agent and always complain.
http://www.amazon.com/Finish-Jet-Dry-Rinse-Dishwasher/dp/B004OB3FP8/ref=sr_1_1
My friend has contracted his 3 bed/3 bath apartment for 70$/per month to hispanic maid for cleaning. She comes twice a month and cleans the house nicely..
I dont know what it is , but I want to return. Here I live with a small circle of Indians and they motivate me with their cheap behaviour.
//the problem with house wives is taking care of kid all alone while the husband is at work//
That is true but again I see people bring their inlaws every six months
if the wife is super hot, it makes sense to listen to her, but if she is not that great looking, no reason for her to have maids. She needs to clean house and press the clothes, when her man is working 60 hours a week. The man needs to have more scene control.
Admins, we all know that this is a serious, elite blog. If you could please remove the ill-fitting (I'm being polite. There are more apt adjectives) comment above - the one at 5:13 PM - it would do a lot of good. Let us not deviate way too much from the main topic. Thank you.
As someone who has come back to India after 10+ years in the US, and has spent 5+ years in India, I can give you all some pretty accurate feedback about life here and life there. FYI, I had a green card, that I gave up after coming back. So, here it goes:
1. Things against US: There are things, that work well there and things that work well here, but trust me on this, there is no utopia. In the US, we used to have nightmares about what if we lost our job and had a medical problem, or what if someone slipped in front of our driveway and sued us for the driveway and the house. Jobs were fleeing, and future looked bleak. In India, I have good medical coverage and I don't have to worry about lawyers. Jobs are plentiful and here to stay, unless the cost of doing business spikes up.
2. Things against India: The biggest issue is not corruption, or lawlessness. the biggest issue is the largest (per capita) number of morons and imbeciles in the world, who don't follow rules and expect everyone else to. This is not a law-and-order issue, but a societal problem. In my opinion, this can only be solved by mass sterilization (a la Sanjay Gandhi). And before you ask, yes, I did take my meds today...
3. About real estate, by all means it is much more reasonably priced in the US, but in India, a crash is unlikely. What will happen is a massive buildup of inventory followed by price stagnation. So, if you have money in the bank, buy 5 years from now when your (liquid) assets double, but the house price stays the same.
Word of advice: Stay out of all metros, they are grossly overpriced. Bombay and Bangalore are the worst. Madras somewhat reasonable and Calcutta quite reasonable. Delhi is getting cheaper by the day, but who wants to live there anyway?
Do not pay more than INR3k/sq ft anywhere in the metros. If someone asks for more, walk away. Rural India will still get you 1-5 Lakh/acre, and life is much better (no noise, pollution). The facilities in a major metro (connectivity, medical) are just pure bullcrap. If needed, with the money you save, you can rent a hospital room for a year! If you live in a village, what you eat, drink or breathe on a daily basis, will prolong your life.
4. Do not be a Techie. It shortens your life.
@Above
Well said. Very articulate, there are things that work here and things that work there. You need everything in life...job, family, friends, society and security.
About RE, rents are going up but prices are more or less stagnant. Rental yields are starting to look attractive.
Anon at 8:49 above, great comment. Truly insightful , the wry, self deprecating humor notwithstanding.
Great post.I really appreciate your insight from the ground.Once thing you have not listed out:In India you have the support of your close relatives and friends at hand when required.This is something you lack abroad.Abroad they will be happy to come to your house on weekends for a few drinks and a meal but would not be seen when you really need a shoulder to lean on.
I hope you will post more regularly on your experiences.Please use a name so that we can recognise you.
The first generation coming from 3rd world to 1st world country will face problems, mostly family, cultural and social.Same would happen if an Westerner relocated to Asia.
This is not new - it has happened since man started evolving and migrating and colonizing.
This anthropological discussion has nothing to do with India's housing bubble which is purely an economic one.
This anthropological discussion has nothing to do with India's housing bubble which is purely an economic one
And economics is one of the major factor governing human behaviour, including anthropological issues. For instance, NRIs abondoning India, their relatives, and friends to settle abroad is triggered by mostly by nothing other than wage differentials (very few may have other reasons as well). Similarly, NRI investment in Indian housing sector was also triggered by economics (market sentiment) - not a call to return to homeland or securing the future home in case green card doesn't come ! The same NRIs are now seen investing in US housing where the market trend is in favour at this time.
The point of discussion was that house prices reasonable to the other side of globe doesn't imply their is an arbitrage - there are pros and cons of relocating and not everyone has that opportunity to relocate. In any case, there could be a potential arbitrage opportunity for an investor who could buy a property abroad and give it to a property management firm for renting. And this opportunity is the one that RBI closed recently by banning real estate purchases abroad.
Someone above commented that Indian economy will face stagflation and there will not be a collapse a la Japan.
My understanding was that Japanese economy was in reasonable shape in the 90s with a budget surplus due to exports.They could do massive infrastructure projects that kept the unemployment from going up.So the grind down was very slow continuing even today and the housing collapse did not happen.
However this was not the case with US,Ireland or Spain.They have had massing house price slides in a short span of 2 years or so.But countries like Canada,Australia,New Zealand too have massive house price bubbles but have not collapsed like US did.Their economies have done ok thanks to relatively lower CAD and good exports of resources.I see some comparison between these countries and Japan.So the Japanese case may apply to their economies.
India is more like US with a large CAD which means we can not stimulate growth with a mega infrastructure spend or such schemes.So an economic collapse like is very much on in India,s case.The persistent high inflation is acting like a fuel for this eventual collapse.Though India has a massive domestic consumption based economy,the high inflation has eroded buying power significantly which will lead to massive demand destruction in the coming years.In my opinion the collapse is the best case scenario as it will bring down costs rapidly and economy can make a sustainable recovery after that.Our government is also not capable(read high CAD) of preventing such a collapse
Rupee may crash to 78 in 6 months!
http://profit.ndtv.com/news/forex/article-rupee-may-crash-to-78-per-dollar-in-6-months-sharekhan-371976?pfrom=home-otherstories
This essentially means that if you are a foreign investor in real estate in India, eventually looking at repatriating the proceeds of your sale, get the hell out of real estate in the next six months. Otherwise, be prepared for a HUGE loss!
Rustomji above, if rupee is crashing to 78 in 6 months, you cannot get out quickly unless you drop price by 50%. Then, you make loss any way. Better to hold and watch. All this talk about rupee crash may be bogus. actually, if you have dollars, it will be good time to buy, if rupee crashes. buy now, prices will only go up from here.
REBear, r u real ?
True or Rumor-
RBI is contemplating issuing Rs 10000 currency note and any paper currency below Rs 100 is going to cease. Also, I heard that all 500/1000 currency notes would be required to be exchanged with new ones with added security feature.
Anybody has further info. on this please
Did you fuys read this
http://timesofindia.indiatimes.com/business/india-business/Mumbai-Bangalore-corridor-set-to-create-25-lakh-jobs/articleshow/25665824.cms
This will drive up RE prices like crazy.Lots or people will get jobs
@ 8:42 PM, please READ the article. It is not even decided if that project CAN be started at all:
It says "So far, the Indian and the British governments have agreed to undertake a joint feasibility study."
Even the feasibility study has not yet started. In India, it will take another 5 years to even start the initial feasibility study. If at all the result is positive, it will take another 10 years to even lay a single stone. And another 20 years after that for the project to progress, ans God knows when it will, if at all, actually start creating jobs. By that time we can be sure all jobs would have migrated to Vietnam or Philippines, and there would be no takers among private companies for this "corridor".
@Ano at 12:56 PM
REBear, r u real ?
What do you mean ? Humans are always real, not complex numbers.
Anonymous 1.33
RBI is contemplating issuing Rs 10000 currency note and any paper currency below Rs 100 is going to cease. Also, I heard that all 500/1000 currency notes would be required to be exchanged with new ones with added security feature
If BJP comes to power , this may be a possibility. I have heard this rumor too. The idea is to expose hoarders. Though, how far it is practical is to be seen
//RBI is contemplating issuing Rs 10000 currency note and any paper currency below Rs 100 is going to cease. Also, I heard that all 500/1000 currency notes would be required to be exchanged with new ones with added security feature
//
You see, thats why corrupt black money hoarders convert paper into concrete/land/gold
They are prepared.
Small business owners who are paid in cash will be affected.
Does anyone know how the Diwali sales in real estate were? There seems to be a complete blackout of all data on this year's Diwali sales...
http://www.moneycontrol.com/news/business/net-bad-loans40-banks-soar-38-to-rs-13-tnh1_990251.html?topnews=1
No bubble...repeat after me
Prices are inching up. I went to aproperty exibition in Pune and the rates are up from six months ago. There werent many serious buyers bit builders are not budging
http://economictimes.indiatimes.com/markets/bonds/icici-bank-raises-750-million-from-sale-of-overseas-bonds/articleshow/26052493.cms
Falling short of revenues, Indian Govt plans to reduce spending by 10b USD.
http://online.wsj.com/news/articles/SB10001424052702303985504579207663682516856?mod=trending_now_5
Also the bond yields above 9% is troublesome. It could trigger rate hikes by banks :
http://articles.economictimes.indiatimes.com/2013-11-18/news/44202369_1_msf-rbi-governor-raghuram-rajan-yields
nice article for the investors and NRI 's who are palning to invest in india.
Some on asking for Deepavali sales report...
http://www.firstpost.com/business/deflating-realty-bubble-sales-down-40-50-but-prices-fall-hesitantly-1237615.html
I think this blog is dead . everybody has lost hope of a price correction . We will be happy renting forever.
Anon at 7:32PM - I hope you are right. Any correction will only happen when the last bear capitulates.
Hello,
I like your blog.
unnati fortune world is the latest commercial complex at sector 144 which launched by Unnati Fortune Group. Offers a high end commercial and residential project.
you will not see any correction, even if the economy tanks, top 1% will keep making zillions, and they control the real estate market.
Every sector will take a hit when the economy derails, but real estate will keep holding strong. Goldman came out with a 1000 target on Gold for 2014, and this will hurt the common man.
Goldman came out with a 1000 target on Gold for 2014, and this will hurt the common man.
Goldman came up with a $200 target for Crude Oil in 2008 and we know what happened. In any case, there will not be meaningful correction in Rupees. Have we not seen that already on Gold coming down from $1900 to $1300?
It seems RE prices in India are the lowest in the world and very very affordable indeed. No, I am not on drugs.
http://www.bangaloremirror.com/bangalore/others/Std-I-fee-Rs-6-lakh-MBBS-fee-Rs-42000/articleshow/26275822.cms?
"And yet, I-schools don't suffer from a lack of demand. School management and parents say the experience is worth every paisa."
Really??
Indians are really really rich
i read your awesome blog.Thanks for sharing this information.
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I think this blog is dead . everybody has lost hope of a price correction . We will be happy renting forever
LOL, bears have been fighting the wrong battle 4 years looking @ it purely from economic / supply-demand perspective.
The biggest factor in Indian RE that directly impacts price is corruption. The top 10% of the population doesn't want to talk about this elephant in the room as they are direct beneficiaries of a corrupt system that concentrates wealth at the very top.
You can choose to stand up to it, else join in the decadent party. Don't stay on the sidelines and DO NOTHING...
Yep, that is what I was thinking that everyone on this board must have given up hope because I don't see much activity. Finally, there is acceptance that correction may never happen in India, at least in my lifetime. Western economies are hooked up on cheap money and institutions are executing carry trade. Unless inflation pick-up in western countries, nothing will change and I don't see uptick in inflation anytime soon.
This situation may continue for another 5 to 10 year. By that time, we wouldn't care.
This situation may continue for another 5 to 10 year. By that time, we wouldn't care.
Just to break the silence, do you know the actual state of property market in India right now ? My brother in law just bought something for 15% less than previous year sale price in the same society in Gurgaon. Worse, 3 sellers came forward on knowing there is a buyer and one of them immediately offered 3 lakh rupee less on knowing he is about to finalise the neighbour's house. Guess what, he immediately accepted it. And this is ready to move society 8 years old construction.
Ask anyone these days - not bloggers, but non netizens and everyone is saying RE is in bad state !
http://economictimes.indiatimes.com/markets/real-estate/mumbai-residential-property-prices-drop-market-turns-in-buyers-favour/articleshow/26425228.cms
Just the start folks. We are in for atleast 2-3 years of pain.
http://www.bloomberg.com/news/2013-11-25/india-office-boom-turns-glut-with-vacancies-real-estate.html
On bloomberg. Guess why these are not reported here.
For those of you asking why the blog has gone silent:Property prices have crashed(In my dictionary a drop more than 10% means crash as this is a high value item))in most parts of India.The purpose of this blog was to discuss the the why,how and when of this crash.Since this is already underway,there is nothing new to discuss other than how much has it crashed in different cities.Most housing bears must be busy hunting for bargains or doing the the groundwork for purchase.The important thing is that the man on the street(in my dictinary they are cows and only know to follow the herd) is talking about price falls and lack of transactions.This is more than enough to deflate the bubble.
And this is ready to move society 8 years old construction.
Wow!! The average age of apartment in India is 25 years for the construction quality and if an 8 year old one is bought with 15 year loan, you don't get to own a house at all unless the land prices increase 10X by then and you get great redevelopment offers like in Mumbai. Sounds like the guy who bought in 2005 made a killing selling the flat.
Thats the problem.
He waited for a price cut of 15%.
He should have waited more since the sellers were ready to offer him a discount and that shows the desperation.
Wait until the price discount is around 40% and then if you have the money go ahead and buy with a smile of your face. :)
The price may fall further but you just made the best deal of your life. No regrets.
He waited for a price cut of 15%.
Nop, he didn't wait. He sold two houses, one in his native place and another in NCR, and then put additional money(which is significant) to buy another one in Gurgaon for personal living. Some people never believe prices will correct significantly.
It can't be said seller made a killing, because he is further going to put this money back in real estate, unless if he is lucky enough to realise the truth.
Property prices in South Delhi - going south. Price correction of 20-35%.
I don't understand where is the black money now and why itis not coming forward to save its beloved Reality market :)
http://articles.economictimes.indiatimes.com/2013-09-10/news/41937957_1_south-delhi-defence-colony-crore?intenttarget=no
{
NEW DELHI: Prices of homes in upscale South Delhi have dropped by 20 per cent-35 per cent over the last one year, with developers and cash-strapped investors offering big discounts to dispose off their assets in a slowing economy.
}
>It can't be said seller made a killing, because he is further going to put this money back in real estate, unless if he is lucky enough to realise the truth.
In any asset bubble, at the end very few people actually make money. The average person ends up with a loss or at best what he started with in real terms (not nominal).
Only a small number (the so called smart money) end up making huge amounts of cash. They know when to exit and not carried away by the exuberance.
In the famous South sea bubble of the 1700s, Isaac Newton made money initially and got out with profits. Seeing the bubble grow bigger and bigger, he re-entered the market (close to the peak) and ended up loosing a large fortune.
Is India under threat of a real estate bubble burst?
Read more at: http://www.firstpost.com/economy/is-india-under-threat-of-real-estate-bubble-burst-1255249.html?utm_source=ref_article
Mumbai’s unsold flats at all-time high of 1.3 lakh: All you need to know
Read more at: http://www.firstpost.com/business/mumbais-unsold-flats-at-all-time-high-of-1-3-lakh-all-you-need-to-know-1250805.html?utm_source=ref_article
avg Indian, i am talking about the 99%, not going to be helped with a 20-30% correction. A shi* property that was worth 5-10 lakhs 15 years ago, is sold as a posh property for 1 crore, and it corrects 30%, is still expensive.
You got just enough to pay for your kids tuition, insurance, car payments, gasoline and food items and then you add the 70 lakh sh** property. Then to top it off, you add the stress that puts on the family, which leads to early diseases and death. My friend just send his family pic and he has aged at least 10 years in the last 3 years.
A shi* property that was worth 5-10 lakhs 15 years ago, is sold as a posh property for 1 crore, and it corrects 30%, is still expensive.
You got just enough to pay for your kids tuition, insurance, car payments, gasoline and food items and then you add the 70 lakh sh** property
Not a proper analysis. 15 year ago people with 10k/ month income bought 8L property (and have their debt wiped out with inflation, that is a different story). 10X to both is probably what we are today (with double income). However, then people didn't buy cars, travel by public transport, not even two wheeler to save money, sent their kids to a normal school. Anyone here enrolled your kid to a state school which you studied? That's the difference.
That doesn't meant to suggest that prices won't come down. Even if it comes down by 50% from 1C to 50L, people here will still find it expensive relative to the job market, deflationary trends and possible social unrest
UK Central Bank wants to contain Housing bubble...
http://www.reuters.com/article/2013/11/28/britain-bank-housebuilders-idUSL5N0JD25L20131128
UK Central Bank wants to contain Housing bubble...
Which means the bubble is expected to grow further. Singapore and China tried the same thing but never succeeded, reason being steps taken were too small and too late.
Thanks for sharing such a nice information. I have you bookmarked to check out new stuff you post. Keep sharing.
Land near by Bhubaneswar
Paid a visit to the Property exhibition in Pune. Prices have gone up since last year. saw several NRIs in there but not many local people
@Above
Did you try to bargain ? Try cutting a deal, don't go by listed prices. Many of my friends are buying in Bangalore, builders are ready to offer 5-10% discount, many are cash strapped.
//// Did you try to bargain ?
Most of the quotes were 10% more than last year. I did bargain but no builder offered more than 5% discount. They claimed there is a big market from NRIs as rupee has gone down and are no interested to talk further than 5%
The US NRIs I know who made money through IPOs and acquisitions are busy scouting deals in Bay Area or San Diego ! Now that Indian real estate is underperforming relative to these locations they prefer US. And that is the reason why RBI banned purchase of overseas real estate by resident indians !
Hello.
This is a wonderful blog. I like it.
World Trade Center Noida is the new launch commercial complex located at Tech Zone-1, greater noida. It offers a wide range office space areas with great facilities. Spire World and Sunworld Group develop these high end business center.
After Euro crisis, Greece is back to "Emerging market status" - down from a developed market.
They had the same Real Estate bubble which collapsed.
http://online.wsj.com/news/articles/SB10001424052702304281004579222303336597192
When central banks print money, bubbles are inevitable. Easy money leads to inflation as Cost of living goes hire.
http://www.usatoday.com/story/money/business/2013/12/02/fast-food-strikes/3805129/
Now the fast food workers In USA going on strike and they are getting unionized. Looks live love affair with Capitalism is turning sour.
[ NEW YORK — Fast-food workers in about 100 cities will walk off the job this Thursday, organizers say, which would mark the largest effort yet in their push for higher pay.
The actions are intended to build on a campaign that began about a year ago to call attention to the difficulties of living on the federal minimum wage of $7.25 an hour, or about $15,000 a year.
]
Nice Article.
i agree with the price problems goin on . but due to that mumbai suburb region is been developed very fast and one can have affordable and luxurious flats in vasai virar region known to be secound mumbai .
local realestate portal and very trusted source to buy and sell flats , vasaivirarproperty says the realestate market in vasai virar is improving at fast rate and would be improving at more speed in future and can be very great for investors.
IT people earning like crazy and driving up inflation
2 and half lakhs per month for a 21 yr old pass out Great
http://timesofindia.indiatimes.com/home/education/news/Five-IIT-Bombay-students-get-Rs-30-lakh-plus-job-offers/articleshow/26813172.cms
@ above, that 30L package s in Japan, not in India. Pls READ. Thnx.
// hat 30L package s in Japan, not in India.
Whatever Dude. 30L is a lot of money whatever currency it maybe
http://www.washingtonpost.com/blogs/worldviews/wp/2013/12/03/an-alarming-map-of-the-17-countries-with-possible-housing-bubbles/?tid=pm_world_pop
Whatever Dude. 30L is a lot of money whatever currency it maybe
Try buying an Apple in Tokyo.
Try buying an Apple in Tokyo.
Apple most expensive in India ;-)
http://www.phonesreview.co.uk/2013/12/05/iphone-5s-price-in-india-more-expensive-than-elsewhere/
So all said and done there is no housing bubble at all in India. All the idiots frequenting this website have scattered. Despite the calamitous headlines in the media, house prices have barely budged. Egg on the face on all the critters here. And no, fictitious 10% reductions in prices of 1 Crore+ do not a bubble-burst make.
Idiots!
Anon above...
"All the idiots frequenting this website have scattered."
Not all it seems :)...You are there and some of us are still there...Idiots??!! Why are you here??!!
Well, the long awaited wait is about to get over. US employment numbers came so good that US Fed would taper soon as soon as January. What does that mean for India:
--Rupee going back to 70 or even 75.
--Sensex back to 17K
--Indian RE to fall by 60-70%.
I'm enjoying it.
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Brands like BMW, Audi, Haldirams and many more with their huge units established in Mohan cooperative industrial estate adds to the shinning of the area. To know more.. logon PropertyDealerOntips.com
Property Dealers in Mohan Cooperative Industrial area
Vik,
Can you remove all these RE pimp links ASAP? Thanks!
US Fed is about to taper next week. Rupee has started its downfall. 10% drop is likely.
I was also looking at RE prices for NCR and Mumbai. There seems to be a 30% drop in prices already on high end properties.
Time to get out if you are an investor. Save your jobs as major layoffs are coming. No amount of money printing can stop it this time. Bears come out of hibernation.
Bears come out of hibernation.
Lot of bears(and bulls too) are already deluded by AAP campaigns in Delhi, they are busy supporting such scams like AAP on the Facebook.
I don't think Fed will taper anything meaningful, it simply can't afford to taper. Look at IMF proposals like 10% levy on everyone with positive net asset values in the world. We are soon heading for crazy times !
http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/
I just saw an ad for property exhibition in Navi Mumbai starting 14/Dec/2013. The last such exhibition took place in Oct/13.
You see the desperation to clear the inventory :)
Patpargaj industrial area is one of the prime industrial area in east delhi due to scarcity of industrial areas in east delhi, but the good thing about the area is that it is nicly maintaines and has good connectivity. Property Dealers in Patparganj Industrial Area
This just in from Business Today. Anecdotal. But hey....its something.
http://businesstoday.intoday.in/story/home-prices-seen-falling-on-high-interest-rates-poll/1/201335.html
REBear:
I don't think the confiscation would happen anytime soon in US. There would be a revolution. Before that would even happen, the RE bubbles in major part of the world would have to burst. As regards to Fed tapering, they might start easy like 5-10B but would eventually finish the printing by June2014. Even if Yellen is a dove, US cannot afford any more money printing.
IMO the first taper would be on Dec17th or the next Fed meeting in Jan and that would be the beginning of burst of RE bubbles all over the world.
Looks like the new generation has had it so easy in the past 10-15 years, that time for payoff is coming. They should also get familiar with tough times.
Taper talk and India bubble is bursting. Wait till it is actually announced. No more free lunch for Indians now. The only way is down from now on.
@Above
Rates are going to go up again, see Chidu's comments on inflation hitting their poll prospects.
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Dream on..
What slowdown? Ask Chennai luxury realty companies
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