Indian Real Estate Forum - www.indianrealestateforum.com - View Single Post - Great time to buy

13-08-09

Quote:

Originally Posted by Economist

The global recession has bottomed,Most developed nations are now out of the woods.The recovery mode has began.

This Global Financial crisis,(GFC) has turned out to be not as bad as predicted earlier. Fortunately some developed nations did not even have negative growth. Mostly Europe and N.America was affected.

The interesting out come I have seen is:

Emerging economies like China,India & Brazil has come out fine in the GFC.
China (with resilient growth and commodities purchase)was the trigger that had ended the GFC.
The wester countries are surprised (by the resilience of China & India) and now reaffirmed that future growth is in China & India.
I am seeing renewed optimism and bullish behavior on investor sentiment towards China and India.
In Nov 2008 no western investor wold have dreamed of investing in Indian money market or short term debt market ( The wheel that moves property market in India)
Now there is renewed interest in the west to invest in Indian credit market due to stable INR and Interest rate arbitrage (ROI 2% US and 3.5% Australia against 7% India)

The Indian credit wheel that runs runs the growth of India is now moving again,The wheel is slowly being oiled by foreign investments again and the the wheel will picking up speed.

Equity market is seeing foreign investor returning to ride the upside.

M&A acitivities are picking up,IPO's are on the cards again.

NOW IS THE TIME TO BUY PROPERTY AT THE LOWER PRICE AND WATCH IT GROW OVER THE NEXT FIVE YEARS.

The return will not be astronomical as it was in 2005 to 08,however the forecast is healthy double digit growth for the next few years.

Hi Economist,

First of all kudos for a well written article. However I must warn you that any bullish writing on this forum is the easiest way to pick up mortal enemies.

While Nabhishek is a bear, he is also a gentleman. So he will digress with you. The pity is Nabhishek is intelligent but is simultaneously bridled like a horse. He is talking about salary increase. What he fails to understand unfortunately is reserve power. When you study engines a more powerful engine is one having more reserve power. So a bullet is better than a yamaha for its reserve power. In other words, while a yamaha might speed off in a flat road the bullet will overtake the yamaha on a slope. {Well one bear on this forum does love bikes but since he will not understand engineering it is futile to explain to him thus.}
Now the govt is proposing to reduce tax to abyssmal levels. 10% tax upto 10L annual income releases so much of this reserve power or reserve income that just this will fuel a hyper growth. In India much against our silly bear friends' views, people continue to have long term views, even the youngsters. Today long term is characterised by possession of RE. So this reserve moneypower in the hands of our folks will chalk out a plan of inflation with price of RE shooting up. Infact even if interest rate moves up this reserve power will act against it and let RE shoot up.
So Economist, my view is that you are too soft a bull. Ofcourse as you said even if the two digit number is 15% it will mean that after your mandatory 5 years RE price will be 2.01 times or doubled. However RE curves are non linear (again I cant explain such terms to our undereducated bear friends!) and so will shoot up in the latter portion. Based on Japan's growth in 80s, my strong view is that RE bought today will cost almost at the same ratio 5 years from now as it rose in the past 5 years. In other words if a land shot up 5 times between 2004 and 2009, my view is it will be 5 times of today in 2014 or 25 times of 2004 prices. This might sound unreasonable to the conservative purists. However many things are poorly understood by the linearly operating purist.
Incidentally the salary of College professors which was around 25K in 2004-5 is now hovering at 1 to 1.25L. These are safe jobs and unlike SW guys these folks can plan and execute their purchases sensibly. Similar is the salary hike and also the huge arrears collected by govt servants. Infact the retirement salary of quite a few folks today is around 3 to 5L p.a. That is nothing measley for owning a flat at 50L. I know of a railway guard who earns 35K p.m. including overtime.
Now RE to me is investment in land. With land prices having shot about 7-10 times another multiple like that will look like I am insane. (The bears think so about me anyways!} However when that (7x7=49 times from 2004 levels) happens they will not be insane, they will be in coma! I personally knew this super duper rise and anticipated it in 2004. I prevented sane folks from selling, some did not listen, then I got others to buy. Today they have independant houses, not a silly flat in some outskirt.
I must remind you that no piece of tangible information in 2004 told one to buy then. I want to know how many of these sick bears bought in 2004. If they couldnt predict the upmove what chance is their in their silly predictions today.
As for the future, reserve power(aka lower taxes), safe buyers (aka govt employees) will spiral the price of realestate. I will tell folks to go and buy even now, though they might think it is costly. The fact of reality is that markets don’t move looking at fundamentals. They move based on mass view. Given this reality it will be unwise to sell any piece of usable land. That by itself will increase demand as is seen today. There are limited buyers and limited sellers. Another post in this forum where someone whose land was quoted at 20L an year ago, got to know that 10L price was the asking rate today and went out to buy. Sadly though 10L was the price suggested there were no sellers.
Also note an interesting post from Kkumar. He challenged one of the famous bears here stating that the bear should sell out every piece of RE he holds (or claims to hold) today and should not buy stocks either as everything according to this bear was moving downwards. That funny bear refused to answer Kumar!
In summary, your post Economist is not only interesting and meaningful but is also triggering the bears to respond to you vehemently. Remember though my warning. You need to be as strong as me to take on these bears. There are three types of them.
Sophisticated/educated bear is Nabhishek who is a gentleman and though I don’t agree with his conclusions, he talks logically.
Semi educated bear names are Wiseman and BigBear. They will talk like gentlemen to begin with, but if you note their innuendos you will see the scum they generate.
The third kind is the run of the mill Cheri bears. They are most unsophisticated, will talk anything and some of them will abuse not only you Economist but also your mother, your wife and anybody they think they can abuse. One of these bears created a pseudonym of my id. So I wont be surprised to see a Ecoonomist id very soon just to piss you off. Fortunately I was able to make this id into a caged lovebird but you will certainly be irritated by these bears. Also Wiseman might talk about stalking you and your id. He is capable of trying to terrorise you in all possible ways. So if you (Economist) want to continue writing here your bullish views, you will either have to take on all this, or retreat and disappear. Ofcourse one silly guy who was writing as a bull suddenly had to write bearish as he got a better offer from the bear BPO. The bears are writing their stories here (save Nabhishek) for pecuniary reasons to please vested interests. So they might forment all sorts of trouble to you.

With this, I must admit that your analysis stands as one of the sanest testament on this board. All the best.