Originally Posted by nycpingo

Only three commodities will decrease in availability - land, and oil. Indians are addicted to land and . Prices will never go down.

Following reasons that inflate property prices

1) Builders- very high holding capacity. Builders have bought/buying land beyond mehsana at peanut prices. My friend(who is a builder), he bought land in sanand at 100 rs per sq yard 10 years ago. They make profit in the first few bunglows they make. They can afford to HOLD the properties

2) Investors- (NRIs and out of State investors) Who want to diversify their portfolio and invest and make money and invest and make money and so onn...........Also rapid industrialization reduces land availability. Eg Nano project and Pharma SEZ in sanand has decreased land by 2000 hectares.

3) Politicians- Who feed of the builders during elections, make policies lucrative to the builders. Eg. Do you thing one floor parking is enough for a 10 floor building? The builders like that. People don`t. Did you know that more than 8 floors the residents are responsible for fire safety not the builders or the government?

4) Megacity GAP- Most upcoming megacities are much more expensive than Ahmedabad. Pune Ahmedabad Hyderabad and Banglore are set to become megacities in 2012. Hyderabad and Banglore are 4 times more expensive to Ahmedabad and Pune is almost double the price

5) People are insecure- And don`t want to miss the boat. The builders feed on this insecurity.

6) Ahmedabad has a good future - so remember guys if you have money invest it wisely with a reputed builder.

Basic funda of real estate - Land and location always appreciate and construction always depreciates.

Originally Posted by refhounds

Cribbing about high real estate prices has become a good time-pass amongst bloggers here.

Here are a few facts:
1.Indian stock mkts are up around 400%+ in the last 5 years
2.Indian salaries are growing by 15-20% compounded since the last 5 years
3.In the last 5 years, in an All-India phenomena, residential properties were up 3x-5x, commercial were up 3x-6x and land was up 10x-100x.

All these are signs of a rapidly growing economy...prices of all commodities (cement,steel,, dal, rice etc) are going up and real estate prices will not be the exception here.

In real estate, the fear people have is that is this a bubble?Acc to Keki Mistry,CEO HDFC "We typically target a growth in approvals and disbursements of between 20% and 25%. So in the context of what we are targeting, these are huge numbers and huge growth. I can also tell you that the growth is coming from people who are buying a house because they need a house to stay in, it’s not investors or speculators"

So the demand is v real.

During the go-go years of 2007-08, some areas went ballistic like blore and hyderabad and they crashed badly...but now even these areas are picking up.

A big anomaly in the Indian mkt is the low rental yields on residential housing-around 1%-2%.You can stay in a 1CR flat in Mumbai paying only 10K a month.

But this anomaly is there ever since i can remember..it has never happened (in Mumbai atleast) that you can rent out for 5%.

Another interesting fact that people (especially NRIs !) dont understand is the enormous wealth being created in rural india on account of high land prices.

If you travel to places like Pen,Chakan etc in Maharashtra, you will find Scorpios/Toyota Fortuners etc a very common sight.The farmers here have made a killing selling their land to the govt.

Some. if not most, of that wealth has gone back to real estate as farmers are v comfortable with land as opposed to stock prices.

So the good people out here wanting/wishing/praying for a crash, please be ready to be disappointed.