Originally Posted by ISHANb

well venky ... hats off to you !!!
I dont know all these elaborate stuff about all the commodities , gold , etc !!!
But since we are here in a thread discussing Gurgaon RE
My prediction would be -

Over all we might see slowish growth in residential RE , It could see a rise of approx 8-10 % from current pricing levels ( i am not big supporter of the correction awaited theory , since the time we have started anticipating correction , the prices have risen approx 8-10 % in decent projects , so even if corrections happen it would only couter the effect of this rise ). So even if correction happens it wont start from current levels of pricing , it ll be from higher levels and only to an extent of 10-15% max correction !

And Commercial RE in gurgaon in 2011 will start making its comeback and presence felt .I forsee a growth potential of minimum of 10 % and maximum of 20-25 % in decent projects ( Ready to move in and whose possession expected till mid 2012 ).

fact - many commercials which didnt even have buyers at any price levels for the last 2 years have seen somewhat of a demand lately in commercial and decent projects have recovered losses , i.e an increase of 10-20 % from earlier low levels !!

Would like to hear others views on these !

Originally Posted by Venkytalks

Hi Ishan B. My original prediction for Gurgaon was

Gurgaon: Expect poor sales in recent launches – avoid booking for quick re-sale of booking. Prices will be steady for 2011 with downward bias for plot prices.

I think increase of 10% in price for flats and plots is unlikely for these reasons:

1. Rise in interest rates will reduce leveraging capacity
2. Mainly short term speculators intending to sell booking have got in, these will be looking to exit and will cap the prices - people will sell at every rise. It is an overbought market.
3. Plots have run up too much. Those who bought on loan will face rising EMI and will look to exit. Everybody who wanted to buy has already bought

On commercial, I agree with your view. Plots, flats and commercial follow different RE cycles. Currently commercial is on upswing and will rise till 2013 to 2014. But the time to invest was 2010, it is too late now, prices have already run up.

Originally Posted by AmitMM

[
venky you are a brave man to predict the next 40 years!!!!! and on all fronts.... WOW!!!!
I woudnt even hazard a guess for next 5 years....
look at the last 50 years and one would see how different the world is today and most things are unimaginable...
USSR gone.. Germany united.. backword China and just liberated India emerging as next powers... Europe declining....
driving the world... Europe becoming EU.... mark and lira giving way to EURO...

But many think tanks predicted the collapse of USSR based on economic unviability and the whole SDI of Reagan was based entirely on the prermise that USSR could not match the capital expenditure of USA in the arms race. That too when USA was just emerging from 70s recession, while USSR was insulated from oil shocks.

Britain was scared of China's rise in 1900 itself and China was given permanent UN seat because of its power. Mao put CHina back by 25 years, otherwise China could have been much ahead.

So I think the world will have very different drivers some of them which we dont even know if they exist today..

Might be true. But one should try to the best of available knowledge

I am more bullish on both economic and political future of India....
i dont see we looking at economic and political failure of any sort..
I see indian economy being driven by internal consumption....
the indian political system will evolve with politians realising that they will have to deliver growth to stay in power...( look at nitish, modi,sheila etc)
I see more more educated/professioal people coming in.. for every jaitley there will be a sibbal...( BJP will continue to be dominated by RSS... though eventually there will be a convergence of economic policies of both cong and bjp)

I dont essentially disagree with this, I am just trying to quantify and qualify the nature of this rise. And put hard numbers to it viv-a-vis rest of the world

the dependence on oil will decrease and new enegry sources will grow.

While I agree on global scale, in India I disagree to some extent.

Ccurrently, alternative energy at current oil price is shale oil which is viable from 60$ onwards, basically another oil.

Nuclear is currently viable and hence India should go for it, but requires massive capital expenditure and counter guarantees which India is refusing to make - and time line of 5 years before becoming operational. I will believe in India's nuclear power resource 5 years from the time it shows seriousness - which it currently does not.

Solar is unviable below 150$ oil, so an oil shock is essential to adopt solar on large scale, which will cause recession.

Wind is also capital intensive, again India shows no seriousness in using this when capital is cheap currently. Later, when oil prices rise, capital will become more expensive and India would have missed the bus.


the commodities will become more precious and countries will try to dominate them... i see great future for metals like copper, silver., zinc( i hold Hind zinc from rs 25 levels)..

Agree totally.

gold will continue to be the prefererd tool for hedging ( inspite of i being useless)

Agree for a good chunk of time, maybe for our lifetime!!!!

the new sector i am betting on EDUCATION.. with private players coming in i see govt allowing For Profit Educational Institutes becoming a reality..

So far, except for IT companies, none of our educational institutions have shown capability in training people to global standards. So these would propel people from 500$ to 5000$ productivity i.e. training people to be carpenters, electricians, teachers, BPO people, sales men speaking English and the like, who currently earn some 20,000 per month = 2.5L per annum = 5000$.

There is no big market for managers, doctors, finance professionals etc in big enough numbers. I predict a maximum of doubling in 20 years = one new generation of these people coming from their children + some people from those outside of already in 20,000$ income bracket = 1L per month salary.

Also, without people moving from 500 to 5000, there will be no market for those who wish to move from 5000 to 20000 and beyond. Tail cannot wag the dog.

I see a huge potential in Integrated /mechanised farming if we can incorprate it in our agricultural sector....

Will result in massive movement of underemployed (current farmers at 500$ per annum) to unemployed and unemployable if this happens. Massive investment needed in schooling. Please note, this means an immediate expenditure of capital and a dead loss if they prove untrainable or unemployable. Still, it has to happen. If we succeed, then my best case scenario of 15000$ per capita in 2050.

In the RE sector we are looking at concept of down towns.. with increased connectivity distances in kms will be replaced by travelling time in hour/min.

RE is the biggest growth sector in India for the next century, since people are currently living in Juggi.

the concept of affordable will become a reality but will take a few more years..

Need reforms in land records, ease of transaction, building in agricultural land etc. Govt currently shows no interest in land reforms.

now 2011... see NCR growing but ROI being in 10-15% range...

Possible but unlikely. Steady state more likely

resale action picking up over new launches....

Too much inventory, will limit prices

new area of development will come in on sohna rd with rozka meo IMT coming up on lines of IMT manesar...

This is for long term growth of Gurgaon and should not affect short term prospects - except for "buzz" and hyping

so there are chances of some buzz coming here though it will not outshine NH8...
The divide between left/right side of NH8 will be irrelevant as the sector roads will make it seamless( wait for 2012 though)

Wait for hero honda chowk actually

The prices will not correct in 2011

I agree that prices should most likely hold steady unless some external shock (unanticipatable) creates a downtrend. Upside is not visible for 2011 - so why invest now, except as part of long term asset allocation plan?

( am i opening a pandoras box here)

Originally Posted by ISHANb

well venky great points put forward by you , but here is what i feel-

I agree with the poor sales for new launches . But that is not attributed to the fact that the money is dried up in the market but because the launches are at absurd prices.

again agree with you on the plots front that market will be slow for them , due to increase in circle rates and further increase in the circle rates is expected in march/april . But dont see major correction happening on that front either !!!

Disagree with you on your point where you say appartments will also see a downward trend due to increase in lending interests by banks . Another school of thought says that the lending rates might come down in the near future (may be at or near the time of new budget ) due to pressure from the market , and when and if this happens , it ll see the built up pressure or demand from users and it can make the appartment markets really hot during that period . even if we disregard this thought , a generali expect general increase of at least 10 % in the appartments segment.


well again disagree with you on the part that time for commercial buying is over and its too late because even when prices have risen somewhat in 2010 , the commercials in gurgaon are still undervalued and there is high level of leasing happening and there are good levels of leasing demand in the ggn market , so i just see this as an initial push to the market , actually this initial push was necessary to gain back the investor confidence in commercial segment as these investors had been very badly hit by recession !!
So i guess the gaining back of investor confidence is another positive for the commercial market !! I see it as the beginning of rise of commercial , not the end !!!

Originally Posted by Venkytalks

Again, you might be totally right. Your points are sensible. But just to ponder little more:

Nobody is anticipating lowering interest rates. Not possible with current rates of inflation. I am waiting for rates to rise further before locking in FD and bonds - I did not invest 20,000 in L and T and IFCI because I expected higgher rates closer to budget. Of course, I might be wrong.

There are two kinds of commercial investment - book and sell and keep for renting. Time for book and sell is already now riskier. Keeping for renting is even more risky because of lack of clarity on how the area will develop. BAsically risk is higher in 2011 than 2010. But then I am a low risk investor. For a more risk taker, 2011 should be fine for commercial - on the higher trajectories of the rise graph when there is no margin of safety.

I had felt commercial was good in Sept 2010 which would have been cheaper and better investment, as posted here and elsewhere. But upmove seems good till 2013 at least.