Jawhar

With more than 14 lakhs houses under construction in India,shattered economy, Zooming interest rates, falling confidence of end user, Banks saddled with 1.7 trillion risky loan to RE companies, and housing loan defaults on the rise, what can be the future of real estate investment? With a rental yield of less than 2%, the only hope is future appreciation. And future looks one big BLACK HOLE.

The NRI's are selling their property in a big way because they are loosing on the falling prices as well as the falling rupee. One of my NRI friend invested 4 crore two years back in a property, and sold it last week for 5.3 crore. He had invested one milliion dollars, and after two years got back the same one million dollar. Absolutely no gain!. dollar was 40 then and 53 now against INR. Big venture funds who had invested in Indian real estate are withdrawing their funds in a big way. Indian builders are short of funds otherwise, and now even banks have refused them fresh loan as per RBI guidance. Many builders have totally stopped work, and remaining have considerably slowed down. Prices of labor and raw material is going up, while house price is coming down. The net result is that inventory of unsold houses is going up very fast, and an avalanche of house inventory is waiting to be added . Please check the link
Delhi-NCR tops list for unsold homes

When every buyer is an investor and nobody is the end user, a disaster is going to happen. If you have money and wish to invest, please invest in any other asset class but not real estate. Those who invested in commercial property have already burnt their fingers. Investment in housing and plots has also become a certain loss.

vshinde98

I bought a 240 plot in vatika sector 83 for 99 lakhs in April. Got a firm offer for 1.30 crs today. Till, last week the offer was 1.20 crs.

One of my friends bought a 100 sq yard floor in rajinder nagar for 1.25 crs in august. Today, he can sell it at 1.5 crs with 7 days payment time.

Where the hell is the slowdown ?

Jawhar

My friend, if in one week your property goes from 1.2 to 1.3 crore, it will become 5 crore in two years. Your reply is not a denial, but a confirmation of the real estate bubble. Have we ever tried to think why? Why has real estate become such an excellent asset to own, that we must practically sell in all asset class and own just real estate. Why? If you dispassionately try to reason, you will be able to see the BIG PROPERTY BUBBLE . I wish , you and your friend good luck

Jawhar

The number of unsold houses in Delhi-NCR has already exceeded 2 lakhs, but still many are withdrawing money from PF to invest in property. This is called playing with fire !!

There is a lifecycle for every asset class, and for property in India we are already in a bubble zone. The irony is that the bubble becomes known to all only when it bursts.

Bobbydel

Jawahar bhaiya , people sitting on the bubble are enjoying to see the bubble grow bigger...let them enjoy , its better to sit on the bubble, enjoy it growing, reap the benefits till the time you can...the guy getting 10 L more in one week, please dont expect him to refuse the extra 10 L saying , sorry ji, this is a bubble , pls give me 1.20 Cr instead of 1.30 crores.

Try to understand that for many investors its a game, people prefer trying their luck in RE rather than sleeping on the spare money. Till the time the bubble bursts people want to play the game , who knows if you might earn 10 L or 50 L or a few crores till the bubble bursts.

Take an example : we all have to die one day but if you tell people dont live cos you have to die one day, this will not have any meaning. I intend to say that you might be right or wrong about the bubble but no investor will stop unless he starts to see a downfall himself.

The good thing about your post is that those people who invest only on loans, without a solid financial holding capacity, should avoid as there might be a crash.

__________________
If thou wilt make a happy man, add not unto his riches but take away from his desires

Venkytalks

In times of Rupee depreciation and inflation, property prices have only one way to go - up.

By 2014, expect full cement capacity utilisation in India and massive cement price escalation

NRI who doesnt have India property will now come in - he can get more house for his dollar.

As long as Rupee value keeps falling, RE will keep rising .

__________________
Venky

kapilmunjal

Venky, nicely said. I totally agree with you. People don't invest with their mind, that is why they lose money in real estate. Our market is not like US, UK or other european countries.

There is no bubble going on right now. Look at the latest article on Rediff, which says that
'India to see BIGGEST urban migration in next 15-20 years'

'India to see BIGGEST urban migration in next 15-20 years' - Rediff.com Business

I can assure you that prices in NCR will not fall for the next 15 years. Its only a temporary slowdown in RE market.

There is a simple fundamental - look at the population in India with their growing income, you will find that everybody wants to move to Metros and this is what is happening. The money is flowing from small cities to bigger cities. It is only a trend about Indian cities. Lets add the money from NRIs coming to India. Lets add the money invested by FDI in Real Estate. It has to go up.

I am very positive on RE investment and every one should be.

If you look at the last two recessions, the RE market didn't go down as compared to the other markets. This is the simple reason for that.

I am not an expert in Real Estate, but whatever trend I have seen in the last 3-4 years, my positive feeling is that in the mid to long term Real estate is going to be the best investment.


There was a question which was asked to Mcdonald's CEO. The question was "What is Mcdonald's business?" and answer was "We don't sell burgers, inface we deal in real estate". So, if you look at any mcdonald's outlet you will always find it in the best location of the city and it is true worldwide.

So, just don't think that there is any bubble going on. Enjoy the steep rise in property prices.

sanaryamni

as long as there is housing shortage in our country real estate will only go up.there are more than 500 million houses short and growing by the day.look at the bloody young population all around you - its a mad , captive housing demand ready to explode. we are in a land mass 1/4 of US but our population is 4 times of US. govt estimates are that we have already crossed china's population.this country is bursting at the seams. they are not making land any more. true, there will be cycles and corrections, but land value deflating when everything that goes into it is inflating,isn't logical. truer still, one can't expect the appreciations one got in the golden days of 90s and 2001-09, but land will give modest returns of 30 % in a year i guess. the buyers are less, there is oversupply,economy is weak, rupee is down , europe is in crises,confidence is low, share market is down, foriegn investors are running.. so don't invest in land blindfolded the way you could earlier.buy one house to live in , another as spare, and sell either if an opportunity presents. otherwise forget it , or continue with rent.

AJ2008oo

You seem to be right ...but then why are so many houses unsold in all cities?

AJ2008oo

If NRIs want to benefit from Currency fluctuations, just buy currency derivatives with good liquidity! Why go for an RE which is not that liquid! Indian rupee is expected to weaken further - one cause being the high inflation caused by rising RE costs!