raumybhan

When I joined IREF in January last year, I wanted to buy an apartment for self use, and many seasoned guys advised me not to buy now since a correction is coming. Though I bought few for investment purposes (& resold them since I did not wanted those for end use), I refrained from buying for end use in the eternal hope of correction. Now after 1 year, the prices have increased by atleast 30% in Gurgaon.
I was always hopeful of a correction, but when will it come ?

To be honest, I have lost all hopes of a correction. If there would be a correction in 2011, it would be only in our minds. Mental correction, huh...

(please don't take personally, this is said in lighter vein

MANOJa

A good one, but if u believed them that correction would come in Jan/Feb 2010 , than certainly, people required mental correction .


.....& also, if one buys now ( when most RE analysts r predicting sure shot correction, in a few months ) , after waiting for correction to come for a year, then it calls for something more than only mental correction .

Please, do not take the above, personally, it is meant to be taken, as a joke .

rohit_warren

There is a reason that correction if happens is not widely visible in real estate markets - You CANNOT trade RE online like stock markets or commodities -

since there is very less speculative interest (shoot me if you like) compared to the total open interests (most of them are end users or very strong hands) the speculative interest is minuscule.

In stock markets there is always a dominos effect when it comes to price correction and that is also for a very short period. If you really want to see the visible correction in re markets put some exchange for trading land or flats in futures and options - everything there would be euphoria and depression then.

In real estate correction means stagnation - and where there is oversupply new projects will be launched at much lower prices like it happened in 2009 where most of the prices of already launched projects remained widely stagnant with very few actual transaction happening new projects got launched at the lower prices.
We all know what is happening to the projects like Unitech Grande and Omaxe Grandwood and many other luxury projects launched during euphoric period - they are stuck badly and markets have moved up.

Those waiting for a correction - this includes me as well is actually looking for a new project which would be launched at much lower price rather looking for something where prices would correct in existing project.

I am a value buyer and my focus is always on the affordable segment where I know I cannot go wrong -

Rohit

Venkytalks

I agree with Rohit on principle.

But in Gurgaon, affordable projects will never get launched.

Some 2-3 which were launched in 2009 were tiny ones. Within few months, others were launched nearby at much higher prices.

Currently, NOIDA is the place for affordable - prices there never went up in 2010 because of oversupply. Resale is non-existent.

I dont think anything will change in NCR. All segments are being adequately covered by existing launches. In fact there is massive oversupply, enough for next 10 years.

I expect inflation related returns only in NCR with this kind of massive pipeline.

Bangalore and Chennai are looking good.

Mumbai, which is what these articles are based on - will probably correct - or as Rohit points out - new launches at lower prices will be seen

__________________
Venky

caveman10

Venky,

Do you track Bangalore as well? I had lived there for some time, but have been out of the country for some time now, and dont have real updates. If you have recommendations, please let me know.

amit001

Guys,

Most of the indicators for RE appreciation are getting negetive

- Rising interest rates
- RE prices seems to peaking up
- RE scams
- Developers are finding it very difficult to get funding from Banks
- Inflation rising
- Crude rising due to tensions in the middle east, which will create pressure on India growth story as well
- stock markets getting beaten down badly
- projects which were launched in after aug 2010, trading at very minimal premium


why do we still think that there are no chances of prices coming down.....

what the senioe mambers think will happen in Ggn RE in this year...

PS - I am not saying any correction will come, I am just trying to analyse and understand the situation

AmitMM

PS - I am not saying any correction will come, I am just trying to analyse and understand the situation

very valid point amit... its important to keep a track of macros/pointers..
corrections dont come because we want them but because of converging negatives

having said that while rising interest rates and difficultly in funding to builders along with inflation can be major impediments but my personal belief is that we are still some time away form correction.

we are now in a phase of "resonable returns" and consolidation and in some cases price stagnation.. the days of 100% returns are over and so are sold out tags on projects within days...
people buying now will not find easy short term exit options...

also the better projects will continue to sell because of three factors
the high economic growth is likely to continue
there is still unmet demand of housing and more professionals are looking to buy than ever before
the market is less leveraged this time so distress sales- a major factor for sharp correction- is still not there..

so my take look for opportunities... be optimistic in outlook but not euphoric..

AmitMM

also as someone following the ggn market closely i expect the resale activity in projects launched in 2009/where const has started to pick up
one pointer in that direction is that now the original booking prices are higher than resale prices by more than 15% in most cases... this is a reflection of slower absorption at higher launch prices..

2011 will also see more units booked in 2009/during early phase of recovery hitting the market so the prices will remain in check...
also the fortune of newer areas will be dependent on the pace of infrastructure develpment...

ISHANb

Also i would like to add , apart from basic housing need demands , people buying property purely as a second home or investment point of view , rather than self use point of view is also very high .

And gurgaon being the hotspot of indian RE and also GLOBAL RE , there is a lot of money coming from other parts of india and the globe which mostlly constitutes of NRI's from USA , Canada , UK , dubai and other gulf regions.

And i guess most of the black money generated by scams like 2 g scams and CWG scams has mostly been absorbed in the market , and the revealing of swiss bank accounts has also led major poiticians to take out money from their accounts would also have been absorbed in the market .

I think we are ina phase of stabilization or sluggish growth in apartments , decent growth in commercial RE (by the way it is already increasing at very decent pace for good projects of Golf course road and MG road) , and i am seriously clueless for short term gains in plot market of alread developed areas like dlf , sushant lok , south city etc ....

MANOJa

Lets hope u guys, AmitMM & Ishan r correct on correction . I may need to sell one or two of my investments in the next 3/4 months, nahi to us waqat bahut ##$$%%###&## padegi . .