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IREF® - Indian Real Estate Forum > Real Estate in India > Real Estate Gurgaon > Real Estate Bubble set to burst again in India
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Old July 29 2012, 05:33 PM   #3731
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I agree , also i think even DLF is paying a higher interest rate than 12% .. They are giving rebates at more than 12% for early payments in installment schemes.

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Originally Posted by speedysinghs View Post
Every big builder in India grew on very big on generous doses of debt. There was a time in India when stock markets use to give multiples to companies with leverage since that showed apetite for growth. Somewhere along the thought process reversed, and stocks with high level of debts got beaten down. But deleveraging is not an easy process. Look at DLF- its been many quarters since they have been trying to shed large assets to reduce debt. To service a debt of 24,000 crores, at an average cost of 12%, its pays Rs 700 crores interest- these are back of the envelope calculations, experts can check the results for actual numbers. The cost of borrowing would be far higher for smaller builders - rumour has it that some of the builders are borrowing at as much as 24-30%. If thats true, then its frightening since those numbers are probably not sustainable- maybe one quarter, two quarters, in the hope that economy will improve and sales will pick up. In this market, when no one can say when India will return to 6+% growth rates, builders will be forced to dump underwriters and investors, and reduce prices, a la 2008-9. For survival is the greatest good.

Therefore, I am not surprised @Venkytalks when you say that there are sms floating around for 103 properties at rates which are lower than the historical highs. Note that I am not saying rates which are below market- because these rates probably represent the new market.

Ofcourse, Deway also has other problems to contend with- with Noida issues clearing up, end users will prefer to buy an area which is liveable today, that wait for Deway to become liveable in 7 years; assuming that the land acquistion mess for the expressway gets cleared up.

 
Old July 29 2012, 05:50 PM   #3732
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Nice .. I think it will be good to find out how ppl are adjusting their portfolios to get a sense where the bubble is heading. Since you are RE overweight, no prizes for guessing you are a bull .

For the most part , traditional investing in india meant dumping all your savings in either RE or precious metal(or gold mostly), apart from fixed income options, which like you said give negative or negligible real returns. Whether this is going to change drastically as younger generation reaches peak income/ earning period of their lives ( ie in 40s, i am assuming for those who started their career in mid 90s or so).

So question, for those who care to share, what percentage of your portfolio is RE?

and it's only fitting if i start with myself, i have 2 properties where total equity in them combined is around 25% of my net worth . Though both are for personal consumption , one for current and one for future , so dont really see them as investments.

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Originally Posted by amit001 View Post
Sheeshu - My investment portfolio is as follows (I have not invested everything in RE)

Real Estate - ~60% (3 UC flats in ggn + commercial space in Delhi)
Gold - ~10%
Equities - ~10% (through both MF and Direct investments)
Fixed Deposits/FMP - ~10%
Cash and Cash Equivalent - 10% (Dollar denominated)

I try to maintain this ratio of 60:10:10:10:10 as much as possible.

One should always keep the portfolio diversified across all the asset classes mentioned above, the distribution across the assets, depend on risk profile and cash flow of each individual.
 
Old July 29 2012, 06:40 PM   #3733
 
 
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Default Home sales in May remain stable in Bangalore, moderate in Gurgaon

NEW DELHI: Home sale volumes remained stable in the month of May in key cities across the country. According to data from property research firm PropEquity, "Bangalore maintained stable volumes with May 2012 residential sales of 5 million sq ft." Mumbai saw a slight increase in month-on-month and quarter-on-quarter sales. Gurgaon also saw moderate volumes with 3.6 million sq ft sold in the month.

"The monsoon is typically a lean season for the sector and the next leg of launches is expected in September 2012 when the festive season kicks in. We remain positive on the sector as most of the slowdown is already in current valuations," said a Religare Institutional Research report on the real estate sector.

Sales of homes in Gurgaon in May stood at 3.6 million sq ft as compared to a six months average of 4.1 million sq ft. "We continue to believe that overall volumes in Gurgaon may remain moderated in the mid-term due to limited new launches and a relative increase in prices. The trend may change once big projects from Godrej, Indiabulls Real Estate and Adani hit the market," said the report.

Bangalore, on the other hand, continued to post steady volumes with sales in the month of May at 5 million sq ft compared to the six-months average of 4.9 million sq ft. "While projects in the city continue to see steady demand, volumes might moderate slightly over the medium term once new launches start slowing down," said the Religare report.

The Mumbai market saw some increase in sales though absolute volumes remained low. Sales of homes in May grew 7%, but absolute volumes remained low at 2.3 million sq ft.

Overall, though inventory continues to rise in Bengaluru, Mumbai, Gurgaon, it should be manageable once volumes revive. "We expect inventory levels to come down once volumes revive in Mumbai, Gurgaon and the pace of new launches slows down in Bengaluru," says the report.






Home sales in May remain stable in Bangalore, moderate in Gurgaon - The Economic Times
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Old July 29 2012, 09:21 PM   #3734
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Quote:
Originally Posted by sheeshu View Post
Matrix bhai i have noticed DLF ka naam sunte hi aapki teesri aankh khul jaati hai .. Any particular reason or something i missed?
Sheeshu Bhai,

DLF represents all that is wrong with this industry. The more in your face DLF is the more value it destroys. I just ensure its radioactive emissions are tracked back to it, in my own little way.
 
Old July 30 2012, 12:19 AM   #3735
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Quote:
Originally Posted by amit001 View Post
Sheeshu - My investment portfolio is as follows (I have not invested everything in RE)

Real Estate - ~60% (3 UC flats in ggn + commercial space in Delhi)
Gold - ~10%
Equities - ~10% (through both MF and Direct investments)
Fixed Deposits/FMP - ~10%
Cash and Cash Equivalent - 10% (Dollar denominated)

I try to maintain this ratio of 60:10:10:10:10 as much as possible.

One should always keep the portfolio diversified across all the asset classes mentioned above, the distribution across the assets, depend on risk profile and cash flow of each individual.
So are you saying that if you have 100 right now you have paid 60 for the under construction flats or that the total cost of UC flat is 60?
 
Old July 30 2012, 11:26 AM   #3736
 
 
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Default 32 million sq ft of office space expected to be absorbed in 2012: Jones Land LaSalle report

NEW DELHI: The global economic slowdown is pushing corporates to postpone their expansion plans, which is bad news for the office space leasing segment in India.

Even though construction activity is expected to continue at a fast pace which would mean 19% higher completions in 2012 compared to the year before, take up of space is expected to remain subdued during the year, says a new Jones Land LaSalle report called Indian Realty - Through the Looking Glass.

"We expect 32 million sq ft of office space to be absorbed in 2012, registering a decline of 12.5% over 2011," says the report.

The year 2011 saw record completion of office space projects as well as take up of space. About 37 million sq ft of space was absorbed in 2011, higher than the previous peak of 33 million sq ft achieved in 2008.

Major Indian cities saw strong preleasing of office space in under construction buildings. Many corporates decided to consolidate their office space by vacating more than one smaller spaces in central business districts of cities and instead taking up one or more larger spaces in cheaper secondary and suburban districts.

A decline in absorption is expected in 2012 because of corporates postponing their expansion plans. "Demand from domestic occupiers, although robust so far, is also under question due to concerns over domestic economic growth, delays in policy reforms, a projected slowdown in corporate earnings and moderately high core inflation. However, large IT occupiers seeking to consolidate or relocate are expected to generate significant demand for IT SEZ and IT buildings in peripheral districts," says JLL in its report.








32 million sq ft of office space expected to be absorbed in 2012: Jones Land LaSalle report - The Economic Times
 
Old July 30 2012, 11:39 AM   #3737
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Quote:
Originally Posted by sheeshu View Post
Nice .. I think it will be good to find out how ppl are adjusting their portfolios to get a sense where the bubble is heading. Since you are RE overweight, no prizes for guessing you are a bull .

For the most part , traditional investing in india meant dumping all your savings in either RE or precious metal(or gold mostly), apart from fixed income options, which like you said give negative or negligible real returns. Whether this is going to change drastically as younger generation reaches peak income/ earning period of their lives ( ie in 40s, i am assuming for those who started their career in mid 90s or so).

So question, for those who care to share, what percentage of your portfolio is RE?

and it's only fitting if i start with myself, i have 2 properties where total equity in them combined is around 25% of my net worth . Though both are for personal consumption , one for current and one for future , so dont really see them as investments.
Excluding self occupied, I am currently having about 30% in RE, 30% in equity and 40% in debt.
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Old July 30 2012, 11:40 AM   #3738
 
 
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Default RBI unlikely to cut rates

It will be a huge surprise if RBI goes either for a rate cut or CRR cut on Tuesday when it announces its first quarterly monetary policy for fiscal 2013




Bankers want the Reserve Bank of India (RBI) to cut the cash reserve ratio (CRR), or the portion of bank deposits that is kept with the central bank, in its quarterly policy on Tuesday to ease pressure on liquidity. A cut in CRR, they say, will bring down the cost of money. Corporations want RBI to cut its policy rate— a more effective tool—to pare their cost of borrowing. Once money becomes cheaper, they will be encouraged to take bank loans and invest in projects. Both the bond and swap markets, too, are betting on a possible rate cut. Still, it will be a huge surprise if RBI goes either for a rate cut or CRR cut on Tuesday when it announces its first quarterly monetary policy for fiscal 2013.

After cutting the policy rate by half a percentage point in its annual monetary policy in April, RBI had left its key rates and CRR unchanged in the mid-quarter policy in June and is likely to continue with the same stance. The quarterly policy should be a non-event as there is no obvious trigger for loosening RBI’s stance as yet.

In some sense, in fact, even the current policy stance is not too tight. The yield on the benchmark 10-year paper, which was 8.57% in April, has come down to around 8.12% now. Even at the shorter end, three-month commercial paper, which was 9.25% in April, is now trading below 9%. This has become possible because of RBI’s active liquidity management. Banks were borrowing more than Rs. 1 trillion a day in April from the central bank’s repurchase window to take care of their temporary asset-liability mismatches, but the daily cash deficit in the system has now dropped to around Rs. 41,500 crore. Through its bond buying, or so-called open market operations, RBI infused Rs. 82,600 crore in the system in the first quarter of the current fiscal. Besides, the rise in the limit of export credit refinance for banks from 15% to 50% in June also released around Rs. 30,000. The combination has neutralized the impact of its activities in the foreign exchange market (for every dollar it sells in the market to stem volatility and protect sharp currency depreciation, an equivalent amount of rupees leaves the system) as well as the hefty government borrowing programme. The government so far raised Rs. 2.33 trillion, 41% of its annual borrowing target for the year.

Ironically, the government is the biggest beneficiary of the drop in bond yields as a lower yield brings down its cost of money. Since there is no synergy between bond yields and cost of loans in the Indian context, corporations have not benefited. With the cost of deposits continuing to remain high, banks are unable to pare loan rates.
The loan rate will come down only when RBI goes for a deep rate cut, but that’s unlikely to happen too soon. Wholesale price inflation in June eased to 7.25% from 7.55% in May, and so-called core inflation, which excludes food and fuel, remained unchanged at 4.8%, but this is not something to cheer about as retail inflation continues to remain in double digits. Food inflation has remained stubborn and can even worsen with the monsoon playing truant and the spectre of a drought looming large on many parts of the country. Any hike in diesel, kerosene and liquefied petroleum gas prices—which should happen sooner than later—will have an impact on inflation and so does a depreciating rupee. Overall, there is absolutely no comfort on the inflation front and it is highly unlikely that the central bank will be encouraged to shift its focus to growth at this point, even though there have been tell-tale signs of Asia’s third largest economy slowing.

The factory output data has been in lower single digits for more than a year now. The capital goods sector has contracted in nine out of the past 11 months, reflecting slowing industrial growth. However, the other lead indicator, HSBC-Markit Economics Purchasing Managers’ Index, has not been showing any dramatic contraction. In fact, both the manufacturing as well as the services indices have been showing a relatively healthy pace of expansion.

Finally, the global economic scenario continues to remain uncertain. The US Federal Reserve has extended its so-called Operation Twist to lower borrowing costs, and the European Central Bank has cut rates, but still there is no solution in sight for the European sovereign debt crisis. Against this global backdrop and uncertain inflation outlook, any rate cut will be suicidal; the status quo is par for the course. Since RBI reviews its monetary policy every six weeks, it can always change its stance and go for policy action quickly if the situation demands so.





RBI unlikely to cut rates - Home - livemint.com
 
Old July 30 2012, 01:14 PM   #3739
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In my case 60% is the paid up value of the 3 UC properties.(It also includes 1 fully paid up property as well)

But because if my healthy monthly inflow, this % never goes above 55-60% as the inflows/accumulated inflows are able to fund the demands from the builder.

PS - I have not take any bank loan, nor do I intend to take, My monthly inflows are more than sufficient to fund the builder demands with out taking a bank loan. I intend to keep this proportion under 60% (Currently it is 58% of my net worth)

I am an financial analyst/IB by profession so I have done all calculations, so till the time i fully pay for these properties, with my monthly inflow, the proportion of RE in my portfolio will not go above 60%, it can go down if my income increased either by way of incriment or rupee depreciation


Quote:
Originally Posted by herohiralal View Post
So are you saying that if you have 100 right now you have paid 60 for the under construction flats or that the total cost of UC flat is 60?
 
Old July 30 2012, 02:40 PM   #3740
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Originally Posted by amit001 View Post
In my case 60% is the paid up value of the 3 UC properties.(It also includes 1 fully paid up property as well)

But because if my healthy monthly inflow, this % never goes above 55-60% as the inflows/accumulated inflows are able to fund the demands from the builder.

PS - I have not take any bank loan, nor do I intend to take, My monthly inflows are more than sufficient to fund the builder demands with out taking a bank loan. I intend to keep this proportion under 60% (Currently it is 58% of my net worth)

I am an financial analyst/IB by profession so I have done all calculations, so till the time i fully pay for these properties, with my monthly inflow, the proportion of RE in my portfolio will not go above 60%, it can go down if my income increased either by way of incriment or rupee depreciation
Aur aise hi logon ke karan yeh bubble kabhi burst nahi ho pata...

Sare log pehchaan lo inko!

Jab monthly cashflow EMI nahi DEMAND letter ke layak ho to yeh Atyachaar hai ...

Aur kaun kaun hain above category wale.. pls identify yourselves.
amit.bhalla and cheettu like this.
 
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