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Old April 22 2011, 08:01 PM   #1
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Default Food for thought

Hi All,

Not really sure how to start this....but plz if you can spend a few mins reading this....

I am new to Noida...have recently got transferred over here....and like many many others....willing to buy a flat.....have been following this forum for quite a while....contributions by a few members have been extra-ordinary.

Ok. Let me get straight to the point. People out here in Noida-Greater Noida seem to be having a MAGIC WAND. I do speak to people in my office and in my locality about property, and pat comes the reply "Investment point of view". But where is the investment ? Is booking a under-construction flat considered to be an investment ? If yes, show me a buyer who is ready to buy your property with the premium.

A very simple question....there are plenty of builders having their projects...and I guess even the top-most builder is finding it difficult to sell the inventory (I don't buy the argument when the sales team say 60%-80% has been sold out). So if these builders, who are having budgets for marketing, advertising and having a few smart sales fellas, are finding it difficult to sell, then how can an individual investor sell his/ her unit.

I am shocked to see that the properties in Greater Noida are giving a NEGATIVE return. People who had booked in Unitech projects in 2008 for 2800-2900 psft are willing to sell their CONSTRUCTED properties at 2200-2300 psft !!!! So what kind of investment this is.....

I guess the same will apply to places like NOIDA EXTENSION, and many other projects in this region.

Junta here in this region is willing to compromise on

1. Time
2. Distance

Time - Willing to wait for another 2-3 years or more by investing in an under-construction project

Distance - Willing to stay 10-20 kms further

As long as, the availability continues on these 2 factors, an individual investor will continue to take the hit. Infact, I would love to have a few comments from a few who can proudly say that they have made a decent profit by re-selling their unit/s.

I am neither an expert into property nor any nostradamus. However, my prediction says that in 2-3 years from now, a few real estate companies will go bust. Quite a no of projects will be stalled/ delayed. Thousands of investors will bear the brunt of this bubble.

Please note that in 2008 the recession occurred due to a major reason...excess liquidity......even the dumbest ass was easily making a killing in the stock market......thereby defying all the logics for returns and growth. Result. No liquidity and CASH WAS THE KING for a few years.

I guess the same would apply to the real estate scene in Noida. Perhaps, the recently delivered projects in Greater Noida are already seeing the same fate.

My kind appeal to all over-enthusiastic and over-frenzied people is...Please take a deep breath....tell yourself 100 times....that it's your HARD HARD HARD earned money.....please don't let it be at the MERCY of a stupid builder. You still can enjoy some decent returns on your money (positive 9-9.5% on FD in today's date) with ample peace of mind. Please do give priority to an already constructed property (probably you will have to compromise on distance or price). But you will your property in front of you from Day 1....

....and please...do forgive and forget this little phrase....INVESTMENT POINT OF VIEW.

Nikhil

 
Old April 22 2011, 08:11 PM   #2
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Absolutely agree.

But there are many people who fall for the broker's promises.
Infact *this* is the time where it does NOT make sense to invest in under-construction property. The bubble, oversupply (in NE), future residential areas being freed as part of master plan in DELHI, and a lot of factors only suggest that it will be wise to wait for 3-4 years when the projects complete or nearing completion, and THEN take your pick from the fish market.
 
Old April 22 2011, 08:28 PM   #3
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To me, it looks like the following....atleast 2 years from now.....one should be able to get a near completed flat at the today's price...there might be a handful of projects which would certainly enjoy a premium....but majorly....the property prices will see a slump.....and the investors will face the challenge of their life....to find a buyer....and for that reason any prospective buyer will make an investor bow down....

so, if this is the scenario.....why not have a decent interest for 2 years or more on your money...why not invest in something like GOLD....or may be a plot (not necessarily in this region) in your hometown or somewhere else....

There won't be many buyers for my appeal........but please STAY AWAY from an under construction property.....do go for a CONSTRUCTED flat/ house if you really want to.....

Nikhil
 
Old April 22 2011, 09:00 PM   #4
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If anyone does anything blindly, there is more probability of failure, be it real estate or anything else.

For endusers, as long as the apartment fits his/her requirements, price is acceptable, he/she can live there happily.... nothing matters.

For investors, there are atleast three categories
a. The big players with lots of money, in many cases colored money. They just need a reliable vehicle to park their money. There is no better option than RE, neither Swiss Bank. These people are the builders and major investors.
b. Small time broker, agents, etc... who want to cash in "Behti Ganga" ... these people are overly leveraged and in bad time will be the most hit.. fortunately, in percentage term, they are minority and their effect is minimal.
c. All the service class people, specially those IT Professional, who got some extra cash in hand and want to make it double, triple in the shortest time. Based on my personal experience during the recent recession with so many of my friends falling in this category... they have many life lines and they are not desperate to sell in loss. Any downturn in market has moderate impact to this class of people. They can reorganise their finance and can manage EMI for one-two years. If recession hits for longer time, then there will more casualties, we will have something else to worry about, not RE.

Now the most interesting part... out of the three classes above,
#a never visited this kind of forums
#b visit the forum sometime but their intellectual is questionable and you will hardly see any of these people are articulating any point logically.
#c are the people who frequent this kind of forums and shower their brilliance all over. They are unable to understand that they are just a small negligible percentage of all RE transactions happening...... but this group of people are all over the online media and try to paint pictures... oh yes, those dumb news paper reporters are also fall in this category.

To me it is very simple, as long as you are convinced that you are getting the house that rightly fits you at right price.... all time is a good time to buy.... otherwise no time is a good time.
 
Old April 23 2011, 12:49 AM   #5
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Hats off dear..

Quote:
Originally Posted by ondabhai View Post
If anyone does anything blindly, there is more probability of failure, be it real estate or anything else.

For endusers, as long as the apartment fits his/her requirements, price is acceptable, he/she can live there happily.... nothing matters.

For investors, there are atleast three categories
a. The big players with lots of money, in many cases colored money. They just need a reliable vehicle to park their money. There is no better option than RE, neither Swiss Bank. These people are the builders and major investors.
b. Small time broker, agents, etc... who want to cash in "Behti Ganga" ... these people are overly leveraged and in bad time will be the most hit.. fortunately, in percentage term, they are minority and their effect is minimal.
c. All the service class people, specially those IT Professional, who got some extra cash in hand and want to make it double, triple in the shortest time. Based on my personal experience during the recent recession with so many of my friends falling in this category... they have many life lines and they are not desperate to sell in loss. Any downturn in market has moderate impact to this class of people. They can reorganise their finance and can manage EMI for one-two years. If recession hits for longer time, then there will more casualties, we will have something else to worry about, not RE.

Now the most interesting part... out of the three classes above,
#a never visited this kind of forums
#b visit the forum sometime but their intellectual is questionable and you will hardly see any of these people are articulating any point logically.
#c are the people who frequent this kind of forums and shower their brilliance all over. They are unable to understand that they are just a small negligible percentage of all RE transactions happening...... but this group of people are all over the online media and try to paint pictures... oh yes, those dumb news paper reporters are also fall in this category.

To me it is very simple, as long as you are convinced that you are getting the house that rightly fits you at right price.... all time is a good time to buy.... otherwise no time is a good time.
 
Old April 23 2011, 04:19 PM   #6
 
 
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Interesting discussions & great posts NBansal, g-harondabhai & others .

The way BMW is selling land, Noida & related areas r looking to have a massive oversupply in the years to come & this could prove to be the worst nightmare, especially for investors . End users could suffer too, with many RE co.'s going bust, with the end user money stuck up for long periods & in the worst scenario, gone forever .
 
Old April 23 2011, 05:27 PM   #7
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Quote:
Originally Posted by MANOJa View Post
Interesting discussions & great posts NBansal, g-harondabhai & others .

The way BMW is selling land, Noida & related areas r look to have a massive oversupply in the years to come & this could prove the worst nightmare, especially for investors . End users could suffer too, when many RE co.'s going bust, with the end user money stuck up for long periods & gone forever .
Stay away from some new over hyped & over supply areas, at least till UP elections. Location wise NE is a good area but oversupply can also effect this area. In place of launching of 2.5 Lac+ flats in 1-2 years, it will be better to builders / buyers if maximum 50000 flats launched in 1 year in 1 area, and next launching will be open only after 50% work finished of previous launches. There should be any regulatory to manage all of these in NCR area. Builders are launching phases after phases every month, without even starting the work of 1st phase.
 
Old April 23 2011, 05:49 PM   #8
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Good post. I have couple of observations -
1) This oversupply in Noida is good for first time home buyers and bad for everyone else.
2) Due to rising inflation and population growth, RE will always remain an investment but this oversupply will surely delay the timeframe to cash in premium
 
Old April 23 2011, 06:06 PM   #9
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Welcome back Manoj.

Oversupply is a real concern.

Overstretching by overly leveraged companies, which had not delivered any significant projects in the past ... much bigger problem. There are too many small time builders trying to expand toooo fast without any credible past delivery history... they are the one will go burst first.

But again, understand from few builders that they just need to sell 50% of the inventory to break even.
 
Old April 23 2011, 06:11 PM   #10
 
 
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g-harondabhai, don't welcome me back, don't say the dreaded words . The last time, i got a welcome, i got banned the same day .

Anyways, thanks Bhai .
 
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