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Dont buy any properties [lets unite together for good Social Cause]

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Dont buy any properties [lets unite together for good Social Cause]

Last updated: August 24 2010
14 | Posts
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  • #11

    #11

    Re : Dont buy any properties [lets unite together for good Social Cause]

    Dont buy any properties [lets unite together for good Social Cause]

    Dear Kiran,
    Your ideas are nice to read but practically not feasible. In the race of real estate, most of the people are opprtunist and greedy (real fact) which means, you cannot stop anybody from investing. In India, very hard to change others unless you change yourself. Our country is ruled by money and power not by qualifieds. Current real estate situation is risky and expessive, I dont think people will stop buying and prices will go down due to positive economy forecast. Now, situation is in favor of rich people with black money and black magic. When you are confused and helpless the best answer is be neutal or find a propety with in your budget, dont complicate your life by over commitment.

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    • #12

      #12

      Re : Dont buy any properties [lets unite together for good Social Cause]

      Prices are much higher than first world while the amenities are perhaps worse than thrid world (please see the city map/landscape in Google maps for hardly heard Herat in Afaghanistan and new suburbs of Bangalore, we should be ashamed for what we have done to Bangalore in the last 10 years!). You can get much better houses in Washington DC suburbs than Palm meadows/Retreat for half the price of these!There is no correlation between income level to current prices. Agreed, real estate is the best way to keep all illegal money but still large part of the demand is coming from real people with earned or borrowed money. Even black money comes to only to areas there is demand/growth!

      There is too much hype about India's (BRICS, emerging market in general) economic growth. We need to take a look at how we are planning and spending our public money. Japan was growing at astronomical rates in 80s and was ready to take over entire silicon valley but today its stock market is 1/4th of its peak in 1989 and its real estate prices are 1/10th. Japan had hugge per capita income, visionary administrators, technology to be best in many industries. Despite high population density, huge growth, high per capita incomes, why have prices dropped so much? There is a limit (which I think we have crossed in India) prices will not increase though in short run it feels they will never come down . Look at US, there were warning bells since 2004-5 about bubble and it took 3-4 years for the bubble to burst.

      Yes, India has large and growing population, there is huge mismatch between demand and supply. But most of the demand is at lower end of the price band and there is very limited supply. Soon (can be in 2-3 years) supply will catch-up. There will be mid segment playes who will become ambitious and will challenge the current arrogant top players.

      Even if prices won't come down drastically, they won't go-up either, they will underperform compared to inflation/bank interest rates. If some one is really interested, look for second sales (especially for top player projects) than approaching the builders/developers, there is big mismatch in prices. Brigade quotes 7-8k per sft for Gateway project while 2nd sales are advertized for 4-5k! There are also some projects which are quoting better (fair?) prices e.g. L&T South City, Elita Prominade, just do good reasearch instead od falling prey to Sobha's, Mantri's, Brigade, Puruvankara etc. Despite the big increase in prices in the last 6-7 years (especially 2003-07), apartment prices haven't really shot-up much. Sobha project which sold 3 bed apartments in 2004 for 40-45 laksh are available for 60-65 lakhs, same is story for Brigade Gardenia, Millenium! It is 40-50% increase over 5 years and calculate cost of capital (interest rate), you will realize the gains really small! If you compare same property prices, they have remained flat for last 3 years and if you calculate interest on capital, it is 30-40% loss! We have passed the en growth era of 2003-07 and we need to tread cautiously!

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      • #13

        #13

        Re : Dont buy any properties [lets unite together for good Social Cause]

        Good points Srini and I am reposting your views in Pune thread
        http://www.globalpropertyguide.com/A.../Price-History

        read this link and
        http://www.indianrealestateforum.com...rld-11206.html

        And

        http://www.indianrealestateforum.com...rld-10848.html

        make you aware where we are

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        • #14

          #14

          Re : Dont buy any properties [lets unite together for good Social Cause]

          I know the pain behind the thread starter and why he took time to write such a post..
          every buyer goes through the same frustration when buying the site, constructing the house etc..
          suppose you want to buy a plot in BSK 6th stage.. the rates quoted by these brokers are rs.1600/- sqft and upwards.. I heard that its not worth more than 1000..
          if u go around BSK 6th stage or Anjanapura ; you would realize why some1 said the real rates are 1000 upwards..
          there r not many homes n also not much construction activity happening.. so in this case, is it worth paying 68L for a 50* 80 property where you cant get neighbors for next 2-3 years!
          also, the rental for 2BHK is rs.4,000. a 30*40 site costs 20.4 L plus registration cost of 2L. Construction of 2 unit of 2BHK would cost another 25L. for a investment of 50L, all you get is 8k per month if you let both houses on rent at present situation.. the interest you pay to the bank is around 40k(for a 40L loan for 20 year tenture)..

          a)IF
          land rates increase,
          you make a profit only when you sell it
          ex : rs.1700/sqft becomes 3000 in next 5 years.. the profit made is 15.5L or close to 50%.. but, u need to factor in interest, lost opportunity cost, selling n buying cost etc..
          FD would have fetched 6L interest, stock would hve made u poorer or richer in multiples of 3-4 times.. so, investors r thinking twice b4 buying these days since rates are not increasing every month or week as in 2007 or 2008..

          b)IF
          rental increase,
          YOUR contribution towards loan EMI would decrease!
          ex: a rental of 4k might increase to max of 15 to 20k in next 5 years considering location becomes livable, inflation goes up, Bangalore is hot place for investors etc!
          so, your duration of making a breakeven on these properties is very long duration since all the benefit of making a profit is taken by seller of the land by quoting high land rates..

          The seller might hve brought at any rate. but for illustration purpose, let's think he is a direct allotted owner .. cost of site in 2001-02 was 190/sqft. appreciation in 8 years is 190 to 1700 sqft or 795% .. is it possible to get a 800% appreciation in next 8 years, is the Q? it means, the rates should double every year from now onwards to get such kind of profits.. its not possible.. tht explains why investors are shying away from testing waters in RE today..

          if u feel that my calculation/view point is wrong, do let me know.. i would like to hear a different perspective too

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          • #15

            #15

            Re : Dont buy any properties [lets unite together for good Social Cause]

            Nice thread very much interested .. in participation
            Guys does anyone know, how would be my house rent which I pay now is 6K after 5 years....

            Will I stay in the same house for the increment of 5% every year

            So I choose to move, after staying for sometime, for more rent, pay elsewhere...

            Say after 5 years the rent I pay goes or shoots upto 12K per month... and what will be the sitatuion as time passes by....

            My rent which I pay will not increase exponentially, so don't expect a tenant to pay double or triple of what he pays today..
            He would choose to move...

            Many people rely on fact, that they can pay EMI out from the rent they procure from the property
            To what extent is this correct?

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