Wiseman, dont be an escapist. In which place was it Rs 15k and your relative sold land in 2007 to DLF. U must be a true coward. Why not get urself an id called COWARDMAN. ROTFL.

Again I repeat Wiseman. Why are you shit scared to tell us about your school where u did MBA? Let the board know about you. You said u manage 3 companies, now companies can be anything from Beedi shops to Shouchalas. So tell us about ur qualification first. Secondly since you used the word Pimping. Do u run such a company too? ROTFL.

Hello Nats,

I have been watching this forum for quite sometime. For some reasons, a meaningful forum topic has been widely diverted for personal reasons. Shall we put our unwanted personal attacks behind and participate actively in the forum or let us refrain from forum discussion.

You have an agenda and wiseman has an agenda. You wanted prices to continue going up and wiseman likes it go down. You obviously are in real estate or have large investment in real estate. The data shows that real estate has tanked and is starting to crash. It must be hard for you to accept it. There are four stages of grief : denial, depression, anger and acceptance. You are in denial stage.

I agree ...



I fully agree with Senthil.

As you would have already noticed, everytime I had to digress on a personal basis, I have also apologised to other members of the forum since I am sensitive to the irritations it will cause them.

As already promised, I will leave the gutter-sniping to more qualified people and will continue to post my feelings about RE only.

Thanks for reminding, Senthil :), even though I'm always careful about the words I use on this forum - bad words are only brought out in retaliation to bad words already brought out. But anyways thats past.

cheers

Let everyone stop this nut

Tell this A.. H... Nats to get out of this forum. Irritating character talking without substance or logic and on top of it he lies that he is from IIT!

And BTW, I traced the origins of that Cushman posting ...

Folks,

Please also beware of posts that only tell part of the story.

Here is the link where that Cushman reference (Aditi Jayakar) was given. It is the 6th item posted.

http://abodesindia.wordpress.com/tag/cushman-wakefield/

There may be other posts with this same story, but the original is here.

Please also refer to the 10th itemRealty players face moment of truth last para ....

"Cushman & Wakefield’s Mr Dutt says prices have already corrected by 20-30% in most markets and may see a further correction of 20-30%. As sales refuse to pick up, developers are putting projects on hold and focusing only on a few projects mainly in metro cities, which may over a period of time generate sales.".

So, you now see why I'm not giving so much importance to a single news release - that too from Cushman, when every other release contradicts what they already say. They don't seem to be checking their various releases for consistency and that talks volumes about not only their professionalism, but also the state of the Industry where anything goes and if you can get away with gyping your customer, why not make merry?!

Everyone is confused and therefore not even checking what they have said before or whether it contradicts what they are saying now. Most reporting is based on confusion and fear and uncertainty about where we are all headed.

So, since there is so much confusion, why not wait for it to clear before taking giant risks with your future money?

I rest my case.

cheers

Please read...

http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Realty_body_asks_members_to_cut_apartment_prices_by_up_to_15/articleshow/3741347.cms

Realty body asks members to cut apartment prices by up to 15%


Nataraj R u there ?:D

Btw, realtors are not willing to listen to request!



Arin,

This drama will unfold slowly like a 5 day test (with a few days holidays in between) rather than a 1-day match. Do not therefore be confused by the confusion amongst them.

So, while the Banks (which own the money that the realtors have used to build) have rightfully asked them to return it one way or another - either return the loans when they become due OR sell houses, which you will have to reduce prices to do so, and then return the money.

Obviously, this ultimatum by Banks - delivered through CREDAI as an advice - must have the okay by FM. Seeing the writing on the wall, CREDAI has suggested that realtors reduce prices.

But realtors (many of whom have only seen business in this last few years) are living in denial and are refusing to do so.

Historically, prolonging a downturn only makes the pain more serious (and this is well known to the older and wiser businesspeople who are survivors). So, this refusal to cut will only result in even deeper cuts than necessary at a later stage due to the obstinacy of the realtors and builders.

So, please watch this drama and learn the lessons from it. It will go on for at least 1 to 2 years or more.

cheers

Though I wish that the RE prices would come down to 2003 price range, I really doubt whether a flat would come down to 15-20 lakhs unlike current price of 40-50 lakhs. Also i really doubt whether there would be more than 20% correction.
The rationale behind my doubt is that as the RE was pumped by the IT folks to unreachable heights in the past few years, it would crash to 2003 prices only if the IT population is reduced to the same # (or close) as 2003. And of course the salary should also be reduced to the same range.
If the average software engineer is still going to earn around 25k/month, i think he can still afford to buy a flat within his two years of employment and it would automatically keep the demand high.
Note: I am one of the person who missed the RE boom bus @2003 and still repent for it.

Mahesh K

completely different angle

I came across a completely different angle why Indian Realty is in crisis in one of the blogs. Check this one out and tell me whether it's true or imagination
http://soviblogs.blogspot.com/

IT Jobs ?

As you might also know that the IT is also saking in different compnay in different version. Many IT prof dont know that the job will be there or not in the next morning.
Many IT company has been closed the sutters in past few months... If Big Company started laying off then the very next day will find 20% correction.

But the IT companies still forecast huge numbers for recruitment.

http://www.rediff.com/money/2008/aug/12infosys.htm

I normally take Infy as bench mark for any movements in IT sector since they are very good at forecasting their future..

Mahesh K

Repeating myself :)





It is so HARD to convince people that even a 15% hit on conspicuous consumption (cars, homes, plasma TVs, Bose systems, wine at 1 lakh per bottle, weekend pub bills of Rs 2000, ...) will have a much greater effect on the overall picture.

One of my avatars is in Direct Marketing. We have an analytical frame called the Pyramid, where we fit the number of customers, revenue and profit of a company into 3 stacked pyramids side-by-side.

Without exception we find that 20% of the top customers account for 60% to 80% of revenues and 90% to 130% of profits. You might wonder 130%??? How's that possible. Well, its possible if the remaining 80% only cost more than they return in revenue, leading to losses.

Point I'm trying to make is, I keep hearing the argument that 65% of India is rural and so we will avoid the effect of the tsunami. Little do we realise the falacy in this argument that, yes, the rural population will definitely miss the effects because anyway they lead a life of shortage and poverty. How much poorer can a poor man become.

But even a 15% drop in consumption of these goods mentioned above will eliminate the margins of all the companies that make and sell them, upon which we are building the entire edifice of economic prosperity! When this core element (Corporate Profit) collapses, it has a severe cascading effect on Corporate stock performance, hitting share prices bringing them to 10% of their peak values or lower, which decimates peoples false wealth, which leads to banks recalling their loans on margins, which will lead to further distressed selling, leading to further depressed prices and so on.

To give you an example, there was a great, cash-rich shipping company called GE Shipping (still there :)). Fabulous management, great performance for years. Cash rich, etc. Old man went his way, cousins quarelled and split up the group. One got the RE company. At the peak, his controlling stake in this company was worth around say Rs 800 crores. So, he pledged all his shares and borrowed around 500 crores to leverage his other interests. Well, guess what! The decline has brought his valuation to around 450 crores leading to margin calls for more money, or else. But he has nothing more to give (all this is in the papers so its public knowledge). So far he is okay since the creditors have not liquidated. But the sword is dangling on a thin thread as he is in technical default and technical bankruptcy. If price declines further OR time goes by increasing interest burden, the creditors will sieze the shares and sell them. This person worth 800 crores is now technically bankrupt all within less than 2 years. This is the effect of overleverage coupled with bad timing :(!!! Why do we think this cannot happen to us when we have a salary of 10 lakhs and take loans of 1 crore? If the property, which we bought at 1.1 crores declines by 20% (and most of us are thinking that is very possible), then you are technically bankrupt since you owe more (say 95 lakhs since you must have repaid some principal) that the value of the property (88 lakhs). If you lost the ability to pay instalment (remember today EMI on 1 crore can easily be 1 lakh!), you give up house as well as lose your deposit!

The (credit-led) boom has been mainly in the urban areas due to a large amount of unaffordable borrowing based on the premise that prices will always go up (and by super-leveraging we can make super profits - remember, buying with cash is like walking on 3 foot wall while buying with high leverage is like walking in 300 foot wall; one slip by both and only one survives!!!). These buyers happen to be mainly software people but recently also others industries which export or which provide ancilliary services to these exporters (food, taxis, etc).

I will add to soviblogs analysis with what I had already said - that the real slide will come when jobs start going downhill in large numbers. This will be the main trigger but not the entire cause!!! His assumption is that demand will fall, thus bringing down prices. Partly correct.

But what soviblog missed is that the builders themselves are heavily in debt (he misses that important point). See front page of EcoTimes today. Sobha is on the hook to return 800 crores some today and all within 2 months itself. They must have run out of cash already (remember I mentioned this around 2 months ago in one of the posts). Unitech is in much worse position (which is why its stock is 28 today and falling much faster than the market). Market is much smarter than we think.

So a combination of demand crashing as well as inability of builders to hold on and not sell, because of large debt obligations will together force the liquidation of a large number of flats, etc. When the market is not able to absorb this large numbers in such quick time, the price decline will be even more pronounced than if there was proper absorption by the market.

So, everything will look normal till 1 week before the crash (like US banks which kept telling till the last day that everything is normal, we are capitalised well, etc). Suddenly, next day the headlines are EXTRA LARGE FONT ABOUT THE COLLAPSE!!! :D Seemingly surprising everyone, but not us ;). Now we know that we will not be surprised when it happens, right?

cheers

PS: Btw, I'm not being overly scary or pessimistic. I have used figures that many people in this forum use daily. 1 Crore price, 10-15 lakh salary, etc. I also use logic that everyone finds reasonable. But when you connect the dots the picture looks scary - as it well should as the example hits home.
So, why are people surprised by the end result? Because we don't anticipate that putting harmless Nitrogen (important fertilizer) and harmless Glycerol in the right mix, we get one of the most volatile and deadly explosive (Nitroglycerine) !!!