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What is the Impact of IT Sector Downfall on Real Estate?

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What is the Impact of IT Sector Downfall on Real Estate?

Last updated: February 25 2009
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  • Re : What is the Impact of IT Sector Downfall on Real Estate?

    Hello everyone, another new member with interest in Chennai real estate. 28 year old NRI looking for RE investment.

    When someone says 10, 20, 50% drop in RE prices, I would assume those are just random ball parking by people. If we explain the reason why someone expects 50% drop it would be more informative.

    I know the current RE prices are not sustainable in Chennai for long time. RE prices should be directly proportional to the people's buying power/borrowing power which would in turn be dependent on the current salary levels. Even with around 80K USD salary I find it difficult to believe the current price levels in Chennai...People say its because of IT that the prices have increased. But I am surprised how a person earning say 50k-70k Rs/month can expect to pay-off loan of 50L to 90L(thats the average price I see for a 3 bed apt). And by the time he pays off, his apt might be worth junk (Given the quality levels of our greedy builders). Also I am really sceptic about investment on a flat/apt in some high rise building. Land/independent homes would be great from investment point of view.

    Keep up the great work guys...most of the posts are informative except the cat fights.

    Comment


    • Re : What is the Impact of IT Sector Downfall on Real Estate?

      Originally posted by wiseman View Post
      abk,

      There will, however be 2 massive effects of this stimulus.

      1. The inflation that this will unleash will be higher than anything the US (and the world) has seen before. Some of the economists I'm talking about - the extremists who correctly predicted this downturn from 2006 onwards - are calculating that inflation may rise as high as 200% - per annum - for a while!!! This will create havoc in all parts of the world.

      2. While it will appear to be turning around, it will not have solved the fundamental drivers that are the real cause of this depression - massively excess credit, massively excess capacity, massively deficit capacity for the populace of this world to consume (after all you are trying to solve a problem of massively excess credit by throwing in even more massively excess credit). These factors will take a much longer time to wind down. If they are forced down - political suicide for Govts - then they may be completed soon but it is still calculated that they will take 2-3 years at least to do so. And they will wreak much greater havoc on the economies of this world.

      Let us see that this does to property in India!

      Not rubbishing your comment / article. But urging you to weigh the odds!!!

      cheers
      wiseman,
      apparently i repeat apparently what you say is a possibility(for the record everything is a possibility)
      my simple question is if the US is embarking on the 'massive excess credit"
      is it without proper application of mind.
      is there nobody in the team who understands this?
      is there a hidden agenda?
      will obama at the start take a un or miscalculated move,would he not have consulted a host of experts?
      are there no wisemen in US
      Last edited February 24 2009, 11:20 AM.

      Comment


      • Re : What is the Impact of IT Sector Downfall on Real Estate?

        Cheers Guys Good News

        DLF revising the Garden City Price ....(Appreciate DLF...Not Appreciation in RE)

        Early bird offer of Rs 2,650 a sq.ft up to May 31.(which was priced * Rs 3200 / SQFT)

        http://thehindubusinessline.com/2009...2451031300.htm

        According to officials, DLF is “readjusting to market realities.”

        When the 53.5-acre project was launched on Old Mahabalipuram Road, about 20 km south of Chennai, a year ago the economic scene and the sentiment in the market were radically different, apart from the costs involved. But now with the slowdown, along with the drop in the cost of construction following the drop in commodity prices, the company is passing on the benefit to the buyers and doing its bit to stimulate the market.

        Cheers Guys , Dont fall prey . Be patient & you will be rewarded & you will have ample choice.
        Last edited February 24 2009, 12:14 PM.

        Comment


        • Re : What is the Impact of IT Sector Downfall on Real Estate?

          Originally posted by sethugm View Post
          Cheers Guys Good News

          DLF revising the Garden City Price ....(Appreciate DLF...Not Appreciation in RE)

          Early bird offer of Rs 2,650 a sq.ft up to May 31.(which was priced * Rs 3200 / SQFT)

          http://thehindubusinessline.com/2009...2451031300.htm

          According to officials, DLF is “readjusting to market realities.”

          When the 53.5-acre project was launched on Old Mahabalipuram Road, about 20 km south of Chennai, a year ago the economic scene and the sentiment in the market were radically different, apart from the costs involved. But now with the slowdown, along with the drop in the cost of construction following the drop in commodity prices, the company is passing on the benefit to the buyers and doing its bit to stimulate the market.

          Cheers Guys , Dont fall prey . Be patient & you will be rewarded & you will have ample choice.
          Dear friend

          do you mean to say "Poruththar Bhoomi Aalwar"...

          thanks

          chataara

          Comment


          • Re : What is the Impact of IT Sector Downfall on Real Estate?

            http://www.dnaindia.com/report.asp?newsid=1233732

            Even affordable housing which is currently hyped by builders are not selling.

            Comment


            • Re : What is the Impact of IT Sector Downfall on Real Estate?

              all are not stupid are they? we have wisemen too!

              Originally posted by BigBear View Post
              http://www.dnaindia.com/report.asp?newsid=1233732

              Even affordable housing which is currently hyped by builders are not selling.
              affordable houses as far as launched are all far away and they were destined to be failures,unless my estimation of number of fools were wrong.
              affordabale housing were good only as weekend homes(far away from congestion,lots of open space,tranquil,swimming,health club,shopping,restaurant etc ) perfect for a weekend break.and dont forget the 400/rs auto fare one way

              Comment


              • Re : What is the Impact of IT Sector Downfall on Real Estate?

                Originally posted by sethugm View Post
                Cheers Guys Good News

                DLF revising the Garden City Price ....(Appreciate DLF...Not Appreciation in RE)

                Early bird offer of Rs 2,650 a sq.ft up to May 31.(which was priced * Rs 3200 / SQFT)

                http://thehindubusinessline.com/2009...2451031300.htm

                According to officials, DLF is “readjusting to market realities.”

                When the 53.5-acre project was launched on Old Mahabalipuram Road, about 20 km south of Chennai, a year ago the economic scene and the sentiment in the market were radically different, apart from the costs involved. But now with the slowdown, along with the drop in the cost of construction following the drop in commodity prices, the company is passing on the benefit to the buyers and doing its bit to stimulate the market.

                Cheers Guys , Dont fall prey . Be patient & you will be rewarded & you will have ample choice.
                What good is 300-600/sqft(10-20%??) reduction for a project that will break even, even if they manage to sell 50% of the flats.

                And the condition that its only till May 31st had me laughing out loud..

                Though it is claimed that final approval is done and the drawing has been passed and have been stamped.

                Large projects need approvals/NOC from atleast 10-11 different departments/authorities.

                Are they sure they will get all of them in their hands by May 31st?

                Maybe the buyers should force such conditions back on them.

                Most of these large projects are not approved yet..The completion date is not known.

                Everyone knows inflation is low.Construction cost has come down.The market is stagnating and needs a sharp correction.

                It just seems to be a last desperate attempt to hold back their profit margin and keep the buyers/investors who have booked with them and attract further advance booking in their pre-launches for liquidity.

                Quoting from article in TOI

                Raman said: "With unprecedented events in the world economy affecting the real estate sector here, bringing changes in input cost and interest rates, DLF went back to the drawing board and created further efficiencies. These benefits are being passed on to consumers."

                What do they mean by going back to the drawing board and creating further efficiency?

                are they going to use a different construction methodology?Make changes in specification?

                It may also suggest - more number of floors, adding a new block where there used to be park earlier, Five star serviced apartment/hotel etc.

                Since they havent registered the UDS yet, they can keep changing what they want to do.

                These builders may never clarify them transparently, and the buyers(speculators) would be happy if someone said to them that the property they bought for 2650/sqft today is worth 6000/7000/10000.. when ever they get it handed over....

                Genuine Buyers..WAKE UP..
                Last edited February 24 2009, 04:56 PM.

                Comment


                • Re : What is the Impact of IT Sector Downfall on Real Estate?

                  redundant!

                  Originally posted by sethugm View Post
                  Cheers Guys Good News

                  DLF revising the Garden City Price ....(Appreciate DLF...Not Appreciation in RE)

                  Early bird offer of Rs 2,650 a sq.ft up to May 31.(which was priced * Rs 3200 / SQFT)

                  http://thehindubusinessline.com/2009...2451031300.htm

                  According to officials, DLF is “readjusting to market realities.”

                  When the 53.5-acre project was launched on Old Mahabalipuram Road, about 20 km south of Chennai, a year ago the economic scene and the sentiment in the market were radically different, apart from the costs involved. But now with the slowdown, along with the drop in the cost of construction following the drop in commodity prices, the company is passing on the benefit to the buyers and doing its bit to stimulate the market.

                  Cheers Guys , Dont fall prey . Be patient & you will be rewarded & you will have ample choice.
                  here is your post in thread'reasons for fall in OMR...."
                  it is not news sethugm

                  Originally Posted by sethugm
                  “The areas around the IT Corridor were among the first to experience an escalation in land prices. It is also the first to experience a considerable reduction in the prices following the economic crisis,” said M.K.Sundaram, Chairman of the Builders Association of India-South Centre.

                  “We have to accept that it is a time for inflated land prices to come to reasonable levels,” explains Mr.Sundaram.

                  “Around 30 per cent of the land near the IT Corridor is available for sale. But there are no takers,” said G.Mohan, Secretary, Federation of Tamil Nadu Flat and Housing Promoters Association.

                  When more and more percentage of lands are available , more will be the crash.
                  Cheers
                  Last edited February 24 2009, 05:28 PM.

                  Comment


                  • Re : What is the Impact of IT Sector Downfall on Real Estate?

                    Here are the answers ...

                    [quote=abk;14247]wiseman,
                    apparently i repeat apparently what you say is a possibility(for the record everything is a possibility)
                    my simple question is if the US is embarking on the 'massive excess credit"

                    is it without proper application of mind.
                    - No, it is done with full knowledge of the ones doing it (Paulson, Geithner, Benanke, Bush and now Obama!

                    is there nobody in the team who understands this?
                    - Everybody understands it. But the situation is so DIRE that the only alternative is to allow the collapse of the Banks and other Institutions and recapitalise them and sell them back to the private sector. This is what works and everybody knows it. Only, they are so scared that it will simply collapse the system that they are doing exactly what they adviced Japan and the East Asians (1998) NOT to do.

                    is there a hidden agenda?
                    - Obviously. Andits so apparent that they (all ex-Wall Streeters) are there to bail out their pals on Wall Street

                    will obama at the start take a un or miscalculated move,would he not have consulted a host of experts?
                    - Who are the ones calling the shots? As pointed above ex-Wall St guys trying to bail out their buddies who took such criminal and then want to protect their bonuses. Besides, you will note that Obama has substantially changed his poll promises and is now doing exactly what Paulson and Bush did earlier. The guess among the people in the know is, he got (or was influenced into being) so scared that he is now toeing the line of the insiders and doing exactly what they are telling him to - in the hope that it will keep his second term prospects intact.

                    are there no wisemen in US
                    - There are many (and many more wise than me ). But none of them are in charge!!!

                    cheers

                    Comment


                    • Re : What is the Impact of IT Sector Downfall on Real Estate?

                      Originally posted by abk View Post
                      here is your post in thread'reasons for fall in OMR...."
                      it is not news sethugm

                      Originally Posted by sethugm
                      “The areas around the IT Corridor were among the first to experience an escalation in land prices. It is also the first to experience a considerable reduction in the prices following the economic crisis,” said M.K.Sundaram, Chairman of the Builders Association of India-South Centre.

                      “We have to accept that it is a time for inflated land prices to come to reasonable levels,” explains Mr.Sundaram.

                      “Around 30 per cent of the land near the IT Corridor is available for sale. But there are no takers,” said G.Mohan, Secretary, Federation of Tamil Nadu Flat and Housing Promoters Association.

                      When more and more percentage of lands are available , more will be the crash.
                      Cheers
                      Thanks for reiterating the points discussed earlier.

                      The earlier post was the opinion on the RE developments by an RE Experts M.K.Sundaram & G Mohan(though many(blindly) claim to be in that industry not knowing the trends).

                      Today's news is first-ever incidence a promoter reducing the price even for the old bookings and you could infer the real need of the hour & trend.

                      Where do you see the redundancy ? You are in front of a mirror ?

                      All other companies are bound to respect the buyers ..Blindly cant claim the high prices as they were foolishly claiming all these days.(Some are foolish even after reading this announcement).

                      More availability in OMR will decelerate the price & will get the development in 3-4 years time there by crashing the prices in now-prime areas.The places 'quoted' 1-2 crores today will fetch half in Q3-09 & either stabilise or depreciate further based on outcome/turnaround of recession.

                      Comment

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