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RE business in Chennai collapsing

Last updated: August 17 2009
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  • Re : RE business in Chennai collapsing

    Dear Friends,

    Finally we have an official acceptance from the builders that all is not fine for them.

    Now they are requesting to end the waiting, soon they will be pleading.

    Unless they realize that price cuts are the only way to revive some interest, not many would survive.

    The following is a request from CREDAI.

    Last edited April 9 2009, 03:09 PM.

    Comment


    • Re : RE business in Chennai collapsing

      Originally posted by connect2sam View Post
      What ? India's fiscal deficit is a myth created by Moody's, S&P,Fitch etc., ? LIC will buying RE to keep the prices steady ? Indian government bonds are better than US Treasuries ? True, Indian government bonds yields more than US Treasury, but that's bad news actually.

      I don't think so. But I am not going to argue here. Let me cut to the chase.

      Yes, US RE market is different from Indian RE market. There the % of people taking out a mortgage to buy a house or apartment is very high compared to the indian market. Even if they take out a mortgage they were taking it well within their means, until few years ago.

      The problem in the US has moved beyond the RE. It transformed into credit crunch, which then has caused the banks to tighten lending, job losses followed, lower consumer spending and which has now resulted in low or contracting growth (i.e.,exports and imports). (Even) if you ignore the RE, others could be very much felt in India also. Don't you think ? The only difference is that the scale of the problem is lesser in India.

      With the upcoming election, cash will flow in the economy, when the political parties go on a spending spree over the next few months. It could even push inflation up by a notch or two, but it will be a short term rebound.

      We are going towards wider fiscal deficit because of less tax revenue due to job losses in many manufacturing industries esp. textile, etc., exports are expected to remain sluggish. The fiscal deficit scenario, things are unlikely to change this FY.

      Much of what is said and written in Hindu, Economic times and Financial express is rubbish. Simply because there is no gauge to measure RE. When most of the transactions are happening in black money (i.e., without the knowledge of the government about the cash flow in the economy), there is not enough data available to gauge it. Much of what is said is hearsay and it is very difficult to back it up with data. I am not talking about few hundred transactions, but data for few hundred thousand transactions in India very hard to get or may be even impossible.

      There is too much focus on the builders at the moment. We could see a bottom in a few months or may be we have hit bottom already. After the western companies get some breathing space, they will think about cutting costs which this time around could be more than just outsourcing. We may soon have KPO and LPO becoming a serious business in India and competing with s/w companies. Or even overseas companies establishing base here in India. Just like how RBS is creating jobs in Gurgaon and cutting down a whopping 9000 jobs in UK in one go (out of 27,000).

      If you give this theory a shot, we may soon be creating jobs late this year or next year. Much of RE (i.e., flats) is targeted surrounding these IT/ITES jobs only. Many young people today have a taste for RE and still believe RE is the best asset class in India and will go that way.

      You see, fiscal deficit could widen and RE (i.e., flat) could stagnate or even pickup.
      Dear friend,

      Nice argument in this post of yours.

      ks2071746

      Comment


      • Re : RE business in Chennai collapsing

        Originally posted by wiseman View Post
        Nats,

        A couple of weeks does not make a trend. The markets are still 50% down from the peak even after this so-called rally.

        And all the filth you use as language does not add virtue to the crap you are dishing out about bullishness.

        Show me volumes anywhere near to even 50% of peak volumes. Show me prices above 2007/08 peak prices. Till then all the talk is just talk.

        I still insist that there are quite a few who have defered buying and will ultimately gain since they will be buying with greater guarantee of their jobs and repayment ability and most like also a lower price.

        Till then, provide data or let others post with data and keep your crap to yourself .

        cheers
        Well well I did not even mean to say that Stock markets and RE are related. Since you harp such rubbish I had to show you your ignorance!

        Comment


        • Re : RE business in Chennai collapsing

          Originally posted by nabishek View Post
          Dear Friends,

          Finally we have an official acceptance from the builders that all is not fine for them.

          Now they are requesting to end the waiting, soon they will be pleading.

          Unless they realize that price cuts are the only way to revive some interest, not many would survive.

          The following is a request from CREDAI.
          How about this

          Rupee Pain Means Exporters Gain as Indians Beat China

          ]http://www.bloomberg.com/apps/news?pid=20601087&sid=aWk19bguGg88&refer=home[/url]

          This article highlights whatever I have been harping for months on this forum. Indian govt will let Rupee depreciate. So RE will not fall since with cheaper rupee salaries will be maintained and RE will be held. So the bears with their American imagination need to become genuinely Wiser than just stating themselves to be so! ROTFL.
          Last edited April 9 2009, 06:21 PM.

          Comment


          • Re : RE business in Chennai collapsing

            ="http://economictimes.indiatimes.com/News/News-By-Industry/Jobs/Residential-property-rates-may-fall-35-per-cent/articleshow/4387266.cms"]http://economictimes.indiatimes.com/News/News-By-Industry/Jobs/Residential-property-rates-may-fall-35-per-cent/articleshow/4387266.cms[/URL]

            Realty brokers in India expect residential property prices to settle down at a 25-35% discount on the current listed prices over the next couple of



            months, according to a recent survey.

            The demand for homes remained muted in the otherwise busy season of January-March, the findings of the nationwide property brokers’ poll, conducted by financial services company Edelweiss, indicate. The only projects selling are those priced at least 25-30% lower as against the ongoing market rates, while real estate companies reluctant to slash prices are struggling to clear inventory.

            “Customers are coming back for deals. Prices have begun to consolidate at 30-35% discount to the list prices,” realty company Orbit Corp’s corporate strategy head Ram Yadav says.

            Some aggressively priced new projects, including Lodha’s project in Thane, HDIL’s in Andheri and Nirman Lifestyle’s Mulund project, are doing well in Mumbai. “HDIL’s Rs 7,651/sq ft at Andheri is a good price as compared to Rs 6,000/sq ft at which the state housing development authority MHADA is selling its flats in a similar area,” says Santosh Naik, MD and CEO of Disha Direct, a real estate marketing company.








            Property dealers, the report says, don’t see a recovery in the domestic realty market any time soon as buyer sentiment is expected to remain subdued due to the weak economic environment.

            According to the survey, 76% of the brokers expect prices to decline over the next three months and about 53% of them see the trend continuing over the next one year.

            City wise, Bangalore is the least pessimistic with 32% of the brokers surveyed having a negative price outlook over the next one year, while Chennai is the most bearish with 73% expecting a decline in realty value.

            Sales during the January-March quarter are expected to be much lower (less than 50%) than what they were in the corresponding quarter last fiscal.

            India’s largest real estate companies DLF and Unitech are faced with unsold inventory and increasing interest costs. Things do not seem to be getting better for at least another year for either of these developers.

            Comment


            • Re : RE business in Chennai collapsing

              Originally posted by nabishek View Post
              Dear Friends,

              Finally we have an official acceptance from the builders that all is not fine for them.

              Now they are requesting to end the waiting, soon they will be pleading.

              Unless they realize that price cuts are the only way to revive some interest, not many would survive.

              The following is a request from CREDAI.
              Nice to see the acceptance.

              But there is no word for RE developers on what should be course of action they have to undertake.But hey blame the Govt ..Did they share/consult the Govt when they were making unscrupulous profits ? Yes Unless the developers realize that price cuts are the only way to revive some interest, not many would survive.

              The article says "With employees in the IT industry having formed 65 to 70 per cent of the consumers during the growth phase of the last three years, the housing market has been badly hit by the tech slowdown. “They don’t know if they will get their increments or if they will even hold on to their jobs. So there is a crisis of confidence about borrowing even if the interest rates do fall further… It is all causing a fear psychosis.”

              I have seen an self-proclaimed 'expert' here claiming here IT industry does not have a say on Chennai RE and still making false claims saying RE will not fall.Unless the developers bring down the prices they will not only survive but succumb.Lets wait for the real correction.
              Last edited April 11 2009, 01:52 PM.

              Comment


              • Re : RE business in Chennai collapsing

                Originally posted by sethugm View Post
                Nice to see the acceptance.

                But there is no word for RE developers on what should be course of action they have to undertake.But hey blame the Govt ..Did they share/consult the Govt when they were making unscrupulous profits ? Yes Unless the developers realize that price cuts are the only way to revive some interest, not many would survive.

                The article says "With employees in the IT industry having formed 65 to 70 per cent of the consumers during the growth phase of the last three years, the housing market has been badly hit by the tech slowdown. “They don’t know if they will get their increments or if they will even hold on to their jobs. So there is a crisis of confidence about borrowing even if the interest rates do fall further… It is all causing a fear psychosis.”

                I have seen an self-proclaimed 'expert' here claiming here IT industry does not have a say on Chennai RE and still making false claims saying RE will not fall.Unless the developers bring down the prices they will not only survive but succumb.Lets wait for the real correction.
                What if IT people are not buying.We have Dravid,Tendulkar waiting in line to buy.

                Comment


                • Re : RE business in Chennai collapsing

                  You forgot the Central government employees, PSU employees, local family business communities like marwaris, sindhis, jains. Do not underestimate the power of domestic consumption. Ofcourse filmstars will continue to purchase RE, film industry is doing well in India. Films made in India have a good market both domestically and in arab countries, north africa and south east asia. I would love to invest in stocks of indian film productions, Sun TV networks has a P/E ratio of 20 which shows potential of indian entertainment. Yes I am happy as more and more filmstars, mega serial actors, producers invest in Chennai RE, they have more holding power then salaried IT employees. Now don't tell Sun TV and AVM studios will slowdown because IT employees don't have disposible income to watch movies and mega serials.

                  Even in Arasi serial in Sun TV, some US based relatives of Arasi madam have come back to Chennai, after they lost everything in US due to economic drepression in US. Now Arasi madam who is Tamil Nadu DGP is feeding them with her salary paid by Tamil Nadu government. That serial shows things to come .

                  Real estate in Kodambakkam, Saligramam always look good.

                  Comment


                  • Re : RE business in Chennai collapsing

                    At what price. Thats the real argument ...

                    Originally posted by contra View Post
                    You forgot the Central government employees, PSU employees, local family business communities like marwaris, sindhis, jains. Do not underestimate the power of domestic consumption. Ofcourse filmstars will continue to purchase RE, film industry is doing well in India. Films made in India have a good market both domestically and in arab countries, north africa and south east asia. I would love to invest in stocks of indian film productions, Sun TV networks has a P/E ratio of 20 which shows potential of indian entertainment. Yes I am happy as more and more filmstars, mega serial actors, producers invest in Chennai RE, they have more holding power then salaried IT employees. Now don't tell Sun TV and AVM studios will slowdown because IT employees don't have disposible income to watch movies and mega serials.

                    Real estate in Kodambakkam, Saligramam always look good.

                    The argument has not been about demand. Rather, its been about the price at which it exists.

                    Do you really think Govt and PSU employees can buy flats at 95 lakhs and such like?

                    Prices will revert to the mean. Even this low-cost housing nonsense is simply being used by RE companies to hoodwink the public as well as Govt. These are new houses to be built and will be of appropriate quality. The houses built for exorbitant prices will still form a glut and their prices will not come down. RE companies will continue to hold them and suffer losses on them till their brains start working and they sell them at a substantial discount at which prices the public will return.

                    cheers

                    Comment


                    • Re : RE business in Chennai collapsing

                      Originally posted by contra View Post
                      You forgot the Central government employees, PSU employees, local family business communities like marwaris, sindhis, jains. Do not underestimate the power of domestic consumption. Ofcourse filmstars will continue to purchase RE, film industry is doing well in India. Films made in India have a good market both domestically and in arab countries, north africa and south east asia. I would love to invest in stocks of indian film productions, Sun TV networks has a P/E ratio of 20 which shows potential of indian entertainment. Yes I am happy as more and more filmstars, mega serial actors, producers invest in Chennai RE, they have more holding power then salaried IT employees. Now don't tell Sun TV and AVM studios will slowdown because IT employees don't have disposible income to watch movies and mega serials.

                      Even in Arasi serial in Sun TV, some US based relatives of Arasi madam have come back to Chennai, after they lost everything in US due to economic drepression in US. Now Arasi madam who is Tamil Nadu DGP is feeding them with her salary paid by Tamil Nadu government. That serial shows things to come .

                      Real estate in Kodambakkam, Saligramam always look good.
                      The slowdown in IT industry will definitely bring down disposable floating money with the public..And the big budget movies are produced with the hope that they will get back the money in the first few weeks during which unregulated pricings are allowed.Am sure IT employees/families constitute atleast 20-30 % and sure there will be slowdown everywhere.

                      The Arasi madam can only feed the relative from US and how long she can feed the family...for weeks...? DGP madam cant even help the family to buy an affordable house for Rs 20 Lacs ..leave alone the apartments priced above Rs 40 Lacs/independant houses.

                      Govt/PSU employees may not able to afford the high priced houses above Rs 40 Lacs even with his/her retirement benefit.Will he be spending all the retirement benefits on housing ? May be they will be spending 50-60 % on housing..What he will do for the medical and other expenses ?

                      If someone can throw some light on how much an IAS officer would be getting as retirement benefits ...it would be a good to know the affordability...

                      Cheers..

                      Comment

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