Hi Friends,

I had been to the FAIRPRO '09 Fair.My Impression after seeing, is that prices are stagnating for all ongoing projects and builders are trying hard to hold them up.

Prices are 10-20% lower for new projects in the pipeline and for ready to occupy flats.

The discount offered at the stall was very less and were in the range 150-500 Rs/sqft max.

For the benefit of fellow members I am posting the project/price details of some of the properties.



Akshaya Foundations

Adora - OMR - 3750/sqft
Aikya - Adyar - 12500/sqft

Alliance Group - Orchid Springs - 3199/sqft

Arihant Foundations

Heirloom - Thalumbur - 2499/sqft
Escapade - Thoraipakkam - 4150/sqft
Villa Viviana - Maramalai nagar - starting from 1 Crore

Asvini Foundations

Amarisa-phase1 - Ramapuram - 4500/sqft
Amarisa-phase2 - Ramapuram - 4250/sqft
Akshita - Madipakkam - 3800/sqft

Casa Grande

Riveira - Palikkarnai - 3450/sqft - before discount 3600/sqft
Silver Oak - Perungudi - 4300/sqft - before discount 4500/sqft
Madhuban - Madipakkam - 3300 /sqft - before discount 3500/sqft
Mylapore - R.K.salai - 12500/sqft
Plots
Ponmar -785/sqft - before discount 825/sqft
Maraimalainagar - 790/sqft - before discount 825/sqft

CeeDeeyes - Chenni Pattinam

Basic Rate - 1600/sqft All Inclusive - 2075/sqft

Chaitanya shanthiniketan

Sunnyvale - Ayanavaram - 4850/sqft
Serena - Rajkilpakkam - 2550/sqft
Gardenia - OMR - 1900/sqft
Green Park - Chitlapakkam - 3300/sqft

DLF

Gardencity - 3200/sqft - was told slash in prices expected in coming weeks.

Doshi Housing

Etopia I and II - Perungudi - 3895/sqft
Nakshatra - Tambaram - 2995/sqft - Completion May 2010
Tranquil - Velachery - 5500/sqft - Completion February 2010
Trinity park - Santhoshpuram,Vengaivasal - 3195/sqft - Completion April 2009
Serene Couny-Villas - Santhoshpuram,Vengaivasal - 2200,2600/sqft
LlanStephan - Chetpet - 9000/sqft - Completion May 2009
Sri Mahalakshmi - Ayanavaram - 4495/sqft - Ready to Occupy

ETA

Rosedale - OMR - 3100/sqft
Le Chalet - Villas - Sriperambudhur - 26 Lakhs - 37 Lakhs

Hiranandani Upscale - 4200/sqft

Hiranandani Palace Gardens - 3475/sqft

Indus Housing

anantya - Navalur,OMR - 2299/sqft + 400(other charges)
riviera villa - Navalur,OMR - 90 Lakhs onwards
habittera - urapakkam,GST - 2399/sqft + 400(other charges)
amber - Saidapet - 4750/sqft

Jain Housing

Ankush Prakas - Kilpauk - 7500/sqft - Ready to occupy
Amrit Kailash - Strahns Road - 4500/sqft - Ready to occupy
La Gardenia - Nungabakkam - 7500/sqft - Ready to occupy
Ansruta - Valluvarkottam, nungabakkam - 10000/sqft - Ready to occupy
Antariska - Kodambakkam - 4500/sqft - Ready to occupy
Eiffel Garden - Vadapalani - 4250/sqft - Ready to occupy
Saagarika - M.R.C Nagar, sea facing - 10000/12500 - Ready to occupy
Green acres - Pallavaram - 3900/sqft - Ready to occupy
Abhishek - Selaiyur - 3500/sqft - Ready to occupy.

Jamals

Orchid - Palikkarnai - 3500/sqft
Palazzo - keelkattalai - 3700/sqft
Grandeur - Velappanchavadi(near saveetha dental college) - 3200/sqft

KGEYES

3 Projects on L.B.Road, Thiruvanmiyur - 6650/sqft
Delmare - Beach road,Thiruvanmiyur - 7000/sqft
Carolina - Velachery,Taramani - 4500/sqft
Swathi - Sastri Nagar,Adyar - 8500/sqft
Kalakshetra - 8000/sqft

Landmark Constructions

Tiara - Perungudi - 4000/sqft - Completion on August 2009
Aston Ville - Vadapalani - 5500 sqft - Completion on July 2009
Tudors Place - K.K.Nagar - 6500/sqft
The Address - Adyar - 11500/sqft
The Grange - Palavakkam - 7500/sqft
Cenralia - Chrompet - 2950/sqft - prelaunch
Gem Towers - AnnaNagar - To be launched.
Mahalakshmi Heights - Ashok Nagar - To be launched

L&T Estancia
Construction in Progress
1st-3rd Floor - 3950/sqft
4th -12 floor - floor rise charge of 20/sqft for each floor
13th - 17th - 4450/qft

L&T Eden Park - 3600/sqft

Mantri Synergy - OMR
2800/sqft - with 20/floor rise
Special offer - First Floor - all inclusive
1140 sqft - 33,67,000
870 sqft - 28,50,000

Navin Housing

Dayton Heights - Nelson Manickam road - 6500/sqft + 30/sqft floor rise from 2nd floor
Subha Mangala - Ramapuram - 4200/sqft
Brookfield - Nanmangalam - 3500/sqft
Merrylands - Medavakkam - 3500/sqft

Olympia Opaline - 3441/sqft - spl budget flats available

PACE Builders

Anna nagar west - 4195/sqft - before discount 4495/sqft
Selaiyur - 3195/sqft - before discount 3495/sqft
Valasarvakkam - 2795/sqft - before discount 3295/sqft

PS Srijan

The Grand - Velachery - 5250 sqft - before discount 5500/sqft - Floor Rise applicable from 4th floor

Rajparis

Harmony - Medavakkam - 3100/sqft

Rajarathnam Constructions

RC Prince Gardenia - Perambur redhill road,Kolathur - 3600/sqft

Rajkham

Independant houses - Ayyapathangal - 2600/sqft

Real Value

Sai Skanda - Velachery - 4200/sqft
Sai Surya - Palikaranai - 3800/sqft
OMR opp SIPCOT - 13.20 Lakhs onwards

Shriram Properties

Trishakti - SIPCOT - 2750/sqft
Shankari - 1990/sqft

Sidharth foundations

Tulip - k.k.nagar west - 4800/sqft - completion march 2009
Natura - medavakkam - 3100 /sqft - completion july 2009
Visvaleela - Annanagar - 8500 /sqft - to be launched
Dakshin - Urapakkam - price TBD - to be launched
upcoming projects in porur, thoraipakkam, rajkeelpakkam, mogappair.

SIS

Safaa - Urappakam - 3150/sqft

SSPDL

Crescent - Kelambakkam - Vandalur Road - 2500/sqft
Upcoming 2 villa project one in OMR and one in Sriperambathur.

Sumanth & Co

Thiruvanmiyur - 6000/sqft
Besant Nagar - 11500/sqft

TVH

Lumbini square - Pursaiwalkam - 5500/sqft + 30/sqft floor rise from 5th floor
Ouranya Bay(Premium) - OMR,Padur - 3100,3200 + 25/sqft floor rise from 5th floor
Ouranya Bay(Budget) - 2bhk - 20 Lakhs
3bhk - 30 Lakhs
Ekanta - Coimbatore - 3100/sqft
Revata - Mogappair east - 4500/sqft
Kamya - K.K,Nagar - 7000/sqft
Metro Golden Nest - Sriperambathur - 1bhk - 15 Lakhs
2bhk - 22 Lakhs
3bhk - 28 Lakhs

VGN Group

Minerva - Mogappair,Nolumbur - 2975/sqft
3 in 1, 4 in 1 - 3800/sqft
Mahalakshmi Nagar,Thiruverkadu - 3500/sqft
Plots
Mugalivakkam - 52 Lakhs/grnd
Selaiyur - 50 Lakhs/grnd
SPKoil - 34 Lakhs/grnd
Katankulathur - 22-27 Lakhs/grnd

Yuga Homes

Shem Park - chemmenachery - 3300/sqft
Upcoming in Koyambedu, R.A.Puram(8000/sqft)



There are lots of properties and also lots of potential buyers.There is sure a sense of uncertainity among the builders and also the buyers on when to make the next move.It was evident that correction in RE prices have started to happen.

Requesting members to respond with their thoughts on the current trend.
Read more
Reply
2344 Replies
Sort by :Filter by :
  • Originally Posted by BigBear
    Indian Builders are very shrewd and with ample support from politicians common man dont know the dirty games they play with their money.Take an example of a south based listed company who have a debt of 1900 crore and they are paying interest of 300 crore for this.But if you take their earnings it is close to 300 crore only.So whatever they are earning(read from new projects) are going into paying interest.Do you think the builder will finish according to schedule.This is nothing but a giant ponzi scheme going on.
    All the listed companies have heavy debt in their balance sheets and noone knows what is hidden in unlisted space as their finanicials are not in public domain and most of the Chennai builders are unlisted.So better know the financial condition of the builder before putting your money.


    it is always better to buy in small projects 4-24 flats and not huge township MSBs,the smaller builders do not get loans from banks(project loans) and do not overleverage their finances they generally stick to 1-4 projects at a time and deliver on time.
    CommentQuote
  • This is not baseless ...

    Originally Posted by Economist
    Any one can come up with baseless allegations,Conspiracy theory and scare mongering. Where is the proof.

    how could anyone continue to operate a business for more than 12 months with such a situation. They could have gone broke a long time ago.
    They wouldn't have survived the testing time we had over the past 18 months.


    Economist,

    This is based on the report in DNA also quoted elsewhere. So, its based on some kind of research done by a newspaper-wala. Not exactly scientific evidence, but research of some sort, nevertheless.

    As soon as I read it, first thought coming to my mind was Sobha since I could recollect that their debt was around that level and they had successfully done a QIP round after failing once!

    Maybe it is, maybe it isn't. But simply because builders are raising prices, it does not mean they are in the pink of health. Please note that most times, when companies (or people) are in their most desperate state, they will bring out their biggest bluff - recall Lehman Brothers which only 3 days before folding up gave an "All ok" press release!

    cheers
    CommentQuote
  • Originally Posted by Economist
    Any one can come up with baseless allegations,Conspiracy theory and scare mongering. Where is the proof.

    how could anyone continue to operate a business for more than 12 months with such a situation. They could have gone broke a long time ago.
    They wouldn't have survived the testing time we had over the past 18 months.


    See the proof below

    ]http://www.livemint.com/2009/02/20002520/Sobha-Developers-still-in-talk.html

    You told chennai RE gave CAGR of 139% between 1986-89.Can you show me the proof for that.That will show who is spreading false information in this forum.

    You told chennai RE gave CAGR of 139% between 1986-89.Can you show me the proof for that.That will show who is spreading false information in this forum.
    CommentQuote
  • Originally Posted by BigBear
    See the proof below

    ]http://www.livemint.com/2009/02/20002520/Sobha-Developers-still-in-talk.html

    You told chennai RE gave CAGR of 139% between 1986-89.Can you show me the proof for that.That will show who is spreading false information in this forum.


    Your Feb 2009 article is old and out of date and everyone and most organisations around the world was is crisis at that time, Typical to all REITs and real-estate related business all over the world at that time (Typical examples are Mirvac,Centro,Emmar,Westfeild,Stockland)

    Sobha developer had a land bank of 3,000 acres in Feb 2009, primarily in South India and Pune.
    The value of Sobha’s land holding in Feb 2009 was Rs 4,380 C and the debt was Rs 1,300C
    Sobha Developers was leveraged a little over 1.6 per cent on its equity in Jan 2009..

    Your article says the companies net profit fell to 7.5 C (Net profit is after EBIT) that tells they are servicing the interest obligation and managed some profit albeit smaller than previous years.

    Sobha Developers targeted to raise about Rs 1,200-1,400 crore by selling part of its land parcels.The cost of acquisition of the land that the company plans sell was around Rs 600-800 crore. The plots identified are 100 acres in Pune, 38 acres in Bangalore and around 300 acres in Kochi.

    The developer has been successful in reducing its debt equity ratio from 1.7 to a manageable 0.85 by June 2009. It is looking to offer more than 2 million square feet of new projects this fiscal.

    The developer has also raised $110 million by diluting 22.5% stake in the company through qualified institutional placement of shares to investors. It has already paid about Rs 370 crore from the funds raised to its debtors.

    Other majors were successful in reducing debts as well.


    A clean up act has helped the real estate sector to strengthen its balance sheets. Leading players like DLF,UNITEC,HDIL & Sobha, together have erased a total debt of almost one billion dollar June quarter.

    ]http://myiris.com/shares/research/ESL/SOBDEVEL_20090729.pdf

    The share price of Sobha was Rs 80 on the day of your article and today’s close it was Rs 264 (That is a 230% gain in share price since Feb 2009)

    This is a good example of the strength of Indian realty firms who has successfully managed its high debt obligations.

    The bottom line is the debts are backed by solid securities (land bank) The LVR (loan to value ratio) in Feb 2009 was only about 33%.

    You should read this: Debt Refinancing Concerns Eased
    Asian REITs revived
    http://www.capitalandinside.com/index.php?option=com_content&view=article&id=239:asian-reits-revived


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.
    CommentQuote
  • Sure, but they are in for a lot of pain nevertheless ...

    Originally Posted by Economist
    Your Feb 2009 article is old and out of date and everyone and most organisations around the world was is crisis at that time, Typical to all REITs and real-estate related business all over the world at that time (Typical examples are Mirvac,Centro,Emmar,Westfeild,Stockland)


    You should read this: Debt Refinancing Concerns Eased
    Asian REITs revived
    ]http://www.capitalandinside.com/index.php?option=com_content&view=article&id=239:asian-reits-revived


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.


    Economist,

    You are correct. As I had already stated in an post around end of last year while doing a similar analysis, I had stated the same about Sobha that they were reasonably comfortable wrt debt. The rreal killer at that time was Unitech (10,400 crore debt) and DLF (14000 crores).

    So, yes, they would not collapse. But things are NOT so hunky dory for them all the same.

    Their principal problem is liquidating inventory built using debt! A lot of Unitech's inventory (please remember that over 7000 crores was in inventory) was built at the highest costs possible as land was acquired in the latter part of the bull run and raw material was also bought during boom times. Now you add the interest burden on the WIP and FG and you see that margins are starting to get rather thin. Then add this drop in prices and you might even see margins disappearing. The importan point to note is that this debt rollover was done at unusually high rates during the crisis and that is adding to the pressure. This point is what is coming out when the newspapers report that RE companies are using down payment for one project to square out painful debt already raised for older projects - a sure sign of distress which could lead to bankruptcy if volumes do not pick up for some more time. Incidentally the so-called land-bank is overhyped since much of these land parcels are fairly illiquid under normal circumstances and are much more illiquid at the prices these RE companies are quoting. Example, that Sobha property opposite Koshy's (photo in the article linked by you) that was taken up over 2 years ago is languishing for a long time without buyers though I believe Sobha is trying its best to sell the project away.

    So, the contention is that, the high debt built up by these companies were for a sales volume level much higher than these levels.

    And exchanging one form of debt for another is not a solution in the right direction. Nor is diluting stake of promoters in raising equity at high premiums.

    As you know, when the ratio of Sales to the (combination of Equity, Reserves and Debt) Total Capital Employed is very low, then earnings generally declines to uncomfortable levels (as Net Margins in RE is around 10% - see Sobha's Net Margin in the boom years 2006-07). Stock Prices eventually follow downwards and remain depressed for long periods of time.

    In fact I used to be shocked at how high the P/Es for RE companies were back in those days since NPM was so mediocre. But then I realised that, like Retail companies (Pantaloon) and Suzlon these guys were taking the public for a ride by ramping up sales volumes at a very high rate and making it look like these were very profitable sectors!!! As per my analysis of Retail, margins are generally in the 6-8% range while P/E was riding well over 50 times!

    My own take is that our RE sector is overdoing this global bear market rally and its become time for a correction. Since markets are continuing to show superheated behavior, the corection will be equally severe. You might expect the next correction to decline to around 10000 levels on the Sensx. And the high-beta sector like RE will take the lead in declining the most and giving a golden opportunity to pick some good growth stocks at very attractive levels.

    I still think that the bottom for the RE sector is yet to come and that will only be when this speculative overpricing is complete ironed out from the economy and the next bull wave is built on more solid fundamentals - volumes at reasonable prices and margins.

    cheers. Incidentally the so-called land-bank is overhyped since much of these land parcels are fairly illiquid under normal circumstances and are much more illiquid at the prices these RE companies are quoting. Example, that Sobha property opposite Koshy's (photo in the article linked by you) that was taken up over 2 years ago is languishing for a long time without buyers though I believe Sobha is trying its best to sell the project away.

    So, the contention is that, the high debt built up by these companies were for a sales volume level much higher than these levels.

    And exchanging one form of debt for another is not a solution in the right direction. Nor is diluting stake of promoters in raising equity at high premiums.

    As you know, when the ratio of Sales to the (combination of Equity, Reserves and Debt) Total Capital Employed is very low, then earnings generally declines to uncomfortable levels (as Net Margins in RE is around 10% - see Sobha's Net Margin in the boom years 2006-07). Stock Prices eventually follow downwards and remain depressed for long periods of time.

    In fact I used to be shocked at how high the P/Es for RE companies were back in those days since NPM was so mediocre. But then I realised that, like Retail companies (Pantaloon) and Suzlon these guys were taking the public for a ride by ramping up sales volumes at a very high rate and making it look like these were very profitable sectors!!! As per my analysis of Retail, margins are generally in the 6-8% range while P/E was riding well over 50 times!

    My own take is that our RE sector is overdoing this global bear market rally and its become time for a correction. Since markets are continuing to show superheated behavior, the corection will be equally severe. You might expect the next correction to decline to around 10000 levels on the Sensx. And the high-beta sector like RE will take the lead in declining the most and giving a golden opportunity to pick some good growth stocks at very attractive levels.

    I still think that the bottom for the RE sector is yet to come and that will only be when this speculative overpricing is complete ironed out from the economy and the next bull wave is built on more solid fundamentals - volumes at reasonable prices and margins.

    cheers. Incidentally the so-called land-bank is overhyped since much of these land parcels are fairly illiquid under normal circumstances and are much more illiquid at the prices these RE companies are quoting. Example, that Sobha property opposite Koshy's (photo in the article linked by you) that was taken up over 2 years ago is languishing for a long time without buyers though I believe Sobha is trying its best to sell the project away.

    So, the contention is that, the high debt built up by these companies were for a sales volume level much higher than these levels.

    And exchanging one form of debt for another is not a solution in the right direction. Nor is diluting stake of promoters in raising equity at high premiums.

    As you know, when the ratio of Sales to the (combination of Equity, Reserves and Debt) Total Capital Employed is very low, then earnings generally declines to uncomfortable levels (as Net Margins in RE is around 10% - see Sobha's Net Margin in the boom years 2006-07). Stock Prices eventually follow downwards and remain depressed for long periods of time.

    In fact I used to be shocked at how high the P/Es for RE companies were back in those days since NPM was so mediocre. But then I realised that, like Retail companies (Pantaloon) and Suzlon these guys were taking the public for a ride by ramping up sales volumes at a very high rate and making it look like these were very profitable sectors!!! As per my analysis of Retail, margins are generally in the 6-8% range while P/E was riding well over 50 times!

    My own take is that our RE sector is overdoing this global bear market rally and its become time for a correction. Since markets are continuing to show superheated behavior, the corection will be equally severe. You might expect the next correction to decline to around 10000 levels on the Sensx. And the high-beta sector like RE will take the lead in declining the most and giving a golden opportunity to pick some good growth stocks at very attractive levels.

    I still think that the bottom for the RE sector is yet to come and that will only be when this speculative overpricing is complete ironed out from the economy and the next bull wave is built on more solid fundamentals - volumes at reasonable prices and margins.

    cheers. Incidentally the so-called land-bank is overhyped since much of these land parcels are fairly illiquid under normal circumstances and are much more illiquid at the prices these RE companies are quoting. Example, that Sobha property opposite Koshy's (photo in the article linked by you) that was taken up over 2 years ago is languishing for a long time without buyers though I believe Sobha is trying its best to sell the project away.

    So, the contention is that, the high debt built up by these companies were for a sales volume level much higher than these levels.

    And exchanging one form of debt for another is not a solution in the right direction. Nor is diluting stake of promoters in raising equity at high premiums.

    As you know, when the ratio of Sales to the (combination of Equity, Reserves and Debt) Total Capital Employed is very low, then earnings generally declines to uncomfortable levels (as Net Margins in RE is around 10% - see Sobha's Net Margin in the boom years 2006-07). Stock Prices eventually follow downwards and remain depressed for long periods of time.

    In fact I used to be shocked at how high the P/Es for RE companies were back in those days since NPM was so mediocre. But then I realised that, like Retail companies (Pantaloon) and Suzlon these guys were taking the public for a ride by ramping up sales volumes at a very high rate and making it look like these were very profitable sectors!!! As per my analysis of Retail, margins are generally in the 6-8% range while P/E was riding well over 50 times!

    My own take is that our RE sector is overdoing this global bear market rally and its become time for a correction. Since markets are continuing to show superheated behavior, the corection will be equally severe. You might expect the next correction to decline to around 10000 levels on the Sensx. And the high-beta sector like RE will take the lead in declining the most and giving a golden opportunity to pick some good growth stocks at very attractive levels.

    I still think that the bottom for the RE sector is yet to come and that will only be when this speculative overpricing is complete ironed out from the economy and the next bull wave is built on more solid fundamentals - volumes at reasonable prices and margins.

    cheers
    CommentQuote
  • Unitech sales at Rs 4000 crore in 6 months

    ]http://economictimes.indiatimes.com/markets/real-estate/news-/Unitech-sales-at-Rs-4000-crore-in-6-months/articleshow/5121566.cms



    Is it true?



    Is it true?
    CommentQuote
  • Originally Posted by Economist
    Your Feb 2009 article is old and out of date and everyone and most organisations around the world was is crisis at that time, Typical to all REITs and real-estate related business all over the world at that time (Typical examples are Mirvac,Centro,Emmar,Westfeild,Stockland)

    Sobha developer had a land bank of 3,000 acres in Feb 2009, primarily in South India and Pune.
    The value of Sobha’s land holding in Feb 2009 was Rs 4,380 C and the debt was Rs 1,300C
    Sobha Developers was leveraged a little over 1.6 per cent on its equity in Jan 2009..

    Your article says the companies net profit fell to 7.5 C (Net profit is after EBIT) that tells they are servicing the interest obligation and managed some profit albeit smaller than previous years.

    Sobha Developers targeted to raise about Rs 1,200-1,400 crore by selling part of its land parcels.The cost of acquisition of the land that the company plans sell was around Rs 600-800 crore. The plots identified are 100 acres in Pune, 38 acres in Bangalore and around 300 acres in Kochi.

    The developer has been successful in reducing its debt equity ratio from 1.7 to a manageable 0.85 by June 2009. It is looking to offer more than 2 million square feet of new projects this fiscal.

    The developer has also raised $110 million by diluting 22.5% stake in the company through qualified institutional placement of shares to investors. It has already paid about Rs 370 crore from the funds raised to its debtors.

    Other majors were successful in reducing debts as well.


    A clean up act has helped the real estate sector to strengthen its balance sheets. Leading players like DLF,UNITEC,HDIL & Sobha, together have erased a total debt of almost one billion dollar June quarter.

    ]http://myiris.com/shares/research/ESL/SOBDEVEL_20090729.pdf

    The share price of Sobha was Rs 80 on the day of your article and today’s close it was Rs 264 (That is a 230% gain in share price since Feb 2009)

    This is a good example of the strength of Indian realty firms who has successfully managed its high debt obligations.

    The bottom line is the debts are backed by solid securities (land bank) The LVR (loan to value ratio) in Feb 2009 was only about 33%.

    You should read this: Debt Refinancing Concerns Eased
    Asian REITs revived
    ]http://www.capitalandinside.com/index.php?option=com_content&view=article&id=239:asian-reits-revived


    WITH THAT MUCH OF ASSETS THEY ARE NOT GOING BROKE.
    Your Feb 2009 article is old and out of date and everyone and most organisations around the world was is crisis at that time, Typical to all REITs and real-estate related business all over the world at that time (Typical examples are Mirvac,Centro,Emmar,Westfeild,Stockland)
    >You meant to say if another crisis happens(most probably will happen due to excessive money printing across the world) all the RE companies will again fall into crisis?So whats the point in putting money in companies which repeatedly falls intocrisis.

    Sobha Developers targeted to raise about Rs 1,200-1,400 crore by selling part of its land parcels.The cost of acquisition of the land that the company plans sell was around Rs 600-800 crore. The plots identified are 100 acres in Pune, 38 acres in Bangalore and around 300 acres in Kochi.
    >But where are the buyers when all the major builders are trying to deleverage by selling their landbanks and projects.Builders selling their landbanks is itself a clear sign of distress as that is their main resource.


    The share price of Sobha was Rs 80 on the day of your article and today’s close it was Rs 264 (That is a 230% gain in share price since Feb 2009)
    >
    It was Rs 1100 during early 2007 and that was a whoping 76% down.So can we assume the land and project value thay hold had decreased 76% from 2007.

    My bottomline is whether they will go bankrupt or not but investing in new project is very risky as there is no guarantee these guys will even start work considering the financial conditions they are in.
    CommentQuote
  • Absolutely right!

    Originally Posted by BigBear
    Your Feb 2009 article is old and out of date and everyone and most organisations around the world was is crisis at that time, Typical to all REITs and real-estate related business all over the world at that time (Typical examples are Mirvac,Centro,Emmar,Westfeild,Stockland)
    >You meant to say if another crisis happens(most probably will happen due to excessive money printing across the world) all the RE companies will again fall into crisis?So whats the point in putting money in companies which repeatedly falls intocrisis.

    The share price of Sobha was Rs 80 on the day of your article and today’s close it was Rs 264 (That is a 230% gain in share price since Feb 2009)
    >
    It was Rs 1100 during early 2007 and that was a whoping 76% down.So can we assume the land and project value thay hold had decreased 76% from 2007.

    My bottomline is whether they will go bankrupt or not but investing in new project is very risky as there is no guarantee these guys will even start work considering the financial conditions they are in.



    BigBear,

    In fact back in early 2008 I had predicted that HCL Tech would go from 300+ to double digits. Everyone laughed (I mean the investors I advice). When I recommended at 85 (most people I adviced asked me at 85 why did I not force them to sell at 300+) that people buy HCL tech again they told me that I was mad and that the world was going to end!:D Today, the same people are telling me, "why didn't you force us to buy at 85!!!"

    Like it or not, people behave like that when in a mob. This mob behavior is what leads to cycles of extreme positive and negative mental outlook. A person who recognises this can track it and use it to very great advantage - which is what I propose to do ...:D

    As you can see, back in March there was extreme pessimism (actually in Oct 2008 it was worse). Today, there is extreme optimism without much change in reality on the ground. What has changed is the mood in society. It is this mood that drives prices and since they happen in cycles, you see cyclicity in price movement.

    What people do not seem to realise is that there are short, medium and long term cycles. Then there are very long term and super long term cycles spanning 100s of years. Most people are looking at the short term cycle (Mar-Oct) and are thinking this bear market is over (maybe in India it is a consolidating bear market where prices may not completely crash, but in the US it is in a crash-type bear market due to fundamentals being extremely bad). And the US does have significant impact on other economies of the world when it crashes!

    If you notice, this recent "growth" is happening on the basis of a low base effect (as 2008 saw significant lows in production and consumption, dividing by a low number gives a high result) and a rebuilding of inventory in the hope of continuing growth and an end to recession.

    But this is not what the RBI and the FED are stating. They are saying that real demand numbers continue to be towards the lower side and there is not great strength in them so far! And that the Stimulus should in no way be removed. This stimulus is what is propping up the world's economy and the damaging part (the high-risk derivatives business) is being merrily continued by the global thieves - watch JPM show imprived performance mainly due to this trade). So, in fact, the world is in a more precarious state today than it was in 2008. And when this bullish rally ends (as I expect it to pretty soon), pessimism will come riding back again as reality of the huge risks we carry return).

    If you take the view to the 20000 ft level we see that we are in a longer term bear and will see a correction of large proportions soon. At the bottom of that correction I expect to see RE company share lower (or at least near their original lows, Unitech near 20, Sobha near 80, etc). This will happen when this short-term buying will end and the next wave down will see these companies going into another business-winter with an even weaker cash position and continued disinterest from buyers.

    If you are willing to be dispassionate about it and track the decline, you will be one of the very few to have cash to buy both peoperty as well as stock (in fact even Gold and Silver) at super bargain prices again. My hope is that Unitech will one day come to single-digit prices and then it is a great buy!:D

    Till then, its okay for the mob to think we are crack. Ultimately, its the cash in bank which matters!!! :D And holding property and other assets bought at historically low prices!!!

    cheers
    CommentQuote
  • Originally Posted by wiseman
    BigBear,

    In fact back in early 2008 I had predicted that HCL Tech would go from 300+ to double digits. Everyone laughed (I mean the investors I advice). When I recommended at 85 (most people I adviced asked me at 85 why did I not force them to sell at 300+) that people buy HCL tech again they told me that I was mad and that the world was going to end!:D Today, the same people are telling me, "why didn't you force us to buy at 85!!!"

    Like it or not, people behave like that when in a mob. This mob behavior is what leads to cycles of extreme positive and negative mental outlook. A person who recognises this can track it and use it to very great advantage - which is what I propose to do ...:D

    As you can see, back in March there was extreme pessimism (actually in Oct 2008 it was worse). Today, there is extreme optimism without much change in reality on the ground. What has changed is the mood in society. It is this mood that drives prices and since they happen in cycles, you see cyclicity in price movement.

    What people do not seem to realise is that there are short, medium and long term cycles. Then there are very long term and super long term cycles spanning 100s of years. Most people are looking at the short term cycle (Mar-Oct) and are thinking this bear market is over (maybe in India it is a consolidating bear market where prices may not completely crash, but in the US it is in a crash-type bear market due to fundamentals being extremely bad). And the US does have significant impact on other economies of the world when it crashes!

    If you notice, this recent "growth" is happening on the basis of a low base effect (as 2008 saw significant lows in production and consumption, dividing by a low number gives a high result) and a rebuilding of inventory in the hope of continuing growth and an end to recession.

    But this is not what the RBI and the FED are stating. They are saying that real demand numbers continue to be towards the lower side and there is not great strength in them so far! And that the Stimulus should in no way be removed. This stimulus is what is propping up the world's economy and the damaging part (the high-risk derivatives business) is being merrily continued by the global thieves - watch JPM show imprived performance mainly due to this trade). So, in fact, the world is in a more precarious state today than it was in 2008. And when this bullish rally ends (as I expect it to pretty soon), pessimism will come riding back again as reality of the huge risks we carry return).

    If you take the view to the 20000 ft level we see that we are in a longer term bear and will see a correction of large proportions soon. At the bottom of that correction I expect to see RE company share lower (or at least near their original lows, Unitech near 20, Sobha near 80, etc). This will happen when this short-term buying will end and the next wave down will see these companies going into another business-winter with an even weaker cash position and continued disinterest from buyers.

    If you are willing to be dispassionate about it and track the decline, you will be one of the very few to have cash to buy both peoperty as well as stock (in fact even Gold and Silver) at super bargain prices again. My hope is that Unitech will one day come to single-digit prices and then it is a great buy!:D

    Till then, its okay for the mob to think we are crack. Ultimately, its the cash in bank which matters!!! :D And holding property and other assets bought at historically low prices!!!

    cheers

    Well said Wiseman and I think I will be on the same belief myself.

    Looking around in the US and Europe, majority of the countries had a freefall of the property / real estate. Things are picking up after the price levels have bottomed out and this is a fresh start, something like after a forest fire new crops growing.

    I dont think India is much different to any other country with respect to basic economy. Looking at todays papers, Mumbai and Delhi falls under least expensive cities in the world and then the basic question is why must the property prices alone stay in par with other developed countries.

    To put thinks into perspective again, 1 cr rupees is 220,000 USD and one can get a good decent house + land for this cost on a nice sub-urban where the country itself has huge facilities.

    What makes land in India more precious in comparison with places like Singapore?. Even in Singapore, for the same amount, ( 310 SGD ) one can buy a decent 3 bedroom apartment in a multistorey building with all facilities and price of Rs 2500.00 for carpark per month.

    Are we all in a dreamland?
    CommentQuote
  • For all the hype about sales picking and price increasing see the results announced by Parsvnath Developers.Net profit is up 150% sales have declined by 30% compared to last year.The company's net profit zoomed on the back of 464.83% spurt in other income to Rs 27.62 crore in Q2 September 2009 over Q2 September 2008.

    And last year was supposed to be the most difficult times for RE after Lehman went bankrupt and they are not able to sell more than last year.Lets wait and watch other builders result also before believing these false hype.
    CommentQuote
  • Friends,

    There's lots of false hype I agree, but we cannot ignore the amount of demand that gets generated due to it and the amount of money that gets sucked into the market due to it.There will be surely an impact(continuation of stagnation or temporary rise)

    The governments all over the world have done well by infusing liquidity to help sustain the businesses.What they have done is similar to providing a vaccine.By infusing the poisonous liquidity at low levels and short intervals they are hoping the economies will develop resistance and get back on its feet again.

    There are numerous reports to state that the efforts are working and the economies are recovering.There are at the same time also fear that it could be overdose of liquidity that will end up killing the economy.

    Its risky endeavour to attempt to live with the pathogen than to get rid of it.Only time can predict the outcome.

    In my opinion its too early to claim and assume that the economies will start running again when most are still struggling to keep the first step.The period of healing could take longer and would be slow and steady.

    The liquidity infused has been majorly used only to absorb loses, not create new demand.Now countries are depending on their people to spend their money from their savings or by availing credit to give the economy a boost.

    On closer introspection of the news and data thats coming out, it should be evident that all these news of "recession over","Boom days are back" etc are just attempt to get people spending again and create a mood of optimism.Its a desperate attempt to get rid of the excess inventory thats piled up without hurting themselves and build consumer confidence.
    There are scores of people who dont want to miss out another opportunity, and such propaganda aims at cashing on the sentiments of such people to get the markets moving again.

    With regard to real-estate, The big builders who are in a better cash position than last year are acting greedy to hike their price knowing well that it will kill the demand.It doesnt matter to them, as they have large numbers of projects under construction which they are yet to complete and the projects that the price are being hiked is scheduled for delivery some 2-3 years down the line and are those which has seen decent booking under the "affordable segment".The price is hiked in anticipation that the economies will revive by then and they will complete it then meanwhile diverting the cash generated now towards completing current projects.The pricing strategy of these builders has always been like futures.

    I request people to exert caution while booking with such builders.My advice would be to choose projects that has a special purpose vehicle floated only for funding that project, ascertain the cash position of the builders,clarify everything in the agreement before signing the dotted line.Even if you have to pay a premium, choose only from projects thats nearing completion or ready-to-occupy.Resale markets are also getting attractive.

    I personally choose to wait to see the smoke clear off and confirmation of the trend before deciding to plunge and am still of the opinion that there is scope for further correction before a take-off.
    CommentQuote
  • About Parsvnath ... and the 'Recovery' ...

    Originally Posted by BigBear
    For all the hype about sales picking and price increasing see the results announced by Parsvnath Developers.Net profit is up 150% sales have declined by 30% compared to last year.The company's net profit zoomed on the back of 464.83% spurt in other income to Rs 27.62 crore in Q2 September 2009 over Q2 September 2008.

    And last year was supposed to be the most difficult times for RE after Lehman went bankrupt and they are not able to sell more than last year.Lets wait and watch other builders result also before believing these false hype.



    BigBear, Abishek, Economist and others,

    Happy Deepavali! to all of you ...

    Was skimming the Parsvnath results. Last quarter, they sold 1.6 lakh shares by promoters to a private group (including a group company) Parsvnath Landmark Developers Pvt Ltd, Banrod Investments and Sterling Pathway for 24.99 Crores, at a premium of Rs.1550 per share. At the same they floated a QIP for Rs.168 crores at only Rs.111 premium (so this is one way of bringing in money into the company from own/provate sources). Without this their results would have been rather bad, considering RE is supposedly doing so well!!! :D Furthermore last quarter sales fell from 219 crores in 2008Q2 to 152 crores in 2009Q2, a fall of 30% which is not a good sign at all!!!
    A tax writeback of 9 crores (against 47 lakhs in 2008Q2) also added to profits. If we remove all of these, profits have been flat despite severe cost-cutting as well as the advantage of much lower "cost of construction" as much of this quarter activity must have been inventory clearance where cost was already allocated in previous quarters. Despite all this, they just about maintained profits on falling sales. One of these days there will be no more cost cutting and accounting gimmicks and by then, if there is no real recovery, then the sh** will hit the fan. They have just bought one more quarter's time at high expense for recovery to happen! Just like most countries and businesses worldwide ...

    Selling your shares to show revenue boosts thru other incomes is a game towards quick death. Also, one more point. They still have 12 Crores shares (81% of Promoter holdings) pledged against debt raised. Any weakening of company financials may see risk of management losing hold (though why anyone would want to get control of a company this badly managed is a wonder!;)).

    Anyway, Parsvnath is not the case study one needs to be looking at. Let us see what the big boys have to show in the coming days.

    There was a lot of hype about IIP shooting up to 10%+ and the markets used this to take off again! Let us not get as confused as the market. IIP is production data, not sales data. The principal reasons for this rise are 2 ...

    1. A low base effect (of bottom IIP data of Sep 2008)
    2. Inventory buildup on hopes of recovery

    Adjusting for these 2 effects, the real, normalised IIP growth has been calculated at just over 4%, still well below the 2007 rates of 20%+.

    My own contacts in the infrastructure business are not too happy about sales growth in critical items for infrastructure. Sales for past 4-5 months has been flat and not showing the magical numbers in the newspapers.

    Finally, both RBI as well as FED (and other Central Banks) are quite clueless about when this recovery will actually happen without the bailout! That is real recovery, right now its Govt spending and propping up (most large infrastructure projects are Govt funded).

    If this real recovery eludes India (and rest of the world) for another 1-2 years, builders will be in serious trouble as sales will start declining again. Their high debt and high level of pledged shares put them in a very risky position.

    Let us watch post-Diwali action in the markets and see how many legs this recovery has!

    cheers
    CommentQuote
  • Wiseman's Credibility

    I request all the people to read all the previous posts of wiseman. This man is knowledgeble no doubt. However he uses his knowledge to send wrong propaganda. He said share market is going to 8000 levels again and Chennai real estate prices will reduce 50% etc. Nothing happened. Even he knows that wont happen. then why he is spreading always somthing when he intend to create panic among people.

    All dear members: please do not panic while reading his posts. you do what you intend to do before reading posts.

    Again, if chennai real estate prices are going to reduce by 50%, I will leverage myself fully with all possible loans and keep on shopping.

    But now market is not going to give " V " shaped recovery either.

    take your own decision.
    CommentQuote
  • Originally Posted by wiseman
    BigBear, Abishek, Economist and others,

    Happy Deepavali! to all of you ...

    Was skimming the Parsvnath results. Last quarter, they sold 1.6 lakh shares by promoters to a private group (including a group company) Parsvnath Landmark Developers Pvt Ltd, Banrod Investments and Sterling Pathway for 24.99 Crores, at a premium of Rs.1550 per share. At the same they floated a QIP for Rs.168 crores at only Rs.111 premium (so this is one way of bringing in money into the company from own/provate sources). Without this their results would have been rather bad, considering RE is supposedly doing so well!!! :D Furthermore last quarter sales fell from 219 crores in 2008Q2 to 152 crores in 2009Q2, a fall of 30% which is not a good sign at all!!!
    A tax writeback of 9 crores (against 47 lakhs in 2008Q2) also added to profits. If we remove all of these, profits have been flat despite severe cost-cutting as well as the advantage of much lower "cost of construction" as much of this quarter activity must have been inventory clearance where cost was already allocated in previous quarters. Despite all this, they just about maintained profits on falling sales. One of these days there will be no more cost cutting and accounting gimmicks and by then, if there is no real recovery, then the sh** will hit the fan. They have just bought one more quarter's time at high expense for recovery to happen! Just like most countries and businesses worldwide ...

    Selling your shares to show revenue boosts thru other incomes is a game towards quick death. Also, one more point. They still have 12 Crores shares (81% of Promoter holdings) pledged against debt raised. Any weakening of company financials may see risk of management losing hold (though why anyone would want to get control of a company this badly managed is a wonder!;)).

    Anyway, Parsvnath is not the case study one needs to be looking at. Let us see what the big boys have to show in the coming days.

    There was a lot of hype about IIP shooting up to 10%+ and the markets used this to take off again! Let us not get as confused as the market. IIP is production data, not sales data. The principal reasons for this rise are 2 ...

    1. A low base effect (of bottom IIP data of Sep 2008)
    2. Inventory buildup on hopes of recovery

    Adjusting for these 2 effects, the real, normalised IIP growth has been calculated at just over 4%, still well below the 2007 rates of 20%+.

    My own contacts in the infrastructure business are not too happy about sales growth in critical items for infrastructure. Sales for past 4-5 months has been flat and not showing the magical numbers in the newspapers.

    Finally, both RBI as well as FED (and other Central Banks) are quite clueless about when this recovery will actually happen without the bailout! That is real recovery, right now its Govt spending and propping up (most large infrastructure projects are Govt funded).

    If this real recovery eludes India (and rest of the world) for another 1-2 years, builders will be in serious trouble as sales will start declining again. Their high debt and high level of pledged shares put them in a very risky position.

    Let us watch post-Diwali action in the markets and see how many legs this recovery has!

    cheers

    Belated diwali wishes.Very nice analysis and looking forward for these kind of analysis about RE companies.
    CommentQuote
  • Originally Posted by bear_baiter
    I request all the people to read all the previous posts of wiseman. This man is knowledgeble no doubt. However he uses his knowledge to send wrong propaganda. He said share market is going to 8000 levels again and Chennai real estate prices will reduce 50% etc. Nothing happened. Even he knows that wont happen. then why he is spreading always somthing when he intend to create panic among people.

    All dear members: please do not panic while reading his posts. you do what you intend to do before reading posts.

    Again, if chennai real estate prices are going to reduce by 50%, I will leverage myself fully with all possible loans and keep on shopping.

    But now market is not going to give " V " shaped recovery either.

    take your own decision.

    Wiseman prediction might have gone wrong with Chennai but can you disagree with the fact that prices have fallen drastically in many places of India particularly in Bangalore,NCR and some parts of Mumbai.
    CommentQuote