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  • Another fact to fuel the myth:

    Gold is down and not much interest from investors. Equity is hated and people have no trust. That leaves only the RE as the sole one to chase. That makes all the bogeys as RE in the train and get on board and there is no other train in town!
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  • True but Gold is not finished yet... I think in India after "land" (not building) only gold comes next in terms of trusted and tested investment
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  • If you want to pop the bubble RE, there is only one way to do it.

    Raise Property Taxes

    No reason why property tax is so low today when prices have increased.
    Make it 1-5% of GV.
    Occupied property at 1%, empty residential lands at 2-5%.
    Charge 12% Interest Rate if they do not pay and get it cleared by new owner when it is sold.
    Remove water tax and other fixed taxes.
    Create one big property tax that makes the holding cost expensive.
    Stamp duties can also be increased further to 10%. Ban POA transactions.

    Once property hoarding becomes expensive and transfer expensive, the prices will automatically come down.
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  • We generally dont know how to prepare for bad times..we suffer from opinion bias to think I am alright, but only the others will be affected. That is wrong..because you are not outside the system. Everyone will be affected if we get into deflationary cycle when the bubble burst. Negative Equity is not a myth..Its part and parcel of every investment and RE is not insulated. It takes different forms in RE..like long stagnation cycles..low market intrest with no buyers..no new projects from builders..price correction in over supply region...slow development in terms of infrastructure and civic amenities etc, price crash in over-leveraged and toxic properties. It has happened in the past..and it will happen again.. We had a glimpse of what can happen in 2009, lets not forget the learning.
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  • Make it 1-5% of GV.
    Occupied property at 1%, empty residential lands at 2-5%.
    If suburb migration is one way to decongest the city, why not make the CBD property taxes at 5% and suburbs at 1%, at least people have some motivation to put up with the issues of new GCs and power cuts and enough incentive to move out.
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  • Originally Posted by maverick007
    Another fact to fuel the myth:

    Gold is down and not much interest from investors. Equity is hated and people have no trust. That leaves only the RE as the sole one to chase. That makes all the bogeys as RE in the train and get on board and there is no other train in town!


    Disagree that gold is done and investors are out, current devaluation of INR has not provided tangible pricing advantange in gold in india plus taxes and jewelers restricting sales of bullions not helping
    in the US, sale of physical may it be through coin exchanges or goldeaneaglecoindotcom or ajpmdotcom etc is through the roof, premiums are up, i can sell bars at 50$ premium today, retailers sell at 3 to 6% premium
    At 1000-1100 - Pre QE levels , gold will stabilize , this is what i see
    Soverigns will start to buy first
    Middleeast, singapore,srilanka, malaysia, indonesia, brunei,african nations etc
    It will cause a stabilization range of the pricing, retail buying will follow from asia or in parallel which will then lead to stabilizing GLD etf
    In the mean time as pointed earlier WGC will try to contain production levels secretly and constrain the supply ...
    this is my theory . let us see
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  • My post meant give respite to end users, charge more for the empty flats and empty plots wherever they are.
    It might sound crazy to charge a retired old person to fork up 5L/yr on his 1C property (5%) where he has been living for 50 years. He cannot give up just because land values went up.
    We should slowly ramp it up for occupied properties. My numbers are just examples.
    I am sure we can come up with a good formula.
    Nothing against rentals, govt should encourage people to rent it out.
    Keeping a property vacant is not right when so many people do not have housing.

    I myself hoard property, I will keep on doing it as long as it is profitable for me.
    I am sure many of you guys do as well.

    Suburb migration is not a objective of Govt.
    Actually it makes harder for govt to provide services. Is it cheaper to lay 10km of metro vs 100km of metro.
    Same for water, power, roads, postal services, internet, hospitals or any other infra.
    Decongestion is never liked by govt, though they never admit it.

    Infra improvement are all pipe dreams, never going to happen.
    People are choosing GCs in suburbs becasue they do have lesser choices.
    Power backup, security, sewage and water are more important needs than swimming pools, gym, etc.

    Put water, power, roads, metro/mono, expressways in Thiruporur then it will become popular as Velachery.
    There are hundred different Thriuporurs all around the city.

    Lets admit we do not have enough funds to improve and give services to every place.
    Denser areas will get a preference.
    Per capita infra expense is reduced by improving Velachery.
    End of the term, Velachery residents have more voters than Thiruporur.
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  • I agree with K11, We need a land ceiling and high property taxes to ensure low cost and affordable housing. Otherwise, people who have money will continue to hoard and own multiple properties. Locking a flat is like wasting food..Government is not doing its part efficiently to provide alternate housing through TNHB or encouraging development of township.

    One of the easiest thing government can do to decongest CBD is..make parking and driving in the city costly..start charging 100 Rs/hour for all vehicles parked on the road..It will create a new avenue for better planned redevelopment of chennais old building/localities and encourage people to move to suburbs.

    IMO, Bringing Utility based charges and ensuring minimum utilization for enjoying service/luxury is a must in country like India where the balance between haves-have-ots is skewed. The gap is widening everyday..If the government overlooks it..in another 50 years we all have to start living in ghettos with protection of guns.
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  • Originally Posted by SRaj001
    Disagree that gold is done and investors are out, current devaluation of INR has not provided tangible pricing advantange in gold in india plus taxes and jewelers restricting sales of bullions not helping
    in the US, sale of physical may it be through coin exchanges or goldeaneaglecoindotcom or ajpmdotcom etc is through the roof, premiums are up, i can sell bars at 50$ premium today, retailers sell at 3 to 6% premium


    Issue is about the charm for gold in India as an investment at current levels. Gazillion sites in US can sell at premium. Does not matter. It has not fallen much in India due to USD strength. Investors don't see a charm in current prices. Just because the bottom is in, one cannot predict that the bounce is around the corner. Gold can wallow for a decade in grinding fashion before it can do anything. Nothing is guaranteed. At this time, investor worth the salt in India, except for usage, will not touch the Gold in INR.
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  • Originally Posted by Ramchi
    Japan to India: Busting the biggest myth of investing in real estate - Firstpost

    Interesting article born RE investment.


    the bear sayers have always been coming up with theories in calling risks in any asset valuation system, for one to become a smart investor, reading and analyzing history is very very important, we get fixated in past performance but never read history.
    Japanese crash, Boston crash in 1980, Subprime crash in US every one of them has and had unique forces driving within and from outside the sytem, some times such systemic risks are very evident, some times it is very difficult to identify.
    In japan's case interest increase to deflate the bubble became a bad decision ,central banks have learnt from it and it has become a case study for most
    now coming to chennai what are the forces one needs to analyze
    1 - Growing urban population movement, i dont see reverse migration back to 2nd tier cities or villages- growing power cuts less opportunities means more people flock to chennai
    2 - language barrier - people in TN are very weary of going to neighbouring states for jobs because of language issues unlike our folks from AP or kerala
    3 - First time home buying still has a lot of room ahead - people who buy factor 20-30% downpayment of total valuation of the property - thats a high order number from world comparison
    4 - interest rates still are relatively low compared to recent years
    5 - Loans are 15 /20 year amortized vs 30/40 or 100 year loans such as in Japan - if India decides to amortize to 25 to 30 years it means another crazy bull run
    6 - FSI is still conservative in chennai and bound to be increased if it does initial stagnation followed by higher valuation of land parcels -- possible bull run
    7 - INR devaluation motivating NRI buyers to get into the market
    8 - Poorly performing MF and NON EXISTENT CORP governance in indian firms including IT non IT telecom manufacturing import export businesses will cause less confidence in equity investing
    9 - shaky political climate with elections coming up and any remote dependency on communist for next govt means equity markets rattled
    10 - Failing agricultural occupation and more and more farmer suicides means next generation would be in service sector instead of farming causing more movement of people to chennai and cities
    11 - Good quality Higher Ed completion rates, Engg gradution rates that causes more qualified work force from TN
    12 - More and more TN folks going outbound to work in countries and newer frontiers in Africa, Qatar , Rebuild efforts in war stricken nations , libya, iraq etc

    these are just forces, does not mean we are going to see BULL market because of such forces
    we are also seeing a lot of counter forces
    1 - What was a local chennai builder market trasnformed to 2000+ MSB development market in chennai - more supply
    2 - Buyers with a lot of choices, lot financial plans 10/90 - 20/80 etc
    3 - Poor rental yields
    4 - Over leverage
    5 - Stagnating salaries
    6 -Competing states for auto and manufacturing industry set up
    7 - lacking infra around roads, airport, metro , rail , water, current/power

    Even though these PRO / CON forces exist in the market all the time, the key catalyst usually is some thing external not organic or within,
    all the forces i mentioned above are known understood and well factored in pricing
    what impacts and brings in a change to the equation A FORCE or a combination of FORCES that are external and not understood that cause valuation corrections
    any clues on what those could be ?
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  • I would not prefer govt to put a max number of property or some other measure to stop holding multiple property/hoarding. China has this stupid rule and still prices go up.
    They just need to make it expensive.
    Any other measure will be socialistic.
    If X pays the proper property tax he can hold 10 acres which could house 500+ houses.
    X needs to compensate for the loss of revenue - as long he does no issues.
    There should not be limits on sizes, but make X pay.

    I do agree with nabhishek on congestion tax for vehicles like in London.
    But of course we need to have public transport - bus/metro/mono/train before we start taxing them.
    Also the money should go into roads/expressways - people should get some value for when they pay.

    Let freemarket rule.
    There is no necessity for govt to do anything else.
    I would not even encourage TNHB to take pivotal role to provide housing for masses.
    Let the private developers do it. Govt should not interfere except for slum clearance and govt property devleopment.
    Acquire land and auction them off to private developers publicly.
    Let them develop townships, price them accordingly. Competition and availability (supply) should bring down prices, not govt dictating prices. Involve private companies wherever possible. Roads, metro, mono, etc.
    Things will move faster.
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  • Originally Posted by nabishek
    I agree with K11, We need a land ceiling and high property taxes to ensure low cost and affordable housing. Otherwise, people who have money will continue to hoard and own multiple properties. Locking a flat is like wasting food..Government is not doing its part efficiently to provide alternate housing through TNHB or encouraging development of township.

    One of the easiest thing government can do to decongest CBD is..make parking and driving in the city costly..start charging 100 Rs/hour for all vehicles parked on the road..It will create a new avenue for better planned redevelopment of chennais old building/localities and encourage people to move to suburbs.

    IMO, Bringing Utility based charges and ensuring minimum utilization for enjoying service/luxury is a must in country like India where the balance between haves-have-ots is skewed. The gap is widening everyday..If the government overlooks it..in another 50 years we all have to start living in ghettos with protection of guns.



    ABISHEK -
    Wow what a transformation - when did you turn to be a socialist -
    Land ceiling, Tax the rich, Punish the success, More govt sponsored housing are all clear formulas that have FAILED in the past in many many countries, why are we not learning from it, privatisation is the only way and if PSUs are learning to do it state / local govts has to as well , going the other end is not going to help
    Affordable housing / EWS is different from socialistic housing prrograms which only will create more and more "PROJECTS"
    I think if you look at where you need to live with guns its the projects not the GC or indpendent layouts
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  • Originally Posted by SRaj001
    ABISHEK -
    Wow what a transformation - when did you turn to be a socialist -
    Land ceiling, Tax the rich, Punish the success, More govt sponsored housing are all clear formulas that have FAILED in the past in many many countries, why are we not learning from it, privatisation is the only way and if PSUs are learning to do it state / local govts has to as well , going the other end is not going to help
    Affordable housing / EWS is different from socialistic housing prrograms which only will create more and more "PROJECTS"
    I think if you look at where you need to live with guns its the projects not the GC or indpendent layouts


    I have always had the inclination..You could have sensed it in many of my earlier posts too..I dont agree that if you have money, you can get away with exploitation. In a diverse culture like ours, we need systems to protect against discrimination..otherwise my fear is we will breakdown like Russia..I firmly believe healthy development should involve everybody and be inclusive and give fair chance. A GC amidst slums? is it safe? My Outburst is more relating to the recent trend of overlooking public instituitions and trying to bypass existing rules/setups for convenience in the name of we can do better with self-governance..it is very disturbing to me. I dont say capitalists shouldnt flourish..Its important for development and growth..I am just saying governments should ensure the right people be taxed and do its job to ensure level playing ground and to see people left behind due to non-exposure to growth be carried along by government schemes and made felt part of the growth..We need social security..thats enough. For people who cannot afford, only the government can subsidize..no private builder will ever do so.
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  • Originally Posted by nabishek
    I have always had the inclination..You could have sensed it in many of my earlier posts too..I dont agree that if you have money, you can get away with exploitation. In a diverse culture like ours, we need systems to protect against discrimination..otherwise my fear is we will breakdown like Russia..I firmly believe healthy development should involve everybody and be inclusive and give fair chance. A GC amidst slums? is it safe? My Outburst is more relating to the recent trend of overlooking public instituitions and trying to bypass existing rules/setups for convenience in the name of we can do better with self-governance..it is very disturbing to me. I dont say capitalists shouldnt flourish..Its important for development and growth..I am just saying governments should ensure the right people be taxed and do its job to ensure level playing ground and to see people left behind due to non-exposure to growth be carried along by government schemes and made felt part of the growth..We need social security..thats enough. For people who cannot afford, only the government can subsidize..no private builder will ever do so.


    Its again a philosphical and long discussion
    I strongly beleive govt should focus on core set of responsibilities and do good at it
    May it be education, health care, infra, judicial systems, law and order etc
    they need to be the enablers for growth
    the moment govt gets into non-core competency then it becomes either a welfare program or an ill-run program. many countries realize it aftre spending all their wealth some realize it sooner than later and become successful
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  • Govt will keep this TDS tightening until next budget and will roll back prospectively from 01.06.2014 like what he has tightened in last budget w.e.f 01.06,2013

    Big land parcels are with Politicians and Landlords for ages and nithing can be done over night,though we wish it should be done
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