Hello all chennai home buyers,

I have been reading the forum with people talking about 50 lakhs to 1 crore with lot of comfort. I am an NRI with a reasonable income level, but still these kind of money is a LOT to my standard. On a wild guess i should be reasonably making a better earning when compared to India based IT people. I am amazed when the forum points out the reason for RE market price to be the IT people. That puzzles me. How could some one pay this 1 crore with ease, even if the pay is 1 lakh /month, we are easily talking about a decade expecting consistent repayment?

Out of curiosity i am going to start couple of posts on understanding the market facts on who is reasonable, the buyers or sellers.

If you don't mind post your comments. please forgive me if i offend someone, thats not my intention. which i will make it clear in my future posts.

Thanks
George
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  • You should read this book!

    Originally Posted by Economist
    Try telling this to corporate investors queuing up to Invest in India and other BRIC nations.

    They know the joint very well and still willing to invest millions in India.
    I live in a G20 country and so called "developed nation" the accepted belief is so call mature nations or developed countries have not much to offer in terms of growth. Every investment portfolios in the west these days have 10% to 20% invested in India and China.

    In my country peoples retirement fund and Goverment future fund (Billions) has great exposure to India & China.



    Economist,

    I'm repeating myself as I have posted about this book a while ago ...

    You must read this 1955 book, "Where are the Customer's Yachts!. It talks about how, while you see so many bankers driving in their Masseratis, you hardly see any of their customers make much money out of their investments managed by these managers.

    Basically, bulk of these money managers are sham and end up losing customers hard-earned savings. And most of them exhibit herding mentality (check out most Mutual Funds will have a large chunk of their funds in very similar sectors, companies, etc, safety in numbers and if you don't stick your head out, there is no risk of getting it chopped off and at the end of it, they are only/mainly interested in their month-end salaries and bonuses!:D

    You will also see this in company ratings. When it reaches 1000 from 100 for a hypothetical company, the agencies will tell you to buy at 1000 and not 100. When it then falls to 150, it is only then that they will change rating from buy to hold. And when the company is about to go bankrupt, they will then change it to sell!!! :D:D

    Figure it out! You are the only good manager of your money. So, read up a little and do your own investment management!

    I should know. I have 2 of my MBA classmates as top fund managers (Templeton and Citi). Let me tell you. Each one of you can start educating yourselves from now on (do it as a hobby with passion) and in 2-3 years, I guarantee you will be as good as the best money managers in this country, if not better. You simply cannot trust your money to most money managers of today, especially the youngsters who do not even have the value systems of the oldies (they take mocu more pride in their work and much better care of your money), leave alone their experience! I know I'm generalising and will face flak, but, like in all generalisations therer will be a few exceptions!

    cheers
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  • I agree with wiseman ;he is absolutly correct as i have experienced myself in the past 5 years of trading experience.:(
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  • prices that are tandem with high quality of life and infrastructure is acceptable. but in chennai, quality of life and infrastructure is nowhere nearer to any comfort level. but prices are multifold. as year passes, 3c property buy now will suppose to go 6c in 4 or 5 years is not going to happen here after. in mean time, foriegn fund will go easily where it find more attractive. so without world class standared, world class prices are not sustainable in longterm
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  • Wiseman,

    you should probably start a thread on books to read to educate oneself.

    I'm gonna read the book you mentioned.

    Thanks
    George
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  • I would love to see Economist throwing out his source of inspiration in predicting the RE market. :)

    I hope those aren't about market creation or brand building stuffs. kidding

    George
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  • Originally Posted by georgel2004
    I would love to see Economist throwing out his source of inspiration in predicting the RE market. :)

    I hope those aren't about market creation or brand building stuffs. kidding

    George


    George, I don't really understand what you are saying, Can you please clarify.

    I am not in the business of predicting short term future growth or decline Boom or bust.

    My main advocacy in this forum has been the following:



      Indian RE has excellent "Long term" prospects.
      To create "long term" wealth and stay ahead of inflation eating your wealth, RE is one of the best tool (If not the best)
      I am all for investments in quality blue chip stocks as well (well diversified) But direct RE holdings must be part of your overall portfolio.
      I dont like to try and time the market or out smart the market (as I believe it is not most situations).

      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
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  • The next decade is for India to grab
    (Todays news)


    A decade is but a small speck on the sands of civilization’s time. But in the life of a nation born only sixty two years ago, a decade can be quite transformational. Each of the last two decades has been transformational for India, and the next one will also see dramatic changes.
    We will see substantial economic growth, reduction in poverty, higher degree of urbanization and a virtual explosion of talent. These changes will be visible not just in living standards or aspirations of the people, but also in public policy. Future leaders will be from a generation born in the era of economic reforms. These leaders are unfamiliar with shortages, and the days of licence and permits. This is the fearless generation that will shape the next decad for us.
    Setting the context
    The global economic turmoil has severely tested every country. India has weathered the crisis extremely well and has emerged stronger, relative to other countries. India’s economic resilience and policy responses are positive indicators that the country’s stature in the international order will gain significantly in the coming decade. Given that an economy’s performance is perhaps the major factor determining a country’s leadership role in the global order, the relatively strong economic performance is likely to confer for India a larger global political role also.

    Global leadership
    I envision India’s higher international leadership along several dimensions. First, India will be, along with China and Brazil, among the worlds’ major drivers of economic growth. It is feasible that a 7-8% p.a. GDP growth over the coming decade will significantly narrow the differential in income and living standards between India and some of the emerging Asian countries.

    The growth impetus provided by the domestic economy can easily propel us into the world league. We can become one of the manufacturing hubs for the world, in areas like automotive, metals, textiles and engineering. In IT services we can enhance our already established global status.
    Power to influence
    India’s leadership role will gain on other fronts too. The country’s economic strength, democratic underpinnings and credibility in a troubled neighbourhood will increase India’s role as a regional mediator and as a key player in ensuring South Asia’s stability.
    At another level, multilateral institutions such as the World Bank and IMF will perforce have to recognize the reality of the importance of the new global economic powerhouses and will have to accord those countries a larger role and voice those institutions.
    Likewise, I do see India getting due representation in an expanded UN Security Council. And importantly, India will, over the next decade, extend its influence to the wider South East Asian region as a full-fledged member of the ASEAN economic bloc.
    Key drivers
    Let me identify the key factors that will drive India’s higher global ranking, economically and in terms being able to project its influence.

    First, I am confident that our Government will continue on the path of pragmatic liberalization, combined with improved fiscal discipline and monetary prudence. The fiscal position will improve driven by combination of higher growth leading to tax buoyancy, a rationalized tax structure leading to better compliance, and more decisive and broader push on the disinvestment front. Hopefully, the sounder fiscal position should lead to globally competitive interest rates.
    Second, I think the reduced involvement in running businesses will enable the Government to free resources and focus more sharply on those areas where it has to take the lead. Such as building the country’s lagging physical and social infrastructure. Providing a wide range of critical social goods, among them education, health care, drinking water, sanitation, law and order and also providing an economic safety net to those who are inevitably affected and disrupted by change.
    A third decisive trend that will play out over the next decade will be a significant strengthening and globalization of India’s corporate sector. Although this is a process that has been on for almost two decades now, we still have a lot of ground to cover. The reinforcing of corporate sector will be evident in areas such as stronger balance sheets, larger scale of operations, focused business portfolios, the emergence of global Indian brands, heightened global M&A activity, stronger corporate governance and greater engagement with society. Be it by way of higher standards of environmental compliance or taking on a larger role in the development of communities around them.
    Raring to go
    I do believe that India is set for rapid growth and progress over the next decade. Even so, I believe that we have to scale up the boldness of our dreams. The time has come to shift from small, incremental moves to taking big leaps even if it means taking on greater risks.

    As the world economy slowly takes to the upswing, we must be ahead of the curve in terms of growth and value creation, so that we are able to supplement the domestic growth momentum with the global push, when it come. High economic growth is a prerequisite to achieve inclusive growth. The next decade is for India to grab.

    DO NOT MISS THE BOAT.
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  • Beautiful and sensible analysis.

    Economist, How do you advice we distribute our investments (from hard earned money) across various portfolios. I think putting all our savings in RE (also in one city) is not a good idea and don't want to take risks with stock market either. I need these ideas to plan/optimize my own investments.
    There is one wild thought running in my mind! What happens if all my savings is in RE at let us say in Chennai or Bangalore and something like natural calamity of pakistan atomic bomb takes out the city! I don't intend to scare anyone here but trying to plan for the worst, hoping for the best.

    Would appreciate your detailed advice. Thanks in advance.

    Would look forward to ideas from someone like Wiseman too who sounds pretty knowledgeable.

    Originally Posted by Economist
    George, I don't really understand what you are saying, Can you please clarify.

    I am not in the business of predicting short term future growth or decline Boom or bust.

    My main advocacy in this forum has been the following:



      Indian RE has excellent "Long term" prospects.
      To create "long term" wealth and stay ahead of inflation eating your wealth, RE is one of the best tool (If not the best)
      I am all for investments in quality blue chip stocks as well (well diversified) But direct RE holdings must be part of your overall portfolio.
      I dont like to try and time the market or out smart the market (as I believe it is not most situations).
      Boom & Bust will happen If we all know when and by how much we would all be richer than Warren Buffet.

      I dont hold any crystal ball unlike some of our fellow members.

      RE is not like stock trading. Go for good property at good location that is affordable for you ( when you get one) If you are a long term investor.

      Dont sit around and wait for the 50% crash, It may never happen and you have missed the boat.

      Even if that happened the next day you bought the property,If you are long term investor you will not worry as it will recover in due course but what if it did not crash and if you missed the boat.
    CommentQuote
  • Economist,

    You do make sense, i got to read more of your posts.

    China's RE was in cities, in India its happening everywhere, that defies reasoning.

    I do agree with your perspective of going long in RE, but it badly needs a correction now.

    RBI disposing of dollars for gold when it is in peak. China not ready to hold dollars any more. ]http://economictimes.indiatimes.com/markets/forex/Dollar-shortage-in-Chinas-foreign-exchange-market/articleshow/5200518.cms

    RBI is moving in to take some cash from the market. There are so many things, which doesn't support RE in near short term.

    Also banks are going to increase interest rates on housing loans.

    Apart from this

    I am wondering why there has been no response to this post. Whether people are unaware or staying clear of anything that is in negative tone. :)
    ]http://www.indianrealestateforum.com/chennai/t-first-hand-experience-in-bank-officials-and-goons-nexus-in-foreclosed-property-7545.html
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  • Originally Posted by blogger
    Beautiful and sensible analysis.

    Economist, How do you advice we distribute our investments (from hard earned money) across various portfolios. I think putting all our savings in RE (also in one city) is not a good idea and don't want to take risks with stock market either. I need these ideas to plan/optimize my own investments.
    There is one wild thought running in my mind! What happens if all my savings is in RE at let us say in Chennai or Bangalore and something like natural calamity of pakistan atomic bomb takes out the city! I don't intend to scare anyone here but trying to plan for the worst, hoping for the best.

    Would appreciate your detailed advice. Thanks in advance.

    Would look forward to ideas from someone like Wiseman too who sounds pretty knowledgeable.


    Transnational, multi asset and intra city diversification can be done easily (Provided funds are available).

    I follow and recommend diversification in various assets classes and various location.

    I personally have exposure in:

    1. Equities (Indian, My Country, Emerging nations, and international)
    2. Direct Property Investment In India and my country (Geared).
    3. Fixed interest securities (Bonds – Government coupon and corporate, Cash)
    4. Listed property funds (REIT – Non Indian)

    Yes the major exposure is on direct property in My country and in India (recently)

    When it comes to RE my heart seems to favor Indian “Land” but I certainly don’t ignore diversification.
    Even with in India I a reasonably diversified (Chennai, Bangalore, Triupathi and Madurai)

    The RE in my country has great income return and excellent protection standards but could not match Indian Capital growth. My Indian RE bias is also influenced by my future plans to live in India on part time basis (If I had no association with India I would be less biased by India)

    Another reasons for my bias in Indian RE is It has historically rewarded my family (parents) well.

    In my country one can even borrow on Equities (Stocks/Shares) up to 70% (I don’t know if that is done in India) the dividend returns from shares are cool 4% to 6% on most blue chip shares. Don’t forget the capital growth.

    Shares and Property both are good if you have “long term” but you need a certain percentage of all the above (Asset allocation)

    Coming to your comment about natural calamity like earth quake and Pakistan atom bomb the answer is you can also be killed by a bus when crossing road – do you stop going out?

    One can die in a car/Train/Flight crash tomorrow so do you suggest we all stay at home?
    Shit happens, that is life.
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  • Roubini warns of mega stock mkt crash 'at some point'

    Q: The carry trade has played a big role in what has been happening but it seems like your thesis is going to count out any ideas that some of this growth in the overseas markets is coming because they have seen real growth, they have seen a lot of spending, they are still buying and snapping some of the stuff up. Do you discount any of that in the equity build that we have seen around the globe?
    A: No, I totally agree that of the increase in risky assets including equity, a good chunk of it could be due to fundamental improvements. We avoided near depression, asset prices should be higher. There is light at the end of the tunnel regardless of whether it is a V or a U-shaped recovery, asset prices should be higher. We are now having lower risk aversion and therefore investors are moving away from lesser risky assets like short-term treasury into equities, commodities, credit emerging market asset classes.
    So part of that increase in asset prices is fundamental. But that has become so rapid, so fast and so perfectly correlated across the world. In EMs asset prices have gone up by 100-150%. The real evidence are now in China and Asia, real estate, commodities, equity are getting out of hand, price-earning ratios are out of hand. So, it is a signal of a bubble and that is what many policymakers in this country are also concerned about.
    There is a clear case that part of this increase in asset prices is not just fundamental but this is the beginning of a very risky asset bubble like we had before and we know what happens when an asset bubble goes bust. And now it is global, it is not just the US asset bubble.
    Full article is available on the following link.
    ]http://www.moneycontrol.com/news/fii-view/roubini-warnsmega-stock-mkt-crash-39at-some-point39_423067.html
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  • Thank you, Economist. Follow-up and clarification on accident, atomic bomb etc.

    Accident:

    Don’t want this to happen. When this does happen to me, at least my wealth/savings is available for my family to survive!

    Atomic Bomb:

    Let us say I live in India/Chennai, I’m taken out with family and my countrymen/citymen, can’t do much. You are gone with Millions of people!

    Let us say I live abroad with family, and all my RE investments are in India/Chennai, hit by atomic bomb, then I have lost all that I saved in my life! Can we deny this risk?
    This is what I want to protect myself from. You answered this case anyway – Don’t’ leave all your savings and investments in one sector, one country or one city. Hoom…got to work it out.

    Sorry guys for thinking scarry things aloud! Apologies.

    Originally Posted by Economist
    Transnational, multi asset and intra city diversification can be done easily (Provided funds are available).

    I follow and recommend diversification in various assets classes and various location.

    I personally have exposure in:

    1. Equities (Indian, My Country, Emerging nations, and international)
    2. Direct Property Investment In India and my country (Geared).
    3. Fixed interest securities (Bonds – Government coupon and corporate, Cash)
    4. Listed property funds (REIT – Non Indian)

    Yes the major exposure is on direct property in My country and in India (recently)

    When it comes to RE my heart seems to favor Indian “Land” but I certainly don’t ignore diversification.
    Even with in India I a reasonably diversified (Chennai, Bangalore, Triupathi and Madurai)

    The RE in my country has great income return and excellent protection standards but could not match Indian Capital growth. My Indian RE bias is also influenced by my future plans to live in India on part time basis (If I had no association with India I would be less biased by India)

    Another reasons for my bias in Indian RE is It has historically rewarded my family (parents) well.

    In my country one can even borrow on Equities (Stocks/Shares) up to 70% (I don’t know if that is done in India) the dividend returns from shares are cool 4% to 6% on most blue chip shares. Don’t forget the capital growth.

    Shares and Property both are good if you have “long term” but you need a certain percentage of all the above (Asset allocation)

    Coming to your comment about natural calamity like earth quake and Pakistan atom bomb the answer is you can also be killed by a bus when crossing road – do you stop going out?

    One can die in a car/Train/Flight crash tomorrow so do you suggest we all stay at home?
    Shit happens, that is life.
    CommentQuote