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Where Are Chennai Real Estate Prices Head in 2010?

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Where Are Chennai Real Estate Prices Head in 2010?

Last updated: May 14 2010
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  • #51

    #51

    Re : Where Are Chennai Real Estate Prices Head in 2010?

    India has to Evolve from within

    Originally posted by subramaniansubbiah View Post
    Agreed.
    1. As you can see EURO is collapsing and it is now 58 (in dollar terms 1.26). It may reach parity with dollar.
    But rupee also will go down little bit and it may touch 47.
    But EURO will go down much fast.
    2. Europe is the world's biggest trading zone than US and total size in GDP as well.
    Market is heading towards a correction in the later half of the year. (around 20&#37
    3. US will start slowdown (already in slowdown only) faster in the second half of the year
    due to tax credit expiry and stimulus withdrawal and exports (even though they are little) going down.
    4. There will be more layoff in IT in coming days and well rupee also will also
    drop against USD due to slowdown but not against EURO.
    5. But remember that the trend will reverse when they see that US is in a bigger danger than India
    and rupee will stay and dollar will collapse but this will take only after 2-3 years.
    6. Long term India is still safe due to low base for a high population and growth will be there
    but it will be inwards not outwards. India will start chasing income tax evasers to rein the fiscal deficit.

    Whatever growth India has seen in last 5-6 years is not the real one, in sense its mainly bacause of FDI, money from outside purely foreign money, excluding the remittance from US/ Gulf.

    Why FDI flows because of lower interest rate and return at source and higher interest rate and return from India using Participatory Notes (PN notes) which is not taxed not under RBI control and mostly from operated through Tax Havens.Once the source country's interest rate start to rise, after the exit from stimulus, money flow out of India, then where is the boom, its a glitch.

    India is growing at its own pace, growth has to be home grown, only then India will evolve and prices and market may sustain.

    Even when the economy is down in US, Europe etc,
    INR is at 45 to US and 58 Euro, very low value.When the economy booms in the West, INR will touch 50-60 against USD fueled by Inflation, then whats the worth of 1C, 2C etc...

    To me INR is in the brink of collapse, markets too are weak inside,
    when things will the collapse no idea....may be after China

    If you see in the last 15 years or so, except India & China, almost all the regions have gone into collapse or recession starting with South East Asia- Currency crisis, US Europe Middle East recession, India & China may be the next to follow the cycle.
    Last edited by REUser; May 11 2010, 11:56 PM.

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    • #52

      #52

      Re : Where Are Chennai Real Estate Prices Head in 2010?

      // Whatever growth India has seen in last 5-6 years is not the real one, in sense its mainly bacause of FDI, money from outside purely foreign money, excluding the remittance from US/ Gulf.

      Why FDI flows because of lower interest rate and return at source and higher interest rate and return from India using Participatory Notes (PN notes) which is not taxed not under RBI control and mostly from operated through Tax Havens.Once the source country's interest rate start to rise, after the exit from stimulus, money flow out of India, then where is the boom, its a glitch.//

      Well said & we lost our money value.

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      • #53

        #53

        Re : Where Are Chennai Real Estate Prices Head in 2010?

        Originally posted by purush View Post
        // Whatever growth India has seen in last 5-6 years is not the real one, in sense its mainly bacause of FDI, money from outside purely foreign money, excluding the remittance from US/ Gulf.

        Why FDI flows because of lower interest rate and return at source and higher interest rate and return from India using Participatory Notes (PN notes) which is not taxed not under RBI control and mostly from operated through Tax Havens.Once the source country's interest rate start to rise, after the exit from stimulus, money flow out of India, then where is the boom, its a glitch.//

        Well said & we lost our money value.
        Absolutely Incorrect.


        Interest rate arbitrage is not the reason why 95% people invest in Indian economy.

        "Carry Trade" into India is minor, In any case Carry trade (mainly the usual Japanese Yen) has a foot print in India under 5 Billion and it constantly moves in and out (This only has margin impact on currency volatility)

        Don't you worry Carry Trade will affect. BTW Japans interest rate is has been under 1% for over 10 years. Japanese Government holds zero interest rate policy.

        European, US and other developed nation's Investors are generally very skeptical to invest even into Indian Government Bonds due to India's poor sovereign debt rating.

        Many Investment boards are even barred from investing In Indian corporate bonds and some even barred from investing in to Indian government bonds.

        Therefore no need worry.

        The real concern will be Poor Government economy management or any locally engineered crisis that affects India's economic growth drastically.

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        • #54

          #54

          Re : Where Are Chennai Real Estate Prices Head in 2010?

          india_urbanization

          http://www.mckinsey.com/mgi/publicat...ve_summary.asp

          Got time read the report.....nice one

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          • #55

            #55

            Re : Where Are Chennai Real Estate Prices Head in 2010?

            Originally posted by Economist View Post
            Absolutely Incorrect.


            Interest rate arbitrage is not the reason why 95% people invest in Indian economy.

            "Carry Trade" into India is minor, In any case Carry trade (mainly the usual Japanese Yen) has a foot print in India under 5 Billion and it constantly moves in and out (This only has margin impact on currency volatility)

            Don't you worry Carry Trade will affect. BTW Japans interest rate is has been under 1% for over 10 years. Japanese Government holds zero interest rate policy.

            European, US and other developed nation's Investors are generally very skeptical to invest even into Indian Government Bonds due to India's poor sovereign debt rating.

            Many Investment boards are even barred from investing In Indian corporate bonds and some even barred from investing in to Indian government bonds.

            Therefore no need worry.

            The real concern will be Poor Government economy management or any locally engineered crisis that affects India's economic growth drastically.
            why did Indian Stock Market go 8000 levels, whats the reason?
            was there any crisis home?

            who is owning ICICI Bank and HDFC Bank, which invest in T bills and govt bonds?

            Interest Rate is just one small factor.
            If you compare the money going into Indian Govt Bonds and PN notes you will see the startling difference.

            In RE also, we have the FDI, ECB flowing into Indian Builders who get the money from Foreign Investors, build/ promote RE and return the profit to the Foreign Investors, aid by Govt Regulators.

            Before Independene, Foreigners bought the raw materials esp cotton from India, process them in their own country, ie convert cotton in fabric, clothes and sell it back to India people, and they made money.

            Now, the reverse is happening,Foreigners pour money into India, in the name of FDI, PN Notes, catch hold of some faithful/slave dogs/lobbyist, then will do the processing and marketing, and return back bulk of the profit back to Foreigners.

            Only the roles have changed because of Huge illiterate Consumers in India.

            Leaving all aside, my only two question is why is INR pulled so low, inspite of being Fundamentally strong? Shouldn't be the INR valued at 1 USD = 30 USD?

            Secondly, the prices of Petrol and Diesel, mother of call causes of price rise and high Inflation. When one barrel was trading at 140 150 USDs we had petrol prices in India around 45 INR. When the prices came down to 60/70 USD per barrel, why did not the prices come in India, to atleast 40 INR.

            Now when a barrel is trading at 80 USD, we have going to have a price rise of 6-7 INR in both, whats the logic can any one explain?

            These two have big impact in RE prices.
            Last edited by REUser; May 13 2010, 11:28 AM.

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            • #56

              #56

              Re : Where Are Chennai Real Estate Prices Head in 2010?

              RE on Shaky grounds

              The Indian version of Forbes magazine lists the 100 richest Indians. Apart from the usual suspects, what intrigued us was that most of the new entrants in it were from the real estate industry. India is a services-based economy and a lot the people were from technology or other export services and products. But real estate?

              It is a bricks and mortar industry that caters to the local market. Yet it is so vast that it is creating untold riches. As people move to cities to build their careers, builders are fueling their aspirations for a dream home. The builders themselves have built their companies with successful initial public offerings and by attracting foreign investment. It's a good time to be in Indian real estate, with buoyant prices and never-ending demand.

              Yet it is our contention that the industry, indeed the economy as a whole, is on some shaky ground.

              First of all, the overall challenge India will face is in dealing with urbanization. We have clearly not been able to use urbanization as part of an inclusive and healthy economic growth strategy. In fact, we have been able to attain a commendable level of economic success despite failing urban infrastructure and services.

              Today, even though only 30% of India's population lives in urban areas, cities contribute more than 60% of the country's GDP and account for 90% of government revenues. Urbanization is a key component of economic development. But, as reflected in the state of most Indian cities, little attention is given to their well-being and advancement. The dire and unbearable conditions of our cities are a result of slow and small-scale interventions to ever worsening conditions. They are a result of a complete lack of long-term strategic thinking.

              Our cities have therefore grown in their physical size and economic prowess even as there has been a virtual collapse in the basic urban services of housing, water, energy, healthcare etc. India's cities today are characterized by widespread poverty, poor health and sanitation, crumbling infrastructure, environmental degradation and poor quality of life. According to the 2001 census, slums now account for about 25% of all housing in our cities; approximately 26% of households in India's cities don't have access to sanitation facilities.

              The imminent and unprecedented urban growth that India is going to experience in the coming decades is therefore daunting. According to the United Nations World Urbanization Prospects report, 914 million Indians will live in cities by 2050, compared to 300 million now. If India doesn't fix its urban systems, its entire future is in jeopardy.

              Those who have moved from smaller towns to the city are not looking at going back to their hometowns.

              “Unplanned development will not only have an adverse impact on real estate investment and development but also on our macro economic and societal development.”
              The sectors of water, solid waste management, transport, electricity and sanitation are some of the areas of that need immediate focus. What's the point of a designer shower system in your new house if you don't have water in it?

              Most large developers in India are today aiming to build their own "integrated townships" to skip the infrastructure woes of the city. But a number of these communities are already facing a crisis of basic infrastructure like water and power which can't be privately delivered. If the overall infrastructure of India's cities doesn't improve, the real estate industry can't escape it.

              Moreover, the License Raj might have vanished from other sectors of the economy but it is well and truly alive in Indian real estate. From buying land to receiving building permits, the ordeal that the real estate industry has to go through to get a project going is irrational. Mumbai, for instance, has a multi-stage building approval system and requires over 50 certificates before completion of a project, which can take anywhere from 24 months to 36 months.

              This level of red tape, combined with laws that are unclear, allows politicians or bureaucrats to use their discretionary powers (read corruption). There is a desperate need to fix the system and make it more transparent and simple.

              Unplanned development will not only have an adverse impact on real estate investment and development but also on our macro economic and societal development. India's economic success in the 21st century is going to be defined by the manner in which we address the revival of existing cities and the way we plan our new cities. If we continue the current trend of apathy, we are doomed towards a very bleak future.

              Businesses can't go on functioning against a backdrop of failing civic infrastructure. Also, economic success in the 21st century is going to be determined by the human capital that a society is able to attract and nurture. Cities today are competing for the best talent that can augment the productivity of their economy. If Indian cities fail to provide a good quality of life to their people, at some point you will see an exodus of smart people, which will be highly detrimental to the economy.

              The earlier brain drain of Indians to the West happened because of a sot economy and limited career options. After liberalization and the economy's subsequent bull run, India has grown as a knowledge economy. But if the cities are unlivable, we likely will have another brain drain -- to greener pastures, literally.

              This what I have been thinking and talking for long time.
              Last edited by REUser; May 14 2010, 01:29 AM.

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