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2010 The Year of Real Estate Bull

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2010 The Year of Real Estate Bull

Last updated: March 30 2010
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  • Re : 2010 The Year of Real Estate Bull

    Originally posted by REUser View Post
    I do not find any flat 2 Bed Room within Tambaram, Sholinganallur, Ambattur Limit
    Actually Wisey is planning to supply you his 1760 sqft plot in RK Salai for 10lakhs and then build you a 2bedroom flat for 8lakhs. So you check out with Wisey!
    PS. Dont take me too seriously, Wisey will want you to sell at the above rates but he wont sell anything but UNWISE stories.

    Comment


    • Re : 2010 The Year of Real Estate Bull

      Hi Economist,

      Thanks for your introduction, appreciate that. (Wiseman, read yours with interest too)

      I myself have recently entered the RE market after being in stocks for 10 years. I had considered a flat in Bangalore in Feb 2009, when there were good distress sales going, but gave up the idea as impractical. Also, all distress sales were in luxury flats beyond my reach. For me RE is a diversification and is only for long term i.e. for keeps. I decided to go with Delhi where I work and now I am tied up in Delhi RE.

      A flat in the south (or Bombay - but too expensive) for me would become possible after 3-4 years only. Hence my eagerness to gauge the direction of the stock and RE markets 3 years from now.

      Plus point - it gives me a lot of time to research. Minus point - I do much of my research online, which is not a very good idea.

      One more thing about me - I like to play safe and always indulge in extra-ordinary what-if kind of analysis. Asking "What if markets fall" in late 2007 saved me a ton of money when markets crached in early 2008. I apply the same analysis to RE. Putting a ball park probability figure helps me make decisions. For example - I am assuming the following:

      Chance for stock upswing: <10&#37;, maximum 10% rise from current levels
      Chance for downswing: ~50%, probable fall 30% from current levels
      Chance for crash due to global even: ~20%, fall of 50% from current levels

      For RE:
      Chance for serious fall from now: <10%
      Chance for serious upswing in next 3 years: <10%

      For cash:
      Chance for interest rate increase by 5% more than current levels: ~30-50%
      Interest rates remain same: ~30%
      Interest rates fall: <10%

      The above feelings ( and I act on them - putting money where my mouth is) clearly point towards RE investment being clearly indicated. Hence my new found interest (I never felt this way for the last 10 years. I made as much return in stocks as others did in RE)

      I am of course hoping RE prices remain the same or drop in the next 3 years, since I am a buyer and cannot take advantage of rising prices by selling RE, being a long term buyer. But I am not sure whether my above analysis is accurate or merely wishful thinking based on what I would like.

      I am equally serious about wars, disruption of law and order and hyper-inflation, but I wont go into that any further.

      Since tamil is my mother tongue, Chennai is the first option. Bangalore is the second because of weather. Also, air tickets to these 2 places are cheaper than Mangalore, Coimbatore, Cochin or TVM.

      I am an end user/ landlord giving out on rent. I dont have enough money for serious RE investing - I earn my living on a salary and investments are only for wealth preservation and "normal" kind of return, I do not want extra-ordinary returns, being satisfied with my current life. I have no illusions of my RE acumen.

      "Most Inner city Suburbs such as Annanagar, Adayar, Sastri Nagar, Mugaper, Besant nagar, KK Nagar etc,etc, and outer suburbs such as Sithalapakam, Medavakkam etc,etc,"

      My sister lives in Annanagar, water is definitely not good. Hair needs a full bottle of conditioner every day


      "I personally believe Guindy is one of the best locations in Chennai"

      I also felt the same, water there is tolerable

      4. What psf rate would you suggest.

      It depends on plenty of other factors such as suburb, location, property, access etc etc.

      So lets talk about Guindy or other places nearby. I'll get my google map

      5. What rental income will such a flat fetch

      As previous answer.

      Give me a ball park rent figure for 1000sf carpet area flat in the same area. How safe are the lease agreements, do you have tenant problems as with the north?

      7. What is the scope of following careers in that area

      a. Medicine – Excellent (as anywhere in India, It depends on the entrepreneur skills of the practitioner)

      I thought there was a serious glut of doctors from private medical colleges and salaried doctors are being paid a pittance

      b. s o f t w a r e engineer (excellent there are PSDs, DCs etc located in Thambaram area, not too far to OMR, Tidel pk etc)

      How much does an entry level IT person after a good engineering degree fetch

      I am asking for my children.

      Tidel park etc has really poor water

      8. What is the retail/commercial psf rates (capital values) in the area you recommend
      Once again you need various other factors to ascertain the valuation (Each property is different)

      I meant a 700 to 1000sf shop in a mall or something like a mall (i.e. Dukaan in Delhi means that nowadays)

      9. What is the rental yield psf PM in this shop


      Which shop?

      The one above, close to the flat.

      • Bangalore (Good value picking available – good potential)
      So you think prices have fallen enough there. It makes Blr a better place to buy than Chennai for now?
      • Chennai (Tight market & good potential must work very hard to look for bargains)
      So do you mean that market might fall a lot in Chennai in the next few years if faced by a global slowdown and tight market for IT?


      "I have plans to retire in Kerala, Every year I make some excuse to spend at least 1 week there."

      All the best for that.
      Last edited by Venkytalks; February 7 2010, 09:28 PM.
      Venky (Please read watch a or before posting)

      Comment


      • Re : 2010 The Year of Real Estate Bull

        Originally posted by nojoke View Post
        US will see another crash this year. There is talk about china bubble and even their Government agrees that there is bubble building up there. Japan is going down slowly. Greece is on the verge of bankruptcy. So is Portugese. With all this problem all around the world, I see there is little chance India will escape another crash this year.
        India has another bigger problem. NRIs will stop investing. There are so many NRIs already pissed off with the builders. Now that the real estate transactions are getting reduced, all these real estate moghuls will seek another avenue to make some easy money. The first thing they are going to do is grab land from these easy target NRIs investments. Already I am seeing this happening. This is the first sign of trouble. It is going to get ugly and worse. Be careful guys. This is not the time for investing in real estate.
        The PIGS (Portugal, Italy, Greece and Spain) situation is getting critical. Keep yourself informed before you invest your hard earned money.
        ]http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7159456/Fears-of-Lehman-style-tsunami-as-crisis-hits-Spain-and-Portugal.html[/URL]

        Comment


        • Re : 2010 The Year of Real Estate Bull

          Reality of Real Estate Investments

          It looks like investments in general and RE in particular is stressing out a lot of guys who are posting on this forum. Bad blood is flowing among forum members who are strangers and never met in life.

          Let me try to give a philosophical touch to this so that we know the root cause of all the confusion.

          1. The human thinking is born out of some sort of neurological defect in the human body. Therefore anything that is born out of human thinking is destructive.

          2. Food, clothing and shelter- these are the basic needs. Beyond that, if you want anything, it is the beginning of self-deception.

          3.There has been no qualitative change in man's thinking; we feel about our neighbours just as the frightened caveman felt towards his. The only thing that has changed is our ability to destroy our neighbor and his property.

          4.Society is built on a foundation of conflict, and you are society. Therefore you must always be in conflict with society

          5.The plain fact is that if you don't have a problem, you create one. If you don't have a problem you don't feel that you are living.

          6.When you are no longer caught up in the dichotomy of right and wrong or good and bad, you can never do anything wrong. As long as you are caught up in this duality, the danger is that you will always do wrong.

          7.When you know nothing, you say a lot. When you know something, there is nothing to say.

          Comment


          • Re : 2010 The Year of Real Estate Bull

            Hi wise,

            Shall keep it short as guys are getting annoyed about non RE discussions.

            Agree with you on renewable R industries future (Although my knowledge is limited in that Industry, I am a dirty non - renewable resources person)

            There is plenty of opportunity in & outside India, just imagine the opportunities when we get some metal & leadership from the Singh & Ramesh gov (soon they will have no choice but act for real).

            I believe the Industry is fragmented all over the world and it is likely to see major consolidation the future (that would be good for the industry)
            Last edited by Economist; February 8 2010, 04:56 PM.

            Comment


            • Re : 2010 The Year of Real Estate Bull

              Wise & Venky thanks for your intro.
              Venky, I am mainly into individual free holding tittles (commercial/ residential)my knowledge is limited in Flats.

              Please do not treat RE as Equities and do not apply the same principle, some basic reasons such as:
              • For a starters RE is not T+2 settlements,
              • The acquisition and exit cost & time are much higher (gov SD,Agent commission etc)
              • The liquidity issue:
              &#216; Say if you hold say 2Lacks worth of ICICI stocks you can liquidate say Rs 50,000 (in a flash) and invest that in to say Jindal steel or invest in FD with in couple of days. Can you sell 1 bed room part of your 3 bed Adyar apartment and buy say buy a flat in Madurai or Invest in SBI stocks?

              &#216; Say If you just heard RBI has dropped or raised rates by say 2&#37; you can in a flash you will strengthen or dispose your bank shares portfolio but will you be able to buy or sell a property in a flash? ( it will take a few months)
              • Capital requirement is much higher in RE (as we all know) where one can buy 10K worth of stocks on line.
              • Gearing & Margin lending – You can borrow against your RE (say 80% LVR) can you do that against your Indian equities? (In my country we can borrow for any purpose up to 75% LVR against our local shares & mutual funds, just like property –Margin lending -I don’t know if that facility available in India)
              Now tell me why should we apply the same principles of equities investment in RE?

              My suggestion is don’t try to time RE (particularly long), doesn’t mean you pay any price vendor asks.
              It is important to factor current market situation and current developments (but waiting for a fall in 2 -3 years is speculation in my language)

              I believe trying to time RE particularly in years is not possible.

              Just have certain basic principles that suits your circumstance (i.e, safe gearing, appropriate commitments etc) and when you get the right property at a reasonable value go for it.

              I had shocking experiences looking for assets in Chennai between late 06 to mid 08 (I can write a best seller on those experiences). Good assets were hen’s teeth. The knowledge of good assets available for sale was treated by brokers like national secret, gazumping was the name of the game.

              In those circumstances any sensible person would stay away (lack of quality stock), but that is not the case now price may have not crashed but good properties are now available and vendors are negotiating.
              Last edited by Economist; February 8 2010, 06:18 PM.

              Comment


              • Re : 2010 The Year of Real Estate Bull

                Originally posted by Venkytalks View Post
                I am equally serious about wars, disruption of law and order and hyper-inflation, but I wont go into that any further.
                .
                Venky,

                Yes that is one of the risk applicable to any investment – but It is not new to India and her risk profile has not increased any more that what it was 20 yrs ago.

                We had Pak 1, Pak 2, china 62, Kargil, Nuke standoff, Economic sanctions, Parliament attack, Many Mumbai attacks, Rajiv, Tiger ,ULFA, Naxals, Kashmir, many communal Violence (Mumbai, Guj, Babri,Kaveri etc)

                And we still manage to become a trillion dollar economy with 2nd fastest growth, Our asset prices have grown in the midst of all of this (both RE & stocks) - Tell me how many countries share this dubious honor? (Israel may come far second)

                Why this sudden concern?

                In fact if there was any sign of major war the whole world will step in as India In war will impact the economies of the rest of the world (not to mention our nuke status).


                If India is at war - more at stake for the world then ever before.

                Seriously – Don’t worry.

                Inflation? That is another story – That works in favor or people who are invested in property – That is the one of the main reason I invest in Indian RE.

                My views on Indians inflation and its impact on Indian RE will follow shortly.

                Comment


                • Re : 2010 The Year of Real Estate Bull

                  Hi Economist.

                  LEaving wars aside, inflation protection is one of the main reasons I am looking at RE.

                  I am of the view that for now 30&#37;individual bond/FD, 30%stock and 30% RE with 5+5%gold is the best mix given the circumstances.

                  I am ready for lumping into RE (since its too expensive) and later rebuilding stock and FD.

                  Since I believe stocks will fall and FD rates will rise, this is the best time for RE investment. Later one can cost averaging into stocks at good prices and FDs at better rates.

                  I have already acted on these assumptions.

                  Cheers, Venkat
                  Venky (Please read watch a or before posting)

                  Comment


                  • Re : 2010 The Year of Real Estate Bull

                    The PIGS (Portugal, Italy, Greece and Spain) situation is getting critical. Keep yourself informed before you invest your hard earned money.
                    ]http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7159456/Fears-of-Lehman-style-tsunami-as-crisis-hits-Spain-and-Portugal.html[/url]
                    There is a problem with some so called NRIs who left India primarily because of the incapability of surviving in India and so their total dislike for India. They will demean India always. I have met such funny folks across the globe and quite a few show up on this forum I suspect.
                    If PIGS die should Indian RE die? When PIGS were doing well did we say Indian RE will go up. In 1980s or 90s when PIGS, EUROS, SAMS did well did we say that we are rich. The WE here are NRIS. They simply went to those parts of the world to live as second rate citizens. Now if the others who stayed back created a successful India which is one of the future SUPERSTARS they (NRIS) cant digest their defeat, since they felt they were special since they crossed the sea with borrowed money, cleaning tables in the new country and then slowly saving peanuts! Now they cant digest India moving up when PIGS are falling!
                    Forget it.
                    Simple terms. Indian growth curve has just begun. So PIGS fall OR have wings I dont care. Indian growth is most likely guaranteed and I think that means RE in India has only a one way ticket. To the moon.
                    PS. Aside from above, I come to know that lots of NRIs who distress sold and exited abroad are coming to India trying to buy real big in RE. They want others to sell cheap but are being ripped. Pity first getting ripped abroad having to sell cheap, then coming back home to be made to buy at high prices and these are NRIs who have their heads floating above their neck! Sorry buddies you need to realise the truth. This is Indias century.
                    Last edited by Almighty; February 8 2010, 11:32 PM.

                    Comment


                    • Re : 2010 The Year of Real Estate Bull

                      Originally posted by Almighty View Post
                      There is a problem with some so called NRIs who left India primarily because of the incapability of surviving in India and so their total dislike for India. They will demean India always. I have met such funny folks across the globe and quite a few show up on this forum I suspect.
                      If PIGS die should Indian RE die? When PIGS were doing well did we say Indian RE will go up. In 1980s or 90s when PIGS, EUROS, SAMS did well did we say that we are rich. The WE here are NRIS. They simply went to those parts of the world to live as second rate citizens. Now if the others who stayed back created a successful India which is one of the future SUPERSTARS they (NRIS) cant digest their defeat, since they felt they were special since they crossed the sea with borrowed money, cleaning tables in the new country and then slowly saving peanuts! Now they cant digest India moving up when PIGS are falling!
                      Forget it.
                      Simple terms. Indian growth curve has just begun. So PIGS fall OR have wings I dont care. Indian growth is most likely guaranteed and I think that means RE in India has only a one way ticket. To the moon.
                      PS. Aside from above, I come to know that lots of NRIs who distress sold and exited abroad are coming to India trying to buy real big in RE. They want others to sell cheap but are being ripped. Pity first getting ripped abroad having to sell cheap, then coming back home to be made to buy at high prices and these are NRIs who have their heads floating above their neck! Sorry buddies you need to realise the truth. This is Indias century.
                      Almighty/Nataraj..Can you write one sentence without hurting other people's sentiments? Why are you so negative..Please understand everyone has a pont of view and they are certainly not as emotional as you are..Why curse NRI's now..We love the country too..I an saddened by your views

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