It seems prices has started falling in Mumbai, many builders have started quoting less than what is being advertised, also many flats owners have reduced their prices to sell their flats as soon as possible before the price drops more, any first hand input welcome...:D
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  • Originally Posted by jadhav_ravi
    Great observation Vishal.

    As you said, the corrections are a mere gimmick. 100 Rs off for diwali :-).

    If you just take into account inflation (Salary, Raw materials, CPI), there is no way that prices can go down. In America they go down because people put 10% of their money and 90% is mortgage and then they see foreclosures and depressed sales.

    In India, thanks to NRIs and old philosophy, loans maybe make 50% of the transactions. Rest are outright purchases. Even people who take loans have 30% down payment. Indians are more prudent. They do not have a reckless lifestyle (although this is changing). In such a case there is no stimulus for deep correction.

    India is a rich nation of poor people. The wealth distribution is very skewed. So though Indian GDP may be 1/100th of USA, many people (NRIS, professionals/businessman in cities) have similar income as in USA.If you look around you will find many bank/IT/telecom/retail guys who have incomes in excess of 10L. A married couple hardly finds it difficult to pay an EMI of 50K per month. That is about 50 Lakhs for the price of flat. So where do you see correction. Given the supply, there is ample demand (atleast in Mumbai)

    What fascinates me is where do people get their money from. But it all seems to work. People are hard working and hell-bent to succeed and make money.
    - Many people earn from stock markets. FIIs put money and support these incomes.
    - Banks take 12% interest. Look at SBI/ICICI profits, they are huge. So they pay their employees good
    - Insurance was inexistant till 5 years ago. Insurance companies are making big profits so they hand out huge money to their employees
    - Airlines, they have good business. They pay excessive salaries.
    - Businessman - Give the population of Mumbai even a good vada paav shop rakes in a turnover of 15-20K a day. So he has an income of 5K a day or 1.5L a month.
    - Same with retail, telecom and ....
    So who is poor: the rickshawman, the manual labourers, maids,... who live in slums.

    It may all seem bad, dirty and miserable on CNN, BBC and Slumdog Millionaire but the ground reality is that many Mumbaikars do have the capacity to buy a flat of 1C while NRIs stare at the outskirts to get a roof and then sing about: NPAs/bad debt/GDP/GNI/debt-restructuring/per-capita/roads/slums and compare prices with manhattan.


    Very well said. Great input.
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  • time to buy a home

    CNBC-TV18 says this is the right time to buy a home

    http://publication.samachar.com/pub_article.php?id=9956395&nextids=9956395|9956396|9956397|9956398|9955726&nextIndex=1

    CNBC-TV18 -- they are smoking something -- just have to figure out what :bab (59):
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  • Whats written is that prices are going to be flat and huge supply...
    dont know how the conclusion was reached..




    "Residential rental prices in Bangalore are expected to stay flat, just like in Mumbai, Chennai and Hyderabad.

    Industry experts say this is largely due to supply out-stripping demand in most of these markets.

    Even this is not a great cause for concern. Experts say that while new projects may carry a higher price tag, an across-the-board increase in prices is expected only the second quarter of next year. Even then, prices that prevailed in the market in the pre-slowdown period of 2009 are not likely to be re-visited anytime soon."
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  • Originally Posted by mamba
    Whats written is that prices are going to be flat and huge supply...
    dont know how the conclusion was reached..




    "Residential rental prices in Bangalore are expected to stay flat, just like in Mumbai, Chennai and Hyderabad.

    Industry experts say this is largely due to supply out-stripping demand in most of these markets.

    Even this is not a great cause for concern. Experts say that while new projects may carry a higher price tag, an across-the-board increase in prices is expected only the second quarter of next year. Even then, prices that prevailed in the market in the pre-slowdown period of 2009 are not likely to be re-visited anytime soon."


    "Even then, prices that prevailed in the market in the pre-slowdown period of 2009 are not likely to be re-visited anytime soon."
    If you follow the market then these levels have already been breached in Mumbai. Mumbai city, suburbs, extended suburbs (Thanke, Kalyan, Dombivali) and Navi Mumbai are all at theo all-time highs.
    virar never quoted 4200, Kandivli never quoted 9K, Mulund never quoted 7K, Bandra never quoted 30K, Thane never quoted 5K, Kharghar never quoted 5K ever before 2010.
    From what I know, atleast in Mumbai there is enough demand to swallow the spurt in supply.

    This however cannot be said for Pune where there is more supply than demand. I have little knowledge of other regions.
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  • An important assumption that could be wrong ...

    Originally Posted by VishalPrabhakar
    I agree with Jadah Ravi, I do not see any depreciation of property prices in Mumbai..

    it goes something like this:
    an boom of 3* "X" percent followed by a drop of X percent...
    and then a boom of I * "X" and then a drop of X...

    But, the value of "I always remains > 2 to 2.5.



    Vishal,

    Your argument is correct IF one bought BEFORE the 3X rise. But the volumes jumped in the market in 2007 mainly which was AFTER the 3X rise. So, the 1X decline has people holding property with some kind of loss or maybe at par.

    To them, its still a loss, right?

    cheers
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  • Originally Posted by wiseman
    Vishal,

    Your argument is correct IF one bought BEFORE the 3X rise. But the volumes jumped in the market in 2007 mainly which was AFTER the 3X rise. So, the 1X decline has people holding property with some kind of loss or maybe at par.

    To them, its still a loss, right?

    cheers

    People who bouhgt in mid 2007 to mid-2008, felt they were underwater between Jan-July 2009. Since then, everybody has come out of the loss.
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  • I agree with Ravi that the best time indeed was around July 2009 last year when the market indeed showed a genuine correction. In fact it was the very bottom of the trough. I would like to state some data points to establish this. City of Joy in Mulund actually quoted 4500 psf though only for 2 days. Casa Univis the bhayadarpada project was quoting at a rate of 3500 psf. Today these projects are being quoted in the newspaper 80L and 65L respectively...thats a huge rise. So if you missed the bus in the 2003-04 era your chance was probably in mid 2009. Once the elections threw a clear majority there has been no looking back since then.
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  • Price correction is sure..may be after Diwali...so guys wait and watch....after one year you can get 30% lower rate...thats is a fact and anybody can note down it...then call me after one year to say thanks....another recession is coming as Warren Buffet declared...then price may be even halved.
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  • Originally Posted by rajpatel
    Price correction is sure..may be after Diwali...so guys wait and watch....after one year you can get 30% lower rate...thats is a fact and anybody can note down it...then call me after one year to say thanks....another recession is coming as Warren Buffet declared...then price may be even halved.

    It is a slow and bumpy recovery. There is no stimulus/shock to trigger any recession for next 3-4 years. After 3-4 years its will be again the bust pasrt of the boom-bust cycle.
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  • Originally Posted by jadhav_ravi
    It is a slow and bumpy recovery. There is no stimulus/shock to trigger any recession for next 3-4 years. After 3-4 years its will be again the bust pasrt of the boom-bust cycle.


    I agree to what jadhav_ravi says. Recession is not around the corner. Right now it's boom time, which would be followed by slowdown in the boom time, then stagnation of prices for some period & if things do not change for the better at that time, price fall in certain pockets of RE.
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  • Lets talk about the real world ...

    Originally Posted by jadhav_ravi
    It is a slow and bumpy recovery. There is no stimulus/shock to trigger any recession for next 3-4 years. After 3-4 years its will be again the bust pasrt of the boom-bust cycle.


    Jadhav,

    Apart from Govt statistics, where is the recovery?

    In the last 3 years (since April 2007) how much has your salary gone up? In the meantime, how much have prices gone up? Petrol, Vegetables, Rice, ...

    Also, as far as I know most Industries out there (lets forget Tata Motors, REliance, Infy, etc who are riding on their cash hoard and cornering the market) are seriously cash strapped and either going sick or closing in large numbers.

    What you say is recovery is mainly adriven by the following ...

    1. Banks (in collusion with builders and retailers) loosening their purse to go back to dangerous levels of lending (given the NPAs and drop in purchasing power of people over time)

    2. Builders jacking up prices in order to recover from their near-death experience back in 2008. Due to stimulus they have not got over their debt problem or inventory problem but merely postponed their crisis by a couple of years.

    3. The Govt desperately using every dangerous and short-term expedient mean to keep the "recovery" story going

    But, given the lack of volumes in RE we can safely assume that price increase is not based on real demand and only quotations used to scare some gullible people to buy in haste! Real growth happens when demand has healthy growth along with prices which is missing this time around.

    Here is my take (and its been the same since 2008) ...

    Back in 2008 I had posted my earliest post talking about home prices declining between 50% - 80% (in areas with the largest rise in prices) n the basis of my understanding that the coming depression was going to be the greatest in modern history. That fact is now commonly accepted (among the people who predicted the last recession) and they are now talking about this depression going on for quite a few years more.

    What nobody banked on was that the FED and other Central Bankers would make it much worse by creating insane stimulus programs and blowing the bubble bigger. Now, with the second leg of the depression threatening to open up, they are talking of yet more Quantitative Easing.

    Please note that this QE has not changed the original target but has merely postponed it because the global economic vehicle had got some more fuel to go a few more months (at a very heavy cost).

    While the rest of the world experiences depression (including China as we shall see), India cannot escape substantial pain, especially given our own precarious Fiscal situation. We do not seem to have the pain because a lot of money from all over the world is currently parked here to squeeze out little returns from one of the few places in the world which has some steam left. Given the lack of any upside in the markets in the last 10 months, the FIIs are getting edgy about the India growth story. And to make it worse, the Govt is squandering this money away in populist, feel-good schemes, and in corruption like the CWG, etc.

    The fact that major export segments like IT are facing serious hits to growth (except the top 10 companies which may have crossed the threshold and survive, most small/mid tier companies are facing significant difficulties which says a lot about where IT is going; apart from the fact that massive cuts in budget like BT - 50% - will inflict further hits on this sector). Shipping is a natural target as will be Textiles, Gems/Jewellery and Auto ancillaries. Much of the profit growth in the last 2 years could be credited to severe cost cutting and increased lending to stimulate demand, both of which do not last long (in fact most companies are done with cost cutting and this will show up in Sep Qtr results and more so on Dec results when the next leg of the depression takes hold.

    You will soon see FII money start to leave in serious numbers as money always seeks safety when things go wrong. And Industrial and Services sectors will take significant hits. What the Govt did not tel you is that the big IIP numbers in first half of this year was due to Low Base Effect as well as Stimulus Spending Peaking simultaneously!!! Now we will see the other side of the story ... High Base Effect and lack of Stimulus AS WELL AS second leg of the Depression!

    Once fear hits in big numbers we will see the same old stories about job loss and banks cutting down on lending and a natural contracting cycle.

    This scenario is unfolding quickly starting in US and EU and will not take long to hit our shores (1-2 quarters from the time it starts in the US). It is specifically when job losses threaten that you will see prices unravelling. If this decline takes longer to run (as there may not be another QE like before to stop it and blow another bubble) then you will also see distress sales by new entrants in RE (people who bought in 2007-10) with high leverage and poor job security which could compound the problem.

    The common man is not a fool. This is why, despite the MF industry trying to talk up the markets (unsuccessfully), MF NET flows are NEGATIVE and all the talk about midcaps and smallcaps and very long term investing is not holding any water with small investors. The stupidest thing to do is to put your money in smallcaps (highest risk of failure) and midcaps (decent risk of failure) especially when markets are in such a precarious state and this is what our geniuses in the investment business are recommending. Sure, in the next 25 years everything will go up. But will I be alive then? :)

    I will go out on a limb to state that I believe that this will happen starting this Sep and probably hit peak in 2H 2011 - 1H 2012 coinciding with the peak in US RE declines. Probably the best thing to do today is to shun RE and stocks (even sell them) and get into Gol.d, silver and short term fixed income securities.

    After a significant fall in prices, it would be best time to get into stocks and RE (especially agricultural land).

    This is not a period to be overconfident. Its a period to be circumspect and very cautious.

    Let us see.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Jadhav,

    Apart from Govt statistics, where is the recovery?
    Look at the companies renewing their hiring spree. That for me is recovery.

    In the last 3 years (since April 2007) how much has your salary gone up? In the meantime, how much have prices gone up? Petrol, Vegetables, Rice, ...
    I am in business. I have over a dozen friends in IT. Their salaries have been rising 20-30% p.a. over last 3 years. So an increase of 70% to 110% in 3 years. I know in America and Europe the rise over the same period had been 0 to -10%. But speak to individauls to know the ground scenario. Same is the case for banking, retail, insurance, motor and telecom professionals.

    Also, as far as I know most Industries out there (lets forget Tata Motors, REliance, Infy, etc who are riding on their cash hoard and cornering the market) are seriously cash strapped and either going sick or closing in large numbers.
    I didnt hear of any company closing. Even satyam was bought over. Subhiksha survived. If you know any names please do tell us.

    What you say is recovery is mainly adriven by the following ...

    1. Banks (in collusion with builders and retailers) loosening their purse to go back to dangerous levels of lending (given the NPAs and drop in purchasing power of people over time)
    Agreed. Can you quote the figure of NPAs of SBI and ICICI. Compare these to anywhere else in the world and you will see the difference. Lending at 12%, is that easy lending??

    2. Builders jacking up prices in order to recover from their near-death experience back in 2008. Due to stimulus they have not got over their debt problem or inventory problem but merely postponed their crisis by a couple of years.
    They saw huge number of booking, so they raised the prices. All industries work on debt. Their debt-equity ratios, given their growths are perfectly normal as compared to any other market in the world.

    3. The Govt desperately using every dangerous and short-term expedient mean to keep the "recovery" story going
    That is the case in America. When Bernanke wants to have 2 years of easy monetary policy. Indian govt hardly gave any stimulus.

    But, given the lack of volumes in RE we can safely assume that price increase is not based on real demand and only quotations used to scare some gullible people to buy in haste! Real growth happens when demand has healthy growth along with prices which is missing this time around.
    There is still good volume in remote suburbs. While we write this post many more people would have bought their flats. Their is less demand to cause an increase in price but there is enough demand over past 1 year to keep the prices stable or make them rise.


    Here is my take (and its been the same since 2008) ...

    Back in 2008 I had posted my earliest post talking about home prices declining between 50% - 80% (in areas with the largest rise in prices) n the basis of my understanding that the coming depression was going to be the greatest in modern history. That fact is now commonly accepted (among the people who predicted the last recession) and they are now talking about this depression going on for quite a few years more.

    What nobody banked on was that the FED and other Central Bankers would make it much worse by creating insane stimulus programs and blowing the bubble bigger. Now, with the second leg of the depression threatening to open up, they are talking of yet more Quantitative Easing.

    Please note that this QE has not changed the original target but has merely postponed it because the global economic vehicle had got some more fuel to go a few more months (at a very heavy cost).

    While the rest of the world experiences depression (including China as we shall see), India cannot escape substantial pain, especially given our own precarious Fiscal situation. We do not seem to have the pain because a lot of money from all over the world is currently parked here to squeeze out little returns from one of the few places in the world which has some steam left. Given the lack of any upside in the markets in the last 10 months, the FIIs are getting edgy about the India growth story. And to make it worse, the Govt is squandering this money away in populist, feel-good schemes, and in corruption like the CWG, etc.

    The fact that major export segments like IT are facing serious hits to growth (except the top 10 companies which may have crossed the threshold and survive, most small/mid tier companies are facing significant difficulties which says a lot about where IT is going; apart from the fact that massive cuts in budget like BT - 50% - will inflict further hits on this sector). Shipping is a natural target as will be Textiles, Gems/Jewellery and Auto ancillaries. Much of the profit growth in the last 2 years could be credited to severe cost cutting and increased lending to stimulate demand, both of which do not last long (in fact most companies are done with cost cutting and this will show up in Sep Qtr results and more so on Dec results when the next leg of the depression takes hold.

    You will soon see FII money start to leave in serious numbers as money always seeks safety when things go wrong. And Industrial and Services sectors will take significant hits. What the Govt did not tel you is that the big IIP numbers in first half of this year was due to Low Base Effect as well as Stimulus Spending Peaking simultaneously!!! Now we will see the other side of the story ... High Base Effect and lack of Stimulus AS WELL AS second leg of the Depression!

    Once fear hits in big numbers we will see the same old stories about job loss and banks cutting down on lending and a natural contracting cycle.

    This scenario is unfolding quickly starting in US and EU and will not take long to hit our shores (1-2 quarters from the time it starts in the US). It is specifically when job losses threaten that you will see prices unravelling. If this decline takes longer to run (as there may not be another QE like before to stop it and blow another bubble) then you will also see distress sales by new entrants in RE (people who bought in 2007-10) with high leverage and poor job security which could compound the problem.

    The common man is not a fool. This is why, despite the MF industry trying to talk up the markets (unsuccessfully), MF NET flows are NEGATIVE and all the talk about midcaps and smallcaps and very long term investing is not holding any water with small investors. The stupidest thing to do is to put your money in smallcaps (highest risk of failure) and midcaps (decent risk of failure) especially when markets are in such a precarious state and this is what our geniuses in the investment business are recommending. Sure, in the next 25 years everything will go up. But will I be alive then? :)

    I will go out on a limb to state that I believe that this will happen starting this Sep and probably hit peak in 2H 2011 - 1H 2012 coinciding with the peak in US RE declines. Probably the best thing to do today is to shun RE and stocks (even sell them) and get into Gol.d, silver and short term fixed income securities.

    After a significant fall in prices, it would be best time to get into stocks and RE (especially agricultural land).

    This is not a period to be overconfident. Its a period to be circumspect and very cautious.

    Let us see.

    cheers

    Meet the people rather than base you opinion on TOI/HT/NDTV
    CommentQuote
  • Agree with wise man. I add that American recession will surely affect India RE.
    http://www.telegraph.co.uk/finance/economics/7913302/Jim-Rogers-predicts-a-new-recession-in-2012.html
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  • Originally Posted by jadhav_ravi
    Meet the people rather than base you opinion on TOI/HT/NDTV


    When the ppl feel that "ALL will be well" and nothing can go wrong...thats the time "overconfidence" has set in...A clear sign of reaching peak...

    What r u talking abt...? 70 -110% increase for IT folks...Man u must be kidding...The ppl u know either r bluffing or have got exceptional raises...

    Folks - 2008 & 2009...On an average ...there was no hike & no promotions..(I am talking about SWITCH companies). Market picked up in Nov -09. From Nov 09 - till date....if any1 has switched ...he would have seen 40-50% increment..(even in extreme cases)...and those who haven't have got paltry hike of 10-20% ....

    So effectively..there r 2 sets ...those who switched have 13-14% hike p.a.

    those who have sticked with their company have -5-6% p.a

    Now coming to other industries...take banking, insurance,real estate etc etc....All these sectors are seeing growth because of IT...these folks have highest disposable income and most care free lot....

    IT has been bane in a sense as it provides 30K per month to freshers who don't even know how to use that amount with no maturity....

    I am running out of time...I will revert back on other points in some time...

    Too much of anything is bad...

    My prof(Chief Investment Strat of a major bank) says...High risk..high return statement used in incomplete....It should be high risk, high return, high losses...

    IF we r seeing high return...its quite easy that we r having high risk...as vice versa is true...
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  • Originally Posted by jadhav_ravi
    Meet the people rather than base you opinion on TOI/HT/NDTV


    I think its time you met some real people - 70-100% raise for IT? I would definitely like to meet these "real" people you speak of.

    I have been working in IT for the past 6 years - and since the bust in 2008 I can safely say that the best any of my colleagues have done is get a 15% hike per annum (if they have stuck to the same company). Sure - there may be people who jumped from Indian IT companies to IT devisions Multinational Banks and have made jumps of around 25-30% per annum but these people are very few (about 5-10% of the entire IT population). I can safely say that about 80-90% of the IT crowd that works in Infy/Patni/TCS/Oracle has had not more than 5-10% salary growth per annum since 2008. Most Indian IT companies gave no incentives in 2008-2009 and promotions were frozen for at least 8 months to a year. Raises in 2010 have been between 10-30%.

    Your arguments are strong - and I agree with most of what you have said in your posts, but your "facts and figures" are highly exaggerated.
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