Hi members,

Seeing the current scenario where we are expecting the recession in coming days, is it right time to invest in gurgaon or to hold the decision for some more time?


Looking for your valuable comments...
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  • You can not time the market. Only make educated guess and move on.

    My personal view is that property market typically stablizes and rarely sees a drastic fall. But i could be eating my own words, if worse were to come.

    Since property investments are typically for 3 years or more, short time price correction may not matter in long run that much.

    Your entry at this point should be more driven by your risk appertite, availability of funds etc.

    Happy Investing!
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  • No one has cystal ball BUT history (2008 recession) tells us that when recession strikes ready to move prices stagnate and under construction projects see very less activity in resale market and hence, investors not having deep pockets start exiting resulting in 10-20% correction in resale prices. Telling from my own personal experience of 2008.

    Hence, depends whether you are a end-user or investor. If end-user looking for ready to move in property, any time is a good time.

    If you are an investor, you may want to wait and watch to see how things unravel over the next 6 months.
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  • Quite agree & if u an investor, who is looking to invest right now, do that after due diligence . CAUTION is the keyword .

    Originally Posted by cautious_guy
    No one has cystal ball BUT history (2008 recession) tells us that when recession strikes ready to move prices stagnate and under construction projects see very less activity in resale market and hence, investors not having deep pockets start exiting resulting in 10-20% correction in resale prices. Telling from my own personal experience of 2008.

    Hence, depends whether you are a end-user or investor. If end-user looking for ready to move in property, any time is a good time.

    If you are an investor, you may want to wait and watch to see how things unravel over the next 6 months.
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  • Originally Posted by vsheokeen
    Hi members,

    Seeing the current scenario where we are expecting the recession in coming days, is it right time to invest in gurgaon or to hold the decision for some more time?


    Looking for your valuable comments...


    My two cents are that recession or not, the more you delay the more you lose, obviosuly after assessing the options, but dont over analyze. Worst case scenario is if you purchase today the price would not move an inch by 2012 but then if you buy in end of 2012 your money is not going to double up in the bank is it? With so much money being invested in basic infrastructure, the worst picture is that the prices would stabalize.

    And hey, Narayan Murthy told Shibulal while leaving infosys " Shibu take the decisions even if you think it can go wrong, but take the decisions."
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  • Know the right time to invest in realty market

    Rising global economic uncertainties have left real estate investors a worried lot. Most of them are leaving no stone unturned to find reliable answers to questions like `` is it the good time to sell? `` Should the decision to invest in property be postponed?''

    Shveta Jain, director, residential services of consultancy firm Cushman Wakefield India , was very forthcoming when she said that with the property prices reaching new peak levels in markets such as NCR and Mumbai, it appears to be a favourable time to sell. It provides the investors with an opportunity to book higher profits, she acknowledged . Since the onset of economic recovery in 2009, the housing market has seen substantial growth in terms of capital .

    Several markets across the country registered significant price appreciation. However , the consultants are against distress selling . The present slowdown has proved to be a greater challenge for those who invested in real estate to make quick buck. `Real estate is not a 'get rich quick' investment route,'' said Ramesh Nair, MD (West) of realty consultancy firm, Jones Lang LaSalle India. "Investment in real estate pays off only when one invests for at least 3-4 years. Not only this, even with a long-term investment horizon, one needs to have a clear exit strategy in mind before one buys real estate as an investment," Nair said.

    Given the current investment climate, Shveta Jain said, sellers are faced with several challenges. Lack of enthusiasm from buyers to invest in property market is among the major limitations and perhaps the main roadblock faced by the sellers, she pointed out. "The caution among the end-users is because of the rising home loan rates coupled with high price points. Consumers are also postponing their purchasing decisions in anticipation of dip in property prices," she said.

    In such challenging market conditions, Nair advised, selling a property as fast as possible was a wrong investment strategy. The important factor to determine is where the market stands in the current real estate cycle.

    From the timing perspective, Nair said, a professional property investor will exit the property if a good deal comes along. "When the investor decides to exit, the price should be guided by open market valuation . It is neither professional nor advisable to wait until a dream figure based on opinions is achieved, he said.

    Ravi Saund, COO of CHD Developers, said that the slump in India's GDP growth rate might keep investors at bay. The projection for GDP growth rate has been brought down from around 9% at the beginning of 2011-12 to around 7.5% at present.

    He said the buyers will gain confidence only when India will again show resilience to the economic slowdown and becomes a favoured investment destination. "Till then, sales might take a plunge. There will not be many new project launches. However, mid and affordable segment will continue to grow. The construction activities will be hit temporarily," he said, adding that developers, who concentrate on timely execution of projects, stand to gain in the long-run .


    Know the right time to invest in realty market - The Economic Times
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  • Next quarter is very crucial for Indian Economy and world economy at large.
    Uncertainty is the worst thing to happen in any business scenario. You dont know which way the tide is going to turn. Hence its very difficult to make a decision to hold or invest in current scenario.
    No expert can give you the correct advise as any advise in current scenarios has a 50-50 chance of success or failure.

    My personal view is that next 3-4 months are not going to see any drastic change in the price of RE market in either direction. There is a lot riding on how Europe comes out of the current crisis.

    There is a definitely a crisis of confidence in Indii growth story at the moment and India is now termed as the weakest of brick among st the "BRIC" countries.
    You need to watch out for following before taking a decision :-

    1. How Europe comes out of the crisis. No further downgrading of Sovereign debt.
    2. Stabilization of Indian Rs below Dollar 50.
    3. Inflation to further come down by 3-4 basis point.
    4. Downward revision of CRR ratio by RBI.
    5.Current govt paralysis to end. Few key decisions on policy matters to go through.
    6. Development of UP election. Will show weakness or Strength of current regime.
    7. Most of the developers (Listed/unlisted) will definitely try to speed of construction in next 2 months and try to garner as much amount through the CLP plan. They would need to show better cash flows and reduce debts before the year ends.
    8. Both the new launches of Unitech (World Spa) and DLF (8x sector) are the last ditch effort to get some more cash flow through new launch. They desperately need money to reduce debt before the year ends.
    9. India has got 150 billion dollar of debt repayment due in next 6 months and we have just 308 billion dollar in our reserves. Trade deficit is already above 30% for this year and govt's deficit is not coming down either. Coupled with it the direct tax collection isnt giving a rosy picture. So all these factors are not encouraging. Govt might borrow more in next 2-3 months hence putting pressure in the liquidity of the system.

    10.Net Net,its better to watch out for next 3-4 months and then take a call. If the markets go up (which is highly unlikely right now ) then better buy the property 5-10% expensive then now. If property goes down then you will be spoilt for choice to pick up the value deal.Its always good to be able to pick up a good property in a distress sale.

    Hope this helps.

    Happy Investing !!
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  • Originally Posted by Gaurav23
    My two cents are that recession or not, the more you delay the more you lose, obviosuly after assessing the options, but dont over analyze. Worst case scenario is if you purchase today the price would not move an inch by 2012 but then if you buy in end of 2012 your money is not going to double up in the bank is it? With so much money being invested in basic infrastructure, the worst picture is that the prices would stabalize.

    And hey, Narayan Murthy told Shibulal while leaving infosys " Shibu take the decisions even if you think it can go wrong, but take the decisions."


    Vsheokeen - my comment was with the assumption that you are investing what you can afford. and not like a business where one picks up credit and so need to evaluate ROI and timelines of same, in which case advise from some other members could be more useful.
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  • There is no one waiting/sitting/nibbling at the fence except the builders. And I'd say its the last place in the world to be sitting on right now - if you'd get what I mean.

    RE will do well and prosper, but the current set of players will be replaced by new set of players. What happened with Gold will probably repeat (how soon + whether as dramatic is anyone's guess) - after a point, the speculators will be forced to abandon positions which shall be taken up by others.

    It does not matter if gold prices again reach the prime, the ownership would have changed. Thats the game - thats what India looks like when you read stories from Mumbai to Delhi of Flagging sales. There is no way the DLFs and current players can take RE to the next level without rollover of positions.

    There are 2 reports of the same phenomenon (from different sources), depending on where you hear it from:

    - One is the local RE participant sources, through new launch prices, which are hopeless indicator of anything except investor interest. Recent DLF ultima sales simply validated that even that is looking increasingly dorky..

    - Other is the wholesale or bulk deal prices at which the FSI is bought and sold among RE participants and that is really soft.

    Right now, there is a lot of wet paint on both these pictures and one of these 2 pictures is the true story at RE. Lets see which one.

    Entire Tata group is not dim wits to bend backwards to make and sell Nanos at wafer thin margins when they can achieve 450 Cr sales in 1 day in bookings. What are they doing on the rest 364 days of the year? Meeting brokers/Sharpening their axes?

    I worked for Tata's for a fairly long time to know they happily work weekends for 30% margin projects and bend backwards to sell it. I do not see that army deployed yet.
    (I did read in the newspapers though IT army is getting single digit raises (a third of what was norm a few years ago) and the lack of Onsite opportunities (thanks to Obama) to build a corpus, to buy homes.
    Oh and they were hiring 1/3rd less this year to save costs)


    So what does it mean ? It means (to me at least, cud be wrong) :

    1. The bulk of buyers are priced out of the market which means there is no panic from buyer side. Folks pretty much do know what their financial position is. Its been years now printing Navratras stories and no one looks at those in newspaper paid news section.

    2. The Investors too are increasingly leaving the new launches in the dust at unrealistic prices - which to be honest I found amusing that no one used the term "missed the bus" or "waiting on the fence". Perhaps these terms are reserved to be used ipso facto..

    3. With the onus to increase sales to service interest cost getting heavier on RE firms there are not many levers to pull. The non-core assets are not there, they were sold to service debt for last year. The waiting game does not look favorable for builders due to this factor.
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  • Originally Posted by matrix_55
    There is no one waiting/sitting/nibbling at the fence except the builders. And I'd say its the last place in the world to be sitting on right now - if you'd get what I mean.

    RE will do well and prosper, but the current set of players will be replaced by new set of players. What happened with Gold will probably repeat (how soon + whether as dramatic is anyone's guess) - after a point, the speculators will be forced to abandon positions which shall be taken up by others.

    It does not matter if gold prices again reach the prime, the ownership would have changed. Thats the game - thats what India looks like when you read stories from Mumbai to Delhi of Flagging sales. There is no way the DLFs and current players can take RE to the next level without rollover of positions.

    There are 2 reports of the same phenomenon (from different sources), depending on where you hear it from:

    - One is the local RE participant sources, through new launch prices, which are hopeless indicator of anything except investor interest. Recent DLF ultima sales simply validated that even that is looking increasingly dorky..

    - Other is the wholesale or bulk deal prices at which the FSI is bought and sold among RE participants and that is really soft.

    Right now, there is a lot of wet paint on both these pictures and one of these 2 pictures is the true story at RE. Lets see which one.

    Entire Tata group is not dim wits to bend backwards to make and sell Nanos at wafer thin margins when they can achieve 450 Cr sales in 1 day in bookings. What are they doing on the rest 364 days of the year? Meeting brokers/Sharpening their axes?

    I worked for Tata's for a fairly long time to know they happily work weekends for 30% margin projects and bend backwards to sell it. I do not see that army deployed yet.
    (I did read in the newspapers though IT army is getting single digit raises (a third of what was norm a few years ago) and the lack of Onsite opportunities (thanks to Obama) to build a corpus, to buy homes.
    Oh and they were hiring 1/3rd less this year to save costs)


    So what does it mean ? It means (to me at least, cud be wrong) :

    1. The bulk of buyers are priced out of the market which means there is no panic from buyer side. Folks pretty much do know what their financial position is. Its been years now printing Navratras stories and no one looks at those in newspaper paid news section.

    2. The Investors too are increasingly leaving the new launches in the dust at unrealistic prices - which to be honest I found amusing that no one used the term "missed the bus" or "waiting on the fence". Perhaps these terms are reserved to be used ipso facto..

    3. With the onus to increase sales to service interest cost getting heavier on RE firms there are not many levers to pull. The non-core assets are not there, they were sold to service debt for last year. The waiting game does not look favorable for builders due to this factor.


    Matrix have done a great job in explaining current scenario.

    I have few questions

    1. What is happening in Black money - which is supporting investors to hold properties for long time.

    2. Cost of land is increased as farmers are aware and builder is habitual of their margins. what will be ur idea on this

    3. End user budget in gurgaon currently hovering around 80 lacs. which projects are left for them. pls suggest.

    4. hunger of Educated class to run for brand like DLF, Emaar etc whose prices are higher than their sky scrappers.
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  • Replies Inline

    Originally Posted by ankursharma1
    Matrix have done a great job in explaining current scenario.

    I have few questions

    1. What is happening in Black money - which is supporting investors to hold properties for long time.
    Matrix>> Black Money of North is already there in RE in high proportion (that's why the RE prices are very high in first place) and hence I treat them as discounted unless any significantly large future inflows. There should not be any considerable change unless another CWG takes place.
    (Out of North, I do not care, NCR is a pretty local market and Mumbai does not invest in NCR. Sometime back some genius tried to pitch Maharashtrian Property in Delhi because of high no of investors in Delhi but I doubt this was much success.)
    I think, in a scarcity driven market as avl area increases geometrically( Pie-R-Square on high level) the requirement of Power to limit fresh supply in 2 states (UP and HARYANA) and requirement of funds to maintain rising prices will rise in Geometrical Progression. The longer it goes on, the tougher it gets and the whackier the resulting crash. See the current situation - thats the stuff in action.
    Besides, Black Money is not only generated but also used in businesses to expand. If property starts giving below 11-12% returns be assured lot of black money will leave to be employed elsewhere.


    2. Cost of land is increased as farmers are aware and builder is habitual of their margins. what will be ur idea on this
    Matrix>> If cost of land were really a factor in RE prices, the prices will be half right now.
    Re does not work on a cost plus model. It works on IPO style model. What matters is how much most folks are willing to pay, not how much the farmer/Neta/Builder/Broker expects. BTW there is a lot of diff between the prices they pay to farmers and what is taken from you.
    If there were a way to cajole buyers to pay more because input has risen, all of the world's pricing experts will flock to India to see how to make this happen. While Shiela has done this with Delhi Electricity/Water she will pay for this in this year's elections unless she gifted folks free RE by legalising unauthorised colonies or similar nonsense.
    Its such attempts of pushing a string which further spoil the long term pricing growth for RE market. You leave nothing on the desk for your investor and hence increase the hostile environment further for your next project.


    3. End user budget in gurgaon currently hovering around 80 lacs. which projects are left for them. pls suggest.
    Matrix>> I doubt there are many 3BHK's at this price point today for ready end use unless the end use is planned 5 years hence

    4. hunger of Educated class to run for brand like DLF, Emaar etc whose prices are higher than their sky scrappers.
    Matrix>> Aren't you taking the whole educated class for granted? One has stopped being smart when one is counting on other humans to behave in a particular way which increasingly looks less in their and more in your interest.


    Anyways, Read These (not paid news coz no one will pay for planting such news. But the facts metioned are worth remembering.)

    1. How real estate developers fared with new launches - CNBC-TV18

    As influential brokerage firm Jefferies notes, real estate developers for seven years in a row have missed the launch and sales guidance provided by them at the beginning of the year.

    Jefferies points:

    a) The collective bullishness of developers at the beginning of the year without any regard to market conditions.

    b) Failure to plan for approval delays.

    c) Lack of seriousness in growing volumes and focusing more on margins.

    d) Also a lack of accountability and responsibility in meeting guidance be it for launches, debt reduction etc.

    He says meeting guidance has become more of an exception rather than the norm. Only Prestige Estates Projects among Jefferies coverage managed to meet its launch guidance with all other developers failing miserably.

    Jefferies calls Delhi Land & Finance (DLF) the "serial offender" for missing guidance year after year. DLF's launches in FY13 stood at 5.3 million square feet. That's a 56 percent decline year on year (Y-o-Y) and a 50 percent miss on its guidance of 10-11 million square feet.

    It is a big miss by Housing Development and Infrastructure (HDIL) as well. It met only 50 percent of its guidance of launches of 11.3-12.3 million square feet. However, it’s trying to pick up momentum by launching two projects in the very first month of the new fiscal.

    This was the second successive year of zero launches from Oberoi Realty.

    Bangalore based Sobha Developers met 64 percent of its guidance. That's a 59 percent Y-o-Y decline as big launches remained elusive.

    The slowdown in launches clearly indicates the real estate sector is not out of the woods. Projects of all leading developers are facing significant delays.

    Since 2011 angry consumers are seeking legal recourse. Last year the Competition Commission of India (CCI) said it had received 200 complaints against developers for delayed projects as well as for builders arm-twisting buyers. The CCI last year said it was investigating as many as 70 developers including Parsvnath Developers , Omaxe and Unitech .

    One may have burnt fingers in the past, but leading law firm Jyoti Sagar Associates wants people to keep in mind going forward. Vivek K Chandy, Partner, Jyoti Sagar Associates says, “The first thing that one needs to check is about whether the property has been mortgaged. What we see in a lot of cases is particularly for newer builders and younger builders where they have one and two properties. They go and mortgage it with a bank or financial institution. Then while they borrow some money they are not able to generate further monies from the sale of apartments. So, they get stuck somewhere, the interest that is payable to the bank is mounting and they are not able to complete the project. In that case the buyers have a problem because the property is a mortgaged property, they can’t proceed against the builder and they land up in a lot of litigation”.

    Builders say they sign the same agreement with all buyers and there is no room to negotiate. However, given the pressure they're under on account of high debt, poor run rate of launches and no large immediate pick up in sales.


    “One needs to be penny-wise and pound-foolish. Spend a little money on going to a good lawyer and ensure that the agreements that one enters into are well drafted and that they protect the buyer. Also do a title check to ensure that the title of the developer is good,” says Chandy.


    So if anyone thinks that restricting supply can maintain current prices, there was hardly any supply from RE builders in last 2-3 years..


    2. And if the future of offshoring is changing, this is how its beginning to change:
    Citibank to launch $1bn contract, puts 90% onsite mandate - CNBC-TV18

    http://www.thehindubusinessline.com/industry-and-economy/info-tech/hiring-by-infosys-wipro-lowest-in-last-5-years/article4647661.ece

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  • One of the main culprits is "moving away from a cost+ model to an IPO based price discovery model"

    RE has moved away from its traditional (in India) approach to a more nuanced (I have reasons to call it so) investment vehicle. There were days when RE (residential) was having a sentimental value attached to it (similar to Gold) - "everyone needs a roof over their head, sort of thing" and that made RE investment a robust hedge against "purely investment" driven asset classes (even gold for that matter). However in the last few years-I would call it post Y2K that changed permanently. However for a country like India, and thanks to the Apocalypse of 2004-08 the results have been more gradual till about 2009. However, the preceeding 4 years have been crucial and will be seen as a game changer period in RE history. For this is the period when RE has become a pure investment asset class - removed from its sentimental glory. That being said, all hidden values (direct, notional and hyped) have been unlocked and factored in, as a last resort to hang on to the Cost + model. When the limit of this was reached, I guess the financial engineers started looking for pricing models and found strength in the argument that "why not let RE shed the Ghost of its past", "why not let the forces of economy act on the market" "why not create a market which looks at RE like an investment banker would look at "wheat or pulses" (I know folks who look at these only as commodity futures and not as things that are eaten by human beings). The plan is to take RE investments closer to that of a Mutual fund. i.e. where an investment grade apartment would be treated like "stock" and split into units of Rs. 10 and thousands of investors can hold units in any "stock". So it will not be surprising that one day the home that you live in is held by thousands of "stockholders" and the asset managers declare a dividend (do they used to call it rent?) on each apartment depending on its performance (occupancy/capital gain?).

    Extending the IPO pricing argument itself can sound so obnoxious, but many of us know the history of shares and then followed by commodities etc. So if the direction of RE is towards that of being purely an asset class (nothing wrong with it) then it may as well be ready to face the music of the market and shed its traditional sayings and beliefs and emotions attached.
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  • Hi
    Greetings

    In the current environment given
    -Supply
    -Economy
    -Elections
    -Prices

    I guess cash is king and if comfortable on finances, Resale options can be worked out.

    views specific to project in gurgaon, timing, micro markets, strategy invited.

    Cheers
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  • An old question

    Gents,

    The question quoted below was posed almost a year and a half back.
    If we were to look back today, what should have been the answer to this question back then?

    Originally Posted by vsheokeen
    Hi members,

    Seeing the current scenario where we are expecting the recession in coming days, is it right time to invest in gurgaon or to hold the decision for some more time?


    Looking for your valuable comments...
    CommentQuote
  • Originally Posted by CaptainYadav
    Gents,

    The question quoted below was posed almost a year and a half back.
    If we were to look back today, what should have been the answer to this question back then?



    Hi
    Greetings

    The question I guess have become more relevant and is still seeking for definitive answers:D:D

    TIME to cash in or stay put or reinvest or move to other asset classes, or plan another investment or enter afresh?


    Cheers
    CommentQuote
  • Old question

    BlessU,

    Greetings.

    Everyone including ME is interested in today's answer to the question and yes, the question has become all the more relevant.

    However, I am equally (and if forum members would excuse me for it - MORE) interested in: What should have been the correct answer back then (End of 2011) when the question was posted?

    Originally Posted by BlessU
    Hi
    Greetings

    The question I guess have become more relevant and is still seeking for definitive answers:D:D

    TIME to cash in or stay put or reinvest or move to other asset classes, or plan another investment or enter afresh?


    Cheers
    CommentQuote