As per the report published in front page today(15-JUNE-2011) ... economictimes.com ----- REAL ESTATE SLOWDOWN has begun, brokers are running here and there due to paltry sales.

http://economictimes.indiatimes.com/markets/real-estate/realty-trends/brokers-hunt-for-jobs-as-sales-slump-hits-realty/articleshow/8856588.cms

Updated: 18/Jun/2011.
India's Homebuyers Gaining Upper Hand

India's Homebuyers Gaining Upper Hand - WSJ.com



NEW DELHI | BANGALORE: Yusufbhai has just opened a stationery shop in a Bangalore bylane. He has christened it 'Smart Shop', borrowing the name from the realty brokerage firm, Smart Properties, he ran from the same premises until about two months ago. Yusufbhai switched to retail after his property business hit a rough patch following a slump in home sales. About three-quarters of his revenues came from sale of apartments, the remaining from renting.

"With home sales plummeting, it doesn't make business sense anymore," he explains. It's the same story in other big cities. In Mumbai, Pranay Shah, a mid-size broker has set up a small fast food joint to make ends meet. In Nagpur, Sashinath Chinchole has quit the real estate business and set up an ice-cream parlour. Their worries are not unfounded. While the large and established players in the property business have managed to stay put even during the slump, thousands of smaller players like brokers and agents are being forced to look for other jobs.

Also hit are lakhs of people employed with such small outfits - each of which hires 5-15 people.With many brokers shutting shop or downsizing, these people are out in the market, looking for jobs in sectors such as retail, banking, insurance and call centres. The real estate industry employs about 10 lakh people across the country, the majority in the unorganised sector.

In the first quarter of 2011, home sales dropped 17% in Mumbai, 14% in Bangalore and 15% in Hyderabad. According to consultant Jones Lang La-Salle, unsold residential units in projects that are complete or are nearing completion in 6-12 months in Mumbai and Delhi-NCR are as high as 25% and 16%, respectively. In other big cities, including Bangalore, Chennai and Kolkata, the numbers range between 12% and 19%. Sales in tier-II and tier-III cities are steady, though there is some panic due to the increase in interest rates, which have climbed to about 11% from 8.25% a year ago.


"For smaller brokers, the impact of the current market factors is a lot more compared to the larger brokers," says Abdur Ravoof, president of the National Association of Realtors India . Ravindra Bramhe, chairman of the Maharashtra Property Brokers' Association, says, "Even for our members - who are fairly well-off - business is down 40% compared to 2009-10. But the smaller guys are in trouble and are setting up businesses that move on a daily basis. Many I know have asked their employees to look out."

Mrinal Chaudhary, 24, chose to work in the real estate sector in the National Capital Region after his MBA last year because it was booming. He worked with a small real estate brokerage firm, which sold apartments in Greater Noida. He made an average Rs 45,000 a month, sometimes even Rs 80,000. Then came the farmers' agitation on the Yamuna Expressway, and business disappeared. Chaudhary moved to a bank. He has vowed never to return to the sector.

For whatever business is left in the market, there are hundreds of agents in queue. For instance, there are pockets on the Noida Expressway, near large projects, where real estate brokers can be seen sitting inside small tents, under the sweltering sun, waiting for business. Those who can't afford to set up these tents can be seen on the roadside, running after every car that passes by, with brochures and flyers of projects in hand. Industry refers to them as the broker mandi. "All my friends and colleagues are now looking outside real estate before things get worse," says Chaudhary. Many have returned to the insurance industry and others have found jobs with small call centres. A few have found employment with retail stores, says Chaudhary.

Many other young sales executives still working with brokerage firms are struggling, not knowing whether they will get a salary at the end of the month, as most of these firms have switched from a fixed salary model to a revenue-based fee model for their sales staff. "This was required," says Sumit Joshi, director of Noida-based Capitol Realtors, a mid-size real estate brokerage that has downsized as well as started working on a revenue-based fee model. To tide over the slowdown in sales, his firm has also recently diversified into loans, both for real estate and business, and loan against property by tying up with multiple banks.

With opportunities opening up in other sectors, the number of resumes received by hiring services firm TeamLease Services from the real estate sector has shot up. Says Rituparna Chakraborty, co-founder and senior vice-president, TeamLease, "Employment in organised real estate is at a nascent stage. And that is why employees seek opportunities in other sectors whenever business is down." Brokers, who ran successful businesses employing people on their rolls, are turning employees themselves. Take the example of Bangalore-based Mustafa Sharif, who has been leasing and renting commercial and residential establishments for a decade. He had to shut shop a few months ago, and chanced upon a job with a local builder. He now earns Rs 35,000 a month and has given his shop to his cousin to run some business.

Uncertainty in real estate was hard to bear for N Darshan, who downed the shutters on his five-year-old brokerage in Bangalore recently. "There was a time when there were no sellers and only buyers. But things have changed. Now I have turned my real estate shop into a cyber cafe," he says. Across town, another broker Shiva Kumar has put up a photocopy machine to balance his real estate broking business. "There is no assured income in real estate anymore. The commission on selling homes too has shrunk with buyers willing to pay only half the brokerage," says Kumar.
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  • Forget about this article, there won't be any slump or price correction. Yes, if inflation increases by 10% and RE prices stay where they are right now then you can call it a slump, but I doubt it.
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  • More than slump in realty sector per say, this article is about the slump in the profits of brokers/dealers. And this aspect is entirely true. Specifically for Noida/GN, Brokers/dealers are left with very little commissions for themselves due to the lack of interest of the buyers which in turn is due to risks involved in transactions and the huge supply itself.
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  • Yes, that is true. Brokers in the NE/GN belt had developed the habit of selling apartments like hot cakes and that too w/o any legwork. They would start getting distributed to different areas now and hot areas like Gurgaon/Manesar will see more of them in the coming future.



    Originally Posted by nishant2hit
    More than slump in realty sector per say, this article is about the slump in the profits of brokers/dealers. And this aspect is entirely true. Specifically for Noida/GN, Brokers/dealers are left with very little commissions for themselves due to the lack of interest of the buyers which in turn is due to risks involved in transactions and the huge supply itself.
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  • Originally Posted by nishant2hit
    More than slump in realty sector per say, this article is about the slump in the profits of brokers/dealers. And this aspect is entirely true. Specifically for Noida/GN, Brokers/dealers are left with very little commissions for themselves due to the lack of interest of the buyers which in turn is due to risks involved in transactions and the huge supply itself.


    Perfect Nishant. I am aware that brokers earn a cool 2L-10L per month during boom time which is more than many top managers salaries. Since they are in this business they know where to invest and re-invest in short term and then make money during recessionary periods. yes their earning due to sales comes down but they make money the moment market picks up and cover up for the time lost within no time. If u see brokers like buniyaad, etc they started with 100sqft shop 15 yrs back and look what has happened now. Had they been in constant turmoil they would have closed their shop 10 yrs back.
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  • I think the slump will last 18 months, so voted option 3, although downside will be less.

    I am expecting only 5-10% price correction, because prices in NOIDA already low at 3000psf all inclusive.

    Maximum downside to 2500psf all inclusive would mean 17% downside.

    Even this 17% fall is unlikely - except in fly by night small time operators where they will take your money and vanish.
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  • I think this slump will correct the prices by 30 to 35%, so I chose last option :)...and I guess this correction will happen in less than 18 months period, we even don't need to wait for two long years...

    Let's see where we go...but it's time to sit tight for all Prospective buyers sitting on fense...
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  • No Slump..Ppl are just creating Panic

    There i sno slump in any RE market. Things are just not moving as fast as they were moving few days back. This is all political issue and once dust settles ppl will again be thinking that they missed the bus etc etc.

    Slump is something when economy is shattered due to any reason like recession etc. Eg. Sub prime crisis, Great Depression etc.

    Don't you guys try to trigger panic among aam junta who have invested their hard earned money in NE and other places of Noida
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  • Slump will of course be in a micro market - parts of NCR or parts of Noida. I chose 1 yr/20% option.

    Whatever the choice - one thing is clear that sentiment has clearly turned negative. Ever our IREF is finding hard to sell its banner ad inventory on the top. :D:D:D
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  • There wont be any slump. And there is no option for that. Option for this should also be there.
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  • Slump is not confined to Noida according to the Article, but is evident all over india and political issue in Noida does not hold relevance all over India.
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  • Some folks are commenting on slump for next 6 months to 2 years, so is that for the whole NCR or just for Noida? Areas in Ghzbd like RNE, CR might grow because of end users moving from NE. Gurgaon is unrelated of what is happening in Noida and its belt inlcuding Dharuhera/Manesar might see some investors coming in from short to long term. There can't be a slump in Delhi as properties are limited. other than Neharpar, Faridabad has never gone crazy like Noida , most of the supplies are occupies by end-users. I can't comment on Neharpar as the appreciation depends a lot on other factors like infra, timely construction etc.
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  • Real Estate Investment has become a fulltime hobby for most of the desi’s. People are becoming greedier and want more. Given this attitude, the prices will only rise in the long-term.

    Yeh Bhookh Kab Bhujegae?
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  • Slump need not mean price correction, probably not.

    Slump can also mean that companies are unable to sell new bookings. So listed companies dont make any profits - and have to service loans without profits.

    Usually cause slow down in construction activity. In real estate prices correct only in news papers, in real life if you go to buy a flat with 30% discount in your mind - you never get it.

    All you will get are top floors at 30% discount which you anyway get even in normal times
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  • Well said Venky Bhai. I think this would also prompt builders to continue construction of their already sold projects in a faster way. This would bring them new money and also gain in their reputation.


    Originally Posted by Venkytalks
    Slump need not mean price correction, probably not.

    Slump can also mean that companies are unable to sell new bookings. So listed companies dont make any profits - and have to service loans without profits.

    Usually cause slow down in construction activity. In real estate prices correct only in news papers, in real life if you go to buy a flat with 30% discount in your mind - you never get it.

    All you will get are top floors at 30% discount which you anyway get even in normal times
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  • quite right when you saySlump need not mean price correction, probably not.

    Slump can also mean that companies are unable to sell new bookings. So listed companies dont make any profits - and have to service loans without profits.

    I will go ahead it means only this in MOST cases....

    but for a customer slump ONLY means price correction... reading papers and following pundits they postpone their decision.. in most cases miss the first upturn and then buy either bad prop or pay more.. its an irony and a fallout of too much flow of information
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