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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  • Making comments and prediction is a theoretical exercise.

    I would respect a person who actually made money by taking a call wether bullish or bearish....

    We see all these pundits on CNBC changing their colours with the market.

    Show me track record where one made money

    People predicted doom in 2008 - how many sold before 2008 to capitalize

    How many bought 2009 to make a killing and in the right projects???

    I have never seen People with theroritical gyan and doing too much of analysis/calculations making money in RE (I am one of them)
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  • I sold stocks in 2007 Nov and Dec, just before the crash of 2008 Jan

    I bought RE in 2009 - unfortunately so, because I felt RE was safer than stocks and missed 100% return in 6 months from stocks.

    Still, I timed both entries perfectly. But I did make a few mistakes in the process and reduced my gains. Because I was a total newbie in RE market.

    Next time I will know better. This forum has been a great learning experience.

    I was the first person to recognise the GGN opportunity in 2010 and started following market in IREF when there was nobody in GGN forum (I posted the thread which said - why no activity!!!). I left NOIDA forum to go to GGN forum because NOIDA was dead and GGN was coming alive - although there were thousands in NOIDA forum and nobody in GGN forum. But I had no capital to capitalise on it - and I dont speculate, I do only safe and long term investments. Others came later and made tons in GGN.

    Same with Kundli - both entry and exit predicted on IREF (happened in 6 months) - again no capital to capitalise personally.

    I predicted a crash in RE of 30% in pune (builders and RE bulls) thread couple of weeks ago, before all the newspapers started their tom toms. Now everybody is shouting RE correction.

    So theory can predict most things. Capitalising requires knowledge, experience - and capital.

    I am currently predicting that the current lows in the stock markets, likely to persist for 6m to 1 year, is a great opportunity for stocks.

    Only time can tell, but you can join discussions on Pune stock thread if you are interested.
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  • Originally Posted by Venkytalks
    I sold stocks in 2007 Nov and Dec, just before the crash of 2008 Jan

    I bought RE in 2009 - unfortunately so, because I felt RE was safer than stocks and missed 100% return in 6 months.

    Still, I timed both entries perfectly. But I did make a few mistakes in the process and reduced my gains.

    Next time I will know better


    To make money their is no analysis /Economics required only one thing required

    "whenever everyone(like doodhwala ,panwala , IT expert ,service man , businessman) going to purchase in any feild that may be Real estate,Stock market, Gold ,Silver that is the time of sale for smart one

    "whenever everyone(like doodhwala ,panwala , IT expert ,service man , businessman) going to Sale in any feild that may be Real estate,Stock market, Gold ,Silver that is the time of Purchase for smart one

    Sir this is simple calculation if someone can do .....but it's impossible ............to control emotion
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  • Originally Posted by pgarg6868
    To make money their is no analysis /Economics required only one thing required

    "whenever everyone(like doodhwala ,panwala , IT expert ,service man , businessman) going to purchase in any feild that may be Real estate,Stock market, Gold ,Silver that is the time of sale for smart one

    "whenever everyone(like doodhwala ,panwala , IT expert ,service man , businessman) going to Sale in any feild that may be Real estate,Stock market, Gold ,Silver that is the time of Purchase for smart one

    Sir this is simple calculation if someone can do .....but it's impossible ............to control emotion


    Let me give you a real example of Rohini. There is a floor (ground floor) on a 48 sq meters plot on which 4 floors (G+3) are constructed in sector-11 that has already changed hands twice since July, 2010 and its price has gone up from 33 lacs to 48 lacs now that the current owner/seller is asking for and he is not even willing to negotiate for Rs 25000. That floor is just 5 plots away from my home and I thought about buying it in July, 2010 but decided to not buy because I believed a huge crash was around the corner. Such floors yield rental income of like 9k-10k only, so the rental income is also paltry.

    On the other hand in last 1 year:

    1. The electrician who had a shop near my home has switched to full-time property dealer business.

    2. Grocery shop from where I used to milk/bread etc. every morning is now a property dealer.

    3. The tailor who used to stitch trousers is now a full-time property dealer.

    4. A car denting/painting/repair shop owner is now a property dealer.

    5. Photocopy shop owner has switched to property documentation business (registry/rent agreement/freehold and so on).

    All this has happened but the crash has not happened but I'm sure that it will happen when even the last bear standing (of the wiseman type) has been sucked into the markets by the bullish sentiments all around.

    Your doodhwala and panwala are no longer the reliable and dependable signals. :)
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  • Thanks sir


    Originally Posted by ThePunjabi
    Let me give you a real example of Rohini. There is a floor (ground floor) on a 48 sq meters plot on which 4 floors (G+3) are constructed in sector-11 that has already changed hands twice since July, 2010 and its price has gone up from 33 lacs to 48 lacs now that the current owner/seller is asking for and he is not even willing to negotiate for Rs 25000. That floor is just 5 plots away from my home and I thought about buying it in July, 2010 but decided to not buy because I believed a huge crash was around the corner. Such floors yield rental income of like 9k-10k only, so the rental income is also paltry.

    On the other hand in last 1 year:

    1. The electrician who had a shop near my home has switched to full-time property dealer business.

    2. Grocery shop from where I used to milk/bread etc. every morning is now a property dealer.

    3. The tailor who used to stitch trousers is now a full-time property dealer.

    4. A car denting/painting/repair shop owner is now a property dealer.

    5. Photocopy shop owner has switched to property documentation business (registry/rent agreement/freehold and so on).

    All this has happened but the crash has not happened but I'm sure that it will happen when even the last bear standing (of the wiseman type) has been sucked into the markets by the bullish sentiments all around.

    Your doodhwala and panwala are no longer the reliable and dependable signals. :)
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  • I really don't understand, where r we heading ?

    wiseman is making certain predictions, based on his knowledge & some facts/assumptions ( i think, he should stop calling them predictions & everything would be fine ) . If u agree to what he says, please add to that & if one does not agree, please counter the arguments provided or simply ignore his post/s .

    Please do not get to the level of accusations & blasting this guy on personal levels .

    As for me, i almost always find wiseman's posts interesting reading, which at most times r supported by facts & look logical .





    Originally Posted by Munish Malhautra
    Dont take it otherwise or personally ss this is not directed to any single person, but please read the content of Wiseman's posts in Pune forum.
    I know for a fact that discussions on Pune forum are far more logical than NCR forum where people often get into emotional tiffs and only bothered about prices and discounts going up or down.
    You will realise when u see how many people got banned from Pune forum and how many from NCR.

    I understand that he gets into longish dooms-day discussions again and again but what he tells is definitely based on some facts and his deep knowledge of financials and economics must have been helpful to many people and definitely it includes me.

    I consider his posts as "heads-up" but not necessarily the deciding factor.

    Hence before discounting someone please see his contribution. :)
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  • Originally Posted by MANOJa
    As for me, i almost always find wiseman's posts interesting reading, which at most times r supported by facts & look logical .



    Can't agree more with that.

    Markets tend to move between points of extreme pessimism and optimism. We all witnessed the euphoria of 2006-07 and then the doom and gloom of 2008-09. Anyone, even the dumbest among the dumb, can make money trading with the markets but it takes a true braveheart to take a position against the market.
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  • As always, I will say a very simple thing... no jargons!!

    You keep on talking about crash in equity or RE .... and guaranteed that you will be proven right at-least once in every 10 years.

    Never mind.... they call it economic cycle, we call it your prediction.
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  • If someone is thinking that Reality CRASH means property rate will reduce 15% to 30% in next 1 to 3 years then this will not happen in any location of NCR.

    At this time Inflation & FD ROI is around 10% per year and in few locations of NCR it will be happen that property rates will be increase less than inflation and that difference can be say as Property CRASH or reduce in property rates after adjusting inflations.

    In simple words, as per current inflation & FD ROI after 3 years value of 100 rupees will be equal to 130 rupess. So,

    After 3 years if in any location property rates increase only 20% then actually there is a loss or CRASH of minimum 10% property value.

    After 3 years if in any location property rates increase only 5% then actually there is a loss or CRASH of minimum 25% property value.

    After 3 years if in any location property rates increase 50% then actually there is a gain in property rate of 20%.

    In NCR, in very few locations it may be possible that property rates will be increased below than inflation or FD ROI ie 10% annually. Forget that property rates will be reduced state away like 40 Lac property will be started to sell in 28 Lac or in 30 Lac or even in 35 Lac. Such case may be only in YEW and not in any other NCR location.

    However my theory is little bit different but I believe in the same, and because of this I do not checked & clicked any of the above options.
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  • Correction name is hypothetical... just like saying All is well... Rates are increasing day by day...
    Only builder may reduce some price to sell inventory..
    If a project started with 2500 per SQ Ft.. after one yr.. its price will be 2850 per sq ft atleast..
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  • Originally Posted by ashokyadav
    If a project started with 2500 per SQ Ft.. after one yr.. its price will be 2850 per sq ft atleast..


    There are tens of thousands of people who invested in Faridabad, Kundli, Greater Noida assuming the same about 5-6 years back. Just ask them what their experience has been like. Most of them are sitting on huge loss.

    It is not as simple as you are making it look like.
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  • I am not saying wiseman is god .

    But, he is pretty decent/good . Agree with him or counter him with facts or ignore him .

    ...........but no point in getting personal . He is not gaining anything by propagating correction or something similar .


    Originally Posted by ThePunjabi
    Can't agree more with that.

    Markets tend to move between points of extreme pessimism and optimism. We all witnessed the euphoria of 2006-07 and then the doom and gloom of 2008-09. Anyone, even the dumbest among the dumb, can make money trading with the markets but it takes a true braveheart to take a position against the market.
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  • Not true

    Originally Posted by ThePunjabi
    There are tens of thousands of people who invested in Faridabad, Kundli, Greater Noida assuming the same about 5-6 years back. Just ask them what their experience has been like. Most of them are sitting on huge loss.

    It is not as simple as you are making it look like.


    I dont agree with your point..

    In Kundali.. ppl booked plots from 4000 to 5000 per sq yard.. and I dont know current rate there now..

    Before investing one has to look thoroughly where one wants to invest and what are the future growth chances in that area.. Kundali area was most bought by north delhi guys... and many ppl who live in Haryana..(Sonipat Panipat etc..) so that they can move near Delhi...
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  • Originally Posted by ondabhai
    keep on talking about crash in equity or RE .... and guaranteed that you will be proven right at-least once in every 10 years.


    Some desi's staying in videsh have pecular negative view on India looking-ahead. These desi's can look wise filling-up many pages as if Indian economy is going to '6 yard zameen ke niche' in a short time taking RE alongwith in drain. They forget that European economies will be first to go to get underground, followed by USA - no proof needed as everyone can see what is happening in Greece/Ireland/Spain/Italy and how much bruised USA has come out from recession (if any).

    I have been hearing since last 3-4 years that China RE is going to go bust as houses are available at 50 months salaries. That prediction on China has not come correct and I don't think same will happen with Indian RE available at 20-25 months salary.
    Ranting has one good aspect- a day might just happen when that ''Bheria" would really come calling.
    Cheers.
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  • India's Homebuyers Gaining Upper Hand

    As per the report published in wall street journal.

    http://online.wsj.com/article/SB10001424052702303823104576390930823892952.html

    If housing prices were a rope then home buyers and developers in India are in a tug of war, each side pulling to see who would give in first. While homebuyers are waiting for bargains on homes, developers of these new apartments or flats are refusing to lower prices.

    Rohit *****, a resident of Jaipur in the western Indian state of Rajasthan, wants to buy a three-bedroom apartment in Noida, a suburb of New Delhi. The sharp escalation in home prices over the past year has put most of the homes he likes out of his budget. Mr. *****, however, hasn't given up hope, and expects a certain amount of correction in prices, after which he plans to buy a place.

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    Noah Seelam/Agence France-Presse/Getty Images
    Newly constructed residential apartments displayed 'for sale' offer signs in Hyderabad, September, 2009.

    It's not clear as to which side will win the war of the rope. But the odds are stacking up in favor of buyers across most Indian cities, especially over the rest of this year. Already, developers have seen a sharp slide in demand for new apartments across the country. Cities like Mumbai have a supply overhang of more than three years worth of new homes, and even the most optimistic of brokers agree that some of the high-end apartments in India's financial capital are overpriced and set for a correction. Across India, if developers halted construction today it would take two years for them to sell all the residential units they have on hand, according to Jones Lang LaSalle research data.

    View Full Image

    What makes the current climate even more difficult for developers is the sudden tightening of purse strings by buyers. Higher interest rates have made homebuyers more cautious. India's central bank on Thursday increased a key lending rate to 7.5%, it's tenth rate increase over the past 16 months.

    "The RBI's hiking of the repo rate by 25 basis points is far from good news for the real estate sector, especially in terms of housing," said Anuj Puri, chairman and country head of Jones Lang LaSalle India, a real-estate services company. "Purchasing activity had already dropped visibly during the last tranche of interest rate hikes, and we will see a further drop in buyer interest now."

    Research analysts at brokerage houses Knight Frank and Jones Lang LaSalle say that developers won't lower prices over the remaining course of this year: "Unless something unexpected happens like another scam or if the Sen tanks" prices are not expected to go down, said Anand Narayanan, national director for residential project marketing and consultancy at Knight Frank.

    View Full Image

    India's real-estate market has been through a turbulent ride these past few years. After a healthy phase in the beginning of 2008, there was a sharp downturn in the second half of 2008, in sync with the global credit crisis, which continued in 2009. At that time, the demand for houses was lower than the number of new construction projects launched. This improved by the end of 2009, and in 2010 the rate at which people were buying apartments started catching up again with supply. From January to March 2011, more than 34,000 new residential units were launched in Delhi and its adjoining suburbs.

    The latest set of numbers from the January to March quarter of this year, shows that the absorption rate or the number of houses purchased by buyers over the number of houses launched and stock of houses unsold, in India's top seven markets decreased to 17.5% from 21.4% in the comparable quarter in 2010, according to data from Jones Lang LaSalle. Cities such as Mumbai, Pune and Bangalore led the way in the drop.

    While this fall in homebuyers' appetite is not an unexpected development, it comes at a bad time for developers. India's construction and development business has taken a reputation hit following a spate of scandals and scams. Developers have a lot at stake to complete and sell their current projects.

    Take for example, Noida, the Delhi suburb that Mr. ***** wants to move to, prices on a three-bedroom "affordable" apartment go up to 8.1 million rupees ($181,208) or more.

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    "Developers need to first focus on the projects that they have already announced rather than launching new ones," said Himadri Mayank, a manager at the research division of Jones Lang LaSalle. Especially in Noida, Mr. Mayank said, developers are focused on finishing projects on hand, selling these units, and using these payments to service their debt.

    At this time, developers in Delhi and its suburbs haven't lowered prices. But discounts, market participants say, are available.

    While "in Mumbai, developers have begun negotiating on the brochure prices and are offering discounts of 100 to 200 rupees per square foot," Mr. Mayank said, who added that developers advertising these discounts in a few cases.

    In the southern city of Hyderabad, prices had been at an absolute standstill since 2008. The region had seen a number of violent clashes over the demand for the creation of a new state which was deterring homebuyers from investing in the city. Now, the state has mostly stabilized, and demand for homes has picked up. As a result, prices are expected to appreciate.

    It's difficult to predict whether a developer would lower prices or not, said Mr. Puri of Jones Lang LaSalle.

    "A lot depends on the financial ability of individual developers to hold on to their current pricing and risk losing sales till the situation improves," he said. "Developers with enough capital bases are less likely to relent on their pricing than smaller developers with an urgent need to sell their stock."
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