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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  • Originally Posted by pgarg6868
    Sir, You never get a flat Below Rs 3000 per sq ft under construction & Rs 3500 per sq ft RTM in any location of noida today or post span of two year or four year but it's true rate may be increase above this .

    If you see rate in the span 2006-2010 rate in noida sectors are not below +/-10% maxm the above rate it means above rates are lowest one in noida region.

    Maximum you book a loss of interest part if rate not move upward.


    Agreed... But Interest part of home loan is too much and if rate not increased a lot then it will make a big hole to the buyers. In simple words, if anybody take 30 Lac flat using home loan then at current 12% ROI buyers will pay approximately 15 Lac amount just in interest part during 4 years (I am saying 4 years because even if work is speedy then it takes 4 years in possession). So, after 4 years even if property rate of that flat is 35 Lac then still huge loss of 10 Lac after 4 years. Flat purchase is always good for own living but for investment think several time before purchasing, good option are there in NCR where you can get more rate appreciation than Home Loan ROI but it require deep studies always.
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  • You also forgetting that you yourself is staying at that house. So factor in RENT as well.

    Anyway, living in one's own house is not something tangible or quantitative. How do you define VALUE of 170 cr house that was sold just few days back?

    Ask your little kid how does he/she feel to change his/her friend circle every year ...

    Not everything in life is a book of Profit & Loss. You need a house, you will buy it irrespective of CRASH or BOOM..... whether your decision is right or wrong? you will only know when you actually sell your house.
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  • Absolutly agree with G-harondabhai......

    First thing, a person buy a house for 2 reasons....either he/she needs it for self use or they have surpulus money to be invested somewhere.....

    Now if you are purchasing for self use, it doesn't matter if your 30 lakh have become 50 lakh, 80 lakh or remained 30 lakh.....it is only a self satisfaction, till you are going to sell it, which logically you will not do in a 4-5 years time......

    If you have surplus money, then again this loan interest part will not come up......if you are short term investor then sell it when you are getting a decent profit......if someone needs home loan for investment, then I would suggest they should not go for a house for investment and if still you want to invest in real estate by taking home loan, look for long term, may be some 8-10 years.....because in the first 6-7 year person will come at par in terms of Interst payed and the Price increase of the property..... from 8th year onwards the profit will start coming in......

    And trust me real estate investment has never failed anyone, not in the NCR region atleast.

    cheers,
    Amol.

    Originally Posted by ondabhai
    You also forgetting that you yourself is staying at that house. So factor in RENT as well.

    Anyway, living in one's own house is not something tangible or quantitative. How do you define VALUE of 170 cr house that was sold just few days back?

    Ask your little kid how does he/she feel to change his/her friend circle every year ...

    Not everything in life is a book of Profit & Loss. You need a house, you will buy it irrespective of CRASH or BOOM..... whether your decision is right or wrong? you will only know when you actually sell your house.
    CommentQuote
  • Originally Posted by saurabh2011
    Agreed... But Interest part of home loan is too much and if rate not increased a lot then it will make a big hole to the buyers. In simple words, if anybody take 30 Lac flat using home loan then at current 12% ROI buyers will pay approximately 15 Lac amount just in interest part during 4 years (I am saying 4 years because even if work is speedy then it takes 4 years in possession). So, after 4 years even if property rate of that flat is 35 Lac then still huge loss of 10 Lac after 4 years. Flat purchase is always good for own living but for investment think several time before purchasing, good option are there in NCR where you can get more rate appreciation than Home Loan ROI but it require deep studies always.


    Sir, purchase a flat for a period of 10 /15 year period than calculate interest part than you are not in loss anywhere in the world if some one have calculation of 15 year of any location than please put the details .
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  • Originally Posted by silly_boy20
    if still you want to invest in real estate by taking home loan, look for long term, may be some 8-10 years.

    wishful thinking - or leveraging - this looks great on excel sheet but look what happened in US and Japan - Home loan is only good if you have alternate means to service it - like rental income or business income from somewhere other than your day job


    sir,

    calculate cost + interest for 10/15 period in U.S/Japan I think you are not in loss in any period
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