Prices doubled from 2009...enough said....
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  • Consider this ...

    In the discussion that Blotjab and Venky are having, 2 things are missed by Venky when he projects flat price to 10 Crores in 2022.

    While in deeply depreciated Re terms flat may become 10 crores, here's why it may not.

    First, as fundoo158 said, ever-rising salaries will become a thing of the part (IT boom). In fact salaries may start declining quite steeply in the next few years as the Western world (which gives us most of our profitable business) goes into a deep depression and starts slashing volumes as well as rates. Much overpaid IT employees will find out really how indispensible they really are.

    If you couple this with steeply declining value of Rupee, then very rapidly the EMIs would become unpayable and many homes will be repossessed with banks finding it extremely difficult to sell it at "estimated" value and they will have to go in for distress sales.

    This will be compounded by Builders caught with large inventories at cost higher than then current market prices and inability to build further in large volumes and thus coming to market with distress sales of their own.

    I will be waiting with cash for a bargain of a generation perhaps in 2013 or 2014.

    I somehow don't think the future is going to be serenely increasing prices as the past, but perhaps sharp declines in market prices and even sharper declines in inflation and rupee value adjusted prices.

    Let us see.

    cheers
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  • It will, finally ...

    Originally Posted by kazihamed
    i bought a flat in andheri for 5500/sq ft..which was previously at 8500

    rohan leher and blueridge..were selling at 2900/sq ft...

    my aunt brought a flat in shastri nagar for 10 lacs in 95/96..its value was 6 lacs in 2000..now 25 lacs..

    funny thing was veterans on this forum were expecting the price to correct further in 2009...they thought 2900 was very high..search some posts of 2009..its comical..



    Kazi bhai,

    The reduction in price assumed banks would not go further crazy from those high levels of NPA and tighten lending.

    Since banks have created a new reality by going completely out of control and pumping trillions into the economy, we are now into a new reality going forward. Old models will cease to work.

    Thus, the declines have only been postponed and perhaps will be deeper than thought of before.

    For patient people like me, who know that RE cycles run into decades, its worth the time waiting, meanwhile raising cash to avoid debt when buying better and larger property for the same buck in future.

    cheers
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  • wiseman bhai...

    i agree to certain extent..i think the markets especially pune is unnecessarily inflated...4500 for baner is crazy..and i personally feel that these are not going to appreciate further for atleast 5 years..though the chance of correction is there..

    but the main point is how much correction are you expecting? What do you think is fair price? thats where people go wrong and miss opportunity..so even at 2900 for rohand leher and blue ridge ppl said it will go down further..thats where my problem with pessimists..they just say price will correct..but never comment what is fair value or at what value they will buy..i will be happy to buy either of above project for 3500 now

    Originally Posted by wiseman
    Kazi bhai,

    The reduction in price assumed banks would not go further crazy from those high levels of NPA and tighten lending.

    Since banks have created a new reality by going completely out of control and pumping trillions into the economy, we are now into a new reality going forward. Old models will cease to work.

    Thus, the declines have only been postponed and perhaps will be deeper than thought of before.

    For patient people like me, who know that RE cycles run into decades, its worth the time waiting, meanwhile raising cash to avoid debt when buying better and larger property for the same buck in future.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    In the discussion that Blotjab and Venky are having, 2 things are missed by Venky when he projects flat price to 10 Crores in 2022.

    While in deeply depreciated Re terms flat may become 10 crores, here's why it may not.

    First, as fundoo158 said, ever-rising salaries will become a thing of the part (IT boom). In fact salaries may start declining quite steeply in the next few years as the Western world (which gives us most of our profitable business) goes into a deep depression and starts slashing volumes as well as rates. Much overpaid IT employees will find out really how indispensible they really are.

    If you couple this with steeply declining value of Rupee, then very rapidly the EMIs would become unpayable and many homes will be repossessed with banks finding it extremely difficult to sell it at "estimated" value and they will have to go in for distress sales.

    This will be compounded by Builders caught with large inventories at cost higher than then current market prices and inability to build further in large volumes and thus coming to market with distress sales of their own.

    I will be waiting with cash for a bargain of a generation perhaps in 2013 or 2014.

    I somehow don't think the future is going to be serenely increasing prices as the past, but perhaps sharp declines in market prices and even sharper declines in inflation and rupee value adjusted prices.

    Let us see.

    cheers


    wiseman bhai,

    This is entirely based on assumption that western world will continue to go further down in the depression for years to come.

    Personally, i would disagree on that. Though, there could be economic stagnation/contraction in western economies, but gradually (my timeframe is by 2014) as things would start falling in place, economies would again resume their growth trajectory as witnessed 2002-2007 period.

    Remember, just like bull phase has its cycle, bear phase also has its cycle. Nothing is endless. Yes, there would be hiccups (and certainly big ones), but if we look at a longer time frame (say beyong 3-5 yrs), things should not be as gloomy as today.

    Though i definitely agree with you that RE at its current rates is over-leveraged or say over-priced. However, instead of IT/Finance paychecks, much of that i would attribute to free flow of black money into RE. And frankly, i don't see any concrete step in near future by government to control it.

    Personal POV....
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  • Both Kazi and you may be right in a way ...

    Originally Posted by bhuvang
    wiseman bhai,

    This is entirely based on assumption that western world will continue to go further down in the depression for years to come.

    Personally, i would disagree on that. Though, there could be economic stagnation/contraction in western economies, but gradually (my timeframe is by 2014) as things would start falling in place, economies would again resume their growth trajectory as witnessed 2002-2007 period.

    Remember, just like bull phase has its cycle, bear phase also has its cycle. Nothing is endless. Yes, there would be hiccups (and certainly big ones), but if we look at a longer time frame (say beyong 3-5 yrs), things should not be as gloomy as today.

    Though i definitely agree with you that RE at its current rates is over-leveraged or say over-priced. However, instead of IT/Finance paychecks, much of that i would attribute to free flow of black money into RE. And frankly, i don't see any concrete step in near future by government to control it.

    Personal POV....


    In the recent price action of Dollar, Rupee and Gold one could see a mini play of how devaluation can give impression of prices of hard assets not coming down at all.

    When Gold hit $1915 some time back, Rupee was around 45-46 to the Dollar and at that exchange rate Gold in Rupee hit around 29500,

    Then Gold crashed and when Dollar price was $1715, given a static exchange rate of rupee to dollar, gold in rupee should have worked out to approx 26500 (a 10.5% decline from peak price).

    But since Rupee declined from 46 to 52 to the dollar (a 11.5% decline), gold was instead marked at 29500 even as its dollar price was 1715.

    Btw, I had studied the gold prices from 1970 to 2010 some time ago and noticed that, though the price of gold went from $850 in 1980 to $250 in 2001, its rupee price was always only going up. This actually showed the continuous decline in rupee against dollar throughout the 20 years in a way not quite discernible to a layman.

    Such is the impact of relative devaluation of a currency.

    If this is applied as Kazi and you are stating, then if rupee compensates for fall in RE prices by itself falling against other currencies, then prices will seem to stagnate, but in actuality be declining in real terms (say against a hard asset like gold), just like in the the earlier example.

    So, maybe I will put my cash in gold/silver after a little more decline and wait for the deepest part of the recession to buy property. This way maybe I will avoid the possible devaluation in the rupee.

    cheers
    CommentQuote
  • Originally Posted by wiseman
    In the recent price action of Dollar, Rupee and Gold one could see a mini play of how devaluation can give impression of prices of hard assets not coming down at all.

    When Gold hit $1915 some time back, Rupee was around 45-46 to the Dollar and at that exchange rate Gold in Rupee hit around 29500,

    Then Gold crashed and when Dollar price was $1715, given a static exchange rate of rupee to dollar, gold in rupee should have worked out to approx 26500 (a 10.5% decline from peak price).

    But since Rupee declined from 46 to 52 to the dollar (a 11.5% decline), gold was instead marked at 29500 even as its dollar price was 1715.

    Btw, I had studied the gold prices from 1970 to 2010 some time ago and noticed that, though the price of gold went from $850 in 1980 to $250 in 2001, its rupee price was always only going up. This actually showed the continuous decline in rupee against dollar throughout the 20 years in a way not quite discernible to a layman.

    Such is the impact of relative devaluation of a currency.

    If this is applied as Kazi and you are stating, then if rupee compensates for fall in RE prices by itself falling against other currencies, then prices will seem to stagnate, but in actuality be declining in real terms (say against a hard asset like gold), just like in the the earlier example.

    So, maybe I will put my cash in gold/silver after a little more decline and wait for the deepest part of the recession to buy property. This way maybe I will avoid the possible devaluation in the rupee.

    cheers


    Few quick points.

    1. Prices of RE might inflate a lot also because economic disruptions cause no more new launches decreasing supply.

    Happened in 2008/2009 in NOIDA when NOIDA had higher prices than Gurgaon by 30% despite NOIDA being down market. Then with masive launches in NOIDA and fewer launches in GGN, prices in NOIDA became half og Gurgaon prices = fall in NOIDA, rise in GGN.

    2. Salaries of highest managers likely to remain static at 100,000 USD plus rates regardless of location. So a 20-50Lakh package will keep pace with depreciation.

    3. Depreciation can be very severe. Current behaviour of Rupee is nothing less than a major crash. In such situations Gold and RE are must in portfolio

    4. Right now, we are already in the middle of bear market in Rupee, stocks, RE and bonds. Everything is falling in value

    5. In such situations, Gold becomes defacto currency to hedge against Rupee misbehaviour. So gold is a good investment now not because USD will depreciate against gold, but because Rupee is collapsing.

    6. I have always maintained that Gold in Rupees is a proxy dollar investment for India with a double benefit - it will gain if USD falls and it will gain if Rupee falls against dollar. So double protection
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  • Realitycheck. Price check point in Q2 2012 . No signs of any softening of prices. Just for quote prices in Punawale are now in range of 4200 (New Baner) and on Baner road 5600 (Yuthika . ok lets leave aside 6K range of Kumar Peninsula for the moment). Hence 3K appreciated to 4K and 4K appreciated to 5.5 K in just 1 year.

    Handewadi road etc which used to be in 23xx range are now not below 3K range. Ravet which used to be in 23xx range is not below 3K range. Even some Talegaon projects themselves are not below 3K. Dange chowk used to be in 2.8 range a year back is now touching 3.8K.

    Basically what it shows that earlier sought after places are now more strongly sought after, while earlier second choice places are now becoming sought after places. Places like Pisoli also have appreciated.

    Now 2xxx range RE can be found in places like Wagholi annex or Anandgram.
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  • Originally Posted by compuwalah
    Realitycheck. Price check point in Q2 2012 . No signs of any softening of prices. Just for quote prices in Punawale are now in range of 4200 (New Baner) and on Baner road 5600 (Yuthika . ok lets leave aside 6K range of Kumar Peninsula for the moment). Hence 3K appreciated to 4K and 4K appreciated to 5.5 K in just 1 year.

    Handewadi road etc which used to be in 23xx range are now not below 3K range. Ravet which used to be in 23xx range is not below 3K range. Even some Talegaon projects themselves are not below 3K. Dange chowk used to be in 2.8 range a year back is now touching 3.8K.

    Basically what it shows that earlier sought after places are now more strongly sought after, while earlier second choice places are now becoming sought after places. Places like Pisoli also have appreciated.

    Now 2xxx range RE can be found in places like Wagholi annex or Anandgram.
    .


    new project called monarchy renaissance cost 90 lakh for 3 BHK at wakad. the rate is 5100 psft and even digging has not started:bab (59):
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  • Yes, exciting days for investors. People who are having that budget, should go for it.
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  • Originally Posted by compuwalah

    Basically what it shows that earlier sought after places are now more strongly sought after, while earlier second choice places are now becoming sought after places. Places like Pisoli also have appreciated.

    Now 2xxx range RE can be found in places like Wagholi annex or Anandgram.

    Why are you wasting time on the forum? Please go and buy in those places,prices will appreciate 200%.
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  • Guys so many people keep saying that we guys keep shouting bubble burst hoga, bubble burst goga. They say, we have heard this time and again and aisa kuch nahin honey wala. Abhi to property ko bahut grow karna hai. Well i was one who invested even in 2008 when property prices were either stagnant or were falling down. At that time i did not think India will start crumpling as fundamentals still pointed that there were avenues for further growth. From then on, there has been a mania of construction all around. Since FDI has been on hold, maximum construction has been in the residential markets. Even in a small town which never had a chance to see any multi-nationals investing there (generating jobs) could at least build a residential dream to attract investors. Today price of a 2 bed flat in small towns around Delhi or any other big cities is only 15-20% lower than their counter parts. So it has become more lucrative for anyone and everyone in construction business. Now some smart builders have started gearing up towards FDI opening up (in big cities and larger towns) but most of the big ones cannot afford to do that with their hands tied at the back. They have no source of funding with Indian investors market drying up with each passing day. I agree with wiseman that property will become discounted (hugely) in next a few years as initially there will be stagnation, then slide and then massive fall.

    I had started a thread in Feb 2012 predicting a fall.

    http://www.indianrealestateforum.com/chandigarh/t-will-property-prices-fall-going-forward-my-perdiction-yes-26901.html#post425777
    This was after my trip to India and comparing all the fundamentals to not only the markets around the world but also to the realities on ground.


    What is the state of real estate (RE) today, with companies still shouting hoarse that prices will go much higher than where they are today? Let’s analyse this from RE company’s point of view.

    Are any RE companies raising fund through IPO today? If they feel RE prices have still a way to rise, why do they not float IPO’s to raise money? Instead it is seen they chose to beg foreign investors for keeping themselves together at this time? They know even though some black money flows in to buying large chunks of land within India (scam money from Indian investors which seems to be drying up too), there will no takers for the stock option which is a true reflection of the situation. 90-95% of the people who invest in the stock options are well informed individuals who do their ground works and study fundamentals before investing in a company. A clear picture of this emerges when you look at how RE stocks have fared compared to other verticals. RE stocks jumped before the 2008 slowdown. There was a time when investors had a choice to either invest in RE directly or RE related stock options. People who liked instant cash release made their investments using stocks. Most of the first time investors invested money on the RE directly. Even though the number of people who invested in RE stocks were less compared to RE investment directly, there was no dearth of investors.

    After 2008 when the reality hit the Indian economy and some RE scam were unearthed, a clear picture emerged. It gave an insight into how weak the Indian RE market was and how it was being inflated to get the maximum return out of a dead cow. From then on RE stocks have been either been flat or sliding down and RE companies have been afraid to raise money using this option. Instead gullible investors are sold dreams of very high returns (there is no dearth of investors in such a high population country where even NRI’s from all over the world have taken a shot at RE). Prices are escalated with every tick of the clock, which has become a very dangerous game now. Investors, who have made substantial amount in last 7-8 years, will be able to take a hit on some of their investments. They can wait for the next wave of bubbles 6-7 years down the line. Naïve investors who have jumped the bandwagon in last 1-2 years will be seen jumping around like headless chicken when this mania comes to a complete halt. Which actually points to how the greed shuts the eyes and minds of people who in normal circumstances and for any other investment would have done their research before investing. Today RE has become like a Ponzi scheme where one investor tries to make the money by selling a dream to the next in line. A flat flows down from developer to investors on a pyramid which has reached a dangerous proportion. All along property dealers make their own killings with no respect for young and old. They seem to be the only ones who can run on the first sound of a gun shot, leaving the blood bath.

    It is time investors understand the first signs of the killings to come and start protecting themselves from the mania, which will be on the other side of the river bank. A side which has never been seen in the history of Indian greed game called “real estate”.
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  • Good analysis, but One thing is that , for me, I am yet to buy my first property so these bear calls give me hopes and feels positive while hunting. But I am damn sure that once I get my first property , after some years, I will myself turn to become bull :bab (3):looking for appriciation to my property or buying another property.

    So even if the fall of prices/softening occurs, there will not be huge advantages for beginers. Today people can afford 90L flats in Wakad, 65-80Lacs flat in Kharadi, 3K rate in Somatane! It's like gold, whatever the prices rise, people will always buy gold, as it's safer. Similarly, for me at least, for my next generation's sake I will be booking assets in RE as well.

    Yes, we need to shell extra amount, savings get hampered, but over long term, we adjust (had to). No matter what secure future, is priority. RE gives that, provided we invest in good one without too much burden on our finacnes. Hoping modest to good return on RE is no false but expecting it to rise 20-25% every year is madness :bab (5):.
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  • I had one Q. Do builders accept gold as payment ?
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  • Originally Posted by mymarji
    I had one Q. Do builders accept gold as payment ?


    not sure why u asking this but u can get cash from jeweller and give to builder (something should be avoided as it generates black money for builder)
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  • How many gold bricks do you have ;)

    Originally Posted by mymarji
    I had one Q. Do builders accept gold as payment ?
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