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Builders & RE Bulls Theory Proved Right !!!

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Builders & RE Bulls Theory Proved Right !!!

Last updated: June 15 2016
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  • Re : Builders & RE Bulls Theory Proved Right !!!

    Originally posted by vivek.cap View Post
    Wanted to share a article i came accross, how people are blindly booking the flats without proper lawyer consultation

    Original Artcile

    The one thing you hear in Bangalore Real Estate - if a project is blessed by "State Bank of India", it's golden. SBI is the top tier bank of the lot and supposedly they have the most **** lawyers in town. If they clear a project, it's absolutely clear. There's nothing to worry.

    Even banks approved projects have gucha

    joined the Yahoo Group of the owners of the "villas" and asked them who used a lawyer to verify the land. Of the 30 odd people in the mailing list, not one had used an external lawyer. They all depended on the fact that the bank they borrowed money from clearing the land. Since the land was cleared by the bank, they assume the land and the project should be clean.
    These folks are investors and will find a bakra for these properties. Hence they are not worried.

    Some of m friends had booked in such non-approved flats and the builder got the approvals after 2 years post possession. How?? Bribe after all. Why do you think the politicians are against Lokpal !!

    Comment


    • Re : Builders & RE Bulls Theory Proved Right !!!

      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
      Last edited December 11 2011, 11:10 PM.

      Comment


      • Re : Builders & RE Bulls Theory Proved Right !!!

        It will, finally ...

        Originally posted by kazihamed View Post
        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

        Comment


        • Re : Builders & RE Bulls Theory Proved Right !!!

          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 View Post
          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

          Comment


          • Re : Builders & RE Bulls Theory Proved Right !!!

            Originally posted by wiseman View Post
            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....
            The knowledge of what to do in a Recession or Boom is more important than predicting a Recession or Boom.

            Comment


            • Re : Builders & RE Bulls Theory Proved Right !!!

              Both Kazi and you may be right in a way ...

              Originally posted by bhuvang View Post
              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
              Last edited December 12 2011, 07:51 PM.

              Comment


              • Re : Builders & RE Bulls Theory Proved Right !!!

                Originally posted by wiseman View Post
                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
                Venky (Please read watch a or before posting)

                Comment


                • Re : Builders & RE Bulls Theory Proved Right !!!

                  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.
                  Last edited May 18 2012, 08:16 AM.

                  Comment


                  • Re : Builders & RE Bulls Theory Proved Right !!!

                    Originally posted by compuwalah View Post
                    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

                    Comment


                    • Re : Builders & RE Bulls Theory Proved Right !!!

                      Yes, exciting days for investors. People who are having that budget, should go for it.

                      Comment

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