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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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  • #41

    #41

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

    Originally posted by pgarg6868 View Post
    Sir Learning Article
    Awesome analysis in the above note .. but let's get down to basic fundamentals .. how can prices of dwellings in India be more or even equal to those in developed nations (in relatively comparable neighbourhods .. let's say in terms of commute time to the central business district) WHEN
    1. The average salary of people in India is nowhere near that of people in the developed nations
    2. The infrastructure cannot be compared to those in developed nations
    3. The quality of construction / fittings cannot be compared to those in developed nations
    4. Even the type of ownership cannot be compared to those in the developed nations. What we terms as "flats" are termed as "co-ops" in the US .. these are considerably cheaper than independent houses / condos as one does not own the 4 walls of the apartment or the land on which the dwelling stands. Can someone tell me how much it would cost to have a 3 bed "house" (not flat) in Mumbai??
    Any thoughts? I know a lot of people make a lot of money in India .. but am talking abt the Average Joe on the street not the investment banker types here. For me .. the math just doesn't add up. People are paying 1.5 Lakhs rent in Bandra .. that's as much as one would pay in Manhattan in one of the swanky towers there .. and from what I could make out of the note .. this is just the beginning .. jeez .. give me a break.
    Look at any of the recently released buildings .. not even 10-20% of the lights are on in the evenings .. as middle class .. are we just shooting ourselves chasing this dream of owning a home?

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    • #42

      #42

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

      Originally posted by sunnybynight View Post
      I am not sure if either of these news is true.

      1. Which Vilas javdekar scheme you are talking about in Wakad? If it is Palash, the rate was 3200 for Insignia's booking - after that it is back to 3600 for the remaining ones. A number of people have inquired. how do you get the 2900 figure? Just trolling

      2. As mentioned by others, the rate is still 4,000 plus in Topaz park. This is the rate quoted by them this monday.
      Today is Wednesday, so add 100 in it.

      Comment

      • #43

        #43

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

        Originally posted by Kimmig View Post
        Awesome analysis in the above note .. but let's get down to basic fundamentals .. how can prices of dwellings in India be more or even equal to those in developed nations (in relatively comparable neighbourhods .. let's say in terms of commute time to the central business district) WHEN
        1. The average salary of people in India is nowhere near that of people in the developed nations
        2. The infrastructure cannot be compared to those in developed nations
        3. The quality of construction / fittings cannot be compared to those in developed nations
        4. Even the type of ownership cannot be compared to those in the developed nations. What we terms as "flats" are termed as "co-ops" in the US .. these are considerably cheaper than independent houses / condos as one does not own the 4 walls of the apartment or the land on which the dwelling stands. Can someone tell me how much it would cost to have a 3 bed "house" (not flat) in Mumbai??
        Any thoughts? I know a lot of people make a lot of money in India .. but am talking abt the Average Joe on the street not the investment banker types here. For me .. the math just doesn't add up. People are paying 1.5 Lakhs rent in Bandra .. that's as much as one would pay in Manhattan in one of the swanky towers there .. and from what I could make out of the note .. this is just the beginning .. jeez .. give me a break.
        Look at any of the recently released buildings .. not even 10-20% of the lights are on in the evenings .. as middle class .. are we just shooting ourselves chasing this dream of owning a home?
        The answer to your question is simple - currency depreciation.

        Right now, Indian Rupee is temporarily strong. So you are calculating 1Crore = 200,000 dollars. But if our currency depreciated to 90Rs to the dollar, 1Cr = 100,000 dollars.

        Since whatever you have said above is absolutely true, something has to give way and that something is our currency.

        So expecting 60Rs to the dollar within the next one year would not be wrong. Only reason it hasnt happened is because US rates are abnormally low.

        The moment US rates start tightening (and it has to happen at some time in the next few years), our currency will depreciate like crazy.

        Let us assume a few approximate prices and see (dont remember exact prices)

        Year X USD/Rupee X Median US house price X DDA flat 2BHK price in Rs (dollar) X Ratio India house/US house

        1982 X ? 12 X50,000$ X1,00,000 Rs (=8000$) X6.25

        1987 X? 18 X75,000$ X8,00,000 Rs (=40,000$)X 1.85

        1992 X30 X100,000$ X6,00,000 Rs (=50,000$) X2.0

        1997 X35 X150,000$ X25,00,000 Rs (=70,000$)X 2.0

        2002 X45 X200,000$ X35,00,000 Rs (=70,000$)X 2.85

        2007 X45 X250,000$ X80,00,000 Rs (=175,000$) X1.42

        2011 X45 X225,000$ X125,00,000 Rs (=275,000$)X 0.81

        So historically US homes have costed around twice the price of a DDA flat. 1982 I dont remember the US exchange rate (strangely, could not find a good web site going back that far - anyone can post a good link????) , but US median housing price readily available - I have rounded off for easy analysis. For rIndia, I went with DDA flat whose market price I know.

        Currently, US homes are cheaper than in India. For reversion to mean, this ratio, currently 0.8 has to go back to about 2.

        So one of three things has to happen

        1. US homes have to appreciate by 100% (double). Seems impossible, but with inflation stoking by printing currency, ultimately it will happen

        2. India prices have to fall 50% (RE bull theory proved wrong guys believe this).

        3. USD has to appreciate 100% (i.e double to 90 per dollar).

        It can happen in any ratio. Over the long term, probably, 30% of each of these will happen i.e US prices will rise 30%, Indian prices will fall 30% and USD will appreciate 30% i.e Rupee depreciation of 30%.

        Question is which will come first? I as a RE bull theory proven right person, believe the order will be: Fall in Indian prices by 30% (happening right now), Rupee depreciation by 30% (expect to happen in next one year) and then US house appreciation by 30% (probably take 5 years and more)

        OR - Rupee can show run away depreciation. I remember 1991 when there was flight of capital. We had to devalue and shift to semi float. From 18Rs to dollar price went to 30 Rs to dollar if I remember right.

        If there is flight of capital, same thing can happen again. All of our forex reserve is hot money from FII who want to chase our volatile stock markets.

        We cannot allow them to put money in our gilt bonds - because with US rate at 0% and Indian rate at 8.4% or so, that is an arbitrage which will either bankrupt us or shift our rates to about 4% which would stoke the wildest inflation we have ever seen and collapse our monetary system.

        Our only option is to allow them to take their money and go and face a massive depreciation of Rupee - which will cause a bad recession and also stoke oil price inflation.

        The truth will lie somewhere in between -30/30/30 I wrote above is the safest prediction possible
        Last edited June 23 2011, 01:56 AM.
        Venky (Please read watch a or before posting)

        Comment

        • #44

          #44

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

          Venky - Me being an NRI with dollar denominated earnings is licking my lips thinking about dollar at 60-70+

          However looking at the America’s huge and growing current account deposit and more pension benefits related debt problems expected to come, I really doubt if the kind of depreciation you are talking about rupee will happen and that too in short to medium term

          Whats your basis for ruppee depreciation and that too so vehemently

          Comment

          • #45

            #45

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

            Venky .. thanks for your reply .. no offence, however, the analysis is just conjecture .. my question does not get answered .. how can people in India who's average income is lower than that of similarly qualified US people afford OR let me put it this way .. continue to afford as if they are going out of style .. such high priced dwellings? Especially when our home loan rates are in the stratoshpere compared to US ..
            Does this question stump others on the board as well or am I just plain stupid?

            Housing demand / supply gap is just a myth propagated by builders / Times of India / Congress .. there is enough and more land available .. in fact there are enough and more vacant flats available .. which are just being hoarded by these scamsters, politicians and the so-called "investor idiots". Your analysis is completely on the spot in your earlier post .. the Congi Govt itsels does not want people from the jhopadpattis / ghettos to move out so that they can protect their vote bank.

            Originally posted by Venkytalks View Post
            The answer to your question is simple - currency depreciation.

            Right now, Indian Rupee is temporarily strong. So you are calculating 1Crore = 200,000 dollars. But if our currency depreciated to 90Rs to the dollar, 1Cr = 100,000 dollars.

            Since whatever you have said above is absolutely true, something has to give way and that something is our currency.

            So expecting 60Rs to the dollar within the next one year would not be wrong. Only reason it hasnt happened is because US rates are abnormally low.

            The moment US rates start tightening (and it has to happen at some time in the next few years), our currency will depreciate like crazy.

            Let us assume a few approximate prices and see (dont remember exact prices)

            Year X USD/Rupee X Median US house price X DDA flat 2BHK price in Rs (dollar) X Ratio India house/US house

            1982 X ? 12 X50,000$ X1,00,000 Rs (=8000$) X6.25

            1987 X? 18 X75,000$ X8,00,000 Rs (=40,000$)X 1.85

            1992 X30 X100,000$ X6,00,000 Rs (=50,000$) X2.0

            1997 X35 X150,000$ X25,00,000 Rs (=70,000$)X 2.0

            2002 X45 X200,000$ X35,00,000 Rs (=70,000$)X 2.85

            2007 X45 X250,000$ X80,00,000 Rs (=175,000$) X1.42

            2011 X45 X225,000$ X125,00,000 Rs (=275,000$)X 0.81

            So historically US homes have costed around twice the price of a DDA flat. 1982 I dont remember the US exchange rate (strangely, could not find a good web site going back that far - anyone can post a good link????) , but US median housing price readily available - I have rounded off for easy analysis. For rIndia, I went with DDA flat whose market price I know.

            Currently, US homes are cheaper than in India. For reversion to mean, this ratio, currently 0.8 has to go back to about 2.

            So one of three things has to happen

            1. US homes have to appreciate by 100% (double). Seems impossible, but with inflation stoking by printing currency, ultimately it will happen

            2. India prices have to fall 50% (RE bull theory proved wrong guys believe this).

            3. USD has to appreciate 100% (i.e double to 90 per dollar).

            It can happen in any ratio. Over the long term, probably, 30% of each of these will happen i.e US prices will rise 30%, Indian prices will fall 30% and USD will appreciate 30% i.e Rupee depreciation of 30%.

            Question is which will come first? I as a RE bull theory proven right person, believe the order will be: Fall in Indian prices by 30% (happening right now), Rupee depreciation by 30% (expect to happen in next one year) and then US house appreciation by 30% (probably take 5 years and more)

            OR - Rupee can show run away depreciation. I remember 1991 when there was flight of capital. We had to devalue and shift to semi float. From 18Rs to dollar price went to 30 Rs to dollar if I remember right.

            If there is flight of capital, same thing can happen again. All of our forex reserve is hot money from FII who want to chase our volatile stock markets.

            We cannot allow them to put money in our gilt bonds - because with US rate at 0% and Indian rate at 8.4% or so, that is an arbitrage which will either bankrupt us or shift our rates to about 4% which would stoke the wildest inflation we have ever seen and collapse our monetary system.

            Our only option is to allow them to take their money and go and face a massive depreciation of Rupee - which will cause a bad recession and also stoke oil price inflation.

            The truth will lie somewhere in between -30/30/30 I wrote above is the safest prediction possible

            Comment

            • #46

              #46

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

              Originally posted by Kimmig View Post
              Venky .. thanks for your reply .. no offence, however, the analysis is just conjecture .. my question does not get answered .. how can people in India who's average income is lower than that of similarly qualified US people afford OR let me put it this way .. continue to afford as if they are going out of style .. such high priced dwellings? Especially when our home loan rates are in the stratoshpere compared to US ..
              Does this question stump others on the board as well or am I just plain stupid?

              Housing demand / supply gap is just a myth propagated by builders / Times of India / Congress .. there is enough and more land available .. in fact there are enough and more vacant flats available .. which are just being hoarded by these scamsters, politicians and the so-called "investor idiots". Your analysis is completely on the spot in your earlier post .. the Congi Govt itsels does not want people from the jhopadpattis / ghettos to move out so that they can protect their vote bank.
              Dont forget the black money when looking at demand for RE as investment...most RE investment is made to hide black money.....there is almost insatiable demand for RE in India
              When the facts change, I change my mind. What do you do, sir? - John Maynard Keynes

              Comment

              • #47

                #47

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

                But with Govt enacting laws to check the black money (Money Laundering Act), will it still be sustainable. 3-5 years down the line, RE should fall as black money dealing will be very very less...

                Comment

                • #48

                  #48

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

                  Originally posted by Kimmig View Post
                  Venky .. thanks for your reply .. no offence, however, the analysis is just conjecture .. my question does not get answered .. how can people in India who's average income is lower than that of similarly qualified US people afford OR let me put it this way .. continue to afford as if they are going out of style .. such high priced dwellings? Especially when our home loan rates are in the stratoshpere compared to US ..
                  Does this question stump others on the board as well or am I just plain stupid?

                  Housing demand / supply gap is just a myth propagated by builders / Times of India / Congress .. there is enough and more land available .. in fact there are enough and more vacant flats available .. which are just being hoarded by these scamsters, politicians and the so-called "investor idiots". Your analysis is completely on the spot in your earlier post .. the Congi Govt itsels does not want people from the jhopadpattis / ghettos to move out so that they can protect their vote bank.

                  perhaps you can go thru this thread

                  https://www.indianrealestateforum.co...-world?t=10848

                  in few post later there is comparison based on Urban dwellers of same class in developed world and Indian Cities ...

                  Comment

                  • #49

                    #49

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

                    Originally posted by stoxxx View Post
                    Dont forget the black money when looking at demand for RE as investment...most RE investment is made to hide black money.....there is almost insatiable demand for RE in India
                    Again .. a myth, I feel .. really .. how many people have access to the sort of Black Money needed to support such a huge investments??
                    Most of those I know and in my immediate circle work a job for a living .. agreed there are scams worth hundreds of thousands of crores .. however the scams are perpetrated by a handful few .. a finite number .. your neighbourhood traffic constable who you tikao 100-200 Rs as bribe cannot buy these places.

                    The more I think abt this .. it looks like there are just not enough moneybags lying around to support .. the problem is that these moneybags are turning up at multiple places giving builders an impression that there is a lot of money floating in the market .. which is giving them confidence to hold on to their prices and increase them at will .. in turn, giving the moneybags who put in their money earlier a sense that prices will continue to rise indefinitely and insanely .. and they in turn hold on to their invstments choking supply .. futher negating any chances of price pressure on the builders .. its just a vicious circle .. gotta break it

                    Comment

                    • #50

                      #50

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

                      Originally posted by Kimmig View Post
                      Again .. a myth, I feel .. really .. how many people have access to the sort of Black Money needed to support such a huge investments??
                      Most of those I know and in my immediate circle work a job for a living .. agreed there are scams worth hundreds of thousands of crores .. however the scams are perpetrated by a handful few .. a finite number .. your neighbourhood traffic constable who you tikao 100-200 Rs as bribe cannot buy these places.

                      The more I think abt this .. it looks like there are just not enough moneybags lying around to support .. the problem is that these moneybags are turning up at multiple places giving builders an impression that there is a lot of money floating in the market .. which is giving them confidence to hold on to their prices and increase them at will .. in turn, giving the moneybags who put in their money earlier a sense that prices will continue to rise indefinitely and insanely .. and they in turn hold on to their invstments choking supply .. futher negating any chances of price pressure on the builders .. its just a vicious circle .. gotta break it
                      I guess you have not personally seen the customers carrying cash in gunny bags (of the kind in which we buy 50 KG rice) to the offices of builders in Connaught place (Delhi). Yes, at least in Delhi NCR it happens even today that people carry 500 and 1000 rupee notes in big gunny bags to book flats/plots in bulk.

                      The guys with moneybags don't care if they are getting 3% ROI or 15% ROI. For them real estate is a place where massive amounts of black money can be safely parked for future generations.

                      Comment

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