I have got confirmed news from one of family friend who works with one of the reputed builders (from Pune), that property market in Pune is getting worse day by day. Many people who has signed but not made agreements are cancelling the deals (due to job conditions). Plenty of new projects are at High Risk. Many wise builders stopped the launch of new projects (including Paranjpe, DSK, Kumar).
People don't have money to pay EMI. Investors are not getting good rents. They want to sell off.
All in all, by Diwali rates will be down, if not the same.

You still can buy a flat if you have secured job and enough of money in hand. Those who want to take loan (more than 10L), please don't take risk.

Sansona
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  • Originally Posted by realacres
    Yep, to purchase the avg annual return on rental have to be 6%+. I pay INR 10k/month as rent for 2BR (I reduced the rent by increasing the deposit) while the owner pays around INR 30k/month as EMIs+the maintenance etc. & I get to enjoy all the amenities inclusive of this rent. The funniest part being that the owner has 4 flats which have been given out on rent in different localities. I don't understand why people don't buy a lavish house for themselves first & enjoy it than keep investing without much savings. He has got 2 of his properties recently mortgaged to send his son to US for MS. Loan pe loan, loan pe loan. What is this mike?? Personally, I feel that there has to be a balance between savings & spending. I would better go on a Caribbean cruise than pay 3 months EMIs for property I am not going to use at all.
    Gosh. It would have been so good had this been the case. Even US buyers did the same thing & ended up with sub-prime crisis.:p


    yes. I know where you are coming from...
    I know people who have more than two flats purchased in this boom time just becasue they had money to invest and it was right option. Then there are couples, both working, both wanting to buy homes for themselves separately. Then there are perfect timing people (I call them), who graduted at the right time, got jobs at the right time, went abroad at the right time, got a flat at the right time and now when loan is done with, searching for a new flat to buy ....

    How interesting is this ?
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  • One thing is for sure, the bigger builders are in trouble. Builder who made insanely expensive houses with so called posh amenities are facing huge issues. Some key examples are Vitoria Lagoon (Bhosale Group), Rohan Mithila Viman Nagar, and Gera's for skyvillas. Same situation in Megapolis and Blue Ridge.

    The question to be asked actually what is happening to the budget segment group. This means the builders selling from the 25-45 L range. If you look at indications in the forum up to Feb-March when recession fears were at its peak, activity in forum and market was very low. Builders are sunk into deep depression. Then market sort of picked up a little and we saw same behavior here. People are now much more open about buying homes and we can see so many inquiries in the forum.

    What happens from Diwali will be decided by this budget segment behavior. Its only when people stop buying will builders panic. Currently people are starting to open their purse strings a little and this is showing in builder attitude also. Suddenly job fears have receded and both Indian and US govt has said its bottomed out.

    God knows what will happen. One thing is sure if real estate does not bottom out properly and builders try and go on another huge growth spurt everyone will loose and we will go into a real estate depression like the US currently has. There is only so much a roof on your head is worth and if builders continue being greedy we will end with 3 times no. of houses than people ready to buy it.
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  • Originally Posted by akssenti
    One thing is for sure, the bigger builders are in trouble. Builder who made insanely expensive houses with so called posh amenities are facing huge issues. Some key examples are Vitoria Lagoon (Bhosale Group), Rohan Mithila Viman Nagar, and Gera's for skyvillas. Same situation in Megapolis and Blue Ridge.

    The biggest problems of builders which is liquidity crunch can be seen by 'Fixed Deposit Schemes' being floated by major builders in Pune like Paranjape & DSK. Have you seen the poor response got by the scheme (arghh forgot the name, but I think it was of Karia builders) which was launched for INR 6500/sq ft in Wanowrie in May 09?

    Prakriti at Balewadi was selling 3BR, 1486 sq ft for around INR 45L recently (all has been sold out) & Bravuria is going for INR 2400/sq ft. Won't this make other builders & resellers stand up & take notice & reduce prices? Sure it will, in fact it already has as the price of resales are dropping faster than that of builders!!
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  • Originally Posted by akssenti

    What happens from Diwali will be decided by this budget segment behavior. Its only when people stop buying will builders panic. Currently people are starting to open their purse strings a little and this is showing in builder attitude also. Suddenly job fears have receded and both Indian and US govt has said its bottomed out.

    US is heading towards $2trn fiscal deficit, the Indian exports are down last month by 28%, fiscal deficit is close to 7%, Indian Govt. borrowing will cross the official fig. of INR 4.5L Cr. Govt. keeps saying such thing, but seeing the facts, we are still falling. Manmohan Singh is a good economist, but now he is a politician first:D!! Just see this. Not all's well on ground.

    Genpact cuts 2009 revenue outlook

    Vivek Seal. New Delhi
    Genpact Ltd, a business process outsourcing firm, expects to post lower revenues than its earlier expectations for 2009 due to IT budget decision delays, pricing pressures and market uncertainty.
    "We feel it is appropriate to revise our annual guidance for 2009.The discretionary IT spending has been cut faster than we expected. There have been more volumereductions than we anticipated in our businesses," Genpact chiefexecutive Pramod Bhasin said in a conference call.
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  • A bubble in the making in India?

    Macro ill-winds are dots on the radar now. By 2011-12 we could see a bigger market fall than the recent one

    Vijay L Bhambwani

    The recent spike in foodgrain prices and the simultaneous rally in the equity markets in an unwelcome phenomenon.
    While I have been advocating spiralling inflation after the election results were announced, from as early as February / March 2009, the runaway prices are more than a cause for concern.
    In November 2007, I had written in DNA Money Bulls have overstayed their welcome that prices of essentials (grains, pulses, clothing, homes and medication) were rising almost fortnightly, whereas prices of non-essentials (air conditioners, TVs, s, watches and washing machines) were falling.
    No stock market can rally for long under such circumstances, perpetually. Something had to give —- either the markets declined or essential commodities became cheaper.
    The markets fell hard and sharp from January 2008.
    Here are my arguments why a similar and bigger fall is in the offing once this bull run ends, probably in 2011-2012:

    1. Higher inflation invariably means less purchasing power in the hands of the retail investor. This curtails his / her investible surplus and means lower / zero buying capability in a falling market as existing investments are bleeding. In the absence of buying cushions, markets decline sharply and rapidly.

    2. During asset price inflation, prices of raw materials invariably rise and impact the bottomlines of corporates. While emerging markets invariably rise the waves of economic progress on the coattails of higher inflation, these economies are relatively more vulnerable to shocks. The current rally (both in stock prices and improving corporate earnings) is enjoying the benefits of a lower base effect. As the base effect gets bloated, inflation will choke the growth prospects, ultimately resulting in a 2008 type decline.

    3. Ralph Nelson Elliot, the father of the Elliot wave theory emphasises on extreme caution while chart reading during periods of higher inflation. He advocated using ratio scale charts rather than arithmetic charts in hyper inflationary periods. That meant tighter stop losses on long positions and quicker exits. Exits from longs means declines.

    4. With the advent of technology, not only do long orders get stopped out, system-based shorts are also initiated. This is especially true of algorithmic trading systems.

    Hedge funds are one of the biggest deployers of such systems and can exert sizeable downward pressure on the markets due to their sheer size. Remember retail guys have scant averaging / cushioning power, so the selling causes high impact costs and steeper declines.

    5. Take the example of the most developed markets in the world which are hard hit when the inflation spikes by even 2% —- the US , Japan, the UK and Germany have got pummeled when inflationary forces rallied. Can we buck the trend for long? True, we are a frontier market where aggression and risk taking capabilities are higher then average, but when sanity returns, it returns with a vengeance that drives prices to depression like levels.

    6. The true value of a market is what buyers are willing to pay —- as per some neuro economists. The quality of buyers in frontier markets is more emotional than intellectual. Which means high greed in upthrusts and highly fearful in declines. Case in point - Nifty high in 2008 at 6357 and Nifty low in 2008 at 2250!!!

    7. Unless an average investor starts to allocate higher amounts towards non-equity exposure (fixed deposites, public provident fund, commodity exchange traded funds), which can be accessed during falling equity markets, there will be no cushioning the declines in equity indices. Our system of asset allocation is highly skewered and inefficient to say the least.


    That's the bad news. Is there a silver lining in this period at all?
    Yes. During times of above normal inflation, commodity prices tend to inflate faster than the inflation.
    Should you be able to buy industrials / consumer staples and energy counters in the prompt / mid / far month series where the cost of carry is under 1 % per month, go for them.
    Treat even this futures exposure (Indian commodities markets lack an efficient delivery based settlement mechanism) as an investment exposure.
    Keep ample funds for fuelling the longs by way of mark-to-market payouts and take a medium term approach if not longer.
    The payoffs have been invariably significantly higher than equities. Go ahead and try it. If you don't manage that over the next 6 months, give me a shout.


    Bhambwani is the author of the recent book A Traders Guide to Indian Commodity Markets, the first technical trading guide of its kind in the country. VijayBSPLindia.com

    Source:- 3dsyndication

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  • Originally Posted by realacres
    US is heading towards $2trn fiscal deficit, the Indian exports are down last month by 28%, fiscal deficit is close to 7%, Indian Govt. borrowing will cross the official fig. of INR 4.5L Cr. Govt. keeps saying such thing, but seeing the facts, we are still falling. Manmohan Singh is a good economist, but now he is a politician first:D!! Just see this. Not all's well on ground.

    Genpact cuts 2009 revenue outlook

    Vivek Seal. New Delhi
    Genpact Ltd, a business process outsourcing firm, expects to post lower revenues than its earlier expectations for 2009 due to IT budget decision delays, pricing pressures and market uncertainty.
    "We feel it is appropriate to revise our annual guidance for 2009.The discretionary IT spending has been cut faster than we expected. There have been more volumereductions than we anticipated in our businesses," Genpact chiefexecutive Pramod Bhasin said in a conference call.


    I don't understand. Why you guys cherry pick and post worst news clippings and paint the picture of dire economy. What happened to all those zillion good news and positive earnings clippings ... DOW and SEN are going gangbusters. There is only so much you can push your agenda.
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  • Gold at 9-10k?! And Dow below 1000!!!

    Originally Posted by m_square
    The gold might touch 17k-18k in the next 4-5 months. but take my word, as soon as the market stablises and the recession is eclipsed by the rising salaries and more offshore jobs, RE prices will start to appreciate and gold might come to 9k-10k.

    This good RE run is not going to stretch past jan-feb 2010 :)


    Gold coming down to 9-10k is akin to a drop in $$ price to between $570-$630, an avg $600.

    Highly unlikely. With the continuing (and in my opinion, increasing) turmoil into 2010 and maybe 2011, Gold has a better chance at hitting $1500 or even $2000 (thats 23.5k to 31.5k) before it can start its long term decline.

    In the worst case, Gold can even touch $3000 which is 47k in INR. This is not my say-so. The last one ($3k) was told to me by a senior partner in one of the leading Jewellers in Bangalore - one which is over 125 years old!:D That is their expectation!

    I'm long Gold from around 6k and am still accumulating ...

    BTW RealAcres, I have said this for some time now.

    Till last week, the main reason for morgage defaults in the US was Teaser Rate resets. While most people have not noticed it, news is that Unemployment has now become the main reason for defaults! This is a completely new and additional reason for defaults and is cause for very serious concern !!!

    Because, even Obama himself has talked of Unemployement climbing into 2010 and maybe even into 2011. When we couple this peak unemployment with peak rate resets, the possible number of foreclosures will increase very significantly!!!

    So, under worst case conditions, the target for Dow is below 1000 and probably well below 1000! I have been saying this for a while now. What will our sensx and nifty at that level and what about our economy as well as RE?!!! Your guess is as good as mine.

    Lets hope this does not happen...

    cheers
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  • Did we factor out the $ vs Rs here ? That has offseted the Gold value whenever Gold went up or down in recent times.

    probably its wise to accumulate Dal also till end of this year.:D
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  • DOW below 1000??? did u mean it will went down from 9,280.97(yesterday's closing price) to say928.0????
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  • ^ Nope, he meant that it might come there :)
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  • if he meant that then ,plz tell me in how many decades:D

    This is only 10% of current value..I can believe in worst case DOW going till 4000-5000 but Can not believe DOW going till 1000 Mark!!!
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  • Whatever you all may say, one thing is clear:-
    BSE or RE, both are at illogical rates including tur dal, tsongt.:D
    The basic economic fundamental isn't strong world over. Also, I don't think share markets globally reflect actual scenario as most of them depend solely on sentiments.

    The BSE would not have been even at 7k if CPM had maintained their seat tally of 62 & been in Govt.:D
    The scenario would have been the same on ground, not the sentiments & sentiments can't drive the economy.
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  • hi all,
    after reading the above posts, its obvious tht RE is dependant of various factors. but wht i know is tht more the development lesser the lands avaialble and there is bound to be some rise in the rates - more particularly the prime locations. its true tht builder lobby has increased it unreasonably before the worst recession hs hit, but on the other hand it is also true tht we wont see the 2004/5 rates to come in near future. any additions will b appreciated....

    sam...
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  • Originally Posted by sam2008
    hi all,
    after reading the above posts, its obvious tht RE is dependant of various factors. but wht i know is tht more the development lesser the lands avaialble and there is bound to be some rise in the rates - more particularly the prime locations. its true tht builder lobby has increased it unreasonably before the worst recession hs hit, but on the other hand it is also true tht we wont see the 2004/5 rates to come in near future. any additions will b appreciated....

    sam...

    Areas like Baner-Balewadi, Vimannagar etc. where thousands of acres is available, the prices of around 3k is not sustainable.
    At Baner, I was getting a plot for INR 900/sq ft. Good onstruction is no more than INR 900/sq ft with vitrified flooring, jaguar etc. & cement grade higher & better than builders'. All this for 1800/sq ft that too for carpet area.

    The drop in rates would be irrespective of location. IF the prices in South Mumbai can fall by 45%+, I see no reason for similar thing not to happen in Pune.

    * Resales at 10Kasturkunj, 1 Modibaug too are down from INR 10k/sq ft to INR 6.5-7k/sq ft.
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