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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by Baruch View Post
    Im not sure but looking at few behaviours, thats my guess...

    anyways dont be surprised if both of us get notifications for this discussion...or these posts get deleted...

    In this world of transperancy (like one can see how wiki publishes even the controversy on who the real owner is), IREF somehow doesnt want to disclose who are the owners of this site...do they get some money from some builders for certain kind of posts...are moderators paid or voluntary

    Answer to some of these questiosn will help users appreciate presnece or absence of conflict of interests...
    Logically iref or its moderators wouldn't be paid by the builders if they post negative news about real estate

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by Sat234 View Post
      Logically iref or its moderators wouldn't be paid by the builders if they post negative news about real estate
      One can always be paid for high number of posts ( preferably contrary to consensus so that it generates even more discussion) as that leads to traffic and popularity of forum...

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by Baruch View Post
        How long this game of Price Appreciation higher than Rental increases can go ? Will this attractiveness of RE to black money will make today's rental yield of 2-3% in India a new normal and rental yield will never touch 4-5% seen in western world ?



        "House prices rise faster than wages

        House prices rise much faster than wages, which means that houses become less and less affordable. Anyone who didn’t already own a house before the bubble started growing ends up giving up more and more of their salary simply to pay for a place to live. And it’s not just house buyers who are affected: pretty soon rents go up too, including in social housing.

        This increase in prices led to a massive increase in the amount of money that first time buyers spent on mortgage repayments. For example, while in 1996 the amount of take home salary that a first time buyer would spend on their mortgage was 17.5%, by 2008 this had risen to 49.3%. In London the figures are even more shocking, rising from 22.2% of take home pay spent on their mortgage in 1997 to 66.6% in 2008."
        RE prices in London have increased by 20 per cent compared to last year. it seems only the asian millionaires are buying in London. Most Brits are now moving out of London. The papers say it is "insane" [emoji3]

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          >By now, the project is completely funded under construction sales begin. At this stage, value of the project increases. The PE and the builder liquidate their investment by listing the investment as REIT.
          I am not sure if this is possible. The REITs have to hold income generating properties. This is a bit of a grey area. Suppose you have a new mall with 20% occupancy, is that considered enough ? Even if it were, I am guessing the REIT manager would not invest in it. Essentially you are paying full price but only getting 20% of the potential rent.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by rembrants View Post
            The flow will be like this:

            - Private equity funds will continue to lend/ fund builders at project conceiving stage
            - Land bought, approvals received and projects are now ready for bank finance. Part of this bank financing will be for repaying the PE investor and part for the project.
            - By now, the project is completely funded under construction sales begin. At this stage, value of the project increases. The PE and the builder liquidate their investment by listing the investment as REIT.
            - Investors who like to invest in less risky RE projects/assets will be willing to buy REITs at this stage and original PE investor and builders exit with handsome returns towards the next project
            - Hereafter, since the units are listed, they can be held by both short term and long term investors.
            - Increased transparency: Just like shares of a badly governed company get beaten up on the stock exchange, REITs with bad underlying projects -where sales are moving slow or construction is stalled or rental yield is less will be under performing.- This will in turn impact the developers reputation, who will hence be more cautious.
            - More investors, will mean more pressure on ministries and local authorities to behave. Stalling project approvals for bribe and corruption etc will be checked.

            This no-way means that RE prices will decline; REITs will only provide less risky RE investments.
            Now lets go step by step :-

            > REIT can be listed only if the min size of REIT is INR 1,000 Cr. This means this is of no use for small-medium builders,

            > Of the total size, 25% should be held by public. So, if 1000 Cr is listed, 250 Cr needs to be held by public,

            > For listing of REIT, 75% subscription is a must. So, if the REIT doesn't get subscribed upto 75%, it simply cannot list.

            Now for all this to take place, investors should see 'VALUE' in it which gives good returns. And for good returns, rentals has to be very good compared to asset price, if asset price is inflated, who will buy REIT ?? This means, for REIT, builders will be forced to align themselves with market FUNDAMENTALS & not SPECULATIONS.

            Apart from this, as REIT will be more of commercial properties in assets, it won't impact much on residential segment, which will grow only if RE prices are in tune with the affordability of the end user.
            If you are happy, you are successful.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by Baruch View Post
              One can always be paid for high number of posts ( preferably contrary to consensus so that it generates even more discussion) as that leads to traffic and popularity of forum...
              In NCR thread, RE bulls have thousands of posts towards them. This means IREF pays to RE bulls too !! Man, before making any allegations, please see entire sections of forum.
              Btw, it will good if you can bifurcate my posts in terms of projects, economy, Vaastu & legal. You will then be surprised to find the results.

              ** You too post a lot (useful articles too), so do you also get paid ??
              Man, please don't act like Kejriwal.
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Microsoft Corporation to cut 18,000 jobs

                Microsoft's India-born CEO Satya Nadella Thursday announced axing up to 18,000 jobs over the next year, the biggest round of jobs cuts in its 39-year history, in a "difficult but necessary" move as it integrates recently acquired business and cuts costs.

                The workforce realignment is expected to be substantially complete by end of this year and fully completed by June 2015.

                "Making these decisions to change are difficult, but necessary," Nadella said.

                Microsoft Corporation to cut 18,000 jobs, majority from
                If you are happy, you are successful.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  NBFCs' bad loans jump to 1.9% in FY14; advances growth down 57%

                  Domestic rating agency Icra today said retail-focussed non-bank lenders have witnessed a surge in asset quality issues during the fiscal ended March and the troubles are likely to continue in FY15 as well.

                  The agency said delinquencies due for over 180 days, after which the asset turns bad as per the existing reporting guidelines, for the retail focussed NBFCs increased to 1.9 per cent for FY14 from 1.3 per cent at the end of FY13.

                  Going by the 90-day due rule, which qualifies an asset as bad for commercial banks, delinquencies increased to 4.5 per cent as of March 2014 as against 3.6 per cent in the year-ago period, it said.

                  NBFCs' bad loans jump to 1.9% in FY14; advances growth down 57% - Financial Express
                  If you are happy, you are successful.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Yaar RealAcres ...ek baat Batao ...how is global job cuts by Microsoft related to Pune RE ?

                    Are you suggesting that since many of the fired ones are going to be Indians and since US economy is in bad shape ( again as per your posts ) ...these guys will be forced to come to India selling everything they have in USA...they will in turn buy in outskirts of Pune...preferably a good quality project like Blue Ridge and hence BR prices are likely to touch 10k by next year end

                    ??

                    Last edited by Baruch; July 17 2014, 11:30 PM.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by rembrants View Post
                      The flow will be like this:

                      - Private equity funds will continue to lend/ fund builders at project conceiving stage
                      - Land bought, approvals received and projects are now ready for bank finance. Part of this bank financing will be for repaying the PE investor and part for the project.
                      - By now, the project is completely funded under construction sales begin. At this stage, value of the project increases. The PE and the builder liquidate their investment by listing the investment as REIT.
                      - Investors who like to invest in less risky RE projects/assets will be willing to buy REITs at this stage and original PE investor and builders exit with handsome returns towards the next project
                      - Hereafter, since the units are listed, they can be held by both short term and long term investors.
                      - Increased transparency: Just like shares of a badly governed company get beaten up on the stock exchange, REITs with bad underlying projects -where sales are moving slow or construction is stalled or rental yield is less will be under performing.- This will in turn impact the developers reputation, who will hence be more cautious.
                      - More investors, will mean more pressure on ministries and local authorities to behave. Stalling project approvals for bribe and corruption etc will be checked.

                      This no-way means that RE prices will decline; REITs will only provide less risky RE investments.
                      So the project has to complete and get renters - THEN the REITS will buy them.

                      And we will buy the REITS

                      Isnt that good? Have you seen the empty malls of Gurgaon? By now they must be giving away space in malls for free - and still finding no takers.

                      Same with a lot of office space - tenants are difficult to find.

                      So when commercial realty fails - it is the builder and his financers who lose money, not you and I.

                      Prices - FOR FINISHED AND RENTED - office space will be AVAILABLE. The issue of yield will still decide whether I buy a REIT or park my money in a FD.

                      See, when I have a choice and clarity, I can chose properly. Right now the option is to invest disproportionate amounts into realty on a wing and a prayer.

                      I know so many who are stuck in commercial - they buy a shop for 50 Lakhs or a crore and it takes years to complete and then no tenant at decent price.

                      Originally posted by rambler View Post
                      [LEFT]Well presented views Venkyanna.
                      Here is something that bothers me.
                      Stock market players shun mutual funds.Stock is a kind of addicting investment which gives them thrill.
                      RE players avoid REIT.RE is a kind of addiction.Will they turn to REIT?
                      People park money in land to avoid tax implications entailed by FD and such things.Will they turn away from RE? Whatever may be the arguments people buy gold for the same reason.How will the scenario play out?
                      Immediately after the budget I posted that burst will be postponed because of freedom to banks to raise long term funds without any obligation.No one noticed that fine line and now that seems to be turning out real.
                      My take is that some industry tycoons invest in REIT and be responsible for propping up inflated RE.Common man is really screwed.
                      Oh yes, the hardcore RE guy will still see much better appreciation from direct investment.

                      But the ordinary service class guy - currently forced to venture into this minefield - will have a better option.

                      I think most of the IT guys will fit that category who will happily say bye bye to multiple flat syndrome.

                      And then who is the bakra of last resort for the builders?

                      Originally posted by Baruch View Post
                      How long this game of Price Appreciation higher than Rental increases can go ? Will this attractiveness of RE to black money will make today's rental yield of 2-3% in India a new normal and rental yield will never touch 4-5% seen in western world ?



                      "House prices rise faster than wages

                      House prices rise much faster than wages, which means that houses become less and less affordable. Anyone who didn’t already own a house before the bubble started growing ends up giving up more and more of their salary simply to pay for a place to live. And it’s not just house buyers who are affected: pretty soon rents go up too, including in social housing.

                      This increase in prices led to a massive increase in the amount of money that first time buyers spent on mortgage repayments. For example, while in 1996 the amount of take home salary that a first time buyer would spend on their mortgage was 17.5%, by 2008 this had risen to 49.3%. In London the figures are even more shocking, rising from 22.2% of take home pay spent on their mortgage in 1997 to 66.6% in 2008."
                      Now this is another good thing. Selling and buying in REIT is all white.

                      So the need for service class people to get their hands dirty with black money will vanish. RE is the main source of black money and is also necessary for purchasing - which means many people convert their white into black because forced to.

                      Black money will then go into the risky under construction projects and white money will go into the derisked REITS.

                      Ideal.

                      Originally posted by Sat234 View Post
                      Logically iref or its moderators wouldn't be paid by the builders if they post negative news about real estate
                      IREF is run by very decent people with very noble motives.

                      Originally posted by Sat234 View Post
                      RE prices in London have increased by 20 per cent compared to last year. it seems only the asian millionaires are buying in London. Most Brits are now moving out of London. The papers say it is "insane" [emoji3]
                      True. Also inevitable. London is the new Dubai.

                      Originally posted by southsea View Post
                      >By now, the project is completely funded under construction sales begin. At this stage, value of the project increases. The PE and the builder liquidate their investment by listing the investment as REIT.
                      I am not sure if this is possible. The REITs have to hold income generating properties. This is a bit of a grey area. Suppose you have a new mall with 20% occupancy, is that considered enough ? Even if it were, I am guessing the REIT manager would not invest in it. Essentially you are paying full price but only getting 20% of the potential rent.
                      Once the project is finished and rented out, no harm in REIT picking it up.

                      And we pick the REIT which makes the best value investments - so there is free market operatibg and pricing things right.

                      Originally posted by realacres View Post
                      Now lets go step by step :-

                      > REIT can be listed only if the min size of REIT is INR 1,000 Cr. This means this is of no use for small-medium builders,

                      > Of the total size, 25% should be held by public. So, if 1000 Cr is listed, 250 Cr needs to be held by public,

                      > For listing of REIT, 75% subscription is a must. So, if the REIT doesn't get subscribed upto 75%, it simply cannot list.

                      Now for all this to take place, investors should see 'VALUE' in it which gives good returns. And for good returns, rentals has to be very good compared to asset price, if asset price is inflated, who will buy REIT ?? This means, for REIT, builders will be forced to align themselves with market FUNDAMENTALS & not SPECULATIONS.

                      Apart from this, as REIT will be more of commercial properties in assets, it won't impact much on residential segment, which will grow only if RE prices are in tune with the affordability of the end user.
                      The REIT portfolio size will be 1000 crores. Individual investments can be smaller.

                      It is good if the completed projects are picked up be good REITS and professionally managed.

                      I think as REITS take off, they will also run buildings for renting out and also serviced apartments.

                      This will bring down apartment costs because REIT will not overpay for an asset.

                      It will bring down rents.

                      It will bring down hotel room rents and increase quality of hotels because they cannot compete with decent serviced apartments on quality at current low levels of quality
                      Venky (Please read watch a or before posting)

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