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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

    @Venky - "I think most of the IT guys will fit that category who will happily say bye bye to multiple flat syndrome."
    1.
    This I seriously doubt. The large majority of people in the world (Indians included) mistrust financial assets. Hard, tangible directly owned assets are what are preferred. I once read about a financial advisor who had a fighter pilot as a client. This guy would be calm about going to war, but would panic at the smallest drop in the stock market. Also, he had no problems taking a huge loan to buy a house. Even though leverage could wipe out his home equity completely he still felt safer with a house.
    2. The second is leverage. In the last decade prices rose faster than interest rates. Over the last 2-3 years they have not, nevertheless people still perceive it as an attractive option.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by southsea View Post
      @Venky - "I think most of the IT guys will fit that category who will happily say bye bye to multiple flat syndrome."
      1.
      This I seriously doubt. The large majority of people in the world (Indians included) mistrust financial assets. Hard, tangible directly owned assets are what are preferred. I once read about a financial advisor who had a fighter pilot as a client. This guy would be calm about going to war, but would panic at the smallest drop in the stock market. Also, he had no problems taking a huge loan to buy a house. Even though leverage could wipe out his home equity completely he still felt safer with a house.
      2. The second is leverage. In the last decade prices rose faster than interest rates. Over the last 2-3 years they have not, nevertheless people still perceive it as an attractive option.
      At least, now the sentiments of milking money from RE is gone. No one is thinking to buy for investing purpose as 70-8-L 2 BHK will never be 100L in near future. If so then very hard to get a buyer. Why I will put 80L in 2 BHK when I can easily get it in 15K rent. In vise-verse nothing fascinate to invest 7-80L to earn 15K rent.
      Bull is already stopped for investors and it is the best to release the holding.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by southsea View Post
        @Venky - "I think most of the IT guys will fit that category who will happily say bye bye to multiple flat syndrome."
        1.
        This I seriously doubt. The large majority of people in the world (Indians included) mistrust financial assets. Hard, tangible directly owned assets are what are preferred. I once read about a financial advisor who had a fighter pilot as a client. This guy would be calm about going to war, but would panic at the smallest drop in the stock market. Also, he had no problems taking a huge loan to buy a house. Even though leverage could wipe out his home equity completely he still felt safer with a house.
        2. The second is leverage. In the last decade prices rose faster than interest rates. Over the last 2-3 years they have not, nevertheless people still perceive it as an attractive option.
        Excellent point.

        But still change of mentality is inevitable.

        Leveraged booking to flip for massive profits will still be done when bull markets come around.

        But loan averse risk averse long term fund allocaters will have better option in REIT.
        Venky (Please read watch a or before posting)

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by Baruch View Post
          Yaar RealAcres ...ek baat Batao ...how is global job cuts by Microsoft related to Pune RE ?
          Man, you need to read this in 2 context :-

          > That global economic recovery is still far from where it was in 2007-08,
          > And that mergers amongst cos may lead to harsher consequences. This is important here as many bulls give eg. of how one asset is sold to another or one co. taken over by other helps to get bailed out, which is not the case.

          Btw, what has London home prices graph to do with Pune RE ?? Don't you post that ?
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            +1.
            Excellent post Venky.
            Originally posted by Venkytalks View Post
            The REIT portfolio size will be 1000 crores. Individual investments can be smaller.
            Yes, but to start with I think NFO will be 1L each. Having said that, another good part of REIT is the ease of exit compared to actual RE assets which are pain to sell & if you stuck up in halted or delayed project, its even bad. Here, the moment you feel REIT is not performing upto the mark, you can exit without worrying about find a buyer & broker.
            If you are happy, you are successful.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by Saurabh01 View Post
              At least, now the sentiments of milking money from RE is gone. No one is thinking to buy for investing purpose as 70-8-L 2 BHK will never be 100L in near future. If so then very hard to get a buyer. Why I will put 80L in 2 BHK when I can easily get it in 15K rent. In vise-verse nothing fascinate to invest 7-80L to earn 15K rent.
              Bull is already stopped for investors and it is the best to release the holding.
              +1. Agreed. Better stay on rent & put the money in better investments.
              Also, what I don't know some RE bulls logic is they say, 'RE market is not good for investors, but for end users, anytime is good time'. Such a big hypocrisy.
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Builders selling assets to repay debt

                Anant Raj Group to exit hospitality business

                Anant Raj Group plans to exit its hospitality business to pare debt; it will now solely focus on its core real estate projects. The developer is also selling a 2-acre property in the Lutyens’ area in Delhi at an approximate value of Rs.500 crore.

                http://www.livemint.com/Companies/3M...-business.html


                HDIL sells multiplex biz for Rs 105 crore

                Has sold its 100% in HDIL Entertainment, which runs 33 multiplexes under the brand name Kulraj Broadway.

                This will also enable HDIL to reduce its debt as planned." said Mr Hariprakash Pandey, vice-president finance and investor relations, HDIL.

                HDIL exited its leisure business which included hotels about seven to eight months ago and sold land parcels and development rights in the past to reduce its debt.

                HDIL sells multiplex biz for Rs 105 crore | Business Standard News

                ^^ All this is happening with the builders even now & yet some RE bulls portray as if all is well.
                If you are happy, you are successful.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by Venkytalks View Post
                  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.
                  I was just thinking, everyone seems to believe that with REITs buying up completed properties with rental yield their rentals and prices will stabilise or even decline.

                  But from my experience of speculation (and after all REITs will also be chasing yield from the fewer good properties that will be traded between them) wouldn't it imply that the price of these few high yielding and "good" properties shoot up more than they would without REITs as now there will be far more organised money (via REITs country-wide) chasing these few good properties and jumping up their prices more than necessary?

                  In any case, like with all new things in India, I will wait for a few months for teething issues to be resolved and the REIT markets stabilise and we investors learn more about the intricacies of this market before jumping in.

                  cheers

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    @Wiseman - "In any case, like with all new things in India, I will wait for a few months for teething issues to be resolved and the REIT markets stabilise and we investors learn more about the intricacies of this market before jumping in"

                    Or wait till REITs become boring to the average person. Like stocks had become since the fall of 2008 and the subsequent stagnation of 4-5 years. Retail exuberance usually drives up asset prices to unreasonable levels. My guess is same thing will happen to RE. The stagnation has started. The exuberance will dry up in a few years, and there will be bargains to be had.

                    Though this time around the retail investors in REITS may be limited, given that a minimum of 2L is needed for investments.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by wiseman View Post
                      But from my experience of speculation (and after all REITs will also be chasing yield from the fewer good properties that will be traded between them) wouldn't it imply that the price of these few high yielding and "good" properties shoot up more than they would without REITs as now there will be far more organised money (via REITs country-wide) chasing these few good properties and jumping up their prices more than necessary?
                      But if this happens, wouldn't the actual yield fall ?? If REIT chase high priced properties compared to the rentals, would they be able to give good returns to investors ??
                      If REIT doesn't see VALUE in the deal, they won't buy. The classic eg. is the high vacancy rate even in areas of BKC, Mumbai. Reason being corporates shifting offices to more 'affordable' locations like Nerul & Andheri.
                      If you are happy, you are successful.

                      Comment

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