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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 aamehra View Post
    First person to twist this news article and prove that these new investments are bad for RE wins a free trip to Ukraine to view amazing scenes of the new cold war that's taking place there. Offer valid till Putin lasts.
    Ranger & Wisey have posted, so won't go in details but you addressed me multiple times, here's the thing :-

    Investments is always welcome, good for semi-skilled people (only manufacturing gives job opportunities for semi-skilled people). When you relate this to RE, just see what is the salary of even plant inspector in manufacturing sector & then ask whether they can afford it.

    At the end of the day, RE runs on SALES which are in turn related to PURCHASING POWER.
    Just because my office now has additional 2 office boys doesn't mean RE prices will go up.

    Btw, I am posting some facts today in my posts below. Do check that & comment.
    If you are happy, you are successful.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Properties shouldn’t get expensive

      Properties shouldn’t get expensive: Real estate consultants are just rigging home prices

      The American author Upton Sinclair once said that “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

      This seems to be true about the “so called” real estate consultants who operate in this country. Their main job it seems is to bring out a research report every few months, where the conclusion is that “real estate prices will continue to go up”.

      This despite the fact when their own data contradicts this conclusion. Let's take the case of a recent research report titled India Real Estate Outlook brought out by Knight Frank. The report takes a look at the real estate scenario prevailing across some of the biggest cities in India.

      In the case of Mumbai, the report points out that there is a huge demand-supply gap. The unsold inventory of residential apartments in the city stands at 2,13,742 units. In June 2014, the quarters-to-sell ratio stood at 12.


      Nevertheless, the Knight Frank report goes around to conclude that “On the residential price front...the forecasted increase for the entire year (2014) is 10.1%.” It goes on to explain the reasons for this forecast. “This period [the first six months of 2014] has seen significant completion of transit infrastructure that has the potential to alter the dynamics of the region’s property market,” the report points out. The Versova-Ghatkpoar Metro, the Eastern Freeway and the Santacruz-Chembur Link Road are some of these projects.
      The report writers forget(or rather ignore) a rather fundamental point here about how markets operate. Markets start factoring in information well in advance. They don't wait for a particular development to be completed before factoring in that information into the price. An excellent example of this are the real estate prices in parts of Navi Mumbai, which are close to the proposed new airport. The airport is nowhere in the picture, but prices have been driven up for years, around this story.
      Hence, the infrastructure that the report points out to, has already been there in the minds of people for a while now. And if they had been so impressed by it, they would be buying homes, and the quarters-to-sell ratio would have come down. Now that as the report points out, hasn't happened, making the point irrelevant. Another reason, which is a favourite with most research report writers these days, has also been offered. Now that Narendra Modi is in power, things will improve and people will buy more homes.


      As mathematician John Allen Paulos writes A Mathematician Plays the Stock Market “Because so much information is available...something insightful sounding can always be said.” But what sounds insightful need not be correct.


      The question that the research report does not answer is: why have the real estate prices in Mumbai going up, despite the fact that people haven't been buying residential apartments. The Residex Index of National Housing Bank points out that real estate prices in Mumbai have risen by 18.7% between the end of December 2011 and March 2014. This despite the fact that the inventory of unsold residential homes has been growing dramatically. In this scenario, where people are not buying as many homes as are being produced, prices should have been falling and not going up.


      The reason for this is straightforward. The real estate market in India is rigged in favour of real estate companies and politicians who are the real owners of these companies. There is no free market in real estate. Most real estate companies are fronts for politicians. What makes this very clear is the fact that even though there are thousands of real estate companies operating across India, there is not a single pan India real estate company.
      And these politicians and their real estate companies have an incentive in holding the prices to be high. They operate as a cartel to do that. Of course, no real estate consultant can “afford” to talk about these reasons given that they make their money from real estate companies. And real estate companies would want its consultants to keep constantly mouthing the lines that “prices will continue to go up”. The research reports brought out by these real estate consultants play precisely that role. They help in managing the price expectations in the minds of prospective buyers.


      Whenever such a report is released, its splashed all over the media. The media, in turn, because it depends on advertising from real estate companies, tends to highlight the price escalation and the sales will increase part (or they just don't bother to read beyond the press release). They don't bother to ask the most fundamental question: If there is so much inventory, why are prices going up? Take the case of South Mumbai. As the report points out “the inventory level in the South Mumbai market will take the maximum time of 18 quarters (4.5 years) to sell. The age of inventory, calculated as the time elapsed since launch, is also the longest, at 15 quarters.” So why are prices still rising is something that no one has bothered to ask?


      This is how real estate consultants help real estate companies manage price expectations in the minds of prospective consumers. So, the next time you read a report saying real estate prices will go up, check for the source. If a real estate consultant is saying so, the information needs to be taken with a pinch of salt. As Guy Sorman writes in An Optimist’s Diary “Economic actors don’t all have the same information at their disposal. Without institutions to improve transparency, insiders can easily manipulate markets.” This is precisely what is happening in India—the insiders have managed to take all of us for a ride.


      Properties shouldn't get expensive: Real estate consultants are just rigging home prices - Firstbiz
      If you are happy, you are successful.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by realacres View Post
        Properties shouldn’t get expensive: Real estate consultants are just rigging home prices

        Properties shouldn't get expensive: Real estate consultants are just rigging home prices - Firstbiz
        And this can never become a front page headline in a paper like TOI(let)

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Live in Rs 1.5 cr flat for just Rs 18000 monthly

          Aug 21, 2014, 12:51PM IST

          Sopan Baug one of the premium areas of Pune, where the capital value of a flat is Rs 1 crore on an average, still offers affordable rents. You can rent a premium and spacious property located in this high-end area for just Rs 18,000 monthly.


          Varun Agarwal, a 29-year-old professional who took up a job in Pune in April 2014, wanted a spacious accommodation in a quieter, green neighbourhood, and found just that with a 2BHK unit worth more than a crore in Sopan Baug, but which he could rent for just Rs 18,000 monthly.

          Agarwal who always wanted to live in a peaceful and good locality, says, “Unknowingly, I assumed that renting an apartment in Pune in a high-end area comes with a hefty cost. Therefore, I had almost decided to say ‘no’ to the job offer of Rs 40,000 monthly.

          However, when I researched, the city offers much affordable rented accommodation and yet spacious as compared to the other realty markets, such as Delhi and Mumbai.”Other areas of the same profile, such as Viman Nagar, Kalyani Nagar and Koregaon Park are located within a distance of 5-9 kms. Accessibility, upmarket location and an elite neighbourhood, Sopan Baug properties may come at a high price tag but seem to be a rental steal.

          http://content./industry-news/live-i...hly/74530.html

          ^^ RE bulls, now please explain how buying is better than renting ?? 80C ?
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            while the links explain one part of the story .. ..the other being real robust demnad for affordable and mid income (25-45L) .. has anyone been to DSK office during his scheme for projects on pirangut and sinhagad road... i know couple who bought there..... apparantly 150 had to be waitlisted for the pirangut project itself... many bought without even seeing the site ... you may call them bakras stupid but the point is there were many who genuinely required house in affordable range .. nothing was left for 150 ppl tranlating into .....two 12 storey towers worth of booking still present inthe market ....... note 2bhk costed 44L

            all -ve news will affect RE even if it is from canada where as any positive wont thats the logic being followed here ..... the news of new investment in auto industry will definetly have some impact on RE and a plant will required enigineers and managers ... even workers earn decent amount to suffiecent for places like chakan or phaltan etc.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              renting is the way to go for now no doubt about it .. but the stroy looks cooked up no one with 40000 salary would dare to get appt with 18000 rent ... i can give hundred examples of such ppl who wont go beyond 12-14k

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by Tangent View Post
                renting is the way to go for now no doubt about it .. but the stroy looks cooked up no one with 40000 salary would dare to get appt with 18000 rent ... i can give hundred examples of such ppl who wont go beyond 12-14k
                Man, if this is the case, same goes with EMI. Wonder how RE bulls think EMI is better, that too when rents are so cheap.
                And yes, demand for RE is there but at logical rates.
                Just see how Tata Zest & Hyundai i20 Elite got good response. Infact, Tata guys were themselves shocked with the bookings especially for petrol variant & diesel AMT.
                VALUE is important, not just the PRICE.
                If you are happy, you are successful.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  true pricing is the key along with value

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    To complete the picture I just wanted to bring here the much valued trilogy of cost value price that helps us evaluate anything with a bit of rigour.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      OnMobile sacks nearly 300 employees, may fire another 300

                      Mumbai/Bangalore: Mobile value-added services provider OnMobile Global Ltd has asked nearly 300 employees to leave and may fire an equal number in the coming months, two people familiar with the development said.

                      The lay-offs follow a spate of senior-level exits over the past two years, starting with that of its founder. Two board members including chairman H.H. Haight and Barry White, an independent director, quit this month. The company had 1,690 employees as of 31 March. “Another 300-odd employees will be asked to go in the next couple of months,” said one of the two people, both of whom declined to be named.

                      One former employee who asked not to be identified said that eventually the lay-offs could number around 600, and were primarily driven by the need to cut costs.

                      OnMobile Global, incubated within India’s second-largest software services exporter Infosys Ltd, was founded in 2000 by Arvind Rao and Chandramouli Janakiraman.

                      Full news here :-

                      OnMobile sacks nearly 300 employees, may fire another 300 - Livemint
                      If you are happy, you are successful.

                      Comment

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