Announcement

Collapse
No announcement yet.

Builders & Real Estate Bulls Theory Proved Wrong

Collapse
X
Collapse

Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
12768 | Posts
  • Time
  • Show
Clear All
new posts

  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by puser View Post
    What "exposure" are you talking of Wiseman? Please elucidate on that.
    As per my understanding, exposure is financial jargon that means the total amount of money that the individual has committed to repay. I guess it would mean the loan amount plus interest amount plus other charges (basically, sum total).

    Interesting article, by the way. I too feel that the way the bank loan clauses are structured, it is completely lopsided and always favors the bank. On top of it, they charge exorbitant interest rates so that they can recover from the mistakes of their own inefficiencies and mistakes (bad loans to others etc).

    As customers, we are basically fools. The only realistic way we can play on a level playing field with others is if we put all our money in bonds, company FDs, and stocks; avoid all types of loans and insurances; and deal with everything in cash. Keep a cash buffer instead of a medical insurance. Pay for a flat/house in cash.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      In comparing between Mumbai & Pune, & the slums etc. you need to see that Mumbai is more like Merc & cycle while Pune is more like Santro, Swift, i20. Few people in Mumbai hike the avg PPP of the entire city. Hence, no point in comparing slums & billionaires vis a vis Mumbai & Pune.

      Originally posted by Venkytalks View Post
      I really pity Pune and Mumbai walas, you are being even more royally cheated by builders than us poor Delhi walas (also being screwed by builders, since 1500psf is all that these flats are worth)
      I always feel that maybe Pune RE buyer hasn't traveled extensively, else why can one see so many pages for projects like Palash+ & likes? Prob is Pune buyers buy at hopless places & hence builders build in useless places. If buyers show restrain in buying at undeveloped areas, builders will be forced to build with good infra; but then not all think with brain. The basic difference between Pune & other cities is, in Mumbai, Delhi-NCR, Bangalore etc. you have professional RE players while in Pune builders are nothing but politicos themselves & hence the difference as Venky rightly pointed out.
      If you are happy, you are successful.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Visit on NH4.

        Well, I would just like to inform that couple of days ago while traveling on NH4 bypass, I found the following:-
        1. Zinnea, Bavdhan looks same as it was few months ago,
        2. Brooke Side, Bavdhan by Pinnacle isn't yet completed even yet, though I saw some lights in 2 flats. DOn't know who were staying here,
        3. West wing, Agarwal properties....man how can even people stay in such places, nothing around for miles.
        4. Many projects from Wakad flyover to Sadanand/Orchid Hotel & later near Chandni Chowk looks almost abandoned. It is the same as it was earlier. The service lane to the NH4 bypass hasn't been completed in many areas through which access to some projects is PROPOSED,
        5. Kumar Papillion, Pashan:- Snails would build faster!!
        6. Kapil Asmant:- No change, same as it was earlier.
        7. No new banners for ads of RE, nor any new projects seen. The situation is more or less the same as earlier. Just saw a new Merc showroom opened on this stretch, which was the only positive development in general.
        * I travel on NH4 many times, but then I don't inspect everything in detail (I don't keep halting as well), & most of the time, it is at night, hence can't see many projects either.....no streetlights (as there are no roads).
        If you are happy, you are successful.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Arun is Asli in his explanation!

          Originally posted by puser View Post
          What "exposure" are you talking of Wiseman? Please elucidate on that.
          puser,

          Arun has explained it well. Normally it is okay when economic conditions are stable and jobs are plentiful and interest rates are benign (meaning not threatening to rise and take you to the cleaners).

          The problem in India are 2-fold ...

          - Your home loan is non-recourse. Meaning you cannot file bankruptcy and walk away after sending your keys to the bank (this was famously known in 1980 during the previous bad recession as "jingle-mail" when there were so many keys sent to the bank that any envelop making tinkling sound meant another walk-away from loan, unable to pay). Ultimately, in India, you have to pay, one way or another

          - Instead of increasing your EMI, banks hide the impact of interest rate increase by extending your payment period, implying many more EMIs paid later. Many people do not even know that an extension has been made and it comes later as a nasty surprise.

          We need to see how far interest rates go and for how long and take a call on a case-by-case basis. Right now things seem okay, but with global debt crisis being what it is, anything is possible with interest rates on the upside as funds go scarce and looking for increased returns to offset higher perceived risk on all asset prices ...

          cheers
          Last edited by wiseman; February 11 2010, 11:30 PM.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by wiseman View Post
            puser,

            Arun has explained it well. Normally it is okay when economic conditions are stable and jobs are plentiful and interest rates are benign (meaning not threatening to rising and take you to the cleaners).

            The problem in India are 2-fold ...

            - Your home loan is non-recourse. Meaning you cannot file bankruptcy and walk away after sending your keys to the bank (this was famously known in 1980 during the previous bad recession as "jingle-mail" when there were so many keys sent to bank that any envelop making tinkling sound meant another walk-away from loan unable to pay). Ultimately, you have to pay, one way or another

            - Instead of incresing your EMI, banks hide the impact of interest rate increase by extending your payment period, implying many more EMIs paid later. Many people do not even know that an extension has been made and it comes later as a masty surprise.

            We need to see how far interest rates go and for how long and take a call on a case-by-case basis. Right now things seem okay, but with global debt crisis being what it is, anything is possible with interest rates on the upside ...

            cheers
            Right man, one can't file for bankruptcy here. Banks too have loads of hidden charges. One of my friend purchased a flat (not in Pune) & SBI charged him some 7-8k as processing charges even when it was said 'No Processing Charges....etc.'.

            What I feel is home loan buyers venture into an agreement with bank as if they are taking car loan for 1-5 years & by the time they realise how much more they are paying in reality, time is already gone from their hand. Hence, first the builders loot & then giving the carrot of low interest rates for 'X' yrs, loots the banks as well, leading the pack is ICICI. Hence, you should be equally cautious about choosing bank just as one should while selecting the builder coz you are going to pay to both.
            If you are happy, you are successful.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              right-time-to-buy-invest-house-property

              I just came across a very good blog...so sharing with u guys...

              http://www.themoneyquest.com/2010/02...-property.html
              Cheers,
              -Ashish

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Asli, your "feelings" sound like the "asli" situation after all. I tend to agree.

                Mumbai's revenue is skewed by HQ in Mumbai syndrome - produced in Jamnagar, corporate tax in Mumbai. Delhi is skewed by govt servant syndrome (tax in Mumbai, pay three times private wage in Delhi - for not working!)

                Conceptually, the socalled PPP is invalid for India. Works only for West and East.

                In India, much of your salary gets wasted on things provided for free in other countries.

                You have to put a booster pump and extra water storage because municipality does not have water

                You have to buy an invertor because power cuts are endemic.

                You have to use a car because decent public transport does not exist.

                You have to buy aquaguard because municipality does not treat its water.

                You have to pay more rent because rental property laws are skewed against landlord.

                You have to pay more for your flat because ....... you guys know all the reasons why!

                So the price of a MacD burger is not a good comparison.

                In India you have to do "purchase" all the functions of govt yourselves (law and order depending on your running speed only!!!!) , even before you can think of purchasing something actually worth purchasing.

                It is a giant tax on the middle class.
                Venky (Please read watch a or before posting)

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by realacres View Post
                  The basic difference be& tween Pune & other cities is, in Mumbai, Delhi-NCR, Bangalore etc. you have professional RE players while in Pune builders are nothing but politicos themselves & hence the difference as Venky rightly pointed out.
                  One of realtives settled in Mumbai was interested in buying property in Pune.
                  He was pretty aghast to know we do not have even a handfull of Pro/Midsized Develpers.
                  Raheja & Kukreja are the only ones recognisable who operate in Maximum city as well and have minuscale presence in pune.

                  Donno why Mumbai Deveopers dont find Pune RE lucrative
                  "...though I can hide my cold gaze and you can shake my hand and feel my flesh gripping yours and maybe you can even sense our lifestyles are probably comparable:
                  I am simply not there."

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Wiseman, a great pot indeed. And this view can come only from an ITG, the one who is closely associated with the industry, nuderstands the real issues and has the ability to see the future.

                    I have a lot of views on this ITG v/s non-ITG guys,. Agree with some, disagree with some. Will post a detailed one soon (I hope). Wiseman has summarized the state of IT industry very beautifully. Just a quick one here...

                    Folks, please understand that the IT industry is still in its nascent stages. One will hardly hear of anyone retiring from an IT company as of now. Majority of the staff is under 40 with hardly 10-15% being more than 40 years of age.

                    The real boom started from 95-96 peaked during the *** com period, then again went down in 2001-2002 and then continued to be buoyant for another five years. By this time, the guys started in 95-96 are probably the happiest lot as they are sitting in reasonably senior positions in the large IT companies. Folks who started in 99-2000 are now in the middle management. But post 2002, when there was a mad rush for hiring and entry level salaries started rising, thats where the real fun started. The industry saw a rapid growth and companies captialized on the opportunities. Just imagine... Infosys' strength was around 13000 in 2001 and in the next 5 years, the count increased to almost 80000. As wiseman also mentioned, things will get stabilized and the real issues will have to be confronted with. The major challenge these days is the upgradation of skills. With every passing year, the count of experienced people in the industry increases whereas there are not so many opportunities. Wages will stagnate and the liabilities will start raising their head.

                    The real fun will start once the taxation at 30% begins (somehow I doubt if it will happen soon - not for the next 2-3 years at least and extensions will probably be granted). The margins will be under pressure even more and their would be further squeeze. And if a double dip is coming, then things will take an ugly turn.
                    Also, there was a mad rush to buy a home during 2004-07. But now even the IT guys are very cautious simply because they too have tasted the difficult situation and the current prices force them to stay out. Builders are still thinking that ITGs have lot of many. Some may still be doing the deals. But the numbers are now negligible. ITGs don't have black money and thats where the problem is. Govt sector folks can exploit the black money channel (only those who are willing to compromise with their prinicples). And the real challenge for a private sector guy is his post retirement income. If one studies the overall incomes during the entire lifetime (including post retirement), then a govt employee will probably far outrun the one employed in pvt sector. Though I wonder how many of ITGs are really thinking about it.

                    Generally, every sector has all kinds of people, good, bad, ugly, sensible, individuals with lot of family liabilities, people with no family liabilities etc... So, based on certain interactions with a small set of people, the views shouldn't be generalized. Yes, there was a mad rush in 2004-07 period. But now that has waned. Earlier, almost dailiy, I used to get sweets from my colleagues (yes, I am from IT :-)) for a home purchase and I started wondering whats happening. Now those are very few and far between and the emotions too have changed. Earlier, people used to be happy. But now, they are not upbeat about announcing it. Probably stressed by the burden of debt. Some like me are still looking for a good deal and have waited for 3 years and will probably have to wait for another 3 years.

                    Will write back with a more detailed post later
                    Last edited by pjain2; February 12 2010, 11:13 AM.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by pjain2 View Post
                      Some like me are still looking for a good deal and have waited for 3 years and will probably have to wait for another 3 years.
                      Great post.
                      At the middle of IT career with family, I see retirement would be approaching in 10-15 years (may be before )
                      Obviously building liquid & equity fund which see me through bad times & retirement.

                      Do not want a debt which causes meaningless-stress & EMI of 4-5 times rent. Waiting to pay reasonable price for home.

                      Wiseman, thanks for posting on floating-rate (teasing rate)
                      Last edited by hitmady; February 12 2010, 12:16 PM.

                      Comment

                      Tags: None
                      Have any questions or thoughts about this?
                      Working...
                      X