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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

    ]http://economictimes.indiatimes.com/quickiearticleshow/5568341.cms[/URL]

    For a change from pessimism, I agree with the thoughts expressed in this article.

    Throughout the history of man, wealth creation has always meant owning some property.

    Things are not going to change beause we hate builders and their corrupt ways.


    The article is reproduced below:

    Noted journalist and writer, late V S Upadhyay, who played a key role in acquiring land from DDA for Delhi-based journalists in Gulmohar Park and was also responsible for enrolling many journalists as members of a cooperative society which built this posh area in South Delhi, used to tell his junior colleagues that they must purchase a house before reaching the age of 40.

    And if possible, they should buy another house before they retire!

    While giving this sage advice, he also used to say that those who do not get any pension after retirement must buy another property before retirement as it would give them social security in the later stage of their life.

    The thinking behind this advice was that if you have more than one property, you could rent out one and earn a good amount. Naturally, those who invest in property cannot be losers and it is advisable to invest in realty . This is especially true for all those who do not get pension benefits.

    Samir Jasuja, CMD of PropEquity, says that property can be a great source of income for your retired life, or in case you loose your job, as many people have done last year. There is no question that property would not help if your investment were made at the right time.

    “Those who invest in realty should have a longer period of time to enjoy benefits of appreciation as it is a long-term game. One should not expect miracles in a short span. It wouldn’t make any sense for a 60-yearold to invest in a property to earn rental income as real rate of return would not be profitable” , says Jasuja.

    There is also an opinion that if you are thinking of a second property, you should not have any hang ups in investing on the outskirts of your city. With the passage of time, even outskirts become part of a city.

    You can meet many people in various trans-Yamuna colonies, who will tell you that they came to that part of the city when it was bereft of any worthwhile facilities. After facing hard times for a couple of years, development commenced .

    And with development, values of their properties went up multifold. That has changed the class character of a large number of people. As rates have really gone up in main parts of the city, one should not mind investing in outer or little unknown areas.

    Vijay Jindal, MD of SVP Developers, says that among buyers of his flats in various projects , the number of those who already own properties are pretty high. That is an indication that the present generation knows for sure that investment in property would help their cause when the chips are down.

    Anil Makhijani, a realty expert, strongly feels that land can be another option for those looking for a second property with a specific goal.

    Between land and constructed property, the former is a lucrative option as it is much easier to sell it and the rate of appreciation is also higher. If you live in Delhi, then you should not think twice in buying land in any part of NCR. That would ensure for you enough returns in future.

    Realty experts say that those dependent on loans for buying a second or third property should focus on it early in life. For example, one should start thinking on lines of buying a second property before In that case, you would get enough time to shed all loan liabilities before reaching the retirement age. Discussing the purchase of a second or third property, Avinash Aggarwal, director marketing of Orange County, says that if one were to look back at the situation of 15-20 years ago, one would realize that, earlier, people were satisfied after buying one property.

    “As salaries have gone up over the years, there has been a paradigm shift in the attitude of people in terms of investing in realty. If investors settle for one property earlier, the later generations have been investing in multiple properties,” says Avinash.

    He is spot on. Now, people are investing in realty with clear-cut thinking that their investment in property would be their source of income in post-retirement life. With higher disposable incomes and more loan options, this thinking is being adopted by a larger number of families.
    Venky (Please read watch a or before posting)

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Guys, you are again missing the facts. No body is scared, and people with more then 40L of Loan won't be reading these threads for fresh ideas.

      The point i am trying to make is, India has a strong growth story. Look at the recent IIP figures. I think you guys are the people who missed the bus earlier and now want to see India doomed so that you can make some buyouts. But guys look at the facts. In all kind of market scenarios you will find people who say it will further go down, if its already down and others will say it will go up, when its already up.

      Sometimes too much of analysis and facts will lead you nowhere. Sometimes shear commonsense, Gut feeling, some research will do the job for you. Otherwise you will find solace in Wisey views(which i think are applicable for short term only, in case some bad happens in worst case).

      Ok, tell me where you guys see India 20 yrs from now?. I am sure we will be far better, with good infra and good quality of life. Why you think all these top car companies are jumping to India suddenly with all kind of fast and luxury cars. Guys they have done some analysis, they know that India is the next growth Engine, because of huge middle class doing well.

      We are and will be hardcore consumer driven economy, and thats a fact which is going to increase day by day unless we stop producing ourselves. .

      I am always OK with Wisey views(-ve) though because he makes us to think twice. But, the point is you should not start scaring people by sayin OH Iceland is doomed so wat will happen of bigger fishes n all.

      Thats not true.

      Think Big. Think Long and Sometimes long term positivity helps.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Or Wisey you are comforting people who cudn't buy earlier and want to see India doomed to buy now.

        I am not sure the so called scared people really come to this forum for anything. They dont have anything here, better focus on work.

        Look at the facts, IIP figures, long term indian story(which is very very strong), look at the Big car exhibitions suddenly hitting India(do you ever think why these MNCs suddenly started loving India). There you go, they do long term research and figure indicates them that India has come.

        Please check the Mumbai rates again?. If you have anythink in 50L(which was 1 Cr) last year, do let me know.

        Originally posted by hitmady View Post
        Wisey, you definitely scare a category of people who has bought 2BHK in kothrud/baner for 60Lacs with loan of 40L+.
        Let them live in fool's paradise.
        You know a famous quote "India is decoupled from western economies".

        Two years back in Mumbai I could hear people saying their RE is worth 1 crore. Now same people have come down to 50L.
        I seriously doubt if they can buy RE worth 50Lacs

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          The consumer confidence index has fallen in US according to figs released on Fri. The BPLR will now be fixed by RBI meaning no special benefits to big corporates who used to dicate the terms to the bank as banks will have to charge above this BPLR. This also means end to practises by banks like low interest rates for first 2-3 years & so on. Hence, no more gimmicks. Good for the market, bad for the banks. The food inflation has again touched all time high. China has has tightened it's liquidity yesterday as well, to cease artificial growth. Man, even if I want to, I am unable to see real growth happening in the country, now let the FM cut the stimulii due to rising fiscal deficit, we will see the real fun. Rented clothes will be taken away.
          Originally posted by puser View Post
          As far as Pune's RE prices are concerned; they are extremely unbearable, but people are buying by taking loans and NRIs are booking apartments in third class localities of BlueRidge or Park Street based on power point presentations, website's manipulative pictures of happy people and landscaped gardens...
          Third class? Man, you are too lenient, I would rate projects like BR as class-less. When people buy these type of projects based on their presentation, I remember the Hindi song:-

          "Humne tumko Dil Ye De Diya, Ye Bhi Na Pooncha Kaun Ho tum".

          Originally posted by hitmady View Post
          Wisey, you definitely scare a category of people who has bought 2BHK in kothrud/baner for 60Lacs with loan of 40L+.
          Let them live in fool's paradise.
          You know a famous quote "India is decoupled from western economies".

          Two years back in Mumbai I could hear people saying their RE is worth 1 crore. Now same people have come down to 50L.
          I seriously doubt if they can buy RE worth 50Lacs
          What struck me first after reading this post is pocket money!! Why? Coz in India, the youngsters only learnt how to go to pub with GF/BF & enjoy there like the American's, but forgetting that the American chaps earn & learn....be it at Pizza Shop, Flourist or whatever & then make merry, & not on parents money. This is indeed a very good quality to learn from American's. Same goes for RE as well, buy as they do in west without knowing that west has bankruptcy laws as well social security unlike India & hence they take such stupid decisions. There are people who have canceled their holidays this year as well coz their salaries goes in paying home loan EMIs & they overstretched themselves thinking that 20-30% increment YoY will be there & now are in a jam.
          If you are happy, you are successful.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            OK, got the message! Time to get optimistic!

            Jai Ho!
            My name is Caan! And so I Can!

            All of you on this forum MUST get yourselves a financial education (if you do nothing else in life, this will see that you do not end up penniless). And this should take you around 1 year part-time. Here's how you do it ...

            Cut your pub time by 50%. And add movie time cut another 50%. This should give you at least 4-5 hours a week which is around 20 hours a month (this is around 12.5% of your productive time at office as computed normally).

            In addition to freeing time, you also cut your expenses by 50% which could be sizeable!!! Use this to get some important books and subsidize your internet time. Here is a list of books you must have ...

            - A fundamentals book on Finance which explains the nitty gritty financial terms like principal, interest, simple, compound interest, IRR, NPV and maybe the basics of how to read financial statements (from how transactions are recorded - cash, bank, sales, purchase, etc - to the bookkeeping basics to books of accounts to trial balance and the P&L and Balance Sheet). It is very important to get a common-sense knowledge of how companies (and later countries) do their finances - in fact it is not much different from how you do your home accounting and financing!

            - A fundamentals book on investing in various asset classes - stocks, fixed income, tax-saving investments, RE, Bullion, etc, etc. And most importantly, the pros and cons of each asset class. Very important is the chapter on risk and how the Risk Profile of an investor changes from the age in 20s to 30s to eventually 70s.

            - A great investment book (please get your hands on "The Intelligent Investor" by Ben Graham - buy it second hand and its available in plenty in second hand stores). I have found that the most important books in life are always available at deep discounts - shows how little people really know about what is important and the rest of the fluff!.

            And now about Asset classes.

            I believe most people drift towards buying a home for a few reasons like ...
            - Environmental pressure (not yet bought a home on gigantic loan?)
            - Genetic memory (for centuries your ancestors did one thing first. Bought land/home
            - Govt partiality towards high leverage at low interest for property (give me 90% loan at 10% interest to buy stocks and see what I can deliver!)

            But, I have, in the last 25 years done better at stocks than in RE (though RE investment too has done exceedingly well). Therefore its obvious that I have a partiality towards stocks. So, here is what I suggest to the youngsters ...

            First get into stocks after educating yourselves on financial and tax matters. For this, you must always buy when everyone is selling (Mar 2009) and sell when everyone is buying (Dec 2007 and Oct 2009-Jan 2010).

            Here comes the optimism. Land and RE will only rise in sync with salaries and wages. Stocks will rise with profitability and surpluses - which could rise much higher than wages. Since India is likely to see a manufacturing boom in the mext decade, investing into sound stocks will probably see you do very well in the next decade as compared to any other investment. A side-effect of this corporate bonanza will also be a sound price rise in RE.

            When you have spent around 4-5 years investing in stocks you will have a sizeable corpus of funds to deploy as down payment into RE. You might want to invest this into RE when prices are at reasonable prices (use long term rental yield as benchmark for "reasonable) and buy after taking all else into consideration (proximity to work area, markets, schools, transport hubs, etc).

            Do not put every penny of your savings/investments into RE. You will suffer.

            You will also note that, when you read financial news, you get a lot of gyan when you are financially educated. This has many beneficial side-effects, one of which is people will seek you out and listen when you talk about economic matters.

            Whatever else your education, you have no excuse not to educate yourself on financial matters.

            cheers
            Last edited by wiseman; February 13 2010, 03:09 PM.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              More thought on Iceland Story

              Wiseman,

              As u have mentioned that iceland (entire country) has gone bankrupt, now what next???

              I mean what Iceland will do,what the ppls of iceland will do, whether they all will die by starving like ppls die in African countries??? or there is any Hope???

              Why I am asking this, coz if somebody (IMF or UR or maybe some other country) will help them to come out from this situation then I think they are in better position than many African countries & if not...still what next???

              I am expecting a well elaborated post on this
              Last edited by ash7979; February 13 2010, 04:31 PM.
              Cheers,
              -Ashish

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                India is no more the protected economy of the 20th century. This extra boom in economy is mainly due to the semi open concept of Indian economy. Many of the western middle class lost to India China due to
                electronic age and the open concept trade. This in turn brought in the recession in these countries and a drop in consumption which in large part is got from trade from India China.
                I guess wisey is connecting the dots India as a global family and since India lags the western world by 6 months to a year the prognoses is India has not bottomed out yet if its looking for trade to give it the extra boost in economy and bring it back to the 2007 era. So lets wait and watch the US
                and western economies haven't picked up yet.
                CAN
                Originally posted by findingnemo View Post
                Or Wisey you are comforting people who cudn't buy earlier and want to see India doomed to buy now.

                I am not sure the so called scared people really come to this forum for anything. They dont have anything here, better focus on work.

                Look at the facts, IIP figures, long term indian story(which is very very strong), look at the Big car exhibitions suddenly hitting India(do you ever think why these MNCs suddenly started loving India). There you go, they do long term research and figure indicates them that India has come.

                Please check the Mumbai rates again?. If you have anythink in 50L(which was 1 Cr) last year, do let me know.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Wisey bhi optimistic ho gaya?

                  Then crash is inevitable soon!

                  By the way, why does Nemo have "banned" status? Surely he doesn't deserve this?
                  Venky (Please read watch a or before posting)

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by findingnemo View Post
                    Think Big. Think Long and Sometimes long term positivity helps.
                    Think Big & positive for whom, builders, black-marketers/speculators? So they make huge profits/money in short-term and we (middle-income RE buyers) shoulder the burden of huge EMI & loan in long-term

                    Even with encouraging IIP numbers and Indian growth-story intact, BSE index is still 20% below it's peak.
                    Pls let us know what is the logic behind builders' increasing RE rate and delaying projects at the same time?
                    May be it's pure greed of making 200-300% profit in single project, so builders need not work again
                    Last edited by hitmady; February 14 2010, 12:26 PM.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Putting the cart before the horse ...

                      Originally posted by findingnemo View Post
                      Or Wisey you are comforting people who cudn't buy earlier and want to see India doomed to buy now.

                      I am not sure the so called scared people really come to this forum for anything. They dont have anything here, better focus on work.

                      Look at the facts, IIP figures, long term indian story(which is very very strong), look at the Big car exhibitions suddenly hitting India(do you ever think why these MNCs suddenly started loving India). There you go, they do long term research and figure indicates them that India has come.

                      Please check the Mumbai rates again?. If you have anythink in 50L(which was 1 Cr) last year, do let me know.

                      Nemo,

                      You must be careful trusting the analysis of people who, in the first place, never saw this bust coming (remember, most of our corporate world was pumping their maximum investments into their businesses at the very top) and, after taking a solid hit in the last 2 years, still do not see the second (and bigger) bust coming. A prime example is Tata Motors and Tata Steel.

                      Add to this the average Janta which wholeheartedly swallows the propaganda of Govt and big business. Much of this huge buying of cars (one of the highest depreciating asset classes and therefore the one that is most likely to take its buyers to the cleaners when things go down) is because the general population with purchasing power has been convinced that the worst is over and we will now recover soon and grow at 9% for ever! Man!!!

                      Coming to IIP, first of all it is a measure of production, not sales! Big difference. In the first case, all you have done is pumped more money into producing and stocked it (risk increases) and in the second you have realised your money thru a sale. You might want to see the net differences in Inventory (period to period) to see how sales really progressed and be prepared for some surprises. Besides, Dec 2008 was one of the weakest Industrial Production periods and we are also seeing low base effect. Just asking you to check these before hoisting the National Flag!

                      In response to what happens in cases like Iceland - and please note that many serious eonomists around the world are looking at at least one medium-sized country to go bust the same way in 2010 itself - Greece?; no one is even contemplating a possibility of one of the big countries going that way since its too horrifying to contemplate since everytime in modern history some bigcountry has gone bust it has resulted in War of global dimensions! - many British people invested in Icelandic Bonds and got taken to the cleaners (one of my cousins in UK was among them and he did it despite my warning him about it well in advance). So, the British Govt first bailed them all out and then did a neat trick.

                      They arm-twisted the Icelanders via the IMF saying, we will bail out Iceland if that country also bail out the bond investors (who took their own private risks investing there). Luckily for the Icelanders, their President had more spine than their parliament and refused to sign. This has gone into a national referendum with 60% of the population against it (in polls).

                      Life for Icelanders is going to be tough for a long time to come. But they are tough and will pull thru. But these are some of the things you can expect. Of course, a side effect related to all assets in the country that goes bust (like RE) is that it literally collapses with liquidity going down to near-zero and prices re-tracing 100% of the gains of the recent boom that caused all this mayhem.

                      Do not let all this affect you. India is not Iceland.

                      cheers
                      Last edited by wiseman; February 14 2010, 06:36 AM.

                      Comment

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