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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 investwest View Post
    What a logic - if shares go down, land and flat prices should go down.. wonderful man, keep it up.
    What you fail to see is why these poor results at first place ? This is due to poor sales due to lack of buyers in the market.

    This is just to show that RE is not in good shape & they can't continue to hold on as it is unless there is end user. If RE had good scope, why are people pulling out of RE stocks then ??

    Stocks of XYZ sector is mere reflection of reality.
    If you are happy, you are successful.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by herohiralal View Post
      You are correct. RE boom is will continue over the next 4-5 yrs. Interest rates in India will start to come down from early next yr. Even the incompetent Rajan cant stop that now.
      Just because Rajan didn't give in to pressure of his political bosses or builders makes him incompetent ?? By this logic Montek Singh Ahluwalia & MMS are the most fantastic financial guys, such a wonderful economic mess we are in.

      Btw, it is said that interest rates may fall only in 2016. And assume it happens today, how much interest rates fall would be ?? 0.5%, 1%, 1.5% ?? And even with this lower interest rate, do you think people will buy flats ???

      Today its not interest rates which are holding people back from buying, its the high RE prices & poor economic scenario which are responsible for bad state of RE.

      Man, Mercedes-Benz financial services offers car loan at 0%, yes 0% interest rate. So, does this make Mercedes very much affordable car ???
      If you are happy, you are successful.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by herohiralal View Post
        I have an ICICIDirect account with overseas trading. Its quite simple actually. For the long term investing in US equities is much better than investing in a crony capitalist or socialist system like India.
        Stock market globally is manipulated, its just that in India, even tom, dick & harry can do that. However, I agree that US stocks, especially S & P index is much better bet than NASDAQ or even BSE/NSE but the min amount required to trade is quite high compared to local stocks. Also, when you buy $, you pay more than market rate which at the time of sell, its lower, so you need to factor in this loss also. Apart from this, the commission of brokerage houses is way more than domestic ones. Personally, it is better to have international account & then directly trade from there than sitting via Indian channels. Now legally, how to go about this, I have less idea but I have seen NRIs dealing on NASDAQ & FTSE via their international accounts located abroad.

        Btw, apart from ICICI direct, even Motilal Oswal gives this facility. Any idea about the differences between the 2 ??
        If you are happy, you are successful.

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by vaibav123 View Post
          EXTRACTS:
          In fact, the first beneficiaries of this easing will be crooked builders – now struggling to sell property in major cities – and their benami investors, mostly even more crooked politicians. By helping them access more and easier finance, the government is essentially delaying a correction in property prices – and making housing more unaffordable to everybody.
          See BOLD above. What does this imply ? That there won't be buyers in anycase. What this is, is more like steroids...just postpone something. But here's the catch :-

          Why will genuine foreign money flow in where returns won't be there ??

          Man, do you buy a scrip of a dead company ?? Same is the case here.

          Consider what is being proposed by the liberalisation. Among other things, the minimum built-up area for projects in which foreign investment will be allowed has been reduced to 20,000 sq metres from the earlier 50,000; the minimum size of investment has been reduced to $5 million from $10 million
          Now lets see it other way round :-

          Projects having size 50,000 sq m which is around 12 acres existed before & still there are lot of them across the country including India. Now this size has been reduced to 5 acres.

          So, is 12 acres project is big project in cities like Pune ?? Man, we have projects spread anywhere between 400-700 acres !! Ample of projects in PS, Wakad, HJW, Kharadi will be in excess of 12 acres. Even Samrajya Kothrud is bigger !!

          Is it the case that projects spread on 12 acres are not selling while those on 5 acres selling well ?? If not, how is the change in size going to affect most of the projects & builders ??

          So, by reverse logic, will prices in projects less than 5 acres will hugely fall as no foreign money can flow in here ??

          Man, if domestic investors are putting money in RE, why shall foreign investors do so ?? Just see the news couple of days back where foreign investors, NRIs are now fighting against ICICI for not giving returns through real estate fund.


          Not surprisingly, the most ecstatic responses have come from builders.

          The Economic Times quotes Rajeev Talwar, Executive Director of DLF, one of India’s biggest value destroyers on the stock exchange, as saying: “The government is bang on (target). We are very glad about the trunk infrastructure completion part as it will bring in asset-based FDI. This will ensure that project developers who have taken FDI are not left with more debt.”
          If DLF gets money from foreign investors (assume), & they use it to repay debt, how will they complete their projects ?? This DLF is one big manipulative co. & with all what has been done by Indian builders to foreign investors, be it DLF, Hiranandani, Unitech, HDIL.... I doubt how many would like to burn their fingers again.

          And if RE would have been so promising, they can simply buy stocks of these cos, but as shown above, just few RE cos have lost over 3.3 L Cr of investor's money !!

          DLF will certainly benefit by being able to reduce its debt load, but how will home buyers benefit if easy money makes builders more reluctant to lower prices and hang on longer to built property? The only way home buyers will gain if the huge debt load and slow sales forces builders to bring down prices to push sales and improve liquidity. But this is exactly what won’t happen is cheap money flows in torrents as a result of the FDI change. The FDI easing will make builders ability to hoard property stronger.
          As said above, DLF if diverts this money towards debt repayment, how will it complete projects & sell it off ? And if this doesn't happen, how will it repay foreign investors.
          This is nothing but taking money from X guy to repay to Y guy, but what about repayment to X guy if sales don't take place ??

          Btw, in NCR thread, people are getting calls from brokers where flats are being offered at 2009 rates from DLF.
          And before bulls here jump on me here, please check details on concerned thread first.

          In Pune, we have scorpio grade builders. How many of Pune builders will be eligible for foreign money, if at all it comes ?? Do you think builders like Goel Ganga, Mittal, GK, Pride-Purple, VJ, Malpani, Kunal etc. can fetch foreign money at first place ??

          Overall, though this is builder favored decision, there is no doubt that this won't help RE get out of its poor health anytime sooner.

          And note that Modi also has said 'Homes for all by 2020'. If bulls are betting on the news posted by Vaibav123 above, they should also be aware that of strings & attachments are going to come up in very near time.

          Someone said Modi is baniya, now understand that baniya never gives anything for free.
          Last edited by realacres; November 1 2014, 11:14 PM.
          If you are happy, you are successful.

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by realacres View Post
            Just because Rajan didn't give in to pressure of his political bosses or builders makes him incompetent ?? By this logic Montek Singh Ahluwalia & MMS are the most fantastic financial guys, such a wonderful economic mess we are in.

            Btw, it is said that interest rates may fall only in 2016. And assume it happens today, how much interest rates fall would be ?? 0.5%, 1%, 1.5% ?? And even with this lower interest rate, do you think people will buy flats ???

            Today its not interest rates which are holding people back from buying, its the high RE prices & poor economic scenario which are responsible for bad state of RE.

            Man, Mercedes-Benz financial services offers car loan at 0%, yes 0% interest rate. So, does this make Mercedes very much affordable car ???
            So poor economic scenario wont change due to lower interest rates?

            Rajan thinks interest rates have an effect on inflation. Indian inflation is determined by monsoon and oil prices both of which are in India's favour right now. So bubble wont burst. Prices are going up. Check NHB index.

            Fall in oil prices allows govt to reduce income taxes even further. Expect more tax cuts in March budget. So dont underestimate the effect of 3 things - pro business govt, stimulus from ECB and BoJ and drop in oil prices.

            All the structural problems of India get hidden due to these factors. Even Japan is bankrupt but that is not stopping the Nikkei from rallying. Always remember this - Markets can remain irrational longer than you can remain solvent

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by herohiralal View Post
              Rajan thinks interest rates have an effect on inflation. Indian inflation is determined by monsoon and oil prices both of which are in India's favour right now. So bubble wont burst. Prices are going up. Check NHB index.
              Issue is not just inflation but more of speculation. Why are NPAs of banks rising QoQ ?? This single answer will put in place most of the queries about interest rates here.
              Btw, I won't bet very high on oil prices as these are largely speculative & beyond control of Indian Govt. Also, note that slowdown in China is one of the major reasons for oil prices to fall. Chinese slowdown will have major impact across the world.

              Fall in oil prices allows govt to reduce income taxes even further. Expect more tax cuts in March budget.
              Haha. Fall in oil prices lead to lower income tax. Man, are you really serious about this statement ??

              ECB is there but will ECB lend at first place ?? Man, they too worry about their money.
              Take latest case of Adani Entp. They wanted atleast $10 bn for their coal project in Aus, but they didn't got it via ECB (tried hard via Morgan Stanley), domestic lenders are not interested in anyway.

              All the structural problems of India get hidden due to these factors. Even Japan is bankrupt but that is not stopping the Nikkei from rallying. Always remember this - Markets can remain irrational longer than you can remain solvent
              +1. Markets need not perform on fundamentals. Today BSE is at record high, yet economy is nowhere close to 2008 !!

              Btw, some say that low interest rates helps people buy flats. Now, BR gave offer of home loan at 8% with HDFC, while Megapolis went one step ahead to offer it for 5%. Now did this translate into huge sales volume ?? No.

              Similarly, builders' offers like 80:20, 10:10:70:10 also failed. This happened not due to interest rates but high RE prices.


              So poor economic scenario wont change due to lower interest rates?
              People put money to earn more money than what they have invested for which demand should be present, which is not the case today. If there are no passengers, what will rikshawala do even if rickshaw is given to him for free ??
              Man, capital investments take place when demand is there, not if interest rates are lower.
              Last edited by realacres; November 1 2014, 11:50 PM.
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by Sj2013 View Post
                I guess
                - agreements till dec 2009 registrations might have happened in SRO Mulshi but
                - agreements of sale of flats might have happened in SRO Mulshi-2 for which eSearch facility is not available

                So it depends on which SRO registration is done.

                You should check with sales office of BR, MP for the actual reason.
                You are right. New registrations are in Mulshi-2 SRO.

                However the SRO is already computerized so not sure why recent records should not be available online. I can understand if old records from pre-computer era are not yet digitized.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by sudhashbahu View Post
                  You are right. New registrations are in Mulshi-2 SRO.

                  However the SRO is already computerized so not sure why recent records should not be available online. I can understand if old records from pre-computer era are not yet digitized.


                  I guess it might be online but not available through e-search facility.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by realacres View Post
                    Issue is not just inflation but more of speculation. Why are NPAs of banks rising QoQ ?? This single answer will put in place most of the queries about interest rates here.
                    Why are NPAs rising?? You mean home loans are the reason for the growth in NPAs??? Home loans have the lowest NPA.
                    Attached Files

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by realacres View Post
                      ECB is there but will ECB lend at first place ?? Man, they too worry about their money.
                      Take latest case of Adani Entp. They wanted atleast $10 bn for their coal project in Aus, but they didn't got it via ECB (tried hard via Morgan Stanley), domestic lenders are not interested in anyway.
                      Ohh plsssssssss..... I used ECB along with BoJ... ECB means European Central Bank.. Pls understand context and then reply with your incorrect analysis

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