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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

    @Tushart: Disagree with your last point. What is logical for you, may be illogical for someone else and vice versa. As a owner of a flat you expect a minimum rent for your property, this is not a discrimination but the value of it. A fruit seller who is not selling his fruits at a cheaper rate to a poor lady is not discriminating but if he is not selling the same fruit to a muslim/ hindu/ christian/ black lady at the same price is actually discriminating.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      This is nothing but discrimination based on financial capacity. We are so brain washed to not even think it that way. Someone who inherits a flat or lucky to be able to buy one has no right to discriminate and deny its use to someone hard working who is not that fortunate to be able to afford it.


      Originally posted by anirban8 View Post
      @Tushart: Disagree with your last point. What is logical for you, may be illogical for someone else and vice versa. As a owner of a flat you expect a minimum rent for your property, this is not a discrimination but the value of it. A fruit seller who is not selling his fruits at a cheaper rate to a poor lady is not discriminating but if he is not selling the same fruit to a muslim/ hindu/ christian/ black lady at the same price is actually discriminating.

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        I am a vegetarian and non drinker.
        I would not like to give my house to anybody who cooks non veg in the house/flat or conducts drinking sessions.
        It is my flat and I reserve the right to deal with it the way I feel within the law of the land.
        Food habits break even marriages and always will form a part of ones decision making process when giving a flat on rent.
        I would be very unhappy to get the smell of fish being prepared or the cry of a chicken being killed in my neighbours flat.
        No wonder with such strong dietary preferences and religious habits,people form homogenous societies where people with similar tastes join together.
        Now these barriers have slowly cracked-economic reasons,frequent transfers/change of jobs.
        Matter is complex and there are no right or wrong answers in whom do you want to give your flat.

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Doubling of Remittance Limit by RBI Will Hurt Indian Real Estate Sector

          The National Real Estate Development Council (NAREDCO), a body of real estate developers has expressed concern over the RBI's decision to double the ceiling for annual overseas investment by individuals to US$ 2,50,000. Appealing to PM Narendra Modi, the builder body called for review of the decision saying, "this has potential to divert investment in real estate away from India, thereby, adversely impacting the sector at a time when market sentiment towards real estate is down."

          NAREDCO claimed that the RBI’s move will encourage Indians to invest in other countries and further suppress domestic real estate sector due to diversion of investments. The council said, "It is pertinent to note that Indians were number one foreign investor in Dubai property during 2014 with investment of Rs 3,025 crore, invested US$ 5.8 billion, 6% of total purchases in the US market during 2013-14 and were leading investors in the UK for housing."

          The council added that with the domestic market reeling under slowdown and having witnessed a 30% fall in sales in top seven Indian cities during 2014, there is growing need for measures to improve domestic market sentiment and boost domestic market.

          "On a review of the external sector outlook and as a further exercise in macro-prudential management, it has been decided to enhance the limit under the Liberalised Remittance Scheme (LRS) to US$250,000 per person per year," the RBI had said in its bi-monthly monetary policy statement.

          Doubling of Remittance Limit by RBI Will Hurt Indian Real Estate Sector - NAREDCO

          ^^ Whenever RBI does something good for buyers, these builder orgs start shouting.
          If you are happy, you are successful.

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Municipal Taxes Hiked in Pune; Water tax up by 50%, Property Tax up by 10%-

            Saying this from long : Cost of ownership will keep on increasing and cut returns significantly . Larger the size and more number of apts a person owns using leverage - more the pain . With more nuclear families , many people will downsize their houses after retirement to manage costs . Only affordable housing will survive in the long run .

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by suryawork View Post
              Saying this from long : Cost of ownership will keep on increasing and cut returns significantly . Larger the size and more number of apts a person owns using leverage - more the pain . With more nuclear families , many people will downsize their houses after retirement to manage costs . Only affordable housing will survive in the long run .
              +1.
              And as far as rents are concerned, they can't be hiked by investors due to large scale supply in rental housing. This means investors who have put flats on rent too will burn hole in their pocket as their inflows will be same but outflows will increase.
              If you are happy, you are successful.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Housing and financial stability

                In the event of a steep decline in housing prices, it is the shadow banking sector that takes the hit

                Housing is a financial asset. Unlike financial securities, it has a direct utility value, like gold and other commodities. As such, housing can be a barometer of asset bubbles, and also of financial repression as savings flee financial securities when real interest rates turn negative.

                Who or what is to blame for housing bubbles? There are five prime suspects: international capital flows deriving from global imbalances, easy monetary and regulatory policies that lower yields and encourage risky credit, fiscal policies that promote house ownership, and the shift from the gold standard to fiat currency.

                What are the takeaways for developing countries in general, and for India in particular?

                First, house prices have risen sharply in urban India in recent years, the near-term tapering notwithstanding. The National Housing Bank (NHB) RESIDEX shows that residential housing prices in the National Capital Region have doubled since 2007. They rose even more steeply in Pune and Mumbai. They increased 3.5 times in Chennai. The moot point is whether the urban housing boom is a response to a real demand-supply imbalance, or whether it is a speculative bubble, driven by excessive liquidity, large capital inflows, financial repression on account of low real interest rates, and a booming informal or black economy.

                What is a bubble? One way of looking at this is to compare rental incomes from investment in housing (2% currently) with the cost of prime borrowers (in excess of 10%). Investment in housing can only be repaid through capital appreciation. This was the original sin of the US subprime housing crisis. When housing prices declined, the financial edifice came crashing down.

                Second, affordable housing is a bigger issue in developing countries because of lower median incomes and rapid urbanization on the one hand, and the steep rise in urban housing prices on the other. There is under-investment in the latter and over-investment in the former.

                Third, what should be the policy response to address this imbalance? Lowering regulatory standards to enable the economically weaker sections to access housing finance could result in a US-type subprime that can threaten financial stability and entail taxpayer-funded bailouts. The poor need access to shelter, which could be effectively done through income transfers for rentals till such time as they accumulate savings to own a house, when ownership could be transferred at subsidized prices, as in Singapore.

                Fourth, low interest rates can endanger macroeconomic and financial stability by fueling asset bubbles, as in advanced economies.
                On the other hand, if monetary policy is used to target asset bubbles it may deflate business cycles prematurely.
                This famously led Alan Greenspan, former chairman of the Federal Reserve, to argue that central banks should not call asset bubbles but simply clean up after they burst. The global financial crisis showed just how costly the clean-up can be.

                Finally, Indian housing markets are a mix of shadow and regulated banking finance. Registered housing prices grossly understate the market price. This makes it difficult to compile robust indices. In the event of a steep decline in housing prices it is the shadow banking sector that takes the hit. It is the shock absorber that shields regulated banking sector from instability, with non-performing assets in the housing sector much lower than in other sectors.

                Housing and financial stability - Livemint

                ** PS:- Those who are not familiar with shadow banking, please see the details of it on IMF website here :-

                If it looks like a duck, quacks like a duck, and acts like a duck, then it is a duck—or so the saying goes. But what about an institution that looks like a bank and acts like a bank? Often it is not a bank—it is a shadow bank.­
                Shadow banking, in fact, symbolizes one of the many failings of the financial system leading up to the global crisis.

                What Is Shadow Banking? - Back to Basics - Finance & Development, June 2013
                If you are happy, you are successful.

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Under continued stress, new residential project launches decline by 12% in 2014

                  Even as the government’s latest projected GDP growth numbers for 2014-15 pegs the growth rate at 7.4 per cent, the real estate sector is far from deriving benefit out of it and according to a report released by Cushman & Wakefield, the number of new residential launches in 2014 declined 12 per cent from 1,74,400 units in 2013 to 1,53,000 units in 2014 across the eight major cities.

                  http://indianexpress.com/article/ind...by-12-in-2014/

                  If you are happy, you are successful.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Raining freebies: Builders offer up to 25% discount, free studio apartments, modular kitchens to lure home buyers

                    Good news for prospective home buyers in India's big cities - finally, some real discounts from real estate majors.

                    Take a look at these builders' offers in Mumbai, NCR, Bangalore and Kolkata: flash sales offering nearly 25% discount on per square feet rates, offers of around 3 percentage point interest subvention on home loan rates, free studio apartments for those who buy top floors of a luxury residential block, free modular kitchens, air conditioners and even wardrobes.

                    Home sales data is that rare economic indicator that's refusing to improve - 832.09 million sq ft of unsold inventory as on end-December and 8% fall in sales for the quarter ending December, according to figures from property research firm Liases Foras.

                    Real discounts are a response to this real supply glut. And builders are not the only concerned lot. Investors who had bet on handsome resale margins are stuck with unsold apartments. Some of them are willing to sell apartments at below current market prices.

                    So, the increase in home prices on paper - catalogue prices went up by 7% in the quarter ending December - hides the real picture, market watchers say. Builders prefer offering discounts to cutting headline prices.

                    "Developers are stressed in terms of sales. They need to show bookings to even raise construction finance," Chawwla said. Yashwant , president of Estate Agents Association of India, says developers are offering brokers bigger incentives but the problem is the lack of buyers. "In this kind of market, builders have no option but to lure buyers with incentives and offers," says.

                    Raining freebies: Builders offer up to 25% discount, free studio apartments, modular kitchens to lure home buyers - The Economic Times
                    If you are happy, you are successful.

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Investors have sold or dumped flats in Dec-Jan period?
                      Two Marvel flats were sold or avble at 1.20cr near their Magarpatta road society.
                      Penthouses sold at 25-25% discount from quoted value.
                      Can some one further corroborate this trend???

                      Me thinks:
                      1. Three yr lock in period over, for selling investor flats.
                      2. Holding cost substantial increased with increase in maint cost, water tax, non utilization penalty etc
                      3. Black money decreased due to increase in RR, 1% subvention above 50 lakh etc

                      Hidden
                      1 Any adverse policy proposed/hinted in coming budget for investor/ bigger ticket houses
                      2 More taxes in local/ state level.

                      Against
                      1 Lower Interest regime.

                      PS; I m both a buyer / seller in mkt
                      1. sell land
                      2. Buy flat
                      Interested can PM me.

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