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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

    Que Sera;

    RBI had recently taken to the OMOs to make gsec yield fall in line with 125 basis cut. However, monetary policy transmission has not been satisfactory, I personally think so.

    Only those corporates would find ICDs cheaper who have good standing in market. Bank loans are still not that cheap, I agree.

    Change in debt fund taxation with indexation is to ensure that people in 30% tax bracket are not using it as way to escape tax liabilities. I did not understand what you meant by FD ponzi.

    To manifest animal spirits, Government had choice to go back to Keynes and disregard FRBM by increasing capital expenditure. Government has decided not to do so.

    Thus government puts an onus on RBI to reduce rate so that private lending would pick up which would generate growth.

    However, when the private perception of economy is wait and watch with being over-cautious, how would credit off-take would grow in productive sectors even if loans become cheaper?

    Such situation makes it fit for scenario where even minor international shock would bring credit flow to the halt and thus stopping the growth.

    In such situations, best strategy is to go back to basics. The passive revolution. Better subsidies targeting, better tax collections and taxing the rich, more capital expenditure, focusing on rural growth, education and health. Jaitley has done precisely this. Now may be RBI would start reducing rates slowly along with increasing CRR as a balancing step.
    Last edited by MANOJa; March 11 2016, 03:28 PM. Reason: User tagging.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by Hairpin View Post
      Que Sera;

      RBI had recently taken to the OMOs to make gsec yield fall in line with 125 basis cut. However, monetary policy transmission has not been satisfactory, I personally think so.

      Only those corporates would find ICDs cheaper who have good standing in market. Bank loans are still not that cheap, I agree.

      .
      If you know enough to quote the OMO, you would know that the 10 year rates were approx 7.60 odd.. No where near the transmission of cuts. The rates spiked to 7.84 followed by the omo. The omo along with deficit targets being maintained has bought down the yields to 7.60 levels. No relief there

      With advance tax pay outs due, the rates would otherwise have crossed 8%. Am still keeping fingers crossed and hoping liquidity is maintained.
      Life is what happens when you are making other plans. Enjoy it

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by Hairpin View Post
        Que Sera;

        Change in debt fund taxation with indexation is to ensure that people in 30% tax bracket are not using it as way to escape tax liabilities. I did not understand what you meant by FD ponzi.

        .
        Three year fmp with AAA papers is 8.20% odd. Credit challenged fmp ( one that has jspl sort paper but still investment grade) is 9%+. A bank fd is a actually a FMP with mix of papers (bank's lending portfolio) so the returns should be between 8.20- 9%. However currently sbi is quoting at 7.75%. Not to mention low cost savings and zero cost current account balances with banks which should further reduce cost of funds. So why does this discrepancy exist ?

        A Ponzi is a scheme where fresh money is required to pay out the old liabilities. Huge part of deposits have been handed out to NPA. While accounting and recognition of losses is being delayed to the extent of 130-40 thousand crores ( your fd used to fund the loan is lost forever), money is still required to keep on funding maturity of deposits and continue business. With corporates and HNI moving to FMP, deposit growth was stressed and this was a measure to assist the banks.

        Remember a mere exchange of say hdfc shares does not result in economic growth, but we have 1 year as the long term capital gain here. But a loan, even to JP, building unoccupied half completed buildings has resulted in more economic activity. So from a economic view point, which one should be encouraged ? Maybe tax exemption for ipo only and encouraging debt ( and debt market creation ?)
        Last edited by Que Sera; March 12 2016, 07:16 PM.
        Life is what happens when you are making other plans. Enjoy it

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Pune attracts total investment of 42K crore as part of operation Make In India. This will surely take economy of the city to next level and the RE rates may see new highs in future . With past inefficient administration Pune could grow so much so imagine what will happen with current aggressive PM and CM (aggressive in pulling investments).


          Biggest investors are Foxconn, Blackrock, GM and Chrysler. Bharat Forge and L&T to setup defense product related plants in Pune (with common sense people can judge the overall direction - as many did during 2009 slump and have benefited immensely from it).


          Big bears like frugality , aditisharma and realacres have taken the cue and retired from the forum . More will learn the lessons in coming times.
          Last edited by compuwalah; March 15 2016, 11:25 AM.

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by compuwalah View Post
            Pune attracts total investment of 42K crore as part of operation Make In India. This will surely take economy of the city to next level and the RE rates may see new highs in future . With past inefficient administration Pune could grow so much so imagine what will happen with current aggressive PM and CM (aggressive in pulling investments).


            Biggest investors are Foxconn, Blackrock, GM and Chrysler. Bharat Forge and L&T to setup defense product related plants in Pune (with common sense people can judge the overall direction - as many did during 2009 slump and have benefited immensely from it).


            Big bears like frugality , aditisharma and realacres have taken the cue and retired from the forum . More will learn the lessons in coming times.
            No Matter how much investment comes to Pune. RE picture will not improve unless builders start following some professional ethics and also prices need to come down.At this moment investing in RE is just not value for money.

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by compuwalah View Post
              Pune attracts total investment of 42K crore as part of operation Make In India. This will surely take economy of the city to next level and the RE rates may see new highs in future . With past inefficient administration Pune could grow so much so imagine what will happen with current aggressive PM and CM (aggressive in pulling investments).


              Biggest investors are Foxconn, Blackrock, GM and Chrysler. Bharat Forge and L&T to setup defense product related plants in Pune (with common sense people can judge the overall direction - as many did during 2009 slump and have benefited immensely from it).


              Big bears like frugality , aditisharma and realacres have taken the cue and retired from the forum . More will learn the lessons in coming times.
              I read all your posts and many of them are interesting. Whatever may be the investments there are other centres which are attracting similar investments.
              Last edited by Malvish; March 16 2016, 01:05 PM. Reason: quote formatting

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by rambler View Post
                I read all your posts and many of them are interesting. Whatever may be the investments there are other centres which are attracting similar investments.
                It is human nature that the more you try to convince somebody out of his opinion the more defiantly he clings to his position . Let the gentleman enjoy his thoughts .

                Looking back we've had bull market from 2003-07 and 2009-12 . People can negotiate good amount of discounts in the current situation .

                Maharashtra has online registration data for last 15 years which can tell you what rate a particular property has been transacted .

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  rambler; Don't deny other centers are attracting investments , but for its size Pune is attracting much bigger pie.

                  suryawork; Can you share what is the site on which you can track the transacted cost propertywise ?
                  Last edited by Skittles8; March 16 2016, 11:36 AM. Reason: mentioned users

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by compuwalah View Post
                    *rambler ; Don't deny other centers are attracting investments , but for its size Pune is attracting much bigger pie.

                    *suryawork ; Can you share what is the site on which you can track the transacted cost propertywise ?
                    http://igrmaharashtra.gov.in

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      As if everything related with so called big ticket investment will start happening inside Pune??
                      As if they will pour money in next 2 years and we all get that money to buy 80 Lakhs + flats??
                      As if drought like situation will resolve tomorrow and 80% societies in Pune will not use tankers??
                      As if roads will be like butter and metros will be flying everywhere??

                      People who want to buy houses for making money will pay the price. For those wanted to have their own house time will never be late since you will not sell and buy your house like vegetables " Seems some people do it" ;-) !!!

                      House buying should always linked upon your buying power, Social security, Long term geographical issues, Climatic conditions, Family needs and issues and long term career planning.

                      I wish they will announce big ticket infra spending for Pune along with 2021 or 2031 plan and timely execution, which may set a next level of uplift for Pune region.

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