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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 khbarilal View Post
    With sales more sluggish than ever, and the number of vacant homes crossing 88,000, desperate developers are doling out goodies to brokers in the hope of getting more business. “For us, it’s party time, literally. So what if business has hit rock bottom,” said another broker.

    Another big developer is said to have organized for Russian dancers to add glam value to a regular broker meet at a hotel. Ackruti City in its grand bash is said to have offered brokers a commission of 2.5 per cent on business over Rs 20 crore.
    And despite this, the brokers say it is hard to sell due to high prices. Some builders also agree that unless the prices come down, such incentives to brokers won't work.

    Btw, see how the new BMC boss is not giving sanctions easily to the builders:-

    BMC boss gives thumbs down to 150 building proposals

    BMC boss gives thumbs down to 150 building proposals, News - City - Mumbai Mirror

    Does any PMC commissioner has guts to do this?? Note that builder lobby in Mumbai is one the most powerful in the country, PBAP/CREDAI Pune is a pygmy when compared to MCHI.

    Even the ex-PMC chaps like Nitin Kareer were pets of political masters.
    If you are happy, you are successful.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by Sharpj View Post
      As expected RBI increased repo rates and reverse repo rates by 25 basis points.. Rate sensitives

      RBI raises repo, reverse repo rates by 25 bps - Moneycontrol.com -

      No respite for realty companies..
      Banking sources have also indicated that if the inflation doesn't fall below 6%, expect another hike of 50 bps or 0.50% by this year end.

      RBI has made it clear yesterday that INFLATION is top priority for them even if it means GROWTH taking a backseat.

      And till date, the Japan's effect has not yet been felt in global economy. If Japan contracts, it will take even more time for global economy to reach at the stage where it was in 2006-07.

      * PS:- Home loans for 11% & FD rates close to 10% makes renting even more desirable in current scenario. Rather than making downpayment, make a FD & get the rent free from the interest earned!!
      If you are happy, you are successful.

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Is this true

        I don't understand who keep buying at these rates... Is it builders hogwash or am I the only idiot.. I know I cannot afford..

        Mumbai real estate prices: What is the outlook? - CNBC-TV18 -

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by RAJESHP View Post
          Builders can afford to pay higher commission to brokers, but would not reduce the price themselves, any one knows why?


          If you will see the RE companies’ balance sheet, the asset is rising but the sales are going down. By collateralizing the assets, the companies have taken hefty loans. If asset value fall there will be Indian prime crisis. By advertising the high prices, they are supporting the collateral. Where as brokerage is consider as expenses.


          If one remember the US sub-prime issue, banks has lot of residential/commercial assets which the borrowers had valued very high & in realty it were less than half a value.

          If you want to verify this, check some foreclosed properties. In many cases, the owner would have taken hefty loan then they will not repay it & let it foreclosed.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by Sharpj View Post
            I don't understand who keep buying at these rates... Is it builders hogwash or am I the only idiot.. I know I cannot afford..

            Mumbai real estate prices: What is the outlook? - CNBC-TV18 -
            Well in the interview, they conveniently avoided, 3rd quarters sell numbers.
            If there is such a healthy sell, why the RE stocks prices are depressed? Are these promoters diverting away the profits? OR any Raju is working in these companies?

            Share holders should do a through check of books & record & find out what scam is going on.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by khbarilal View Post
              Well in the interview, they conveniently avoided, 3rd quarters sell numbers.
              If there is such a healthy sell, why the RE stocks prices are depressed? Are these promoters diverting away the profits? OR any Raju is working in these companies?
              Today in Bloomberg property-matters, RE expert of Knight Frank said "Mumbai RE prices are going to fall upto 35% within next 2 years. End-user should wait at least for two quarters before entering."

              When it happens its surely going to impact Pune negatively.
              Last edited by hitmady; March 20 2011, 11:06 PM.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Thoughts on rental vs capital value in Delhi

                I might be repeating things I have already posted on this thread, but having made the effort, thought I would post it here

                Regarding ratio of price to rent:

                Ratio in South Delhi DDA flat 1988 Price 8L, rent 2000, Ratio approx 400. Salary was 4000

                Same, 1993 Price 20L, rent 4000, Ratio approx 500. Salary was 8000.

                Same, 1998 Price 25L, rent 8000, Ratio approx 250. Salary was 15000
                Same 2003, Price 34L, rent 10,000 Ratio approx 350. Salary was 30,000=50,000 for most Delhi people

                Same 2008, Price 1 Cr, rent 15000, Ratio 600 approx. Salary in Delhi varies from 50,000 to 1L per month.

                In this period there have been 3 major bull runs, first from 1982 to 1988 (same flat costed 1.5L in 1984 but I have no idea of rent so cant tell the ratio)then plateau till 1992, then bull move from 1993-1996, then plateau till 2003 and then bull till 2008.
                At the top of each bull run. ratio was around 500 plus. At the fag end of the plateau phase, ratio was 250-300 (difficult to estimate, because there are few transactions when price is so low - no sellers - also difficult to tell when price is so high, there are no buyers at such prices)

                Even now, ratio is probably only 500, because there have been no transactions of 1Cr - maybe around 80L is actual market value

                Transactions at ratio 250 and ratio 600 are all difficult to manage.

                Sensible thing is to buy at ratio of 300 and sell above 500.

                From 2011 to 2014, what we have to do is look for creeping increase in inflation and rent. Minimum rent for 2BHK is now 11000 in good area. One can expect 20,000 soon. With people paying just 20% of salary as rent (vs 50% through 80s and 90s), there is good scope for rent increase - but not in NCR because of massive oversupply in Dwarka, Gurgaon and NOIDA.

                The 2014 upmove is more likely to be linked to price rise in steel and labour and cement than rent increase, in NCR. Prices now reflect good lobbies, club and other intangibles, not seen before. Soon, quality of these services will be visible (not a tall tale from builder) and rent for these good condos will go up while the rest will languish.

                By 2015, price of flat will be more determined by good management of services than anything else. If service management of the flat fails, you will neither get rent nor capital appreciation.

                People have lot of money now and no way are people going to pay for crap service.

                With oversupply glut in NCR, only good services will differentiate good and poor RE investment.

                Better to wait and watch for these trends. Or bottom feed in basic minimum flat catering to lower/middle class where these factors are well known.

                holding period of >15 years till 2025 is needed.
                Venky (Please read watch a or before posting)

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Value = Price * Unit

                  1. In Nov-2010, RBI asked banks to reduce the RE loan portfolio & use higher risk factor.
                  2. PE funds are demanding lower valuation.

                  Both the news confirms that RE valuation is not sustainable & it’s on high side. Which also explain the higher assets gimmick on RE companies’ balance sheet.

                  As per the law of price elasticity, different price levels have different demand. When people talk about demand, they intentionally hide the price factor. If prices are too high there will be no demand, which is the current case.


                  Price elasticity of demand - Wikipedia, the free encyclopedia

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Downward Trend Continue...

                    Sales in Mumbai’s suburbs fell sharply, down 26% year-on-year in February, on the back of a 26% year-on-year drop in January. In contrast, sales in Mumbai city at 824 are up 13% year-on-year, albeit on the lower base of last year.
                    The brokerage notes that although February 2011 figures suggest a divergent trend, “a sharp slowdown is visible in both the city and suburbs, with volumes down 45% and 46% respectively compared to their peaks in 2010.”


                    Mumbai witnesses fall in real estate sales registrations

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      How we lost the plot, News - Cover Story - Mumbai Mirror

                      Politician + Builders nexus is hard to break in Mumbai..

                      I do not have any hope for this state. There was a Nitish Kumar for Bihar.. Maharashtra does not seem to be possible to break from this nexus..

                      Even Prithviraj chauhan was in various binds over the CVC PJ Thomas..

                      Opposition.. Shiv Sena or MNC are not effective and bigger crooks..
                      BJP does not exist in Maharashtra..

                      Is there anything possible in the near future.. or more pain left for this state

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