Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • @SanjanaSingh

    I spoke to an agent who listed himself as HDFCRealty for a property in Pune.
    The guy neither confirmed nor denied his association with HDFC. The property did not interest me as much. So let it go.

    How may of these brokers who call themselves by that name genuinely represent HDFC is hard to say. But HDFC does have a real estate arm which probably does what you just mentioned.

    HDFC Realty

    I have seen quite a few resale flats in the last six months in Viman Nagar, Wadgaonsheri, Kalyani Nagar area. I did not see anything worthwhile based on the price quoted.

    Quite a few of these flats remain unsold. So the owners rent out these flats and keep looking for buyers. Some have even reduced prices.

    One flat I saw in Viman Nagar started out with 62 lacs, then 60 and finally 58. Not sure about the current status.

    I agree with you on the idea of fog settling down. Let us wait and see.
    CommentQuote
  • Originally Posted by SanjanaSingh
    Realacres & Khabri are the Sherlock Holmes of RE !

    I was going thru some ads on 99acres.com and there are numerous ads by some entity called HDFC Realty. They claim to be the broking arm of HDFC. Can someone check if this is true ?

    If they are indeed part of HDFC or HDFC bank, maybe they are trying to sell properties in the market to get a better price instead of foreclosing ? Because if they foreclose, long court procedures will follow & also they might not get a good price if the properties have the foreclosure stigma attached.

    Also, I'm seeing the same ads being updated over and over again on different websites. Some properties are still available after 6 months :D and price quoted is gradually being reduced.

    Any property seekers have similar real-time experiences ?



    I have one experience in Bangalore, as I stay here. One flat owner had posted an advt for resale of his apartment at Rs 82L for 3BHK 1420 Sqft, about 6 months ago. However ongoing rate in that complex was Rs 64-68L. Last week, one broker called me regarding the same flat and said he can negotiate it for Rs 76L. Still it is unsold, that tells the whole story.

    I have posted my requirement on makaan and some brokers are calling. Many of them quoting the same complex for different rates depending on my budget. Sometimes I say my budget is 1Cr, sometimes I say my budget is 90L. The brokers quote a price based on my budget. Isn't that strange ?

    I have one experience in Bangalore, as I stay here. One flat owner had posted an advt for resale of his apartment at Rs 82L for 3BHK 1420 Sqft, about 6 months ago. However ongoing rate in that complex was Rs 64-68L. Last week, one broker called me regarding the same flat and said he can negotiate it for Rs 76L. Still it is unsold, that tells the whole story.

    I have posted my requirement on makaan and some brokers are calling. Many of them quoting the same complex for different rates depending on my budget. Sometimes I say my budget is 1Cr, sometimes I say my budget is 90L. The brokers quote a price based on my budget. Isn't that strange ?

    I have one experience in Bangalore, as I stay here. One flat owner had posted an advt for resale of his apartment at Rs 82L for 3BHK 1420 Sqft, about 6 months ago. However ongoing rate in that complex was Rs 64-68L. Last week, one broker called me regarding the same flat and said he can negotiate it for Rs 76L. Still it is unsold, that tells the whole story.

    I have posted my requirement on makaan and some brokers are calling. Many of them quoting the same complex for different rates depending on my budget. Sometimes I say my budget is 1Cr, sometimes I say my budget is 90L. The brokers quote a price based on my budget. Isn't that strange ?

    I have one experience in Bangalore, as I stay here. One flat owner had posted an advt for resale of his apartment at Rs 82L for 3BHK 1420 Sqft, about 6 months ago. However ongoing rate in that complex was Rs 64-68L. Last week, one broker called me regarding the same flat and said he can negotiate it for Rs 76L. Still it is unsold, that tells the whole story.

    I have posted my requirement on makaan and some brokers are calling. Many of them quoting the same complex for different rates depending on my budget. Sometimes I say my budget is 1Cr, sometimes I say my budget is 90L. The brokers quote a price based on my budget. Isn't that strange ?
    CommentQuote
  • Originally Posted by khbarilal
    Why banks lured into RE brokerage business when they can run own projects? Does RE brokerage become more lucrative than the core banking activities? Ohhhh… no Banks got stuck into RE financing & non-performing loans. :bab (59):


    Brokerage is possibly the best business in the world as the return on equity is probably the highest. So nothing wrong with banks doing broking (they do that for stocks and other assets) so doing it for RE seems logical.



    Why not foreclosure? The properties are still unsold & owned by Builders which is financed by Banks. Foreclosure is only possible if it’s owned by middle class borrower, whose arm can be twisted easily.
    No wonder economic growth is stalled due to weak banks & non-performing assets on banks’ balance sheet.;)


    Economic growth is not stalled due to weak banks and NPA. Its stalled due to lack of economic reforms and due to the Euro crisis. NPA though increasing are not due to RE. They are due to steel, airlines etc. even the most indebted RE companies (DLF, Unitech) are able to service their loans unlike the airlines which are running huge losses


    ICICI is selling the Kolte Patils projects “Allura,Glitterati,Ivy Apartments,Tuscan” with discount offer.
    Kotak Mahindra Prime Ltd is selling “Parinee Adney-Borivali” project.
    Email based ads are already circulating in market.

    Short the banks & make your fortune. :bab (35):


    These companies have an equity stake in these project so doing marketing to the vast customer base. Nothing different to Airtel or Vodafone sending u ads. Private sector banks have very good balance sheet. Public sector banks are the ones who have lent to airline, steel and textile companies and suffering.
    CommentQuote
  • Originally Posted by mymarji
    I have one experience in Bangalore, as I stay here. One flat owner had posted an advt for resale of his apartment at Rs 82L for 3BHK 1420 Sqft, about 6 months ago. However ongoing rate in that complex was Rs 64-68L. Last week, one broker called me regarding the same flat and said he can negotiate it for Rs 76L. Still it is unsold, that tells the whole story.

    I have posted my requirement on makaan and some brokers are calling. Many of them quoting the same complex for different rates depending on my budget. Sometimes I say my budget is 1Cr, sometimes I say my budget is 90L. The brokers quote a price based on my budget. Isn't that strange ?


    Yes the seller and the buyer are both changing their rates and for a transaction to occur both need to agree at a price at which both are comfortable. Brokers try to sell high cause their commission is based on the sale value while buyers try to buy low for obvious reasons.

    Best approach for the seller would be to hold a open house on an weekend and ask interested buyers to come visit the flat and then ask them to quote their rates rather then depend on brokers. Set a base for the flat (say 75 lakhs based on ur post) and then see what happens.
    CommentQuote
  • As I'm in the process of coming back to India, I've been scanning thru RE ads in different cities. Have decided to set up base in DDN, but an independent house in a tier II city makes sense from a long-term perspective. Metros are too expensive. Already have property in Delhi. When I visited Pune twice before, I rather liked this NIBM annexe area. Have a long-time acquaintance staying in Wanorie, and he has been doing some checking around for me.

    From what he reports, there is a definite change in attitude of sellers. Earlier it was like ' take it or leave it'. Now they are willing to negotiate -- and substantially. Brokers, who were smug & arrogant before, are now eager to please, they keep sending mails & calling up.

    Just a few examples

    1] Independent kothi in Everjoy Soc, NIBM annexe, land 4300 / bu 2200. Quoted 2.25 cr ; agent contacted thrice in a week, sent photos by email, and is now down to 1.40 cr after I pointed out that it requires lot of renovation work.

    2] Townhouse in Cloud 9 Soc. bu 2300, land 3000, fully furnished quoting 1.50 cr; down to 1.30 cr after feigning genuine interest in my part.

    3] 5 bed/ 5 bath, garage, servant quarters etc semi-furnished independent kothi on Sahastradhara Road quoting 80 L, willing to negotiate substantially for DP -- My guess is he will happily accept 55 L

    Just some indicative examples. I'm convinced that if a buyer actually sits down at the negotiating table with all downpayment and no loan, he can get groovy bargains.

    This was definitely not the situation during the heady days of 2006 - 2010. Being in the finance sector, I can recognize the first signs of a bear market when I see them. Experience tells me that this bear may have some distance to go -- or it may be a grinding / churning market for years. Cant say right now. We will have to track it and share our experiences here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction. here to get a sense of direction.

    If this is just a bear phase, corrections should be bought for long-term gains. If this is a vicious bear market, aligning with the dismal outlook for the world economy for the next decade, then one house for self-use is enough.

    Since most of us are looking for an advantageous entry-point, maybe we should keep track of the market by checking out ads and contacting sellers every now and then ? It will help get a sense of direction.
    CommentQuote
  • Will look forward to your experience in DDN - I am quite interested in the region.

    Pune not so much - I prefer Bangalore as better VFM. I will probably make a property investment early next year either in DDN/Haridwar DDN road or in Bangalore.
    CommentQuote
  • How did you conclude that Economic growth is stalled due to lack of economic reforms? It is the rumors spread by vested interest who trying to divert the attention from real problem OR have vested interest in economic reforms like Multi brand retail, free up Insurance sector etc…
    Builders wanted to divert the attention from real issue so they started blaming govt. for economic reforms.
    Without economic reforms(new impetus ), shouldn’t it perform to previous sustainable level ? Or is it a hangover of previous false growth?
    Check the credit situation in Small scale industries & businesses, the credit terms has swelled to 4-6 months in all sectors.
    Externalities effect is there but I don’t think it’s causing so big drag.
    After reading the news & analysis about the US & European crisis, many started thinking that only US & Europe have crisis not India. The fact is that for India no reliable data, news or analysis is available, so even though it’s a crisis many will not have clue. The greatest thing about US is transparency & reliable data which is why in crisis time everyone shelter there.
    RE brokerage for Banks doesn’t fit into banking business model else one can keep adding any brokerage business under the hood of great profit.


    Originally Posted by herohiralal
    Brokerage is possibly the best business in the world as the return on equity is probably the highest. So nothing wrong with banks doing broking (they do that for stocks and other assets) so doing it for RE seems logical.


    Economic growth is not stalled due to weak banks and NPA. Its stalled due to lack of economic reforms and due to the Euro crisis. NPA though increasing are not due to RE. They are due to steel, airlines etc. even the most indebted RE companies (DLF, Unitech) are able to service their loans unlike the airlines which are running huge losses

    These companies have an equity stake in these project so doing marketing to the vast customer base. Nothing different to Airtel or Vodafone sending u ads. Private sector banks have very good balance sheet. Public sector banks are the ones who have lent to airline, steel and textile companies and suffering.
    CommentQuote
  • I have experienced the attitude of brokers/sellers changing a bit.
    It has generally been take it or leave it. This even with the talk of no loan etc.

    Since last week, brokers have started following up which never happened for a long time.

    I think the second weak link in the whole R.E game/tamasha/gamble ..... is the retail sellers.
    Not the investor class but genuine sellers who have a need to sell. The first weak link being buyers.

    Genuine sellers get stuck between the hyped prices of a locality dictated by the builders and the real prices at which there are genuine buyers. Builders have more staying power, retail sellers don't.

    Genuine sellers get stuck between the hyped prices of a locality dictated by the builders and the real prices at which there are genuine buyers. Builders have more staying power, retail sellers don't.
    CommentQuote
  • Originally Posted by SanjanaSingh


    1] Independent kothi in Everjoy Soc, NIBM annexe, land 4300 / bu 2200. Quoted 2.25 cr ; agent contacted thrice in a week, sent photos by email, and is now down to 1.40 cr after I pointed out that it requires lot of renovation work.

    Just some indicative examples. I'm convinced that if a buyer actually sits down at the negotiating table with all downpayment and no loan, he can get groovy bargains.



    If you make email enquiries, they think you are a 'Bakra' and quote a highest possible they cab imagine.

    In wakad a 2200 sq feet rowhouse I saw is for sale since last 6 months. quoted at 87 lakhs. I did not go to have a discussion.

    Another rowhouse 2300 sq feet available at Omega paradise at 90 L
    One twin bunglow type some 2400 sq feet in Pimple saudagar available at 1.05 Cr and broker calling me for more.

    If you make email enquiries, they think you are a 'Bakra' and quote a highest possible they cab imagine.

    In wakad a 2200 sq feet rowhouse I saw is for sale since last 6 months. quoted at 87 lakhs. I did not go to have a discussion.

    Another rowhouse 2300 sq feet available at Omega paradise at 90 L
    One twin bunglow type some 2400 sq feet in Pimple saudagar available at 1.05 Cr and broker calling me for more.

    If you make email enquiries, they think you are a 'Bakra' and quote a highest possible they cab imagine.

    In wakad a 2200 sq feet rowhouse I saw is for sale since last 6 months. quoted at 87 lakhs. I did not go to have a discussion.

    Another rowhouse 2300 sq feet available at Omega paradise at 90 L
    One twin bunglow type some 2400 sq feet in Pimple saudagar available at 1.05 Cr and broker calling me for more.

    If you make email enquiries, they think you are a 'Bakra' and quote a highest possible they cab imagine.

    In wakad a 2200 sq feet rowhouse I saw is for sale since last 6 months. quoted at 87 lakhs. I did not go to have a discussion.

    Another rowhouse 2300 sq feet available at Omega paradise at 90 L
    One twin bunglow type some 2400 sq feet in Pimple saudagar available at 1.05 Cr and broker calling me for more.
    CommentQuote
  • I heard that some 3-4 members together made deal with Javdekar at Palas + for 3700.

    I think if Javdekar is reducing the rate to 3700 then there is no reason for other small buildings to charge more than 3400 in Wakad.
    CommentQuote
  • Originally Posted by khbarilal
    How did you conclude that Economic growth is stalled due to lack of economic reforms? It is the rumors spread by vested interest who trying to divert the attention from real problem OR have vested interest in economic reforms like Multi brand retail, free up Insurance sector etc…


    Reforms I am looking for are in priority order
    1) Disinvestment in already listed govt backed companies
    2) Free up petrol and diesel and LNG prices
    3) Labour reforms
    4) More banking licenses
    5) Stop food security bill
    6) List BSNL and LIC on stock exchange and divest 30% minimum
    7) Railway reforms
    8) Land reform


    RE brokerage for Banks doesn’t fit into banking business model else one can keep adding any brokerage business under the hood of great profit.


    Banks do a lot of businesses apart from pure lending. M&A, Stock brokerage, Mutual Fund, Insurance, Money transfer etc which are dont involve lending in the purest form.
    CommentQuote
  • Is it a reform OR fiscal stimulus? Stimulus only gives temporary growth.
    Developed nations already have these since last couple of years still it felled in recession. And you might have read that developed nations don’t have any growth prospect only emerging market have growth story.

    I guess it called investment banking not core banking & definitely it don’t include insurance.

    Originally Posted by herohiralal
    Reforms I am looking for are in priority order
    1) Disinvestment in already listed govt backed companies
    2) Free up petrol and diesel and LNG prices
    3) Labour reforms
    4) More banking licenses
    5) Stop food security bill
    6) List BSNL and LIC on stock exchange and divest 30% minimum
    7) Railway reforms
    8) Land reform



    Banks do a lot of businesses apart from pure lending. M&A, Stock brokerage, Mutual Fund, Insurance, Money transfer etc which are dont involve lending in the purest form.
    CommentQuote
  • Originally Posted by khbarilal
    Is it a reform OR fiscal stimulus? Stimulus only gives temporary growth.
    Developed nations already have these since last couple of years still it felled in recession. And you might have read that developed nations don’t have any growth prospect only emerging market have growth story.

    I guess it called investment banking not core banking & definitely it don’t include insurance.



    Labour reform, disinvestment, listing of govt owned companies, land reform etc are not one time stimulus.

    One time stimulus is generally a tax break or more spending to get over a temp lack of demand. India has structural problems which need to be solved.

    I think u will see that most successful banks have a large fee based business - MF, stock brokerage, M&A etc than interest based income - lending - so I would be quite happy as an investor to invest in a bank which increases its fee based income by entering into another brokerage business.

    Happy to let some govt owned bank do all the lending to airlines and textiles and sugar industries.
    CommentQuote
  • Originally Posted by herohiralal

    I think u will see that most successful banks have a large fee based business - MF, stock brokerage, M&A etc than interest based income - lending - so I would be quite happy as an investor to invest in a bank which increases its fee based income by entering into another brokerage business.

    Happy to let some govt owned bank do all the lending to airlines and textiles and sugar industries.



    Fee based income was an attraction 3 years back. Since the bubble burst in 2009, the fee based income is seeing major trend reversals.

    Eg: Brokers have seen the volumes dissappear, insurance companies which were ticking triple digit growth rates are seeing double digit decline in new business premium, Investment Banking...far too crowded..infact some promoters have realised how useless IBs are and have started doing deals inhouse rather then appoint a banker.

    The margins in para banking businesses have declined drastically, partly due to consequences of suffocating regulations, and do not even cover the distribution costs. Old private banks have opened branches by dozens every quarter during the hay days but for newer banks its very difficult to match the distribution networks. In such scenario only public sector banks can compete since they have old and wide network already in place

    It makes sense for banks (whether private or public) to strengthen their balance sheets by concentrating on core banking (ie: lending)
    CommentQuote
  • Originally Posted by Venkytalks
    Will look forward to your experience in DDN - I am quite interested in the region.

    Pune not so much - I prefer Bangalore as better VFM. I will probably make a property investment early next year either in DDN/Haridwar DDN road or in Bangalore.


    Venky,

    Some preliminary findings :

    1] Pune is overpriced, not many independent kothis available, architecture / quality of construction is lousy. The reason I was thinking of buying a kothi in Pune is that in the past year, I've made 50% returns on gold, and I can invest that corpus in RE, and lease it out to some Company. Corporate lease only, not individual.
    Considering the ROC on gold, I'm already buying RE at 50% discount !

    But Pune is overpriced and the calculation is not working out. I think I'll chuck that option altogether.

    2] DDN is a better edu hub than Pune . RE rates have gone up in the last 6 - 8 yrs, but still very affordable. Beautifully designed and well-built houses.You can rent to Bank / company officers or students.

    Example : If I buy a 2 bed / 2 bath kothi in Banjarawala for approx 18 - 20 L , furnish it with basic items, rent it to students, it will fetch 4000 per room ie 12000. Not a bad return.

    DDN RE has better upside than Chandigarh, Simla, Rudraprayag etc. In large cities and metros, ofcourse, the rental yield is miniscule compared to capital invested -- and hardly any upside potential.

    3] In DDN, its better to go for mid-sized houses of 3 bed / 3 bath sizes, rather than huge ones. Selling smaller units is easier. If one has the money and inclination, one can buy a large house for own use.

    4] Many good resale options on Haridwar Rd Check out the areas surrounding Defence Colony. Also Mussourie Bypass , Sahastradhara Rd, Nehru Colony, E C Rd. But avoid GMS Rd, ISBT or centre of town such as Rajpur Rd, Dharampur, Station Rd, Saharanpur Chowk etc. Quite expensive and very crowded.

    I'm going to pare down my PM holdings to approx 20 - 25% of portfolio and invest the proceeds in RE over the next 7 - 8 months. From my POV, RE has already corrected 50% ;), Sahastradhara Rd, Nehru Colony, E C Rd. But avoid GMS Rd, ISBT or centre of town such as Rajpur Rd, Dharampur, Station Rd, Saharanpur Chowk etc. Quite expensive and very crowded.

    I'm going to pare down my PM holdings to approx 20 - 25% of portfolio and invest the proceeds in RE over the next 7 - 8 months. From my POV, RE has already corrected 50% ;), Sahastradhara Rd, Nehru Colony, E C Rd. But avoid GMS Rd, ISBT or centre of town such as Rajpur Rd, Dharampur, Station Rd, Saharanpur Chowk etc. Quite expensive and very crowded.

    I'm going to pare down my PM holdings to approx 20 - 25% of portfolio and invest the proceeds in RE over the next 7 - 8 months. From my POV, RE has already corrected 50% ;), Sahastradhara Rd, Nehru Colony, E C Rd. But avoid GMS Rd, ISBT or centre of town such as Rajpur Rd, Dharampur, Station Rd, Saharanpur Chowk etc. Quite expensive and very crowded.

    I'm going to pare down my PM holdings to approx 20 - 25% of portfolio and invest the proceeds in RE over the next 7 - 8 months. From my POV, RE has already corrected 50% ;), Sahastradhara Rd, Nehru Colony, E C Rd. But avoid GMS Rd, ISBT or centre of town such as Rajpur Rd, Dharampur, Station Rd, Saharanpur Chowk etc. Quite expensive and very crowded.

    I'm going to pare down my PM holdings to approx 20 - 25% of portfolio and invest the proceeds in RE over the next 7 - 8 months. From my POV, RE has already corrected 50% ;)
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