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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 dnkumar View Post
    Hello all,

    I have come across a builder who has finished the project after 9 months than originally planned and now have asked for an escalation charge of about 10% of the project cost! Is this a practice in India? I can see in his terms that if the cost of construction material rise during construction period, he is entitled to increase the price but the hike upto this extent is justified with the material cost increase in last 1 year and the fact that delay is from his side due to what ever reasoning he has?
    which builder is this? and this is not a practice in india unless builder is crook. does it mean builder will refund or reduce rate if cost of material comes down?

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Exactly - my other questions was - if I am staying on rent now, the delay in constructing would cause me additional cost which the builder should be penalised for.
      This is not in Pune but in Ahmedabad- so apologise if I have put it in wrong thread.IT seems this is common practice in Ahmedabad - builder straiht away says that as he has managed to increase the price of your property after you bought,he deserve that amount!!!

      As I mentioned, these is a clause in the construction agreement of the bunglow about increase in material cost with the cost of all material at the time of the agreement!
      Apparently most of the people in this scheme have paid this so called escalation charge and typical issue I see in India is - they do not get togather or check with any other member before paying such charges.That works good for builder who would quoet 1000rs escalation charges, give him a discount in that and not to tell any other member about that

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by dnkumar View Post
        Hello all,

        I have come across a builder who has finished the project after 9 months than originally planned and now have asked for an escalation charge of about 10% of the project cost! Is this a practice in India? I can see in his terms that if the cost of construction material rise during construction period, he is entitled to increase the price but the hike upto this extent is justified with the material cost increase in last 1 year and the fact that delay is from his side due to what ever reasoning he has?
        People are so naive . Did you read the terms now when he has started demanding more or you signed even after knowing those terms ? Why not sign that you'll finance the builder if he runs out of money later just because its in his terms and he can't get funds from the market cheaply ?

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Good question!!
          Of course people are naive when it comes to real estate in india and that's why they need some sort of awareness.
          This is something which is in his brochure and seems you are agreeing to all those terms in the brochure.

          Again, the main issue here is - we take it for granted that the market works like this - every one is paying this amount so there is no use of argueing.

          What i wanted to know if - whether this is faced by anyone in the forum and what can be the course of action in such case.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            EMI increase

            Home loan EMIs to rise by 6k cr - The Times of India

            Another blow to the over leveraged right when everything else is getting ever more expensive.

            "The impact of rising interest rates is best reflected on the EMI of a borrower with a 15-year home loan for Rs 15 lakh. With the current mortgage rates hovering around the 11%, the borrower's EMI would have risen by by 15% from Rs 14,771 to Rs 17,049. If rates were to go up to 13%, his EMI will rise to Rs 18,979. "

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              RBI has cautioned banks from taking higher exposure to real estate

              Getting home loan will get more difficult.

              SBI sees sharpest rise in realty loans

              Builders said prospective home buyers have postponed planned purchases. Poor demand and delays in securing approvals have resulted in a drastic drop in the number of new projects in recent months, they said.
              ...
              Traditionally, RBI has cautioned banks from taking higher exposure to real estate, citing the probability of defaults on account of volatility in prices.
              ...
              “You are very likely to see more defaults from home loan borrowers in such a market. Already, many of the borrowers have sought restructuring of their loans,” said Anand Gupta, honorary treasurer at Builders’ Association of India lobby group. “Many borrowers, who had drawn home loans at a rate of 8-8.5% a year back, have now seen their repayment rates going up to 12-14% on account of successive rate hikes by banks.”

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Property prices expected to fall by 25 per cent in next quarter

                "The realty market is over-heated at present. We expect prices to come down by at least 25 per cent by the next quarter," Sachin Sandhir, managing director of Royal Institution of Chartered Surveyors (RICS), South East Asia, said. "Home buyers are holding back their decision to buy property. The sales in Delhi and Mumbai have gone down drastically," he added.

                The report, which studies the debt burden of leading companies, including DLF, Unitech, HDIL, Oberoi Realty and Sobha Developers shows that these companies together piled up nearly Rs.14 crore of debt every day. If large unlisted real estate companies are also taken into account, the daily debt burden will shoot up further.

                I friend of mine is a small builder in Pune, he is few steps away from his bankruptcy, he had to sell his car and office to pay the debt
                Last edited by vivek.cap; November 19 2011, 06:05 PM.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Realtors squeeze as funds turn scarce

                  Originally posted by vivek.cap View Post
                  Property prices expected to fall by 25 per cent in next quarter

                  "The realty market is over-heated at present. We expect prices to come down by at least 25 per cent by the next quarter," Sachin Sandhir, managing director of Royal Institution of Chartered Surveyors (RICS), South East Asia, said. "Home buyers are holding back their decision to buy property. The sales in Delhi and Mumbai have gone down drastically," he added.

                  The report, which studies the debt burden of leading companies, including DLF, Unitech, HDIL, Oberoi Realty and Sobha Developers shows that these companies together piled up nearly Rs.14 crore of debt every day. If large unlisted real estate companies are also taken into account, the daily debt burden will shoot up further.

                  I friend of mine is a small builder in Pune, he is few steps away from his bankruptcy, he had to sell his car and office to pay the debt
                  Over-leverage & greed is what has harmed RE sector. Frankly, there is a huge demand for housing, if priced correctly. Unfortunately, most of the builders' vision is myopic. Good price, high volumes is the way to go forward, if not, one will find today's builders being wiped out from RE scene just as it did in 1990s.

                  Here is similar story:-

                  Rising cost of construction, depleting sales volumes and increasing interest burden on debt are hitting the margins of developers as they struggle with a fund crisis.

                  According to the Reserve Bank of India (RBI), Indian developers held a total of $ 24.4 billion (about Rs.1.22 lakh crore) of outstanding credit at the end of June, up 23 per cent from last year. With the continuous rise in interest rates, developers are struggling with repayment burden month after month.

                  Realtors squeeze as funds turn scarce : India News - India Today
                  If you are happy, you are successful.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Useful links

                    Here is another link

                    Soaring realty ambitions belie rocky foundations | Reuters

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Delhi: Man slaps Sharad Pawar at NDMC centre

                      Man, this bastard bobada Pawar has been slapped in full public view .
                      Hats off to this Sardar .

                      Read more & see video here:-

                      Delhi: Man slaps Sharad Pawar at NDMC centre - Politics - Politics News - ibnlive
                      If you are happy, you are successful.

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