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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

    Why pinch? Pinch is still a big thing compared to the micro-point of a pin to burst the bubble.

    Originally posted by khbarilal View Post
    Agreed, the drop is peanuts. To bust the bubble a small pinch is enough whereas blowing takes huge resources.

    Comment


    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Not again .. abt weak INR and real estate

      Originally posted by puser View Post
      dear khabrilal, please explain how rising dollar makes real estate sector feel the heat? according to alternate theory provided by some on this forum, rising dollar makes it inexpensive for NRIs to buy property in india and so it actually attracts real estate investment.
      That quote was from ET attributed to someone else not!!

      ANyways, once again ...

      RE is not a liquid investment. To benefit from currency fluctuations you need liquid investments that can be bought / sold freely and ideally with derivatives products.

      Asking NRIs to invest today means

      1. Assuming rupee will appreciate going forward
      2. Assuming they can 'quickly' lock-in today's rate for the RE transaction that will take a few months to complete! (or that INR rate does not move for that long)
      3. Assuming Indian Real estate will appreciate so much that no matter what happens to the currency, you will get good returns


      None of the above seem to be related to any sound logic or fact. Please think - don't blindly follow what some vested interests will tell you.

      RE may or may not collapse. INR may or may not appreciate. In such situation RE or any long term investment is not wise.


      AJ

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        I am not sure why NRIs would come here to invest in RE . Only those who are working and fear losing their jobs or those returning to India for good, are the ones going to buy just in case....but that too, they must have worked there for 3 years atleast, to have some accumulated savings. If they have worked for 3 years, then wouldn' they prefer to apply for GC and stay there. We cannot compare the infra in US with what we have. Other than social-interaction, they don't lack anything.

        If I was in US, I would buy something there and lead a happy life without worrying too much about Indian RE and Rupee depreciation.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Rupee weakening against the dollar is going to help bursting the bubble. This is because all top builders in India have taken FDI in the form of bonds and debentures.

          Now if I have taken a loan of USD 100 when exchange rate was 45, redeemable after 1 year at USD 110, with a 10% interest. Now I believe that redemption will cost me only Rs. 4950, and I have the cash flow to deal with that.

          When rupee weakens to 56, I now have to get Rs 6160 from somewhere to pay back USD 110, while my cash flow is only 4950. The only way to raise the extra money is through distress sales to other investors. But other investors are facing their own redemption problems and no one has cash to invest.

          Slowly the only option is to let prices fall thru the backdoor, allowing agents to sell investor's flats in the retail market, at deep discounts. But the retail market does not keep deals confidential, and once the downward spiral starts, it spills out in the public

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by abeerbagul View Post
            Rupee weakening against the dollar is going to help bursting the bubble. This is because all top builders in India have taken FDI in the form of bonds and debentures.

            Now if I have taken a loan of USD 100 when exchange rate was 45, redeemable after 1 year at USD 110, with a 10% interest. Now I believe that redemption will cost me only Rs. 4950, and I have the cash flow to deal with that.

            When rupee weakens to 56, I now have to get Rs 6160 from somewhere to pay back USD 110, while my cash flow is only 4950. The only way to raise the extra money is through distress sales to other investors. But other investors are facing their own redemption problems and no one has cash to invest.

            Slowly the only option is to let prices fall thru the backdoor, allowing agents to sell investor's flats in the retail market, at deep discounts. But the retail market does not keep deals confidential, and once the downward spiral starts, it spills out in the public
            too good to be true. however don't think this will be the case. there is no sign of any correction so far even though rupee has plummeted.

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by puser View Post
              dear khabrilal, please explain how rising dollar makes real estate sector feel the heat? according to alternate theory provided by some on this forum, rising dollar makes it inexpensive for NRIs to buy property in india and so it actually attracts real estate investment.
              Sorry, I didn’t understand the alternate theories about weak currency & asset appreciation.
              I totally agree with you. Why the Assocham the CREDAI advisor is spreading such false news.

              If you are referring below theory, then it’s not a theory it’s an advertisement by CREDAI. Only Lallu can explain this funda.
              http://timesofindia.indiatimes.com/c...w/13611665.cms
              Last edited by khbarilal; May 29 2012, 01:27 AM.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Pulse of Indian Economy

                The slowdown comes after nearly 20 years of almost unbroken rapid growth, and fears are growing of an end to, or at least a pause in, the long-running boom.

                "We've been OK until now, but from now on all the economics will start impacting. People are feeling the crunch. The brakes are coming on," Chopra said.

                India's 20-year economic boom gives way to doubt in Delhi's malls | World news | guardian.co.uk

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  India's business cycle loses momentum

                  The re-emergence of the euro area crisis and recent weakness in Chinese data suggest downside risks to the global economy. Given India’s twin deficits and fragile recovery, weaker external demand can trigger non-linear effects, such as capital flight, exacerbating the slowdown. We see downside risks to our GDP growth forecast of 7.4% year on year in FY13 (year ending March 2013).

                  Sector-wise details are not available, but we judge that the services and real estate sectors have probably seen the maximum outflow. In our view, both push and pull factors are responsible. Global deleveraging may have forced companies to sell their Indian assets and repatriate funds to their home country.

                  Moneyguruindia - India's business cycle loses momentum in March-April

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Too much of real estate can be drag on your portfolio

                    First and foremost, real estate — be it residential or commercial — is not a liquid asset. It’s not even semi-liquid. Realty, in fact, is considered very low from the liquidity point of view,” says a Mumbai-based financial adviser.
                    Investing hefty sums of money just for tax breaks is not always a very good idea. You can possibly make more money by paying the tax on what you have and investing it in a better class of assets,” says another asset manager.

                    Remember all assets have varying cycles. Five years back, it would probably have been a good idea to have an extra house. Today, it doesn’t really make much of a sense as realty across India is witnessing an oversupply situation.

                    Moneyguruindia - Too much of real estate can be drag on your portfolio

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by puser View Post
                      dear khabrilal, please explain how rising dollar makes real estate sector feel the heat? according to alternate theory provided by some on this forum, rising dollar makes it inexpensive for NRIs to buy property in india and so it actually attracts real estate investment.
                      Do NRIs now have money to Invest in RE ? Man, see what's happening in EU, US. They are more worried about local economy, let alone they coming here & investing heavily in already hyped RE market. The foreign equities are pulling money out from RE, then why will NRI come in that too when their own home is not secure ?

                      Lets not forget that the builders are now having several exhibis in US, Aus etc.
                      If you are happy, you are successful.

                      Comment

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