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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

    Strange

    Hello Guys,

    I wonder that i got call from Nanded City Pune saying that book now as they are going to increase the Rate from 1st July 2012 to 4100sq/ft. Strange!!!!!!!!!

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Venkey, wisey, Sanjana and Hero, here people are discussing BOOM or Burst theories and every one are writing their thoughts about the future scenario but i want to ask you all only one question and please answer me.
      1. As per Most of the Bears in case of economic doom government will print money to boost growth which may bring hyper inflation and people will loose faith in currency and suppose My Rs100 will become Rs10 by value then considering that is it not beneficial to Buy the Flat as due to de-growth even if flat prices will stagnate or fall as predicted by all, still I have to pay back to bank only 1/10th of my debt due to hyperinflation (means even if the value of flat reduces by 50% still i will be in profit of 500% as money which i have to pay to bank has devalued by 1000%) . Is it not better to buy Real estate in loan, invest 50% of your money in Gold to Repay for Loans and other uses by selling them, 20% in FD's and 30% cash for other asset buying opportunities.
      Last edited by naganyal; June 30 2012, 02:59 AM.

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        The recent move seems to make more sense where the PIIGS banks are directly bailed out. Your thoughts?

        Originally posted by herohiralal View Post
        This is where the Germans policy doesnt make sense. They are already funding billions and billions of euros towards bailing out other european countries and still they thing there is no join liability. The day they adopted the euro was the day the euro zone accepted joint liability.

        ECB has bought 200+ billion euro in govt (spain, italy, greece etc) debt
        The money leaving Spanish, Italian and Greek banks is going into French and German banks which are lending it back to the ECB and the ECB is giving it lending it back to "solvent" Spanish, Greek and Italian banks.

        The german banks and govt is on hook for atleast 1 trillion euros and still merkel is saying germany wont adopt joint liability without more control. She spent 1 trillion with no controls attached but now she says it has to stop you cant just take the drug addict off drugs in one single day.

        Options to save the euro in the medium term
        1. ECB print money
        2. Europe wide gaurantee on bank deposits
        3. Selling of govt stakes in major european companies
        4. Lets banks which made bad bets fail and bond holders who invested into those bank debt take a hit. Dont take the liability of the bank bonds on govt books
        5. Get Italy and Spain to give up budget control to EU / EC till budget is balanced
        6. Get same retirement age in all of euro zone (france just reduced it retirement age as they had a new leftist govt)
        7. Open the services sector in Euro to competion

        Can this be done? No. So the bond markets will force change their way. Default of Spain. Greece exit. Germany then agrees to print money.
        Last edited by WillyWick; June 30 2012, 10:43 AM.

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by naganyal View Post
          Venkey, wisey, Sanjana and Hero, here people are discussing BOOM or Burst theories and every one are writing their thoughts about the future scenario but i want to ask you all only one question and please answer me.
          1. As per Most of the Bears in case of economic doom government will print money to boost growth which may bring hyper inflation and people will loose faith in currency and suppose My Rs100 will become Rs10 by value then considering that is it not beneficial to Buy the Flat as due to de-growth even if flat prices will stagnate or fall as predicted by all, still I have to pay back to bank only 1/10th of my debt due to hyperinflation (means even if the value of flat reduces by 50% still i will be in profit of 500% as money which i have to pay to bank has devalued by 1000%) . Is it not better to buy Real estate in loan, invest 50% of your money in Gold to Repay for Loans and other uses by selling them, 20% in FD's and 30% cash for other asset buying opportunities.
          You are right inflation above loan rate is favourable for the debtor. Keeping cash under ur bed hasn't been the best investment option in the last few decades.

          In a high inflation or hyper inflation if ur income grows above the inflation rate then yes u are paying back a home loan whose value is greatly reduced in relation to ur new income.

          In a country like India where property laws are poors and the general tendency has been to tax RE gains heavily u need to be sure that in a high inflation scenario the govt wont tax property at a very high rate and limit rents.

          The best possible investment of money is either ur education or of that ir family - kids / wife / husband. It took just one/two 23 olds to write code for a website we all use and is worth 60 odd billion $

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by WillyWick View Post
            The recent move seems to make more sense where the PIIGS banks are directly bailed out. Your thoughts?
            Test is next week on whether ECB will buy Italian and Spanish bonds in the secondary market. Bailing out banks directly will mean they will also be forced to merge as the ECB will supervise all European banks something the US FDIC and fed does all the time.

            Still the key point is printing money cause just giving bullets without guns ito fire them is of no use.

            So all fine with RBS or do I need to go to tesco and store up on 6 months ration?

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by WillyWick View Post
              The recent move seems to make more sense where the PIIGS banks are directly bailed out. Your thoughts?

              So the last summit has made 1 things possible

              1. Loans to Spanish and Italian banks using the bailout funds - ESFS and ESM - without putting the debt on the sovereign' balance sheet i.e. sharing of debt. So a question. Who will own the bank? Or is this a pure loan or an equity injection? Weird way to prop up a bank by giving a loan.

              2. ESFS and ESM which was supposed to buy govt debt wont have senior status.

              On both counts germany is going deeper and deeper into the euro mess. Markets are taking this as a indication that germany is slowing moving towards printing money and euro bonds. Recent statements from German PM and FM are not encouraging but then they didnt want to do even the above 2 points a few months back. Euro is one big mess.

              Focus on the next big thing to go belly up - China. 2 trillion wont be able to save communism just as germany is struggling to stop countries from leaving the euro.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Interest rates could get linked to price index

                Originally posted by herohiralal View Post
                You are right inflation above loan rate is favourable for the debtor. Keeping cash under ur bed hasn't been the best investment option in the last few decades.

                In a high inflation or hyper inflation if ur income grows above the inflation rate then yes u are paying back a home loan whose value is greatly reduced in relation to ur new income.

                In a country like India where property laws are poors and the general tendency has been to tax RE gains heavily u need to be sure that in a high inflation scenario the govt wont tax property at a very high rate and limit rents.

                The best possible investment of money is either ur education or of that ir family - kids / wife / husband. It took just one/two 23 olds to write code for a website we all use and is worth 60 odd billion $

                If interest rates of banks get linked to price index, as the index rapidly rises, your interest rates will almost always LEAD your income growth and so this will impact your home loan negatively.

                Meaning, it may not be so easy to pay down your loan as the rising interest will mostly outpace your ability to pay the interest itself.

                Moreover, other than Farmland, which will shoot up in value as it produces increasingly precious food, other properties rapidly decline in value as the economy will be in severe crisis with crashing output, rapidly rising unemployment and very little appetite for RE purchase. In fact, to get daily bread, people will dump almost ALL categories of assets (except perhaps Gold - which they will HOARD - and Bluechip Stocks) and I have read of instances where people in such situations have acquired property for a song.

                Btw, Hero, I'm right now hopefully writing such code as you are talking about, to see if my (continuing) education is capable of making me this elusive money everyone seems to be talking about!

                cheers
                Last edited by wiseman; June 30 2012, 08:20 PM.

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  The latest RBI report has shown that the NPAs have risen by whopping almost 45% . This shows that repayment capacity of borrowers has gone down, mostly due to over-leverage. And guess which sector is having one of highest NPAs ?? Real Estate, as usual.

                  Apart from this, SBI has increased fixed deposit rates by 0.25% & this is clear indication that even banks like SBI are facing liquidity issues even if they are not accepting this on face.
                  If you are happy, you are successful.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by herohiralal View Post
                    So all fine with RBS or do I need to go to tesco and store up on 6 months ration?
                    No, all is not fine with RBS. The ' IT glitch ' is not solved. They are graciously handing out a few hundred pounds on ID proofs.

                    Ulsterbank has now confirmed that normal operations will not resume on Monday as promised. There is no indication of when this will be resolved. I believe they have given up now trying to spin this as a 'glitch'.

                    Ulsterbank has 1.9 million customers. After the poor communication and lack of resolution I think this bank is finished. there will be droves leaving as soon as access to cash is restored. 6000 employees likely to lose their jobs over this fiasco and 146 more empty high street shop fronts to remind us of our economic woes. Fines and compensation likely to be awarded too.

                    When I suggested stocking up on necessities, everyone here assumed it was a ' whacko ' kinda preparation for the end of the world. Ridiculous. Dosent it occur to anyone that stocking necessities is also a hedge against inflation ? Compare prices from just 6 months back. Now that a bad monsoon is guaranteed in India, food & other household necessities will become even more expensive.

                    If stocking up is ' whacko ', why do people put money in FDs, PPF, mutual funds etc ? Might as well spend it all. You're trying to plan for the next several years, right ? That's even more whacko.

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      SOLD OUT is now LAST FEW

                      Indradhanu, a residential project in Kothrud is giving Special Offer for first 20 buyers. This project was almost sold out when it was launched some 4 yrs ago.
                      When evrything is SOLD OUT, why these offers. And now, they have removed 20 & replaced it by LAST FEW .

                      Anyways, this is a very cramped project with small rooms & high loading. Remember this well as I got some details then when I had gone to buy Ghulam Ali Show tickets which had the name of this project on it.
                      If you are happy, you are successful.

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