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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

    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.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by khbarilal View Post
      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.

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        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 View Post
        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.

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by khbarilal View Post
          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.

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by herohiralal View Post
            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)
            Last edited by rembrants; July 10 2012, 11:37 AM.

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by Venkytalks View Post
              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 [ not many are aware of this fact ]. 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 [ 5 / 6 bhk ] for own use.

              4] Many good resale options on Haridwar Rd [ away from the main road is preferable, as this road has become very crowdy after being widened ] Check out the areas surrounding Defence Colony. Also Mussourie Bypass [ after Jogiwala ], 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%

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by khbarilal View Post
                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.
                + 1 [ as Realacres says ]

                Something fishy. Looks like the banks who are starting RE brokerages are also the ones that have max exposure to RE [ ICICI & HDFC ]

                Maybe they want to sell those properties that are at risk of becoming NPAs / or are already NPAs.

                If that is the case, maybe there is a larger shadow inventory of RE that we dont know about.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by msp1976 View Post
                  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.
                  No, I have a contact [ from the banking sector ], who did the checking around. He approached the brokers as a buyer looking for a house for self-use. He knows the city and I think his info is accurate.

                  But anyway, rental yield calculations are not working out, so its off. The takeaway point was that attitude of brokers / sellers has changed. If you go into the market with a 1 cr budget [ in cities like Pune ] or a 20 - 30 lakh budget [ in emerging cities like DDN ], brokers will follow you around like lost puppies Thats a major attitudinal change. Its the beginning sign of a bear market / bear phase in RE.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by SanjanaSingh View Post
                    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%
                    Sanjana...you are confusing me!! Based on your posts for last several months,its seems you are very bullish on PM. You kept saying that as the dooms day comes closer there will be a rush for Gold etc. You have also been very very bearish on RE.

                    Why would you then at this time like to exit PMs (you advise others on accumulating more) and put money into RE (which you believe is entering a bear phase)?

                    The rules of investing should be the same...whether it is fresh savings or ploughing back the profits. Why dont you buy more PMs and multiply the returns rather then let the RE (in bear phase) wipe out the profits you made in Gold?
                    Last edited by rembrants; July 10 2012, 12:21 PM.

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by SanjanaSingh View Post
                      Its the beginning sign of a bear market / bear phase in RE.

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