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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 fatichar View Post
    The part in bold reflects a closed mind.
    Real estate bears are in minority among common public.
    People just don't accept that real estate prices can come down.

    I don't understand whose mind is closed.

    Just today I talked to some of my economics professors;even they are apprehensive about this bubble and fear that people will loose their entire life savings whenever it bursts.

    People are just not ready to understand what can be the devastating impact of a de-leveraging cycle.

    Europeans have gone from riches to rags in a span of just 4 years.

    High Inflation and stagnant salaries in the coming years is going to cause a lot of pain.

    We live in a globalized world and are tightly coupled.
    Indians just can't remain immune from what is happening in the world.
    Last edited by abc111; December 26 2012, 08:19 PM.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by simsagar View Post
      Good News - Good News !!!

      The Property Exhibition comes to Pune on Jan 4 thru Jan 6th, 2013 @Hotel VITS....so i think this is the opportunity to get that "reduction in proce" CREDAI has mandated...
      Full hawa hai...kuch kam nahi honewala.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by abc111 View Post
        Real estate bears are in minority among common public.
        People just don't accept that real estate prices can come down.

        I don't understand whose mind is closed.

        Just today I talked to some of my economics professors;even they are apprehensive about this bubble and fear that people will loose their entire life savings whenever it bursts.

        People are just not ready to understand what can be the devastating impact of a de-leveraging cycle.

        Europeans have gone from riches to rags in a span of just 4 years.

        High Inflation and stagnant salaries in the coming years is going to cause a lot of pain.

        We live in a globalized world and are tightly coupled.
        Indians just can't remain immune from what is happening in the world.
        I am more worried about rupee collapsing. 90 ruppes to dollar can mean havok

        Strangely re will protect you from this havoc though gold would be best
        Venky (Please read watch a or before posting)

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by abc111 View Post
          Real estate bears are in minority among common public.
          People just don't accept that real estate prices can come down.

          I don't understand whose mind is closed.

          Just today I talked to some of my economics professors;even they are apprehensive about this bubble and fear that people will loose their entire life savings whenever it bursts.

          People are just not ready to understand what can be the devastating impact of a de-leveraging cycle.

          Europeans have gone from riches to rags in a span of just 4 years.

          High Inflation and stagnant salaries in the coming years is going to cause a lot of pain.

          We live in a globalized world and are tightly coupled.
          Indians just can't remain immune from what is happening in the world.
          You and me are staring at a coin from opposite directions. Me saying that the coin has head is not a closed mind. You saying that the coin has tail is not a closed mind.
          Saying that "any sensible person will see only tail" is a closed mind.

          Can't clarify more.

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Market always takes the maximum number to the cleaners!

            Originally posted by abc111 View Post
            Real estate bears are in minority among common public.
            People just don't accept that real estate prices can come down.

            I don't understand whose mind is closed.

            Just today I talked to some of my economics professors;even they are apprehensive about this bubble and fear that people will loose their entire life savings whenever it bursts.

            People are just not ready to understand what can be the devastating impact of a de-leveraging cycle.

            Europeans have gone from riches to rags in a span of just 4 years.

            High Inflation and stagnant salaries in the coming years is going to cause a lot of pain.

            We live in a globalized world and are tightly coupled.
            Indians just can't remain immune from what is happening in the world.

            I had a friend who had his main business in Spain. Warned him seriously around as late as 12-18 months back to get out asap. He assured me that things were quite okay. Today, his business is closed.

            You are correct. Bear phases jump out of the window. They occur so quickly that the majority (by now highly complacent about prices going up forever - remember USA in 2005/06?) move too slowly and by the time they finally come around to thinking of selling, price is below their purchase price + interest and then fear and confusion grips them.

            Finally its when prices are near bottom that most people sell in distress and swear never to get in again.

            The 2 things to be apprehensive about today is Rupee going to 90 (to the dollar, with dollar also falling against real assets like PMs) and the fact most people think 18L salary is middle-class. Are we living in an alternate reality? How many families have 18L as income level compared to the total?

            And if at 18L one can only save 2.5L, we are close to the tipping pont. These levels of salaries cannot be sustained in a global economy, especially when many other populations are in desperate situations.

            Please note that in a recent advert for 300 attendant positions by Delta in the US, 10000 applications came in during the first week alone. Back in 2010, for 1000 positions, 100,000 applied.

            Not being able to sustain our competitiveness globally, salary cuts are definitely coming. And with inflation (hyper-inflation?) coming up rather quickly, its going to get rather difficult to make ends meet, leave alone cover giant and rapidly increasing debt servicing needs.

            Think a little longer term when it comes to such large debts and you will be surprised how little we have as debt cover.

            cheers

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by abhayd View Post
              Full hawa hai...kuch kam nahi honewala.
              Log to jaroor kum honge....guaranteed.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by wiseman View Post
                I had a friend who had his main business in Spain. Warned him seriously around as late as 12-18 months back to get out asap. He assured me that things were quite okay. Today, his business is closed.

                You are correct. Bear phases jump out of the window. They occur so quickly that the majority (by now highly complacent about prices going up forever - remember USA in 2005/06?) move too slowly and by the time they finally come around to thinking of selling, price is below their purchase price + interest and then fear and confusion grips them.

                Finally its when prices are near bottom that most people sell in distress and swear never to get in again.

                The 2 things to be apprehensive about today is Rupee going to 90 (to the dollar, with dollar also falling against real assets like PMs) and the fact most people think 18L salary is middle-class. Are we living in an alternate reality? How many families have 18L as income level compared to the total?

                And if at 18L one can only save 2.5L, we are close to the tipping pont. These levels of salaries cannot be sustained in a global economy, especially when many other populations are in desperate situations.

                Please note that in a recent advert for 300 attendant positions by Delta in the US, 10000 applications came in during the first week alone. Back in 2010, for 1000 positions, 100,000 applied.

                Not being able to sustain our competitiveness globally, salary cuts are definitely coming. And with inflation (hyper-inflation?) coming up rather quickly, its going to get rather difficult to make ends meet, leave alone cover giant and rapidly increasing debt servicing needs.

                Think a little longer term when it comes to such large debts and you will be surprised how little we have as debt cover.

                cheers
                A different opinion..
                Spain, USA, UK, etc are "developed" economies and India is a "developing" economy..the dynamics involved are completely different...I don't see a USA or Spain like situation in India for many years ahead..we're just not at that level of maturity as an economy..

                I have this friend (and his wife) who have been working in the US for more than 5 years now..they have decided to consciously stay on RENT there but are buying RE assets in India..even though the ROIs for mortgages in US are a meagre 2.75% (on an average)...the underlying fear being that a housing market purchase will forever deteriorate..again..don't see this situation happening in INDIA anytime soon..

                In my opinion, a comparison with an economy in a similar situation as INDIA is currently would be more fruitful..
                Last edited by AnkitS; December 27 2012, 12:09 AM.

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Ankit,
                  Your friends in US are intelignet !
                  Last edited by Superduper; December 27 2012, 12:52 AM.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Lot of indians in US live in cheap, unsafe places to save money and may be buy properties in india.
                    depending on what part of US you are in , you could pay as much in rent as you would in mortage, if renting in a nice area.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Right and wrong

                      Originally posted by AnkitS View Post
                      A different opinion..
                      Spain, USA, UK, etc are "developed" economies and India is a "developing" economy..the dynamics involved are completely different...I don't see a USA or Spain like situation in India for many years ahead..we're just not at that level of maturity as an economy..

                      I have this friend (and his wife) who have been working in the US for more than 5 years now..they have decided to consciously stay on RENT there but are buying RE assets in India..even though the ROIs for mortgages in US are a meagre 2.75% (on an average)...the underlying fear being that a housing market purchase will forever deteriorate..again..don't see this situation happening in INDIA anytime soon..

                      In my opinion, a comparison with an economy in a similar situation as INDIA is currently would be more fruitful..

                      I agree with you. The 2 economies are at different stages of "development". While India is still having its growth pains , the US is fast heading for the stone age!

                      You would have noticed that I was not comparing the two. I was pointing out to the fact that, India started by competing on wage arbitrage in the global market (not only IT but also in areas like Engineering Exports).

                      This wage arbitrage is being squeezed by 2 factors. Too many Indians (many of them not upto international quality) being paid too much for shoddy work. Increasing number of rather good quality people all over the world becoming cheaper (and sometimes better) than us and taking away work that used to come to us by default.

                      The danger is not only in deals falling through to competition from cheaper and equally good countries (we are losing voice BPO to the Philippines) but its what we don't see (deals where India is simply not considered) which used to come to us by default in the old days).

                      You might also note that while exports account for around 20% of out GDP roughly, they account for a lot more of our disposable surplus. Specifically, its the IT crowd (especially, as you note, the crowd onsite) that saves up like crazy and puts it into RE here.

                      Point I was trying to make is, it is dangerous to assume the 18, 24 and 30L jobs are going to continue for long in increasing numbers out here. These salary levels grew upon the outsourcing model India became famous for. While it grew, our capability to deliver at those elevated levels of salaries has not grown proportionately.

                      Our large factory with cheap labor approach is based on 20th Century, large, expensive project model which is rapidly changing with the introduction of new methodologies, tools and processes which is cutting down project durations as well as product lifespans. That old model is becoming history (you might have noticed even many of our IT CEOs also taking this language, Phaneesh, Vineet, etc) slowly but surely and so will the kind of salaries to managers of our factories / bodyshops we have built so successfully.

                      In the new model, we do not have the natural wage advantage we used to have and we have to unlearn the old stuff and re-learn the new, while the others don't have that baggage to deal with. Besides, we have to breakdown the old organizational structures and re-build new structures that is more suited for work with small, high-quality teams rapidly developing and delivering massively scalable products.

                      While large IT companies continue to flog the old model (keeping that structure intact for now) as a cash cow, they are also throwing large sums of money trying to learn the new model (sometimes buying out companies that seemed to have succeeded here). Right now this does not seem to be yielding much as we don't seem to have the mojo to re-invent Indian IT yet (throwing money is not enough).

                      In short ... rethink the belief that we will keep seeing 20, 30 and 60L jobs for the long term in absolute safety. The new model might also have such salary levels, but serious, long term weakness in global economies will lead to increasing levels of competition, putting a dent on cushy 30L jobs while increasing the stress levels to keep changing faster and faster (otherwise one becomes history very quickly and earning capacity drops precipitously).


                      On another note, our IT industry will boom once again when we have the same kind of risk taking ability by the Venture Financing crowd and the ascendance of hands-on builders of product companies (please note that most of the highly successful product companies in the US and elsewhere were started by people who built those products themselves ... Hewlett and Packard, Page and Brin, Bezos, Gates, Jobs and Wozniak, etc, etc. WE also need a risk-taking population to try out new products as quickly as people in the West buy new stuff.

                      Going to be an interesting journey in the coming years.

                      cheers
                      Last edited by wiseman; December 27 2012, 04:51 AM.

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