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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 vlokras1 View Post
    I guess you cant compare US subprime crisis with Indian RE market..I agree that we have lots of unsold inventories, but unlike US market India has a big end user market..Currently Investor market is down coz of marginal returns (high rates)..
    The Big enduser market is actually the Big Bank Loan book. What is your estimate about the percentage of equity (in aggregate) buyer have in the RE market (lets take last 10 years as timeframe as this was the boom time.

    Also, if rent yield is 4% at today's price levels nywhere, I'd guess that either price has not risen in those areas last few years OR rents are too high!

    In that case, I'd also guess that, continuing economic crisis will bring down not only home prices but also rent so that home prices may come down to proper levels which sustains rents as well as prices.

    And do not think that this coming bear market in home prices will be a short one - even today bulls think that there will be a short dip and then up and away for another wild ride for speculators.

    This time around, neither banks nor PE funds will be savior of builders. Also speculator sales will put additional pressure on builder rigged prices.

    I expect a multi-year decline (gradual perhaps) till all the speculative enthusiasm is taken out of investors. Btw, this has not yet happened in the US (again because of stimulus and Govt deficit funding Fannie, etc) and speculators once again made a beeline in recent months.

    Now that mortgage rates are starting to reach uncomfortable levels, there is talk about one more leg down in the US RE markets as recent speculators will once again get taken to the cleaners.

    I was talking to a friend who bought in the Mumbai market (Bandra) in early 00s and is nearly closing the loan (lucky). Recently her bank called up and told her that the 14% her loan was based on was being revised to 19%. As stimulus unwinds and money flows out of this country (notwithstanding the $30 Billion rumored to come in as hot-money into this country because of the movie-star looks and long-distance running of our new RBI Gov'nor, as well as his loose-money, quasi-stimulus announcements as soon as he came in) money will become very tight and interest rates will go up. This will put much more pressure on RE loans on top of sentiment pressure like price not rising and precarious job/income situation.

    I suspect such a thing as is happening in the US (in more moderate form) will also happen here. We are far from finished on the downside. We are only starting.

    cheers
    Last edited by wiseman; September 9 2013, 02:22 PM.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Sword of Damocles.

      All are busy discussing so many things - what about those losing jobs ?

      In bad times, keep your flock together | Business Line

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        A lot of similarities exist...and i am of the opinion that certain sectors of Indian RE can face a similar crisis.

        However, i think there is a slight difference – For the newly built flats (maybe last 10 years) the above stands true; but for the major portion of Indian RE which consists of houses built before 2000s, a large portion is of black money paid during purchase, because of which the official property prices quote substantially low than the market price, because of which the bank loan sanctioned is much lower than usual 75-85% for newly built houses

        Thus, according to me, even if such a property is mortgaged and market prices fall by good 30-40%, you wont see foreclousres in such a market....you may definitely see foreclosures in new residential hubs (Gurgaon et al)

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by rambler View Post
          All are busy discussing so many things - what about those losing jobs ?

          In bad times, keep your flock together | Business Line
          That's exactly why I think this thread is an irony..Ppl are sure discussing the effects of the current downturn, but are more interested in what effect will it have on RE and how there will be a crash and whether they should wait for their purchase of a new house

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Candies but no sticky fingers,please.

            So we want freedom to invest.YES, but think.

            Why Rajan should give us the freedom to invest | Business Line

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Originally posted by vlokras1 View Post
              That's exactly why I think this thread is an irony..Ppl are sure discussing the effects of the current downturn, but are more interested in what effect will it have on RE and how there will be a crash and whether they should wait for their purchase of a new house
              thats related... for most of the guys RE is the life times money.. so it is closely linked to jobs... in fact, the most mature advice i have seen on this forum for end users is to "Buy without over leverage"

              Leverage indicates use of future money and that implies guarantee of a job for salaries individuals... all the industry discussions also first talk about job downturn and then its impact on RE...

              So if you save wisely now and if you have a job inspite of recession, you can strike a good deal when RE prices come down... if one doesnt have a job, i dont think one would even be thinking about RE purchase...

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                India

                Yashwant Sinha is right when he tells the UPA.. Just go.. I don't understand their stubbornness to hang on when things are getting worse and now that they have passed Sonia's pet bills they can just go.. Anyways the effect of all this will not be there even till next May..

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Iceberg tip ?

                  Prices of homes in upscale South Delhi have dropped by 20 per cent-35 per cent over the last one year, with developers and cash-strapped investors offering big discounts to dispose off their assets in a slowing economy.

                  Inventory levels, too, have risen sharply. According to property consultants, residential areas such as Vasant Vihar, Defence Colony, Greater Kailash, New Friends Colony, Panchsheel Park and Gulmohar Park have about 3,000 unsold apartments, and investors are set to add another 1,000 soon.

                  South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit by slowdown - The Economic Times

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit

                    Originally posted by compuwalah View Post
                    frugy dude. No we don't know what cooks behind closed walls. Why don't you post the recording of your hidden videos on youtube for everyones benefit , so we know what goes behind those doors . But good throw lien to start with . Already I have a impression "this guy knows something man .. I am scared ..."


                    You post this year after year and we have seen no sign of bubble . If it had been a bubble it would have burt in 2008 itself. In reality at best it may be slight overpricing due to market dynamics, but all in all the prices have sutained ... oops ... appreciated fast continuosly.


                    I sometime wonder if you are one of those "baahari takat" . Every year you post such news of country X takes over India. I am not sure of that but we need to find out what has overtaken you btw



                    I think you are conservative in your estimates. ajha etc are predicting 30 to 50% fall. Anyway 30% or 10% , when will we see that fall. Show us the fall yaar. Can you give some date ( Diwali as answer is not acceptable ) so that we can benefit from it.


                    Good diversion . By this time the reader has forgotten what you started discussing. Standard pattern. End the post with some big name thrown in and then some hilarious statements ... read further ... hope at least you know what you are posting. Did you buy those train stocks btw ? What has this to do with the prop bubble (ok its hallucination but for a moment lets assume there is a bubble) ?


                    munna bhai kee style mein ek sawaal poochta hoon (munnabhai to dean) "teri depressing post padhne kee wajah se bahut log 2008 mein ghar nahi khareed sake , ab rate double ho gayele hain , oos nuksaan ka jimmedar kaun "
                    South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit



                    South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit - The Economic Times

                    Catch the trailer .... wait for the movie .....

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by frugality View Post
                      South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit



                      South Delhi's property prices down by 20-35%, Defence Colony and Vasant Vihar worst hit - The Economic Times

                      Catch the trailer .... wait for the movie .....
                      I live in SOuth Delhi and I can vouch for this slowdown

                      Also - a Vasant Vihar or Defense colony 2000 sf floor is simple not worth 10 crores - no way.

                      Actually it is not even worth 6.5 crores either = million dollars.

                      It is in fact not attractive at all - no security, no parking, traffic congestion outside, no good market except malls a fair distance away, unfriendly neighbors, danger of burglary, harassment of women outside the home, car jacking, dengue and now scrub typhus - horrible. And this is the status of the best places of Delhi.

                      Trend itself is changing to self contained apartments in townships. These old fashined ways of living is no longer preferred - so everyone is planning to sell for 5 crores, move to Gurgaon for 2 crores and spend/invest/live on 3 crores.

                      Who will be the bakra to buy into a fading trend of colony living?

                      Anyone having a home worth a million dollars is better off selling and leaving the country actually.
                      Venky (Please read watch a or before posting)

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