Dear Forum Members, following post is only my opinion!! Feel free to comment.

Well, every knowledgeable person in this forum is trying his / her best to explain the current situation in Pune real estate market. They are trying to explain the past and predict the future. Few of them have their thought based on immense knowledge due to the experience in real estate market, whereas others who has expertise in finance and market conditions of India. Few are victims of the boom, whereas few are just shrewd guys explaining and predicting things based on analytical skills they have ……

Don’t forget there are some marketing guys among us too.

But there are large numbers of people who are planning to buy their first home soon…. May be This Diwali… This post is for these people. Please read through this and if you feel that it makes sense then WAIT till next year. Here is what I have learned in last few years -


    In last two year infrastructure is not significantly improved around suburbs of Pune, but the rates have. Water problem, Transportation, DP roads, MSEB Meters issues everything has remained as it is since last two years. The only thing improved in Existing Main Roads and May be at some locations - BRT. Both have their own reasons why they are being implemented so rapidly.
    In last 1 year (after the slowdown hit), the whole focus of the builder community was to sell what is available in their inventory. The 50% builders were able to sell their 75-80% inventory (Good Projects Only) (Don’t get surprised - there was large number of people who do not read this forum or don’t know it exists, but who needed homes urgently and took advantages of stable or reduced prices). These builders have at least recovered their cost if not found profits.
    Bigger projects, such as townships and high end projects were flops. It seems that exception is Nanded City. But not sure about it. Whatever they had launched, most of it, they were able to sell with 2500 rate. But there are buildings they have not yet launched in Phase 1 (I think 2BHK ones) and then Phase 2 is still there. Secondly, most of these projects haven’t even taken off which means minimum loss to builders (may be only cost of land if purchased, cost of plan sanctioning, foundation if planted and Marketing).
    Various surveys have been made prior to slowdown (and after the slowdown and in recent months) regarding requirement of homes in Pune or all over India. These surveys are showing the numbers that have made builders more excited during the boom time and now more hopeful in not so recent slowdown. Most of us don’t know these surveys and its data. But what I can tell you that, builders know more than most of us in this forum about it and future prospects of real estate. If Indian Market is going to improve in future they would be the first to know it. One of the surveys made public recently was the need to “Budget housing Projects”.
    Elections are going to add another dimension to Maharashtra real estate market. Change or not change in “Sarkar” will change the RE market drastically.
    IT industry which was the root cause of the real estate boom has itself suffered enormously due to American market turmoil. But real estate market of Pune had already moved away from IT. Indian businesses, industries and services improved in last couple of years in Retail, Auto, Oil, Steel, Pharma, Exports, Food, Medical etc. including government income improved which made real estate market to flourish without IT. Real estate has moved on. One example is where Ford, Toyota and GM suffered due to American slowdown; domestic auto market was relatively unharmed. Who is buying all these cars? People who can afford to buy cars can certainly afford to buy a home right?
    Basically Income has improved in Cities. not same thing for Rural. There are a large number of people traveling towards cities now. Ask, your daily Cab driver, where is he from and if he has a home yet in Pune or not…
    And finally, global market is in recovery mode.
    Unfortunately, most of the members in this forum are IT people or related. If you don’t believe me, let’s take a poll!!

    Let’s come back to Real Estate. Here are some categories of the Projects that I would like to make based on current situation of real estate market.





        Builders with good Projects – While we are talking about these projects in length in this forum for last one year, builders were able to sell around 80% of the inventory they had. Naturally, they have increased the rates as they now know that these projects are popular ones or they don’t have major inventory left.
        Builders with flop Projects – Well, they have not increased the rates of their project. Mithila, Bloomfield, Amonara, Swiss County to name a few. Most of them would be available for negotiations too. But as I said earlier, most of these projects haven’t even taken off which means minimum loss to builders.
        Builders who are yet to launch new projects – Type 1. There are few builders who do not have existing inventory or is already recovered cost and but have some new projects they want to launch.
        Builders who are yet to launch new projects – Type 2. There are few builders who are stills struggling with their existing inventory and but to add to their misery they still have some new projects they want to launch. They are in immense pressure to sell their existing inventory. You will start seeing ads in paper from these builders. Mostly these ads will be for the projects which are know since last one or two years.
        Builders who are in loss - Well, I don’t know yet how to identify these builders but as far as I can tell, only small scale builders would be in this category for now. They will have less than 3 projects at their hand at this time.

        Now, let’s talk about price hike – I think its driven by an organization or an association

        a. Builders with good Projects – Of course they have done it. They were successful to sell most of their flats. Now they can increase their prices the way they want.
        b. Builders with flop Projects – No increase in price seen here.Most of them would be available for negotiations too.
        c. Builders who are yet to launch new projects – Type 1 – Of course, they are waiting for Diwali or even New Years Eve. They don’t really bother about current price hike and discounts. But, if price increases for existing projects, launching rate of new projects will go up too.
        d. Builders who are yet to launch new projects – Type 2 – They will be OK to increase the price now, and will provide huge discount in Diwali. People who don’t closely follow this will fall for it. And flats would be sold at the same rate that of 6 months back. Builders will come close to closing their inventory. Secondly, they would be launching new projects with attractive rates in Diwali, hoping that people will rush to buy. Increasing cash at their hand.
        e. Builders who are in loss – These guys are screwed anyways. Whether to increase the price or decrease it a lot. Builders association would be forcing these builders to keep quite too.

        Now, why not to buy a House in this Diwali?

        You will be buying a house from one of these explained categories. I can not predict that your decision will be right or wrong, but I can certainly say that you would end up paying the amount that you could have paid in last one year or in worst case you would end up paying much more.

        But if you wait till next year, you could end up making a resale purchase or a making better decision just by analyzing market situation at that time. If real estate is still booming, your jobs conditions might have already improved too (salaries, promotions etc.) and you would be able to afford the flats anyways.

        For Projects that will be launched between 2009 OCT to 2010 April, the launching rate will be around 2100 to 2550. This will look attractive to most of us, because of the recent hike in prices of existing projects. And we will end up paying hell lot more than these projects and their locations deserves. But again, you can buy flats in these new projects in 2010 as well. So why hurry in this Diwali?
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  • ]http://www.siliconindia.com/shownews/Interest_rates_may_increase_after_Diwali_SBI_Chief-nid-59258.html

    I am hoping this happens. We would still be able to buy a nice home in 2010.

    I am hoping this happens. We would still be able to buy a nice home in 2010.
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  • Originally Posted by Navina
    I am not sure about the inventory backlog as many projects in the areas I had enquired about are all sold out. I feel the rates are not going to come down, nor they are not going to increase much further either. Just like in Chennai, the Pune builders are also now following the matchbox flats concept to keep the overall price affordable, but the psf rates are not going to vary much. All the new project launches have flat sizes of ~750 to 850 sqft for a 2 bhk. Earlier in Pune it was very difficult to find small flats and all the flats for 2 bhk used to be atleast 1200.


    Navina,

    A very true point about matchbox flats concept. And large number of buyers for such flats are people who do not access internet regularly :)

    Huge Backlog is there though.. only for bad and average projects.
    Good Projects, they probably are sold out or have some 10-20% inventory left.
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  • Originally Posted by Space
    ]http://www.siliconindia.com/shownews/Interest_rates_may_increase_after_Diwali_SBI_Chief-nid-59258.html

    I am hoping this happens. We would still be able to buy a nice home in 2010.

    Oh !!! so you don't need loan to buy a house and have all cash.

    Oh !!! so you don't need loan to buy a house and have all cash.

    Oh !!! so you don't need loan to buy a house and have all cash.

    Oh !!! so you don't need loan to buy a house and have all cash.
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  • Originally Posted by rishitiwari
    I find it highly amusing to read every now and often the intent to bring down the rates by unifying and not buying a property. More so considering the fact that I have read this for pretty much the entire past 1 year. I would (want to) believe that folks, at the end of the day, will primarily buy a house when they deem it necessary. This is on the assumption that most of the people right now are buying for self use (don't we all point fingers at speculative buyers and claim not to be one ourselves?). So, under the above assumption, I would think people will go ahead and buy one when they see value (kindly note ... it is value, not price. Value is one's perspective).

    So exhorting people not to buy as an individual does not see "value" is kind of silly ... it is as if one is trying to get other's confirmation of validity of one's definition of value. The more people say "I agree, one should not be buying", the more the individual feels better of not buying a house himself. So guess what ... if everyone says "Noooo, that ain't a smart decision of not buying now", I wonder if the folks claiming these are ridiculous prices will have bouts of self doubt? :)

    Read, research, analyze ... but have confidence in one's own decision.

    Cheers
    Rishi


    You got it right. If you ask other what is correct time then you will get 2 answers. 1) after 4 month 2) You should have bought before 4 month.
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  • Originally Posted by mahesh pune
    Oh !!! so you don't need loan to buy a house and have all cash.


    Well ... I am hoping that this increase will force builders to bring their rates down. Secondly, if interest rates go up, so is the interest on my FDs too.
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  • Originally Posted by mahesh pune
    You got it right. If you ask other what is correct time then you will get 2 answers. 1) after 4 month 2) You should have bought before 4 month.


    But 'Before 4 months' is long gone. And in current and confusing situation of pune real estate after 4 months makes more sense. doesn't it ?
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  • my ideas on RE in pune:

    1. the rates increase too fast (2-3x) between 2004-2006. Some people kept on buying at higher rates however most people bought at the lower rates.
    2. The people who have bought at 2004 (or before) rates are not interested in selling at all.
    3. Most of the new project started after 2004 were booked fully. So builder really does not have much inventory in which he is incurring loss.

    Now this means that for a builder it is not tough to wait for customers to come to him and buy at his price.

    For a buyer who is genuinely affected by the downturn, there is no option but to wait.

    For a buyer with enough saving, he is cautious in buying due uncertain conditions in the RE market, he does not want his money to get washed away. Many in this category are still buying at these rates.

    So, question remains is when is this standoff going to end and how.
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  • Money is diverted

    Originally Posted by Space
    One thing I don't understand is that if they are in so much deep trouble then why the heck they are increasing the rates?

    It's pure mind games. Nothing more than that. Have you seen crime branch guys interrogating a criminal? If you have seen this, you will know what mind games are!

    A. Certain local builders are really big builders who have cash in their hand like anything. If you consider all the projects launched in Pune by such builders, the total cost that he had to pay to build and hold inventory might be less than what he has already earned in last 10-20 years of business he has done. (here I am not even considering money coming in from bookings ...)

    Man, the builders who had capacity to execute not more than 2 projects at one time started 10 during boom time. Later, they failed & are miserable lot today. Others artificially said sold out when flats were available hoping to sell these when prices increase further. Eg. Crosswinds, Iris, Aatman. These now look haunted!!:p

    B. Certain Big Builders (mutiple cities ones), have much more money at their end. Even DLF which was considered to be f**ked up, is suddenly cash rich !!

    DLF has 2 company's, one a subsidiary called DAL (DLF Assets Limited). It is DAL which buys all the properties from DLF; then DLF shows good results on books & it is DAL which is left hanging if anything goes wrong. This time when DAL itself ran out of funds as it could not sell the inventory, DLF decided to sell it's Mall, Hotels & land to raise money. Other form was through QIPs.
    So, DLF did get cash but by selling off it's assets & not by selling off it's inventory.

    C. The problem might be with builders who have formed their groups/organizations in last 5-6 years, when boom started.They started with limited money, earned hell lot in boom time, and now have unsold inventory at their end after launching some new projects. Look around you and you will notice that some of your fav names are falling under this category. These guys are part of around 60% projects in Pune. But then they can not do anything if A and B type builder decide to increase prices ...can they ?

    Look for points above. Btw, Pune builders are so crude, that they can even mortgage their souls for loans (if they have one):D.
    There are several projects which got delayed despite having 90-100% bookings like Magnolia, Crystal Garden, Tarang etc coz builders put this money in other projects including the principle amount (logically only profits should be invested). Investors who know the scenario have started to offload their inventories at low price. I have seen 1560 sq ft, 3BR at Suncity going for INR 52.5L nego.

    Remember; your money is not always spent in building your house.
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  • Originally Posted by ttt43
    So, question remains is when is this standoff going to end and how.

    There is a standoff coz builder wants the buyer to buy at his price while buyer insists on logical pricing. When buyers don't fall for builders' mind games forcing builders to cut rates & purchase happens at these reduced rates, the standoff will end which is win win situation for buyers as well as builders. Note that buyers are not homeless. Rented or owned, buyers do have house, but builders can't survive without buyers. In any business, customer is the king, be it RE or any other sector.
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  • Originally Posted by pjain2
    I think no one has really been able to understand the Pune realty market thoroughly... Inspite of the huge inventory getting build up, fact of the matter is that there was no significant correction in prices. When prices in places like Mumbai, Bangalore, Gurgaon etc dropped by 40-50%, there was a minor correction in prices in Pune to the extent of 15-20%.
    ...


    Can you tell me a single Project in Gurgaon where rate gone down by 40-50%, I am ready to buy in that project????

    Actually Mumbai is only place where is the correction to the extent 40-50%, nowhere else....if you ask a guy in Gurgaon or bangalore, he will also give u the same answer that rate has reduced here by not more than 10-15% and that is reality.....I am following couples of UNITECH properties in Gurgaon....I am not getting those cheaper than 10-15% to their all time price even in resale...so these talks abt 40-50% reduction in prices in any place other than Mumbai is all rubbish...Nobody have any real example of that....and I think Price reduction is pune is more than NCR....I have a real example Mont vert Tropez in Wakad went till 3199 & last I heard that thay were selling at even 2200 ( 2 of my friends booked at those rates)...so u calculate the reduction by urself...its at least more than 15%p

    So, its upto individual, if u see current price are value buy the buy it or forget it...I dont think Any good project gonna down more than 5% from current prices ...

    Ppls quote price on this forum for the lowest price, which are either not good project at all or are some left over flats which nobody like to buy....So in Nutshell you Mark my words...Per sq ft price are not gonna lower than current rate...Only over all package cost gonna come down...and if you ask How, so Answer is with MATCHBOX homes...2 BHK of 800 instead of 1100 & 3 BHK of 1000 sq ft than the 1400-1500 sq ft.....
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  • For those who had booked, what points to look in agreement?

    What if the buyer didnt like the clause and builder doesn't agreee to change/modify the clause.
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  • price justified

    Originally Posted by ash7979
    Can you tell me a single Project in Gurgaon where rate gone down by 40-50%, I am ready to buy in that project????

    Actually Mumbai is only place where is the correction to the extent 40-50%, nowhere else....if you ask a guy in Gurgaon or bangalore, he will also give u the same answer that rate has reduced here by not more than 10-15% and that is reality.....I am following couples of UNITECH properties in Gurgaon....I am not getting those cheaper than 10-15% to their all time price even in resale...so these talks abt 40-50% reduction in prices in any place other than Mumbai is all rubbish...Nobody have any real example of that....and I think Price reduction is pune is more than NCR....I have a real example Mont vert Tropez in Wakad went till 3199 & last I heard that thay were selling at even 2200 ( 2 of my friends booked at those rates)...so u calculate the reduction by urself...its at least more than 15%p

    So, its upto individual, if u see current price are value buy the buy it or forget it...I dont think Any good project gonna down more than 5% from current prices ...

    Ppls quote price on this forum for the lowest price, which are either not good project at all or are some left over flats which nobody like to buy....So in Nutshell you Mark my words...Per sq ft price are not gonna lower than current rate...Only over all package cost gonna come down...and if you ask How, so Answer is with MATCHBOX homes...2 BHK of 800 instead of 1100 & 3 BHK of 1000 sq ft than the 1400-1500 sq ft.....


    Oil too went from 70 to 150 and buying was more or less same at that price too
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  • Originally Posted by realacres
    It's pure mind games. Nothing more than that. Have you seen crime branch guys interrogating a criminal? If you have seen this, you will know what mind games are!


    Man, the builders who had capacity to execute not more than 2 projects at one time started 10 during boom time. Later, they failed & are miserable lot today. Others artificially said sold out when flats were available hoping to sell these when prices increase further. Eg. Crosswinds, Iris, Aatman. These now look haunted!!:p


    DLF has 2 company's, one a subsidiary called DAL (DLF Assets Limited). It is DAL which buys all the properties from DLF; then DLF shows good results on books & it is DAL which is left hanging if anything goes wrong. This time when DAL itself ran out of funds as it could not sell the inventory, DLF decided to sell it's Mall, Hotels & land to raise money. Other form was through QIPs.
    So, DLF did get cash but by selling off it's assets & not by selling off it's inventory.


    Look for points above. Btw, Pune builders are so crude, that they can even mortgage their souls for loans (if they have one):D.
    There are several projects which got delayed despite having 90-100% bookings like Magnolia, Crystal Garden, Tarang etc coz builders put this money in other projects including the principle amount (logically only profits should be invested). Investors who know the scenario have started to offload their inventories at low price. I have seen 1560 sq ft, 3BR at Suncity going for INR 52.5L nego.

    Remember; your money is not always spent in building your house.


    I absolutely agree with you on every point you said. The only this I wanted to highlight is that big buiders have their ways to get the cash they need. So, they will be ok with increase in prices seen in Pune.

    And for DLF, they sold the assets, but also they were able to sell some inventory. ]http://www.indianrealtynews.com/real-estate-india/delhi/dlf-sells-1250-flats-in-delhi-within-two-hours-of-launch.html

    This news could be a false news too :)

    This news could be a false news too :)
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  • This Diwali If you want to negotiate - Ask them to reduce rate by RS 800-1000 sqft.

    1. We already know for a fact that builders from Pune and even all over India are increasing the rates ahead of Diwali.
    2. We also know for fact than this hike is between 200-500 rs psft.

    Just to throw these builders off, why don't we start negotiations by reduing property rates by 800-1000 ?

    That is, asking them to reduce their rates by 300-500 even after discounts ??

    Lets see what happens.....
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  • Ashish,
    Gurgaon rates are down by 40%+. Case is DLF Garden something, Unitech Grande & DLFs (hey forgot the name but it is on new expressway).
    DLF flats were earlier going for 4k/sq ft, which came as low as 2.3/sq ft.
    I have somewhere posted the video link of Singh of DLF interview on CNBC who says the same thing.
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