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Impact of weaking dollar & US economy on Pune RE

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Impact of weaking dollar & US economy on Pune RE

Last updated: October 25 2009
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  • Impact of weaking dollar & US economy on Pune RE

    Hi

    Dollar has weaken by 6% in a month & soon going to touch Rs 45 which will hit IT revenues.
    It is said that next growth in IT ought to be driven by higher volume as margins will be tight.

    Going forward it seems IT pros may not get salary hikes as seen in last 5 years.
    I may be biased towards low RE/I.T growth but certainly feel that it is very risky to buy RE on loan at current-level (EMI = 3 x Rent) either for investment or living.

    What you guys have to say?
    Last edited by hitmady; October 22 2009, 11:41 PM.
  • #2

    #2

    Re : Impact of weaking dollar & US economy on Pune RE

    hi

    I see that you are contradicting yourself.+

    If IT is going to driven by higher volumes then there will be more jobs and means more demand. I am happy that more people will get jobs
    About pricing I think it doesn’t matter if IT does well or no (May be 25 basis influence). Look at Mumbai or Delhi those RE prices were not driven by IT.
    I feel RE prices are more about demand and supply. And as real acres pointed out earlier supply for land/plots in controlled by handful of people(politician and bureaucrat ) in PMC. By the way same people have retained power yesterday in state. So now these people will be rampant for collecting money they spent on elections.

    Its wishful thinking that RE prices will come down because of $ crisis. $ depreciation definitely will have impact on common man as Oil prices are going up and inflation will return. You can recall memories of 2007-08 inflation. And there are no elections nearby so at the center and state Mrs Italy will have more free hand for getting things done like increasing oil prices.
    Hope I am not too pessimist, I guess if real estate get regulated then there will not be exorbitant prices. But problem for that is its like retuning to license raj.
    I wish I could have solution

    Comment

    • #3

      #3

      Re : Impact of weaking dollar & US economy on Pune RE

      Two years ago, dollar was at 40 and people predicted 35. It went to 50!

      Most things in economics are unpredictable, but currency exchange rates are the most unpredictable of them all.

      IT I think will not grow, but not because of exchange rate problem. The business is in a plateau phase. Exchange rates will only add insult to injury and push IT over the edge.

      India's low cost IT business model is in decline.

      You can still buy RE, I think it will do OK in the long term.

      Pune RE is of course suffering from inflated prices. You can wait and watch in Pune for about six more months to maybe one year.

      Prices wont rise in Pune, it is overbought
      Venky (Please read watch a or before posting)

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      • #4

        #4

        Re : Impact of weaking dollar & US economy on Pune RE

        2 cents

        I am not expert but 2 cents from me $ depreciation leads to commodity boom and leads inflationary pressure. Remember 2007-08 we were having severe inflation, but that was coupled with RE boom. As IT person I will be least interested in the debate who drives RE prices but I don’t see $ devaluation will lead to RE crash. Well last we have seen 2008 lead to RE crash in USA, but it was systematic failure of monetary policies.

        I think this depreciation will be curbed by USA by controlling fiscal deficit or steps like adopting extreme pro-communist policies and ignoring free market rules. See they are capping compensation for some banks.

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        • #5

          #5

          Re : Impact of weaking dollar & US economy on Pune RE

          I remember when last time rupee was gaining strength NRI have moved money in Indian share market to enjoy boom, remember ~21000 levels… also they have invested in RE also as there were stories which were saying 5 years you can triple your money. Also be candid how many people here wants to invest money in RE for their first home.. Lot of people have seen asking question where I will get maximum appreciation. I am not saying that’s wrong but point I am driving is RE boom is not just driven by one sector.

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          • #6

            #6

            Re : Impact of weaking dollar & US economy on Pune RE

            Other than RE, even the stocks will be hit as FIIs get a lot more with weak INR. The moment INR becomes strong, it is good for importers rather than exporters. Keep a tab on gold prices & crude oil. Countries like China are selling US$ & buying gold, hence the increase in gold prices.

            However, the bottom line from this remains that US economy still remains weak which means further delays for global economic recovery, India included.
            If you are happy, you are successful.

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            • #7

              #7

              Re : Impact of weaking dollar & US economy on Pune RE

              Inform Santosh, I could not agree with you more.

              I do think inflation will keep RE steady if not rising in India. Same for stocks. FII wil buy stock as long as the dollar carry trade remains.

              I dont buy e-gold in INR precisely because of the unpredictability of exchange rate. I burnt my fingers a couple of years ago when INR was strong. I bought gold, correctly predicting rising dollar price for gold, only to watch Rupee depreciate away all my returns.

              Exchange is a no go zone for me.
              Venky (Please read watch a or before posting)

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