Many on this board including the so called Wise and also the Sethus to Jadhavs have a problem of my pricing on land. Just 2 minutes ago I called up a builder in Urapakkam. He is selling a flat. This is not on the better side of the Urapakkam and is quite some distance from the Railway station....1.5km. I know there are no shops on this side either and development is tardy. He was quoting a price of 2600psft on the advt posted in Oct 2008. On phone he quotes 2400psft. I said that was high. His logic...land price is 30L per ground! and it increases to 35L per ground if you are a bit closer. Then he says..."saar price of construction is also to be taken na... and he says 1K psft".
Let us come to the bare mathematics. Let us assume he wont build 2 times the land area even though that is possible in todays new Master plan but uses only 1.5 as FSI.
So it works out like this (all figures in rupees).
Cost of land = 30L/2400sft = 1250psft
Cost of land needed per sqft of building at 1.5 FSI = 1250/1.5= 833psft
Cost of construction = 1000 psft
So net cost incurred is 1000+833=1833psft.
Giving him a Fair margin of 200 rupees profit psft we can assume that 2033 is a fair price but in reality he charges 2400. So he yet has a Safety Bumper margin of 2400/2033= 18% over an above his fair profit margin. Now remember he would most likely have got a deal with the land owner where he will repay the landowner over period of time. So the builder's investment is zero on the land. Next he constructs using the buyer's money. Nowadays that is where he might be chewed a bit, since bookings are not fast enough. So he has to pay that interest portion for his construction activity.
Finally I assumed FSI=1.5. Most builders easily take this number to 1.8 and they also price car parking etc as separate. So if u use 1.8 in the argument and add 1.5L for car parking as this builder quotes it will mean his price is about 2600psft and his cost of land is 700psft. So his Safety Bumper margin is
2600-1000-700-200=700psft.
In other words he can yet reduce his price by 700psft and go home with a fair profit of 200psft.
Why am I saying this?
a. As many on this board with almost rudimentary Mathematics knowledge seem to say (rudimentary as in class 3 and no better even if one of those shit colleges gave them a B.E. degree sadly though!) if DLF reduces price by 400psft, it does not mean RE market is crashing. Just that it is stabilising at best and the pinch is felt for the EVER CONNING BUILDERS.
b. Let us assume that 2600psft is the end price and 1.8 FSI. Then if you back calculate (2600-1000(cost of construction)-200(fair profit))=1400 is the cost of land you are actually paying that too at 1.8FSI. So price of land is 1400*1.8=2520psft which translates to 60L per ground. So it is clear that if you have land (like I do) and I just become a builder I will gain 60L-30L=30L for my land. Being fair I try to ask for 45L for such a land and I know on the worst day the biggest Mathematical idiot on this board will buy it for 35L. So why should I sell land? Or why should anyone sell land...Unless he/she is hardup for money!!

In net, the builder in Chennai is minting money like mad, and in recent times his minting has come down. This will mean slightly cheaper flats. However in the process land price wont come down but with more of the buyers becoming SANER (move from Class 3 to Class 7 ... LOL ... Hopefully Wiseman reaches Class 7 soon!), they will prefer to buy land and build homes than flats.

Only when that class also disappears will there be a RE collapse. In Bangalore (I mean proper city...not Whitefield or Devanahalli which is almost same as Chengalpet or Tindivanam in development!), price of land to flat is extremely clean. Builders have clean profit margins and they are able to sell their property much more fairly than in Chennai. Ofcourse the Brigades who try to mint money have got chopped in the process. So Brigade which was quoting fancy prices in Rajaji Nagar has been forced to take a lot of shit, with FSI as high as 4-4.5 while the normal flat in that vicinity having hardly priced any bit lower.

In summary, if you want a flat to live tommorow (not after 2 years like India Bulls is selling in Medavakkam!) then buy it at that fancy price ... after all 2600psft and 2200 psft wont matter much in the long run as u might as well stay in your house today than pay rent. However if you are an INVESTOR and have cleared Class 7 mathematics (not by mugging but by understanding!) then you better buy Land for investment. If you book a flat with a long delivery time and then cry, especially if you are losing your job like that Fidelity guy, then u can use abuses like That HECK of a Fool or Like Jadhav the Bus driver, but in reality you need to improve your brain. So go to the nearest Mutton shop and try to fit that brain into yours! LOL!
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  • Originally Posted by ks2071746
    Dear friend,

    Jobs are a little difficult now for those with less than 2 years of experience in IT field. I have referred to those of about 27 + years of age, who will have atleast 3 or 4 years of experience who can somehow manage to be in some IT job or the other with even Rs. 30,000+ pm type of take home pay and with his spouse also with atleast 2+ or 3 years experience can supplement with another Rs. 20000 + a month atleast. it will not be easy for the initial period of 2 or 3 years to manage the family within what remains after the EMI, but it is to be managed and possible though difficult in today's situation. 15 years back, when I went in for a flat of about 850 sq. ft. at Saidapet, costing Rs. 7.5 lakhs then, I managed to put in about Rs. 3.0 lakhs out of my savings/Provident Fund withdrawals and a house loan of Rs. 4.5 lakhs from HDFC at a whopping 16 % ROI. The EMI was coming to Rs. 7700 PM and my take home salary was then less than Rs. 10,000 with a son going to school, of course living in company township with a low rent of Rs. 300 PM. It was Himalayan efforts initially, but we did manage. The ROI has come down later to almost 8.5% progressively in another 7 years time and the loan was fully paid of 2 years back. I was the only breadwinner in the house and we did manage somehow. Unless some risk is taken and the couple manage, ing a flat any time will look most difficult and at times impossible. I feel, one should not only look into what income comes in today but also what can be the income possible in the coming years till the loan repayment. Afterall, the so called dull economy may reverse after 2 or 3 years and it may be flourishing again. Regards.

    ks2071746:p

    I think what you did 15 years ago is crazy. You were so desperate KS to get a house I suspect. 7700 out of 10K towards housing loan is dangerous. However you had one stuff safe. YOUR JOB WAS ALMOST 100% SAFE IN THOSE DAYS.
    Today that is not true, so if one loses a job he is in trouble.
    However dont take the above to mean I am bearish. Not one bit. The fact is for the first time Indian middle class learnt what is money (2003 to 2008) and what is firing (2008 onwards). Not many other than folks in top IT firms and in Mgmt consultancy had seen job losses and pink slips before 2003. Those guys were top guys who picked another job the next week after taking a fantastic exit package!
    Now if job losses in India really becomes large then I will agree with the bear point to some extent. However the fact is when just 5% jobs are gone, who cares! Even 20% is nothing as most of these are anyway useless guys, or in your words the freshies who anyway were worthless from damn it colleges (ask Wiseman for his degree and he will squeam!!).
    So in essence if job losses really become biggggg then there will be a liquidity issue. I dont seem to see that happen ONE BIT. Hence I tend to believe we are actually in for another big bull run in RE.
    (Read my new post in a few min from now on PROF FEES).
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  • Originally Posted by badrig
    People have herd mentality. they tend to realise the gravity of the problem only after it is too late to do anything. when all are ing RE one also gets carried away & gets into debt trap for 25 to 30 years . debt is very sharp edged sword. people will surely bleed by the cuts of debt sword

    People who take loans will bleed especially the 99% who did not know what a loan is. Those who dont realise that in a 20 year loan after 10 years you probably paid only 5% of the loan deserve to bleed anyway!
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  • Originally Posted by ks2071746
    Dear friend,

    I am not talking of loans like Rs. 50 lakhs or 60 lakhs. It can be Rs. 30 lakhs or less only. A fairly decent 3 bed flat is available in good locality for around Rs. 40 lakhs or below. Due to higher margin money, one may have to shell out Rs. 10 lakhs by self which normally a 27+ year would have saved in his last 4+ years alongwith his better half also in job for the last 2 years or so. It is true that job security is not like what it was earlier, but those with 4+ years experience in IT will be able to find some job or the other or continue in the same company with very less increase or no increase or even with some wage cut. Instead of wage cut, many companies plan now for increased work hours of about 1 or 1.5 hrs. extra per day. This is the time i.e., about 27+ years of age, one should go in for his dream house within his capacity and capability to manage the loan jointly with his wife, as waiting for some more years may not help as they will have to take care of their kids costly education etc. by then. Fearing the so called " collapse " or " likely job loss " etc. may make him go into his shelter and possibly delay his house dream for years, ultimately after some years, say 5+ years, and then feel/regret that he should have done it 5 years ago etc. Of course, this is for house/flat for personal use and not for pure investment purpose.

    ks2071746

    BTW, KS, there are so many divorces happening nowadays that if you a joint loan with a wife who becomes EX WIFE then you really will be in pits! Just my 2cents worth!
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  • NOW FOR THE PROFESSOR AND HIS FEES. I noticed in Hindu a advt by Sastra University (god save the number of universities in this country!!) for jobs. A Senior Prof (well these designations are funny) gets upto 75K p.m. and if you add the rest it will be 110K p.m.
    Now a professor in IIT (max position in IIT is prof and dont argue about dean and director..dean is only a designated post and offered to a professor and adds some small carrots... dean is not a permanent post in IITs!) in 2004 was only getting Rs 40K all put together.
    If College Professors can get a cool deal then I dont find a reason to think that jobs are not there!!
    The asst Prof there will get around 30K in this univ, the lowest pay scale mentioned in the advt.
    So in todays world a job of 4L p.a. is PEANUTS, not that I consider it that way. Well in late 1980s the Prof in IIT was getting around Rs 4K and the best SW guys (like me) got the same at entry level! So nothing has changed but for a cipher in the back. So if a flat cost then 2L now it costs 20L.
    Well well, you might say what? That is true in Bangalore but with archaic FSI rules in Chennai it costs 40L. So how does that matter to me?
    In summary RE has not really gone up so much as imagined. Salaries have actually gone up a lot and so RE has been pushed up. Ofcourse many who have suddenly seen 20K salary think that they are super rich and deserve a flat in Adayar. Well a 2K salary guy in my times might have had a tough time ing a flat (I mean in 1980s). The same hold good now. And if you see KS example with 10K sal 15 years ago (which will be in my view about 80 to 100K today's equivalent) he just managed a 800+sqft flat.
    Today's guys want a 1500sqft flat. So they are doing what they should not. THat is their problem. However RE especially in terms of Land price has just managed to outperform the inflationary salary rises. No more.
    And if you think you will lose your job, think clearly. Were you worth the job in the first place!
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  • In summary, the bears are just bullshitting in lunacy and hallucinating about falling RE prices. That will happen only if there is a real depression in India. In that case many will lose jobs, not those textile workers who anyway were used to it, not those BPO guys who are low level clerks, not that IT guy with a 40,000 rank in CET who studied in some silly college in some non descripit place in TN.
    It will happen if good engineers from RECs and Guindys loose jobs, it will happen if companies close down under, it will happen if Infosys becomes delisted and non existent. In that case RE will fall to say half or quarter its value now. Not when 5K folks who were the bottom 10% of Infy are sent out. Wipro has an internal plan to throw out about 40% of the bottom in the next one year or so. They will sack one in nine every quarter I understand!
    These wont change RE prices, just that RE companies trying to fleece ers will come up with sane plans. They will charge the price of land+ price of construction + small margin of 5%. Not a margin of 200 to 400% that they do today.
    Finally if you yet think RE will fall, please dont and you will end up crying like the Sethugms, Chataras and the rest who did not know when to in 2004 (due to poverty) and want prices of RE to go to 2004 levels while their almost non existent salary in 2004 has jumped to reasonable numbers today.
    Such pitchakaran wanting to become rich DOES NOT HAPPEN except in story books!
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  • RE Prices in Chennai aint falling primarily because Land price in Chennai is yet very very cheap. So dont sell your land for a song!
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  • Finally, if u dont know mathematics how can u count money. All the bear talkers here were just guessing with no idea of quantitative methods. Now that the bears will disappear, be careful. Be a buyer of RE and dont be a seller. WOrse still, if u own land dont sell it for the next 4 years.
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  • Nats, I wish I could believe in your bullish fantacies. But even for a brain as stupid as mine, it looks like you're getting too much carried away to the extent of attempting to con people with some unsold properties. And I find it very appropriate to believe a Paul Krugman, who is a nobel prize winning economist than you, who is trying to offload unsold properties. I'm sure, you'll question even Krugman's credentials and economictimes credentials. But you know what? The one who says everyone else on this world is stupid is a mental.

    It's not even decoupling/coupling with US economy. It's simple demand-supply
    equation and basic investment fundamantals. Its surprising how can someone miss RE fundamentals by so many miles!

    http://economictimes.indiatimes.com/US-job-losses-could-last-5-years-Krugman/articleshow/4553033.cms
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  • Originally Posted by Raghavan.aiyangar
    Nats, I wish I could believe in your bullish fantacies. But even for a brain as stupid as mine, it looks like you're getting too much carried away to the extent of attempting to con people with some unsold properties. And I find it very appropriate to believe a Paul Krugman, who is a nobel prize winning economist than you, who is trying to offload unsold properties. I'm sure, you'll question even Krugman's credentials and economictimes credentials. But you know what? The one who says everyone else on this world is stupid is a mental.

    It's not even decoupling/coupling with US economy. It's simple demand-supply
    equation and basic investment fundamantals. Its surprising how can someone miss RE fundamentals by so many miles!

    ]http://economictimes.indiatimes.com/US-job-losses-could-last-5-years-Krugman/articleshow/4553033.cms
    Are ayangar val. First of all, we are talking about Indian Real estate. I dont care about your american crap here. Maybe you are in the wrong board given that you yourself admit to your stupidity.
    Paul Krugman might be a noble laureate, does it mean he can climb the Himalayas? In other words people know about what they know and not about everything. Do you know that if you could retain 2% of your entire education, upto say the Graduate level you will be a Noble laureate. In other words most of us have very limited memories.
    Now what Paul said is immaterial. What u understood or rather misunderstood about it is important. Being stupid, even if u attended Montessori 1, u may not get much, and u admitted being stupid. So dont baby cry about it! OK?
    So if u listen to a Noble laureate, the chance of you understanding anything is rather very remote.
    As for India, it is not USA. Infact most of the NAY sayers here, can I say all, are NRIs or Foreign Indians. So a Bobby Jindal cant rule South madras. Not a dog will vote for him here. Does it mean Jindal is bad or the dog in Chennai is bad? Neither of it.
    Learn to be context sensitive. In Chennai the caste name has long disappeared and I think Wiseman and his pseudonames have now started taking a Casteist outlook with Raghavan...AIYANGAR. I am sure we will have very soon names like Ganesan AIYER, Velu MUDALIAR, Pandu NADAR and so on. Almost like Wiseman is a pure and pure politician who likes to get some casteist support.
    I am not against ur name Raghavan, just that I believe u r just another creation of Wisey.
    Remember Wisey could get a guy to keep a name as Nataraajg007, just changing one letter. And he wont know why 007 existed in the name! Ofcourse that guy has become tamed into a Lovebird. Let us see how casteist names unfold over time.
    Are ayangar val. First of all, we are talking about Indian Real estate. I dont care about your american crap here. Maybe you are in the wrong board given that you yourself admit to your stupidity.
    Paul Krugman might be a noble laureate, does it mean he can climb the Himalayas? In other words people know about what they know and not about everything. Do you know that if you could retain 2% of your entire education, upto say the Graduate level you will be a Noble laureate. In other words most of us have very limited memories.
    Now what Paul said is immaterial. What u understood or rather misunderstood about it is important. Being stupid, even if u attended Montessori 1, u may not get much, and u admitted being stupid. So dont baby cry about it! OK?
    So if u listen to a Noble laureate, the chance of you understanding anything is rather very remote.
    As for India, it is not USA. Infact most of the NAY sayers here, can I say all, are NRIs or Foreign Indians. So a Bobby Jindal cant rule South madras. Not a dog will vote for him here. Does it mean Jindal is bad or the dog in Chennai is bad? Neither of it.
    Learn to be context sensitive. In Chennai the caste name has long disappeared and I think Wiseman and his pseudonames have now started taking a Casteist outlook with Raghavan...AIYANGAR. I am sure we will have very soon names like Ganesan AIYER, Velu MUDALIAR, Pandu NADAR and so on. Almost like Wiseman is a pure and pure politician who likes to get some casteist support.
    I am not against ur name Raghavan, just that I believe u r just another creation of Wisey.
    Remember Wisey could get a guy to keep a name as Nataraajg007, just changing one letter. And he wont know why 007 existed in the name! Ofcourse that guy has become tamed into a Lovebird. Let us see how casteist names unfold over time.
    Are ayangar val. First of all, we are talking about Indian Real estate. I dont care about your american crap here. Maybe you are in the wrong board given that you yourself admit to your stupidity.
    Paul Krugman might be a noble laureate, does it mean he can climb the Himalayas? In other words people know about what they know and not about everything. Do you know that if you could retain 2% of your entire education, upto say the Graduate level you will be a Noble laureate. In other words most of us have very limited memories.
    Now what Paul said is immaterial. What u understood or rather misunderstood about it is important. Being stupid, even if u attended Montessori 1, u may not get much, and u admitted being stupid. So dont baby cry about it! OK?
    So if u listen to a Noble laureate, the chance of you understanding anything is rather very remote.
    As for India, it is not USA. Infact most of the NAY sayers here, can I say all, are NRIs or Foreign Indians. So a Bobby Jindal cant rule South madras. Not a dog will vote for him here. Does it mean Jindal is bad or the dog in Chennai is bad? Neither of it.
    Learn to be context sensitive. In Chennai the caste name has long disappeared and I think Wiseman and his pseudonames have now started taking a Casteist outlook with Raghavan...AIYANGAR. I am sure we will have very soon names like Ganesan AIYER, Velu MUDALIAR, Pandu NADAR and so on. Almost like Wiseman is a pure and pure politician who likes to get some casteist support.
    I am not against ur name Raghavan, just that I believe u r just another creation of Wisey.
    Remember Wisey could get a guy to keep a name as Nataraajg007, just changing one letter. And he wont know why 007 existed in the name! Ofcourse that guy has become tamed into a Lovebird. Let us see how casteist names unfold over time.
    Are ayangar val. First of all, we are talking about Indian Real estate. I dont care about your american crap here. Maybe you are in the wrong board given that you yourself admit to your stupidity.
    Paul Krugman might be a noble laureate, does it mean he can climb the Himalayas? In other words people know about what they know and not about everything. Do you know that if you could retain 2% of your entire education, upto say the Graduate level you will be a Noble laureate. In other words most of us have very limited memories.
    Now what Paul said is immaterial. What u understood or rather misunderstood about it is important. Being stupid, even if u attended Montessori 1, u may not get much, and u admitted being stupid. So dont baby cry about it! OK?
    So if u listen to a Noble laureate, the chance of you understanding anything is rather very remote.
    As for India, it is not USA. Infact most of the NAY sayers here, can I say all, are NRIs or Foreign Indians. So a Bobby Jindal cant rule South madras. Not a dog will vote for him here. Does it mean Jindal is bad or the dog in Chennai is bad? Neither of it.
    Learn to be context sensitive. In Chennai the caste name has long disappeared and I think Wiseman and his pseudonames have now started taking a Casteist outlook with Raghavan...AIYANGAR. I am sure we will have very soon names like Ganesan AIYER, Velu MUDALIAR, Pandu NADAR and so on. Almost like Wiseman is a pure and pure politician who likes to get some casteist support.
    I am not against ur name Raghavan, just that I believe u r just another creation of Wisey.
    Remember Wisey could get a guy to keep a name as Nataraajg007, just changing one letter. And he wont know why 007 existed in the name! Ofcourse that guy has become tamed into a Lovebird. Let us see how casteist names unfold over time.
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  • As for India, it is not USA

    Vow! What a finding! Thanks for enlightening all of us Nats!
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  • Originally Posted by Raghavan.aiyangar
    Vow! What a finding! Thanks for enlightening all of us Nats!

    Looks like my feather brained friend is getting enlightened!
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  • R u missing the psychology (fear) of a IT man,

    the threat of job loss.
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  • IT guys are over paid, especially in the last few years. So if they have a fear of job loss who cares. If even 20% of them lose jobs so what?
    Did I answer your question?
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  • A lot of average, below average good for nothing people got into IT industry when jobs were easily available for taking. Many well deserving, hard working candidates particularly those coming from middle class/ lower middle class families, rural areas, villages face many hurdles in IT industry right from the start during job interviews, promotions, appraisals, onsite openings etc.

    So if about 30% useless unbillable project managers, business analysts, Ivy league sweet talking consultants, urban educated hi-fi rich/upper class freshers and such crazy people are laid off nothing will happen to real estate or IT industry.

    There will still be 60% hardworking technical people taking moderate income, mostly working at offshore (except a few who could conquer this system and go onsite) who will stay and keep earning their salaries. They will still take rented homes or buy own flats (both decisions are positive for real estate). FULL STOP
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  • Originally Posted by contra
    A lot of average, below average good for nothing people got into IT industry when jobs were easily available for taking. Many well deserving, hard working candidates particularly those coming from middle class/ lower middle class families, rural areas, villages face many hurdles in IT industry right from the start during job interviews, promotions, appraisals, onsite openings etc.

    So if about 30% useless unbillable project managers, business analysts, Ivy league sweet talking consultants, urban educated hi-fi rich/upper class freshers and such crazy people are laid off nothing will happen to real estate or IT industry.

    There will still be 60% hardworking technical people taking moderate income, mostly working at offshore (except a few who could conquer this system and go onsite) who will stay and keep earning their salaries. They will still take rented homes or buy own flats (both decisions are positive for real estate). FULL STOP

    You hit the nail on the head.
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