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Indian real estate – boom or a bubble?

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Indian real estate – boom or a bubble?

Last updated: January 13 2009
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  • #31

    #31

    Re : Indian real estate – boom or a bubble?

    Outsourcing?

    I checked various message boards discussing the financial mess and associated job losses in USA. It confirms that they had worst job losses since WW2. And as you stated Wiseman, people are already talking about Outsourcing and its impact on the overall US economy (people losing jobs and not being able to make mortgage payments and shopping less… that leading to more retail sector jobs… So one big spiral). This anger will certainly affect new contracts coming into India. Textiles are already hurting and mineral/raw material exports are suffering due to fallen commodity prices (although I believe that will be short term).
    In today’s news, Satyam has told the employees that it will hold their salaries for 2 months (wonder what do they have planned in the 3rd month?). Their monthly employee expense obligations are upward of Rs. 500 Cr. Their cash reserves don’t justify 53,000 employees unless there is huge cash injection (question is who will lend them money?). So they are back to being target of acquisition and associated job losses. This will also affect the PwC staffers in India in that PwC’s other clients will look elsewhere for their auditing needs. Also if you do not know, check with Infosys/Wipro/TCS friends about how many people are on bench (not actively generating revenue for the company). That number has gone up a lot. Remember, the people holding these kinds of jobs were the largest group of people buying expensive RE (besides the NRI which we already spoke about).
    Maytas seems to be in equally bad position. Wonder what happens to them. I heard that they were in the Infrastructure development. If true, it will affect infrastructure work in Hyderabad and that’s bad for the RE prices there (at least for sane people). The stagnation of Infrastructure building in India is my biggest concern and will affect the bounce back of Indian economy (Any politicians reading this? Please do something about this).
    The joke about building Rs. 80L houses/apartments 40KMs from Bangalore border is coming to an end. With shrinking job market and falling/stabilized salaries, who (in their right mind) would plan on commuting that distance with his/her on conveyance?
    BTW, did you guys know that Microsoft (which employees a large number of NRIs), a bellwether company which did not do layoff in the tech bust of 2001 has indicated that they are planning for 15% workforce reduction?

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    • #32

      #32

      Re : Indian real estate – boom or a bubble?

      Hi.........,
      I think no one knows this for ure. Bu let hear the expert views Concerns about an asset price bubble have led the Resserve Bank of India to raise the risk weightage on real estate loans exended by banks, and mortgage rae have gone from 7.5% to about 9.5% as a result, That's still well brlow the 15% rate that most Indians were used to, but it's enough to raise questions about whether the speculation of the past year and a half, which has driven land prices up by 30% to 100% and real estae stocks up as much as 2'000% , may be coming to an end.

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      • #33

        #33

        Re : Indian real estate – boom or a bubble?

        real estate prices

        Originally posted by grace View Post
        Hi.........,
        I think no one knows this for ure. Bu let hear the expert views Concerns about an asset price bubble have led the Resserve Bank of India to raise the risk weightage on real estate loans exended by banks, and mortgage rae have gone from 7.5% to about 9.5% as a result, That's still well brlow the 15% rate that most Indians were used to, but it's enough to raise questions about whether the speculation of the past year and a half, which has driven land prices up by 30% to 100% and real estae stocks up as much as 2'000% , may be coming to an end.
        Dear grace,

        Yes. We cannot see such increases repeating atleast for another 6 to 12 months minimum. Either, it will be slowly going downtrend or remain at same levels as of now.

        ks2071746

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        • #34

          #34

          Re : Indian real estate – boom or a bubble?

          Originally posted by nick_alan_76 View Post
          I checked various message boards discussing the financial mess and associated job losses in USA. It confirms that they had worst job losses since WW2. And as you stated Wiseman, people are already talking about Outsourcing and its impact on the overall US
          outsourcing where?
          one of the top 3 best destinations would be india.
          i see some job creation there do you?????
          may be the US bane is our boon??????????????

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          • #35

            #35

            Re : Indian real estate – boom or a bubble?

            Re Will Correct By 50% If Not More

            we will see corrections in real estate more than 50 % in one year. the next year IT budget by US companies will be known only by march. more job losses likely and more real estate corrections also likely

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            • #36

              #36

              Re : Indian real estate – boom or a bubble?

              real estate trend

              Originally posted by badrig View Post
              we will see corrections in real estate more than 50 % in one year. the next year IT budget by US companies will be known only by march. more job losses likely and more real estate corrections also likely
              Dear badrig,

              If what you say is going to happen, it will be bad for the RE industry as a whole but may be good for the buyers.

              ks2071746

              Comment

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