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Coming Property Crash

Last updated: May 5 2009
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  • andyserd
    replied
    Complaints, nothing but complaints

    Everyone is complaining about the economic downturn, high inflation and everything. And everyone is looking to the horizon thinking they are making out a coming crash of the real estate markets. But has it come to your mind that this is the price for the rapid economic growth in India? Sooner or later a slowdown is inevitable!

    My stance in life is: don't worry, what goes up, must come down. But I think that the rebound will be here in no time at all! I am even thinking of using this chance to buy property in India while prices are stagnant. Or perhaps I should wait for the alleged crash that everyone is predicting!

    Cheers!

    Andy

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  • andyserd
    replied
    Come on people! You fear a crash of the property market in Indias booming economy. A crash or "downward correction" is prone to come but probably not within the next few years.

    Just look at the predictions from 2004 and compare them with the actual figures for this year!

    Talk about crash... ridiculous.

    Andy

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  • arin_12
    replied
    Small update !!!

    No person from this Business will tell that Real Estate sector is going down. Becos as much as hype/boom that much profit they can make. See this URL for some updation.

    https://www.indianrealestateforum.co...ce-fall?t=2409

    Thanks,

    Leave a comment:


  • Guest's Avatar
    Guest replied
    Well I think I have been misunderstood by our fellow member. I never tried to be over smart, I was sharing what I have observed during my 5 years of experience with one of India’s leading real estate developers like Parsvnath Developers, Vatika and Unitech. I thought we are here for a constructive debate and not to discuss who is from Delhi and who is not.

    As far as Delhi issue goes, I am a born and brought up of Delhi and belong to this city only. And as far as my over smartness is concerned, I was really enjoying until my eyes fell upon the following statement in one of the entries "We are builders and the amount of knowledge we have i dont think rest of you could have". Plz tell me which statement oif mine can beat this statement in terms of speaker being over smart.

    But lets not get into that. We are sensible people taking out time from our busy schedules to duiscuss something qualitative here.

    Now as far the boom in residential sector is concerned (provided we are not limiting our debate to the so called posh localities where u work) please tell me do you think investing in Dwarka paid off??? Empty towers waiting for occupants is a clear cut proof of that.
    Apart from this, what happened to the much hyped Lok Nayak Puram of DDA. The location was excellent – proximity to Delhi Metro (If im not wrong Delhi Metro is considered to be one of the biggest gifts to Delhi for Commonwealth games). But still its almost 2 years when the draw was declared but still there are no takers.

    Now coming to the commercial aspect – im sure my friend is keeping a track of whats happening in Delhi NCR region. Anyways, here is what I have got from my sources:

    · V3 S Mall – Preet Vihar (One of Delhi biggest shopping mall located at one of the posh localities of East Delhi – Preet Vihar)- 15 shops have closed their operations in last 3 months

    · Metro Walk – Rohini (Touted as India’s best project as of now) – 11 shops have packed their bags in last 2 months

    · Cross River Mall (Needs no introduction especially for someone
    belonging to Delhi) – 30 shops have closed their operations in last 4 months

    I have a complete excel list that can give you some more ideas about this. Sorry, im not being over smart but since im working with a real estate developer BASED OUT OF DELHI, I have to keep a track of market.

    So I think when we were discussing property crash we were not limiting our discussion to a particular city or location but were going through a generic discussion.

    Ofcourse everyone knows that if I have a plot of 500 Sq. Yds. In CP, it will always appreciate irrespective of any kind of property crash. But this may hold good for a very few % in a big city like Delhi.

    I think fundamentally we are discussing two entirely aspects of property crash – For me property crash will mean decline in the sales figures (ofcourse my bread and butter depends on it) and for laymen it might refer to a complete drop in the sales prices
    Last edited June 19 2008, 04:05 PM.

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  • Guest's Avatar
    Guest replied
    Originally posted by chin2_2much View Post
    My high regards to knowledge and expertise of our fellow member PRAT12 but I still beg to differ.
    First of all, tell me one project which the parent developer has handed over in 7 – 8 months. Normally excavation only takes around 4 months and ofcourse 2 months of Monsoon is avoided even by local Thekedaars constructing a Kothi.
    As far as working style of developers or builders is concerned, you dont need to be a scholar to understand that. I myself have sold two projects worth 4 million Sq. Ft. and 6 million Sq. Ft. IT developments single headedly on the most upcoming location of Gurgaon – Sohna Road much before we had acquired the land and way before we placed any advertisement (The noticeable thing over here is that both were in the same sector and as per HUDA guidelines only one IT park is allowed in one sector)
    But the issue which we are discussing is beyond local or region specific issues. Even if we take Delhi, please let me know what is the scenario in Gurgaon or Manesar or Dharuhera or Bhiwadi. I am not denying that developers sell there project easily but the aftermaths will come once the project approach completion. Most of the pre launch investors move out of the project within first 1 year and the second line of Investors (who have purchased from these original prelaunch investors) find it difficult to find the next line of investors. This chain continues until we have an end user in picture, which is difficult to find. That is why we are witnessing a large number of cancellations and customers moving to consumer forums these days.
    As far as the so called boom created by Common wealth games is concerned, please let me know how will it effect the Residential sector in a positive manner. The only possibility which I could think of is that probably we are able to find a good “firangi” tenant but I am sure that is not in the mind of my friend and he will bring into the notice of this forum some valid advantages).
    We all know at what prices the hotel plots went for in the recent auctions by DDA and HUDA (thanks once again to the so called Commonwealth boom). But plz show me one plot where development has commenced. Infact all these plots are available in market under co-development or outright sale options because the project viability is under question.
    The recent housing scheme by Greater Noida Development Authority is an excellent example of the real estate downfall. (I am sorry for keeping my response Delhi NCR centric but I believe in order to answer the queries better this was required) The rates at which the authority issued the draw notification were at par with the plots available in the market for the same sector. For the first time we witnessed that there were no takers for a Government draw and the last date had to be extended twice.
    So my friend, investing in real estate looks easy at the surface but as you go down towards the bottom you will realize that there are many twisters that you need to avoid.

    Everybody has different views,So if you dont agree with me,it doesnt mean i am wrong.Here is the one deal for you.Invest in the land which our team will choose,I will pay you double the amount of loss if it happens,But if you earn you will have to share 50% profit with me.
    As far we are concerned we dont get involve in housing society.It take very long and the profit margin is far less than what we do.Rather we buy plots in posh colonies of delhi.We build 4 floors with full parking at the ground floor.Moreover we finish the construction within 8 months.So please think before you open your mouth.

    "I myself have sold two projects worth 4 million Sq. Ft. and 6 million Sq. Ft. IT developments single headedly on the most upcoming location of Gurgaon"

    You only have sold,but we have build over 200 buildings in past 20 years.So please dont tell me how much time construction takes.

    Now next thing you said the actual buyer.Most of our actual buyers are NRI's who invest in the posh colonies in delhi.So it doesnt matter what's happening in indian stock market or inflation or intrest rates for loan.

    Next thing is common wealth games that are going to be held in delhi.Our state govenment is taking very good steps to make delhi ready for the common wealth games.Better visit delhi you will find yourself.Soon new delhi will be the best city in india.moreover if master plan 2011 is implemented succesfully,delhi will be in the list of best cities in the world.So i cant think about your so called "property crash" happening in delhi.A lot of money will come to delhi as a result of common wealth games,If people will get better rental income why they will invest in other parts of delhi.A lot of foreingers will visit india during the games,It will give very good business to everyone in delhi,If business will be good they will surely invest.There are more reasons if you think properly.

    For a laymen every thing is difficult as would be investing in real estate.So please dont tell me about the twisters because i am not a layman.We have already earned alot from this real estate business.

    Sorry for being rude.But you were trying to act over smart.

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  • Guest's Avatar
    Guest replied
    Originally posted by chin2_2much View Post
    My high regards to knowledge and expertise of our fellow member PRAT12 but I still beg to differ.
    First of all, tell me one project which the parent developer has handed over in 7 – 8 months. Normally excavation only takes around 4 months and ofcourse 2 months of Monsoon is avoided even by local Thekedaars constructing a Kothi.
    As far as working style of developers or builders is concerned, you dont need to be a scholar to understand that. I myself have sold two projects worth 4 million Sq. Ft. and 6 million Sq. Ft. IT developments single headedly on the most upcoming location of Gurgaon – Sohna Road much before we had acquired the land and way before we placed any advertisement (The noticeable thing over here is that both were in the same sector and as per HUDA guidelines only one IT park is allowed in one sector)
    But the issue which we are discussing is beyond local or region specific issues. Even if we take Delhi, please let me know what is the scenario in Gurgaon or Manesar or Dharuhera or Bhiwadi. I am not denying that developers sell there project easily but the aftermaths will come once the project approach completion. Most of the pre launch investors move out of the project within first 1 year and the second line of Investors (who have purchased from these original prelaunch investors) find it difficult to find the next line of investors. This chain continues until we have an end user in picture, which is difficult to find. That is why we are witnessing a large number of cancellations and customers moving to consumer forums these days.
    As far as the so called boom created by Common wealth games is concerned, please let me know how will it effect the Residential sector in a positive manner. The only possibility which I could think of is that probably we are able to find a good “firangi” tenant but I am sure that is not in the mind of my friend and he will bring into the notice of this forum some valid advantages).
    We all know at what prices the hotel plots went for in the recent auctions by DDA and HUDA (thanks once again to the so called Commonwealth boom). But plz show me one plot where development has commenced. Infact all these plots are available in market under co-development or outright sale options because the project viability is under question.
    The recent housing scheme by Greater Noida Development Authority is an excellent example of the real estate downfall. (I am sorry for keeping my response Delhi NCR centric but I believe in order to answer the queries better this was required) The rates at which the authority issued the draw notification were at par with the plots available in the market for the same sector. For the first time we witnessed that there were no takers for a Government draw and the last date had to be extended twice.
    So my friend, investing in real estate looks easy at the surface but as you go down towards the bottom you will realize that there are many twisters that you need to avoid.

    As far as we are concerned,we buy plots in posh colonies in delhi measuring from 200-500 sq yards and make 4 floors(uper ground,first floor,second floor and the third floor) with full parking at the ground floor.we easily finish our construction with in 8 months.Most of our investors are NRI's so it doesnt affect us whats happening to stock market or inflation in india,We cant even fulfill the demand we have from NRI's.We dont indulge in housing socities,Its slow process.
    As far as common wealth games are concerned,It will make delhi the best place in india with the efforts that our state government is making.I can ensure you soon delhi will be in the best cities in the world.

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  • Guest's Avatar
    Guest replied
    My high regards to knowledge and expertise of our fellow member PRAT12 but I still beg to differ.
    First of all, tell me one project which the parent developer has handed over in 7 – 8 months. Normally excavation only takes around 4 months and ofcourse 2 months of Monsoon is avoided even by local Thekedaars constructing a Kothi.
    As far as working style of developers or builders is concerned, you dont need to be a scholar to understand that. I myself have sold two projects worth 4 million Sq. Ft. and 6 million Sq. Ft. IT developments single headedly on the most upcoming location of Gurgaon – Sohna Road much before we had acquired the land and way before we placed any advertisement (The noticeable thing over here is that both were in the same sector and as per HUDA guidelines only one IT park is allowed in one sector)
    But the issue which we are discussing is beyond local or region specific issues. Even if we take Delhi, please let me know what is the scenario in Gurgaon or Manesar or Dharuhera or Bhiwadi. I am not denying that developers sell there project easily but the aftermaths will come once the project approach completion. Most of the pre launch investors move out of the project within first 1 year and the second line of Investors (who have purchased from these original prelaunch investors) find it difficult to find the next line of investors. This chain continues until we have an end user in picture, which is difficult to find. That is why we are witnessing a large number of cancellations and customers moving to consumer forums these days.
    As far as the so called boom created by Common wealth games is concerned, please let me know how will it effect the Residential sector in a positive manner. The only possibility which I could think of is that probably we are able to find a good “firangi” tenant but I am sure that is not in the mind of my friend and he will bring into the notice of this forum some valid advantages).
    We all know at what prices the hotel plots went for in the recent auctions by DDA and HUDA (thanks once again to the so called Commonwealth boom). But plz show me one plot where development has commenced. Infact all these plots are available in market under co-development or outright sale options because the project viability is under question.
    The recent housing scheme by Greater Noida Development Authority is an excellent example of the real estate downfall. (I am sorry for keeping my response Delhi NCR centric but I believe in order to answer the queries better this was required) The rates at which the authority issued the draw notification were at par with the plots available in the market for the same sector. For the first time we witnessed that there were no takers for a Government draw and the last date had to be extended twice.
    So my friend, investing in real estate looks easy at the surface but as you go down towards the bottom you will realize that there are many twisters that you need to avoid.

    Leave a comment:


  • Guest's Avatar
    Guest replied
    Originally posted by ssumili View Post
    Many people post on this forum saying that the Property prices will not crash. After we carefully investigate, it is clear that these people are either builders or pure investers who have property to sell. So there is a clear conflict of interest. Why will they say the property pricess will crash ? They are going to loose money when this happens.

    The simple formula for a good investment is property is:
    If you purchase a property, the rental income should be equal to the mortgage payment that you will be making to your bank. If the rental income is less (current it is 50-75%) the only way you will make money is if the property pricess will increase. Since you are loosing 25% every month due to poor rental income, the property price has to increase by 25% for you to break even. And that my friends is not going to happen with recession looming large due to sub-prime crisis, high inflation, high crude oil prices, sinking stock markets etc.
    Rental income has never been equal to the mortgage payment that you make to the bank and it never will be.Sorry to say but you dont know how to earn by investing in property.If rental income will equal to the mortgage payment..then everyone should invest in property and give it to rent and with rental income pay the bank.After you have paid the full mortgage payment to the bank,the land is yours.Its not that easy to earn in real estate.
    Here is what we offer to those who want to invest in real estate,Suppose we offer you a flat for 50 lakhs for booking and we take 50% in advance that is 25 lakhs.Construction will take about 7-8 months and pay remaining 50% on completion.We gurantee you will earn minimum of 5 lakhs

    There is alot i want to share but i dont have much time.

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  • ssumili
    replied
    Coming property Crash

    Many people post on this forum saying that the Property prices will not crash. After we carefully investigate, it is clear that these people are either builders or pure investers who have property to sell. So there is a clear conflict of interest. Why will they say the property pricess will crash ? They are going to loose money when this happens.

    The simple formula for a good investment is property is:
    If you purchase a property, the rental income should be equal to the mortgage payment that you will be making to your bank. If the rental income is less (current it is 50-75%) the only way you will make money is if the property pricess will increase. Since you are loosing 25% every month due to poor rental income, the property price has to increase by 25% for you to break even. And that my friends is not going to happen with recession looming large due to sub-prime crisis, high inflation, high crude oil prices, sinking stock markets etc.

    Leave a comment:


  • Guest's Avatar
    Guest replied
    Sorry i dont agree with you as far as delhi is concerned.We are builders and the amount of knowledge we have i dont think rest of you could have.Till the common wealth games that are to be held in delhi in 201o..There is no chance of property rates even getting stable..it gonna increase and after 2010 property rates will get stable..no chance of getting down.
    People book our flats even before we start construction and we take 50-75% in advance as booking amount.

    As far we are concerned buy anything today..Tommorow you will feel it was cheap.Land has no depriciation...it only appreciate...

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