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Coming Property Crash

Last updated: May 5 2009
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  • #11

    #11

    Re : Coming Property Crash

    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,
    Either land or AIR and FOOD. Choice is yours.

    Comment

    • #12

      #12

      Re : Coming Property Crash

      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
      “He who marries for love without money has good nights and sorry days.” - Old proverb

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      • #13

        #13

        Re : Coming Property Crash

        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
        “He who marries for love without money has good nights and sorry days.” - Old proverb

        Comment

        • #14

          #14

          Re : Coming Property Crash

          Just thought would share this view...

          Indian Real Estate-The Rabbit Hole Goes All The Way Down
          Sell Anantraj, Ganesh Housing, Ansal trio, Bombay Dyeing, Century, DLF, HDIL, Mahindra Life, Omaxe, Parsvnath, Purvankara, Sobha and Unitech
          Indian real estate stocks have corrected sharply since January 2008, and most stocks are now trading at deep discounts to NAVs. This scenario is no surprise, given the severe headwinds that the sector is facing at present. Anecdotal evidence points to a slowdown in Indian real estate. Developers are totally responsible for the current state of affairs-for three years they kept buying agricultural land at astronomical prices making cost of acquisition unthinkable for Individual investors. Across most of North India average selling rates range from Rs 8000 to Rs 15000 per sq feet, and Commercial Rentals at Rs 200 to Rs 300 per sq feet. Money raised through IPOs has been used to build land bank, while REITs were planned for parceling off developed projects. With the Singapore REIT market all but collapsing, both IPO and REIT route is effectively closed. On top of that Indian stocks listed on the UK AIM market have under-performed so signifcantly that even that route of
          funding is closed now such stalwarts like Hirco and Ishaan Real Estate. Finally, and most importantly, lending rates especially for Real Estate could rise so substantially over the next 6 months that it will put most apartments out of reach of middle class financing. The Result will be distress sale of land assets held by concerns such as Ansal trio, MGF Emaar and so on, which are poorly capitalised entities competing in a already soft market. Stocks from Real Estate sector were a fad, and fad's do not last Discounts to NAV do not necessarily imply a buying opportunity -regional peers have historically traded below their NAVs, and the current situation is not restricted to India. Look at the Hong Kong market for clues as to where Indian property stocks may bottom out. In Hong Kong discount to NAVs have historically increased in times of weak property prices, with maximum discounts for developers ranging between ~34-77%. Discount to NAV for Indian realty stocks
          are likely to increase further, and persist until demand recovers. Why so? A severe liquidity crunch has emerged, with channel checks indicating that developers have raised bridge finance at 18 to 25 per cent interest rates until October. The expectation is that the lull in activity during the monsoon months will end with the festive season in October 2008. Given the interest rate scenario, there is a higher than 50 per cent probability that the recovery in sales volume will be weaker than expected. This would lead to under-cutting on product prices by the developers facing a capital crunch. Asset sales will be done hence at distress levels and equity injections at much lower entry points. In six months time most stocks from DLF, Unitech, Ansal and Anantraj should begin trading at liquidation valuations. This is how the three scenarios work out: A. Liquidation case scenario: -The company cannot raise any capital and shuts down business. -The company shuts down
          business and sells of land at current estimated market price and pays of the debt and outstanding land costs. B.Pessimistic case scenario: -The company cannot raise any capital and constructs using available cash and equivalents. -Development margins fall to 30 per cent, implying a further 20 per cent correction in Real Estate prices. -The company re-invests from the construction and after two years shuts down business and sells off land at current depressed market prices and pays off the outstanding land costs and debt. C. Two year slow down scenario: -A two year slowdown will comprise volumes dropping to 50 per cent of what has been seen in FY08 accompanied by a 20 per cent correction in prices and rent across all markets. -Further 6-12 month delay in new project launches. This is over and above the already envisaged 6 to 18 month delay in new project launches depending upon how far out the project is. SEZ property-Uncertainty Reigns Politically sensitive SEZs
          in Sonepat, Rai, Manesar, Gurgaon and Noida may not be set up at all given the political uncertainties and closeness to the General Elections approaching possibly in December 2008. Give a "Zero" value to all concerns which have put money into SEZ development.

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          • #15

            #15

            Re : Coming Property Crash

            I am also surprise about all this talk about a property crash. Maybe the econmic boom will temporarily flatten in some areas because explosive growth cannto always be sustained. But I think that the only way is up!
            “He who marries for love without money has good nights and sorry days.” - Old proverb

            Comment

            • #16

              #16

              Re : Coming Property Crash

              befitting reply

              Originally posted by chin2_2much View Post
              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
              Hi Chin
              I think you gave a befitting reply to someone whose sole motive is to BRAG and possibly advertise his WARE in the stealth MODE
              WIll the moderators please go thru PRAT12's post and find that he is not following the Basic rules of the Forum.

              PRAT, you seem to think too high of yourself and seem to be putting down others. I would say you are RUDE and ARROGANT with scant respect of other people's sensibilties. Let this be a healthy debate
              Ram

              Comment

              • #17

                #17

                Re : Coming Property Crash

                Originally posted by andyserd View Post
                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
                Don't be over smart my dear friend. If you have invested money in India then its time to sell off. Else you may regret your self. I think you are aware of the US HOUSING MARKET. 13 yrs Low. Correct ?
                Either land or AIR and FOOD. Choice is yours.

                Comment

                • #18

                  #18

                  Re : Coming Property Crash

                  Nice reply chin2

                  Thanks for unbiased analysis...

                  Comment

                  • #19

                    #19

                    Re : Coming Property Crash

                    Thank you everyone...
                    I am glad to see finally some sensible people coming and participating in a healthy debate.
                    I am not rigid on my viewpoints and believe that forums like this are made to tell you the actual.
                    Anyways, I would still like to correct my point. When I say property crash, I am not saying that prices have touched the sea level but I refer to the drop in sales figures.
                    I think most of the replies in various forums are nothing but copied and pasted stuff from sites like Wikipedia. People need to understand that Wikipedia is not an updated source and should not be trusted.
                    And as far as stats and figures are concerned, plz tell me which industry can look for a promising future based upon what happened in 2004. It is very easy to copy and paste stuff but as the old saying goes “nakal ke liye bhi akal chahiye” (you need brains even to copy )

                    Comment

                    • #20

                      #20

                      Re : Coming Property Crash

                      Property prices have already been taken to the roof now correction is inevitable @Prat and Andyserd I work with Top Stock brokerage of this country as a manager , One of our clients based in Aberdeen Hong Kong who is a leading financial institution .They sold there entire Property Stocks Holding in November 07 , They say they were very very negative on not real estate but Interest rates going forward in India which will have a serious effect on real estate and economy

                      I dont blame any one for being bullish or bearish because it over shoots both ways now people are stuck badly in expensive Pre-launches ,commercial properties, falling rentals unable to pay Borrowed loans Still after listing to there misery some people will not expect a fall same is the case when Mkts bottoms out people dont buy ,This is the classic example of difference between an average Joe And big financial institution

                      * Prat i would appreciate you having 20 years experience in real estate Market but tell me whom should we listen to The fund manager at this Institution buys and sells share in 30 minutes which are probably more than all the money u would have made in 20 years in your real estate business, Then countries top bankers Mr KV kamath of ICICI and Deepak Parek of HDFC say that correction of 20 -30 % is expected in real estate ,and then we have others like you and Andyserd Who say fall is not word in real estate dictionary .

                      Please pick up news papers go to real estate section then again get a two month, three month or even a four month old paper and my Friends you can see the same listing unable to sell weather Delhi or NCR , Now after this has been done check the impact of a rise of 300
                      BPS of interest rate hike from any loan calculator 44986 is the installment for 50 lacks loan for 20 years and the way inflation is with already one hike at 12 % this installments becomes 55054

                      I have worked for 2 years with Capital one bank USA ,and my friends from all my experience i am convinced that there is a same set of people funds banks which move the prices of asset classes up or down ,they moved the stocks markets up ,and down now they moved the property markets up ,coming down now ,they are now moving metals gold silver and crude and then those guys expecting crude to go to 250 $ will be in the shoes Of the property speculators and stock market traders of Today

                      I dont mean to offend any body but the problem is no one in trade or some one having interests in that Field likes to listen anything negative
                      But the truth is in front of you look at any real estate sector stocks it has not fallen it has been butchered ,Unitech results are as bad as one expected and other will be even worst

                      I have no interest in property markets and came to this site when i was searching for interest rate scenario i have 3 flats and one house in Delhi and i dont intend to sell or buy them weather the market falls or goes up ,But i will analyze what the situation is Higher interest rates Higher inflation == lower markets

                      Death and crash are Two certainties of Life and markets ,and only fools deny both and i am not one of those fools
                      Last edited June 29 2008, 04:42 PM.

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