Announcement

Collapse
No announcement yet.

Coming Property Crash

Collapse
X
Collapse

Coming Property Crash

Last updated: May 5 2009
102 | Posts
  • Time
  • Show
Clear All
new posts
  • #81

    #81

    Re : Coming Property Crash

    Property market crushed II

    continued from ..............

    “How long will this continue?” is what everybody is thinking all about. If we try to understand, why our economy did grew so fast, I think we can get an answer. The year 1991 was a real starting point for new Economic Era for India, under the leadership of Sri P V Narasimha Rao. The Globalisation, Liberalisation and Privatisation were a step to boost India’s crippled economy. Later Sri Vajpayee’s financial reforms commensurate with time made India one of most favoured business destination of the world. With this the IT & ITES sectors became the centre of attraction. Indian engineers especially in Electronics, Electrical, Computer and Mechanical section spread throughout the world, while BPO sector flourished here. Thus for the first time since then, foreign money started coming to India.

    That was the time people started to invest money to have a house or property. Its not only “Builder/Politician nexus that has caused the hype”.Banks also came forward to give easy home finance. Tax laws were changed such that people became attracted to real – estate, either in form of taking loan or investing in reality funds and bonds. That was the time real-estate business gained pace. With addition to that the Information Act of Swiss Bank led our most respected politicians and other high profile citizens to divert their (so called) hard earned (black) money to put into this sector.

    Now, with the fall of US economy, the IT & ITES sector went down and the “trickle down” effect of that, is the coldness, what we are feeling now. The middle-class people (whom the trikaldarshi Swami Vivekananda ji foretold to be the India’s backbone), who lost the money power now (as most of them invested it in money market) became cautious, so did the government. Thus the normalisations of the IT & ITES sectors are one of most important factor for the economic stabilisation, which in turn would bring back the lost balance in reality sector also. The time required is obviously understandable by anybody and everybody.

    My suggestion would be to take steps cautiously but steadily whether you are a buyer and seller in this “property crushed market”.
    udayan.giri
    trustedproperty

    Comment

    • #82

      #82

      Re : Coming Property Crash

      Dear friend,

      Good and detailed analysis. I liked it due to its reasonableness.

      ks2071746

      Comment

      • #83

        #83

        Re : Coming Property Crash

        Originally posted by udayan.giri View Post
        You can now get good residence in moderate prices. Don’t go for unknown builders at this point of time. If you go, don’t forget to see all legal (specially NOC for land use from the authority) and technical documents (specially final map approval from authority). You can get both the papers from the authority itself, but with a price. Always remember, a cheap house may not be a good asset.

        Now every builder advocates being the best. Any builder who without much pursuance shows the legal and technical documents to a prospective client is a good builder according to me (Ref - http:// www .indianrealestateforum.com/real-estate-discussions/t-buying-a-house-beware-of-builders-tricks-2237.html). You can request any people who understand these land documents to verify whether those are true or not, and what is the area, FAR, loading etc. I am sure, in these turbulent days, most of the builders will honour your request. If they don’t, mark these builders as petty/3rd grade builders. What do say Mr prat12?
        Big builders or small doesnt make a diff. the big started as small only.
        actually the big projects by big builders are prone to indefinite delays of delivery. and many cases of gym and club open to outsiders.swimming pools reasonably sized cannot accomodate more than 100 persons at a time else you will be getting a dash every few seconds(some actually like it ).
        coming back to legal issues.builders big or small never book a flat without getting legal opinion from 'your' lawyer . I prefer the smaller builders who definitely are not overleveraged(most of them) and will deliver on time.
        anyways big builders have projects only in distant places. I would anyday prefer to be in estb localities,and join health clubs in hotels the cost of which would be offset by your travelling expenses to your distant homes.

        Comment

        • #84

          #84

          Re : Coming Property Crash

          udayan.giri, very well written analysis.keep up your good work.

          Even a small builder without big credentials fixes the price with minimum 25% profit.

          The bigger the builder and brand name, larger is this profit margin.

          cost of a flat = land cost + construction cost on builtup + min 25% builders profit + other expenses.

          The reason they say, the amount of money they invest for the land, the labour and interest outing for the project time, other expenses to get approvals etc.

          Despite the pre-launch, the huge interest free money they recieve from customers and investors.We are seeing huge resistance from the builders to reduce price.The ones who are doing now are just reducing their profit margin.

          They are scared it will have a spill over effect which will have greater implications.

          This opportunity should be used to create awareness among end users, The more informed the consumer is the less fooled they will be.

          Buying a property from a builder without paying extra "Builders Profit" doesnt and wont happen in India.

          Comment

          • #85

            #85

            Re : Coming Property Crash

            Dear friend,

            I liked your last lines as this is true in India.

            ks2071746

            Comment

            • #86

              #86

              Re : Coming Property Crash

              So much ignorance

              Sorry this got double posted.
              Last edited April 1 2009, 07:28 PM.

              Comment

              • #87

                #87

                Re : Coming Property Crash

                test message

                Hello Guys,

                I see a lot of ignorance and lack of understanding regarding basic economics. Here are few things I have to say.

                1. Price of the house has nothing to do with how much it cost the builder in the first place. It has to do with what a buyer is willing to pay for it (in economic terms it called market forces). So forget about 25% profit as a baseline. If the profit is not there for the builders, we will simply have less number of builders. Simple math.

                2. What a buyer should be willing to pay has to do with buy/rent argument as I stated numerous times earlier along with the need for owning and availability of rental property.

                3. NRI's are not dumb people. If they can go to foreign countries with minimal capital and make good living (& save), they are smart enough for make the decisions for themselves. Again, I am an NRI living in USA. I understand my economics very well. NRI's won't be investing simply because someone (expert ?) says the market has bottomed and now is the time.

                4. FDI is not all that bad for a country. It has to do with where the FDI is invested. If it gets invested in sectors that promote growth to the country and increase employment then it is good (see China for example). It is bad if it comes as a short term cash in the stock market investment. That is why the government of India is clamping down on it.

                5. Even if the RE market hits bottom, it doesn't mean it will rebound from there and go on the same price trajectory as before. Remember the DotCom boom of the 1990s. When the bubble burst and market came back, the new money went in to creating RE bubble. Many DotCom companies never recovered. See Sun MicroSystems as an example (yes i got burnt in that and yes it's stock went from $60 to $2.47. It is being sold to IBM for about $5 now... So no recovery for many dotcoms).

                6. Smart money is to locate what is the next area of opportunity. RE investment is a dead horse. It may recover but only to reasonable levels. Multi-Cr flats are history. Look for the next area of making money. My money is on commodities and PMs in short/medium term.

                Chao
                Last edited March 31 2009, 09:13 PM.

                Comment

                • #88

                  #88

                  Re : Coming Property Crash

                  Have seen the prices come down

                  I was in the market to buy a flat to stay in - I'm in Gurgaon.

                  I started asking around in November when I got transferred here.
                  Prices were too high for me and I kept looking around. I wasn't sure about how much prices would fall.
                  But they did fall, and what I've seen in March has been an acceleration in the drop - I get the feeling that we're at the edge of a cliff and the worst is to come.
                  Since I was on the ground, going around speaking to brokers and dealers (and even went cheque in hand twice) I have a fair idea of asking prices, so am stating them here. Of course, you are free to disagree with me, but if you do disagree, please at least post your version of the prices.

                  DLF Ph. IV and V: Were 6000 to 7500 psf. Now are 4500-6000 psf.
                  Golf Course Road: Was 5500-6500psf. Now 4500-5500psf.
                  Sohna Road: Was 3600-4500psf. Now is 2700-3600psf
                  Anything by Unitech is diving (Close, Uniworld, Fresco, Nirvana)

                  Some examples - Richmond Park has fallen from 1.5cr for a 2000sqft flat to 1.2cr.
                  Wellington 4br apts. have fallen from 1cr to 85L
                  Icon 4br luxury apts have fallen from 1.6cr to 1.2cr for the 2600 sqft option.
                  Sohna Road Parkview II has fallen from 3800psf asking to 3300psf asking.
                  Sohna Road Vatika City Iris has fallen from 4100psf to 3400psf (what I was offered)
                  Sohna Road Vatika City Aster has fallen from 3300psf to 2700psf (last transacted prices as quoted by a broker, who was offering to get me a similar deal).
                  Sohna Road Omaxe Nile has fallen from 3800psf to 2800psf.

                  All numbers are rough guides, please do your own homework. Examples given are actual quoted prices offered to me (both earlier and now).

                  I've now moved to a rented place and taken a two year lease. I'm quite confident of getting any of these properties at much lower rates.

                  Comment

                  • #89

                    #89

                    Re : Coming Property Crash

                    ************...... I can not give more than this.

                    Asif Khan

                    Comment

                    • #90

                      #90

                      Re : Coming Property Crash

                      Dear friend,

                      You have done th right thing. Opting for a rented house now. Watch the price movements on continuous basis and strike a deal for your dream flat at the correct moment. Upto 10 % higher rate for a locality of your best choice and good construction may not be a bad proposition.

                      ks2071746

                      Comment

                      Have any questions or thoughts about this?
                      Working...
                      X