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Is it Over - Bubble burst by liquidity Crisis

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Is it Over - Bubble burst by liquidity Crisis

Last updated: June 24 2012
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  • #21

    #21

    Re : Is it Over - Bubble burst by liquidity Crisis

    The time is bad and getting worse with frustration brewing in all the builders for very-very poor sale. The underwriters are now demanding their pound of flesh before buying from builders.

    An underwriter whom I met recently and became friendly told me that he (with his group) bought 260 units of a project launched 1.5 years back at a rate of 2400 psf. This was 20% cheaper than the pre-launch price of 3000 psf. The chief condition is that the builder cannot sell for less than 3000 psf in ANY CASE.

    Now the underwriters are demanding 30% discount on pre-launch price for buying 25% of the project size because they (underwriters) are sensing deep erosion in prices in near future.

    The problem, in all likelihood will aggravate because builders sitting on land parcels are eager to launch new projects or sell plots

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    • #22

      #22

      Re : Is it Over - Bubble burst by liquidity Crisis

      Might be a good idea to compute input-cost based price

      Originally posted by Mulmule View Post
      The time is bad and getting worse with frustration brewing in all the builders for very-very poor sale. The underwriters are now demanding their pound of flesh before buying from builders.

      An underwriter whom I met recently and became friendly told me that he (with his group) bought 260 units of a project launched 1.5 years back at a rate of 2400 psf. This was 20% cheaper than the pre-launch price of 3000 psf. The chief condition is that the builder cannot sell for less than 3000 psf in ANY CASE.

      Now the underwriters are demanding 30% discount on pre-launch price for buying 25% of the project size because they (underwriters) are sensing deep erosion in prices in near future.

      The problem, in all likelihood will aggravate because builders sitting on land parcels are eager to launch new projects or sell plots

      This is warning to the many people who could not understand how builders can sell below cost to them. I've said a long time ago. If it comes to between remaining in business with some loss Vs closing business, builders will sell at ANY price (including below cost if necessary to move inventory at distress). They had their chance in 2009/2010 and blew it due to greed and over-confidence of Indian Economy recovering and doing great! Reality is coming home to roost now and its now proven that all that was due to the Gov stimulus programs (as I said then).

      Rs 2400 must be pretty close to their cost of construction + interest for 1.5 years. Lets assume land cost them Rs 500 per SFt and building, including all amenities another Rs 1500. This implies Rs 2000 cost of property. For 1.5 years add interest (at 15% pa) of Rs 450 (22.5%).

      Just thinking loud. Wouldn't it be better for buyers to knowwhat might be the approx cost of construction of the flat they are buying so they know they are not paying thru their nose?!

      Maybe on-ground people like Real may be able to come up with likely cost of construction (purely own opinion). This will let people decide better if they want to pay the high premiums demanded of them today!

      cheers

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      • #23

        #23

        Re : Is it Over - Bubble burst by liquidity Crisis

        HELP!!!!!!! I sold an investor's flat last month in Pune, now deal has finished then also he is not willing to pay my brokerage. When deal was started he committed through mail that he has to pay me 1% commission, as he was out of India at that time we didn't made M.O.U. for commission that's why I confirmed through mail several times for brokerage and he also agreed, now he is saying "do what you want to do,I am not going to give your brokerage". Kindly help me out, I am in need of money..........................REPLY!

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        • #24

          #24

          Re : Is it Over - Bubble burst by liquidity Crisis

          Originally posted by A232kapoor View Post
          HELP!!!!!!! I sold an investor's flat last month in Pune, now deal has finished then also he is not willing to pay my brokerage. When deal was started he committed through mail that he has to pay me 1% commission, as he was out of India at that time we didn't made M.O.U. for commission that's why I confirmed through mail several times for brokerage and he also agreed, now he is saying "do what you want to do,I am not going to give your brokerage". Kindly help me out, I am in need of money..........................REPLY!
          Although most of us would have very little sympathy with any broker, no one should be cheated of his rightful hard work and effort. you have 2 options.
          1. File a complaint in police for cheating
          2. Inform It dept. and IRS (Internal Revenue Service) of this transaction. chances are that guy who cheated you of your rightful money must be cheating the govts. too. If you can make the effort of filling in the IRS form, you have punished him of the consequences unimaginable to you even.

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