The real state boom was empowered by too many +ve factors during the year 2004 - 2008

    Cash Inflow from foreign Investers
    Home loan interest rates were quite low
    Boom in IT Sector
    People buying more than one house on loan just for investment purpose even if it was a costly affair.
    Many NRI's buying houses in India for investment.
    Black money from politicians and other sources going in to reality
    Now all of the above conditions have reversed


      Foreign investers taking out money
      Interest rates too high
      IT Boom some what burst
      People who brought more than one home are desperate to sell their 2nd home
      NRI's selling their invested houses as they need the money there.
      Black money some what already invested and not giving that result. Some more can flow in but it can not change the fate of this industry.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
      now all the +ve has become -ve and I see no reason for property rates going 25 - 50% down in another 1 year.

      So the mantra for home buyers is wait and watch policy unless you are getting a very good deal from some NRI or from a person who can not take the heavy interest rate any more.

      And for the ones who want to sell, sell your property even if it did not give u any profit.
Read more
Reply
72 Replies
Sort by :Filter by :
  • Prices in outskirts of Pune

    Let me share here with all, my experience of Nov. 11, ‘08. I visited a mid-sized builder, for enquiring for the first time a commercial property. After finishing our discussions about the commercial office space, I asked him about the residential property they were offering.

    I was talking to one of the partners of the company, who was responsible for sales. He showed me their brochure containing 4 – 5 apartments in Baner – Balewadi area. I could see that all their properties (possession by mid ‘09) were only few hundred meters away from Katraj - Dehu Road bypass. After asking him about the rate, he said that before the slowdown started, they were offering those flats (2, 2.5 & 3 BHK) for Rs. 3,300 per sq. feet. However because Diwali was very cold for them from the point of view of customer enquiries, they were offering the same property now at 2,850. On my way out of his office, I overheard him offering these properties to someone on phone at 2,600!

    So the learning I got from above interaction was that if someone approaches a builder with ready cash today, one can squeeze a further discount of at least 10 – 15 %. They are clearly desperate for sales.

    However I would not recommend someone to buy today, even with above discounts. Keep watching the market closely, before putting your hard earned Lakhs of Rupees. Remember, it may be your ones in a lifetime investment.
    CommentQuote
  • Looks like only the Chennai guys get hot about RE :)

    Though people are coming in from Bombay, Pune, NCR, etc, there does not seem to be continuation on those posts.

    Appears only the Chennai related posts get people all hot and bothered! Wonder why? :D

    For example, this last example speaks of a nearly 20% decline for a motivated buyer in Pune. What seems to be the situation in Bombay and NCR - these are two of the most important locations, given the volumes and their proximity to IT and Financial/Business.

    Just wondering. Why don't our Bombay friends post more stuff about prices and their trends in these regions.

    cheers
    CommentQuote
  • Land prices

    As prads_in has pointed out there are several factors which pushed property prices up.Builders hiking up apartment prices for no apparent reason but greed was another feature sending land prices shooting up.
    Recently , in a meeting with the FM, RE companies made the curious statement that unless land prices come down, it would be unprofitable
    to reduce prices.
    Now my question to forum members is this. Is the reverse true ?
    If there is a fall in apartment prices,say 30-50% which seems imminent,would the land prices follow suit ?
    I would like to invite forum members' valuable comments on this.
    Thanks in advance.
    CommentQuote
  • Yes, land prices also fall. I am not sure about the % amount but they do fall.
    CommentQuote
  • Look at the windfall profits RE has done recently !

    Originally Posted by unlikely
    As prads_in has pointed out there are several factors which pushed property prices up.Builders hiking up apartment prices for no apparent reason but greed was another feature sending land prices shooting up.
    Recently , in a meeting with the FM, RE companies made the curious statement that unless land prices come down, it would be unprofitable
    to reduce prices.
    Now my question to forum members is this. Is the reverse true ?
    If there is a fall in apartment prices,say 30-50% which seems imminent,would the land prices follow suit ?
    I would like to invite forum members' valuable comments on this.
    Thanks in advance.



    Dear Unlikely,

    One of my other hobbies is equity analysis to find hidden gems in the stock market. While doing this recently, I figured that the RE sector is making profits even higher than the IT and other sectors. If you look at the reserves they have built up (many through usurious route of exorbitant premia on IPO), they have looted the public - but the public too is to blame falling for this trick due to their own greed .

    But to answer you question, this morning a Goldman analyst spent a lot of time answering questions about RE. Incidentally he was of the opinion that there is likely to be a 30% fall in areas that had had big jumps.

    He was taking the 1996-98 crash as the basis (since that was the only boom-crash cycle we have had in India in the recent past). I remember, land which had gone from 2-5 lakhs per acre before the boom rose to 60 lakhs in Whitefield. From there it fell to between 8 - 10 lakhs by end 98. Then it took till late 2004 for prices to return. I had mentioned this exact same thing some time back in a post. He too said the same thing.

    So, who says land value does not fall! Of course it does when it goes too high. In the long term it gradually rises but after booms, it falls quite a bit.

    Land prices have the same properties as Tomato prices. Demand and supply (of course there are other parametric differences, but you get the point).

    So, all this stuff by builders is either disingenuous (that they are being dumb not knowing things) or is being fed to you for their own ulterior reasons (so that you can believe this and fall for their high prices). Which one of this do you think is happening? :D

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Though people are coming in from Bombay, Pune, NCR, etc, there does not seem to be continuation on those posts.

    Appears only the Chennai related posts get people all hot and bothered! Wonder why? :D

    cheers


    Helo Wiseman,

    Its really interesting to read your postings and the analysis and stats you provide are awesome and educative.Thanks for your postings.

    As I could read from known people around me,(some 40-50 NRIs who work for an FI ) I could see the two main reasons why Chennai guys are more active in realty discussion..

    1) Majority of the Chennai/TN guys tend to save money when they are abroad whereas their counterparts tend to spend more on lifestyle and luxury leaving less savings with them.

    2) Many of the Bombay and NCR guys have parked good amount of their savings in stocks and the happenings in stock market make them not to exit now with losses and they are waiting to exit from market even if its break-even.

    Keep doing well.
    CommentQuote
  • Hey Wiseman,
    Ur posts are full of wisdom for us newcomers. Thanks.
    I am looking for the Golman sachs india realty report but unable to find it on net. It u have it, please provide a link.

    Thanks
    CommentQuote
  • @wiseman...

    good analysis buddy..but cut down on the 'I's in your sentences.

    one can appear wise without associating wisdom directly with oneself ..:) being subtle is very posh..:)

    cheers...
    CommentQuote
  • Hi,

    Real estate price like all will face a correction but not across all geographies,as someone said "like tomatoes" they too are vulnerable to demand-supply factor,last month tomatoes in chennai touched 40-60 /kg
    but nobody stopped buying them.same way RE and housing in particular will not fall in established(old) localities in major cities.big condominiums which offer 'all' in the same compound without any social infrastructure,located away from the city will face a fall may be as much as 30%.and the higher end housing >65 lacs will face resistance. the 25-45 L range will not be affected much (max 10-15%) in areas where there are good healthcare,shopping,temples and schools i dont see a correction beyond 15% in housing.simply put where land is available in acres there would be a steep fall. but where land is available only 'between buildings' not much of a fall
    CommentQuote
  • Prices

    I do not think that the prices will fall that much, as roti, kapda, makan is one of the basic needs of people. Look at the luxary items, are the prices of cars, plasmas etc down by 50%?? If there are no buyers then the builders will not start any new projects, then the supply will dry up and prices stablize. Also keep in mind the RBI help for flats below 20 lacs. Max prices will fall by another 10% in the next six months.
    CommentQuote
  • Prices to crash/fall by 30% (source DH,12/12/08)

    So the correction was/is delayed but not denied to common man. Just like everything else, the cascading effect of any changes in US can be felt world over after a brief (make that long pause) period of time, the real estate correction too has found it's much needed home coming to India.

    Check out Deccan Herald Front page bottom half dated 12/12/2008 for the news update.

    Thanks
    Dinesh
    CommentQuote
  • You are looking for "instant" declines. No fun in that!

    Originally Posted by vivekvan
    I do not think that the prices will fall that much, as roti, kapda, makan is one of the basic needs of people. Look at the luxary items, are the prices of cars, plasmas etc down by 50%?? If there are no buyers then the builders will not start any new projects, then the supply will dry up and prices stablize. Also keep in mind the RBI help for flats below 20 lacs. Max prices will fall by another 10% in the next six months.



    Vivekvan,

    Be realistic. When prices have taken 5 years to rise, do you expect them to fall in one day? Or even in one year?

    Cars and Plasma TVs will fall by 50% - oe even more. But not when you have money in your pocket to buy them. They will fall when a majority of people run out of money (in the form of ability to raise loans, mainly, since majority of people buy these things with debt rather than cash) to buy these things. Don't be under the belief that this is going to be fun and games.

    And people will run out of ability to get loans when they are no longer loan-worthy - this means out of job! Just try to go on your own for a while and see if Banks (which rolled out red carpet just a month ago) even entertain you if you tell them you are on your own :D!

    But IIP numbers are "shocking" according to the news today, but not to some people who get news regularly from the Industrial and Services marketplace. Officially IIP for Oct is -0.4% and we have entered recession too.

    This bear market will not be the 12-18 month variety. Yes, the market may seem to bottom out and even rise a good amount in 2009-2010. But a double-dip in 2011-12 will see it go down even lower than the 2009 lows.

    Estimates based on long-term P/E and what is called the Q ratio sees the DOW going down as low as 4500 (50% down from here). We might even see our Sensex go down that much and more importantly see it hang around below the 10000-12000 levels for quite some time to come.

    It is not the fall period that will affect us badly. It is the stagnation after that which will wear us down and seriously affect us! As you can see, during this fall last few months, most people seem to be partying as if nothing happened. This is the time when the Titanic hits the iceberg and is slowly settling down. People still are not aware of the real dangers. And even if some people have lost jobs, everyone is thinking, "this is for another 3 months. Then jobs will come back and then party time again." Also, they are dipping into savings to tide things over and so all seems hunky dory. Wait till a good number start running out of savings and still jobs do not seem to be coming back ... Then you will see the serious volume and price drops.

    dblacksmith: Can you find a single "I" in this? :D

    cheers
    CommentQuote
  • Originally Posted by vivekvan
    I do not think that the prices will fall that much, as roti, kapda, makan is one of the basic needs of people. Look at the luxary items, are the prices of cars, plasmas etc down by 50%?? If there are no buyers then the builders will not start any new projects, then the supply will dry up and prices stablize. Also keep in mind the RBI help for flats below 20 lacs. Max prices will fall by another 10% in the next six months.

    This is a recent article published in 'Indianrealestatenews.com' :

    India’s realty industry is facing its worst crisis in recent years with profits of most listed companies taking a hit after riding on the boom of the last few years, a boom fired by an appetite for new investment avenues for the rich and middle classes alike.Such has been the impact of the downturn that the realty index of the Bombay Stock Exchange (BSE), an indicator of investor mood for the industry, has fallen more than 25 percent in the past month and over 75 percent in the past year.
    “It’s just an initial indicator of a long-term crisis,” said Santosh Kumar, the chief operating officer and director of noted global realty consultants, Jones Lang Lasalle Meghraj. “Developers went overboard on land acquisition without paying attention to the delivery of projects. Now their money is blocked in lands,” Kumar told IANS. The trouble faced by the realty developers was also reflected in their second-quarter results reported last week, where company after company had to contend with a drop in profits.
    Realty major DLF, which had long ago raised Rs.100 billion over ($2 billion) in what was then the largest-ever initial public offering in India, logged a four percent drop in consolidated net profits for the July-September quarter. So was the case with Unitech, which logged a 12 percent decline in net profit, while for Parsvnath Developers, it was the second straight quarter of decline, with a dip of 78.6 percent in the July-September period.
    Another Delhi-based realty firm, Omaxe, which is also facing turbulent times for the second straight quarter, reported an 87.3-percent decline. “Real estate continues to face tight monetary conditions that has had an impact on the sector. If restrictive conditions continue, we expect the industry outlook to weaken further,” DLF said in a statement.
    “Reduction in construction costs with softening of raw material prices will help us maintain our product margins in challenging times,” said Rajiv Singh, vice chairman of the company. “Earlier, these companies were in the denial mode. Now, they have started to acknowledge it,” said Anil Chawla of D.E. Shaw and Co, leading private equity investors in the real estate sector.
    “I feel the real loss figures will come up in the next quarters.” According to Sanjay Chandra, managing director of Unitech, the company had been “slightly affected” by high interest rates. “Borrowing costs are currently about 15.5 to 16.5 percent, compared with 12.1 percent for the year ended March 31, 2008.” Agreeing with his assessment, Kumar said: “With tight liquidity, poor stock market sentiments and drying private equity, they are finding it difficult to cope up. Projects are also getting delayed because of funds.” Experts did not foresee any upturn in the immediate future, though the government and the central bank have been taking steps to infuse additional liquidity into the system, especially for sectors like housing. “The realty sector needs a reality check for itself. I feel that the realty sector will go for price cut up to 30-40 percent. Prices must match market demand and developers cannot just blindly quote prices,” said Chawla.
    “This situation seems likely to persist for another 8-10 months at least. Most of the projects are getting delayed and buyers are not showing interest,” said Sanjay Verma of Cushman and Wakefield. “Even in peak season like Diwali, the response was very lukewarm,” said Verma, who is managing director for South Asia with the international real estate solutions firm
    CommentQuote
  • Hi


    need help of some one since I don’t know much about property.

    I am from Punjab and looking for investment in property. I know that I will not be staying here for next 20 year due to the nature of my job. It’s purely for investment purpose.

    1. I want to go for a plot instead of flat for the reasons, the entire land is of mine and second since I will not be staying here so it’s better to have a plot and build a house whenever I feel that I shall stay in it.

    Is it right approach

    2. I can invest 20 - 40 lacs and I am looking for 250 - 300 sq yard plot minimum and I am more interested in places like Ludhiana , Chandigarh , Mohali , ....these are the paces where I can stay whenever I want being from this part of country plus I can visit the residential area once a while ( which is not possible if I take it in bag lore or delhi..)

    Which is the best place in Punjab

    3. Can someone help me some good residential project in Punjab / Chandigarh with a good builder where I can invest in plots considering my above budget and requirement of 250 - 300 sq yard

    4. I have heard about two residential projects ( plots ) in Punjab , one is by parsavnath in rajpura ( around 5500 / sq yard) and second by Pearls in Mohali ( around 14000 / sq yard).

    Which one is better considering from long term investment angle.

    Thanks for your help

    Best regards
    CommentQuote
  • Originally Posted by punitkumar
    Which one is better considering from long term investment angle.


    Better investment is to go gamble at a Casino. You will still loose but you will atleast enjoy in the process.;)

    If you haven't gone and invested yet, I also have a plot on moon to sell you... right next to where Chandrayaan MIP landed.:D
    CommentQuote