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.
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  • Originally Posted by nick_alan_76

    On a side note regarding the reasons why NRIs will not invest more in 2009/2010, Say an NRI remitted $60K for buying a property in India back in Oct 2007 at Rs. 39/$. Now imagine he want to pull back that money, he will be pulling out at Rs. 51/$. That's a loss of Rs. 12/$ and total Rs. 7.2 Lakh for his initial investment. Imagine that he had taken a second mortgage on his house to invest in India and the picture gets dirtier. With so much rupee fluctuation, do you think anyone in his/her right mind invest at this time ?


    It is really interesting and sad to know that people have taken second mortgages to invest in India.

    Any most of the wiseman predictions are coming true, now we have to be prepared for oncoming inflation threat because of stimulus packages all around the world.

    Not sure when to expect this.
    CommentQuote
  • Originally Posted by sehgal
    you are right nick...reality prices are bound downwards. Can you suggest what may be done if one is highly invested in house/commercial property. should one sell few?What then to do with cash?


    Dear friend,

    This is not the time to sell RE unless one is in very urgent need of money for some specific purpose like higher studies abroad/marriage etc. Better to hold on till the downstrend is off and signs of recovery are visible. Whatever has come down now will go up after some time including the IT sector and that will be the time to sell RE at good rates/value.

    ks2071746
    CommentQuote
  • Originally Posted by ks2071746
    Dear friend,

    This is not the time to sell RE unless one is in very urgent need of money for some specific purpose like higher studies abroad/marriage etc. Better to hold on till the downstrend is off and signs of recovery are visible. Whatever has come down now will go up after some time including the IT sector and that will be the time to sell RE at good rates/value.

    ks2071746



    Dear friend

    Next few years in RE will be non performing years. i.e., prices will be either stagnant or getting downwards.
    This means no appreciation during this period. Suppose the selling price of a particular plot is Rs. 10L.

    If it lies idle for the next 3 or 4 years, you will lose 4 or 4.5 Lakhs rupees

    which you could have got through interest rate.

    If you sell this particular plot, after 3 or 4 years you will have around 14 or 15 lakhs in cash.

    So, It is not adviseable to retain the non performing land for long period

    thanks

    chataara
    CommentQuote
  • Originally Posted by chataara
    Dear friend

    Next few years in RE will be non performing years. i.e., prices will be either stagnant or getting downwards.
    This means no appreciation during this period. Suppose the selling price of a particular plot is Rs. 10L.

    If it lies idle for the next 3 or 4 years, you will lose 4 or 4.5 Lakhs rupees

    which you could have got through interest rate.

    If you sell this particular plot, after 3 or 4 years you will have around 14 or 15 lakhs in cash.

    So, It is not adviseable to retain the non performing land for long period

    thanks

    chataara


    Dear friend,

    One need not have to rush sell now. If you see in a longer perspective, say 5+ years, the property would have given more return than the normal bank interest. Of course, if one in debt, they may have to sell some or all proiperties to avoid getting bankrupt.

    ks2071746
    CommentQuote
  • What would you say to a 10 to 15 year recovery ...

    Originally Posted by ks2071746
    Dear friend,

    One need not have to rush sell now. If you see in a longer perspective, say 5+ years, the property would have given more return than the normal bank interest.

    ks2071746


    ks,

    I would like to disagree.

    - First, in the case of Sehgal, by "investment in too many properties" does he mean based on cash or based on Debt. Agree with Alan that if it is debt, then Sehgal is in serious trouble.

    - Like Alan, I too have wound down my debt position to ZERO over the last 2 years having seen this approaching from around late 2006. In addition, I focused out of the export market (US mainly) and took these 2 years to build an India-focused and low-cost, high-margin business that specifically thrives on downturn (our product cuts cost of operations by 50% - 80% for customers besides sharply increasing accuracy).

    - As Chataara has said, would you like to be the early one out? And lose 20%? Or would you like to wait for the turnaround over next 10 years? And see your real returns coming only 15 years or so later - if you still survived?!:(

    Remember, focusing on the 15% - 20% loss today would mean missing the much bigger loss - not to exclude the position of being asset rich and cash poor (in a declining asset value scenario) - of seeing your property going down to surprisingly bad levels and staying there for a long time.

    If Sehgal is overloaded with debt, there is a real chance of him being bankrupted by this decline the way he is loaded.

    Beware!!!

    cheers
    CommentQuote
  • if TSUNAMI couldnt kill RE on ECR,slowdown cannot kill RE in Chennai.

    Originally Posted by wiseman
    ks,

    I would like to disagree.


    Beware!!!

    cheers


    WM as you adapted to the downturn by looking at other avenues,the indian economy has diverse strenghts and is resilient too.I for one think that we are not in the same boat as US and UK.
    I still see many people making money (lots of em) i do not know the Numbers or the % of IT or the salaried crowd buying RE.but i know by personal exposure the big deals are done by self employed people.till date not much of a dent in their earnings (if any).and many businesses are managed by one person or famil(managmt)they have surplus which they do not invest in expanding their own business as they cannot manage on their own and do not want to risk delegation or diversification. these people still invest in RE,
    these people are happy to buy RE and rent it out. they do not calculate the CAGR or the R/E etc and are blissfully unaware or care about the impending 'doom' predicted by wiseman & co.
    there are lots of ifs & buts in both our views, i am neither pessimistic or overtly optimistic ,
    you remember the TSUNAMI and people telling nobody will ever buy land on the ECR ..... one year and the Tsunami was forgotten and people started
    buying on ecr and it was not left out of the boom.
    if a catastrophe like tsunami couldnt kill RE on ECR then i dont think a slow down can in Chennai.
    CommentQuote
  • be careful what you wish for ...

    Originally Posted by abk
    WM as you adapted to the downturn by looking at other avenues,the indian economy has diverse strenghts and is resilient too.I for one think that we are not in the same boat as US and UK.
    I still see many people making money (lots of em) i do not know the Numbers or the % of IT or the salaried crowd buying RE.but i know by personal exposure the big deals are done by self employed people.till date not much of a dent in their earnings (if any).and many businesses are managed by one person or famil(managmt)they have surplus which they do not invest in expanding their own business as they cannot manage on their own and do not want to risk delegation or diversification. these people still invest in RE,
    these people are happy to buy RE and rent it out. they do not calculate the CAGR or the R/E etc and are blissfully unaware or care about the impending 'doom' predicted by wiseman & co.
    there are lots of ifs & buts in both our views, i am neither pessimistic or overtly optimistic ,
    you remember the TSUNAMI and people telling nobody will ever buy land on the ECR ..... one year and the Tsunami was forgotten and people started
    buying on ecr and it was not left out of the boom.
    if a catastrophe like tsunami couldnt kill RE on ECR then i dont think a slow down can in Chennai.



    abk,

    I'm not surprised to see denial een at this late stage. Please consider the facts in front of you ...

    over 80% of the World's economies had just concluded Jan 2009 with an Industrial Production drop between 10% and 20% (Japan, which dropped 20% dwarfs Indias IP as it is THE manufacturing powerhouse in the world as well as the 2nd biggest economy in the world).

    We are talking about economic collapse in so many countries that are considerably bigger than us, you cannot even start fathoming the severity of this financial tsunami.

    Right now, I would liken our condition to the hours before the real Tsunami struck. When the output of much of your export markets decline 50% - and this happened back in the '30s - you will realise that the total exports from India - which was targeted at $200 billion for 2009 and is now revised to $170 billion already by the Govt (remember this is a 15% reduction even before the storm has struck) will have declined by as much as 50%.

    Do you realise the impact of a 50% drop in exports alone - which is 10% drop in total GDP? Even assuming a 1.5 times impact on the broader economy (most analysts use 2 or 3 times multiplier) you will see a 15% drop in GDP. We will be in deep depression. This end seems to be very realistic given the global economic situation, unless you want us to believe that somehow we will be exporting all our good and services to Martians.

    You seem to be all too eager to invite this final stage into India. The consequences of a 10% - 15% drop in our GDP will beggar this country and take us all the way back to early 1990s in economic terms. Do you really want to imagine the consequences of millions of jobless people both in the IT/ITES and other sectors? Your property will be worth 1/5th of what it is now and even then be considered high given economic conditions then.

    cheers
    CommentQuote
  • Hats off Wiseman,

    I think the link below contains yet another prediction you made.

    http://businessstandard.com/india/news/realty-biggies-likely-to-lower-earlier-profit-figures/13/19/350315/

    According to a Credit Suisse report, developers such as DLF, Parsvnath and Orbit have over 20 per cent of their revenues booked since financial year 2006-07 as outstanding from customers and some of these transactions could be cancelled leading to write offs.
    CommentQuote
  • Up up and away

    Wiseman. Very well put. First we had Irrational Exuberance (in words of Alan Greenspan) and now denial to accept the reality.

    Here is to people who think the real estate properties WILL ALWAYS come back, this is what happened in Japan in 1989 (which was the largest exporter that time with HUGE trade surplus... UNLIKE INDIA which still has public debt ~59% of GDP).

    Prices were highest in Tokyo's Ginza district in 1989, with choice properties fetching over 100 million yen ($1 million US dollars) per square meter ($93,000 per square foot). Prices were only marginally less in other large business districts of Tokyo. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak. Tens of trillions of dollars worth were wiped out with the combined collapse of the Tokyo stock and real estate markets. Only in 2007 had property prices begun to rise; however, they began to fall in late 2008 due to the financial crisis.
    Source: http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

    KS & ABK: Do you still feel the real estate price bounce back is only a matter of time? How long are you willing to wait?

    That is why I tell everyone that you need to do your own study. Don't base your investment strategies on what someone else says. He/She may have vested interests. I learnt the hard way in 2001 tech bubble burst that your don't trust anyone else but your brain. Don't ask me or anyone what you should do. Remember, Internet discussion forums or financial advisers are not a replacement for your own research.

    My posts keep getting bigger so I will try and keep them short now onwards.
    CommentQuote
  • Friends,

    We all know that people who earn large money, park them in RE, Thats the safest haven for them.

    They have been doing this for several years, and are continuing doing so because they are still able to afford it.They are buying out of their money.

    As long as they are able to convert the unmanageble cash into a solid immovable asset like RE they are happy and dont care about the returns,the economic situation etc.

    They have various sources of income unlike the salaried class who are so dependant on their job.

    Coming to the point, how many of you believe the present boom were caused by these business people??They are just the end users who bought the property outright at the market price, not the ones who speculated.They dont take home loans from bank to buy homes.

    India is a large country and classic example of paretto's principle, where just 20% of the population contributes to 80% of the countries economic growth.

    85.7% of the population was living on less than $2.50 (PPP) a day in 2005 says a world bank report.

    Most of the growth came only after the 90's when we opened our markets to the world.Even though we have had good regulations we are still heavily exposed to foreign countries economy and when they collapse we will surely be affected too.

    The most affected would be the export business and the one's that hugely leveraged the banks and foreign investments.They may take several years to recoup and reach the same growth rate as earlier.

    For people and business who are producing for internal consumption, this is a growth opportunity.

    I doubt the people who own large acres of agricultural lands in countryside and villages,who are harvesting crops are gonna be affected by this.They never enjoyed the sudden spurt of growth in their profession and may not feel the brunt also in any way.they may not be able to sell at huge profits to the builders and industries anymore, but thats only opportunity loss.They are landlords then and will remain landlords in their place still commanding respect.

    There will still be several pockets of people who will not even feel a pinch.

    When we hear of a crash or talk about bubble burst and RE prices crashing 1/5th of the peak.My understanding is that we are talking about rolling back of the crazy escalation of prices.

    If a flat was sold at 20L in 2002, and being sold in 2009 at 1C.I feel the crash means the property will be priced at a more saner corrected price of 40-50 L.
    CommentQuote
  • you miss the social fabric which attracts people

    Originally Posted by nick_alan_76
    Wiseman. Very well put. First we had Irrational Exuberance (in words of Alan Greenspan) and now denial to accept the reality.

    Here is to people who think the real estate properties WILL ALWAYS come back, this is what happened in Japan in 1989 (which was the largest exporter that time with HUGE trade surplus... UNLIKE INDIA which still has public debt ~59% of GDP).


    KS & ABK: Do you still feel the real estate price bounce back is only a matter of time? How long are you willing to wait?


    all here! there is a fundamental diff between japans social fabric anf that of US and india and few other countries like UK etc. the society at large in india and US is friendly and accomodative of settlors and does not have the overtures of "cold shoulders" or "you ar unwelcome" stance.

    tell me if today US announces citizenship to anyone who brings in a million $s
    i am sure there will be a million people across the globe to avail that. and how many across the globe other than the orientals will like to relocate to japan if japan gives that offer.hardly any.
    India has friendly people and anybody would not have much apprehension about settling in india and US (leave JK and WB etc).

    we all know that it was the social fabric of the US and its immigration laws
    and the open economy which attracted talent to the US. even today most students aspire to go to the US, you heard anyone dreaming about japan????

    dont compare japan and the world.
    CommentQuote
  • Japanese Social Fabric

    ABK: Japanese are probably the least understood society. There is lot more we Indians have in common with the Japanese than with Americans. How do I know? I live in America and have years of first hand experience dealing with the Japanese (Japanese born and brought in Japan... Not one person but over 50 people). The similarities start from the religion (not only Buddhism but also Shintoism), hierarchy in order, trust building, code of honor, code of conduct etc. Let me know if you would like to know more about them. I can write a whole thesis. But just to give you some perspective.

    The "cold shoulder" that you mention is actually apprehension. It stems from the fact that they follow strict guidelines of personal conduct which outsider seldom do (I messed up in dealing with them too. Too me long time to clarify the matters).

    Now coming back to America. If you know analyzed and not just read the immigration history of the country, you would realized that original immigration happened to REPLACE the aboriginals (this is mellowest I could go). Do you want to still compare India with USA? And who would you replace in India ?



    The achievers who went to America were already achievers in their own countries. Here are some examples:
    Albert Einstein (Germany)
    Hakeem Olajuwon (was a player in Nigerian national team)
    Martina Navratilova (Czechoslovakia player who had already won professional singles title in Orlando) etc.
    Do you know this talent was bought with borrowed money? USA has an astronomical debt. Here are numbers compiled in late 2007. They have grown a lot since.
    $9.2 Trillion - Federal Government Debt
    $2.2 Trillion - State & Local Government
    $41.6 Trillion - Private (household, business and financial sector)
    Total Debt (exclude contingent liability items) = $52.9 Trillion

    Add to this:
    $85.6 Trillion - Unfunded Medicare contingent liabilities (part A $34.4 T, part B $34 T, Part D $17.2 T)
    13.6 Trillion - Un-funded Social Security contingent liabilities estimated looking forward

    America as you see it today is living off of the borrowed money. Immigration HAS to be allowed because they are not producing enough Doctors, Engineers and Scientists.

    I am so glad we are NOT LIKE America and I hope we don’t become like them.

    Did you know that the population density of Japan is about same as India (Japan 339 people/Sq.Km. vs. India 336 people/Sq.Km vs. USA 31 people/Sq. Km.)

    Originally Posted by abk
    tell me if today US announces citizenship to anyone who brings in a million $s
    It already is there. Well sort of. First you get Green card then citizenship. Google the word EB-5 visa. While you are at it, also check how many people are taking up the offer and their profiles. Not many haah ?

    This post is getting longer. I will continue in the next one at a later time.
    CommentQuote
  • Abhi

    nabhishek...
    Originally Posted by nabishek
    We all know that people who earn large money, park them in RE, Thats the safest haven for them
    That's not correct. We all know that people who make large money want to invest in tangible productive assets that provide returns. They do not PARK it. RE in todays day and age does not provide returns. In fact it will be proved that it's a black hole for money (black and white). It’s not clever to say people want to invest money in immovable assets. It is a tradeoff between liquidity and returns (investment 101).

    Originally Posted by nabishek
    They are just the end users who bought the property outright at the market price, not the ones who speculated.
    Do you even know the definition of speculator? Here is a definition just for you:
    A person who trades with a higher-than-average risk, in return for a higher-than-average profit potential. Speculators take large risks, especially with respect to anticipating future price movements, or gambling, in the hopes of making quick, large gains.
    Originally Posted by nabishek
    85.7% of the population was living on less than $2.50 (PPP) a day in 2005 says a world bank report.
    Those are 85.7% people LESS affected by the global slowdown. Those are also the people who cannot afford Rs. 20L flat… let alone a 1Cr house.
    Originally Posted by nabishek
    If a flat was sold at 20L in 2002, and being sold in 2009 at 1C.I feel the crash means the property will be priced at a more saner corrected price of 40-50 L.
    Read my post just before yours and also read the definition of Speculator.
    CommentQuote
  • Hi Nick,

    Looks you have not read my post in detail and havent understood the context and continuity in which i have written.

    nabhishek... That's not correct. We all know that people who make large money want to invest in tangible productive assets that provide returns. They do not PARK it. RE in todays day and age does not provide returns. In fact it will be proved that it's a black hole for money (black and white). It’s not clever to say people want to invest money in immovable assets. It is a tradeoff between liquidity and returns (investment 101).


    RE becoming a black hole for white and black money alike is because of the over valuation of assets and over leveraging that happened in the past few years.

    your point that people have to invest in productive tangible assets is well taken.

    The crash in prices is because the real valuation and real worth of properties/assets are catching up.All the non-existant profit and money one saw growing on their books is getting wiped off.Not because RE is giving you returns less than it ought to.RE grows over long cycles,the boom and bursts are part of the cycle.

    During the recession, a property worth 1 C today may devaluate to 30L.During this period the seller may not even get a buyer for 30L quoted for years together and become bankrupt in the process.Does it mean the value of property is zero?no one is going to give the property for free, there will be no buyers..and the returns from it for the recession period is zero.Thats it.

    For a person, who is buying property out of their surplus, or for self use from their own money and if they are not going to think of selling it back for another 15-20 years and have enough cash and other assets to fall back on anytime, why should they bother about the recession?Are you saying RE is not worth investing at all for another century?I am sorry, I beg to differ.

    My comment
    "We all know that people who earn large money, park them in RE, Thats the safest haven for them"

    If you can tell me any other avenue where businessmen/politicians can keep Crores of Rupees thats not on the books, evading tax and without being noticed in India.I will get convinced that RE is not the safest haven.

    Holding RE is not just for returns, Its about marking one's territory.From time immemorial we have seen this behaviour,Looking back at History also we can see People who own the land, rule that land.

    Its the same even today, thats how people command power.Its a matter of Pride not X Rupees or Y Dollars.


    Do you even know the definition of speculator? Here is a definition just for you:
    A person who trades with a higher-than-average risk, in return for a higher-than-average profit potential. Speculators take large risks, especially with respect to anticipating future price movements, or gambling, in the hopes of making quick, large gains.


    Thanks for putting up the definition of speculator here,I had never looked up a dictionary definition.You saved me lots of time and effort.

    Neverthless, My understanding is right.

    Read my comment again seems you overlooked the "not"

    "They are just the end users who bought the property outright at the market price, not the ones who speculated."

    To clarify, this sect of people who bought RE of their money, dont expect quick,large gains or immediate returns is what i meant.They can hold it and pass it down for generations together.

    Remember, not everyone see's RE just as an asset class.Its bound by sentiments in India.

    Those are 85.7% people LESS affected by the global slowdown. Those are also the people who cannot afford Rs. 20L flat… let alone a 1Cr house.


    When these people couldnt afford the 20L already, do they bother if 1C crore property becomes 20L??

    During the recession, These 85.7% people would be able to adjust and adapt quicker than the rest.I believe India is a stronger country than how the world perceives it.We have time and again surprised ourselves by bouncing back in troubled times.Thats the strength we derive from our unity among diversity.

    Our dream of becoming superpower in 2020 may take longer to be realized.But we are getting there slow but steady.

    Read my post just before yours and also read the definition of Speculator.


    Not everybody take informed decisions and know what they are doing.Most of us just get carried away.

    Every one have the right to their own opinion and have their own reasons to act and believe in a way,it should be respected.

    I am preparing myself for any inadvertant situation I may face in the future due to my job or due to the economy.I feel its the wisest thing to do now, so I am saving up cash by investing in FD's and monitoring my investments closely,I have no debt and do not over exert my capacity.Its a conscious decision I have made from the inputs I have gathered.

    I Believe the RE market in Chennai needs correction upto 40-50% from 2007 prices.

    i.e. Inflation/CAGR RE returns adjusted 2003/2004 prices.

    In a way I am also hoping to cut down on my losses by holding back and not anticipating quick large gains by buying today.Many would say being in wait and watch mode is also no less than speculating.I would completely agree with them.

    None of us know what future holds for us, We are all acting upon the cues that we get from sources around us and are making choices hoping its the right one.

    Risk is everywhere.What if the recession hits the Indian banks and the bank where I have my FD becomes bankrupt?RBI would give me back only 1 Lakh per account..what about the rest of my savings?Isnt it a huge risk?

    To say holding cash is the only best thing to do is also foolish.Not the same rules apply to everybody.If things are going to be really very bad then all of us will be affected by collateral damage in a life altering way.No exceptions.whatever be our stand, it is not going to make any difference.

    I urge that one should make a well informed decision,take full responsibility for it and be prepared to face whatever comes of the decision.

    Unless there is a armageddon, global catastrophe and natural disasters or nuclear warfare we wont go back to the stone ages.

    India is a large country with large population, but has very less towns and cities which have good infrastructure and capacity to sustain the needs of diverse people.

    As long as mankind rules earth, Demand for a home in a civilized society to live will prevail.

    Nick,I really admire your knowledge and grasp of the world economy, learning lot from your posts.keep your thoughts coming.
    CommentQuote
  • Originally Posted by nabishek


    For a person, who is buying property out of their surplus, or for self use from their own money and if they are not going to think of selling it back for another 15-20 years and have enough cash and other assets to fall back on anytime, why should they bother about the recession?Are you saying RE is not worth investing at all for another century?I am sorry, I beg to differ.

    My comment
    "We all know that people who earn large money, park them in RE, Thats the safest haven for them"

    If you can tell me any other avenue where businessmen/politicians can keep Crores of Rupees thats not on the books, evading tax and without being noticed in India.I will get convinced that RE is not the safest haven.

    Holding RE is not just for returns, Its about marking one's territory.From time immemorial we have seen this behaviour,Looking back at History also we can see People who own the land, rule that land.

    Its the same even today, thats how people command power.Its a matter of Pride not X Rupees or Y Dollars.



    Thanks for putting up the definition of speculator here,I had never looked up a dictionary definition.You saved me lots of time and effort.

    Neverthless, My understanding is right.

    Read my comment again seems you overlooked the "not"

    "They are just the end users who bought the property outright at the market price, not the ones who speculated."

    To clarify, this sect of people who bought RE of their money, dont expect quick,large gains or immediate returns is what i meant.They can hold it and pass it down for generations together.

    Remember, not everyone see's RE just as an asset class.Its bound by sentiments in India.



    When these people couldnt afford the 20L already, do they bother if 1C crore property becomes 20L??

    During the recession, These 85.7% people would be able to adjust and adapt quicker than the rest.I believe India is a stronger country than how the world perceives it.We have time and again surprised ourselves by bouncing back in troubled times.Thats the strength we derive from our unity among diversity.

    Our dream of becoming superpower in 2020 may take longer to be realized.But we are getting there slow but steady.



    Not everybody take informed decisions and know what they are doing.Most of us just get carried away.

    Every one have the right to their own opinion and have their own reasons to act and believe in a way,it should be respected.

    I am preparing myself for any inadvertant situation I may face in the future due to my job or due to the economy.I feel its the wisest thing to do now, so I am saving up cash by investing in FD's and monitoring my investments closely,I have no debt and do not over exert my capacity.Its a conscious decision I have made from the inputs I have gathered.

    I Believe the RE market in Chennai needs correction upto 40-50% from 2007 prices.

    i.e. Inflation/CAGR RE returns adjusted 2003/2004 prices.

    In a way I am also hoping to cut down on my losses by holding back and not anticipating quick large gains by buying today.Many would say being in wait and watch mode is also no less than speculating.I would completely agree with them.

    None of us know what future holds for us, We are all acting upon the cues that we get from sources around us and are making choices hoping its the right one.

    Risk is everywhere.What if the recession hits the Indian banks and the bank where I have my FD becomes bankrupt?RBI would give me back only 1 Lakh per account..what about the rest of my savings?Isnt it a huge risk?

    To say holding cash is the only best thing to do is also foolish.Not the same rules apply to everybody.If things are going to be really very bad then all of us will be affected by collateral damage in a life altering way.No exceptions.whatever be our stand, it is not going to make any difference.

    I urge that one should make a well informed decision,take full responsibility for it and be prepared to face whatever comes of the decision.

    Unless there is a armageddon, global catastrophe and natural disasters or nuclear warfare we wont go back to the stone ages.

    India is a large country with large population, but has very less towns and cities which have good infrastructure and capacity to sustain the needs of diverse people.

    As long as mankind rules earth, Demand for a home in a civilized society to live will prevail.

    Nick,I really admire your knowledge and grasp of the world economy, learning lot from your posts.keep your thoughts coming.


    Dear friend,

    I liked your above views. Really plain speaking of the facts.


    ks2071746
    CommentQuote