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Propert Bubble busted now..


Propert Bubble busted now..

Last updated: November 13 2008
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  • Propert Bubble busted now..

    It's now time for market correction in Indian Properties. The market in India was not based on the demand and supply but broker driven and now they cant' keep pulling this anymore.
  • #2


    Re : Propert Bubble busted now..

    burst or saturated

    I recon people who invested hefty amount will not sell even when there is correcetion.Thus making the market stabalized.When the world economic cycle (back on track) probably in late 2010 s ,india will hike again in all sectors.So in worst case scenario if india runs in GDP of 3-4% in the next 18 months it will recover fast back on track.I dont think sellers other than builders will be giving a small margin of discounts.Most of the builders postponed thier plans thus making the demand cycle for more wors for the coming years.I dont think prices not going anymore,may be a correction .


    • #3


      Re : Propert Bubble busted now..

      Wake up call!

      Dear Harry,

      What would you consider a small discount? 15%? 25%? 40%? For a home, only a 5% discount will be small. And this kind of discount has long since passed. Now-a-days I hear (obviously since I'm not in the market for buying) discounts of upto 25% are quite common IF you insist and are a cash buyer.

      And forget GDP growth of 3-4%. Thats good for the FM to say. But do not be surprised to see actual contraction (its commonly called recession and is measured in negative GDP growth). At least for a few quarters.

      We still have not seen the real fall in terms of job loss, DEEP salary cuts and so on. Do you remember the 2001 recession? Well, we have already fallen deeper than that in some contexts but the broader market has not seen it yet. I believe this time the recession and pain will be deeper (Don't blame me, I've not created it or defending it, just sayinf it like I see it).

      Already in Bangalore, more than 1 million SFt is going vacant and there are no buyers. This is the same in residential as well as commercial. Builders are deeply in debt and there is something called interest they pay on that. So, as you think, they cannot sit indefinitely on their vacant property.

      This is NOT saturation. This is breakdown. Of course, as you say the markets will eventually bottom and climb ABOVE the 2007 peak.

      For people who bought in 2007 they may see their prices again in 2017 and probably a prince 100% over original investment maybe in 2022. So, a 1 crores purchase in 2007 will probably be worth 2 crores in 2022. But for this 1 crore, another 1 crores may have gone to the bank in interest. So, after 15 years the return on investment will be meagre!!!

      For people who buy in 2009 they may buy at say 50% discount. By 2017, they will already be up 100% and by 2022 maybe 300% up on their investment. After deduction of Bank interest, they will still be seeing a 200% ROI. See what a difference timing makes.



      • #4


        Re : Propert Bubble busted now..

        wiseman looks to have the dream of dreams. His dream that the real estat prices will be down by 50% only can remain as dream. There can be some small correctons like a 5% or 10 % that too may come by way of free items. Those thinking that the Chennai RE prices will come down by 50% in Chennai key locations will only lose good flats/property at good locations in Chennai. I bet, the real estate prices especially for apartments and houses may at best remain at current level and may not escalate for the next 6 months or so in key locations. Some corrections are possible in the outskirts far away from the key locations. I have been on the look out for a new flat of about 1300 sq. ft. 3 bed for the last 6 months in areas like East Tambaram, nearer to the railway station and my looking around showed the rate ranging from Rs. 3200 to Rs. 3500 per sq. ft. within a radius of 2-3 km from station. As days passed, some really good flats got sold off and I could settle down for a 1398 sq. ft. flat in the I floor very near to the Tambaram Sanatorium Station at Rs. 3500, the selected builder is Ruby Builders, a good and quality builder in the area with schedules being maintained as commited by them. Waiting for 6 months did not give any reduction. Flat prices remain at almost same level in areas like Tambaram ( Rs, 3300 to 3500 ) , Saidapet ( Rs. 4500+), Vadapalani ( Rs.5500+), Ashok Nagar ( Rs. 5500+ ), Manapakkam ( Rs. 4000 ) , Chromepet ( Rs. 3500 ) etc. ( projects not at the outskirts in these locations ) . A good location coupled with nearness to your place of work as well as other facilities for living like schools, hospital, market, decent restaurent, no water stagnation, no ground water problem etc. are very important and crucial, then better decide now if you come across a good project rather than waiting for another 6 months or more. Taking a flat at a place over 20 KM from your place of work even if well conected by road is not advisable unless the same comes to you from your father. You should be able to reach your residence at minimum time and most facilities should be within 2 KM radius from your flat. Better to be near to Railway Station. Your travel by two wheeler can be limited to 2-3 KM and by 4 wheeler limited to 10 KM. Never go a first time builder. Do not opt for flats which may get ready in 24 months time from date of booking. It is advisable if you go for a ready or getting ready in less than 3 or 4 months time etc.


        • #5


          Re : Propert Bubble busted now..

          wiseman is always thinking of 50% like discounts. Every buyer will be happy to get such discounts. Even those owning one flat will go for the next one soon. Such things are possible only if the Chinese Real Estate chaps enter India and do RE projects with simple and low quality materials and their very standard designs not taking care of Indian Conditions and requirements.


          Have any questions or thoughts about this?