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Is it Recession in Indian R E ?

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Is it Recession in Indian R E ?

Last updated: January 16 2010
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  • #31

    #31

    Re : Is it Recession in Indian R E ?

    Mopping up water with a towel!

    Originally posted by contra View Post
    10-15% correction is too small ...it is just a small blip.

    The way the prices have gone up since 2004 in indian RE only a major crash will set things in order.

    Most of us remember how we mop up water spilt on the ground. We take a bucket and a dry towel (or absorbent cloth) and first dip it in the water to soak it up. Then we squueze into the bucket till cloth is only damp.

    Then we go back to the spill and repeat till ground is dry.

    Well, guess what, this is what the market does to people who have money but no experience of ups and downs - which today probably includes almost all the youngsters who have come into work life after 2003!!!

    First the big fall happens and soaks up 50% of their asset value - this is the first squeeze of the towel. Then there is a small rally with all the TV Analysts -like day-traders there are also day-analysts who daily change their tune to suit the mood in the market so they can keep collecting their fees; only thing is, since the majority of people in the market is always pointed in the wrong direction the advice is also almost always in the wrong direction.

    Comign back to the story, when the rally is near its peak, the majority of people think, "bottoms already past and now we may miss the boom as the market seems to be running away" (anyone comes to your mind around now?). And they jump in and dump all their hard-earned money back into the market. This is the time the towel is put back into the market to soak it up again.

    Then the market crashes again and this is the second squueze when the money is transferred from the weak to the strong. This repeats till the weak have no more money left and run away from the market swearing never to return again!

    So also, in the RE market this soaking will happen in a gradual manner - just like boiling the frog by slowly raising the temperature!

    It will happen over time.

    cheers
    Last edited by wiseman; July 11 2009, 01:29 PM.

    Comment

    • #32

      #32

      Re : Is it Recession in Indian R E ?

      well said.. wiseman!

      just wish the new age service class people do not get enslaved to life long EMIs on a highly inflated RE market... those who can wait out for the next 2-3 years for more realistic prices will be so much more happy throughout their lives..

      Comment

      • #33

        #33

        Re : Is it Recession in Indian R E ?

        How to send a letter a task carry on when your a no undertaking experience?

        I lack to refer during a make proceeding in my area. I am 14 and procure no problem trial, except for the purpose umpiring netball. I acquire no fantasy how to dash off a resume. Should I subsume my umpiring area in my pick up where one left off peaceful be that as it may it has no appropriateness to the job?? Can someone cheer tell me the guideline i should echo or the character of handwriting a carry on in my situation. See fit help me!!!

        Comment

        • #34

          #34

          Re : Is it Recession in Indian R E ?

          very well said ... I too came across a news on Indian R E which read as :

          ="http://www.indianrealtynews.com/real-estate-developers/developers-start-new-projects-leaving-old-projects-midway.html"]Developers Start New Projects Leaving Old Projects Midway[/URL]



          Home sales in India may be on the rebound, with real estate firms launching new projects to tap a revival in housing demand, but Ajay Jain remains an angry customer of DLF Ltd, the country’s largest ="http://www.indianrealtynews.com/category/real-estate-developers/"]property developer [/URL]by sales. Singapore-based Jain, 49, who signed up in August 2006 for a four-bedroom apartment in DLF’s Belaire project in Gurgaon, a satellite town south-east of New Delhi, is upset that he has paid the developer at least 85% of the cost of the flat—Rs2.4 crore—but only half the work has been completed so far at the site. At the time of booking, Jain said, he was told that the project would be completed in three years—by August 2009. After paying two-three instalments, DLF gave Jain the buyer agreement in February 2007, which said that possession would be given within three years of signing the agreement.
          “Though DLF has collected the money for this project, they are not bothered about completing it and instead, they keep investing in other projects,” Jain said in a interview with . Belaire is likely to be delayed by 15 months, say real estate consultants. Buyers such as Jain—those who bore the brunt of the downturn along with developers—are in plenty. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. Average delays have ranged from six months to a year. But what irks buyers even more now is that while several existing projects are stuck mid-way, developers have started launching new ones. These projects, mostly in the budget range, promise possession to buyers within two years, yet there are few signs that the pace of construction at existing, delayed projects will be accelerated.
          DLF declined to comment as it was in the mandatory silent period ahead of its first quarter results, likely to be released later this month. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. In November, the company’s chairman K.P. Singh had said its assets under construction spread over hotels, residential and commercial projects were delayed because of lower demand and an industrywide liquidity crisis. DLF’s Belaire and Park Place projects in Gurgaon are likely to be delayed by 15-18 months, say consultants. Belaire was to be ready by August and Park Place by October. A visit to the sites showed that both projects are far from completion. At both sites, only the structure of the towers are ready. The DLF website reflects as much: Structural work is in progress both at Park Place and Belaire, it says.
          With these projects lagging, DLF launched 2.8 million sq. ft of residential projects in the first quarter of fiscal 2010, compared with 2.1 million sq. ft launched during the first quarter of fiscal 2009, according to a July report by Motilal Oswal Financial Services Ltd, a brokerage firm. This is true of other developers, too, who have launched new projects—mostly in the budget or affordable housing category—to generate cash flows even as their existing projects await completion. According to Motilal Oswal, real estate developers, including DLF, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd, have launched 36 million sq. ft of residential space in the quarter gone by, compared with 2.6 million sq. ft in the year-ago quarter, across cities such as Mumbai, New Delhi, and its suburbs, Bangalore, Chennai and Hyderabad. Of this, developers have already sold 44%, or 16 million sq. ft, of homes.
          Unitech’s Fresco, Escape and Harmony projects, all within a 300-acre township, Nirvana Country in Gurgaon, look delayed as well. According to Unitech’s website, Escape and Harmony are to be delivered in the January-March quarter of 2010 and the first phase of Fresco is expected to be completed by the last quarter of 2009. But during a visit to the Escape construction site last week, site workers said construction had just restarted after a lull and it would take at least a year-and-a-half to finish the project. At Escape, only the structure is ready, but the landscaping within the project is still not done. Arvind Panwar, a buyer at the project, is visibly worried. He had bought a three-bedroom apartment in Escape for around Rs1 crore in July 2006. He had opted for a down payment plan, paying 95% of the cost of the flat at one time in return for a 10-11% discount on the base price of the flat.
          Panwar, 35, who works with a tech firm in California, US, feels weighed down by loan instalments of around Rs70,000 every month. “I am worried because I am paying my (loan) EMIs regularly, but there is no clarity on when the possession of the apartment will be given,” he said. Panwar’s buyer agreement says the flat would be delivered within three years—a deadline that matures next month. “The penalty for delay that they have said they will pay (Rs5 per sq. ft per month) is nothing compared with the EMIs I am paying,” he said. “I have been getting lots of emails from Unitech and brokers on the new projects they have launched. I get frustrated when I see those mails.” Unitech had not responded to’s queries on email and text messages until late Wednesday. In Mumbai, with five projects still at various stages of construction and far from completion, local realty firm Neptune Developers Pvt. Ltd has launched two more this year.
          A 125-acre affordable housing project was launched in March near Kalyan, about 50km north of south Mumbai, and an upmarket, 30-storey twin tower project in Bhandup, a northern suburb of the port city, in April. The developer is clear about the urgency to do so. “One needs to run the show and for that, one needs to keep adding cautiously to one’s portfolio even when times are not that good. We are only launching projects that will sell and ensure cash flow,” said Nayan Bheda, managing director of Neptune. The firm has sold 2,000 of 2,100 apartments in its budget housing project at Kalyan, said Bheda, and expects the development at Bhandup, priced at Rs5,000 a sq. ft, to sell out,too. The quantum of sales at the Kalyan project could not be independently verified by . A realty consultant seconds Bheda’s candidness. “Some developers are launching new projects in a particular price category to ensure cash flow to fund construction of its delayed, existing projects even at a lower profit margin,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj, a property advisory.
          Construction at Neptune’s projects running behind schedule has picked up after slowing down, Bheda said, without giving any more details. It doesn’t help, as a spokesman for Parsvnath Developers Ltd said, that realty firms see further liquidity pressure as buyers at older projects default or delay their instalments due to the developer. Bangalore developer Brigade Enterprises Ltd has nearly 20 projects at different stages of construction, each of which is lagging behind by at least six months from completion dates expected earlier, M.R. Jaishankar, chairman and managing director of the company, said at a press meet earlier this month. The Brigade Gateway-branded luxury apartments project in north Bangalore, for instance, is at least 10 months behind schedule and several blog sites on the Internet are flooded with complaints on the delay from customers there. The company has plans to enter the budget housing segment.

          Comment

          • #35

            #35

            Re : Is it Recession in Indian R E ?

            Thanks all for your valuable comments. I too have a feel that the market has not bottomed out completely as on date and particularly with developer coming out with new project on the name of affordable housing and collecting huge money from the end users is without bothering to complete the previous on-going projects seems like the pain will be more and deeper as it's end users entering in to the market at this level.


            ="http://www.indianrealtynews.com/real-estate-developers/developers-start-new-projects-leaving-old-projects-midway.html"]Developers Start New Projects Leaving Old Projects Midway[/URL]



            Home sales in India may be on the rebound, with real estate firms launching new projects to tap a revival in housing demand, but Ajay Jain remains an angry customer of DLF Ltd, the country’s largest ="http://www.indianrealtynews.com/category/real-estate-developers/"]property developer [/URL]by sales. Singapore-based Jain, 49, who signed up in August 2006 for a four-bedroom apartment in DLF’s Belaire project in Gurgaon, a satellite town south-east of New Delhi, is upset that he has paid the developer at least 85% of the cost of the flat—Rs2.4 crore—but only half the work has been completed so far at the site. At the time of booking, Jain said, he was told that the project would be completed in three years—by August 2009. After paying two-three instalments, DLF gave Jain the buyer agreement in February 2007, which said that possession would be given within three years of signing the agreement.
            “Though DLF has collected the money for this project, they are not bothered about completing it and instead, they keep investing in other projects,” Jain said in a interview with . Belaire is likely to be delayed by 15 months, say real estate consultants. Buyers such as Jain—those who bore the brunt of the downturn along with developers—are in plenty. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. Average delays have ranged from six months to a year. But what irks buyers even more now is that while several existing projects are stuck mid-way, developers have started launching new ones. These projects, mostly in the budget range, promise possession to buyers within two years, yet there are few signs that the pace of construction at existing, delayed projects will be accelerated.
            DLF declined to comment as it was in the mandatory silent period ahead of its first quarter results, likely to be released later this month. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. In November, the company’s chairman K.P. Singh had said its assets under construction spread over hotels, residential and commercial projects were delayed because of lower demand and an industrywide liquidity crisis. DLF’s Belaire and Park Place projects in Gurgaon are likely to be delayed by 15-18 months, say consultants. Belaire was to be ready by August and Park Place by October. A visit to the sites showed that both projects are far from completion. At both sites, only the structure of the towers are ready. The DLF website reflects as much: Structural work is in progress both at Park Place and Belaire, it says.
            With these projects lagging, DLF launched 2.8 million sq. ft of residential projects in the first quarter of fiscal 2010, compared with 2.1 million sq. ft launched during the first quarter of fiscal 2009, according to a July report by Motilal Oswal Financial Services Ltd, a brokerage firm. This is true of other developers, too, who have launched new projects—mostly in the budget or affordable housing category—to generate cash flows even as their existing projects await completion. According to Motilal Oswal, real estate developers, including DLF, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd, have launched 36 million sq. ft of residential space in the quarter gone by, compared with 2.6 million sq. ft in the year-ago quarter, across cities such as Mumbai, New Delhi, and its suburbs, Bangalore, Chennai and Hyderabad. Of this, developers have already sold 44%, or 16 million sq. ft, of homes.
            Unitech’s Fresco, Escape and Harmony projects, all within a 300-acre township, Nirvana Country in Gurgaon, look delayed as well. According to Unitech’s website, Escape and Harmony are to be delivered in the January-March quarter of 2010 and the first phase of Fresco is expected to be completed by the last quarter of 2009. But during a visit to the Escape construction site last week, site workers said construction had just restarted after a lull and it would take at least a year-and-a-half to finish the project. At Escape, only the structure is ready, but the landscaping within the project is still not done. Arvind Panwar, a buyer at the project, is visibly worried. He had bought a three-bedroom apartment in Escape for around Rs1 crore in July 2006. He had opted for a down payment plan, paying 95% of the cost of the flat at one time in return for a 10-11% discount on the base price of the flat.
            Panwar, 35, who works with a tech firm in California, US, feels weighed down by loan instalments of around Rs70,000 every month. “I am worried because I am paying my (loan) EMIs regularly, but there is no clarity on when the possession of the apartment will be given,” he said. Panwar’s buyer agreement says the flat would be delivered within three years—a deadline that matures next month. “The penalty for delay that they have said they will pay (Rs5 per sq. ft per month) is nothing compared with the EMIs I am paying,” he said. “I have been getting lots of emails from Unitech and brokers on the new projects they have launched. I get frustrated when I see those mails.” Unitech had not responded to’s queries on email and text messages until late Wednesday. In Mumbai, with five projects still at various stages of construction and far from completion, local realty firm Neptune Developers Pvt. Ltd has launched two more this year.
            A 125-acre affordable housing project was launched in March near Kalyan, about 50km north of south Mumbai, and an upmarket, 30-storey twin tower project in Bhandup, a northern suburb of the port city, in April. The developer is clear about the urgency to do so. “One needs to run the show and for that, one needs to keep adding cautiously to one’s portfolio even when times are not that good. We are only launching projects that will sell and ensure cash flow,” said Nayan Bheda, managing director of Neptune. The firm has sold 2,000 of 2,100 apartments in its budget housing project at Kalyan, said Bheda, and expects the development at Bhandup, priced at Rs5,000 a sq. ft, to sell out,too. The quantum of sales at the Kalyan project could not be independently verified by . A realty consultant seconds Bheda’s candidness. “Some developers are launching new projects in a particular price category to ensure cash flow to fund construction of its delayed, existing projects even at a lower profit margin,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj, a property advisory.
            Construction at Neptune’s projects running behind schedule has picked up after slowing down, Bheda said, without giving any more details. It doesn’t help, as a spokesman for Parsvnath Developers Ltd said, that realty firms see further liquidity pressure as buyers at older projects default or delay their instalments due to the developer. Bangalore developer Brigade Enterprises Ltd has nearly 20 projects at different stages of construction, each of which is lagging behind by at least six months from completion dates expected earlier, M.R. Jaishankar, chairman and managing director of the company, said at a press meet earlier this month. The Brigade Gateway-branded luxury apartments project in north Bangalore, for instance, is at least 10 months behind schedule and several blog sites on the Internet are flooded with complaints on the delay from customers there. The company has plans to enter the budget housing segment.







            Comment

            • #36

              #36

              Re : Is it Recession in Indian R E ?

              6 Months Research in Chennai RE

              Hi,
              I have spent last 6 months time in understandng the reality behind the Chennai RE. Here is my view

              1. Lot of sales Stagnation in Mogappair Area. The following are project/ Unsold Apt/ Proj.Completion Period details

              a. Jains Nakshata 135 Apts Sept 09.
              b. Jain Sunderbans 140+ Apts( Minimum) MAr 10
              c. DABC Mithilam 75 Apts - Dec 09
              d. Others like ( Fomra, Indira, Vinoth, Saijayani etc..) 150 - partially completed..Availability chart changes drastically. One day Sold out other day again available ( funny )..

              If you have a view Mogappair area in Google earth, you will find only new paint colours. All are either unfinished / temporarily stopped construction.

              If it goes like this
              I am pretty sure that there are 50+ builders in this area and will be around 2000 unsold Apts before this year end.

              But All these developers say that the rate per sq.ft will never come down.

              Few players increased the rate from the Initial offer price + 1000 and now reduce -500 and cliam that they have reduced the price.

              If we go through the ="http://www.tnreginet.net"]www.tnreginet.net[/URL] website guidline value in these are between Rs 750 and Rs 1200 sqft. All these people acquired lands for 30-45L and quote Rs 3000 per sqft. They are still profitable becos they have sold 50% Apts Rs 3000 per sqft. They can still hold it for another 3 months, but after that there will be big big problem when they sell the remaining Apts lesser rates with no further advertising. The people who live in these apartments will feel like their investment has lost its value by atleast 30%.

              Pls note that OMR story is atleast 10 times bigger than Mogappair.

              Hold on to your hard earned money. I have wisely invested my money in Bank FDs which has appreciated atleast 6% (avg) during last one year, where in RE has not returned even 1%. I will redirect my funds once good times return after 2 years.

              Regards,
              Vaidy

              Comment

              • #37

                #37

                Re : Is it Recession in Indian R E ?

                Don't you people think that the market has turned out to be end user's market since last six months. The prices too have stabled to some extent.

                Though prices seems to be on the higher side still but at the same time the real estate prices are not going down further.

                Will / Can the current prices will be sustain in future or you people expect it to go down further in near future.

                Request to comment...

                Regards

                Comment

                • #38

                  #38

                  Re : Is it Recession in Indian R E ?

                  I'm in a quandry too about finding the right time to invest. Will the market go down again (from current values) in the next 2 years? No IT company has announced major hiring or price hikes - so what is getting the real estate companies to hold on to their prices, even when there is so much of oversupply in the fringes of the city (at least in Bangalore)?

                  Comment

                  • #39

                    #39

                    Re : Is it Recession in Indian R E ?

                    New Tax Code

                    Add to it the new tax code + monsoon worries.

                    The RE is going to take a breather if it does not go down further.

                    Comment

                    • #40

                      #40

                      Re : Is it Recession in Indian R E ?

                      sir,

                      your nick suggests that you are a builder / developer ... if so, it's request to introduce yourself so that we can exchange our thoughts and ideas.

                      Reagards

                      Comment

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