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Real Estate Bubble Set to Burst Again in India
July 23 2012 , 07:24 PM   #3641
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Originally Posted by expat101
Rovingeye - I agree with you, Real Estate as a inflation hedge but Not Emerging Market Real Estate.
Real Estate that yields something maybe 3,4,5% and not the one yielding 1%. If the Real Estate yielding 1% holds up and since rents will not go up if economic malaise they only go down would you still stay in Real Estate that yields .5% well that's close to the US Fed and what you will earn in 1 year CD's in US Banks considered risk free assets. Maybe our Real Estate in India is Risk free too....
I believe all real assets (irrespective of US or EMs) do hold value or gain during (hyper) inflationary periods - because of the simple reason that the currency is losing value rapidly. As long as printing continues, fiat money continues to lose purchasing power - hence, any real asset you already own become more and more valuable. The inflation could be caused intentionally to devalue debt owed to other countries (West), or simply because you have become ineffective as a central bank to control prices in the economy (India).
July 23 2012 , 07:38 PM   #3642

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Rovingeye - I agree with you that all real assets will hold up considering how much money printing the Western banks have to do. however there are two types of assets the risk profiles of which are different and the spreads between these two types of assets will only widen. The USD dynamics with CHF will change and CHF will at some point in the future rally and similarly the USD dynamics with INR will change and in this case USD will rally. It's all a case of risk perception and the fundamentals of the economy. While sitting in Real Estate in INR terms is okay Gold in INR terms will be the best since Indian Real Estate as an asset is not yielding much. I personally believe that the asset valuations of Indian real estate with respect to yields indicate a bubble of massive proportions and that will correct once money supply and excessive liquidity get drained from our system.
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July 23 2012 , 07:41 PM   #3643

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Are we not considering the impact of possible early elections in 2013 + Global recession coming in 2013 ?

Won't this be a cause for draining out the excess liquidity out of the RE market ?

It's probably the election time, when the netas redeem their money invested through builders. And when no sale is happening, how do they get the sales number up ? By offering discounts ?
July 23 2012 , 08:21 PM   #3644

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This requires deep analysis and cannot be answered in few lines...The Haryana Jats are traditionally warrior class and possess a distinct character and have played a big role in the 1857 mutiny...The rapid growth of Gurgaon dividing the city in distinct upper and lower class; land prices shooting beyond imagination can be some answers to your questions.. g;493706]Hi asheesh,

Couple of questions -

1. Why such violent inhuman incidents happen at UP-Haryana belt. Strikes happen across India, but i've never heard such horrible incidents taking place anywhere.
Does it mean that workers of only UP-Haryana region are least paid compared to Rest of India.

2. Pune is the automobile production hub of India. Similarly, Maharashtra has largest concentration of industries in entire India (if i'm not wrong) Why such strikes and lockouts never take place there. And if even they do, why don't they fall to such a level.

3. What i get from your post, workers angst was due to disproportionate remuneration they are offered as compared to senior staff. If that be the case, why were they silent for so many years. Were they waiting for some worker to get fired so that they can get a chance to show how frustrated they are with their work.

4. If unequal wealth distrbution is the PRIMARY cause of such horrible incident (where one person was burned alive and 90 others are in hospital with severe injuries), then i guess all the businessman and politicians should be burned alive or crushed to death on streets.
All those brilliant students who study 18 hrs a day throughout their life, stretch their limits to becomes MBA, CA, CS, Doctor, Scientist, Engineer so that they can land on good jobs with high paying salaries should be either butchered or paid similar to what a 10th-12th pass worker is paid (who spent their entire childhood on streets for faltu ki MASTI or teasing girls instead of studying at home).

Did i miss anything (though i wanted to say a lot more, but couldn't get words) ???? [/QUOTE]
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July 23 2012 , 09:45 PM   #3645
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Originally Posted by expat101
Rovingeye - I agree with you, Real Estate as a inflation hedge but Not Emerging Market Real Estate.
Real Estate that yields something maybe 3,4,5% and not the one yielding 1%. If the Real Estate yielding 1% holds up and since rents will not go up if economic malaise they only go down would you still stay in Real Estate that yields .5% well that's close to the US Fed and what you will earn in 1 year CD's in US Banks considered risk free assets. Maybe our Real Estate in India is Risk free too....
I think the reverse will happen i.e. rental yield in India will start rising because rents will start rising.

You aint seen nothing yet - extremely high inflation has horrible side effects. Already, drivers, maids and workers are demanding more - and many are also being fired because people cant afford.

I have seen the 80s when rent was 50% of salary for middle class like us. For lower middle class, rent was 75-80% if they wanted anything better than a juggi. Many could only get unauthorised lal dore flats.

Our nearby lal dora flats are now all PGs with 3 people per room at 5000Rs each. Nobody wants families any more - there is much better earning with PGs.

Soon the rents will jump. In my area rents are up by 30% in last one year (from 25000 to 35000 for DDA flats)

Those bad days of 1970s and 1980s are going to return.

If you elect the same jokers into govt, you will get the same result. It is to be expected.

Re: Europe - people arent focussing on the real implication - a recession in Europe means less consumption for many years to come - maybe a decade

Again, money printing will end up in inflation of prices in Euros - with added depreciation of Euro. Your Euro will buy less.

And those who have been exporting to US and Europe - they will have economic disasters of unimaginable proportions.

So Germans, Japanese and Chinese - currently escaping all attention and supposedly strong economies - will be in deep trouble in 2013.

The Jap Zombie disease is now infected USA (least) and Europe (badly). That is 2/3rd of global GDP.

There are no easy answers for money implications and no easy solutions for the economic problems.

We will have to starve out the fever.
Venky (Please read FORUM RULES watch a VIDEO or SEARCH FAQs before posting)
July 23 2012 , 10:14 PM   #3646
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Hmmm. US housing prediction from Goldman sucks.

Housing has a “long list of positives,” including rising prices, job growth, supportive government policies and a decline in the so-called shadow inventory of homes, Goldman Sachs analysts Joshua Pollard and Anto Savarirajan wrote in a note to clients. They raised their rating on the homebuilding industry to attractive from neutral.

Goldman Sachs Sees
July 24 2012 , 01:31 AM   #3647

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Hi guys,

These links might not be pertinent to this thread (so apologies in advance for it), however thought of sharing them since they conveyed a sense of optimism for today's uncertain times.

Long-term investors continue to bet on India: KKR ...... from moneycontrol website

Long-term investors continue to bet on India: KKR - CNBC-TV18

'Massive demographic change' gives India edge over China ...... from moneycontrol website

'Massive demographic change' gives India edge over China - CNBC
July 24 2012 , 10:15 PM   #3648
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Europe, US economies struggle as China stabilizes

NEW YORK/LONDON: The struggles of the US and euro zone economies intensified in July, surveys showed on Tuesday, though improved Chinese factory output suggested stimulus measures were starting to boost the world's second-largest economy.

Europe's private sector looked set for a prolonged slump as surveys showed the downturn that began in the euro zone's small economies has since become entrenched in Germany and France.

Business activity in the 17 states that use the euro shrank for a sixth straight month in July. Manufacturing nosedived, notably in Germany, suggesting recession ahead.

Europe's malaise infected businesses across the Atlantic. US manufacturing this month grew at its slowest pace since December 2010, hobbled by a decline in overseas demand, according to financial information firm Markit.

Whirlpool Corp, the world's largest appliance maker, cited weak demand in Europe and a stronger dollar for its quarterly earnings miss, while Texas Instruments Inc's warned that its third-quarter revenue would be weaker than usual due to global economic uncertainties.

"The slowdown in manufacturing is a concern. We are seeing that the effect from Europe is weighing on U.S. manufacturing, and manufacturing is one of the few bright spots in this recovery," said Craig Dismuke, chief economic strategist at Vining Sparks in Memphis, Tennessee.

The Richmond Federal Reserve Bank's monthly manufacturing composite index in July was the weakest reading since April 2009. In Europe, manufacturing in Germany, the euro zone's biggest economy, contracted at its fastest pace in more than three years and its service sector also shrank. In France, factory activity fell at its fastest pace since May 2009.

The surveys should increase expectations in financial markets for the US Federal Reserve and European Central Bank to do more to help their respective economies.


In China, the news was more encouraging, suggesting a series of policy measures, including interest rate cuts, may be starting to revive an economy that had slowed sharply of late.

HSBC's Flash China manufacturing purchasing managers index, the first significant set of data in the third quarter, r ose to 49.5 in July from 48.2 in June, closer to the 50 level that divides expansion from contraction. The increase was driven by a jump in the output sub-index to 51.2 - the best showing since October 2011.

The PMI "adds to recent signs of stabilization of the Chinese economy, thus underpinning our view that the slowdown in activity will bottom out over the summer months," said Nikolaus Keis at UniCredit.

Chinese economic growth in the second quarter cooled to 7.6 percent from a year earlier, its slowest pace in more than three years, but still way ahead of the United States and the euro zone, which has likely fallen back into recession.

For Nomura's chief China economist, Zhang Zhiwei, the PMI provided further evidence that a slowdown in China's economy bottomed out in the second quarter of 2012. "This suggests the effect of policy easing is being transmitted to the economy and reinforces our view that growth has bottomed in Q2," Hong Kong-based Zhang said.


Markit's Eurozone Composite PMI, which combines the services and manufacturing sectors and is seen as a good guide to overall growth, held steady at 46.4. A reading below 50 indicates contraction in the sector, and the euro zone composite index has been below that mark for half a year. Data collator Markit said it suggests a quarterly GDP fall of 0.6 percent.

The euro zone economy shrank 0.3 percent in the second quarter, and another quarter of contraction would tip it into its second recession since 2009. Unlike China, forward-looking indicators in the surveys painted a gloomy picture. The business expectations index fell to a level previously seen when the bloc was last in recession.

Companies also cut their workforce at the fastest pace since the beginning of 2010, which some said risked extending a vicious circle in which slow growth breeds job cuts which breeds still slower growth. "When you have all of the fiscal austerity measures ... why would you want to be hiring at this moment? The question is whether or not this is going to be a permanent state," said Sian Fenner at Lloyds Banking Group.

In the United states, new orders for exports fell for a second straight month, the first back-to-back decline in nearly three years, Markit said, as recession in Europe dented demand for US products.

Economists worry that the broader US economy, which grew at a 1.9 percent rate in the first quarter, has since lost momentum. A poll of 74 economists polled by Reuters expects April-to-June growth to have slowed to a 1.5 percent pace.

As a result, Wall Street expects another round of monetary easing from the Federal Reserve. The median forecast in a July poll of 16 primary dealers showed a 70 percent chance the Fed would do more to boost the economy.

Earlier this month the European Central Bank cut its main refinancing rate to a record low 0.75 percent and the deposit rate to zero, and a Reuters poll of economists showed the ECB will likely do more to stimulate the economy, possibly by offering more cheap loans for banks.

Europe, US economies struggle as China stabilizes - The Economic Times on Mobile
July 25 2012 , 01:44 AM   #3649
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Indians own more than a hundred of 900 apartments in Dubai’s Burj Khalifa

Burj Khalifa, the world's tallest tower and perhaps the poshest address in the Gulf, is fast acquiring a distinct Indian identity.

Indians now own more than a hundred of 900 apartments in Dubai's 828-metre skyscraper, a sign of the growing financial power of the community in the West Asia.

"Indians have bought between 100 and 150 apartments since its completion in 2010," an executive of project developer Emaar Properties said on condition of anonymity.

The figure reflects a growing trend among well-heeled Indians to invest in property in the West Asia, especially Dubai, the luxury hotspot where the real estate market is on a rebound after the slump in 2008.

Here, the depreciating rupee is no dampener.

"Indians are the No. 1 when it comes to buying property in Dubai. They buy, sell, flip regularly, and we are getting a lot of queries from them," said Manish Khatri, vice-president of business development and investments at Dubai-based SPF Realty.

Khatri said more than half of SPF's business comes from Indians.

Prominent Indians who have acquired an address in Burj Khalifa include actors Mohanlaland Shilpa Shetty, Shetty's entrepreneur husband Raj Kundra and lawyer Rohit Kochhar.

BR Shetty, the owner of the Emirate's NMC Hospital and money transfer firm UAE Exchange, is reported to have bought the entire 100th floor, while NV George, who owns 14% stake in the Kochi International Airport, has bought seven apartments in the iconic building.
"It's a huge status symbol to own an apartment in the building," said Delhi-based lawyer Kochhar, who set up an office in Dubai recently. He has the option of inviting clients to the exclusive owners' lounge on the 123rd floor, he added.

Buying property in Burj Khalifa, however, offers more than just a coveted address. "There is a huge demand for rental in this building," George said, alluding to the six apartments he has rented out. George sold one two months ago for a 50% profit. Property dealers confirm real estate prices are on the upswing in Dubai, West Asia's trading hub.

"Property rates are going up and investors see a good opportunity for price appreciation in this market," said Parvees A Gafur, chief executive officer at Dubai-based Propsquare Real Estate.

Property prices in the UAE had plummeted during the global financial crisis, with several project developers halting sales. They started stabilising early this year following a pick up in economic growth. "Since January this year, rates have risen 20%-30% in the prime areas of Dubai," said Khatri of SPF Realty.

Apartments in the 206-storey Burj Khalifa now cost between 38,000 and 45,000 per sq ft, up from 31,600 per sq ft last year. When the market was at its peak in 2008, the same property was fetching 1,06,000 per sq ft.

Real estate brokers say that while the Burj is a favourite, Indians have also been buying in many other projects across the region. "Many are buying property here to get easy access to the region to set up businesses," Mudassir Zaidi, a regional director at property advisory firm Knight Frank, said.
July 25 2012 , 01:46 AM   #3650
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I think dubai is a btter market to invest as compared to ggn - especially because it will be dollar denominated....
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