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Problem of liquidity in RE
April 28 2010 , 05:51 PM   #11
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Quote:
Originally Posted by mt0587
Real estate is a different market than the stocks or FD's. and we should all be fully aware about this before comparing the two. this market if and when it faces a temporary oversupply will tend to cool down and meander in a range. we have seen this in Delhi espacially in case is Dwarka. People were struggling to sell 3 Beroom flats for 12-15 lacs and then suddenly when that feeling of oversupply vanished, they got 70-80 lacs for the same thing in a gap of 2 years. There can be no permanent oversupply of residential space in India looking at our population and growth potential even in the medium to long term. And as to why people are struggling to sell their flats.... Their asking price would be ahead of the market realities. Otherwise there are still a lot of transactions happening in the market. Go to any financing Bank and you will be surprised at the ques that you have to encounter. PPL will always need houses to live in.....
agreed there wont be a permanent oversupply .. but u urself agree that there maybe a temporary oversupply situation when all these flats become ready for posession .. isnt it better then to wait for that to happen (and buy at that time) rather than to book a flat now and wait for 3 yrs ...
April 28 2010 , 08:56 PM   #12
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Makes Sense

Quote:
Originally Posted by trialsurvey
agreed there wont be a permanent oversupply .. but u urself agree that there maybe a temporary oversupply situation when all these flats become ready for posession .. isnt it better then to wait for that to happen (and buy at that time) rather than to book a flat now and wait for 3 yrs ...
makes sense (for investors) to do that and while you wait - one might invest in FD's and earn atleast 24-30% interest over the 3 yr period as the oversupply hits the market. Your flat acquired then (in 2013) would be hence cheaper by 30% compared to those who enter now.

However, for an end user, intending to buy for self consumption - one may not be able to get a location/floor or choice. Personally, if I get it cheaper by a good 30% - who cares about a slight compromise in location.

Which then brings me to the next question?

Whats the ratio of investors vis-a-vis end users in Noida RE today?

a. If majority are end-users, then their would be little inventory floating around in the market. Moreover, as these people move from their rented flats elsewhere to occupy their own now ready flats in 2013-2014, vacancy rates will increase and it will put a temporary downward pressure on rentals but not capital values.

b. If majority (which I dont think is the case) are investors then again they would not sell below the capital outlay and again try to ride out the lull by renting out these flats and financing the gap between rent and emi. This too would ensure that rentals head south. Only the very desperate and stuck investors who cannot face the emi will exit at low/no premium after servicing loans or self financing their investments. Generally, I feel anyone entering RE in today's (bearish) market are those who have the financial muscle to see them through the oversupply.
April 29 2010 , 01:48 PM   #13
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If only one could know when that mental effect of oversupply will go, there would be many people who would be living their own houses in Delhi rather than paying rent and looking at places like Noida. There would be many cases in this forum who have thought of this FD like formula and have missed once in a lifetime opportunities. The time for buying your home has always got to be today(that is if you have the bucks to do that).
If is not proper to treat real estate like shares- "You wake up every morning. Open CNBC and check your share prices. And then feel good or bad about yourself depending on the share price". Real estate investment requires patience but By GOD it PAYS.
April 29 2010 , 01:51 PM   #14
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Also when you book an under construction property, builder has to give you a differential price below the ready to move properties which would be much higher than the Bank FD's. Some day you have to put that money. Why not today when we know prices are at or near the bottom.
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