Tis the time of the year to reflect on the year gone by and to plan ahead. As most people will agree 2008 was the year to bury leverage for good. Borrowers with good credit saw rates go up regardless and there were no prizes to be won for being a good kid and being frugual in your livestyle. Everyone got hit pretty bad. The difference being that the prudent investor still can rebound whenever the market turns, however the speculator is bankrupt and will have to restart his life from scratch to recoup the money back lost in the de-leveraging process.
2008 also put an end to the lot of myths about real estate
1. Real estate never goes down. Oops it just did.
2. Black money will support the market. Oops Black money speculators lost heavily in the market.
3. NRI's will come in droves. Oops NRI's lost jobs and returned back with empty pockets thanks to the decline in their 401k's and stock investments
4. Outsourcing will increase inspite of US downturn. Another big OOPS. With the collapse of Wall St. institutions, the need for systems engineering has collapsed as well. Add to that except for the top 4 outsourcing vendors, none can differentiate themsevles in any way and are competing by lowering prices. We all know what happens when prices go down!!
5. Sensex was supposed to hit 25000. Oops it closed at 9600 for 2008. If one takes the closing Sensex of Dec 31st 2005 of 9300, we had a massive gain of 3% over 3 years, annualized at 1% per year. Fantastic achivement by any standards, Dalal Street Einstiens.
As we move into 2009 I'm expecting the following for Indian real estate.
1. RBI will cut PLR to get loan rates to 2004 levels.
2. It is best to buy property nearing completion from investors. There is no point in buying directly from the builder when there are thousands of flats which are held by bleeding speculators.
3. We will see investors dumping flats as their jobs situation worsens. US is going thru major layoffs and that will have an effect on the Indian market was well. Some work will get outsourced but that gain will be compensated by the loss of Wall St business, some of which have closed for good. We will see layoffs and paycuts in the Indian industry in general, IT or otherwise.
4. NRI's who plan to live abroad will dump their holdings in India. It is cheaper to buy primary or investment property in the US with a better rental yield and lower mortgage then to keep their holdings in India. 2009 will bring out all these rats out of their holes.
5. Media will keep proping prices by issuing advertorials. The more research the buyer does the better. If it sounds too good, stay away. If they promise you the moon, you will get to live on it.
6. All the Abdullah's and Bindas Bhai's of India, cannot prevent humpty dumpty from having a big fall yet again in 2009. 2008 was the year of denial. 2009 is the year of acceptance.
To all the readers, commentators, bulls, bears or otherwise Have a Happy, Safe and Prudent 2009. We all learn from the collective knowledge, information and opinions we share. Happy posting.
2008 also put an end to the lot of myths about real estate
1. Real estate never goes down. Oops it just did.
2. Black money will support the market. Oops Black money speculators lost heavily in the market.
3. NRI's will come in droves. Oops NRI's lost jobs and returned back with empty pockets thanks to the decline in their 401k's and stock investments
4. Outsourcing will increase inspite of US downturn. Another big OOPS. With the collapse of Wall St. institutions, the need for systems engineering has collapsed as well. Add to that except for the top 4 outsourcing vendors, none can differentiate themsevles in any way and are competing by lowering prices. We all know what happens when prices go down!!
5. Sensex was supposed to hit 25000. Oops it closed at 9600 for 2008. If one takes the closing Sensex of Dec 31st 2005 of 9300, we had a massive gain of 3% over 3 years, annualized at 1% per year. Fantastic achivement by any standards, Dalal Street Einstiens.
As we move into 2009 I'm expecting the following for Indian real estate.
1. RBI will cut PLR to get loan rates to 2004 levels.
2. It is best to buy property nearing completion from investors. There is no point in buying directly from the builder when there are thousands of flats which are held by bleeding speculators.
3. We will see investors dumping flats as their jobs situation worsens. US is going thru major layoffs and that will have an effect on the Indian market was well. Some work will get outsourced but that gain will be compensated by the loss of Wall St business, some of which have closed for good. We will see layoffs and paycuts in the Indian industry in general, IT or otherwise.
4. NRI's who plan to live abroad will dump their holdings in India. It is cheaper to buy primary or investment property in the US with a better rental yield and lower mortgage then to keep their holdings in India. 2009 will bring out all these rats out of their holes.
5. Media will keep proping prices by issuing advertorials. The more research the buyer does the better. If it sounds too good, stay away. If they promise you the moon, you will get to live on it.
6. All the Abdullah's and Bindas Bhai's of India, cannot prevent humpty dumpty from having a big fall yet again in 2009. 2008 was the year of denial. 2009 is the year of acceptance.
To all the readers, commentators, bulls, bears or otherwise Have a Happy, Safe and Prudent 2009. We all learn from the collective knowledge, information and opinions we share. Happy posting.
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