Sushil Mantri of Mantri developers speaks to NDTV and makes some good points about the Indian housing market. I like the spin he puts on the market to entice the buyer back into the market. He believes that 80L is unaffordable however 40L is affordable. He also thinks that Mumbai is highly speculator driven market.
Wednesday, 30 September 2009
Saturday, 26 September 2009
Morons of the world unite.
Here we go again. Its start of the hype season for the builders and they are sparing no effort. Here is an article on rediff.com on such outlandish super luxury apts. There is no mention on who the buyers are, what is their profession, are they using banks to finance loans or how much black money is used to finance these homes. All the hype is meant to persuade the middle class buyer so they can jump back into the market and take loans to buy apts in far flung suburbs. Who the hell cares if there are 1000 people in Mumbai who buy apts priced over 10 crores. Most readers of rediff hardly make a fraction of that. What are these moronic idiots trying to present to the reader ? There could be 10,000 people in a city of 20 million who can afford these apts, what about the 19.999 million people who living in Slumbai ? If you agree with me just post a comment in this section. I will then point this to rediff and let them know that we are not stupid.
Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation (HDFC)
Developers committed a number of mistakes. The first was that they increased prices too much, too soon. Since sales volumes were strong, all developers across the country felt prices should be increased, even though many of the projects were on legacy land parcels. Developers kept raising prices to a point that went out of reach of even the upper class. The second, and more damaging, mistake was that they committed to buy land at exorbitant prices. Developers rushed to buy land as if there is no tomorrow and land is in short supply. Without tying up the necessary funds, developers bought land at unbelievable prices at auctions across the country. There was intense competition to buy land. The government was also increasing prices at each auction. Commercial plots of land in Bandra-Kurla Complex went as high as Rs30,000-35,000 per sq ft. If you add on three years of interest (as buildings take that long for construction), it is just too high. The third mistake was that developers refused to sell stocks that they held as they thought prices will only go up.
Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation (HDFC)
All three factors were due to greed—aimed to make quick money and more money. All these could have been avoided if we had a real estate regulator, for which I have been asking the government for a while. We have a regulator for the petroleum ministry and for civil aviation. But we are reluctant to have a regulator for real estate. Agreed that it is a state subject, but the industry needs to be regulated—in good times, you will notice that developers made a lot of money, but their balance sheets were still heavily leveraged. When RBI prohibited banks and housing finance companies (HFCs) from lending against land, developers went overseas to borrow money. Most of the deals were structured as cumulative convertible preference shares (CCPF) and generally carried very high rates of interest. These were convertible into equity in 2-3 years, and developers intended to repay the face value before conversion. Since these structures were categorised as equity, they came under the automatic approval route. Developers utilised these borrowings to purchase land. So, real leverage on developers’ balance sheet was very high.
Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation (HDFC)
Tuesday, 22 September 2009
HDFC Rate cutter offer
In the mortgage business the more you know the better it gets. Ignorance is definitely not bliss.
HDFC has comeup with a scheme called "Rate cutter" for the existing Loan customers . In this ,if you repay 0.5% of the outstanding principal, your interest will come down to 9.5 irrespective of your present rate. If you repay 1.5% , then it comes down to 9%.
There is a huge win for everyone since the differential payout could be in the 30k-50k range but the interest savings are in the lakhs. I have no idea why they don't publicize this but some friends have benefitted from this and are very happy. Hope more folks benefit. Also check with your local bank to see if they are able to match this offer. Enjoy and spread this news. This Diwali is definitely going to good for the HDFC loan borrowers. Kudos to Deepak Parekh for this.
Saturday, 19 September 2009
Slow demand crimps India property rebound: PE fund
Finally people are getting the fact that the Indian bubble has popped. The unwinding in high priced locations will be slow just like air leaking out of a balloon. and this is the Economic times reporting. Good job guys to report the ground reality. Full article here
Sourav Goswami, managing director of Walton Street India Real Estate Advisors, sees the most potential in middle-income and affordable housing in top-tier cities and expects land that was initially earmarked for high-end development will be shifted to lower-cost housing as strapped investors sell at a loss.
"There are deals in the marketplace now where funds are offering to sell down some of their land positions at 50, 60 cents on the dollar. And once they do that, the next fund that's buying in at a much lower basis has the ability to sort of re-engineer, sort of reposition the product," he said.
Chicago-based Walton Street manages $3 billion globally. It has invested $200 million in India, including a position in a high-profile township project in Kolkata.
Also Read
→ Step carefully while buying a property
→ Rakindo, Appaswamy strike Rs 100-crore deal
→ Mafatlal puts city property on the block
→ HDIL to pay tax on Rs 350 cr more, says didn't evade tax
Once-soaring property prices in India tumbled by as much as 50 percent during the global financial meltdown as an asset price bubble collapsed, and while prices have crawled back by roughly 20 percent, Goswami said they have a long recovery ahead.
"I really think that even the 20 percent recovery from the lows may have gotten ahead of itself a little bit, and I think maybe you'll just see it stall here for a little bit before it starts to pick up again," he said in an interview.
Much of the bubble was driven by high-end, high-margin projects, and Goswami said the pool of buyers for such offerings has shrunk in the wake of the global financial crisis.
"To really sell into the marketplace you need to make sure that you're building something that the local population can afford," or a monthly mortgage of about 40 percent of a buyer's income, he told Reuters TV.
Sourav Goswami, managing director of Walton Street India Real Estate Advisors, sees the most potential in middle-income and affordable housing in top-tier cities and expects land that was initially earmarked for high-end development will be shifted to lower-cost housing as strapped investors sell at a loss.
"There are deals in the marketplace now where funds are offering to sell down some of their land positions at 50, 60 cents on the dollar. And once they do that, the next fund that's buying in at a much lower basis has the ability to sort of re-engineer, sort of reposition the product," he said.
Chicago-based Walton Street manages $3 billion globally. It has invested $200 million in India, including a position in a high-profile township project in Kolkata.
Also Read
→ Step carefully while buying a property
→ Rakindo, Appaswamy strike Rs 100-crore deal
→ Mafatlal puts city property on the block
→ HDIL to pay tax on Rs 350 cr more, says didn't evade tax
Once-soaring property prices in India tumbled by as much as 50 percent during the global financial meltdown as an asset price bubble collapsed, and while prices have crawled back by roughly 20 percent, Goswami said they have a long recovery ahead.
"I really think that even the 20 percent recovery from the lows may have gotten ahead of itself a little bit, and I think maybe you'll just see it stall here for a little bit before it starts to pick up again," he said in an interview.
Much of the bubble was driven by high-end, high-margin projects, and Goswami said the pool of buyers for such offerings has shrunk in the wake of the global financial crisis.
"To really sell into the marketplace you need to make sure that you're building something that the local population can afford," or a monthly mortgage of about 40 percent of a buyer's income, he told Reuters TV.
Monday, 14 September 2009
Action hots up in premium realty market
Another meaningless article from Economic Times. In a city of 20 million residents, these morons trumpet the realty purchases of few unnamed HNI and NRI's when in other articles they have quote studies which put the number of slum dwellers at 54%. Absolutely retarded reporting by the most moronic newspaper in India.
MUMBAI: With the revival in the residential portion of the real estate sector gaining ground, developers in Mumbai are focusing on the premium
category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations too find takers.
Developers point out that big-ticket deals are in the range of Rs 5 crore to about Rs 35 crore, with the price on a per sq ft basis starting from Rs 25,000 to almost Rs 1 lakh.
Among the properties that attract huge interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi too are witnessing interest from potential buyers.
Prices in both South and central Mumbai did not drop during the slowdown. Read more here
MUMBAI: With the revival in the residential portion of the real estate sector gaining ground, developers in Mumbai are focusing on the premium
category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations too find takers.
Developers point out that big-ticket deals are in the range of Rs 5 crore to about Rs 35 crore, with the price on a per sq ft basis starting from Rs 25,000 to almost Rs 1 lakh.
Among the properties that attract huge interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi too are witnessing interest from potential buyers.
Prices in both South and central Mumbai did not drop during the slowdown. Read more here
Sunday, 13 September 2009
Can you wait till after Diwali 2010 to buy your house?
Last month, a friend of mine called up asking for my help in looking for a 1 BHK flat in Pune area. He is thinking of closing the deal by Diwali. I suggested him to wait for one more year, more specifically till Diwali 2o10.
In my opinion real estate market in Pune is a game of "who blinks first". Builders who are sitting on ready possession homes are still quoting the astronomical prices from last year (30L to 50L). Builders who are quoting around 25L for a 2 BHK are promising castles in the air (i.e. new projects launched now and will complete god knows when). Real estate nerds (and investors) like us think these projects and builders are sub prime and will crash anytime soon.
For a genuine home buyer who wants to buy a flat and stay in it, this is a dilemma.
This is not a purely financial decision. Buying a flat which is going to be your home is a great emotional high. It means security and stability, freedom from increasing rents, not having to search for a new flat to rent every 2-3 years.
On the other hand, no one likes to buy a flat for 35L and see its value drop to 25L in 2 years, even though they planned to stay in it for the rest of their lives!
So here is a question for the person who actually needs to buy a flat and settle down:
Does it make sense to wait for one more year and see where the real estate market goes in Diwali 2010, or is it better to go for a deal today if you can afford it?
In my opinion real estate market in Pune is a game of "who blinks first". Builders who are sitting on ready possession homes are still quoting the astronomical prices from last year (30L to 50L). Builders who are quoting around 25L for a 2 BHK are promising castles in the air (i.e. new projects launched now and will complete god knows when). Real estate nerds (and investors) like us think these projects and builders are sub prime and will crash anytime soon.
For a genuine home buyer who wants to buy a flat and stay in it, this is a dilemma.
This is not a purely financial decision. Buying a flat which is going to be your home is a great emotional high. It means security and stability, freedom from increasing rents, not having to search for a new flat to rent every 2-3 years.
On the other hand, no one likes to buy a flat for 35L and see its value drop to 25L in 2 years, even though they planned to stay in it for the rest of their lives!
So here is a question for the person who actually needs to buy a flat and settle down:
Does it make sense to wait for one more year and see where the real estate market goes in Diwali 2010, or is it better to go for a deal today if you can afford it?
Thursday, 10 September 2009
I-T dept raids HDIL premises
The Income Tax (I-T) department has raided 12 Housing Development and Infrastructure (HDIL) premises, reports CNBC-TV18 quoting sources. The raided premises include residences of two HDIL directors. Sources said the department has recovered unaccounted cash of Rs 1.54 crore so far.
HDIL has been claiming excess expenses and undermining profits, it has been alleged. Over 100 I-T department officials were involved in the raids today, sources said. HDIL is publicly listed and trading at 308 at close of business 9/10/2009. Lets see what 9/11 brings to HDIL. I'm not sure what the fuss is all about with builders and black money. Everybody knows that there is no way one can buy in Mumbai without paying 40% black. What is the fuss all about ? and why single out HDIL ? Why not others like Raheja's and Akruti and countless other big and small builders ?
More details here
HDIL has been claiming excess expenses and undermining profits, it has been alleged. Over 100 I-T department officials were involved in the raids today, sources said. HDIL is publicly listed and trading at 308 at close of business 9/10/2009. Lets see what 9/11 brings to HDIL. I'm not sure what the fuss is all about with builders and black money. Everybody knows that there is no way one can buy in Mumbai without paying 40% black. What is the fuss all about ? and why single out HDIL ? Why not others like Raheja's and Akruti and countless other big and small builders ?
More details here
Monday, 7 September 2009
Friday, 4 September 2009
Rich in India aim for fixed returns, shy risk: Deutsche Bank
I love the dicotomy in reporting by Economic Times and the Times of India property times, both papers belonging to the same company, Bennett and Coleman. Deutsche Bank says that rich folks with minimum assets of 4crs and above have very little appetite for real estate, on the contrary the Times of India says that property sales are picking up in the upper segment. Now the question is are there two sets of rich folks in Mumbai, or are we suckers like they say in Mumbai "Alibag se ayaa hain".
MUMBAI: Deutsche Bank sees little appetite for riskier assets among India's rich despite a more than 60 percent rebound in the domestic stock
Ajay Bagga, head of the German bank's Indian wealth management arm, said its assets under advisement had risen by more than a quarter in 2009 but clients were seeking safe-haven investments. "Most of the money is still very short-term, very fixed return, very preservation oriented. Very little money is looking at taking risk," Bagga told Reuters in an interview.
Deutsche has a 55-member wealth management team spread over five large cities in India and services individuals with at least $1 million in bankable wealth. Bagga said while some clients had started to invest in stocks, demand for real estate and private equity investments remained low.
"Clients have lost that bull market frenzy of chasing returns. It is back to sober asset allocation," he said. The world credit crisis has wiped away trillions of dollars of wealth globally, cutting profits of wealth managers who charge higher fees on riskier asset classes such as stocks as compared with short-term investments such as money market funds.
In India, the number of wealthy fell by nearly a third to 84,000 in 2008, the fastest drop in the world after Hong Kong, as a 52 percent slump in domestic shares hurt the net worth of individuals. By comparison, the world's rich lost a fifth of their wealth in 2008 and their number fell 15 percent as the financial crisis wiped out two years of growth, according to a Merrill Lynch/Capgemini report. Their wealth dropped below 2005 levels to $32.8 trillion.
Ajay Bagga, head of the German bank's Indian wealth management arm, said its assets under advisement had risen by more than a quarter in 2009 but clients were seeking safe-haven investments. "Most of the money is still very short-term, very fixed return, very preservation oriented. Very little money is looking at taking risk," Bagga told Reuters in an interview.
Deutsche has a 55-member wealth management team spread over five large cities in India and services individuals with at least $1 million in bankable wealth. Bagga said while some clients had started to invest in stocks, demand for real estate and private equity investments remained low.
"Clients have lost that bull market frenzy of chasing returns. It is back to sober asset allocation," he said. The world credit crisis has wiped away trillions of dollars of wealth globally, cutting profits of wealth managers who charge higher fees on riskier asset classes such as stocks as compared with short-term investments such as money market funds.
In India, the number of wealthy fell by nearly a third to 84,000 in 2008, the fastest drop in the world after Hong Kong, as a 52 percent slump in domestic shares hurt the net worth of individuals. By comparison, the world's rich lost a fifth of their wealth in 2008 and their number fell 15 percent as the financial crisis wiped out two years of growth, according to a Merrill Lynch/Capgemini report. Their wealth dropped below 2005 levels to $32.8 trillion.