Mumbai is the world's least affordable home market

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Bloomberg research shows a 100-square-metre luxury residence in Mumbai costs about $US1.14 million, or 308 times the average annual income in India, based on calculations from a housing index compiled using 63 markets by Knight Frank LLP and income estimates of the US Central Intelligence Agency for purchasing-power parity in 2011.

“There are big differences in wealth levels in emerging markets compared to the developed world, which is part of the course for economic development,” Bailey said in an e-mailed response to questions. “In the first phase of growth some people make big fortunes, it takes time for this to trickle down as the middle class develop and generate their own wealth.”

This guys have no clue on why prices are so high in Slumbai. It is politician, builder, mafia nexus which does not let prices down and does not create infrastructure to increase land supply.

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Chennai - GST road land value rises rapidly

Chennai, the laggard in the property bubble has finally caught up with Bangalore and other IT cities like Pune and Noida. Guideline values of agricultural land on the fringes of the city have been revised on an average of upto 270%. Hindu has more on this. 32L documents have been registered in FY2011. By this comparison the number or registrations stands at 4,000 per month. This just shows the scale of affordability in Mumbai as compared to Chennai. 

Jumping on this trend Artha property, an arm of the Times Group has launched villa's off GST road, in close proximity to Mahindra World City. Gives the reach of Times of India full page advertisements coupled with Artha's marketing savvy, I am expecting huge positive response to this property.  Added to this the Times Group can post surreptitious  marketing articles likes this which promote their own self interest it won't be too long that these 230 villa's will be sold in no time.

I expect that the area around Artha meadows sees rapid development in the next few years, as investors and end users join in herds in anticipation of double digit returns. Areas like Adyar are over priced and OMR is flooded with investors which have pushed land prices way to high for anyone to make money in this high interest rate environment. GST road appears to solve the problem of affordability at the expense of a longer commute. For those working around GST this cannot come at a much better time.

Disclaimer : 

I have been a fan of this area for some time due to its low prices and high potential and some of the investments made by me few years ago might see some fruit in the years to come.

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Budget 2012 implications on Indian real estate, Gold , Stock markets and black money

Lets discuss how this impacts investments and taxability for Indian residents and NRI's.

1. IT exemption limit raised marginally so more income in every tax payers pocket.
2. Gold bars tax limit increased, making gold more expensive. The process of laundering black to white using gold also becomes more expensive.
3. Service Tax increase of 2% passed down to end users
4. Cars become expensive due to increase in excise duty
5. Electronics less expensive as the import duty is cut marginally
6. TDS for real estate transactions. This is a big one.
7. I don't understand how real estate capital gains become tax free after one year.
8. The first step for Indian government to tax all global income is proposed by the FM where NRI's/Indian residents are mandated to report foreign ownership of assets held abroad. Hell if the US government can do it, so can the Indian FM
9. Rail budget has increased Freight rates which directly inflates the cost of everything including steel, cement, coal
10. Coal prices are expected to increase in April which causes electricity prices to be hiked.
11. Petrol/Diesel will soon rise now that UP elections are behind us.

Instead of presenting the budget the FM should just increase the cost of everything by 10% every year. It will save us the trouble of analyzing

Please add comments and I will roll all salient points into the main post

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Investors in Mumbai flats want money back Investors in Mumbai flats want money back Investors in Mumbai flats want money back

Times Of India reports. Of all the papers this is TOI reporting.. Again.. Times of India reports :)

Underconstruction investors are screwed big time. Brokers are returning calls as prices are dropping in Mumbai. With good cash one can easily snatch a good deal.  Unfortunately this cannot be said of Bangalore/Chennai or Pune as yet.

MUMBAI: Property speculators and investorswho book flats even before the project is launched are in trouble. Builders who used to take money from them upfront and promised them large areas by manipulating certain spaces in the building, can no longer do so after BMC's stringent building laws kicked in in January. 

Across the city, most builders sell up to 30% of their stock at a discounted rate to investors if they pay a major chunk of the amount upfront. These deals are struck when builders do not even have the basic construction approvals in place. 

Earlier, when building rules could be manipulated to the hilt, developers misused and sold areas which were not part of the apartment. These areas were then surreptitiously and illegally amalgamated into the flat to make it bigger. New rules have upset the calculations of such builders who had promised larger houses to their investors. 

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DLF Business Model Suspect

Here is the news 

•  - http://business-standard.com/india/news/veritas-says-dlf-accounting-biz-model-suspect/466477/
• http://economictimes.indiatimes.com/markets/stocks/stocks-in-news/dlf-shares-fall-after-negative-research-report-from-veritas/articleshow/12097092.cms 
• http://www.firstpost.com/business/is-dlf-on-the-ropes-stock-is-worth-only-rs-100-says-report-230946.html

Verbatim
"Canadian research firm Veritas has slammed realty major DLF Ltd, calling its accounting practices “conflicting” and pointing at gaps in its business model — charges the company termed “mischievous and presumptive”. Earlier, Veritas Investment Research had come out with damaging reports on other Indian firms, including Reliance Industries, Reliance Communications and Kingfisher Airlines.
Veritas has said DLF’s stock is at best worth Rs 100, and the company may have to recast its loan. DLF said “the company adhered to the highest standards of corporate governance and financial integrity”. “We do not generally comment on individual research reports. However, this report in question is presumptive and mischievous as the analysts have never contacted the company to seek any information or clarification,” a DLF spokesperson said . “The audited financials of the company are always in the public domain,” he added. Following the report, the DLF stock price dropped 5.5 per cent on Thursday, becoming the biggest loser on the Bombay Stock Exchange, closing at Rs 214 after an opening of Rs 224."

Source: Moneycontrol ticker

- Source Business Standard (link 1)

Stock price chart
http://www.google.com/finance?chdnp=1&chdd=1&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1330634199048&chddm=391&chls=IntervalBasedLine&q=NSE:DLF&ntsp=0

Later Times of India trying to assuage market fears by claiming that DLF is crying foul
http://economictimes.indiatimes.com/markets/real-estate/news-/dlf-says-report-that-hit-its-shares-mischievous/articleshow/12100095.cms

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Smart money is moving out of realty; so why should you buy?

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If you are a home buyer waiting for property prices to fall before buying, here’s a counter-thought: the big investors are actually moving out of real estate.

One signal came last week when Deutsche Bank asked the Mumbai-based Lodha Group to return its money with a clean profit. The group forked out Rs 2,542 crore to the bank to enable it to exit its investment.

According to a Business Standard report, apart from Deutsche Bank, there are at least six other private equity and property funds that have exited. Among them: HDFC Property Ventures (two investments of Rs 715 crore), Kotak India Real Estate Fund I (Rs 575 crore), Indiareit Fund (Rs 500 crore), India Advantage Fund Series I (Rs 305 crore) and Trinity Capital plc (Rs 120 crore).

That’s a cool Rs 4,700 crore-and-odd opting out of real estate . The problem is fly-by-night “investors” are realty’s big mafia – keeping prices unreasonably high and preventing actual users from buying. This is also one reason why the Deutsche Bank’s are running away.

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Mumbai placed at 199 in list of 200 cities by per capita income

Read a report from Brookings Insitute.
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Top 3 Cities
1 Hartford North America 75,086
2 Oslo Western Europe 74,057
3 San Jose North America 68,141

Bottom 3 cities
198 Alexandria Middle East and Africa 2,248
199 Mumbai Developing Asia-Pacific 1,990
200 Cairo Middle East and Africa 1,989

So the question is: We have lowest per capita income, but highest real estate prices? All RE Bulls are immediate to compare Mumbai with New York, London, Tokyo, Singapore and Sanghai. While our income is just $1990 per capita. Are these BULLS cracking something???

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