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Old 15th November 2019, 10:59   #31
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Default Re: How long to sell all of India's unsold houses?

The charge that stuck is siphoning of funds, which means the thousands of crores are intact - overseas. When a home buyer approaches the court for justice, they spend a lifetime fighting these cases. Most just give up half way either due to pressure or costs involved. My friend, who is wronged in this matter, prefers to wait it out since RERA isn't protecting his interest. That was my point
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Unitech's Ajay and Sanjay Chandra, Amrapali's Anil Sharma are behind the bars for a long time. The honorable Supreme court has taken a very strong stand and must be applauded
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Old 15th November 2019, 11:37   #32
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Originally Posted by alpha1 View Post
Only in real estate business do you see that the unit prices rise while the unsold inventory piles on.

True.....thanks to the holding power of black money invested in RE. There is no pressure to sell when the money invested in not borrowed from finance institutions.
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Old 15th November 2019, 11:38   #33
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Default Re: How long to sell all of India's unsold houses?

In other news, the big seem to be getting bigger according to this ET article.

https://economictimes.indiatimes.com...w/72034459.cms

Quote:
Indian home buyers are flocking to the nationís well-funded publicly traded developers as risks of stalled and delayed housingNSE 0.05 % projects mount at smaller players in the industry
Quote:
While overall home sales remain weak, Indiaís top nine listed real estate companies saw sales jump 159% in the year ended March from 2017, when the slowdown began, Anarock Property Consultants said in a report this month. These developers also reduced their debt by a total 8% during the period while competitors struggled to survive.
So while the smaller players are pushed out of business, the big players consolidate. Don't know if its a good thing as I am not a fan of being swimming pools and club houses being forced down my throat when what I really want is an apartment which will last a few decades and has 'basic' amenities like open spaces and good approach roads. My parents live in their own flat in south Kolkata which is part of a small complex with no frills (read no pool or clubs) and even after three decades, looks in better shape than the new complexes which have mushroomed recently. My B-I-L has a flat in one of the swank complexes in Noida and while it was completed only three years back, judging by how the facade already looks I wonder how well it would age. And the best part is he works in a different country and struggles to get 'decent' tenants who would not trash and vandalize the place while vacating. Many complexes in Noida appear to be fraudulent to me, in the sense that a plush dream has been sold to people who don't know any better and have been saddled with a property which is unlikely to be what one expects a house to be, ie a place which will remain a home for many years to come.

Cannot really blame only the developers, they are in the game to make money and real estate is a dirty dirty business. People should also know better.
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Old 15th November 2019, 11:47   #34
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Default Re: How long to sell all of India's unsold houses?

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Originally Posted by speedmiester View Post

Also do not ever get into the mindset/ societal pressure that buying a house is major priority as this might cloud your judgement.
This is something that most prospective buyers ignore. The societal pressure to be a "house owner" is massive. Unless one is sitting on a big pile of liquid capital, it makes very little sense for a salaried person to take a loan to buy property. Given the high interest rates, the debt trap will eliminate the possibility of making investments elsewhere.

Over a 10 year period, 50 lakhs invested in a good mutual fund is more likely to yield better returns than an apartment.

Last edited by satishv1987 : 15th November 2019 at 11:48. Reason: grammar
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Old 15th November 2019, 12:31   #35
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Default Re: How long to sell all of India's unsold houses?

OK, I'll go against the grain here.
I was looking to buy an apartment since 2013. I heard everyone say the same thing online and in person: Real estate bubble is about to burst and buying a property is futile in the current market. The same was said to me in 2013, 14... and so on. What was surprising was every year the prices of the apartments kept increasing still. Well, someone seemed to be buying these houses!
To keep the prices down (or low I should say), builders came up with a new idea; instead of 2BHK or 3BHK, they now have 2RLK or 3RLK. Flat sizes have shrunk considerably! A friend bought a 700sq ft 2BHK (from a tier-2 builder) in Pune (outer Bavdhan) for a whopping 65lakhs on loan! He was pushing me to buy one too. I was interested in a 3BHK which that same builder quoted as 99lakhs (for a 900sq ft carpet area 3BHK). Insane! I deferred. A year later, that same house is now being quoted for 1.2cr in Pune. Prices have been increasing every year since 2013! A 1100 sq ft carpet area from a reputed builder in Pune today costs 1.7cr and that'll be given to you in 2024! Pune especially has this malaise of small apartments costing a bomb!
Over to Bangalore. The houses are comparatively bigger but not inexpensive by any means (I mean why would they! duh). The prices here are increasing as well each month! Checked out an apartment in Purva Westend/ Skydale, Sobha Silicon Oasis, Salarpuria Sattva Cadenza in May 2019 and all of them have prices increased since then by Rs. 400-500 psf! Are all apartments sold out? Nope. Is the price going to go down? Nope. Godrej today is offering (at least on paper), a 2BHK with 850sqft carpet area for ~INR 75-85lakhs to be delivered only on 2023-24 in Sarjapur area!
Over to Chennai, the main city is beyond expensive! A new 3BHK flat (not an independent house) is available only in the decent outskirts for around 1cr! Delhi NCR? The less said the better! I remember visiting my sister's flat in Sector 52 and the prices there were ridiculous even in 2012 with shoddy built conditions.

From my extensive first hand research since then:
1. Everyone keeps saying this is a bubble which will fall. Doesn't seem so. It might eventually, but that pretty much aligned with what economist say: In the long run the earth will be engulfed by sun!
2. Buying a home will always be an expensive affair! Unless you have liquidity, don't fall in an EMI trap.
3. Buy from a reputed builder. I value peace of mind over saving a few pennies.
4. If looking for an investment, buy during pre-pre-pre-pre-pre-launch phase and buy a 1-1.5 or max 2BHK at lesser the price the better!
5. Sobha has a premium hold in the market in Bangalore! All its flats are sold out during launch phase or before completion. A lot of agents buy them and will sell to you at a much higher price later.
6. Buy in an area where public transport is available! Locations near metro stations might help appreciation.

PS: A friend bought a house from a tier-3/4(?) builder in Bangalore as well for pretty inexpensive rate! The builder has given him a duplex on regular flat prices! The caveat? Well, the top floor of the duplex is illegal but the builder says he will pay off the "appropriate" authorities in due time so no worries! Sigh! To each his own!

Last edited by ValarMorghulis : 15th November 2019 at 12:31. Reason: spacing
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Old 15th November 2019, 13:05   #36
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Default Re: How long to sell all of India's unsold houses?

Few things to consider about this real estate circle

1. Although everyone is counting the unsold inventory but major issue (atleast in Bangalore) is most of these houses are incomplete and cannot be occupied or sold.

2. Since last 3 years people are waiting for their apartments handover which is getting delayed year after year. Not sure if these are also being counted as pending inventory. I believe sold unit stats are derived by government agencies for units which have been allocated occupancy certificates.

3. Big builders like Nitesh, Mantri etc are in the verge of bankruptcy. And there is no justified reason for this. Few years back they were playing in millions and all of a sudden they have no money. Looks like most of their money is stashed in foreign accounts and they are not ready to spend a penny in further development. But for their personal lifestyle these guys continue with their imported cars and private jets.

4. Builders have now formed cartels to make sure price reductions are prevented. Most of them have an agreement about pricing and discounts. Even heard that builders have come up with some innovative ideas where the unsold flats are being given to raw material suppliers as guarantees. These suppliers will hold the units till they get their payments & release back to builder or in worst cases they sell it off by themselves. This plan works for builders where they don;t have to worry much about selling apartments at discounted rates to clear of the dues.

5. And we cannot totally blame builders as ministers and government babus like leeches have been sucking major money from everyone. As per builders group in Bangalore almost 25-30% money straight away is given as bribes and commissions. Even though sales has reduced and builders are reducing margins, but there is no reduction in bribes which is preventing the real estate price from coming down.
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Old 15th November 2019, 13:31   #37
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Originally Posted by dextor View Post
3. Big builders like Nitesh, Mantri etc are in the verge of bankruptcy. And there is no justified reason for this. Few years back they were playing in millions and all of a sudden they have no money.

4. Builders have now formed cartels to make sure price reductions are prevented. Most of them have an agreement about pricing and discounts.
Add PSU / Private Banks also to that cartel. Banks survive on loans to building projects. If you and me ask for a loan, these banks show us 100 page rule book while for these mallaya's and mantri's, there is no rule book.

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Originally Posted by hothatchaway View Post
So while the smaller players are pushed out of business, the big players consolidate. Don't know if its a good thing as I am not a fan of being swimming pools and club houses being forced down my throat when what I really want is an apartment which will last a few decades and has 'basic' amenities like open spaces and good approach roads.
Me too and i got one. The trend ( read societal pressure ), however, seems to favor the luxury segment. I get my biggest laughs looking at real estate advertisements. Something like "Serene lake view" near bellandur , kallakere lakes in bangalore which are known world over for their frothing. One more sample , " He could be your neighbor " and add a photo of a beautiful bird or squirrel next to the caption and build the complex next to a dry land.

One factor that i want to add is the NRI factor. Though some of the members fit into that category, no offense to them, but these real estate people seem to target them for selling their overpriced flats. The NRI's do this for investment with no intentions of ever coming back to india. The sales people of real estate companies even have a complete list of HNI individuals ( thanks our IT Dept moles) and specifically call them to seel their flats.

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Originally Posted by fordday View Post
And the govt seems to have fell for their tricks.
GOI has earmarked 25000 crores (sort of bailout to the builders) to help finish the unfinished projects.
Read my reply to earlier post. Govt is scarred S**t that banks would fall if their NPA's increase and this threat seems to work.

A Big rant. So let me stop.
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Old 15th November 2019, 14:24   #38
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Default Re: How long to sell all of India's unsold houses?

A friend recently bought a 2BHK flat measuring about 740 sq ft in my colony (Suburban Malad) for Rs 1.1 cr, inspite of unsold houses lying around in new constructions. This is in a 10yr+ old building. He infact feels he's fortunate to bag a 2BHK as most flats in that price range were 1BHK !
The building doesn't boast of any amenities like gym, club house,etc which would have shot up his monthly maintenance & he wanted none of it apart from a parking spot for his vehicle.
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Old 15th November 2019, 14:33   #39
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Default Re: How long to sell all of India's unsold houses?

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Originally Posted by V.Narayan View Post
Given that a home to live in is usually the single biggest investment a family makes it is tragic it was deliberately left virtually unregulated for 72 years since 1947.
But ... but the wise economists and capital owners always have maintained that the govt intervention by the means of regulation always distorts the market valuations and increase the costs and thus make goods out of reach for a larger population.
Also the regulation reduces the competition by erecting some sort of techno-commercial barrier to tide over, which will again lead to increase in prices.



Quote:
Judging a project for quality, integrity, future value, completion on time or almost on time, take value etc can be woefully complex for the best of us let alone for the honest employee putting in his life savings for that one apartment.
Here in lies the crux (may I also add the lack of transparency and information asymmetry in the above reasons), and I agree this is the reason why regulations in real estate sector are important (just like any other sector where same problems lie for the buyers).
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Old 15th November 2019, 16:13   #40
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Default Re: How long to sell all of India's unsold houses?

It is very hard to gauge the internals of an opaque and fragmented industry like Real Estate. Many people have already noted on this thread that despite of all the doom and gloom, prices somehow stay ascending.

The supply has not reduced. The statistics in the opening post is a clear cut evidence. Advertisements for new launches also are not reducing.
On the other hand, paying ability of the salaried class and small business class has been under pressure for a while. Half the people on this very thread have expressed this already.

Price and supply trends continue to defy logic.

However, there is one way to estimate the happenings in the industry. The Brokers!

Brokers make money only when a deal happens and money exchanges hands. All the financial and other tricks builder's employ to sustain sticker prices do not help them.

Back in 2014-16, real estate agency offices were more numerous than pan beedi shops in Thane. But in recent years, these have reduced significantly. Number of brokers on the internet hasn't gone down, but physical storefronts have. Some of this fall might be attributed to the rise of real estate startups like housing.com etc. But reduction in commission income is also contributing greatly to this decline. At least that's what the brokers say.

Some people from this fraternity are known to me. They are not doing too well these days. They lay the entire blame on the deep pocketed builders for pushing prices out of reach for most genuine buyers. Many of them are well aware and very concerned about the drop in build quality too. These are the people flat buyers will catch and beat when ceilings start cracking and drains choke. Builders are beyond reach.


Some argue that black money (originating from Corruption and Crime) provides the endless holding capacity to the builders. This is largely true.
However, the black money guys also have investment objectives and timelines. They will remain quite as long as they believe that the small guys like us can and will pay the inflated price. Once that belief shakes, their resolve will crumble.

Some builders are getting arrested, some are trying to flee the country and getting caught, some more (I assume) are managing to escape. Such news do not lend confidence to the people who have nothing but gun powder as investment guarantee.

Consider also the fact that almost every other well off family in this country have invested large parts of their future security in this sector. Once the big guys blink, these small investors won't be able to hold their confidence. If I had a half constructed mantri property, I would sell it for any price today. All the brokers I had spoken to are somehow hanging in and waiting for this avalanche to start.

Some old timers in the broking fraternity fear that the margin calls from the dark finance might have started already. Once bullets (both real and metaphorical) start flying, the resulting fear and confusion could erode as much as 70% value from the market.

Given the unprecedented economic crisis raging in the country, this flash point does not seem to be that far fetched any more.
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Old 15th November 2019, 17:23   #41
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Default Re: How long to sell all of India's unsold houses?

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Originally Posted by V.Narayan View Post
In my 34 years of buying and selling real estate by take is as follows:-

As public transport, especially metro rail grows the land area that is practically available for big city residentials within reasonable commute time will keep growing. Hence over time i.e. 10 years supply will rise.
I have checked the case of many major cities with good transportation facilities like Toronto, Stockholm, Tokyo, Dublin, Paris etc. Getting a house for rent is a herculean task in these places.

Even if mass transportation becomes a reality in Indian cities, people will still have to spend time travelling in the mornings and evenings. Many would prefer to stay closer to work rather than spending insane number of hours in a train or bus every day. Rents are high and difficult to get houses on rent too.
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Old 15th November 2019, 21:55   #42
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Vivek Kaul has been writing on the supply side having excess inventory and we are headed to a collapse since early 2014 but i do not see that happening yet. Couple of builders are arrested but housing hasnt gone bottoms up yet. New launches are happening and people are willing to live with a 5k per month maintenance charges which includes water from a unknown source delivered to your home.

An example on this maddness has to stop somewhere is brigade building a new complex near sarjapur. Sank 11 borewells and all are dry today. In the end its left to the society to somehow manage.

Lastly if your really looking for a house go for it, but do check out rentals as the value for money you get is awesome. Hold your money dear to you as a lot of shady money is floating around. When i was talking slowdown a friend mentioned at a recent villa plots launch in the outskirts of blr there was no shortage of people walking with bags of money and buying it. Some still think its the best way to make money after gold.

Rera will be a joke till our justice system stops being a tortoise.

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Old 16th November 2019, 07:21   #43
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Default Re: How long to sell all of India's unsold houses?

'Bubble waiting to burst'.

We have been hearing it since 2013/14. 5 years later we are still waiting for it to burst. I bought a small apartment(2bhk) back in 2011(moved in 2014) while I was too young(~3 years exp. bachelor) for such investments and now I feel should have gone for 3bhk instead looking at the prices we paid back then.

Since 2017 I have been looking around and any decent 1500sqft+ 3bhk is >1cr. Yes the prices haven't gone up in these 2 years the way it used to back in 2011-14, but they haven't even come down. Am not in a hurry and can easily wait another 5 years but I seriously wonder if it makes sense to plonk crore+ in apartments which might not even last my lifetime. Some solid nexus among builders have made sure there's no price reduction whatsoever & government bailout package will further give them the safety net to continue the extortion

Last edited by SoumenD : 16th November 2019 at 07:27.
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Old 16th November 2019, 09:35   #44
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Warning 1: Long post ahead
Warning 2: Economics garnished

So yes, the prices for real estate is huge in Indian cities and it has been steadily going thru increase-stagnate-increase style.

There is a tendency for the upper middle class to complain about all this, but people usually comply. And no, it is not just the cultural thing about owning a house.

The middle class which grew in size and wealth thru the 90s, 00s and 10s have been funding this inflation in prices. Yes, there is nexus of babus, builders, et al. But then it is not just that.

Real estate is a special type of asset. If a car has high demand, the car maker rarely increases prices to milk the demand. He just tries to increase supply. But real estate is exactly opposite. For higher demand, they increase prices.

The youngsters who got into the higher wage industries became relatively well off with disposable money. At the same time, their parents, who mostly were the protagonists of the Nuclear family revolution in the past decades retired and got their savings disposable. The kids also have the high inflow from overseas thru NRIs among them. Large swathes of money available amongst this section of people and that is pumped into this one sector. You can take off all the corrupt babus, builders, brokers etc and this sector still has enough reasons to inflate itself out.

The reason for the stagnation/slowdown etc relative to some years before are because of the following two reasons in my opinion.

a) The prices reached a bubble stage.
A lot of members have pointed out high prices already. Question is how do we arrive at whether price is high or not ? It has to be some function of affordability. And you can intuitively arrive at a good price.

Take example of say Bangalore, and look at this figuratively (not literally).

15 years back, an up and coming area in B'lore would have a 3BHK for about 35 L.
That would have counted as the average s/w engineers 15-20 years worth of work ( Down payment upfront and EMIs).

About 7-8 years back, this had gone up to about 75-80L. Remember, this means the down payment almost doubles. For the average software engineer, the salaries would have increased, but it is now not just his effort only. You need two incomes now, albeit not exactly same salary. Most double income families in Indian cities would have a husband-wife income ratio somewhere around 2:1. The family needs two incomes to live comfortably and pay EMIs.

Fast forward to today, at this point, the prices have increased to around 1-1.25 crores. And that is with the state of salaries remaining more or less stagnant for the last few years. Think about this -- now it requires THREE incomes. How will that ever work ? You need two generations for that. The only option is to bring in inherited money into the system. That can never be sustained.

PS: I used some numbers here figuratively. For every city, this can be worked out based on the prices.

In the above explanation, I have written as though inheritance money is a new thing. We all know it is not. At any given point in the above scenario, you can plug in inheritance money and it accelerates the price rise. The previous generation of Indian middle class had been relatively very interested in getting their children "settled" as if that was their life's aim. I am not sure whether the recipients will reciprocate the love for old age, but that is another discussion.

b) The uncertain employment future.

In other words the gig economy. The Indian kids have been brought up saying taking a loan is a good way to get ahead in life because inflation will eat away your risk. As inflation controls set in, automatically wages will stagnate overall, and taking a loan becomes a big risk. People will reduce that culture of running for a home loan immediately when they land on a good job.


But, will the prices keep going up? Yes in many places, because there is so much of money out of the system for the previous generation, which they are eager to pass on. Think dowry, inherited lands, PFs maturing, retiral benefits etc. That has to be handed over to kids, and that will be pumped in.
There is also a lot of black money in medium scale operators of small businesses. What is the best way to create value out of this ? Indian middle class has only one answer, its real estate.
We will now see selective inflation in some places, and stagnation in other places for the short term. In the long term, we are all dead.
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Old 16th November 2019, 20:19   #45
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Default Re: How long to sell all of India's unsold houses?

Great post by Ashokrajagopal.
Another aspect that fed the demand is people buying multiple houses as investment. In some growing cities like Bangalore, there are opportunities for rent. If not its a dead investment.
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