Team-BHP - The Property / Real Estate Thread

Quote:

Originally Posted by alter.e.go (Post 3774378)

Found this good article..

"To conclude, let me reproduce an example from the India Today article: "At Himgiri, a typical multi-storeyed residential block on Mumbai's arterial Peddar Road, the IT Department acquired a 624 sq ft flat for Rs 72 lakh in 1994. A year later, a similar flat went for Rs 60 lakh. And in June this year, a 622 sq ft flat was bought at a little under Rs 50 lakh. The list is endless."
Pedder Road, as you would know is where Lata Mangeshkar lives and it is located in South Mumbai. And if real estate prices can crash in South Mumbai, they can crash anywhere else. Meanwhile, let me hear a few more arguments in favour of investing in real estate. Bring it on! But do remember that the one investment lesson that people learn over and over again is that, this time is not different"

http://www.firstpost.com/business/lo...0-2357070.html

I personally find these rates very difficult to believe! I am not sure of the exact location and condition of the building, but given the location - there is definitely something wrong with the rates.
Heck, Mumbai distant suburbs such as Thane and Navi Mumbai are more expensive (if you look at per sq.ft costs).

As for investing in real estate - one suggestion is to not limit yourself to one area, or one form of property. That is, as an investor - one should look around India for good opportunities, not necessarily limited to only residential/only commercial.
I read in a report recently that some places in Hyderabad are witnessing a good boom in demand by the IT industry, and for a change - supply is short! Getting in there and picking up a pre-leased property might be a good idea for all you know!
(NOTE: This is just my understanding, and am not recommending anyone to do the above without carrying out their own checks)

Secondly: The Mumbai market has a huge demand/supply gap. Issue is that most developers are not understanding consumer needs. There are many cases where buildings have had record sales during their pre-launch phase - just because they've been launched at the right price with the right product mix. Look at L&T Crescent Bay, etc. which were launched at 18,xxx/sq.ft and pre-launch inventory was booked quite quickly. By getting in at the right time, investors can easily expect to get back double the amount when the project is completed.

Thirdly: Prices will not go down, until the land value is reduced. Gone are the days when land was cheap and developers were minting money. Today, 70% of the cost of a project is just the land. While prices will undoubtedly reduce, it will be interesting to see by how much. I do not see a 50,000/sq.ft property going to sub-10,000 levels unless it is a distress sale by someone apart from the owner (such as bank who financed it, being forced to sell it to recover their dues).

This is how I have come to view the Real Estate market based on about say a month of Research.

The Rental Yield is a good indicator of what the price in a area should be. In Mumbai the property prices have been climbing but rental yields have been decreasing(these should ideally move in sync) **Why?**
Because rental yield is solely governed by demand and supply, there is no concerted effort to fix that price. This cannot be said of property price. The builders just tells you the price is Rs 7500 and after x months it will go to 7800. But based on what?
Based on the current unsold inventory it is evident that the price is definitely artificially propped up. It is difficult to judge what the actual price (based on demand and supply) should be. Even home owners will not admit that they have perhaps made a mistake and 'sit' it with property even when it has depreciated in value.
If you calculate based on the rental yield.

Property cost Rs 1,00,00,000. Rental Yield @ 2 - 2.5% = 2,00,000 per annum
Now if calculate the price of the property based on a 4 - 5% rental yield the value of the property comes to Rs 50,00,000 - half the value!

This calculation may not give you the exact value of the property but is only intended to give a general reference point for the price.

Hi, If I may ask, where exactly is your property located? As Im scouting around for one with clean papers in Bangalore South.

One more query - this to knowledgeble BHPians - a friend is selling land meant for farming at Ramanagara. Im planning to grow some produce there. He owns this tract for a year now.

What are the things I need to be careful about? What are the documents I need for verification? How does one get an agriculturist tag?
Thanks in advance.

Quote:

Originally Posted by ramki067 (Post 3783949)

Hi guys,

We are trying to sell our parents house in Bangalore which we expect will fetch us around 1.25 to 1.5 crore and plan to take a plot and construct a house immediately in an area close to my workplace. How can we do a transaction with the buyer for such a huge amount without getting cheated? As this is whole life savings of my parents, i do not want to get into any trouble. Kindly advise.

Thanks,
Ramki

"Indian Realty Faces Flat Sales, Stagnant Prices Next Year: Moody's"

All India | Indo-Asian News Service | Updated: September 01, 2015 20:06 IST

NEW DELHI: India's largest realty firms will continue to experience a challenging operating environment over the next year characterised by weak cash flows, flat sales and stagnant prices, Moody's Investors Service said in a report on Tuesday.

"India's largest property developers will continue to face a challenging operating environment over the next 12 months -- including weak cash flows, flat sales and stagnant prices," the US firm said.

"Cuts in interest rates by the Reserve Bank of India, if passed on by the banks, will filter down to the property market, reducing the cost of borrowing for developers as well as buyers, and supporting demand," said Moody's vice president Vikas Halan, releasing the report on the property market titled "Cash flows to remain weak amid flat sales and high costs".

http://www.ndtv.com/india-news/india...moodys-1213242

LOL Indian realtors are a funny lot living in a alternate reality. The statement that RBI needs to cut interest rates is similar to saying "The boy needs to change his behavior and compromise" rather than saying everyone should contribute to this. Not one realtor will cut his rates by even 5% but expects the banks to lower interest.

The banks are to be blamed too. Realtor charged X. Banks funded 80% of X. Realtor increased the price to x+5% in a months time, the same bank offered a new bugger a loan.

Looking at this either two things will happen. The behavior of buyers will change and they will accept their fates or else the resale markets will be filled with discounts soon.

The builder tho will survive. He is a "Wealth Generator" for any two time politician and goon.

Maddy

Quote:

Originally Posted by Turbanator (Post 3793544)

whatever is written is only about the cheque payment and cash component is separate ?

This is probably the case. In Nerul Sector 6, cash component is 5 - 20% for residential.

In this specific deal, cash component should be even lesser since deal price is 12.5k per square feet. This price is quite close to official price anyways (12.2k), so saving in stamp duty / gains with cash payment is not that much.

Official rates published by revenue department :

http://igrmaharashtra.gov.in:8080/eA...DistName=Thane

(Rates are in per square meter carpet area. Multiply by 0.12 to get square foot quoted rates)

http://realty.economictimes.indiatim...-2015/48767076

" Unsold Inventory in Bengaluru crosses 84,000 mark in Q2 "

MUMBAI: New project launches coupled with poor buyer sentiment have resulted in an increase in unsold inventory to more than 84,000 units in Bengaluru during April-June period, says a survey by Jone Lang LaSalle (JLL).

Bengaluru has surpassed Mumbai in terms of unsold stock to take the position of the second-highest residential real estate inventory overhang, the survey said, adding that NCR, however, continued to top the list during the period.

"Bengaluru's residential property inventory overhang now stands at 32 months. With more than 84,000 unsold housing units by the end of Q2 2015, the city has surpassed Mumbai in this respect for the first time," JLL India Chairman and Country Head Anuj Puri said.

According to the report, developers launched new projects even as the buyers preferred to postpone their decisions.

"Given the rising land costs and expected cash flow issues, developers have been launching new projects in the last few quarters. The situation, however, does not reflect a disconnect between developers and buyers. Though enquiries are happening, buyer sentiment has been affected by macro-economic conditions, causing them to put their buying decision on hold," he said.

Though the overhang is higher due to launches, developers are willing to wait until their projects sell off, he said.

"The primary reason behind their confidence is the fact that Bengaluru remains a very end-user driven market, quite unlike Mumbai and NCR, which have traditionally been speculative, investor-driven markets. The key characteristic of being a stable market still exists in Bengaluru," Puri said.

The study pointed out that units in the price range of Rs 35-80 lakh sell off quickly in Bengaluru, while those with ticket sizes of Rs 1 crore and above take longer to sell.

Presently, ticket sizes for most projects in the city range from Rs 75 lakh to Rs 1 crore. Also, sales are slow only in relatively less popular locations like western part of Bengaluru, Mysore Road, Tumkur Road, the report stated.

On the other hand, good and stable demand is observed in areas like Sarjapur Road, Bellary Road, Kanakpura Road and Varthur (in Whitefield) mainly due to the accessibility from IT parks that these locations enjoy.

"The developers should have waited longer before launching so many projects in the last few quarters. Though they may be confident of the situation changing for the better due to the latent demand in the market, sales and buyer sentiment are both likely to remain slow for some more time," Puri opined.

Going forward, developers will have to launch projects after fully understanding the prevailing market conditions.

"It is important to balance out the existing demand-supply mismatch mainly to ensure that it does not start affecting price dynamics and the market does not move from stable to stagnant mode in terms of pricing due to the increased overhang," Puri added.

The real estate crash is yet to come i feel ,since the sellers are not willing to sell at lower prices.When that wave comes it will be a tsunami and prices will drop faster than most people think.The speculative money has gone out of real estate and from here on it will be only slow growth if at all any,hope people will remember where real estate was before in the pre 2000 period. I had bought land in my place in 2012 where lot of developements have come ,but yet the prices have barely gone up by an annualised 10%, which is nothing if you compare with a FD fetching 8% compounded returns.So where is the growth people have dreamt of?From here onwards i feel, you wont even get 5% returns,you will be lucky if you get any positive returns for the next 5 years atleast.

" Builders in trouble as unsold flats continue to pile up "
By Shubhra Tandon | The Financial Express – Thu 3 Sep, 2015 4:35 AM IST

The value of unsold apartments across the top seven cities of the country at the end of June has been estimated at a whopping Rs 4 lakh crore, with few signs the inventory will be cleared anytime in the next four years. At 7.5 lakh, the number of flats in the mid-priced range is virtually the same as it was at the end of March, this year, which means sales have come to a standstill.
In addition, there are 50,000 luxury apartments, priced at an estimated Rs 1 lakh crore, lying unsold in Mumbai alone. “Developers are now reducing the sizes of the apartments to make them more affordable,” Sandeep Runwal, director, Runwal Group, told FE.

to know everything,
https://in.finance.yahoo.com/news/bu...230500422.html

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" Develop layouts first, then sell: Govt "

P M Raghunandan Deccan Herald September 4, 2015

Bengaluru: In a bid to prevent realtors from hoodwinking property buyers, the State government has decided not to allow registration of sites in a layout till the developer completes the project as per the approved plan.

The government has decided to do away with the present system of releasing a portion of sites to the developers for registration soon after approving a layout.

Under the present system, the urban local bodies (ULBs), like Bengaluru Development Authority, and local planning authorities (LPAs) release sites to the developers for registration in the ratio 40:30:30.

Of the total sites in a proposed layout, 40 per cent is released to the developer as the first installment immediately after giving approval to the project. This was done to help developers mobilise funds to take up development works like constructing roads, underground drainage, culverts, shoulder drains, street lights and demarcation of sites.

The remaining 60 per cent is released in two installments as these development works progress. A large number of developers, however, were misusing this provision.

"ULBs and LPAs have been receiving complaints from citizens that developers were cheating them without providing infrastructure. The worst affected are those who are allotted sites in the first installment," said town planning expert S B Honnur.

To curb this, the Legislature recently passed a Bill amending the Karnataka Town and Country Planning Act (KTCPA), 1961, making it mandatory for all ULBs and LPAs to release sites for registration only after the developer completes the project as per the approved layout plan.

" Realtors face heat "

Authorities approve layout plan and release 40 pc sites for registration

Realtors are allowed to sell these to raise funds for development

Development includes roads, drainage, culverts, and street lights

But many buyers complained that developers were cheating them

Now, govt has decided not to allow sale till layout is developed as per plan

Just adding my two cents, quite a large portion of real estate buyers are investors. So these investors will invest where they think they will get good returns for the money they invest. In 2014-15, the stock market was giving very good returns, in some cases stocks have doubled in this one year. Also Gold and Silver is at an all time low. So a good opportunity to invest there also.

But now, the stock market is consolidating and heading downwards bringing about a lot of uncertainty. Gold is also inching up. So I am guessing Investors will start looking at real estate again in the coming months. So the crash doom and gloom in the property market that people are expecting, may not be as big and bad.

In any case for the average person, property investment is a long term proposition, so no matter what, over the long run, investment in real-estate does makes sense in a developing economy like India.