Gurgaon price trend prediction

Returns in Gurgaon will keep pace with inflation, Rupee depreciation and stock market returns from now on.

If inflation remains muted, if stock market stops moving up or goes down and Rupee remains strong in next 2 years, expect stagnant prices with no appreciation.

In the long term, expect 15-20% annualised returns in Gurgaon property. I have no dout that property in good locations will outpace stock and FD returns by a comfortable margin.

As for Delhi, DDA flat rate is 10,000 psf. Builder floor is depending on location, nothing less than 10,000 psf in good location.

And anybody selling land for <3L psy is a fool - or cheating you with unclear title

On India's Space Program

Unfortunately, our space program is misplaced priority. All these scientists and engineers working on Chandrayan etc should have been put to work in setting up a proper ballistic missile delivery system for our nukes - where we badly lag both Pakistan and China.

Our only spece ventures should be military satellite systems and spy satellites.

Currently we dont have a credible nuclear delivery option, making us very vulnerable to conventional attack with threat of nuclear war. Most of our missiles are 2 decade old technology which doesnt even work properly.

People just dont know what they are doing in our govt funded space program. We can make more money by exporting Hero Honda motorcycles, which are of excellent quality viv-a-vis Chinese, than by trying to monetise our space program which is basically capital destruction with no viable return.

Please remember that most of out IIT graduates do not join our space program or even BARC - they mostly sell biscuits or insurance - because the money is there. Our space and atomic programs run totally on second rung colleges and physics students from whom the best are picked up with superhuman efforts from the HR departments sifting 2-3000 graduates to select one capable person. The people (engineers) who enter pvt sector here are all overqualified and capable - they are attracted with big salaries because pvt people dont want to interview 1000 people to find 1 gem. But BARC is forced to do this. oOr brightest minds wrestle with selling biscuits and buying up overpriced real estate.

If I was running the country, I would ban our IIT engineers from leaving the country or working in unrelated fields. And I would put security needs over boasting rights - which is all our space program is about.

Our Prithvi, Agni basically dont work well. Pakistan has much smaller solid fuel propelled missiles capable of hitting anywhere in India. We do not have the specialised hardened silos needed for surviving a nuclear attack on our missile sites and lauch second - survivability is just not there.

Currently our nuclear deterrent is based only on attack planes and disassembled airplane bombs - we do not have good designs for missile launched nukes.

On commercial property

With inflation, rental yield will go up. 50psf is average rent today i.e. 20,000 pm for a 200sf shop.

100 psf will become average in a couple of years i.e. 40,000 pm for the same shop.

Capital values will rise less, because FD interestrates will be higher and so capital values will less than double with doubling of rental - so that rental yield will be say 17 or 18% of your capital invested.

Asset allocation for TODAY

Hi Amit 001,

I dont think Gurgaon prices will correct. These prices are here to stay. They may go up or stay same, but will not come down.

I think they will stay same, but that is a guess. If stocks outperform like this, RE will bubble up like anything.

If I had 100Rs in cash, TODAY, I would
1. Put 30% in bonds
2. 30% in stocks
3. 5% in gold etf
4. 20% in plots in Faridabad
5. 15 % in commercial RE in NOIDA (like JMD or JP, provided I had some 3-4 Crores and could go for commercial with ticket size of some 50L. Otherwise put 15% in liquid funds and wait for opportunity - probably a flat booking in 2012 or 2013, when global and local scenario is clear

Dwarka Eway Projects

( Hey Venky, Which project you would choose on Dwarka e way for investment. Exclude luxary projects. Budget : 35-40 )

Closest to Delhi is probably best - so Shilas is probably best.I personally prefer Ramprastha because of triple connectivity.
1. Dwarka Eway,
2. Existing Gurgaon expressway (once Hero Honda Chowk is built) - right now only one way connectivity
3. Thru it to Infocity and Sohna road malls
4. Basai Road to Jhajjar developments
5. Proximity to Sultanpur sanctualy and green area.
6. Reliance will probably make IT park there.
7. Water levels likely to be the best in this region because of green area.
8. Active construction by Supreme - delivery is 2012 is probable

Negatives:
1. Not for short term investment
2. Three infrastructure proposals only on paper - Dwarka Eway, Basai road flyover, Hero Honda Chowk flyover (which is why it is available cheap)
3. Lot of village houses nearby
4. Multiple ifs and buts are a negative - even if one fails to materialise, then prices will not equalise between Ramprastha and Sohna Road / MAnesar
5. Rental yield will be very low for 5-7 years - better for people who plan to keep it locked up.

But it is a 10-15 year hold - and while with this much hold you make money everywhere, when whole area is developed and commands similar valuation, only entry price will differentiate the investments - and 2800 psf is dirt cheap.

Psambher, there is huge land bank in the area. Many affordable projects will definitely come. But the whole corridor will be a highly urbanised area.

Ashish, Crescent Park is poorly located wrt Dwarka expressway. Much land bank in the area. Distance from Dwarka Eway, NH-8 and KMP is almost same - some 4-6 Kms. So Pataudi Road is the main road for this. It is a project for those who cannot afford Gurgaon prices.

Durbious, I agree, these prices of 2800 and 3000 psf are here for max 6m to 1 year. Then we will move to 3600 psf.

Guesswho, the Eway is expected by 2015, Metro will be parallel and expected by 2020 only.

On ATS village prices, NOIDA

Bhuwanb, RE cycle is 7-8 years, industrial cycle is 4-5 years.

But yes, alternate cycles deliver much bigger returns. Since 2003-2007 returned abnormal returns, 2015 returns will be more muted and 2023 will see the hydrogen bomb.

That means a holding period of 15 years or more. So if buying a flat, go for quality, because flats have a life and will deteriorate, otherwise buy a plot.

Re. ATS village, maximum price appreciation ocurred between 2003 to 2007, when the big bull run in property wqas on. From what I remember, prices were 1500 psf in 2003, 2500 psf in 2005, 3500 psf in 2006 (and this includes the construction premium) and 6000 psf in 2008. Now it is probably 5500-6000 psf - but there are no deals happening, so cannot judge.

ATS village turned out to be much better than Gurgaon Sohna Road - where prices were 1200 psf in 2003, 1600 psf in 2004, 1900 psf in 2005, 3000 psf in 2006, 4000 psf (plus) in 2007, 3500 psf in 2008, 3000 psf in 2009 and back up to to 5000 psf now, in Vipul Greens, which started around the same time.

Infrastructure, shops etc around Vipul Greens are much better now than around ATS village.

ATS sector 50 is much better actually, than ATS village.

Anyway - all this construction in NOIDA will actually give paradoxical returns to prices of ATS village for the next 20 years - because it will continue to be one of the best locations and societies. The more the area develops, the more the value of ATS village. The more the inflation (currently 15%), more will appreciate ATS village.

I expect prices to now move to 7000 psf and more very soon - when many of the new launches start facing delays in construction. In 2014, I expect it to be 10,000 psf which is south delhi DDA flat rates.

While your points are very valid, and prices of ATS may not rise, I expect otherwise. Because development of RE is very slow - other constructions will stagnate and not get delivered. End users will buy in ATS (no other options) and existing owners will not part with lesser price.So we will have scarcity in the middle of plenty. I have seen it happen in many places. Omaxe coming nearby is no competition, Unitech Grand is much delayed and JP is stagnating without progress.As I said before, when Grand and JP come up, there will be paradoxical elevation of ATS prices, because in premium property, the valuation is based not in supply and demand but on positioning - and ATS will command premium over Grand, JP pavillion and LB espacia.But for that, all the ongoing construction and chaos and dust have to go away. Will take some 5 years. By 2020 ATS village will still be the best in the area and will command great value.

BTW, when investing in flat, go for very small (1BHK or small 2BHK) or very large (>2000 sf). Both command better rent and resale value than usual average sized 2 and 3BHKs.

Price rise in big flats is not always true - prices rise in spurts. It rises only during a sudden jump in prices like what is happening now in Gurgaon/Mumbai/Pune and what happened all over India in 2006-7.

Big flats appreciate a lot during booms but their price drops a lot during a bust.

So you have to exit during a boom time and for many years you will not be able to exit, because price is not attractive. But in the peak of a property boom, big flats outperform smaller 2 and 3BHKs because you can charge a psf premium - since carpet area is much more than for smaller flats. People pay the premium for this.

On the other hand, it commands a better rent than 3BHK even in busts, because the people who rent such flats can afford it and there is a premium for its size.

29.9.2010

Kube is a good price. Main problem will be excruciatingly slow execution.

Having said that (so that thread is not highjacked) I must say few things.

1. Distance in expressway is measured in time from exit. If there is no exit on expressway, Greater NOIDA will be closer to Delhi than both JP NOIDA and Unitech Grande (if both are approached from sector road rather than expressway).

2. Expressway without toll will degenerate to NH24 like chaos - so toll is good and it will and should come.

3. Without expressway exits near 93B, LB is best located followed by Grand for Delhi people. JP not so good.

4. Risks with Unitech have gone now - they have funding, reduced debt and Grand will probably finish before time. This is not 2008-2009 when they had funding problems

5. JP has no funding risk but has huge execution risk - expect extreme delays (>5 years) in all except Pavillion, Imperial, Klassic and Kosmos.

6. Biggest delays expected in Kube :-), followed by Knights court, Kasa and least delay in Kensington.

7. JP has a very poor customer service dept - almost non-existent. Customers will be treated very badly - unlike Unitech. They are overstaffed and yet totally inefficient and near breakdown even with current customer base.

8. JP has been a B2B company - they are failing at B2C level - its not there in their company make up.

9. So your money is equally safe in JP and Unitech currently. As pointed out, JP is less exclusive than Unitech althoughsame psf price. Some people (like me) prefer a more friendly middle class crowd and would prefer JP over Unitech - where you will live and die without ever meeting your rich neighbor.

LB is best for neighbors - all techie crowd. JP has more of non-techie crowd.

I would not wait and watch till Diwali for buying in NOIDA - these prices are here to stay and can only go up from here, seeing how stock and RE markets are behaving.

Looks like there has been massive absorption of the new NOIDA launches - even if not, builders are back to their game of increasing prices every 4 months just as a tactic.

My view on Kundli: Poised to take off

Nitin, (planning to sell plot in Kundli and buy in Gurgaon) dont be crazy, hold on to your 240 sy plot in Kundli. It will be appreciating like crazy very soon - unless it is in a very interior place in Sonepat and is badly located. Even then Sonepat is worth holding Also, roads are now better and the area will take off in a year or two. Expect to sell for 35-40ooo psy in 3 years or so - maybe even more, going by the sudden pick up in interest in Kundli in the last month or so.

Kundli is poised to leap, just like Manesar did some 6 months ago.

For own use, live on rent - it is vey cheap. Get a Sohna Road plush 4BHK for 20,000 pm and live well.

And buy a second plot from your salary in Manesar. In Gurgaon the rates are already very high and will appreciate less as a percentage than in Kundli. Gurgaon will be a market performer, Kundli will be an outperformer, using stock market terminology

Hi Capsreal and AMit.

At the end of the day, Kundli will not be the next Gurgaon. Thats for sure.

Kundli and Gurgaon are in Haryana - so there is no way policy action will attract IT/manufacturing.

Only thing going for Kundli is abundant land all around it, still cheap compared to Rohtak, Gurgaon and Faridabad - and excellent connectivity better than Rohtak.

Because entry price is lower, Kundli is a good long term hold at 1/3 rd Gurgaon price - In 3 year time frame the return from Kundli may be higher in percentage terms because of catch up effect. In long term 10-15 years, returns may be similar in percentage terms.

I dont see Kundli being a laggard unlike Daruhera, Greater NOIDA etc. It has a position advantage in being the only such place in the north

Investing in Silver

Investing in silver is difficult. They dont have etf/gold fund like mutual funds yet. I have as yet not invested, although I also am interested.

I would avoid MCX futures - that is just short term speculation.

You can find jewelers who will give you ingots of silver in kilogram quantities for long term investment. You have to keep in bank locker. It is about 33000 per Kg and measures smaller than an iron bar of same weight. You can buy maybe 5-10 Kilos and keep in locker and open after 10 years.

Returns are likely to be 1.5 - twice the gold returns in the long term.

Most people recommend 5% of investment in gold of which 1% can be in silver

On the current US Bond bubble

Business Insider's doom and gloom scenarios never convince, because the fatal flaw in the argument is always clearly visible - as pointed out by Robert Happek - who after his completely insightful observation, went off course into an improbable govt conspiracy theory, which is as unlikely as the hyper-inflation argument.

The hyperinflation scenario requires the fed to protect T bonds.Why should they? They can just allow people to sell bonds - rates will rise to the level where people feel comfortable investing in bonds again. End of matter.

The fed can continue to keep short term rates at zero - why should they change that? They will keep it there until the economy and jobs recover. Nothing to do with bond yields.

Long term rates have never been under fed control - they are market determined. Frankly, I never understood why people are buying so much into T bonds and pushing rates down - people are crazy to feel happy with 2.8% return or whatever the rates are now.

The people who will get crushed when the bond rates climb will be the dumb 401K investors who chose bond funds rather than bonds - the smart money will dump bonds quickly before they crash - whereas the average Americans will be wrong footed. Having lost a lot of money in the 2008 stock crash, they fled to "safety" in bonds - but put money in bond funds instead - now they will lose a lot more money - those who got crushed will get crushed again.

Ironic.

If I were a conspiracy theorist like many who have commented here - I would think it was a Wall Street conspiracy to make money from the stupidity of average americans - moving money from the 401Ks into their pockets.

All over again !!!

Anyway, conspiracy and unlikely scenarios aside, at some point, USA will grow again - because unlike Japanese, Americans are not going to save and not spend - Americans work hard and play hard - they wont work hard and give the money to other people - unlike the Japanese.

At that point of growth, expect 10% inflation. Not hyper-inflation.

You can think of the current bond buying as basically being financed by the extremely low US short term rates. Getting money at 0% and investing it at 3%, getting more funds and investing at 2.8%, then 2.4%, then 2% - basically pushing up the price of bonds - and then suddenly dump it. Its like any pump and dump scheme. Its a liquidity fuelled bond bubble which has to burst and will burst soon.

But without hyper-inflation.

In other words, we are witnessing investment bankers get rich from free govt money once again.

In response to article:
Read more: http://www.businessinsider.com/how-hyperinflation-will-happen-in-america-2010-9#comment-4c8fd27a7f8b9abe31cb0300#ixzz0zXGPO9rs

22.10.09

I think RE is a good investment option in the current circumstances. Inflation is coming. RE prices will stay same or go higher in the next 3 years. Shares will underperform, except base metals. Cash (bonds) will depreciate in real terms. will stay the same with dollar depreciating against the Rupee. RE is the only option left

23.10.09

Two years ago, dollar was at 40 and people predicted 35. It went to 50! Most things in economics are unpredictable, but currency exchange rates are the most unpredictable of them all. IT I think will not grow, but not because of exchange rate problem. The business is in a plateau phase. Exchange rates will only add insult to injury and push IT over the edge. India's low cost IT business model is in decline.You can still buy RE, I think it will do OK in the long term. Pune RE is of course suffering from inflated prices. You can wait and watch in Pune for about six more months to maybe one year. Prices wont rise in Pune, it is overbought

22.10.09
I think RE is a good investment option in the current circumstances. Inflation is coming. RE prices will stay same or go higher in the next 3 years. Shares will underperform, except base metals. Cash (bonds) will depreciate in real terms. will stay the same with dollar depreciating against the Rupee. RE is the only option left

23.10.09
Two years ago, dollar was at 40 and people predicted 35. It went to 50! Most things in economics are unpredictable, but currency exchange rates are the most unpredictable of them all. IT I think will not grow, but not because of exchange rate problem. The business is in a plateau phase. Exchange rates will only add insult to injury and push IT over the edge. India's low cost IT business model is in decline.You can still buy RE, I think it will do OK in the long term. Pune RE is of course suffering from inflated prices. You can wait and watch in Pune for about six more months to maybe one year. Prices wont rise in Pune, it is overbought

7.12.09

I dont know about Pune, but in Delhi, prices are up by 5% every 3 months for the last 6-9 months, total around 10-15% up.Jaypee sold 5000 flats in Kosmos in3 months flat. Their office was like a mela and people were buying flats like aloo-pyaz at a mandi. That too after JP already sold 2000 flats of Klassic from May to September.Another 5000 flats were sold by 3C lotus boulevard, Amarpali, GC etc in NOIDA.Some 15000 flats were sold by Gurgaon builders in 3 months with a price bump up of 15-20%.One way builders hiked price was ingenious. They sold a carpet area of 900 sf as 1200 sf super area during the slow down in MArch 09, and sold out in 1 month. The same 900 sf carpet area plan was slightly changed to 950 sf but packaged as 1500 sf super area and were still sold out. That way builder effected a 20% price hike by fooling the customers, although the per sf area was kept the same (at 2400 psf)Mind you - that rate is on a superb expressway, 10 minutes from an international airport and with metro connectivity - you Pune people are being really bilked by these builders, going by the rates you all are posting for a second tier city, although with superb weather)Anyway, price decrease is a dream that we buyers like to indulge in. It will never happen. RE in developed countries may crash, where supply exeeds population.In India, supply is far less than demand, as personally witnessed by me in Delhi and detailed above. Plateau for 3 years and a relentless rise to astronomical levels after 10 years is my prediction.

8.12.09

Hi Ash.Rates for resale will never ever fall. People will hold on and not sell.I know of 2 people in my parents' apt complex in Delhi asking for 1 and 1.25 crore for 3 years without selling their flat. They stayed put and actually raised their asking rate as the prices around went up - now asking for 1.5 instead of 1.25 for a ground floor flat. Still no buyer.The price which crashes is the price of new flats being built. I saw mostly area reduction in 2008 Sept to 2009 Sept. Hardly any price reduction. Instead there was marked reduction in green space - very crowded apartment complexes are on offer now. Will be concrete jungles when built

11.12.09

Rajesh P, The flats in my parents apt complexes were speculations gone partly wrong. One guy bought for 50L or so in 2006. Wanted 1 Cr plus. Could not get it.Now the buyer has moved in. Drinks and makes a nuisance of himself, being of a different background from the rest of the residents. Nobody wants to protest, since such people can do anything.The other guy bought for 40L and rents out at 20,000 PM. Wants to sell at 1Cr. No takers.Uskokumar,My info is reasonably accurate based on broker responses and the project staff. Kosmos has sold over 4000 flats. Top floors are left - 80 towers with 6-8 flats per floor is itself some 500 odd flats, which will not sell now at all, except at heavy discount.Building risk of course exists. But should go through if the market continues like this for 6 more months.Prices of built up flats are not falling at all. Omaxe next to 93B in NOIDA was selling at 3600 psf built up 6 months ago. Now price is 4200 or 4400 depending on location. The flats are ready to move in.With such discounted prices direct from builder, no resellers are active. In 93B the flats were bought for 5000 or even 6000 psf. How can they sell when now ready to move in flats are being sold by builders nearby for 4000 psf?Only an idiot would sell and tell his family and friends he bought for 60 Lakhs and sold for 40 Lakhs after waiting for 3 years to see his flat built. Even if it made financial sense as some here argue, it does not make emotional sense.People just dont behave that way. They (irr)rationalise, change short term speculation into long term investment, and do something else for a few years, so that nobody notices their stupidity. After 10 years if they sell for 80L, who is going to calculate what his FD return would have been?Often after 10 years, prices run up a lot, he sells for 1.5 crores and boasts of his fantastic 60L investment. Although he might have repaid 1.1 Cr in loans - who is calculating? People always boast of the purchase price, not loan repayment cost. The only people who might go for distress sale are builders. Those fire sales happened 4 months ago and some people got lucky.Just like some people bought stocks in March 2009 and doubled their money in 6 months.I have never lost money in the stock market in the last 10 years with 2 downturns in the period. But I have missed many opportunities.Unfortunately, there were many on other fora who talked similar to Wiseman, Realacres etc. I agreed with their pessimism.I had not discovered this site then to be misled even further.But I never cry over missed opportunity, only look for more. One lesson? Six months is enough for getting oversold or overbought. Repeating the same mantra for more than 6 months means one misses the turning point.By this token, six months of upside has resulted in overbought stage in both stock and RE. Downturn is 1-2 months away at maximum. Or tomorrow at minimum.Still for RE there will be arrested development with static prices, no downturn in prices, as argued above.Or so I believe.


14.12.09

Stock has always beated RE in the long term. It is true in USA for the last 120 years and true in India in the last 20 years.Thats only sen returns, without market timing. With good timing, Stock returns are far superior.But if you have to take a loan to invest, it is stupid to invest in Stock. RE is a great leveraged investment, especially if you plan to live in it. Even otherwise.Without leverage, if you have say 50L lying around, even Bank FD returns will beat RE returns over 10 years.YOu will get 40,000 a month, even 50,000 a month if rates harden. Keep your capital and blow the money. Live for today.Invest in property if you have saturated your senses or have children (assuming you already own your retirement flat and have another 50L lying around.It is a truism that by selling one house, you can buy another liveable house anywhere else in the world.Another truism - if you child can study, sell your flat to pay for it. If he cant study, give him the flat to live in it.Srinidhi, a flat gives more pleasure than a plot. Flat is like a consumption of your money today, plot is an investment which will bear fruit when you are too old to enjoy your money.

15.12.09

What ndegaonkar proposes (enormous RE price rise) happened once in 2004-2007.Such opportunities dont come every day. For it to happen again we need1. All existing inventory to be occupied by end user - will take 5 years minimum2. Recession in economy so that no fresh housing launches take place. Only 50% chance of that happening.Otherwise fresh supply will keep coming to create a glut.This recession has to be followed by a strong rebound from such a recession with strong job and salary growth. Again, if at all these events happen, it will take 5 years or more.Still, in the long term of 10-15 years, property is not a bad investment

16.12.09

invested in stocks through 2000 to 2007. I got 500% returns. That beats .gave 100% returns if you invested when dollar was 39Rs and was at 9000 levels, sometime in 2007, and held till today.Re gave about 3-400% returns from 2004 to 2007. Still, RE was better than stocks, which gave 500% return. Why?The difference was leverage. I invested the money I already had in stocks. Had I taken a loan of say 20 Lakhs and invested in RE, I would have got 400% returns on a much larger sum than what I committed to stocks.But I am happy not to have a loan. Plus I would not have sold RE, but heavily sold stocks to book profit. By holding on to RE, which is enevitable, you ensure poorer returns. Plus had I bought RE, I would have a white elephant on my hands - one I dont need.

16.12.09

Dont worry wiseman, 80s are going to be back soon in India. People's lifestyles will regress a lot.For credit cards, you will be back to paying a jacked up annual fee instead of having 4 of them couriered to you free of charge. Air travel will go back to being a luxury. Cars will become expensive, so will the petrol to run them. All these Chokras of ICICI will loose their jobs and take up pick pocketting and chain snatching to fund their m o b i l e s and eating out.Just like the 80s.

17.12.09 (in response to “the house in WestCoast would cost you between 1-2 Cr INR but will have better the quality, ambinence which you will not be able to get in any indian city for same price. The return on the house i.e. rent is also comparable or almost equal to EMI you pay.”

US homeowners taxes will kill you

20.12.09

So does Abu Dhabi paying 10 billion mean they shorted and then bought back cheap?Shades of man sachs here. In 2007, man made a killing by shorting their own junk CDOs and the men traders got million dollar bonuses for doing that.Of course, chinese walls ensured that their divisions did not have insider information, but still, that trade will go down in history.As will Dubai.By the way, building of skyscrapers (world's tallest building) have always heralded a recession.Happened in 1906 (the first NY scrapers and first recession of the 20th century along with the Fed being set up to mitigate the crisis), 1913 (Woolworth building), 1929 (Empire state and Crysler buildings), 1971 (World trade center and Sears tower with the oil crisis), 1998 (Petronas tower and Asian crash).Only fitting that the Burj Dubai, world's tallest building, presaged the current depression.

21.12.09

LOL, real.If Indians try to build the world's tallest building, it will physically crash and bring down the markets with it.Anyway, what are they going to do for water?????Wise, I forgot about Taipei 101 and the new Shanghai tower.The more the skyscrapers, the more the market will crash.

2.1.10
wish everyone on this forum a very happy new year.My two cents worth of predictions for 2010:
Q1-Q2 2010:
US will see recession and a stock market collapse.
China will see RE and stock market collapse.
Indias stock market will top out by Feb 2010 and will start falling after budget and keep falling throughout rest of 2010. RE prices in India will stop rising and there will be few sales after budget. New launched projects will stall. Prices will stay steady or dip 5-10% (in affordable apts) or 10-20% in luxury apts.
Gold will rise 20-40% in dollars (1400 per ounce)
Q3-Q4 2010: We will see Shanghai 2000, Dow 8000, Sen 12000.
Commodity prices will collapse. Metal stocks will do badly (exit by Q2).
Gold might slowly fall, but I am not sure - might keep rising - unpredictable.
RE companies will face fresh liquidity problems as interest rates will rise. There will be no more buying in RE.
End 2009 marks the end of lift in RE sales and prices, reflecting pent up demand and 6th pay commission arrear related sales.Fresh launched projects of Dec 2009 will see no sales and will take a long time to build too.
The phony recovery will be over in 2010 and the return of bear markets and recession seems unstoppable.
I think Dow will fall for the next 20 years. I expect it to fall 20% in the next 6 months, rise and then then keep falling with lower tops and bottoms for maybe 3 years. It will go to sleep in a dungeon after that.In real terms, Dow will fall more. Because of inflation, which will keep the dollar price for shares at the same level even as poor economy will lower share value, nominal Dow will fall less.
There is a possibility that US might go into a deflationary spiral. But I am not at all sure, gut tells me stagflation.
In US RE, I am sure of 20 years deflation though.
Short term interest rates will be kept as low as possible by the fed. Its a delicate balance. US fed action will be ineffective, but easing by ECB, China, Brazil/Russia (bothered by falling commodity prices) will prevent global deflation.Stagflation is my bet.
India will see higher interest rates and high inflation (no deflation in India, I am 100% sure). We are the only country without overcapacity in anything (RE included).USA has many million homes more than number of households (1.8 million or 18 million empty houses from what I remember. Anyone have exact data?).
China has no slums - it also has more homes than households, although many are two room hovels (better than juggi). These homes are all that the Chinese can afford though - they cant afford to live in the palatial flats they have built. Banks which have financed Chinese RE will go belly up. Most Chinese banks are now Zombies, people just havent seen the dead eyes of the zombie yet, that is all.
Despite low fed short term rate, bond yields will go up. Idiotic 401 K investors who sold stocks after the crash and went into bond funds will lose half of their capital values, as yields will double. Americans have been total idiots this decade. They have fled to the safety of treasuries through bond funds - a good trade when fed was lowering, a really bad investment to hold as rates rise, no safety there at all! Total total idiots. I expect them to watch their 401k fall further as bonds crash, then exit bond funds after they have taken their fall, shift to equity which will shore up values for a while in 2010 and early 2011 and then stare at further erosion as their shares in broken companies yield nothing.Americans are so badly screwed, so solidly screwed. Their capital (of 50 years of work) is now burnt to ashes.
The baby boomers have crapped on their dinner plate.Equally doomed are Indian IT and other outsourcing ventures. Stay away from their stocks.
I base all predictions on gut feeling, on data absorbed here and there on the internet. Nothing more. I am not an analyst, I am a consumer of analysis. So Wiseman, 8000 is a guesstimate. Could be 6400 too. But I prefer 6400 for 2012, 4000 for 2015 for the Dow.There can be no more bailouts. Not possible, USA is bust. The more it prints, the more US pensioners will get screwed and blame Obama for it. No way Obama will print more money, not if he wants to win the next election.
In any case, Obama will lose the next election. He is going the way of Jimmy Carter.
I agree, my predictions are based on bits and pieces gathered here and there in internet and dont mean anything. Except that I personally believe them and put my money where my mouth is.I post them here because I get your counterpoint, that helps me refine my viewpoint and avoid costly or stupid mistakes.
Dow will fall next 20 years. Let me give 5 reasons.
1. Populations dynamics. Just like the Japanese baby boom aged, American baby boom is also aging. The most productive members of USA are the whites and their population is in decline. US population is increasing because of immigration of less productive MExican population. Terminal decline.
2. Currency devaluation. American companies selling in America will do poorly. American exporters and multinationals will do well.Yes, Dow may change its composition to multinationals and be at 20,000 also. But existing Dow will be zilch. Nobody can predict.
3. Terminal decline of RE. Currently houses outnumber population. With decining population, they will remain unfilled or be filled with immigrants who will pay less/pay in depreciated currency
4. Decline in commercial RE for next 5-7 years. Depreciation of current built property will erode values further.
5. What happened in Japan is echoing in USA. Japan had 20 years of recession. They had 120 million high quality workers. USA also has 150 million high quality workers and another 150 million poorer quality workers. Mean wages will fall. I can see no reason why things wont repeat in USA and have 20 years of recession. They will go the same way. Stagflation will wipe out the savings of American old people and they will be dependent on their younger workers to be alive/healthy. Youngsters will have to support the old for 20-40 years, or old people will have to work till 80 or their health fails.
That is not the prognosis for healthy wealthy or wise!!!!
401K of most Americans is weighted currently towards bond funds. This is after switching out of stock /stock fund in 2008 after markets fell, after 25% loss of capital. Now if they remain in bond funds, they will lose another 25% of capital.Rest of capital will depreciate anyway due to inflation. Average American retirement fund of around 50,000 dollars is grossly inadequate. They need at least 1 million per person. That is 300 trillion for their total population.
Current world wealth is around 450 trillion including all assets. It includes 70 trillion of assets whose value is not clear and can be anything. Total US wealth is around 150 trillion dollars, half what they require.And their capital assets are depreciating faster than replacement. Of course the Americans are screwed.
As I said, I am not an analyst. I consume other's analysis. Much of what I believe is already posted in this site in various places. Click on my name and read previous posts to gather what I believe in. I cannot reproduce it all over againTry reading a blog called Of two Minds. Much of what I have been reading is summarised on this site (though I dont believe everything there, but much data is encapsulated for easy reference).


5.1.10

Investing in RE thru stock market
It is not necessary to buy a flat to participate in RE. If RE is going to do well, one can1. Invest in Cement shares (Madras Cement is my rec)2. Invest in Hotel shares -they are priced at P/BV and at replacement cost - a great proxy RE investment. (Asian hotels and Leela Ventures are my recs)3. Tile makers are poor companies. Steel is too global in pricing. Avoid for Indian RE proxy.4. For now, avoid DLF, Unitec etc - too risky.5. LIC HF and other banks are good proxies for home loan growth. They will always get their spread and LIC HF does not have treasury bond risk

7.1.10

Hi Santosh. It is not my point that USA will become weak. It will stay the global superpower for the next 50 years, probably even after that for a long time.But a superpower past its prime is not the best place to invest. USA will be strong. But not investible or a growth engineChina should stop buying US treasuries. The day it stops, US interest rates will rise. Dollar will rise, Yuan will fall, ideal for China.But US will impose trade sanctions on Chinese goods. Otherwise global imbalance will come back and kill US banks. Chinese existing bonds will fall in value.Actually, China is buying less treasuries day by day and hedging all of its treasuries against metals and oil. It is being smart, but if Chinese economy collapses, their purchases will rot in the docks. So a great gamble by China. Let us see how it pans out. My bet is on the Chinese, they are smart.Santosh, I think India is a basket case. I look out of the window, see our pathetic people, and wonder how stupid people must be to believe in India shining.On the otherhand, India is the place to invest. If a sector is the do well, one does not invest in the best company in the sector. It is already priced to perform.Instead, one invests in the basket case, the worst managed company in the sector whose share price is crap.So much scope for improvement! But Santosh, no matter how well informed you may be, I have no doubt that US will decline over the first half of this century. Dollar will slowly fall.The top 30-40% of USA who are highly competitive (Indians and Chinese who are doctors, engineers, IT workers etc included) will do very well and prosper. Basically republicans.The bottom 60% will decline to half of their current wealth status and become like middle class in Asian countries. This includes white trash, less skilled workers, blacks and Mexicans (Latins of all description).These people vote democrat. After Obama goes in 2012, Republicans will come, will also mess up and then in 2016 Republicans will get kicked out and we will get democrats for a long long time. Maybe for ever.I am bullish on Indian RE for the next 30 years. You can always time your entry as some had suggested elsewhere. But please note, currently, best time to buy was April 2009, in retrospect. Did you time successfully?Then again, April 2010 can bring different story. Cant predict with certainty.Timing is very difficult to achieve. Better to take a long term call.

Investing in blue chips gives OK returns. You dont need to be a stock picker to achieve that. Investing in a turnaround gives fantastic maybe 2000% returns.For example, Arvind mills gave fantastic returns when the company turned around. Turnarounds are dream stuff for stock pickers. Not all whites are dumb? Could not agree more. They are the most intelligent people in the world barring none except jews. The top 150 million in USA includes maybe 130 million brilliant whites. They are the ones who write the textbooks you and I read, design the original computers, and other original thinking which the Japanese then rip off and mass produce. They write the original ERP and CRM s which the Indians modify for customisation. Indian cybercoolies on the other hand are well known for writing the buggiest s in the business (I am not in IT - hearsay only). Whites are the ones who play the music we (at least I) hear, write the books I read, make the movies we watch and make the drugs we use to get better.The best cream of India (Maybe 0.1%, 1 million people or so) comes up to the average of this enormous pool of intelligent and hard working whites. For each 1 of the very very best Indian (or Chinese) of nobel winning capability, there will be 10,000 such whites. Even their secretaries are fantastic and would be high class officers in India.I have lived abroad and deeply admire the whites. If only my countrymen measured up!By white trash, one normally means ill educated poor working class whites. Dominated by a lot of Poles, Italians, Irish and other ill educated and lazy Whites (Note - a much higher percentage of Poles, Ities, Irish etc are very intelligent than Indians, so I am not putting them down. I know where we stand). There are some 50 million such white people in USA.

11.1.10

My usual prediction is - If a company calles in McKinsey, sell their stock! When they fire them, buy!Vam Organics was another example. Once those idiots at McKinsey gave their advice, Vam was in even deeper trouble! Once they decided to ignore McKinsey advice, Jubilant Organosys has done great!

12.1.10

Issue is not when to buy - for self occupation, the time to buy is always NOW.Issue is, buy what you can afford. If what you can afford is too small for your needs, wait, accumulate a downpayment and then buy.Forget market timing, unless you are buying a second home for investment purpose.

13.1.10

I agree with this, good quality kothi construction in Delhi comes to 2000Rs psf. But builders typically have advantage of scale and cost is maybe 600psf for basic crappy flat, 900 psf for reasonable flat of reasonable quality and 1500psf for the most luxurious flat imaginable, no matter what fixtures (unless plated )One cannot transfer Kothi construction cost psf into flat cost psf. But I uderstand your thinking - I also think the same - if I try to make my own house, I anyway also spend the same as what flat companies do, so why bother - pay them and forget about it for 3 years instead of breaking my head

18.1.10

Ideally, one should save for a downpayment while renting and buy the flat with a downpayment.Since renting is typically one fourth to half of EMI for same flat, one should at least aim for 50% to 75% downpayment, so that rent and EMI are approx same.Normally, rent/EMI should be around 20% of salary (tax being 30%) so that remaining 50% is for living and saving.It is foolish to pay 40% of salary as EMI, better to save and buy smaller flat.If EMI is coming more than 20% of salary, it means you are purchasing beyond your means.

(Re: Rent/month * 200 = Total cost of the flat, all inc)

This is the widely quoted US figure. I swore by it throughout this decade and refused to buy.I think for India, given the ground realities and low rent vs high cost of RE in same area, one can never buy with this formula. After using this formula in 2003, I did not buy, since rent was 12000 and cost of flat was 30L-35 L. Since 200 times came to around 20-25 L, I thought it was one and a half times what it should be and was too expensive.Now rent is 15000 and cost of flat is 1 crore!!!!!! That is some 600 times rent.Historically in India, RE cost is 300 to 400 times rent. I expect this price target to be reached by 2012 (RE price stays same, inflation mounts) which would be the best time to buy.Waiting longer than 3-4 years with prices holding steady at current levels increases risk of mistiming, and getting left behind, which happened with me this decade.

19.1.10

Our previous generation was, I think, badly traumatised by RE cost and scarcity. Certainly true for my parents in Delhi and relatives in Bombay also. People bought flats with great difficulty. Loans had 20% interest, if you could get it, which was almost never.Now its easy, so people buy three each!!!!

5.2.10

My feeling?RE slowdown for 3 years. Prices will come down by at least 15%. As someone said, if food becomes the problem, who can afford EMI?Long term big RE inflation. RE will always keep pace with inflation.15 years from now price of flat in Lakhs today will be same number in Crores. And petrol will be 1000Rs a litre.

18.2.10

Hi Economist. First, I agree 100% that some RE, including at least the roof over your own head, is a total must to guard against inflation.I differ from you in that I do not think it is currency devaluation which is the main cause of inflation, although it contributed in the past. After 1991, Rupee is in a reasonable free float with restrictions on inflow and outflow which are actually good and beneficial. India's currency management and reserve banking in the last 15-20 years is impeccable - I think they are both the best in the world, from what we have seen over the last decade. Much better than many free float countries.There are 3 causes of inflation. First, the most basic is supply demand mismatch. If a thing is scarce, it costs more and as scarcity continues, price keeps rising. Scarcity can be genuine or because of hoarding/black marketing.Second is monetary policy - an increase in money supply. Third is competitive disadvantage - which is what results in currency devaluation.As regards RE, increase in price of RE is in fact nothing but inflation. It affects everybody including you and me. Re price inflation has been traditional in India because of scarcity factor due to misgovernance reasons. There is 700 million acres of land in India, around 1 acre for every 2 people. Around 250 million acres of this is cultivable.People cannot build homes in this land because there are no roads - you need a helicopter (or walk/bullock cart as actually practiced) to reach 90% of this land. Cost of land in countryside reflects acricultural output. Average is 50,000 per acre (price of 1 laptop). Highest possible yield of agriculture, as practiced in India is 2 tons of cereal per acre = 40,000 Rs at 20 Rs per kilo. Not counting input costs. Usual agricultural yield without irrigation is around 10,000 Rs per acre. Which is peanuts.So the value of land is determined entirely by means of roads - if there is road, price is in crores. If there is no road, price is in peanuts.Second we have bad laws. There are laws in every state which restrict building on agricutural land. There are urban land cieling acts which prevent easy manufacturing of large scale apartments. Tenancy laws are tilted against landlords, who prefer to lock up the flat than rent it (more in Delhi).All of these create a scarcity of housing, which has the effect of making housing expensive.Tenency laws paradoxically prevent people from getting cheap rental houses. Otherwise massive tenaments can be erected by companies and rent out 1000 sf flats at 1000 Rs per month (thats all it actually costs). But our govt is wretched and perverse and prevents this from happening by keeping archaic tenancy laws.As a result, people pay the same 1000Rs rent for living in a slum in Dharavi. Actually much more. Govt gains in multiple ways from this scarcity. Politicians finance and are financed by crooked builders. High value RE is a good hiding place for black money as well as corruption money. Congress traditionally has juggi jhopri vote bank - so they try to keep people poor. Their modus operandi is - you have to vote for me otherwise you lose even your juggi!!!!! Nobody publicises the fact that Congress laws are what created the juggi in the first place.In any case, after 60 years of mismanagement, the scarcity of flats remains. At the pace in which govt is creating roads, there is going to be flat scarcity for my lifetime at least.But my fear for the near future is that multiple factors are converging to cause inflation all together.First, the RE scarcity has been magnified by recent prosperity - salaries are up and a lot of people are looking to buy. People in their 50s, 40s, 30s, and even 20s are all entering the RE market at the same time. Last time this happened in 2004-2007, we had RE hyperinflation. Flat prices tripled in 3 years.As long as our economy does well, this trend will continue.Second, there has been good monetary action by RBI but exceptionally incompetent fiscal policy by the finance ministry. This includes NREGA, 6th pay commission and loan waivers. We have overspent govt funds crazily and this has caused an increase in money supply which makes inflation inevitable. This will be reflected in RE price. The govt servants and puclic sector undertakings have all got salary rise and arrears which will inevitably go to RE. It will also stoke inflation of food - where also poor govt policy has caused scarcity by destroying agriculture (17% of GDP last I heard).Third, monetary policy of the whole world is loose and over 5 years is bound to increase raw material prices for oil and base metals, both will impact RE constructin cost.Finally, currency movements in both directions will cause RE price inflation. If Rupee strengthens, then it means our economy is doing well and there will be more people quieing up for flats. If Rupee weakens, raw material costs will go up making flats more expensive to build. At the same time s o f t w a r e outsourcers will get a competitive advantage and will see pay rises - increasing demand for RE.There is one other thing - which many people who talk demand and supply do not understand at all.In USA there are 18 million more dwelling units than there are households. 18 million vacant homes. But year on year the number of households is increasing because of immigration and more children by christian rightwingers.In Europe, number of dwelling units equals number of households, with a mild excess which varies from country to country. There is a decline in number of households year on year due to declining population.In Japan, number of dwelling units equals number of households. But number of households is dropping precipitously due to massive aging and population decline.In China, number of dwelling units which in India will be called "pucca" exeeds number of households (YES!!!!!!). Everybody has a home, a TV, a cycle, a washing machine. Most current dwelling units are more than adequate by Indian standards. New housing is aspiratinal i.e. a luxury, as people earn more and want to better their lifestyle. Population is plateauing and is likely to face a 50 year slow decline followed by a precipitous drop much worse than Japan.Now you all know what India is. The vaaaaaaaaaaast majority live in tents/juggi/footpath/village huts without electricity.A small percentage of this mass moves out of poverty every year. This will create a demand supply mismatch for the next 100 years. If India shows even 5% growth sustained for the next 20 years, there will probably be a 50% mismatch over this period i.e. there will be only half as many dwelling units as compared to households with income enough to buy/rent a flat.Shortages and RE price inflation is inevitable.Better buy now. RE price has only one way to go and that is up.Current flattening is a buying opportunity, before the relentless RE inflation continues.I do not anticipate good road building by Indian governments for at least 15 years. The only thing which can prevent RE inflation is road building. If govt builds roads, then it will dull the RE price inflation somewhat.Since political parties are the main beneficiaries of RE price inflation, including election funding, it is in their self interest to misgovern India.
26.2.10

Stimulus not totally withdrawn + tax rates reduced + stockmarkets up+ increased 80ccc limits = more money for employees and companies.=> Builders will maintain their rates for sure. There is no positive for realty but no negative either.Status quo for now

22.3.10

Great discussion, very illuminating.My two cents worth - if you have the money, RE is the best way to spend and buy an asset which has the POSSIBILITY of appreciating.Cars depreciate fast. Electronic items turn into clutter the second day after buying it. Travel abroad depreciates to 0 when you return. g o l d invites burglars. Shares and FDs are pieces of paper which you end up storing for ever.For an average middle class person with simple needs, RE is a good expenditure viv-a-vis all the above.If you dont lock up your money in RE, you start wasting a lot of it on useless things.

You are forgetting all about currency markets and hyperinflation in domestic market. Rupee depreciation and inflation both led to price inflation in RE market in mid 80s and early 90s .High spending Congress govt is always inflationary and anti middle class - by destroying your savings with inflation. RE price always inflated with Congress policies in the past

31.3.10

Fantastic link. At 15000 rent, 50L house, 12% interest rate, 15 year loan, 15% downpayment, it will take 25 years to make a profit. Assuming 7% annual property and rental appreciation.But at 15000 rent, 50L house, 12% interest rate, 15 year loan and 60% downpayment, you break even at 15 years.Buying property with own savings only makes sense. With loan, only your bank makes profit. In my opinion, if you can put down 60-70% of the cost from savings , you should not buy. Some 20-40% loan can be used when trying to time the market for a good purchase - after all, nobody normally has 30-40 Lakhs lying around in the bank!!!!But one point against renting - after your time, leaving a pile of cash to your children may result in them blowing it up in extravagance.LEaving a flat for your children will at least ensure that they will have a roof over their head!!!!!


5.4.10

Floating rates are now around 10% (?). Fixed rates are around 13% (again, I dont have the exact data, since I am not in the market).With tax rebate of 30% on 1.5L, That is 45000 per annum. On a 45L loan for 15 years with EMI of 45,000 PM, that is same as rates coming down from 10% to around 9% (approx). FD rate is currently around 8%. If interest rates rise, FD rates also rise, so calculation remains same.So yes, not much difference between loan and own money - some 1-2% in terms of difference, taking tax also into account (for loan) and assuming you cheat on your FD tax (otherwise 30% tax on your FD return). More savings will occur with smaller tenure smaller size loans - rates may come down to even 7% with tax rebate. Except that the advantage of paying back depreciated money to bank after 10 years is lost, because of inflation effect.Problems come if you book under construction flat. You cannot avail of tax benefits until you occupy the flat. Unfortunately, maximum appreciation is seen when you book new flat projects. So for 5 years (allowing for delay) you cannot avail tax benefits.Also, for under construction flat, it is more sensible to go for CLP, which is better with own money than with loan. With bank loan, DP is better since you can avail of DP discount and reduce cost of ownership. Best for those who dont have the money in the first place.

One does need to retire in a flat of ones own. Shifting house even now is hell, shifting house after one is old is inconceivable.Losing value in a flat? Never seen it in my life time. There are up moves and there are plateaus. For less price, people just do not sell.All eggs in ones basket? Never. I believe in 30% RE, 30% stock and 30% bonds. But since RE is expensive, one can temporarily go to 60% RE and then reaccumulate in bonds and stocks within 2-3 years.

Business needs? Dont lock money in flat. Car? One assumes you will already have one. Yes I agree that if one has to take a loan, it should be a home loan. But better not to take a loan even for that. If you dont have the money, why not just save and wait? I live in a rented flat 5 minutes drive from my work place. I dont believe in massive and lavish flats. I currently live in 700 sf carpet area and find it adequate.

There are of course PPF and other tax free options also.If there is need for liquidity (say business) or if ROI on bank loan is low (8.75 seems too low, must be teaser rate for 1-2 years) then there is hardly 1-2% difference in investing own money and loan money. No bank will get funds at 8% and lend at 8.75%. At least 2% spread is needed just to cover 2% delinquency rate.Even if the ROI is floating and goes up, ROI on savings will also go up. Since EMI is anyway covered by the existing funds, it will not eat up your salary also.Sure one can go ahead and take loan even if having the money. But what good does it do? Except give a false sense of security?Maintaining big liquidity is mostly useless in normal life where you do a steady job and get a steady salary and most expenses are forseeable far into the future. Having 30L sitting in the bank is not much use, since you anyway cannot spend it if you owe it to the bank. If sudden liquidity emergency comes, for an amount of 30L, you are anyway screwed. Such a medical emergency would be total financial disaster. Hope such a thing never happens to anybody.Only thing falling in this category is kidnapping and ransom!!!!!! Having such a bank balance is only invites such predators. Think about it.It is in fact good in such instances to diversify one's funds into RE - in which case, loan and giving a spread of 2% to bank seems unnecessary.

22.4.10

I agree with this but only for stable inflation scenario of 5-10% annual inflation.In hyperinflation scenario, taking 20 year fixed rate loan is best. In 5-6 years, the EMI will be like peanuts to what your salary will swell to (assuming you are easily employable). You will take money from bank today, get RE at todays prices and then pay back a depreciated valueless Rupee to the bank while your RE appreciates enormously with the hyperinflation.In my opinion, inflation will be very high for the next many years in India.(Personally, I dont believe in taking loan. Never have so far)


25.4.10

Builder theory is not exactly "double every 2-3 years", which is clearly rubbish.Builder theory is that RE prices only goes up and gives better return than FD and stock. That RE is the best repository of value.Builder practice is to play every trick (detailed by numerous contributors in this thread itself) to keep this theory alive and kicking.Prices below 2008 peaks? Not in NCR currenly. Prices up by 15-20% from 2008 peak, having never gone down (except for 1-2 months on the peak of the liquidity crisis and only in super luxury flats)Stock does not correlate with RE. But there are only 3 classes of assets - RE, Stocks and bonds (FD). I keep my eye on all 3 and try to predict directions. I was just illustrating the difficulty of trying to predict the future.So when I say RE prices will be stable for next 3 years (which I believe), I might be totally wrong.RE price does not have to "honour" anything, least of all affordability. All that matters is supply and demand - if "some" people can afford overpriced RE and the supply caters only to this demand, it is enough to keep the RE bull theory alive. It is not necessary that many people have to afford it.Most "people" of our country cannot afford to eat or wear clothes, leave alone RE.Scarcity value of RE has been kept alive by Congress govts for the last 60 years, because they are part of the builder mafia. I predict the success of this mafia for the next 15-20 years. I also predict huge inflation destroying money value.Both predictions could be wildly wrong. But I have personally acted on both these predictions.In other words, I have put my money where my mouth is. I just hope it doesnt decide to switch orifices!!!! ;-)

23.9.10

Real, I can vouch for Gurgaon and Dwarka for sure - at night 30% windows are blank in the best occupied towers.Worst occupied have every window blank. Yet each flat is selling for 1Cr.Basically, India and China are having the same buy for the child syndrome - people have money and they buy a flat for their small children and keep it locked for future use - if any.All of Sohna Road Gurgaon is like this - people buy a flat they dont need and keep it locked because if they rent it out they get dispossessed (Punjabis, Haryanvis, UPwalas and Biharis being the way they are - they will squat for 10 years without paying rent)If people are not law abiding, this is what will happen. Flats will be locked, people will live in Juggis.India has a bad record of protecting property owner's rights after independence. This is the consequence.

The whole place is full of debris. But Delhi has been like this for the last 10 years with metro construction all over the place.Maybe they will call out the army Otherwise my suspicion is that if one more adverse event happens - stadium roof falls, Dengue epidemic, terror blast, some kind of major corruption event getting exposed more than whats already happened - they might cancel the CWG in Delhi and hold it in Sydney or London.Like Mani Shankar, I almost hope this happens so that we improve ourselves and tackle our corruption and civil engineering. But then I realise - we will not improve ourselves - it is not in our nature - so it is best if the CWG is a success.I am a permanent pessimist and bear - I expect the worst. But it is in our country's interest if CWG is a success

24.8.10

An alternative eminently sensible vision for China
http://www.fool.com/investing/intern...-bottomed.aspxA very balanced and thought provoking insight into how China's future might unfold.Essentially he feels - now they have built their cities, their modern housing and now they will start to consume their 4000$ per capital incomes.And China will become rich and prosperous. So a good place to invest.While India rots in its own unique hell hole

1.9.10

Hi frugal, your data is never too frugal, very ample indeed.More and more a feeling of deja vu is coming - just 2 years ago, we were saying India is different, it is growing, it will not be affected by US downturn which was going on - now 2 years later, we are saying the same thing all over again.Global imbalances are so huge, nobody can possibly predict what is going to happen.But any and every idiot should be able to predict that SOMETHING is definitely going to happen?How come nobody is scared any more?Ominous sign of a crash = people stop feeling fear, greed overwhelms their fear

2.9.10

Wiseman, if this happens, Rupee g_old will collapse, because of Rupee appreciation against dollar.The whole rationale of buying gol_d etf on BSE is Rupee depreciating against dollar. The reverse scenario you propose will wipe out g0ld investors in India.Contrarian view - dollar weakness and inflation will push up US rates (it cannot fall, already 0) - dollar will rise - dollar carry trade will fall - Indian equity will crash, Rupee will depreciate, g0ld etf on BSE will appreciate like crazy.Tough call

9.9.10

I actually agree completely with Wiseman here.In every investment you make, it is always useful to go through many improbably "what if" scenarios. Weigh the risk before discarding it as negligible. But think about what will happen if the risk comes true. If the investment feels safe even if the worst predictions come true, it is probably prudent.Some "what if" scenarios that I frequently use are1. What if I die2. What if I fall seriously sick3. What if interest rates rise enormously to 15% or more4. What if interest rates fall to zero like in USA5. What if Rupee appreciates 30%6. What if Rupee depreciates 30%7. What if there is a war8. What if there is a global depression9. What if there is global hyper-inflation10. What if India or USA govt changes (assuming BJP/Republican)Having said that, the current market upmove is climbing a wall of worries. That means genuine bull market.It is when people make wild predictions of sense+x 35000 that you should start worrying of a major crash.The current move seems like a final leg of the intermediate uptrend we have been seeing these last few months. The intermediate downtrend should be starting some time soon, but no major crash expected.The more market runs up now, the more abrupt will seem the downmove to 17000 levels. The faster it moves to17000, the more likely it is to overshoot and go to 15500 levels. Unlikely to fall lesser than that. I would welcome a small fall like that, give better buying opportunity.I think one should keep booking profits regularly. Looks like the next 2-3 weeks are going to be good for exit from stocks and entering gol=d since its price is falling and Rupee is appreciating as well.

10.9.10

Prefabricated housing ha the potential to reduce building costs by 30% and improve construction quality at the same time - also reduce labour costs which are rising with NREGA and inflation.If a cement biggie like Birla latches on to it, it can be a game changer in Indian construction. Unfortunately Tata has sold its cement business, otherwise they would have been perfect - Nano housing!Some of the prefab Singapore housing is amazing. Building goes up in weeks.

It just uses iron rods and cement - forms for making beams to standard sizes are used. There are joining iron spikes for bolting the beams together. The beams are made in the factory, rather than on site. Similarly, floor plates are manufactured in the factory. These are carried to the site on trucks, lifted by cranes and joined together to make the RC beam structure of the foundation and the framework. Joints are reinforced with on-site cement and voila - the RC frame is ready. Fill in the brick work, plaster it and finish the fitting - building takes just a few months to make.Delhi metro uses similar technique, except the design and size are gigantic and high tech.This kind of mass production are routine for building in the west and in south east Asia. The height of the crane determines what height you reach.Mass production will make sense in India if the labour cost keeps going higher and capital cost goes higher - this way you save on labour and quick finishing makes the capital costs some 30% lower.I have been waiting for this to come to India for over 10 years now. No signs of it - our builders dont want to build efficiently, they want to delay and hood wink and bilk their customers.Only someone like Tata will do it.

11.9.10

Hi Wise, didnt you see the youtube video of a whole Chinese city which is just lying empty? An entire city with broad roads, high rise buildings, commercial buildings, apartments - all empty.In Delhi also, every family is occupying 2 or three flats - they live in 1 and leave 2 empty (renting out flats is dangerous in Delhi). Most of Dwarka and Gurgaon are full of empty flats.You see, the people who want to live in flats dont have money and live in slumsThe people who have the money have 3 flats each and are busy "investing" in their fourth flat.As for USA, it has 18 million dwelling units over and above their total number of households - The number of empty houses in USA is enough to house all of Delhi (or mumbai) - that too in luxury which currently only Ambani can afford.In fact, USA traditionally has about 5-10 million dwelling units above total number of households - that is how their economy operates, people have second homes, people move (a lot) by buying and selling a house which takes time and they tear down a lot of old houses all the time, youngsters move out of their homes into apartments, old people sell their house and go to retirement home etc etc. This has been the case for the last 30 years and more, the extra houses number has been inching higher all the time and has reached a gigantic number with the bubble.But even if you put together all the excess homes in USA and China, and even in Gurgaon and Dwarka, you still cant give a house each to India's homeless.Thats the tragedy

12.9.10

Only premium flats in Gurgaon are good. Even there, as we saw on the video, there are problems.Affordable type flats of Gurgaon and Indirapuram are even worse.But even Mumbai flats worth 4-5 crores have seepage problems. A friend of mine living in downtown Mumbai has lined his cupboards with tiles to prevent monsoon seepage. Otherwise, you cant keep clothes inside !!! Yet the rest of his house looks like a five star hotel.Quality of maintenance and upkeep is definitely better in Mumbai than Gurgaon. But cost is also more.The thing is that Indian construction is basically done by untrained labourers paid some 150 Rs a day. How can you expect anything better from people who are bvasically unemployable?We need to shift to more skilled workers and more high tech building methods. Only thing is, the builder is just not bothered. Because he is making his margin of 500% from using this same useless 150 Rs labour who cannot build. He has no incentive to improve.Until there is true competition, things will not improve. Currently we have an oligopoly controlled by builder politician nexus. Until this nexus is broken, there is no hope.

Hi real.Watching builders in UK was an eyeopener. Some two people with machine tools do the work of 50 Indians. They leave no mess and the quality is fantastic.When you leave for work, you would see two guys dig up the road behind barriers. When you return in the evening, you cannot even make out where they were digging.Compare with Delhi preparations for commonwealth. Traveling on the road outside our colony feels like a moon buggy ride - for the last 2 years!

I had recently travelled to London. I made my booking through Booking .com. I was unhappy with my hotel and complained by email after returning.Now the hotel has been removed from Booking.comAnother time, some equipment we purchased from Nikon was not upto the mark. The Indian distributor refused to do anything. I sent an email to Nikon in Japan. They replaced with a better model free of cost and the disrtibutor in India was told off in no uncertain terms.But some of the Indian corporates are getting good. In an Indian hotel, the cab provided was terrible. Later, when I sent an email complaint, they refunded the whole amount.But builders are Mafia, complaint will only invite victimisation.

12.9.10

Hi Wiseman, I agree with your China scenario. I felt it was so way back in 2005, but China has managed to juggle all its balls for full 5 years after people flagged the problem.Given the global weakness, they just might pull it off. My respect for China has increased a lot after seeing how they handle their economy and foreign policy.They may well be the best we have ever seen, even better than the British - who were really good.Re: India, all signs point to high (but not hyper) inflation rather than crash or deflation.USA and Europe will deflate like Japan.China will probably start a war.India has 14% plus consumer price inflation. I epect this to continue for the next 5 years.Obviously, if USA deflates and we inflate, our currency will see some ferocious depreciation. Expect 100 Rs to the dollar in 5 years.Everything will become more expensive by becoming double the cost.RE might just stand still at current prices for 5 years. Or it might also inflate further.Given current govt. borrowing, the interest rate differential between us and the rest of the world, depreciation and inflation are foregone conclusions.In such a situation, one should spend one's money quickly. Borrow on fixed interest rates and spend that also.As I have maintained through the last one year on this forum, we are going to see inflation of everything. Maybe least inflation will be in RE (it is already inflated), but even there we will see some inflation.My scenario is not new to you Wiseman, its just a repetition of what I always say.But my degree of conviction has increased rather than decreased. It has increased enough for me to start buying gol-d (which I had never liked because it is a pure speculation, it has no underlying yeild unlike bonds, stock and even RE).If USD becomes 100Rs, gol-d will become 40,000 !!!!!PCP, your stand still scenario seems likely to me. But please reflect on one thing:A flat needs 3 years plus to be built. So if you expect RE to move up in 2014, you need to book in 2011.Better still, buy a plot or a ready made flat in 2014. Still, market timing is never very accurate or easy especially in a opaque dealing like RE. Better to time it after whatever next shock shakes up our Indian system - stock crash, RE crash, recession, war, global crash , epidemic - whatever crashed the Indian economy should be bought into for stock and RE.I expected the crash of 2008 in Oct 2007 and cashed out totally in stocks. It feels like Oct 2007 today - imminent crash in economy is weeks to months away.

12.9.10

Good one.BTW, how to reconcile this with new hiring by IT, maintained profit margins and share prices rising every day?Somehow, I think there is misrepresentation of India's growth numbers. Our inflation deflators are all wrong. Our growth is supposed to be 8.5% or so.But if our true inflation is off by 50% i.e. 15% rather than 10% WPI, then almost 50% of our growth might be just wrong capturing of inflation related price increases as true rise of GDP.i.e. If you sold a soap for 10 Rs last year and sold a smaller sized soap for 11Rs this year - and our GDP was just soap - we would have grown 10% in GDP, whereas actually our soap gor smaller.Again, if you made a road for 100Rs last year, it got washed away in the rain, you again made the same road for 110Rs, our GDP would calculate it as a 10% growth. Whereas actually we had 100Rs capital destruction.Again, RE is not part of our inflation measures and growth deflator. But it is a part of our growth figures. So if you sold a flat for 30L last year and sold a similar flat for 45 L this year, our GDP would grow 50%!!!!!I dont know what to believe. All around me I see uncompetitive people and inefficiency. I see enormous capital destruction. I see terrible mismanagement .And still India is shining??? How ????

13.9.10

Thats always the paradox of waiting for the market to fall - it never does - until you get disgusted and enter the market - and immedeately after you invested your money, the market will crash.The current bull run will continue till the fence sitters capitulate and enter the market.I prefer to sit out the last 20% rise of the stock market - I can forego the profits. I would rather keep my capital safe. After all, bonds also give some 7-8% return - I would rather have 7-8% per annum now than a risky 20% over 1 month's time.Having said that, I sold 50% of holding in BASF for 470, now it is 620. I sold 100% of Hin Zin at 1060, now it is 1100. I trimmed 10% in LICHF at 1050, now it is 1200.Damn it.

13.9.10

I agree with you, PCP. Loks like this party will continue for a while.

I am only buying already identified companies and gol=d - maybe gol=d will decline as our stocks rally, giving buying opportunity.

Havent sold anything in last 3 days - just waiting for a slightly better price

13.9.10

Hi Vicky. This is one of the toughest of questions and is difficult to explain - and difficult to understand. As Wiseman also says, it requires a lot of pondering. I personally dont understand all of it - nobody does, that is why the currency markets are impossible to predict or make money from.Basically, one should stay away from currencies. They are the devil of investing.Still, some of the factors affectiong Rs vs USD according to my understanding, I will try to explain - although I am not an economist - mostly, even economists are unable to explain or understand all of it. Some factors are:1. Interest rates. US rates parallel our stock market completely. a) After dot com bust, US (Greenspan) lowered rates. FII money poured into India and lifted stocks. Our currency strengthened to 40 per $.b)US experienced a bubble, there were global bubbles because of low rates in USc) After RE started growing in 2006 onwards, US rates started rising. Rupee weakened to 53 per $d) The rising rates burst the global bubble in 2008. US responded by lowering rates again.e) Rs strengthened against the $ to the current 46 per $.f) US cannot lower rates because it is zero. Whenever US raises rates, Rupee will weaken. FII will pull out money from our stocks and run for US bonds. Our stock market will collapse.g) US is currently not planning to raise rates. That means the party continues.h) It is placing long term bonds at about 2.8% or so - basically it is borrowing massive amounts to feed its easy money policy and running deficits. US will raise rates when it finds it impossible to place bonds at 2.8% - when this will happen is anybodies guess, but it has to happen sooner or later.i) Probably, US will raise rates when global commodity prices start rising again because China consumes it - basically spending the money it holds in USD bonds on commodities. If oil prices rise to 90$ you can be sure USD will have to strengthen - because US has to raise rates.2) India has a current account deficit - it imports more than it exports. Rs is strong because of FII inflow. Whenever FII inflows becomes an outflow, Rs will depreciate like crazy. There are many possible reasons for FII outflowa) Rates rise in USA - detailed aboveb) Corporate underperformance in India - earnings disappointment is likely to be the main cause. That means next quarter results are rather crucialc) Crisis of confidence in India - probably because of:-failed commonwealth games-failure in govt policy-warsStrangely, as FII will flee India, it will push down US rates again - because funds will flee to the US safe haven bonds - pushing down rates as bonds rise - it is a very difficult to predict scenario - difficult to say what exactly will happen.3) Goods and services in India cannot be out of balance with USA. If price of a burger in India is currently 50Rs and it is 1$ in USA, if price in India becomes 100Rs, either $ price also becomes 2$ (i.e. US inflation matched Indian inflation - unlikely) or Rupee changes value to 100Rs per dollar. If prices are actually deflating rather than inflating in USA, there is no way price of burger will become 2$. Only the exchange rate can adjust.Currently India has huge inflation of probably 15%. So exchange rate has to give up 15% i.e. 55 Rs per $ within the short term, just to keep pace with inflation.4)India is currently placing govt bonds at 8%. Obviously, people can borrow in USD at 0% and place it in India at a safe 8%. Obviously, this is not sustainable. So exchange rate has to adjust.5)FII can pull out money for obscure reasons - something spooks them and they pull out. And our currency will collapse. Only explanation is - Simply (as a Malayalee would put it)6) India's economy is import sensitive. If Rs starts to depreciate, Rupee cost of imports goes up - this makes Indian companies less efficient and squeezes margins - FII see poor results and pull out money - Rupee depreciates further - FII pull out more - Rupee collapses further - a vicious cycle is started.7) Indian inflation has the same effect - it pushes up cost of manufacture - company results deteriorate - FII pull out - above vicious cycle is started.8) India is running massive deficits - money is being used unproductively by govt - it is pushing up prices in India - setting off inflation and starting the above vicious cycle.In other words, it is a humongously complicated affair - as complex as a weather system - one small thing somewhere has the potential to set off a chaotic storm.This happened in 1989-1990 when the stupid Janata govt mismanaged the economy. There was a flight of capital and our financial system almost collapsed. We devalues tosome 40-45 Rs to the $ because of that flight.Currently Congress is badly mis-managing the economy. Something has to give.It is unpredictable. It is like dropping one grain of sand grain by grain on the floor. It will create a mound - when the mound will slip cannot be predicted. All you can say is - at some point, the mound of sand has to slip.But which grain of sand will make the mound slip - nobody can predict that.