Real Estate Boom - Recent India Trip

Jaggudada · Post by **Jaggudada** » Fri Aug 12, 2011 7:26 pm

I recently spent 3 weeks in India and was astonished to learn real estate prices in Mumbai and Pune. The going rate in Mumbai suburbs such as Ghatkopar, Thane, Andheri was Rs10,000/sqft and in Pune it was Rs 7,000. With these prices you have to shell out anywhere from 70 lacs to 1 crore for 1000 sqft flat. I believe those of us who have been in US have been priced out with this kind of escalation and inflation. Mentally not prepared to spend 1 crore to buy a flat, not knowing the bubble if there is one.

Do you guys share the sentiment and what is your take on real estate in India? There doesn't seem to be any chance of prices coming down as real estate is in demand due to growing middle class and there is so much black money and people with ton of money. If they don't have a need to sell, how would the prices come down? plus the mindset in India is that real estate will never come down and everybody is trying to buy a piece of land.

oasis138 · Post by **oasis138** » Fri Aug 12, 2011 7:51 pm

Jaggudada;404452I recently spent 3 weeks in India and was astonished to learn real estate prices in Mumbai and Pune. The going rate in Mumbai suburbs such as Ghatkopar, Thane, Andheri was Rs10,000/sqft and in Pune it was Rs 7,000. With these prices you have to shell out anywhere from 70 lacs to 1 crore for 1000 sqft flat. I believe those of us who have been in US have been priced out with this kind of escalation and inflation. Mentally not prepared to spend 1 crore to buy a flat, not knowing the bubble if there is one.

Do you guys share the sentiment and what is your take on real estate in India? There doesn't seem to be any chance of prices coming down as real estate is in demand due to growing middle class and there is so much black money and people with ton of money. If they don't have a need to sell, how would the prices come down? plus the mindset in India is that real estate will never come down and everybody is trying to buy a piece of land.

Yup ...agree....real estate in India wont come down..buy today for 1 crore vs 2 in 5 years.

Sid · Post by **Sid** » Fri Aug 12, 2011 8:07 pm

Mumbai prices are particularly skewed. Its price movement will be much like Manhattan. In NCR area, what I've heard is that prices are stable since past year. But if inflation continues like it has been, then prices will go further up.

gujju · Post by **gujju** » Fri Aug 12, 2011 8:16 pm

Couple of my builder friends have told me to just stay away from RE for the next 2-2.5 years. You guys might not be aware of the extra EMI's that people are paying from the RBI rate increases.

Isn't it so beautiful our people do everything in herds, now they have lined up to buy gold coins & jewelry. One unpadh (barely literate) guy was quoting me the Goldman Sachs report!! I asked him "jaante bhi ho yeh Goldman kaun hai"(do you even know who Goldman is) and he replies "New York main Gold ka bahuth bada dukaan hai" (He is a big jeweler in New York)

venkat786 · Post by **venkat786** » Fri Aug 12, 2011 11:58 pm

Mumbai & Pune gone mad.

sumeet · Post by **sumeet** » Fri Aug 12, 2011 11:59 pm

oasis138;404458Yup ...agree....real estate in India wont come down..buy today for 1 crore vs 2 in 5 years.

You are spot on, reading pundits opinions in multiple fora and gurus actively predicting 'impending crash' and advise to never to buy in this environment, I personally passed up many good opportunities to buy and ended up buying the same property at thrice the cost 5 years later. Atleast in India there has been nothing like a crash in real estate. I am aware of the cyclical downturns like in 90s, where there were periods of lull, but never was there a crash, and I am not aware of a single person who lost his money in real estate in India, if he has had the ability to stay the course in a lull.

oasis138 · Post by **oasis138** » Sat Aug 13, 2011 12:01 am

sumeet;404519You are spot on, reading pundits opinions in multiple fora and gurus actively predicting 'impending crash' and advise to never to buy in this environment, I personally passed up many good opportunities to buy and ended up buying the same property at thrice the cost 5 years later. Atleast in India there has been nothing like a crash in real estate. I am aware of the cyclical downturns like in 90s, where there were periods of lull, but never was there a crash, and I am not aware of a single person who lost his money in real estate in India, fi he has had the ability to stay the course in a lull.

yup.....just buy....all these talks etc are meaningless..with money supply doubling every 5-6 years expect prices to double in same time frame....

Sid · Post by **Sid** » Sat Aug 13, 2011 12:22 am

Real estate in India will never crash unless there is a major economy crashing event, like a war or a global depression. India's GDP doubled in past 5 years, and is currently close to 1.4 Trillion. Even at a reduced rate, it is expected to cross 2 Trillion by end of 2014. With so much of wealth being generated, inflation skyrocketing, and population of young people only rising, there is no way real-estate is coming down.

layman · Post by **layman** » Sat Aug 13, 2011 12:52 am

sid_earth;404529there is no way real-estate is coming down.

Deja Vu :-)

Lakshya · Post by **Lakshya** » Sat Aug 13, 2011 3:03 am

sid_earth;404529Real estate in India will never crash unless there is a major economy crashing event, like a war or a global depression. India's GDP doubled in past 5 years, and is currently close to 1.4 Trillion. Even at a reduced rate, it is expected to cross 2 Trillion by end of 2014. With so much of wealth being generated, inflation skyrocketing, and population of young people only rising, there is no way real-estate is coming down.

Sid if we are talking RE which is above 50L, it is not crashing because massive black money is hidden in these RE projects.

Is there any genuine or real demand of 70L to 2 Core apartments in India? I would say no. What % of population in India can afford this price range? Typical above average middle class in urban area can stretch max up to 35-40L. After that range everything is bought by rich NRI- Businessmen- IPS-IAS- and other govt officers who really have to hide their black money somewhere. Few IT folks who lived in 1 bedroom apt in US and save good amt of money were also lucky to go for 1 Cr apt.

Yes there is demand for home in India, but that range is 15-25 L. But builder will not go for that type of projects because profit margin is less there.

For investment purpose I would not put my money in RE now, to hide my black money I would RE is evergreen.

Problem many NRI will face is even if they decided to go back, they will not able to adjust in locality where apartments are available for 20-25L. So called status will push them for 1 Cr apt, but for that they have to come up with good $$$ (from their savings) or have to keep working to pay hefty EMI.