Hi,
I came across an article which i thought of sharing with you folks –
Looks like real estate bubble burst is just around the corner now. Good news for prospective buyers.
-Deepak
Hi,
I came across an article which i thought of sharing with you folks –
Looks like real estate bubble burst is just around the corner now. Good news for prospective buyers.
-Deepak
In last one year bangalore has not seen any decline over the residential property prices. Rather it has exponentially growing by 10% every month. Can anyone tell me even a single rupee drop in prices for last 6 months anywhere in bangalore.
This article is not appropriate according to my view.
This is True. Look at the below article posted in harsha sagar on august 2011.
http://harshasagar.com/2011/08/08/10-points-to-consider-before-investing-in-real-estate-by-jayesh/
Now 2 years are already over from the date the above article is posted, have anybody seen a 1% price drop in any of the project from august 2011 in Bangalore?. Instead, i could see 20% appreciation in most of the projects and up to 100% appreciation in some projects. For example: PrimeCorp fiesta homes quoted price in this article is Rs 2400, now it is Rs 3600+ that is 50%+ appreciation. Even the so called, RE bubble happen, will it go to 2011 level?. No way, may be 10 – 20% down from the prevailing rate. So whoever not bought home at 2011 is still a looser.
Now a days, it is very hard to see any project below Rs 2500 per Sqft rate. Even if it is available, it would be a low cast project in some remote location. The Construction cost is heading towards Rs 2000 per sqft in Bangalore and land price in any of the city location (even it is under developed) is quoted minimum Rs 2000 per sqft. Bulk land purchase or joint development project may get some discount in the land rate. With advertisement cost and profit margin, it is very hard to sell any thing below Rs 3000 psqft. That is the trend going forward.
Leave apartment aside.
Can anyone imagine what is the prevailing sqft rate of land/independent house (old) in any of the well BDA developed area?. The land rate is somewhere around Rs 8000+ psqft (average) and 30×40 site old house is somewhere around Rs 1.3 to 2.0 Crore. In HSR layout, a house in 30X20 land is around Rs 1.0 to 1.2 Crore. Because this 600 SQFT house with 4 floors is yielding around Rs 48000 rent per month. That money would be sufficient for owner’s EMI payment even if he bought the house thru’ loan. So why he has to sell the house for below 1.0 crore after RE burst.
So the RE bubble burst (more than 50% correction) will happen only when the entire economy is struck – People are loosing jobs (not only IT, all private sectors) and vacating bangalore left and right, owners stopped getting rent, etc. Until then, we no need to worry. At the same time, i am not asking people to go behind all pre-launches at the very high rate from the prevailing market price. It is each individual to decide depending on their capacity. For me, It is better to look at ready to move than pre-launch.
Please check at what prices owners are selling completed flats. That will give good information about price rise. Do not go by prices quoted by builders during construction. I am not saying that prices have not increased. They have increased, but go by the owner sale price. Magicbricks has the trend of price.
Very valid point by NKS.
If you put some efforts, you would easily get ready to move in apartments which are cheaper than the newly pre-launched one.
There was a time when buyers during prelaunch made a killing, but now it amounts to nothing. The builders have realized this and are not willing to pass the benefit to the customer.
For own use, buy ready-to-move in, for investments, just hold the temptation to jump into the prelaunch frenzy! (Land is a better inv than flats).
Regards,
Resident Indian
would suggest everyone to read this article..with lots of data points etc.. this will explain the crash in bangalore clearly
http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=947648&num=0
Mahesh
I do feel that people are over estimating the Bangalore realty, mainly because of young less informed investors. I could not read the link you had given, seems that article is removed. Anyway I do not think that there is any evidence of any price down turn, may be slightly lower appreciation. I believe that it is the second hand market that shows the real price of house. But on the booking during construction it is going beyond reachable range. See how many projects Prestige has done in last one year, highest ever in shortest period. Now a days no project is available within 4000 psft. But I do believe that people have to be cautious, not to go by the artificial staged price rise of flats from pre launch, giving an impression that catch it else you will never get it.
Go and buy a completed flat with full loan, bank also will happily give you loan and you will get rent.
I mean how many project Prestige has conceived in last one year….highest ever.
Saw below report.
Bangalore real estate mkt bubble bursts – CNBC-TV18
http://www.moneycontrol.com/news/business/bangalore-real-estate-mkt-bubble-bursts_317459.html
The bubble in Bangalore ‘s real estate market has begun to burst. Prices of homes have dropped by nearly 20% in six months, reports CNBC-TV18’s Faye D’Souza.
Buying a home in Bangalore just got a lot easier on your bank account. According to a report released by Asipac , a real estate consultancy firm, prices of homes in Whitefield and Marathahalli have dropped by 12%, while homes in Sarjajapur RD have seen a sharper drop of 20%. Homes in Jayanagar and JP Nagar are cheaper by nearly 15%. The report attributes this to the end of the speculation in the city’s residential market.
Multiple purchases are almost nil. Earlier people would buy 4,6 or 8 apartments. That has gone down to a great extent. It is becoming much more a user-driven market than a speculators market, said Amit Bagaria , Chariman and CEO, Asipac Projects .
A lot of the blame is being pinned on Bangalore’s collapsing infrastructure. No water, no electricity and bad roads has resulted in a dip in buyer interest in the city’s upcoming suburbs.
According to Asipac, the only areas that have not seen a dip in rates are those around the new airport. But the volumes of sales in these areas have dropped by 10-40%. Banglaore’s organized developers have sold only 26,000 homes in the city so far this year, compared to the 33,500 homes they sold last year. Anxiety about the political situation and the job market in Bangalore could be the reason.
Even if there are people who can afford to buy at today’s prices, they are holding back, because of the political situation. They do not know what the future of the city will be. With a lot of companies moving out to Hyderabad, Chennai and Mysore, they do not know if they will have a job in the city, added Amit Bagaria.
Some experts say investments in projects, supported by strong infrastructure, could still be a good bet.
There was never a decrease in price in the last six months especially in the areas mentioned. Its ever increasing only.
Who on earth will invest in Hyderabad than in bangalore
This is a crap article.
.
It would be great and kind if “Ram brother” can tell where you get cheap housing. He can also buy and also help others buy cheap home.
These article writers first decide what they want to write and then choose numbers to justify that. Tomorrow you will see another article that prices are going up and there also he will put some numbers. What matters is at what price you get housing/apartments and that has no relation to these articles. These articles are all biased.
I am of the view that the prices must even out and must be within reach of all people. The short term traders are not allowing it. If short term traders are out which would happen, it must soften and horse trading will stop. But price going down, no chance as the land price itself is going up. People are holding on to big lands for decades, so how can it come down.
It’s true that prices haven’t decreased in these areas so either the report is not correct or may be it’s stating some facts which have been concealed by the usual suspects to ensure the Real Estate boom continues to enrich the rich.
This year 2007 post in money control #facepalm
Once real estate regulator is in place..the prices will moderate and all speculative investors will take a hit. As per research there are 11 million apartments in metros not occupied. This is pure black money and driven by speculative investors. Since middle class could not afford to buy in cities
things will surely slow down.
I would request everyone in this forum to avoid booking flats till Real estate regulator comes in place. This will happen in another 1 month..Lets hope for good things to happen and prices to be rational
What is Real Estate Regulator ?
Also I would like to know why the Tier 1 Builders (Shobha, Prestige, Purvankara..) have such a high pricing even at remote places as compared to Tier 2 builders, and how to decide on which one to opt.
I am planning to book a Flat in bengaluru.
bcoz they think they are the creators of bangalore..50 % of their projects are empty. They do not show this to the people outside.
Most of the apartment which are Vacant are already sold (except for Purvankara) they are vacant because the buyers are actually investors and don’t want to rent the apt.
that might be true saurab. The average cost of construction will be maximum 2000 rs..it cant go beyound that.. rest all are profit made by builders.
If people can wait till real estate regulator comes..it is going be be win for customers.
True. Even after paying close to 5000 per sq feet which is now a standard rate on ORR, no buildler is even providing marble flooring.
It’s true that builders make hefty profits, but its not that apart form cunstruction cost all is profit. There is land cost which is very high and other company costs (advertisement. staff, etc.).
Better builders have better staff, customer care and all. You feel the premium at every place. If the buyer don’t feel he is not getting what he is paying for, he will not buy, if he does not buys the company will not grow. But the buyers are buying and companies are growing.
And had it been so easy to sell apt. at high cost, all the builders would have done that.
Maruti and Mercedes made from same steel, cost a lot different, its the customer chose what he want 😉
There are no better builders. All builders are nice only during sales ..once you pay the money they become the king and you need to follow up 100 times for anything to be done.
the customer service is there to collect money..and you can see puruvankara builders ..their sales are available 24 * 7.
Dont we face issues in the apartment ? who will solve the problem..do they have any time period for resolving the problem in the apartments.? will builders available 24 *7 to solve the problem ?
What happened in US sub prime crisis is going to happen in India soon. How long investors hold on to the apartments.They gain only when there is a huge demand and sell within short span of time. else sub prime crisis will come to India as happened in US. Renting is not a good option for them though..so let us wait for 1 more year and prices will cool down or will not go up.
Thats true, because there is no regulator in real estate and its highly non corporate field and is also neck deep in corruption.
But the fact that you and me are in this forum shows that ppl have interest in Real estate even though prices are high.
Scarcity of land and unavailability of good infrastructure drives the prices up and I believe this is gonna stay in India for couple of decades.
Real estate regulator is highly required and awaited, to create healthy platform. Many ppl prefer Big names in place of good small builders just because the buyers rights are not protected in India and ppl have to relay on Brand name to avoid frauds.
But RER does not seems to be priority for a govt. preparing for Elections next yr. Anyways most of us dont vote and will not decide govt’s fate, than why will gov’t worry about our faith…
Its true that it cost maximum of rs2000/- persft but at the same time not all 100% flats belongs to builder out if which only 55 to 60 percent goes to builder remaining to the land owner but the builder has to do constrution to all 100% flats so in this case the landed cost for a builder will be Rs3500/-persft. Plus bwssb and bescom deposits and BDA approval’s which going to cost builder a fortune finally he has to collect the same from us that’s the reason why Bangalore prices are so high
There is nothing strange about Tier-1 brands selling their units at a higher price. A good brand always carries certain premium and it is a result of the reputation those brands manage to build over the years. It holds true in any product, including the property market.
Big brands are always accused of price manipulation but at the end, price is always a product of market mechanism. They can sell an apartment at a certain price, because there is a demand for that apartment at that price.
I’m afraid your view is too simplistic in my view. I think you are confusing oligopolistic pricing with brand premium. Yes, brand premiums are valid and justified. However, these big builders form cartels, buy pockets of land which lie vacant and then announce a project at a high rate pushing prices up. Its like if AMUL, NESTLE and few others were to buy all organized dairies in India and then selling milk at 70 rupee per litre. Would milk deserve a premium of 100% over the local milkmen rates? Yes, brand reliability and promise could command some premium but not as much. However, milk market is regulated, at least more than the screwed up real estate market. You talk about market forces, but that’s relevant in an efficient and fair market. This market in Bangalore is comprised of builder-broker cartels where builders transfer units in broker’s names only to wait for prices to rise and then sell it through them etc etc. Lets not even get into the black money part of it. So justifying the high prices just on the basis of brand premium is missing the root of the issue in my opinion
Bubbles are applicable only for short term investors. Those invest for long terms (5 years or more) or those who buy for themsleves, no bubble makes a difference. But one has to ensure that the land part is only minor portion of the apartment as that is what going to beaten down. Around 2000 Rs is construction cost normally, that cannot come down unless builder sells on loss, which is not a consideration, so do not invest, but buy homes.
Will this really happen ? Today there was advertisement about “brigade Altamount’ apparently their launch offer – and it said ‘ALL 2 BHKs are prebooked’ and they just want 3BHK customers.
Even before plan is getting approved, all 2BHKs of A grade builders are getting booked. Is this easy money coming from IT industry ?
Hi Bhola,
Even IT people are finding it very difficult to book at prevailing high rates which have become norms nowadays. I do not understand who the real buyers are or for that matter if there are buyers at all ?
-Deepak
Funny people think IT people get easy money. Nothing comes easy, IT ppl sacrifice their family and social life by working late and earn decent salary. Even they cannot afford apartments which are so high priced.
There should be a like button here 🙂
Most of IT people cannot do basic financial planning.
IT bashing? So is good at financial planning? Don’t tell me the MBA’s are good at it and they did not cause the economic crisis
True. If there was a sense of financial planning, atleast they would have bought flats which do not have to rely on water tankers throughout their life.
Easy IT money> Slogging > Financial planing> MBA > Economic crisis > Water problem
Dynamic discussion ;-)….
Anyways, If IT has easy money, any one should join it and make money. If one is qualified, there is no restriction in joining IT companies.
And if ppl. wait to buy an apt. which gets water connection, they will have to wait for a life time or travel hrs to reach home. All the areas close to work space are water deprived and has to depend on tankers. So it’s a small price to pay against living in other part of the city and traveling to work place and not to forget congesting the roads.
More importantly providing proper water should be in govt.s planning. But Bangalore local governance is known for its infra mismanagement.
No salaried people can buy at these prices..
It must be booked by investors.I wouldnt be surprised if I see ads for 2BHK in secondary markets..
And builders are hand in hand with the investors.. All the builders want to achieve is first get rid of bigger houses(3BHK) because they are difficult to sell.Selling 2BHK is relatively easier..
and of course, our honourable Finance Minister wont let the industry to go bust.. A bailout package in some form will be announced shortly.. 🙂
good news for buyers, bad news for speculative buyers and developers who purchased land at high rate
If only they can predict it so well. In next week property times, they will out that this is the right time to invest. Maybe the astrologers told them so.
Property times is sponsored publication. Moreover, there are only 1-2 authors who keeps on writing the same stuff i.e. this is the right time, this area or that area has got big potential for investment blah blah. Clearly they get big kickback from real estate developers.
i agree to your comments.