1. Upto mid 2007 - I had stayed for 5 years in Delhi in a centrally located place (Vikas Puri), paid a rent of Rs 5,500/- per month for a 2 BHK with abudant parking space and facing a big park. The house owner proudly claimed its market value was about 1.5 Crores (must be 3.5 Crores now!) Surely a very poor return for money he got. But then this man had bought it way back in 1980 for less then 10 Lacs.

2. I booked a “builder floor” in Delhi around early 2006. The builder was into buying houses, demolishing them and rebuilding into floors. I booked the first floor of a 4 storey construction (90 Sq Yd) for 16.5 Lacs in Uttam Nagar. This was in mid 2006. Then the boom accelerated by end 2006…they said it was now worth 25 Lacs. The builder got greedy, slowed construction and all the related tricks. I finally took his offer to take double my deposit and quit. The house still isn’t sold. Its mid 2008. The builder is bankrupt and has fled. The story is repeating in the entire area.

3. I came to Pune. The traffic was horrible, the pollution worser, the cost of everything was three times what it was in Delhi starting from fruits to furniture. The houses were also as expensive! Far flung outskirts, no electricity or water….but lot of nice morphed photos and glossy brochures…and the usual promise of once in a lifetime investment opportunity. Everyone said it was the IT.

4. Then I met an IT graduate (the city is called the Oxford of the East)…this guy told me that offer letters handed out after Campus interviews had joining dates six months later and very few got actual confirmations. Half the guys didn’t even get interviewed. Some smaller institutes didn’t even get visited by the industry. Also, this was in sharp contrast to last year when almost everyone got a job. So it isn’t the IT anymore!

5. Lastly, I went to a small town in MP. This one was untouched by builders. An empty 200 Sq Mtr plot with a tube well (at least ground water supply assured), stable electricity supply and in a well developed area on the outskirts was quoting for Rs 75,000/-. The airport at Bhopal was 20 Kms away, the railway station the same. That was what I used to travel in Delhi or Pune too! The vegetables and fruits were half the price in Delhi and one quarter the price in Pune. Full time domestic help was available in plenty at as low as Rs 1000/- pm. The schools were roughly the same standard but charged one tenth what similar schools charged in Delhi and Pune.

What did I conclude? Stay on rent in a big city while you work (remember Delhi @ Rs 5,500/- ….and dropping). Build yourself a nice palatial bungalow in a small town and relax there once you retire. The amentities (hospitals etc) are still as closeby as in a metro or worst case you can fly down to Delhi for Rs 3,000/-.

Compare that with buying a 1 Crore designer flat adjacent to a slum (or a suburb 60 Kms away from city centre) and paying all your salary as EMI all your life.

Bottomline is…..either it crashes, else I am not buying!!

http://markets.moneycontrol.com/india/newsarticle/stocksnews_newsletter.php?autono=243239

The US econony is slowing down . This will have an impact on real estate.

http://markets.moneycontrol.com/india/newsarticle/stocksnews_newsletter.php?autono=243546

There was an interesting article I saw today on INRnews.com Apparently policy measures are being considered by the Urban Development Ministry to curb speculative land deals. The measure being considered is to force anyone in possession of urbanisable land to construct within six months of purchase or else face the prospect of the land being acquired by the government at guideline rates. This move would of course make it difficult for the land investor but I have to wonder how such a policy would be executed!!

Policy measures being considered to curb speculative land deals

The rate of appreciation in metros avg about 10% YOY, however i feel the prive are at the peak. The thing to watch this year is the developments in the north and east of india. This will have a profound effect on rest of the country. My feelings are that with increasing oppurtunities in Punjab, Harayana, Bengal and Rjasthan you will find investors will have more choices. Tier2 cities in these states will be more attractive to NRI’s and Local investors. There will be more assets chasing propotionately less capital. In mumbai - native city, the start of construction for the Navi mumbai airport will shift the focus from the central and western suburbs of mumbai to Navi Mumbai. This will be another factor in easing the demand in the western suburbs. There are 2 SEZ coming up close to the airport in Navi mumbai. knowledge based industries will prefer locating here as compared to the already congested old mumbai.
Mysore and hosur are naturally attractive as alternatives to B’lore, their growth will cause a correction( masive )in the valuation of B’lore real estate. Cochin-coimbatore is another attractive proposition.
The present prices are a indication of pent up demand for assets. Going fwd we’ll see tremendous oppurtunities for professionals to live and invest in. I am a tamilian aircrft engineer based in U.K., i am originally from mumbai. I am seriously looking at heading back home, i’ve ruled out settling in mumbai, banglore, chennai or hyderabad - delhi is out of question too much crime out there. I would prefer Goa, Cochin, Hosur, Baroda, coimbatore or Pondichery. I am hopeful that real estate in these cities will be affordable and offer quality living with good schools, leisure etc.
I would prefer investing in flats rather than plots, firstly for safety/security from enchraochers secondly it is easier to dispose a flat in recession and rent it during time of growth.

What would you advice a person who has a land worth 20 lakhs in bangalore and has to spend an avg of 6000 on rent per month for a one room flat in an ok locality. Should he sell his land and buy a flat so he saves 6000 per month. His flat will also appreciate. may be not as fast as the land.

or should he sell his land, buy three more plots are cheaper rates and it’s more profitable to spend 6000 from you pocket as the land’s appreciation per month on an avg is more than 6000.

I would really appreciate if you could help me out here.

Thanks!

You will see that happening soon.

Will the appreciation be as high as it is now - no, but is a correction in site - no, not unless huge chunks like the mill-land in Bombay come on to the market at one go. But infrastructure - roads and power have a way of making people think where to go. Hence the increases IMO would be moderate (around GDP growth rates), till an external event changes the direction. Of which none seems to be lurking

That was an interesting post

I’m surprised that you haven’ received more comments, more accolades so far

Keep such posts coming

Though I may NOT agree to all what your said, your blog brought back lots of old memories and thoughts about OUR COUNTRY, our society, friends and relatives

While we as world citizens think that Justice and equality are the most important cornertones of a civil society, does the ground reality reflect that ?

We feel that friendship, love, affection and above all our family is very important in shaping our lives and thoughts. To most of us, a mother, the epitome of love and sacrifice, plays and important role

But what happens when the same mother is denied justice in her own family ?

more at
http://o3.indiatimes.com/motherindia/archive/2006/03/05/517925.aspx

regards
Vinayak