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Dear ck.kislay,
You are subscribed to the thread "Real Estate Bubble Set to Burst Again in India" by MANOJa, there have been 1 post(s) to this thread, the last poster was g.angi.
https://www.indianrealestateforum.com/forum/city-forums/ncr-real-estate/gurgaon-real-estate/13876-real-estate-bubble-set-to-burst-again-in-india
These following posts were made to the thread:
RE prices to bottom in 2019-20 in NCR - read the strong logic
https://www.indianrealestateforum.com/forum/city-forums/ncr-real-estate/gurgaon-real-estate/13876-real-estate-bubble-set-to-burst-again-in-india
Posted by: g.angi
On: March 31 2018 07:32 PM
Couple of weeks back, I bumped into a renowned real estate analyst. Since the topic is so close to my heart, we had a very candid discussion on where one sees the real estate prices are heading to? Has it already hit a bottom or there is some more juice left? I couldn't disagree to what he said but somewhere my heart was looking for an opposite conclusion – after all my hard earned money is at stack :( Looking for your advice – please find out some flaws in his theory. According to him, the real estate prices would fall by 20-30% by 2020 in NCR – and he was talking about 'ready to move-in' properties. Ready to move-in properties have not witnessed significant drop so far, the correction has been mainly in under-construction category. Following was the rational for his conclusion: a) RERA came into effect this year and most of the new/existing projects have been registered with it. All the projects, even if they were launched ten years back, have given the completion date between 2018 to 2020. b) Under the current situation when judiciary and government have tighten the noose, builders are extremely unlikely to default on the timelines set with RERA. They would either deliver the projects or announce the insolvency and leave the project to be completed by someone else. I am sure they have no intention to pay heavy interest on delays. c) NCR has unsold inventory to the extent of around 3,00,000 which is 35% of the total under-construction lot. On a conservative side, around 20-30% of the sold inventory is lying with volume investors who would never want to register property on their name – it would mean significant cash outflow for them. Further, with implementation of Benami Act, linking of ADHAAR card and change in income tax laws, real estate has lost its tag as lucrative investment. d) With simple mathematics, we can expect guaranteed flow of around 6-7 lacs units that would be up for sale by 2020. Mind you, all of them would be ready to move-in. e) Builders and investors would face tremendous pressure to clear the inventory by bankers and authorities respectively f) This situation would trigger price reduction of ready to move-in property anywhere between 20-30% or may be more. Just to put in perspective, in business as usual, an inventory of 6-7 Lac would take around 8 years to clear. Couple of weeks back, I bumped into a renowned real estate analyst. Since the topic is so close to my heart, we had a very candid discussion on where one sees the real estate prices are heading to? Has it already hit a bottom or there is some more juice left? I couldn't disagree to what he said but somewhere my heart was looking for an opposite conclusion – after all my hard earned money is at stack :( Looking for your advice – please find out some flaws in his theory. According to him, the real estate prices would fall by 20-30% by 2020 in NCR – and he was talking about 'ready to move-in' properties. Ready to move-in properties have not witnessed significant drop so far, the correction has been mainly in under-construction category. Following was the rational for his conclusion: a) RERA came into effect this year and most of the new/existing projects have been registered with it. All the projects, even if they were launched ten years back, have given the completion date between 2018 to 2020. b) Under the current situation when judiciary and government have tighten the noose, builders are extremely unlikely to default on the timelines set with RERA. They would either deliver the projects or announce the insolvency and leave the project to be completed by someone else. I am sure they have no intention to pay heavy interest on delays. c) NCR has unsold inventory to the extent of around 3,00,000 which is 35% of the total under-construction lot. On a conservative side, around 20-30% of the sold inventory is lying with volume investors who would never want to register property on their name – it would mean significant cash outflow for them. Further, with implementation of Benami Act, linking of ADHAAR card and change in income tax laws, real estate has lost its tag as lucrative investment. d) With simple mathematics, we can expect guaranteed flow of around 6-7 lacs units that would be up for sale by 2020. Mind you, all of them would be ready to move-in. e) Builders and investors would face tremendous pressure to clear the inventory by bankers and authorities respectively f) This situation would trigger price reduction of ready to move-in property anywhere between 20-30% or may be more. Just to put in perspective, in business as usual, an inventory of 6-7 Lac would take around 8 years to clear.
With warm regards,
Team IREF
With warm regards,
Team IREF
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