Sunday, March 30, 2008

Pune real estate slowdown: school exams may be the reason says Sachin Bora, director of Samrat Constructions

Optimistic Pune Real Estate Developers:

The builders, however, still hope that the IT sector will see boom times once again and the present slowdown turns out to be a temporary phenomenon.

Says Sachin Bora, director of Samrat Constructions, “All opinions are based on past records and here we cannot deny that the kind of growth the real estate market has seen is unprecedented. It is the hype and not market that has slowed down,” he says, adding that school exams may be the reason for the present slowdown.

Frustrated Pune Property Buyers:

With rising home loan rates leading to the EMIs sometimes even exceeding their salaries, the IT sector in the city has gone a wait-and-watch mode.

“I think the price hike was not just fueled by the IT industry, but also by the NRIs. But today those investments aren’t paying off because of the rise in prices. Thus, you find that 70 per cent of the flats are empty in many high-end housing projects in the city. In fact in IT-specific areas like Magarpatta, where the official price is Rs 3,500 per sq ft, resale flats are there at Rs 3,100 per sq ft,” adds Aashish Kapoor working as a manager in IBM.
IT sector finding Pune rates too hot for comfort - ExpressIndia.Com


  1. If you are planning to purchase your dream home then just wait for 6 to 12 months as property rates started coming down.
    Closely watch constructions going near by your home then you willfind now they have stopped construction or the speed of constructions is very slow.

    Reason behind is they don't have bookings so it is very difficult to complete their project. If they become defaulter then you will loose your valuable money.
    For confirmation you can visit Aditya builders bawdhan pune, Aditya Builders Baner, Sun Orbit Singhgad Road Pune, Huzur Developer Singhgad Road Pune, DSK Vishva Dahiri, Roseland Aundh there are so many who don't have customers. Rates will surely come down which is good sign for buyers. - You can check it very easily visit their sites and enquire from some construction supervisor or site engineer about bookings. Then visit in their sales office they will try to present 80% - 90% has been sold out. Actually it is just 10% - 20%.
    So total 10% - 20% poor guys has been nicely looted by these smart property developers. Please don't disclose them how you get real information about their project that way other interested property buyer will not get correct information about project and they might loose their valuable money. You can also enquire this from small kirana and pan shops which are near to that site. Or you can visit site 2 - 3 time in 10 - 15 days. So you will also get idea about work progress.
    Before investing watch regularly CNBC and other business channel's real state programs. According to them real state developers are in big trouble. Some of them have invested their money in stock market when it was 20000+.
    Most important thing is be aware about your job security also. Now a days job market is also little bit shaking. In case if you are job less and can pay their heavy EMI at least for 1.5 year then go ahead and purchase property if you feel it is worth.
    Then after if you are interested in buying a property then just bargain with property developers if they ask for 3300/- per sq. ft. then just tell now it is buyer's time I can't pay more then 2200/- and give your contact number they might contact you. Believe or not last month someone purchased a 2 year old 2BHK flat somewhere near to Kothrud bus stand (It is prime location of Kothrud) in just Rs. 1900/- per sq. ft. because seller and purchaser were aware with current market scenario. Property developers are having a syndicate which is not allowing small developers to sale their property openly in reduced rate.
    It already happened in USA. Property market, It has been came down 30% - 50% depends on location. You can enquire from your friends who are living there.

    This is awareness mail for all highly paid people. Don't get looted by
    smart property developers.

    Pass this message to all your true friends.

  2. Absolutely agree with anonymous. I too have visited the mentioned sites & indeed there are no bookings happening. So wait & watch for couple of months & see real estate prices dip by at least 20%.

  3. I have been hearing the price will go down from last 1 year and it never happened. The prices went up 25% more in last one year and even if I wait 6 months more it will go up by 10 % and then may come down to what would be the good can decide easily i guess.

  4. Someone mentioned about a 2 BHK flat in Kothrud at 1900 /sq feet.

    I too have seen a flat at similar rate near Kothrud Stand....but the condition of building and flat is such that I have decided not to purchase it and finally settled for 1 BHK at same price near Kothrud don't believe on such rumours....and findout reason behind rate fall

  5. Dear Friends,
    I would like to highlight some points which will be helpful to you.
    1.) Builders say price rise because of input costs. Did the input costs rose by 250-300% in last 3 years? If this is the logic, any automobile price should have been at least increased by 50-70% as majority of body,chassis is of steel & aluminum. The prices in real estate market are dictated only by demand & supply.
    2.) Inflation is inversely proportional to real estate prices because you spend more & save less, which makes it difficult to pay high EMI's.
    3.) Prices were hyped in cities like Pune,Banglore,Gurgaon based upon IT/ITES industries. All the mentioned cities have seen price correction of 25-30% & still expecting further fall. Pune will see this by the end of 2008.
    4.) In Pune majority of people are engaged in manufacturing sector where the average salary is 15k to 25k. These people are the main end users & can't buy the flats at current rates. Investors are pulling out & IT people are insecure about there jobs.
    5.) Home loans interest rates have increased from 7.5% in 2004 to 13-14% today. Hence, EMI's too have increased a lot,which many today can't afford.
    6.) Based upon purchasing power of the Pune citizens & the infrastructure which the city provides, the logical rates are between Rs.1500 - 2200max.
    7.) 22000 acres of land has been released because of ULCRA repeal. This will further push the prices down within next one year.
    8.) Today, it's better to stay rented, purchase vehicles, consumer durables & when real estate prices crash, move in your new house with these products. Hence, you have well furnished house that will cost you much less than todays price & won't come with the headache of high EMI'.
    Please let me know your comments.

  6. Hello there all my friends & Rajeev,
    There is a strong possibility of Barack Obama as next US President. He has offered tax concessions to the American companies who are heavily into outsourcing (read IT/BPO). Hence, if these companies get good deal with US Govt., & faced with a recession, the first to go will be outsiders (read Non-Americans). The countries like Vietnam too are posing a threat to India in terms of outsourcing. Also the tax sops given to IT companies by Central Govt. will no longer stand after March 2009 which will reduce net operating profit margins of IT companies anywhere between 20-30%. Remember, Pune real estate is largely driven by IT sector. You move Hinjewadi out of Pune and see prices crash in next 24Hrs.
    To get correct picture of Pune real estate, see the number of property registrations taking place in registration offices. It has dropped over 50% in last 6 months while the lease/rent agreements have increased. This clearly indicates that people now prefer to rent than to buy in current market scenario. The home loan borrowers too have reduced by over 40% & the banks are now are careful in giving loans over 65-70% of total amount taking current situation into account. Oil is reaching all time high & inflation is moving towards double digit. My friend in Gurgaon was looking at a flat for which the builder was asking 4550/- last year. In Feb 2008, the same builder was willing to sell the flat at 3700/- after negotiations. Still he did not buy & is awaiting for further drop which will take place soon. As far as that flat is concerned it still remains unsold even today! This means no one is ready for even 3700/-. The same is in Bangalore where prices dipped from 4000/- to 3000/-. Latest might be even more. Under any circumstances I don't think that Pune will be isolated from domestic factors like inflation,election & global factors like oil. Hence wait for next 6 months & you will see prices dipping.

  7. @parimal, thanks! 1)Barack Obama - tax concessions to the American companies 2) Threat to India in terms of outsourcing 3) Tax sops to IT companies by Central Govt 4) Pune real estate without Hinjewadi 5) Oil prices 6) Double Digit Inflation 7) Don't think that Pune will be isolated = You are absolutely right. But real estate is a local business. You have to add local factors to these global factors. When you add the local factors you realize that what happens at Gurgaon and Bangalore will not be exactly repeated or replicated in Pune real estate market or any city in India. Hence the conclusion: wait for next 6 months & you will see prices dipping. is "global" and "over generalized" Think local!

  8. @parimal, thanks for the comment! Today, it's better to stay rented, purchase vehicles, consumer durables & when real estate prices crash, move in your new house with these products. No comment!!

  9. Dear Ravi,
    The domestic factors I mentioned were oil & inflation along with rising interest rates. This will affect the purchasers across India.
    The real estate prices were hyped by builders due to NRI & investors for which the end users suffered. Because of global factors, NRI's are running away while investors have burnt their fingers in stock markets. To leverage their losses in stocks, they are in a hurry to sell off their invested property ASAP. This will increase the supply especially in resale market. This will hamper builders sale as the rates of builders would be higher than that of the investors. The end user however now has understood this well & is waiting for correction to happen. Hence, end users too are out of market now even if they require a residence. As far as real estate rates are concerned, I agree to an extent that they are determined by local factors. In Pune, the local factor was only one:- more demand & less supply. Nothing has changed in last 2-3 years in terms of infrastructure, development, Governance etc. Now since the demand has dipped, so should the prices.
    Lastly, though prices in Gurgaon don't affect prices in Pune, Bangalore definitely will as in both the cities the prices were driven to high levels by IT. People working in auto or any other manufacturing industries can't buy flats at current rates & these people form the majority who require houses. Also if you are a buyer, if fall is there in major cities including Mumbai, mentally you will be discouraged to purchase a property in a neigbouring city. See how the PBAP has come up with a fund for small developers. This clearly indicates that there is no liquidity now in the real estate of Pune too. I also read how builders in Mumbai are now unable to pay interests to banks & private equity holders. In the recent auction of Bandra Kurla complex, a big residential plot remained unsold. Hence, personally I think rates in Pune should come down by a minimum of 20%. Let me know your take on my comments.

  10. Parimal,

    You have disappointed many real estate promoters with this bad news...!!!
    I was looking forward to see prices touching to at least 6000/- in the outskirts of Pune by this December. You know, all the recently launched mega-townships are over-subscribed already and there is great shortage of flats in Pune and thousands are waiting for next buzz...!!!!
    I think, PBAP should increase the prices again by at least 1000/- per square feet immediately :))
    You know what I mean...!!!!
    What you have put up is a worst nightmare for every builder, and dreams never come true.

  11. Well anonymous,
    I think you don't dream but day dream. Get your facts corrected first. Go through the records of registration offices, banks (home loans dept.) & you will find there is a dip of 40% in last 7 months. So, comments should be based on facts & not dreams err day dreams.

  12. Dear Parimal,

    For your kind information please go thorugh it

    Buyers, if you need a house for yourself do not wait …… it. As an investment i don’t know……


  13. Dear Anonymous/Dac,
    Here is a link which will help you understand what I am trying to say. There are lot more but this has been updated last week so that you can get clear picture.

    Also on the market if you see in the current week, the biggest losers were realty stocks. I won't get into details of DLF,Omaxe or Unitech (they too have performed miserably) because some bloggers insists on local factors. Hence, if you see Kolte Patil Developers , the price band for their IPO was Rs.125-145. The listing price was Rs.230/-. The highest price was Rs.272/- & today i.e. 25/06/2008, it's trading at Rs.65.20/-.
    The market performs on fundamental & overall outlook & not imagination. Hope this helps you in getting rid of misconceptions.


  14. Hi Guys,
    Nice article:



  15. Guys ready to buy a flat on loan and ready to spend next
    15 to 20 years of your life repaying the loan. I wish you
    all the best. Pune market is overhyped at any give day.
    If you just happen to be in Hyderabad in last 6 years and
    seen the growth their, you would agree. I do not understand
    why everyone and his uncle want to be in Pune. It is a
    pathetic city at its best. If you just want to invest then
    better not do it in Pune, pick up cities like Hyderabad
    which has better infrastructure and better plans. Renting
    is better in the overyhyped market than paying EMIs close
    to 35k to 40k. Before you decide to take the plunge, read

    although this site is specific to US, there are lots of
    common points.