Sunday, April 7, 2013

Last chance to Real Estate speculators to escape


Many guys do not understand the RE cycle and making fun on the people who are bearish on RE sector. The cycle normally lasts for years. As I said elsewhere in the forum, the boom period ends 2 years back and now is ready to fall. 2013-2014 is the year we are going to see huge downside.

Share markets are under tremendous pressure and falling 100 points easily with only 300 crores selling by FII's. That shows the depth and mood of the markets. Imagine if all the ETFs want to go simultaneously. Even a 5000 crore selling casue nifty to nosedive to 4000 levels.

Whatever RE rates are quoted by people now are imaginary rates. Whoeevery buys RE for the past few years are not sitting in profit as per my analysis  ( They buy at 40 Lakh and then think the price is 70 lakh or 80 lakh), we need transactions at the new price to accept.

China is very busy pricking the bubble and their inflation is at moderate level. Still they think their inflation is high. We are busy cutting rates and nobody talks about the need to prick the bubble. Actually this Indian mentality gives me more confidence that the coming bubble burst will be huge.

Corrupt government, corporate mafia, cheater builders and media brokers are in the same page regarding the bubble and recently they have successfully postponed the much awaited (even watered down) RE bill supposed to be passed in parliament.

All 2-tier and 3-tier cities real estate transactions have come to stand still. Now actually I see bulls are desperate unlike we were desperate few months back.

Basically I see RE bulls have exhausted all their options and now with the corrupt government has ran out of options and also counting the days. I don't think RE can be saved.

People who bought house should do fine. But whoever invested hoping for a killing would do good if they escape with whatever profits or minimal loss.




12 comments :

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  2. My views on the real estate sector closely matches yours, I called the peak a little early in 2007. People laughed at me and continue to laugh. I even developed a simple excel model to test my hypothesis and voila it confirmed my predictions. We are in for a massive real estate bust, not seen in Indian real estate history for the simple fact that we have gone up so much. The crash should start early next year (2014).

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    Replies
    1. The model confirms that the more levered the asset is the more sensitive it is to interest rate cycle. The interest rate cycle is turning not due to RBI but because of the international liquidity cycle. The monetary system is an inverted pyramid structure and right now there is de-levering going on in full swing. We will be forced to maintain tight liquidity and higher interest rate due to currency exchange rate considerations.

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  3. this is big the realty cyle started in 1990 ..SEE HDFC home loans big way

    it has grown or say pumped realty at the rate of 18% cagr...this is money supply now if it collapses by half also u wont have a banking system ...sorry we ...

    these guys are in deep shit ...houses are selling at crores and the smartest guys... some of my friends talking about trippling housing in the next 3 years...

    India is the biggest bubble in housing...total scam...it is about time it will go bust now and delevraging will happen till 2020 atleast...starting in 2013 ...

    ReplyDelete
  4. ronit,

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