Deekay, Indore , 20th October 2008

You have pointed about Recession in USA but what does it affect to Indian Real Estate??? I think Nothing. Real Estate sector will Pause only for Two years.Real estate sector Boomed when everything like Steel, Cement , Interest Started to Zoom. So people beilived that “Buy now or Never”. But now everything is cooling off. Thus the cost of Building a Flat will come also down…

Btw Population in India has crossed magic figure at 113 Cr. Will not do they need first Homes, offices, Godowns etc etc ??? and if you can see present situation in india. people (mostly Youngs like Me) are becoming more Educated , Fashionable and Savy of luxurios lives . Will they live in Slum like the generation of 70-90 Spent all their lives ????? The big answer is NO NO NO…
If we talk about the price of Real estate companies in Stock market they have corrected almost 80-90% from their previous highs. Like HDIL from 1100 to 90 , Sobha devloper 1100-100… I think we should buy this companies if they correct more 30-35 % in Crisis to get handsome profit in 2-3 years ..
Thanks & regards
Jayesh, Gharkopar , Mumbai

Kalidas Replies (Although your reply is directed to Deekay, I just add my viewpoints)
A flat in Ghatkopar cost anywhere from Rs 50 lakhs to 1.5 crores on 60′ Road or near Rajawadi or new developments near Vidya vihar. How many of middle class people have even Rs 1,00,000 in cash? How many poor people living in shanty chawl can afford a house of modest value Rs 5,00,000? Mere population does not translate into demand for expensive properties.

Compared to quality of residential and commercial property that I have seen in Ghatkopar and around, and having also seen the quality of properties in California, USA which is in deep recession, I can tell you that I would buy the property there with highest quality. I was born in Ghatkopar, so I know this city simply too well.

I do not trust developer’s stocks. Most of the profit goes into the promoters or Director’s pocket – they never share the prosperity of the company. Although a public limited company, they remove the word “public” from the name plate and behave accordingly. I never ever buy the developer’s stock – I would rather buy the property – because that will never become zero.

If one is bullish about cement and steel, there are number of quality companies to chose from. Most of the developers’ stocks are “hyped” up and the stock like DLF was not even worth Rs 50 which went to the roof because of make up stories. When the troubles hit the property market, the first persons to flee are the developers who leave the half completed buildings behind in memory of their misdeeds.

Further, the population of India is inflated to 113 crores. If you apply Arithmetic progression, taking a base of 30 crores in 1950, and having regard to death/birth rate, India’s population can never be beyond 70 crores – it is inflated to have bogus voters’ list. During 50s, each parent used to have 5 to 7 children – now only 1 or 2 – growth rate has slowed down by 60%. There is no way India can have population of 113 crores as projected. Geographically, the boundries are same, with family planning in full force – from where do the statisticians bring in such figures? Even China can not have 1.2 billion population. Normally, we accept what is given without verifying the source or the result. That is greatest mistake.

1.Now that is is certain that US is going into recession for may years what do you forsee for a country like ours ,
2.India growth story was connected to rising incomes & consumption . Would Real Estate & Retail not drop like hot cakes on the floor. And I mean not just their shareprices but their own financial positions
and their hyped projects,
3.Do you think countries like India & China could emerge as the darkhorses in the World economy or would US/Europe pull India dowm with them.

Dont you think that when the Gold Prices shoot to twice of its current range, it will lead to demand destruction in India which is the largest buyer(Indian Lower and Middle Class) of Gold. Wont that keep the prices in check.

Regards,
Vivek