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3 Comments

    • Why the U.S. Credit Crunch Will Not Affect India [view article]
      hi ihvbeentld

      Tell me name of bank who has opened loan to Realty sector or builders. Everbody knows that how RBI has been chasing banks to curtail their rela estate exposure.

      if chennai has seen increased FAR that does not mean whole India has seen that and anyway chennai is suffering from over supply.

      Problem is the author belongs to a group which has substantial investment in indian real estate market and they have to build hype on india to sell their stuff.       Apr 29 08:19 AM
    • Why the U.S. Credit Crunch Will Not Affect India [view article]
      "Foreign investors, wealthy Indians and NRIs (see Table I) are still acquiring property around the country at an astonishing pace, making the real estate market among the most lucrative in the world yielding average returns of 25% annually, and according to some as high as 50%-60%. India’s real estate liberalization in the form of relaxed lending provisions (Bank loans for commercial real estate have grown 500% to $2.4 billion during the past four years) has also helped fuel the real estate market. Finally, we have seen building construction laws (such as the height of buildings and increased floor area ratios [FAR]) have been increased as well, instantly creating a more valuable project. "

      All the above statements are misleading and am surprised how Seeking Alpha has allowed publication of such a misleading article with vested interest on its reputed platform.

      Myth 1 : Banks are having relaxed lending norms.
      Reality : Banks are no longer funding real estate and for last 2 years there is almost a ban on debt as well as ECB ( external commercal borrowings)

      Myth 2 : Returns are as high as 50%. Returns were high and "are" not high. In fact majority of markets are seeing corrections. Further in any market, where assets are growing at 50% cost ( return of 50%), it will be soon be out from the reach of majority of people as Indian GDP is growing at 8% and not 50%,

      Myth 3 : FAR / FSI has been revised upwards. I dont know of any area where FSI has been revised ( i am not sure of Mumbai) but no change in Karnatka, Delhi, Gurgaon etc.

      In fact as of today the deals which are happening are highly over valued and majority of foreign PE players are going to end up with losses on thier face if they invest any further.

      Check this article which was published in 2005 and has now turned to be correct

      Bubble Trouble?
      Your Home Has a P/E Ratio Too

      by Prof Edward E. Leamer,
      Director, UCLA Anderson Forecast

      www.coolavenues.com/kn...       Apr 28 01:38 AM
    • Why the U.S. Credit Crunch Will Not Affect India [view article]
      Hi

      While macro numbers look very interesting, the fundamental questio remains which is buying ability of users. Given the rate of increase majority of asset will move out of reach for majority of indians as with all those glowing nos, India is still a country where almost 50% of population lives below poverty line ( less than a USd per day). As an investor myself, I think that in real estate P/E of majority hosuing locations has crossed the threshold now and later or sooner we are bound to see some reaction.       Apr 27 09:52 AM
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