Ravi Karandeekar's Pune Real Estate Market News Blog: Developers are likely to be forced to reduce prices further and offer higher discounts to clear existing inventory

Look, who is talking!

For ages, in Indian real estate market only banker who could dare to speak out his mind was Mr. Deepak S Parekh, an unofficial crisis consultant of India. However, in the last week, the chairman of Housing Development Finance Corporation Ltd (HDFC) was little busy in his company's affairs.

Taking advantage of this situation, look, who is talking? BNP Paribas! The bank for a changing world!! French banking major who has recently acquired beleaguered Fortis' operations. BNP Paribas, who claims to have 'a historical association with India' and 'an unparalleled experience of the Indian economy', released a note this week.

Writing on the wall:

In the note BNP Paribas says:

"With the writing on the wall pretty clear, developers are likely to be forced to reduce prices further and offer higher discounts to clear existing inventory and to rev up pent-up demand in the sector. We believe the sector fundamentals remain weak with both pricing and volumes under threat."

Convert demand into sales!

"Cash discounts, waivers in registration fees or stamp duty and free parking spaces do not excite property buyers. Offers do not change their mind. Reduce property price. Convert demand into actual sales!"

You may wonder, why BNP Paribas, the private bank, which is eying Lehman India's assets, who has invested is DLF and Unitech, jumped to this conclusion? Only because of one residential property exhibition? Or two? PBAP and MCHI Property 2008!

Would you book a flat if the property rates come down?

"Do not book now. Wait for six months." is an out dated slogan. Now, it's too late. Around six months back, lot of property buyers were expecting property prices to fall and anxiously waiting for that moment to book.

But recently, instead of property rates, economy is on the verge of collapse. Instead interest rates of home loans, who knows, banks may go down. Who will book a flat in the present economic uncertainty? Would you? Please, share your views in the comments. (Please, read comments policy!)

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5 comments:

AnonymousThursday, October 16, 2008 at 11:45:00 PM GMT+5:30
Ravi,

How would you want to translate this to Pune market. Pune has blend of people who need a house. This blende includes IT,Automotive,Mechanical sector on one hand and education and tourism sector on the other.

Given the uncertainty what would be a good price to book a flat. Is it 10% lower from current price or 20 or 30. I am sure you have seen this up and down as you worked as a sales person before.

The current market sentiment is extremely negative and one need to have real courage to buy. However gainers are people who decide when other don't. What would be your suggestion.

Thank you
AnonymousFriday, October 17, 2008 at 1:31:00 AM GMT+5:30
But recently, instead of property rates, economy is on the verge of collapse. Instead interest rates of home loans, who knows, banks may go down. Who will book a flat in the present economic uncertainty? Would you?
*********

Rvi, you have just said it. The economy is going in a black hole. People are concerned about their savings in banks, they lost faith on banking system. US is in recession, this will remain for a long duration, situation is tough.
At this difficult time, valuations in India are at par and things like real estate are too much costly and beyond imagination.
I will surely not invest a P in India at these valuations in real estate; I am getting a world class property at half price here in US/UK. You guys enjoy your life in the hype.
Ravi KarandeekarFriday, October 17, 2008 at 4:41:00 AM GMT+5:30
# ref: "However gainers are people who decide when other don't. What would be your suggestion."

Yes! Sure!! As a real estate salesman i am trained to say "yes!"! But since i have started blogging, i have become more responsible (!).

Yesterday, i suggested to somebody (who was from Singapore,) to think twice about the risks involved and go ahead only if you are very much confident about your financial and mental capacity!

In any situation, lot of stress is involved from buying to taking a possession of your property in Pune real estate market. Which costs you lot more than what you pay in terms of money!

This happens because, when you buy a property in Pune real estate market you are not buying a finished product but a service. Most of the builders do not have an inclination and basic infrastructure to give you a service. Plus transparency is a big issue. When you are aware about economic uncertainty all around you, small things bother you a lot.
Ravi KarandeekarFriday, October 17, 2008 at 4:47:00 AM GMT+5:30
# ref: "I am getting a world class property at half price here in US/UK."

Yes, i have some idea about it. When i read the listings of independent homes and compare them with 3 bhk luxurious flats in Pune, i feel the same.
AnonymousMonday, October 20, 2008 at 7:47:00 PM GMT+5:30
It is true that prices in US are very attractive but taxes are very high over there and so property rates are less.

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Thursday, October 16, 2008

Developers are likely to be forced to reduce prices further and offer higher discounts to clear existing inventory - BNP Paribas