"Where flats are more expensive, the drop will be sharper than where the flats are cheaper...
correction is bound to come,"
HDFC Chairman Deepak Parekh told reporters!
Really?.. Amazing!..What about home loan interest rates, any cuts, corrections, Mr. Parekh?
"If..if the availability of money...if our cost of fund comes down,......we will certainly reduce rates," Mr. Parekh!
Mr. Deepak Parekh, now you can not make this statement "Correction in real estate is bound to come" more than ones in a year..
Rajkumar Barjatya of Rajshri films, producers of Maine Pyar Kiya, Hum Aapke Hain Koun..!, Hum Saath-Saath Hain, Main Prem Ki Diwani Hoon, has taken the rights of this sentence.
Rajshri has found out why "Vivah" was not a big hit. Now "Correction in real estate is bound to come.." is the title of their upcoming film.
Don't you think Chairpersons of HDFC, ICICI, SBI are playing to the gallery?
Despite the economic slow down profits of these banks have gone up substantially. These banks didn't pass on the benefits of stimulus packages to their borrowers.Still just to grab the front page these people take every chance to talk about real estate rate cuts. These people bash builder as if he is some "bad man." Do you think that a boss of the bank is a hero of the Hindi film who cares for the common man? Please, share your views in the comments. (Comments Policy),
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Perhaps Ravi, I would tend to disagree with your this viewpoint.
ReplyDeletePlease understand that these bankers are going to have biggest hit if the real estate prices correct as per their expectations. They are trying to showcase fair reality without concerned about their own profitability.
The Ex-FM deputy Subbarao has been trying to save the RE investment of all politicians by giving un-necessary sops to Real Estate industry. He, irresponsibally reduced the risk weightage for RE industry and tried to put our banking system into a big time risk. But the private bankers are much more diligent to understand the situation and are trying to stay away even if it means lesser business for them. They are smart enough not to build more NPAs which we will see sky rocketing in coming months.
The risk in Real Estate has increased to two-fold as compared to last July. But Subbarao has reduced the risk weightage to 100 instead of 150 in last October. This is going to have worst impact on our banking system in coming days.
You will see this happening, and when it happens, hopefully, you will remember me.
For some reason, we have very few ethical business / economic leaders in this country. Few of them are: Ratan Tata, Narayana Murthy, Azim Premji, Deepak Parekh, Ramesh Chuhan and Y.V. Reddy. You must go to their companies, talk to their employees to understand how ethical their business models are.
Again, I do not say that they are the best in the world. But they are just better then all other business / economic leaders in this country.
Dear Ravi, I thought as you mentioned earlier are not biased to anyone but you seems to be angry with this very true statement by one of the respected leaders. We should also not forget that he is the first who warned and foresaw the building bubble earlier and there is not to make fun of view points. You tell what these builder lobby has done so far..they wants State gov, central govt, banks to contribute in lowering taxes, interest rates and what they are doing?? At least Pune very planned play is being played...
ReplyDelete1. Acquire the hundreds of acers of land first with dirt cheap rate (farmers not knowing what is going on)
2. Then the lobby with their friends in gov will declare some SEZ or IT park of Airport or something interesting
3. Invite big MNCs with all offers with concessional rates to establish their shops
4. Start their shops first and then start the game of "Walk to work" concepts with monopoly and unity (PBAP)
BTW - whats wrong in his statement?
Also, if this kind of views / opinions are criticized and all Kumar, gera statements /views are sugar coated..then I guess readers have enough online places to express their opinions and even blog
Not sure even this will be published!
Anyways, all the best Ravi!
-Anil
Hello Atul and Anil! Let me confess. You caught me. I am biased. Completely. Towards the property buyers.
ReplyDeleteParticularly, those property buyers who wish to book a flat before telling their parents to find a suitable girl/boy to marry.
As their seniors have done in 2003 to -06 when NDA government, along with the IT, gave concessions to the real estate to stimulate the economy.
When the current generation finds it impossible to book a basic decent 2 bhk flat at the convenient location and feel victimized by the system (builder lobby!), well educated bankers try to take disadvantage of them by playing good cop and bad cop!
Whereas look what 'bad cops' do!
"Dear young friends, we have stopped building flats for you. Now, we are building only for those who have higher budgets than you. Because we can earn more profits from them. We are in real estate industry not to provide you housing but to make a maximum profits.," less educated and less sophisticated 'bad cops' say this up front.
My point is: urban middle class property buyers should realize that no body is on their side and affordable property rate is not on anybody's agenda.
Trully appreciate Ravi.100% true sentiments of buyer who want to buy house but couldn't due to high rate. According to PBAP president Mr.Jain, Pune builders invested almost 2700/sq.feet min. to construct house hence it is the minimum rate & can't go further down.Who will believe this. In boom time these builders are increased rate on daily basis even hourly basis I have experienced this one & decided not to buy flat in pune. Even in banglore the rates are much cheaper than pune.Now it's turn of buyer.
ReplyDeleteHonestly Ravi,
ReplyDeleteI am confused. Could not understand what you are trying to say.
Can you explain in simple language. Sorry, my 'Charles Dickens' Vocabulary is very weak.
Lalit Jains comment of ... cannot go below 2700 Sqft .... I think he is talking about independent houses and not Apts .... as He includes land prices over and above construction price and adds their modest margin of just 50-100% to it... as when u build apt what we see discounted here is land price is distributed between all the apartments and builders also charge for so called salable area... which is non existant and icing on cake is parking + other charges which they dont spend anyting to build. It would be great to see this consolidating .... Even if I am loosing few lakhs ....I am sure Builders are loosing more crores for their greed .... best part is they loose their sleep ... as the nightmares have just began .... it has brought down most (supposed ot be robust) economy of US... it will to some extent affect us for sure. I like Ravi's blogs... he has been honest always. Keep up the good work Ravi!!!
ReplyDeleteRavi can you explain all of this in simple terms.
ReplyDeleteRavi can you explain Rs 2700 per sq ft mystery?
ReplyDeleteCan you tell us following for Kothrud on per sq ft basis
Land cost / FSI + Construction material cost + Pune Municipal Tax + State Tax.
This should give us minimum construction cost for Kothrud under which builder can't go unless takes loss. Then add to it Interest on loans + other unavoidable charges like architectural, planning etc which are depend on Builder. add to that profit margin which builders should reduce in current scenario to get customer back to market.
-Atul
Hi Ravi,
ReplyDeleteYou have a great blog which I read regularly, though this is my first post.
Your tongue-in-cheek commentary about Pune builders is really humorous and exposes the dilemma they face between preserving their 100 - 200% profit margins by keeping prices artificially high and ensuring their survival by atleast selling some flats at those prices!
Yesterday I called up Aditya Garden City sales office at Warje, asking about the price of a 2BHK flat. The salesman quoted 40 lakhs. He himself sounded unsure about the price. I told him that this is beyond my budget, which is 25 lakhs. He was very unsure and promised to get back to me soon.
In earlier days, he would have tried to convince me to book saying that price will go to 45 lakhs soon.
I have one suggestion for you, please try to use a little simple english in your blogs, sometimes it is difficult to understand what point you are trying to make.
# ref: "I have one suggestion for you, please try to use a little simple english in your blogs, sometimes it is difficult to understand what point you are trying to make."
ReplyDeleteThanks for the suggestion Abeer! I will be more simple and clear.
# ref: "Aditya Garden City sales office at Warje"
ReplyDeleteThanks for sharing the incidence!
In real estate marketing, convincing the property rate is a major job than actually giving information and getting booking.
If salesman himself is not sure about the pricing then how can he sell it?
Your experience tells me that he is inviting you for a deep discount and hard bargaining!
Good for you, Abeer!
(Or was it a bad news for you? I hope your are not the same Abeer!)
# ref: "Ravi can you explain Rs 2700 per sq ft mystery?"
ReplyDeleteHello Atul, thanks for the comments.
Are you referring to Rs. 2,700 at Blue Ridge?
If yes, then there is no mystery! That was the pre-launch rate of Blue Ridge Hinjewadi! The minimum expected selling price of the builder. I have taken it as a benchmark. That's all!
# ref: "Can you tell us following for Kothrud on per sq ft basis"
ReplyDeleteSorry Atul, i can't tell you about Kothrud.
I think, it will change from project to project. So please, ask this to the builder of your project.
However, you can refer to the current on going rates in Kothrud market which have come down by 500 rupees and are in the range of 4,500 to 6,700 rupees per sq.ft and rate of the resale flat (5 - 15 year old) is in the Rs. 3,000 to 4,000 per sq.ft.
We have to keep in mind few point:
1) I stay in Kothrud so i may be biased!
2) We are talking about an area which is fully developed, not a developing country like Baner or Wakad.
3) Open plots are not available. Except Balwantpuram - Samrajya no body has a plot of big size.
4) Preferred by families who have more purchasing power and they look for convenience than a glamor.
5) Original tenants or bungalow owners expect high rates or more space.
6) Expected construction quality and construction cost is on the higher side.
7) Premium value - perceived worth - plays important role in the pricing in this area.
I don't think that you can take the pre-launch price as a benchmark for no-loss cost to the builder. Add to that the times then were different compared to current scenario. So basically I don't think you or Paranjape Builders can justify the cost of 2700/- per sq. ft. for Blue Ridge, today.
ReplyDeleteSame goes for Kothrud cost. Yes scarcity of land will be the main driving factor here. At the same time I dont believe the statement about families prefer convenience over glamor. It's more about the class of people who prefer Kothrud compared to any other location, which adds to the demand and hence higher cost. Also dont believe the pricing here has anything to do with the quality of construction. most of the buildings here are traditional designs and dont cost too much compared to any other type of construction.
I have a question though, how come you haven't commented on the PBAP announcement about reduction in the rate. Perhaps waiting for next entry in the blog? This is the first time PBAP has admitted publicly the reality of the market. So I feel like good times for buyers are coming soon.
# ref: "I don't think that you can take the pre-launch price as a benchmark for no-loss cost to the builder. Add to that the times then were different compared to current scenario. So basically I don't think you or Paranjape Builders can justify the cost of 2700/- per sq. ft. for Blue Ridge, today."
ReplyDeleteDear Sir,
Fine! Thanks for telling what i can't do.
Now, will you please, tell me what should be done according to you?
Please, tell your views. I am eager to hear your opinion.
# ref: "Same goes for Kothrud cost"
Thanks for your views about Kothrud.
"How to work out rational rate of Kothrud?" Did you get an answer for your question? Do you buy my argument about finding it out on a project basis? I am trying to find at least a range. Let us see.
# ref: "how come you haven't commented on the PBAP announcement about reduction in the rate"
1) That PBAP happened in the last month. You can expand the last month in the drop down menu of "blog archive" placed in the side column and find the headings.
2) To find old blog posts, please, use custom search engine in the side column. I have more than 900 posts.
3) Use search blog in the left hand top corner of the navbar and you will find all post which have your search term, "PBAP" (instead of using "PBAP announcement about reduction in the rate", better use only PBAP.)
Thanks for asking. I should do something so that new visitors can enjoy old posts. Right?
I have written 5 - 6 posts in the last month on PBAP's "confessions"
Dear sir I want to confirm from you that when a builder lauches a scheme on reduced price then the price quoted by them is it decided by biulders association? and they bound not to sell below that? Is it right?
ReplyDeleteshailesh
# ref: "when a builder lauches a scheme on reduced price then the price quoted by them is it decided by biulders association? and they bound not to sell below that? Is it right?"
ReplyDeleteNo! Not at all. PBAP is not involved in pricing. Property price is completely builder's decision.
Ref#No! Not at all. PBAP is not involved in pricing. Property price is completely builder's decision.
ReplyDeleteHowever, I heard if a builder is about to reduce his project pricing way below other builder projects, he is most likely harrassed by PBAP since it will start a spiral of price war. PBAP is equal to cartel and monopoly, against anti trust laws. Either way, builders are actually getting in trouble because of this mindset.
Ravi, i think u rgetting good money from paranjpe and pls. stop this cheap mkting.
ReplyDeleteI saw paranjape builder’s constriction quality in Rolling Hill behind Symantec in Bner.. It's awaful..
Also I have seen his other schemes most of them is conventional designs no new concepts and only suitable for traditional Maharashtrian families and not for cosmopolitan societies.
Punctuality is worst and they always delay possessions.
Paranjape’s flat and bungalow rate is far more than market and nowhere to realistic.