You know the stock market has reached its peak when the paanwala tells you what stock to pick.
But how would you know that the real estate market has peaked?
You know the real estate market has peaked out when honorary secretaries of cooperative housing societies write to builders asking them to redevelop their properties in the hope that each member would get an additional 25% as living space, and a couple of million rupees in their coffers. And those letters remain unreplied.
You know the real estate market has peaked, when the Times of India admits that there is indeed a slowdown, after a slew of articles in prior weeks waxing eloquently about big-ticket real estate sales and at least one categorically saying "there is no slowdown in the Indian real estate market".
You know the real estate market has peaked when a company barely 10-years old, whose previous claim to fame is a commercial complex in Faridabad in 2003, and a purchase of a plot in Hyderabad, says it has paid Rs 5006 crore for a 95-acre property in Noida (UP).
No, I am not gloating that I have caught the top of the real estate market, because I have been saying real estate is overpriced for the last 2 years, and it has always proven me wrong. I have also heard my maid telling me how she has as much money - may be even more -- than I have because her 100-sq ft home in Bandra-Kurla Complex has been sold for Rs 80 lakh, in this mad grab for commercial real estate space.
But I am proud this time, like a first-time archer who has got the bull's eye on a dartboard, after missing three times, that this time I am right -- no matter what they print on the front pages of the newspapers, we are just one month away from a collapse.
The signs are visible: A 4-bedroom home in 20-year old building located in central Mumbai, which until January 2008 was priced at Rs 12,500 per sq feet, is now available at Rs 10,500, and still has no takers. This despite the obviously exaggerated ranges that Narain's Real Estate Consultants will publish in Times Property. What would you expect from a broker, whose livelihood depends on the size of the sale?
Enough of my rants of anguish. Here is the evidence. The Old Lady of Bori Bunder has relented and is now aquiesing to my point of view.
Agreements of old cooperative housing societies signed with builders in January 2007, to move out lock, stock and barrel, in exchanged of megabucks running in to couple of crores for each family.
Deals that have now fallen to the ground:
- Bharatiya Bhavan Co-operative Housing Society - 17th Road, Khar (West) - Rs 180 crore for 37 flats in 6 buildings - deal has fallen through.
- Nutan Nagar, Bandra (West) Station - Rs 451 crore for low-rise buildings - deal has fallen through.
- Khira Nagar - Santacruz (West) - Rs 900 crore - deal has fallen through
Read this story here
Read about the BPTP story here (In the print version of this story, there was a line that read: This proves there is no slowdown in the real estate market. This line does not appear in the online version)