Sunday, April 13, 2008

Quotable Quotes on The Housing Correction

"The correction will be of a short-term nature rather than a long-term one, lasting for about 18 months, after which they will stablize." -- Balaji Rao, Country Head, Starwood Capital.

What he means: For the next 18 months, prices will continuously decline, after which they could stop declining, but not necessarily rise.

"The suburban market will see a bit of slowdown, in addition to what was witnessed last year, but this will not be true for the island city." -- Sanjay Dutt, Joint Managing Director, Cushman & Weikfield.

What he means: Although, some others in his company were denying it, there has already been a correction last year in Mumbai suburbs, and some more slowdown can be expected, but not in South Mumbai.

"The next two years will see the market remain on hold, unless the US economy recovers and inflation comes under control." -- Pawan Malhotra, MD & CEO, Mahindra Lifespace.

What he means: Forget about any further price rises in the real estate industry. The US economy will not recover for 2 years.

"Any crisis leads to innovation and differentiation, hence we may see builders constructing, one BHKs or compact 2 BHKs in a bid to push volumes." -- Pawan Malhotra, MD & CEO, Mahindra Lifespace.

What he means: Builders have in so far deliberately not been not building 2-BHK houses, and we have been focusing on luxury apartments, but now we may want to cater to the middle class.

"During this interim period builders should adapt to the situation and continue to sell rather than going underground. The market wants to see resilient builders; hence builders should take a dip in their margins and continue selling, in order to emerge as long-term players in the market." -- Balaji Rao, Country Head, Starwood Capital.

What he means: I am wishful thinking.

Source: Times Property, Mumbai, April 12, 2008

Posted by Eclectic Investor at 2:27 PM  

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IN PASSING

Consider how the crisis has unfolded over the past eighteen months. The proximate cause is to be found in the housing bubble or more exactly in the excesses of the subprime mortgage market. The longer a double-digit rise in house prices lasted, the more lax the lending practices became. In the end, people could borrow 100 percent of inflated house prices with no money down. Insiders referred to subprime loans as ninja loans—no income, no job, no questions asked. - George Soros in latest book


“When everything’s going up, there’s a feelgood factor and people tell each other how much their houses are going up at dinner parties,” says Professor Mark Stephens of York University’s Centre for Housing Policy. “Then the music stops, as it always does.”

“Last year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” - a senior executive at an international financial services group, who did not wish to be named.

"Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond, "Mortgage experts were too caught up." - John Paulson, trader, who bet against subprime market and made $15 billion.

The most puzzling are the real-estate projects of Parsvnath. Just have a look at the Pride Asia project near Chandigarh. They are asking almost US $300K-$350 K dollars for 2 bed room apartments. They have Villas in this project that costs more than US $1.5 million dollars. It is true that some people in India have that kind of money in India. However most of their wealth is black money and that can not be used to buy these properties. Obviously, these projects have been launched keeping NRIs in mind. - Sanjeev, comment from another site

Prachi Desai, aka Bani, the star of Balalji Telefilms's soap, Kasam Se, has been house hunting for over a year. She had almost closed a 2-BHK deal last year for Rs 1.5 crore in a Oberoi Constructions' building located at Andheri, Mumbai, but when she went back to confirm it, she was asked to cough up Rs 2.61 crore. Since then, she is still house hunting. - Mumbai Mirror

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