Saturday, November 29, 2008

MHCI Chief Seeks Greater Fools in Gulf NRIs

Trust desperate real estate developers to act even more foolishly. Zubin Mehta, CEO of the Maharashtra Chamber of Housing Industry (MCHI), is seeking greater fools for his real estate industry a little too late in the day, when even the fools have lost their money.

Mehta said MCHI is targeting UAE NRIs to purchase real estate projects in India, his argument being NRIs could stand to gain up to 20 percent if they purchase now, since the Indian rupee has fallen by this value against the US dollar.

Why UAE NRIs? He said that these folks work to buy a home in India, unlike those in UK and US, who are given residential status and further citizenship in those countries. Good deals are now available, said Mehta, pointing to a depreciating rupee, discounts from builders, facilities like free parking and a stamp duty write-off.

However, Mehta would have a tough task convincing Gulf NRIs, who have already burned their money investing in the Dubai real estate market. Real estate in the Burj Tower area of Dubai is reported to have fallen 50 percent in last three weeks.

Mehta also added that he expects the Indian real estate market to perk up January. Now this is really desperation.

Posted by Eclectic Investor at 6:19 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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