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Crashing Realty! :) February 26, 2009

Posted by Chatore Diaries in India, Society.
Tags: , , ,

Like i predicted more than a year ago here, the realty rates are going South. And boy am i glad.

DLF’s move to cut prices by upto 30% will definitely see some positive feedback from the market. Some say this as a bodl move from DLF. I say it is a necessity if they want to survive. A lot of big builders have defaulted on their EMIs to banks, Unitech being one the big ones. Till August 2008, people were buying because they thought that the rates would only go up. This was further aided by the fact that the global recession was not any where on the horizon, atleast what we could see of the horizon.

Now people dont want to buy, thinking the rates will further go down. And mark my words, the rates WILL go down. Atleast another 10-15% correction is still left. The banks have reduced lending rate, the builders have reduced property rates. As far as buying opportunities for first timers go, i think they have ample reason to celebrate.

The market outlook for employment may look bleak, and Obama’s announcement yesterday of No Tax SOPs for firms that Outsource has not done anything for the moral of the massive IT workforce in India. This announcement will further cut spending on major stuff like realty since the majority of buyers are from IT. So all in all i think the realty sector is far from recovering yet. Though Obama’s announcement may seem like a lot of bold talk, but who wants to risk it. American companies today are in no position to not outsource, considering the major financial crisis everything American is in. It may be a long time before the implementation of this “No Tax SOPs” comes into play.

Till then, all we can do is wait and watch.