I have been having some very interesting comments to my articles I have previously written on Indian real estate specifically targeting the Pune market. However, the situation seems to be common across most upcoming cities and Metros in India.
The comments left actually reflect the reality of present Indian real estate situation. Majority of people have been waiting in the wings in anticipation that the prices will come down since last 2-3 years. In the meantime, prices have more than doubled and it is out of reach of even people earning a fat salary.
Here are few selected comments from the article I had written late last year on how I made a fool of myself about prediction of real estate prices:
Voyager opines that the the rising prices are real big fraud|
Pune bubble is bigger then US and its a massive fraud fueled by ignorant IT folks and builders with more IQ then these nerds.
Shanties selling for prices at which you can buy a huge beach-side villa abroad in a small town. The construction quality is pathetic and infrastructure is zilch.
Pune traffic sucks…if ur staying on one of those fringes deemed as the new hotspots, you might as well apply for leave when you want to come to MG Road.
I’ve been in Pune recently…same old morphed photos on the hoarding’s showing lots of trees and butterflies and cute kids with smiling couples ….on ground just a hell hole where you can’t even see the sky and where there is no proper approach roads or electric supply.
One particular thing called “River View” really fascinated me….the so called river is actually a stinking drain….mercifully it was not visible from the apartment but the stink was there.
Only fools would invest here.
Ad opined it is cheaper to buy a house in UK/USA than here in Pune and I agree with him completely. In US you can get a lovely 3 bedroom bungalow in most places for around $200,000/- (about 80 lakh rupees) but here you can’t even get a cramped 3 bedroom apartment for that price.
Here is my experience of Pune market.
I am in UK and have been looking for a row house in/near pune since early 2007. I was astonished to get a quote of 88 lakhs for a 3 bed row house near the high way. No proper road to the site – in the middle of barren land and no way near public transport/rickshaw stand. My father optly described it as nothing more than a glorified ‘chawl’ and advised against it. I am glad I did not go for it, as there are still some rowhouses available in the same scheme almost 12.I could not justify paying the premium amount for an area so far from city especially kowing that my friend brough a flat on S B road for 30 lack rupees about 4 years ago. The insfrastructure in wakad/baner does no comapre with that in central pune and still builder are asking for this sky high prices.
Recently I was quoted 1 cr for a duplex flat in baner / wakad area. These prices are similar to prices in UK wherein I can buy a 1 /2 bed flat for similar price GBP 125K+ .
Even RK feels the same
At the prices what realty is quoting in pune/mumbai you would get a mansion in and around Dallas with lower interest rate, better construction etc etc. Based on my experience and what I have observed the builders in pune are not providing good construction quality at all and the prices they ask for amenities are all unjustified.Like for example a reputed builder in wakad offered me 2 options of 2BR one having normal bathroom and the other normal bathroom with shower curtain. The difference was 150 PSF. Do you think it is worth giving 150 PSF for a shower curtain , the best one which could get for like 100 USD. These are cheap gimmicks and people get lured.
I am an IT person worked with top IT company as well worked abroad but still prices in pune are not affordable. In the US with the sub prime crisis , the govt is trying hard with sops and options , do you think something like this could happen in swades.
A loan of 35 or 40 lac rupees for 20 years resulting in EMI of Rupees 40000 per month is like a devil sitting for 20 years on the head.
I find Rupesh has conveyed a very good message with his story that he narrates
I remember an incident one of my elderly staff was narrating and I like to share with you. In 1989, a real estate developer advertised for a residential layout in a Chennai suburb. Price was Rs. 30K for a plot measuring 2400 sq. feet. My colleague felt it was too steep a price and he backed off.
As more and more people started buying the plots from his office, he visited the builder again only to be told that the price has been increased to Rs. 45K per plot. It was a 28% hike in a short time. He did not have enough money to pay the amount. He was pestered by his wife to buy the plot and he returned to the same vendor next week. To his dismay, the developer had jacked up the price to Rs. 70K per plot!
With only some 35K budget, he had no option but to settle for half a ground and his wife was wise enough to insist him for buying the plot even at that rate. It is roughly 18 years since the incident, and the current rate of property in the area my colleague mentioned is 1.2 Crore per ground! Now consider this – suppose due to some “market correction” (imaginary) the Rs. 70K price would have dropped to Rs. 50K, does it makes any difference compared to the price of Rs. 1.2Crore today?
If you move up in the time horizon of say 15-20 years a small difference of 10% even 30% has no meaning. My advice to all is simple follow your real need and act accordingly. Don’t wait too long for price to correct, but never overstretch yourself. Remember, even with so-called sub prime crisis in the US, prices of property have not come down by 50%, may be 20% on an average.
I urge reader to check out comments left on these articles as there are too many to quote out here. It will be a worthwhile read and true reflection of what a common man feels about today’s Indian real estate prices.