Hotel Industry Boom Awaited!

Real Estate Boom or Bubble not withstanding, that there is a huge scarcity of hotel rooms in India is a big fact, and is here to stay for a long time. No wonder everyone is investing, from Mphasis' Jerry Rao, to Mallya to Ex BPL's Chandrasekhar.

Ideally, Hoteliers like Bharat Hotels', ITCs, the Tata's and of course Leela's should be leading the pack, but why does the sector seem subdued.. We don't hear too much noise. Perhaps building and selling off rooms, read apartments, seem more logical at the moment then b uying land at huge prices and own the rooms.

The hotel industry will not see a huge spike untill the real estate industry cools off, me thinks.

Be following the hotel industry closely.... there is money to be made..

DLF will Join IPO Boom afterall!

With the stock markets Up and then down, and then up. And soothsayers sayers, both bears and bull, giving their verdict only after each climb or slide, but never before.

It is as if the World Economy changes overnight. One week the fundamentals are very strong, the next week the markets are overheated. One week, we see nothing wrong in the sustained correction, the other week, the market is beating the trend.
I should I should also become a market analyst.
They never seem to go wrong, because they always do posts analysis.

It made DLF, the largest real estate major real worried. DLF have been mulling with the IPO for ages now, but the market always go the wrong way, there is a correction, and then the real easte stocks also took a beating. Last few weeks have been good, and now DLF don't want to wait.

They are comming with a 2 Billion Dollars Plus issue. 8750 to 9625 crore to be precise. 500 to 550 per share. All the best to you all.

Will the Real Estate Correction Start soon?

Good News,

Despite rising income levels, bankers said rising property prices have had an impact on home loan growth rates. Property prices have increased by about 50% to 60% in the last one year, though in some pockets the rise was as much as 100% to 150%.


"We could see a correction of around 20% to 30% in real estate prices in 2007," said analysts. HDFC chairman Deepak Parekh had said property prices could see a 15% to 20% correction. However, builders and developers do not seem to buy this argument.

"Growth in home loans has been slowing this year. This is largely on account of rising property prices and higher base," said Rajiv Sabharwal, senior general manager, ICICI Bank. The home loan portfolio, which has registered a growth rate of about 30% year-on-year, has dipped to 25% this fiscal.[source]"

Which means fewer people are buying homes, though the construction never stops, and of course land acquisition. The reason could be the rise in home loan rates, combined with the irrational rise in property prices. Genuine buyers won't be hurt, though they might feel some dissonance. Real estate companies won't be hurt either. Most of them have raised good money from the market at the right time. And anyway, they can now grow upwards. As the developers add more and more floors upwards, it will beneficial for all. But if there be speculators who have leveraged to invest in the property boom directly, and have entered in the last one year, they migth be hurt, and I have no pity for them.

Times of India, delhi also reported a news about yesterday's DDA auction which went for a lower than expected price ( It doesn't mean though that it went below the reserve price, but it was below the market price). Another Signal??

This good for Home buyers who have been waiting for a correction. The same article above also mentions a correction of about 15-20%, which is not new though. I see more correction than just 15-20%.

I won't exit the housing stocks just now though. But soon enough. Time to switch to Sugar.. Damn cheap I tell you.

Delhi To Grow Upwards, Skycrapers coming to town!

I had recently posted that the only way the Real Estate Market in India will rationalize is by letting it grow upwards. Not to restrict on the number of Floors that can be built, if technically viable. Economically it is much more viable. Seems like the developers knew it all along.. Time to buy Ansal Housing Stocks huh!! [The stock had been hitting the upper circuit the past few days after some Analyst lady came on CNBC and explained that it was trading way behind its peers.. Man, we can be such herds!!! ] {By the way, they signed some agreements with the UP Govt *wink*}

The city skyline could change dramatically, with Centre planning to allow re-development of certain areas by allowing up to eight-storey apartments and permitting construction between 20 and 60 floors at locations earmarked for new development.[source]

And once the master plan comes public, the prices of houses might come down, and if lucky, like nine pins. I'd wait for a little longer now.. The cost you are paying is now for a house is not for the construction cost, but for the number units per hundred crores paid for that land. With 60 storey house, the number of Units will multiply, like bunny rabbits?, and well the prices might just rationalise.

Walmart Enters India via Bharti Finally!

And yes, retail is one sector which will immensely benefit the customers, as more and more players come in. Some players will even die out under cutting each other, but the customers won't complain.

I hope it don't heat up the already heated up real estate market. Walmart, fo course, usually sets up shop out of town, but the competitors in a mad rush to compete will set up more shops in the not-so-out-of-towns.
In the news,

After months of waiting for a policy change that would allow foreign companies to enter multi-product retailing, Wal-Mart, a company with annual sales of $312 billion (Rs14,00,000 crore), threw in the towel and tied up with telecom bigwig Sunil Mittal for a 50:50 joint venture.

Wal-Mart would, ideally, have preferred to come to India on its own, but the current policy allows foreign companies entry only into single-brand retailing or wholesale trading.

The Bharti-Wal-Mart agreement, announced on Monday, will thus have Bharti running the shops and Wal-Mart managing the backend sourcing, supply logistics, and wholesale cash-and-carry businesses. But contrary to what people believe, the real power of Wal-Mart, the company that pioneered everyday-low-prices for shoppers to become the world’s biggest retailer, lies in its backend process.

Over the next few years, Wal-Mart will be making investments to the tune of $1 billion to make its presence felt across the length and breadth of the country. [more]

And yeah, its been a surprise that Bharti tioed up with Walmart.
Suni8l Mittal had once told that, now that Airtel is on an auto pilot mode, he is looking at more business opportunies. His Agri Business is also doing very well, what with his knack of tieing up with the best of the industry. Even in retail, I couldn't have expectd anything less than Walmart. Walmart will eventually want to run the show on its own, regulaters willing, and by that time Bharti would have learnt the ropes. After all who could have started a telecom empire from selling telephone sets.
Expect something different from Bharti.
Perhaps the biggest agri-products supplier to Walmart?
Logistics providers to all the Retailers?
Or with Indian Companies becoming overly acquisition happy, it would be good to see Bharti staging a bid for Walmart. Ah!! India will have arrived.

What is Ratan Tata Doing?

Will Real Estate Bring Down India's Growth?

Just a thought...
No research. no home work.. Top of the mind as they say...
You don't even have to believe what I write :)
... at your peril !


When we were in Engineering college, and a senior got a job with HP (Hewlett Packard) for a princely sum of 25000 per month, which was more than my IITian cousin got at that time( it was ages ago), many of us refused to sit for the campus interview for the 13-15 K jobs. Some even declined after getting an offer, starting the mad rush for Bangalore. When this said gentleman bought a Fiero ( the TVS -SUZUKi Bike), it was rumoured that he bought a Cielo.

25000 could buy a lot of stuff, definitely not a Cielo, but 25000 could buy you alot of stuff then. It was not even too long ago. And 25000 could definitely have afforded you the emi for a House then. A good one at that. In bangalore. In 2003, Houses still were affordable. Another friend bought a pigeonhole for 800,000. He was paying a rent of 6000 per month, and the pigeon hole was what his rent when converted to an EMI bought him. A similar apartment in that area today goes for no less than 25 lakhs, when i last enquired. In Pune.

I doubt if someone with a 60K salary could afford a decent House today. That is Indian Real Estate Scene today!

End of the LIG:
With Land prices so high, I don't know if there ever will be the LIG housing schemes, tomorrow. LIG housing schemes or Lower Income group's Housing schemes were built so that the LOWER Income people could afford a house. The Houses came cheap because the house were built cheap, adjacent to land where there were Medium Income and Higher Income Group Housing complexes. The cost of housing was brought down by not providing luxurious Amenities', no frills as they say, but with a large portion of the cost of building houses going for the land acquisition, how will one bring down the cost of housing.

One way is Growing up. Skyscrappers!!! But there will master plans and policies before that!!!!!
What the hell is FSI?

FDI in Real Estate:
FDI in any other sector had more or less translated to benefits to the end consumer. Take the case of telecom, and more visibly Retail. If walmart came to India, there will be discounts galore. Prices won't shoot up.

Why, then have the prices of real Estate shot up with the opening up of FDI in the real Estate. The answer is quite simple I guess. Where as the Foreign Funds in all the other sectors were used to fight for a market share with reduced Prices, or in other words SELLING, the FDI in Real estate was being used in pushing up the costs. They were BUYING up lands, and lands are the scarciest resources. Supply and Demand mechanics.

Lots of money chasing the same piece of land. As a result the land prices shoot up. The same Builders are bidding for the new HIGH Priced (FDI Induced) land and they have to get the money some where (well everywhere) and the end consumers are the best choice. And prices have shot up unlike other sectors.

Same solution. Grow Upwards... prices should come down when there are more units of Apartments per square feet of the land.

Let me plug in a small personal opinion.
FDI is good, and moeny is always welcome but given a choice between Insurance and Real Estate, Insurance should have been the better Choice.
World over Infrastructure developments which takes a very long gestation period needs very long term funds and Pensions and Insurance are about the only source that could provide cheap funds for 20-30 years even more. Without good Infrastructure, there would be no roads to apraoch the Skyscrappers, no water to bathe the residents and no lights to pull the Lifts. And Chidambaram jee and Manmohan Singhjee Know this. Does Sonia and Yechuri ?

So it is not the NRIs buying up flats that have shot up the prices but the bulders buying up land. With Apartment prices skyroketting 100-200% in the last 2-3 years, the profit margin of property developers should have shot up, but the profit margins have remained flat.. Never mind the topline and the net worths.

The Investors are also fueling the Real estate Inflation in a way. We value the Real estate Stocks way too high, giving them money to bid higher and higher for land. That doesn't mean I won't apply for the IPO of Shobha Developers :) ..

Indian Real Estate should grow upwards for the prices to grow downwards.


Will Real Estate bring down India's growth?

Say what you, India's growth have been fueled by low cost. Skilled Low cost resources.

Exports of IT, ITES, Auto Components, textiles that are fueling the growth of the nation have all been because of Low cost. Salary in the IT and Financial services might have skyrocketted, but average salary of a skilled engineer at Bharat Forge and Bajaj Auto are still as low as that of an unskilled worker in medium developed countries ( This I read in an old swaminomics article today morning).. When your basic need of housing becomes unaffordable, you will join the next company that is giving you a better hike and the company will have to hire a replacement at a higher package than your previous salary because more often than not, your replacement will also come from a different company for a Hike.

And all resources being scare, this salary hike war will continue as is continuing, and the cost advantage of India won't be valid too much longer..

Why do I blame the real estate?

Well, but for movie tickets and petrol, I don't see any drastic price rises in any other thing than Housing. In fact, Mobile phones, Mobile phone calls, Food, Laptops, all have become all the more cheaper and when I see people cramped in 1 room houses but each with a laptop, I can clearly see where the real estate prices will bring us.

If only the real estate prices were rational!

Earlier, when I believed that the Inflation in real estate was due to bulk buying by NRIs, I thought the prices will come down eventually. But, then I saw that the Mills owners are not going to return the 100's and 1000's of crores back to the Developers, and those crores have to be recouped back :)

The prices will not come down as long as they building don't grow skywards.
For those who are waiting for prices to come down, it will be a real long wait.

>>Vote this on Indian Pad.

Mumbai Salt Pan Lands to Open-up for Development

The Land Starved Real Estate Industry of Mumbai just got a breather. Privately owned salt pan land would be made available for redevelopment. The union govt have earlier opposed redevelopment of Salt pan land, but a recent high court order asking the Union Govt. not to create any legal obstructions for the developers seem to have given a fresh breath of air to the already land starved developers.


Some 2000 acres of salt pan land had already been bought by real estate developers for a long time now. Real estate developers seem to be most far sighted of all breeds, but then then eventually all land have be developed some time or the other. As Max said in superman returns, they have stopped manufacturing Lands.


On my way to work everyday for the past one year, when we approach Airoli from Mulund, and as we cross the airoli bridge, the vast tracts of Salt pan, with heaps of white salt piled in neat hillocks, have always been a treat to the eye. I had never seen salt pan before I cam to Mumbai, and would never have had the office not been in Mahape, Navi Mumbai. I always wanted to take some pictures, but I always forget to take my camera. If those land are also included, ugly building will now replace those beautiful salt lands.

It may not be such a natural sight to someone who have seen it all their lives, but to me it was different. Last vestige of natural beauty, in the concrete jungle that we are in.

Environmentalist, of course, have been saying that exploiting the salt pan lands for real estate development will be suicidal.